000074211212/312024Q1FALSE00007421122024-04-042024-04-04
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
April 10, 2024 (April 4, 2024)
INVACARE HOLDINGS CORPORATION
(Exact name of registrant as specified in its charter)
| | | | | | | | |
| Delaware | 001-15103 | 38-4264819 |
(State or other jurisdiction of
incorporation) | (Commission
File Number) | (IRS Employer
Identification No.) |
One Invacare Way, Elyria, Ohio 44035
(Address of principal executive offices) (Zip Code)
(440) 329-6000
(Registrant’s telephone number, including area code)
None
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(Former name or former address, if changed since last report.)
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Securities registered pursuant to Section 12(b) of the Exchange Act: None
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01. Entry into a Material Definitive Agreement.
On April 8, 2024, Invacare Holdings Corporation (the “Company”) entered into the Third Amendment to the Loan and Security Agreement (the “Third Amendment”) by and among the Company, certain of the Company’s direct and indirect North American subsidiaries (the “ABL Borrowers”), certain other of the Company’s direct and indirect North American subsidiaries (together with the Company, the “ABL Guarantors”), Invacare International Holdings Corp. (“Intermediate Holdings”), each lender party thereto (collectively, the “Lenders”), and White Oak Commercial Finance, LLC, as administrative and as collateral agent (the “Agent”). The Third Amendment amends the Loan and Security Agreement, dated as of May 5, 2023 (the “Loan and Security Agreement”, as amended by the First Amendment to Loan and Security Agreement dated as of February 26, 2024 (the “First Amendment”), as further amended by the Second Amendment dated as of March 13, 2024 (the “Second Amendment”) and as further amended by the Third Amendment, the “Amended Loan and Security Agreement”).
The Third Amendment, among other things, amended certain provisions of the Loan and Security Agreement to: (i) provide for additional borrowings under the Amended Loan and Security Agreement in the aggregate principal amount of $14,000,000 and additional delayed draw term loan borrowings in an aggregate principal amount not to exceed $10,000,000, (ii) increase the margin applicable to the loans under the Amended Loan and Security Agreement to eight percent (8.0%), (iii) modify the financial covenants under the Amended Loan and Security Agreement to remove testing of the fixed charge coverage ratio and minimum unrestricted cash balances, (iv) extend the deadline for delivery of certain financial statements, (vi) add certain covenants as set forth therein, and (vii) waive an event of default arising from the Company’s failure to deliver financial statements for the fiscal quarter ending September 30, 2023 as and when required by the Amended Loan and Security Agreement. The Third Amendment may additionally amend, subject to the occurrence of the CF Transition Date (as defined below), certain provisions of the Loan and Security Agreement to: (i) include an annual loan prepayment requirement based on excess cash flow of ABL Borrowers and their subsidiaries, (ii) shorten the maturity date applicable to the loans thereunder and (iii) provide for additional guarantees of the obligations under the Amended Loan and Security Agreement by subsidiaries of the Company that are not guarantors thereunder and the granting of additional collateral in assets of subsidiaries of the Company that do not secure the obligations under the Amended Loan and Security Agreement as of the effective date of the Third Amendment, in each case, upon request by the Lenders.
In connection with and pursuant to the Third Amendment, on April 8, 2024, the Company entered into (i) a Master Equity Agreement (the “Master Equity Agreement”) by and among the Company, Intermediate Holdings, Invacare Corporation, and each of the Lenders (or their designated affiliates) party thereto (each, a “Holder” and collectively, the “Holders”), which provides that certain equity transactions will occur upon the CF Transition Date and (ii) an Exchange Agreement by and among the Company, Intermediate Holdings, Invacare Corporation, and each Holder, which agreement is effective upon the CF Transition Date and provides for certain equity transactions after such effectiveness. Under the Master Equity Agreement, the CF Transition Date is defined as: the business day after the earliest date that: (a) the obligations under the Company’s term loan documents and convertible notes are paid in full or (b) the covenants in the term loan documents or the convertible notes documents applicable to the transactions contemplated by the Master Equity Agreement (the “Transactions”) are either (i) no longer applicable to prohibit the Transactions; or (ii) waived or modified by the requisite creditors under the Company’s term loan and requisite holders under the convertible notes.
Pursuant to the Master Equity Agreement and the Exchange Agreement, upon (and subject to) the occurrence of CF Transition Date, the Company, Intermediate Holdings, and Invacare Corporation agreed to take the following actions:
i.file an Amended and Restated Certificate of Designations of Series A Preferred Stock of the Company substantially in the form set forth on Exhibit C to the Master Equity Agreement (the “Parent A&R Series A COD”), which will amend certain provisions contained therein including to reflect the issuance and terms of the Series B Preferred Stock (as defined below) that for so long as the Master Equity Group Members (as defined in the Parent A&R Series A COD) hold at least a majority of all outstanding shares of Parent Series A Preferred Stock and Series B Preferred Stock (as defined below), holders of Series B Preferred Stock would be entitled to vote together with holders of the Parent Series A Preferred Stock as a separate class on all matters upon which holders of Parent Series A Preferred Stock are entitled to vote, including the issuance of any shares of capital stock of the Company other than the Company’s common stock, par value $0.001 per share (the “Parent Common Stock”);
ii.file a Certificate of Designation of Series B Preferred Stock of the Company substantially in the form set forth on Exhibit D to the Master Equity Agreement (the “Parent Series B COD”) which will create a new series of preferred stock of the Company and establish the designations, powers, preferences and rights with respect to such Series B Redeemable Preferred Stock (the “Series B Preferred Stock”). Each share of Series B Preferred Stock and share of Intermediate Holdings Preferred Stock will be treated together as a single unit and will rank senior to the Parent Common Stock and Parent Series A Preferred Stock with respect to dividend rights and upon a liquidation, winding-up or dissolution of the Company;
iii.cause Intermediate Holdings to file the Amended and Restated Certificate of Incorporation of Intermediate Holdings substantially in the form set forth on Exhibit E to the Master Equity Agreement (the “Second A&R Charter of Intermediate Holdings”) which will, among other things, (i) increase the number of authorized shares of common stock of Intermediate Holdings (the “Intermediate Holdings Common Stock”) by an amount sufficient to satisfy any exercise of the Intermediate Holdings Warrant (as defined below) and (ii) authorize 5,938,620 shares of Series B Preferred Stock for issuance;
iv.cause Intermediate Holdings to file the Certificate of Designations of Intermediate Holdings substantially in the form set forth on Exhibit F to the Master Equity Agreement (the “Intermediate Holdings COD”) which will create a new series of preferred stock of Intermediate Holdings and establish the designations, powers, preferences and rights with respect to such 9.00% Series A Preferred Stock (the “Intermediate Holdings Preferred Stock”);
v.cause Invacare Corporation to file an amendment to its Certificate of Incorporation increasing the number of authorized shares of common stock of Invacare Corporation (the “Invacare Corporation Common Stock”) by an amount sufficient to satisfy any exercise of the Invacare Corporation Warrants (as defined below);
vi.issue to Intermediate Holdings 5,938,620 shares of Series B Preferred Stock of the Company;
vii.cause Intermediate Holdings to exchange each share of Series A Preferred Stock of the Company held by the Holders for one share of Series B Preferred Stock of the Company held by Intermediate Holdings and one share of Intermediate Holdings Preferred Stock in accordance with the terms of the Exchange Agreement (as defined below);
viii.cause Intermediate Holdings to issue to each Holder a warrant (the “Intermediate Holdings Warrant”) to purchase a certain number of shares of Intermediate Holdings Common Stock which will give the Holders the right to acquire up to 49% of the Common Stock Deemed Outstanding (as defined in the Exchange Agreement) in the aggregate of Intermediate Holdings Common Stock; and
ix.cause Invacare Corporation to issue to each Holder a warrant (the “Invacare Corporation Warrant”) to purchase a certain number of shares of Invacare Corporation Common Stock which will give the Holders the right to acquire up to 49% of the Common Stock Deemed Outstanding in the aggregate of Invacare Corporation Common Stock.
The descriptions of the Third Amendment, the Master Equity Agreement and the Exchange Agreement as contained herein are qualified in their entirety by reference to the text of such agreements, which are attached to this Current Report on Form 8-K as Exhibits 10.1, 10.2, and 10.3. respectively and are each incorporated by reference into this Item 1.01.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation of an Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 is incorporated herein by reference.
Item 2.05. Costs Associated with Exit or Disposal Activities.
On April 4, 2024, the Company announced a restructuring focused on improving its cost structure by streamlining its operations and right sizing its organization in North America, primarily related to headcount reductions. As a result, the Company anticipates annual pre-tax savings of approximately $8 million. The Company will incur restructuring charges of approximately $1 million and expects to make cash payments in the same amount, primarily related to severance costs expected to be paid out over the second quarter of 2024.
As it has done for the past several years, the Company continues to develop plans for further transformative actions that will enhance shareholder value.
Item 3.02. Unregistered Sales of Equity Securities.
The information set forth in Item 1.01 is incorporated herein by reference.
Subject to and conditioned upon the CF Transition Date, any issuance of the equity securities contemplated by the Master Equity Agreement or Exchange Agreement will be conducted in reliance on the exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) provided by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder, and any such securities will not be registered under the Securities Act.
Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
On April 8, 2024, in connection with the Third Amendment, the Company, with the consent of the stockholders required thereby, amended the Certificate of Designations of the Company for its 9.00% Series A Convertible Participating Preferred Stock (the “Second Amendment to the Certificate of Designations”), to among other things amend certain definitions contained therein and amend the scope and timing of delivery of certain financial statements with respect to the Company to the holders of the Parent Series A Preferred Stock.
The foregoing is not a complete description of the Second Amendment to the Certificate of Designations and is qualified by reference to the full text and terms of the Second Amendment to the Certificate of Designations, which is filed as Exhibit 3.1 to this report and incorporated herein by reference.
Item 5.07. Submission of Matters to a Vote of Security Holders.
In connection with transactions contemplated by the Third Amendment, on April 8, 2024, certain stockholders of the Company representing more than a majority of the voting power of the issued and outstanding Parent Series A Preferred Stock acted by written consent in lieu of a special meeting to (i) approve the Second Amendment to the Certificate of Designations and (ii) approve the Master Equity Agreement and the transactions contemplated thereby.
Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements within the meaning of the “Safe Harbor” provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include words or phrases such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “could,” “may,” “might,” “should,” “will” and similar words. Forward-looking statements are based on management’s current expectations, beliefs, assumptions and estimates and may include, for example, statements regarding the Company’s commitments; efforts which have or may be undertaken to restructure its operations; and the Company’s expected savings from those restructuring activities. These statements are subject to significant risks, uncertainties, and assumptions that are difficult to predict and could cause actual results to differ materially and adversely from those expressed or implied in the forward-looking statements, including risks and uncertainties regarding the Company’s ability to restructure operations; employee attrition and the Company’s ability to retain senior management and other key personnel due to the uncertainties; and the Company’s ability to maintain relationships with suppliers, customers, employees and other third parties and regulatory authorities.
Forward-looking statements are also subject to the risk factors and cautionary language described from time to time in the reports the Company files with the SEC, including those in the Company’s most recent Annual Report on Form 10-K and any updates thereto in the Company’s Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. These risks and uncertainties may cause actual future results to be materially different than those expressed in such forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement, and we undertake no obligation to publicly update or revise any forward-looking statements, except as required by law.
Item 9.01. Financial Statements and Exhibits.
| | | | | |
| (d) Exhibits. | |
| |
| Exhibit Number | Description |
| |
| |
| Second Amendment to the Certificate of Designations of 9.00% Series A Convertible Participating Preferred Stock, dated as of April 8, 2024. |
| Third Amendment to Loan and Security Agreement, dated as of April 8, 2024. |
| Master Equity Agreement, dated as of April 8, 2024. |
| Exchange Agreement, dated as of April 8, 2024. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| | | | | | | | |
| INVACARE HOLDINGS CORPORATION |
| (Registrant) |
| | |
| Date: April 10, 2024 | By: | /s/ Anthony C. LaPlaca |
| Name: | Anthony C. LaPlaca |
| Title: | Senior Vice President, General Counsel, |
| | Chief Administrative Officer and Secretary |
INVACARE HOLDINGS CORPORATION
SECOND AMENDMENT TO THE CERTIFICATE OF DESIGNATIONS OF
9.00% SERIES A CONVERTIBLE PARTICIPATING PREFERRED STOCK
Invacare Holdings Corporation, a corporation organized under the laws of the State of Delaware (the “Corporation”), DOES HEREBY CERTIFY AS FOLLOWS:
I.The Board of Directors of the Corporation (the “Board of Directors”), by resolutions adopted on May 5, 2023, and a Certificate of Designations filed with the Secretary of State of the State of Delaware on May 5, 2023 (the “Certificate of Designations”), established a series of Preferred Stock designated as “9.00% Series A Convertible Participating Preferred Stock” (the “Series A Preferred Stock”).
II.The Corporation, pursuant to resolutions adopted by the Board of Directors on March 12, 2024 and the written consent of the requisite holders of Series A Preferred Stock dated March 13, 2024, filed that certain First Amendment to the Original Certificate of Designations with the Secretary of State of the State of Delaware on March 13, 2024 (the “First Amendment” and the Original Certificate of Designations as amended by the Amendment, the “Existing Certificate of Designations”).
III.The Board of Directors, by resolution adopted on April 7, 2024, determined that it was advisable and in the best interest of the Corporation and its stockholders to amend the Existing Certificate of Designations as follows (the “Second Amendment”):
1.Section 3, the following defined terms are hereby deleted in its entirety and replaced with the following:
““Change of Control Excluded Person” means: (a) a Person that is a Backstop Party (or a Backstop Party’s Related Fund), to the extent that prior to the date hereof neither such Backstop Party nor any of such Backstop Party’s Related Funds or Affiliates has filed a public report pursuant to Section 13(d) of the Exchange Act indicating that such Back Stop Party or such Backstop Party’s Related Funds or Affiliates delivered a letter to the Board indicating that such Person, either alone or together with other potential investors, had or was proposing to engage in discussions with the Corporation regarding the potential acquisition of the Corporation; (b) any Person that controls, is controlled by, or is under common control with a Person described in clause (a) of this definition; and (c) a “group” (as the term is used for purposes of Sections 13(d) of the Exchange Act) that includes one or more Change of Control Excluded Persons as defined under clauses (a) or (b) above, where such Change of Control Excluded Persons beneficially own capital stock of the Corporation having more the 50% of the combined voting power in the election of directors of all the capital stock of the Corporation held by such group.”
“Intermediate HoldCo Fundamental Change” means the consummation, at any time after the Effective Date, of (A) any transaction immediately following the consummation of which Intermediate HoldCo ceases to be a Wholly-Owned Subsidiary of the Corporation; (B) the voluntary or involuntary liquidation, winding‑up or dissolution of Intermediate HoldCo, (C) any consolidation, merger, binding share exchange, or other combination pursuant to which the Intermediate HoldCo Common Stock will be converted into, or exchanged for, stock, other securities, or other property or assets (including cash), or a combination thereof, in each case after which Intermediate HoldCo will no longer be a Wholly-Owned Subsidiary of the Corporation; or (D) any sale, lease, or other transfer or disposition in one transaction or a series of transactions of a material portion of the consolidated assets of Intermediate HoldCo and its
Subsidiaries, taken as a whole, to any Person other than the Corporation or any of the Corporation’s Wholly‑Owned Subsidiaries (a material portion of the consolidated assets of Intermediate HoldCo and its Subsidiaries, taken as a whole shall include, without limitation, assets with a value in excess of $10,000,000).
“Reorganized Invacare Fundamental Change” means the consummation, at any time after the Effective Date, of (A) any transaction immediately following the consummation of which Reorganized Invacare ceases to be a Wholly-Owned Subsidiary of the Corporation; (B) the voluntary or involuntary liquidation, winding‑up or dissolution of Reorganized Invacare, (C) any consolidation, merger, binding share exchange, or other combination pursuant to which the Reorganized Invacare Common Stock will be converted into, or exchanged for, stock, other securities, or other property or assets (including cash), or a combination thereof, in each case after which Reorganized Invacare will no longer be a Wholly-Owned Subsidiary of the Corporation; or (D) any sale, lease, or other transfer or disposition in one transaction or a series of transactions of all or a material portion of the consolidated assets of Reorganized Invacare and its Subsidiaries, taken as a whole, to any Person other than the Corporation or any of the Corporation’s Wholly‑Owned Subsidiaries (a material portion of the consolidated assets of Reorganized Invacare and its Subsidiaries, taken as a whole shall include, without limitation, assets with a value in excess of $10,000,000).”
2.Section 6(a)(i) is hereby deleted in its entirety and replaced with the following:
“provide the Holders with, (1) as soon as available, and in any event within one hundred twenty (120) days after the end of each fiscal year, audited consolidated balance sheets of the Corporation and any Corporation Subsidiaries as at the end of each such fiscal year and audited consolidated statements of income and cash flows for such year and (2) as soon as available, and in any event within sixty (60) days after the end of each quarterly accounting period in each fiscal year (other than the last fiscal quarter of the fiscal year), unaudited consolidated balance sheets of the Corporation and Corporation Subsidiaries as at the end of each such fiscal quarter and unaudited consolidated statements of income and cash flows for such fiscal quarter. The foregoing notwithstanding, the Corporation shall not be required to provide the Holders with (i) unaudited quarterly financial statements for the quarters ended June 30, 2023 and September 30, 2023 or (ii) audited financial statements for the year ended December 31, 2023 until June 30, 2024;”
3.The following is hereby included as a new Section 9(i):
“For the avoidance of doubt, the Corporation may waive the provisions of this Section 9, including the occurrence of a Mandatory Redemption Event, and all rights, preferences and privileges with respect thereto, for all Holders with the applicable approvals or consents set forth in Section 18.”
IV.The holders of a majority of the outstanding shares of Series A Preferred Stock, representing the votes necessary to authorize such action pursuant to Section 4.2 of the Certificate of Incorporation of the Corporation and Section 7(b) of the Existing Certificate of Designations, acting by written consent, approved the adoption of the Amendment.
V.Accordingly, the Amendment has been duly adopted in compliance with Section 242 of the Delaware General Corporation Law.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be executed on this 8th day of April, 2024.
INVACARE HOLDINGS CORPORATION
By: /s/ Anthony C. LaPlaca________________
Name: Anthony C. LaPlaca
Title: Senior Vice President, General Counsel, Chief Administrative Officer and Secretary
THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT
This THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”), dated as of April 8, 2024, is entered into by and among INVACARE HOLDINGS CORPORATION, a Delaware corporation (“Parent”), INVACARE CORPORATION, an Ohio corporation (“Invacare”), FREEDOM DESIGNS, INC., a California corporation (“Freedom Designs”), MEDBLOC, INC., a Delaware corporation (“Medbloc”), INVACARE CANADA L.P., an Ontario limited partnership (“Invacare Canada”), MOTION CONCEPTS L.P., an Ontario limited partnership (“Motion Concepts”), and PERPETUAL MOTION ENTERPRISES LIMITED, an Ontario limited partnership (“Perpetual Motion”; together with Invacare, Freedom Designs, Medbloc, Invacare Canada, and Motion Concepts, each a “Borrowers”, and collectively the “Borrowers”), each Guarantor party hereto (collectively, the “Guarantors”), each Lender party hereto (collectively, the “Lenders”), and WHITE OAK COMMERCIAL FINANCE, LLC, a Delaware limited liability company, as Administrative Agent and as Collateral Agent (respectively, the “Administrative Agent” and the “Collateral Agent”).
RECITALS
WHEREAS, the Borrowers, the Guarantors, the Lenders, the Administrative Agent, and the Collateral Agent are party to that certain Loan and Security Agreement dated as of May 5, 2023, among the borrowers from time to time party thereto, the guarantors from time to time party thereto, the lenders from time to time party thereto and White Oak Commercial Finance, LLC, as Administrative Agent and Collateral Agent (as amended, restated, amended and restated, supplemented or otherwise modified from time to time immediately prior to giving effect to this Amendment, the “Existing Credit Agreement”, and, as amended by this Amendment, and as further amended, restated, supplemented or otherwise modified from time to time after the effectiveness of this Amendment, the “Credit Agreement”);
WHEREAS, the Borrowers desire that the Lenders party hereto and the other parties hereto agree to amend the Existing Credit Agreement to make certain changes to the Existing Credit Agreement as more fully set forth herein, which amendments shall become effective upon the Third Amendment Effective Time (as defined below);
WHEREAS, the Guarantors agree that all of Borrowers’ obligations under the Credit Facility are and shall continue to be guaranteed by the Guarantors, and each Guarantor has agreed to confirm the Guaranty (as defined in the Existing Credit Agreement) as set forth in the Credit Agreement;
WHEREAS, the Lenders party hereto are willing to make such changes as more fully set forth herein, in each case, subject to the terms and conditions set forth herein; and
NOW, THEREFORE, in consideration of the premises contained herein, and for other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto agree as follows:
1. Defined Terms; References. Except as otherwise defined in this Amendment, terms defined in the Credit Agreement are used herein (including the recitals hereto) as defined therein.
2. Additional Advances.
(a) Notwithstanding that all Commitments (other than to make Loans deemed made pursuant to Section 2.12(c) of the Credit Agreement in respect of Letter of Credit Disbursements, the Percentage Share of each Lender in respect thereof being reflected in Schedule I hereto) have previously terminated as of the First Amendment Effective Time pursuant to the First Amendment, (i) the Lenders have agreed to provide, severally and not jointly or jointly and severally, additional advances of Loans pursuant to the Credit Agreement on the date hereof in the amount of Fourteen Million Dollars ($14,000,000.00) (the “Third Amendment Effective Time Draw”); (ii) the Lenders have agreed to provide, if and only if the Required DDTL Approving Lenders elect in the sole and absolute discretion of such Required DDTL Approving Lenders that all Lenders shall so provide, an additional advance in the amount of Five Million Dollars ($5,000,000.00) following the satisfaction of the Third Amendment First Delayed Draw Pre-Conditions (the “Third Amendment First Delayed Draw”); and (iii) the Lenders may in their sole and absolute discretion provide, but in each case if and only if all Lenders unanimously agree to so provide, a further additional advance in the amount of up to Five Million Dollars ($5,000,000.00) (the “Third Amendment Second Delayed Draw” and, collectively with the Third Amendment First Delayed Draw and the Third Amendment Effective Time Draw, the “Third Amendment Advances”). In the sole and absolute discretion of the Required Lenders, a portion of the Third Amendment Advances may be delivered to counsel to the Lenders for the purpose of paying legal fees and expenses in accordance with the Lender Fee Letter and such Third Amendment Advances shall nevertheless be considered Third Amendment Advances even if such funds are not advanced to the Borrowers but are applied as provided therein. The Loan Parties agree that the Lenders have not committed to provide the Third Amendment First Delayed Draw or the Third Amendment Second Delayed Draw, and the Lenders agree that, if the Required DDTL Approving Lenders elect to provide the Third Amendment First Delayed Draw in the sole and absolute discretion of such Required DDTL Approving Lenders, all Lenders shall make their Percentage Share of the Third Amendment First Delayed Draw as reflected on Schedule I hereto on the date selected by the Required DDTL Approving Lenders and that any Lender’s failure to advance their Percentage Share of the Third Amendment First Delayed Draw on such date (if the Required DDTL Approving Lenders elect to make the Third Amendment First Delayed Draw) shall be deemed to be a Lender Default that renders such non-advancing Lender a Defaulting Lender. The Borrowers agree that, if the Lenders agree to provide the Third Amendment Second Delayed Draw, the Borrowers shall cause a Responsible Officer (as defined in the Term Loan Documents and the Convertible Notes Documents, respectively) of Invacare to deliver a certificate to the Term Loan Agent and the Convertible Notes Agent at least five (5) Business Days prior to the incurrence of the Third Amendment Second Delayed Draw, together with information and in the form required by the Term Loan Documents and the Convertible Notes Documents so that the Third Amendment Second Delayed Draw satisfies all respective conditions for Required Additional Debt Terms thereunder, and to certify to the Administrative
Agent and the Lenders that the Responsible Officer has done so. The Third Amendment Advances (if and when advanced), together with the Second Amendment Advance (as defined in the Second Amendment), the Additional Advance (as defined in the First Amendment), the Remaining Advance (as defined in the First Amendment), and the Pre-Assignment Principal Balance (as defined in the First Amendment), are and shall be deemed to have been made in the aggregate as a Loan to the Borrowers under the Credit Agreement and to constitute the principal balance of the Loans, in the amount of Fifty-Two Million Three Hundred Twenty-Five Thousand Eight Hundred Dollars ($52,325,800.00) (the “Pre-LC Draw Maximum Principal Obligations”), and the Principal Share of each Lender in respect of the Pre-LC Draw Maximum Principal Obligations is set forth on Schedule I hereto. Any payments or proceeds applied to the Pre-LC Draw Maximum Principal Obligations and the accrued interest thereon shall be applied (1) first to the portion thereof that do not constitute either (A) the Junior Portion of the Third Amendment First Delayed Draw or the interest thereon; or (B) the Junior Portion of the Third Amendment Second Delayed Draw or the interest thereon, (2) second to the portion thereof that constitutes the Junior Portion of the Third Amendment First Delayed Draw or the interest thereon, and (3) third to the portion thereof that constitutes the Junior Portion of the Third Amendment Second Delayed Draw. The Borrowers confirm that all Commitments remain terminated, and agree that they have requested the Third Amendment Advances to be made pursuant to the same terms as the other advances constituting the Loans;
(b) Each Lender agrees severally and not jointly or jointly and severally that upon the effectiveness of this Amendment on the Third Amendment Effective Time each such Lender shall make the Third Amendment Effective Date Draws on the Third Amendment Effective Time in the aggregate principal amount equal to the amount of its Percentage Share indicated on Schedule I hereto of the amount of such Third Amendment Effective Date Draws, and, in each case, when made, the Third Amendment Effective Date Draws shall be added to and constitute a part of the outstanding Revolving Loans under the Credit Agreement. In each case, if and when made, the Third Amendment First Delayed Draws and Third Amendment Second Delayed Draws shall be added to and constitute a part of the outstanding Revolving Loans under the Credit Agreement.
(c) Upon the making of the Third Amendment Advances hereunder, the Administrative Agent shall promptly update the Register to give effect to the Third Amendment Advances.
3. Amendments. In reliance upon the representations and warranties set forth in Section 4 below and upon satisfaction of the conditions to effectiveness set forth in Section 5 below, upon the Third Amendment Effective Time, the Existing Credit Agreement is hereby amended as follows:
a. Additional Definitions. Section 1.01 of the Existing Credit Agreement is hereby amended to add thereto in alphabetical order the following definitions which shall read in full as follows:
“Capital Expenditure Cap” means $15,000,000.00.
“CF Transition Date” means the Business Day after the earliest date that: (a) the CF Debt Obligations (as defined in the Intercreditor Agreement) are Paid in Full (as defined in the Intercreditor Agreement); or (b) the covenants in the Term Loan Documents or the Convertible Notes Documents applicable to the Transactions are either (i) no longer applicable to prohibit the Transactions; or (ii) waived or modified by the requisite CF Debt Creditors.
“Consolidated Working Capital” means, at any date, the excess of (a) the sum of all amounts (other than cash) that would, in conformity with GAAP, be set forth opposite the caption “total current assets” (or any like caption) on a consolidated balance sheet of Parent and its Subsidiaries at such date, excluding the current portion of current and deferred income taxes over (b) the sum of all amounts that would, in conformity with GAAP, be set forth opposite the caption “total current liabilities” (or any like caption) on a consolidated balance sheet of Parent and its Subsidiaries on such date, including deferred revenue but excluding, without duplication, (i) the current portion of any funded indebtedness, (ii) all Indebtedness consisting of Loans and obligations under letters of credit to the extent otherwise included therein, (iii) the current portion of interest and (iv) the current portion of current and deferred income taxes; provided that, for purposes of calculating Excess Cash Flow, increases or decreases in working capital (A) arising from acquisitions or dispositions by Parent and its Subsidiaries shall be measured from the date on which such acquisition or disposition occurred until the first anniversary of such acquisition or disposition with respect to the Person subject to such acquisition or disposition and (B) shall exclude (I) the impact of noncash adjustments contemplated in the Excess Cash Flow calculation, (II) the impact of adjusting items in the definition of “ECF Consolidated Net Income” and (III) any changes in current assets or current liabilities as a result of (x) the effect of fluctuations in the amount of accrued or contingent obligations, assets or liabilities under hedging agreements or other derivative obligations, (y) any reclassification in accordance with GAAP of assets or liabilities, as applicable, between current and noncurrent or (z) the effects of acquisition method accounting.
“ECF Consolidated Net Income” shall mean “Consolidated Net Income” as defined on the date hereof in the Term Loan Agreement, as of May 5, 2023, without giving effect to any amendments after the date thereof, and reference to the sentences, items, clauses, or provisions of the ECF Consolidated
Net Income shall be references to the sentences, items, clauses, and provisions, respectively, in such definition of Consolidated Net Income.
“Excess Cash Flow” means, for any Excess Cash Flow Period, an amount (if positive) equal to the excess of:
(a) the sum (in each case, for Parent and its Subsidiaries on a consolidated basis), without duplication, of:
(i) ECF Consolidated Net Income for such Excess Cash Flow Period,
(ii) an amount equal to the amount of all non-cash charges to the extent deducted in arriving at such ECF Consolidated Net Income (provided, in each case, that if any non-cash charge represents an accrual or reserve for cash items in any future Excess Cash Flow Period, the cash payment in respect thereof in such future Excess Cash Flow Period shall be subtracted from Excess Cash Flow in such future Excess Cash Flow Period),
(iii) decreases in Consolidated Working Capital,
(iv) an amount equal to the aggregate net non-cash loss on Dispositions by Parent and its Subsidiaries during such Excess Cash Flow Period (other than dispositions in the ordinary course of business) to the extent deducted in arriving at such ECF Consolidated Net Income, less:
(b) the sum (in each case, for Parent and its Subsidiaries on a consolidated basis), without duplication (including in any subsequent Excess Cash Flow Periods), of:
(i) an amount equal to the amount of all non-cash credits included in arriving at such ECF Consolidated Net Income and cash charges included in clauses (a) through (o) of the definition of “ECF Consolidated Net Income”, except to the extent such cash charges were financed with long-term Indebtedness (other than revolving Indebtedness) (including any amounts included in ECF Consolidated Net Income pursuant to the last sentence of the definition of “ECF Consolidated Net Income” to the extent such amounts are due but not received during such Excess Cash Flow Period),
(ii) the amount of Capital Expenditures made or accrued in cash during such Excess Cash Flow Period or, at the
option of the respective Loan Party, made prior to the date the Loan Parties are required to make a payment of Excess Cash Flow in respect of such Excess Cash Flow Period, except to the extent that such Capital Expenditures were financed with Indebtedness; provided that the amount of Capital Expenditures deducted pursuant to this clause (ii) shall not exceed the Capital Expenditure Cap in any Excess Cash Flow Period,
(iii) the aggregate amount of all principal payments of Indebtedness, including (A) the principal component of payments in respect of Capital Leases, (B) the amount of any mandatory prepayment of Loans to the extent required due to a Disposition that resulted in an increase to ECF Consolidated Net Income and not in excess of the amount of such increase and (C) the aggregate amount of any premium, make-whole or penalty payments actually paid in cash by Parent and the Restricted Subsidiaries during such Excess Cash Flow Period that are required to be made in connection with any prepayment of Indebtedness, to the extent not financed with long-term Indebtedness but excluding (I) all other prepayments of the Loans, (II) all prepayments of revolving loans and swingline loans made during such Excess Cash Flow Period (other than in respect of any revolving credit facility to the extent there is an equivalent permanent reduction in commitments thereunder) and (III) all such principal payments of Indebtedness to the extent financed with long-term Indebtedness,
(iv) an amount equal to the aggregate net non-cash gain on Dispositions by Parent and its Subsidiaries during such Excess Cash Flow Period (other than Dispositions in the ordinary course of business) to the extent included in arriving at such ECF Consolidated Net Income,
(v) increases in Consolidated Working Capital,
(vi) the amount of Investments and acquisitions not prohibited by this Agreement made in cash during such Excess Cash Flow Period (including Investments made after the end of an applicable Excess Cash Flow Period), to the extent that such Investments and acquisitions were not financed with long-term Indebtedness; provided that the amount of Investments deducted pursuant to this clause (vi) shall not exceed $1,000,000 in any Excess Cash Flow Period,
(vii) the amount of taxes (including penalties and interest) paid in cash and/or tax reserves set aside, payable, or
reasonably estimated to be payable (without duplication) in such Excess Cash Flow Period to the extent they exceed the amount of tax expense deducted in determining ECF Consolidated Net Income for such Excess Cash Flow Period,
(viii) cash payments by Parent and the Restricted Subsidiaries during such Excess Cash Flow Period in respect of long-term liabilities of the Parent and its Subsidiaries other than Indebtedness, to the extent such payments are not expensed during such Excess Cash Flow Period or are not deducted in calculating ECF Consolidated Net Income and were not financed with long term Indebtedness; provided that the amount of payments deducted pursuant to this clause (viii) shall not exceed $1,500,000 in any Excess Cash Flow Period, and
(ix) the aggregate amount of expenditures actually made by the Parent and its Subsidiaries in cash during such Excess Cash Flow Period (including expenditures for the payment of financing fees) to the extent that such expenditures are not expensed during such Excess Cash Flow Period or are not deducted (and not added back) in calculating Consolidated Net Income, to the extent that such expenditures were financed with internally generated cash flow of the Parent and its Subsidiaries.
“Excess Cash Flow Period” means each 12-month period ending each June 30, commencing with the fiscal period during which the CF Transition Date occurs.
“Junior Portion of the Third Amendment First Delayed Draw” means that portion of the Third Amendment First Delayed Draw that constitutes Revolving Credit Excess Principal Obligations under the Intercreditor Agreement.
“Junior Portion of the Third Amendment Second Delayed Draw” means that portion of the Third Amendment Second Delayed Draw that constitutes Revolving Credit Excess Principal Obligations under the Intercreditor Agreement.
“Lender Fee Letter” means that certain Confirmation of Fee Reimbursement Agreement dated as of or about the Third Amendment Effective Date, between and among one or more of the Loan Parties and Brown Rudnick LLP, as counsel to the Lenders.
“Required DDTL Approving Lenders” and “Required MIP Approving Lenders” means Required Lenders that are comprised
of not less than three (3) groups of Lenders for which no Lender within any such group is affiliated with any Lender in the two (2) other groups (although such a Lender may be affiliated with other Lenders in its same group).
“Third Amendment” means that certain Third Amendment to Loan and Security Agreement dated as of April 8, 2024 by and among the Lenders, the Loan Parties, the Administrative Agent and the Collateral Agent.
“Third Amendment First Delayed Draw Pre-Conditions” means the occurrence of each of the following:
(i) the Required DDTL Approving Lenders have agreed to provide the Third Amendment First Delayed Draw, and have not revoked such agreement;
(ii) (a) the Term Loan Documents permit the Third Amendment First Delayed Draw to be incurred and maintained as Indebtedness secured by Liens (as “Indebtedness” and “Liens” are defined under the Term Loan Documents), the Convertible Note Documents permit the Third Amendment First Delayed Draw to be incurred and maintained as Indebtedness secured by Liens (as “Indebtedness” and “Liens” are defined under the Convertible Note Documents), the Third Amendment First Delayed Draw satisfies all qualifications for Required Additional Debt Terms as defined in the Term Loan Documents, the Third Amendment First Delayed Draw satisfies all qualifications for Required Additional Debt Terms as defined in the Convertible Note Documents, the Third Amendment First Delayed Draw is entitled to treatment as either Revolving Priority Obligations or Revolving Credit Excess Principal Obligations under the Intercreditor Agreement, and the incurrence, maintenance, and payment of the Third Amendment First Delayed Draw Loans and all other Obligations on the terms of the Loan Documents does not violate any provisions of the Term Loan Documents or the Convertible Documents; and (b) all Obligations other than the Third Amendment First Delayed Draw and the interest thereon are entitled to treatment as Revolving Priority Obligations under the Intercreditor Agreement;
(iii) a certificate of a Responsible Officer (as defined in the Term Loan Documents) of Invacare has been delivered to the Term Loan Agent at least five (5) Business Days prior to the incurrence of the Third Amendment First Delayed Draw, together with the information and in the form required by the Term Loan Documents for such Third Amendment First Delayed Draw to satisfy all conditions for Required Additional Debt Terms as defined under the Term Loan Documents;
(iv) a certificate of a Responsible Officer (as defined in the Convertible Note Documents) of Invacare has been delivered to the Convertible Notes Agent at least five (5) Business Days prior to the incurrence of the Third Amendment First Delayed Draw, together with the information and in the form required by the Convertible Notes Documents for such Third Amendment First Delayed Draw to satisfy all conditions for Required Additional Debt Terms as defined under the Convertible Notes Documents; and
(iv) the senior financial officer of the Loan Parties has delivered to the Administrative Agent and counsel for the Required DDTL Approving Lenders a certificate stating that each of the Third Amendment First Delayed Draw Pre-Conditions (specifying each one in detail) has been satisfied).
“Third Amendment Effective Time” has the meaning given in the Third Amendment.
b. Amended and Restated Definitions. Section 1.01 of the Existing Credit Agreement is hereby amended by amending and restating the following definitions, in each case, in their entirety as follows:
“Applicable Margin” means eight percent (8.0%).
“Default Rate” means an interest rate equal to the sum of: (a) the Base Rate; plus (b) (i) prior to the CF Transition Date, 2.0% per annum; and (ii) from and after the CF Transition Date, for the first month following CF Transition Date, 2.0% per annum, and escalating by 50 basis point each month thereafter up to 5.0% per annum.
“Maturity Date” means:
(1) except with respect to the Junior Portion of the Third Amendment First Delayed Draw and the Junior Portion of the Third Amendment Second Delayed Draw:
(a) prior to the CF Transition Date (or if the CF Transition Date has not occurred prior to May 5, 2026), May 5, 2026, or
(b) from and after the CF Transition Date (but only if the CF Transition Date occurs prior to May 5, 2026), the later of: (i) the CF Transition Date; or (ii) the earlier of (A) September 30, 2024 or (B) the occurrence of the International Business Disposition; and
(2) with respect to the Junior Portion of the Third Amendment First Delayed Draw and the Junior Portion of the Third Amendment Second Delayed Draw:
(a) prior to the CF Transition Date (or if the CF Transition Date has not occurred prior to November 5, 2027), November 5, 2027, or
(b) from and after the CF Transition Date (but only if the CF Transition Date occurs prior to November 5, 2027), the later of: (i) the CF Transition Date; or (ii) the earlier of (A) September 30, 2024 or (B) the occurrence of the International Business Disposition; and
c. Excess Cash Flow Prepayments. Section 2.03 of the Existing Credit Agreement is hereby amended to add thereto in alphabetical order the following new subsection (f):
(f) From and after the CF Transition Date, following the end of each Excess Cash Flow Period, the Loan Parties shall prepay the Term Loans in an aggregate amount equal to 50% of Excess Cash Flow for such Excess Cash Flow Period. Each prepayment pursuant to this paragraph shall be made on or before the date that is ten (10) Business Days after the date on which a calculation of Excess Cash Flow is required to be delivered pursuant to Section 6.01(f) with respect to the fiscal quarter ending on the last day of the applicable Excess Cash Flow Period for which Excess Cash Flow is being calculated.
d. Financial Statements.
i. Section 6.01(a) of the Existing Credit Agreement is hereby amended to replace the first parenthetical therein, in its entirety, with: “(or on or before June 30, 2024 in the case of the Fiscal Year ending on December 31, 2023)”.
ii. Section 6.01(b) of the Existing Credit Agreement is hereby amended to add the following parenthetical immediately following the reference to “the date that is 75 days after the end of each such fiscal quarter” therein: “(or on or before July 31, 2024 in the case of the fiscal quarter ending on March 31, 2024)”.
e. Excess Cash Flow Reporting. Section 6.01 of the Existing Credit Agreement is hereby amended to add, as clause (f) to the end thereof, the following:
(f) Within thirty (30) days following the end of each Excess Cash Flow Period, the Loan Parties shall deliver a detailed report calculating the Excess Cash Flow to be paid for such Excess Cash Flow Period, certified by a Financial Officer of Parent.
f. Financial Covenants. Section 6.14 of the Existing Credit Agreement is hereby amended and restated in its entirety as follows:
SECTION 6.14 FINANCIAL COVENANTS.
(a) Reserved.
(b) Reserved.
(c) Reserved.
(d) Global Liquidity. The Administrative Borrower shall not permit Global Liquidity, as of the last Business Day of each week, commencing with May 19, 2023, to be less than $20,000,000.
g. Section 6.23 – International Business Disposition. Section 6.23 of the Existing Credit Agreement is hereby amended to add the following paragraph after the end of Section 6.23:
Notwithstanding the foregoing provisions of this Section 6.23 or anything else in the Loan Documents to the contrary, (A) from after the CF Transition Date, the Obligations, including, without limitation, all interest thereon and the Exit Fee, shall mature and be payable by the Loan Parties jointly and severally, immediately upon the International Business Disposition, (B) the International Net Proceeds shall be delivered by the Loan Parties (and the Parent shall cause International Holdings and any other Person in
control thereof to so deliver such International Net Proceeds) to the Administrative Agent for the benefit of the Administrative Agent and the Lenders to pay all Obligations in full in cash, without any requirement to deposit any amounts into an Escrow Account, and (C) if the International Net Proceeds are not sufficient to pay all Obligations in full in cash, the Loan Parties shall nevertheless be jointly and severally liable to pay all Obligations in full in cash on the date of the International Business Disposition.
h. Section 6.25 – Additional Guarantors and Liens and Section 6.26 – Employee Agreements. Section 6.25 is hereby added to the Existing Credit Agreement after existing Section 6.24:
SECTION 6.25 Additional Guarantors and Liens. At the request of the Required Lenders from time to time, in consultation with the Administrative Borrower and taking into account circumstances where the burden or cost of obtaining a security interest will be excessive in view of the benefit to the Lenders afforded thereby as determined by the Administrative Borrower and the Required Lenders in their reasonable judgment, by such date as the Required Lenders determine in their discretion (a) the Parent shall provide, or cause to be provided, to the Required Lenders information and details requested by the Required Lenders as to the value and location of the specific assets and properties of the Parent and its Subsidiaries, and (b) the Parent shall:
(i) upon and following the CF Transition Date, enter into the Pledge Supplement in substantially the form attached as Exhibit A to the Third Amendment, to be attached to the Pledge Agreement, pursuant to which Parent shall pledge as Collateral all outstanding Equity Interests of International Holdings held by Parent;
(ii) upon and following the CF Transition Date, cause International Holdings: (a) to become a Guarantor by executing and delivering to Administrative Agent a joinder agreement pursuant to the Joinder Agreement attached in substantially the form attached as Exhibit B to the Third Amendment, (b) to execute and deliver a Due Diligence Certificate in substantially the form attached hereto as Exhibit C to the Third Amendment, (c) to enter into the Pledge Supplement in substantially the form attached as Exhibit D to the Third Amendment, to be attached to the Pledge Agreement, pursuant to which International Holdings shall pledge as Collateral all
outstanding Equity Interests of the direct Subsidiaries of International Holdings held by International Holdings; and (d) to execute and deliver each such other document as the Administrative Agent or Required Lenders shall require for the purpose of causing International Holdings to become obligated as a Guarantor and to take such other action (including, without limitation, authorizing the filing of such UCC financing statements and delivering control agreements) as shall be necessary or appropriate to establish, create, preserve, protect and perfect a first priority Lien (subject only to Permitted Liens), or a Lien with such other priority as the Required Lenders may determine in their sole and absolute discretion, in favor of Administrative Agent for the benefit of Administrative Agent and Lenders on all or substantially all assets, both real and personal, in which International Holdings has or may thereafter acquire any interest, as contemplated by the Collateral Documents, (ii) to execute such other Collateral Documents, in form and substance as the Administrative Agent and Required Lenders may determine in their sole and absolute discretion, as may be required or requested by Administrative Agent or Required Lenders in connection with the actions contemplated hereby and (iii) to deliver such proof of corporate (or comparable) action, incumbency of officers, opinions of counsel and other documents as Administrative Agent or Required Lenders shall have required or requested;
(iii) cause each other Subsidiary of Parent (except to the extent such Subsidiary has already done so), and following the CF Transition Date to the extent that the consent of the holders of the CF Debt Obligations is required: (a) to become a Guarantor by executing and delivering to Administrative Agent a joinder agreement pursuant to the Joinder Agreement attached in substantially the form attached hereto as Exhibit E to the Third Amendment, (b) to execute and deliver a Due Diligence Certificate in substantially the form attached hereto as Exhibit F to the Third Amendment, (c) to enter into the Pledge Supplement in substantially the form attached as Exhibit G to the Third Amendment, to be attached to the Pledge Agreement, pursuant to which International Holdings shall pledge as Collateral all outstanding Equity Interests of the direct Subsidiaries of each such Subsidiary held by each such Subsidiary; and (d) to execute and deliver each such other document as the Administrative Agent or Required Lenders shall require for the purpose of causing such Subsidiary to become obligated as a Guarantor and to take such other action
(including, without limitation, authorizing any filings that are necessary or appropriate) as shall be necessary or appropriate to establish, create, preserve, protect and perfect a first priority Lien (subject only to Permitted Liens), or a Lien with such other priority as the Required Lenders may determine in their sole and absolute discretion, in favor of Administrative Agent for the benefit of Administrative Agent and Lenders on all or substantially all assets, both real and personal, in which such Subsidiary has or may thereafter acquire any interest, as contemplated by the Collateral Documents, (ii) to execute such other Collateral Documents, in form and substance as the Administrative Agent and Required Lenders may determine in their sole and absolute discretion, as may be required or requested by Administrative Agent or Required Lenders in connection with the actions contemplated hereby and (iii) to deliver such proof of corporate (or comparable) action, incumbency of officers, opinions of counsel and other documents as Administrative Agent or Required Lenders shall have required or requested.
(iv) grant, and cause each other direct and indirect Subsidiary of Parent to grant, following the CF Transition Date to the extent that the consent of the holders of the CF Debt Obligations is required, such other assets and property to secure the Obligations, whether or not such class of assets or property would constitute Collateral under the current definition of Collateral, as the Required Lenders may determine in their discretion in consultation with the Administrative Borrower and taking into account circumstances where the burden or cost of obtaining a security interest will be excessive in view of the benefit to the Lenders afforded thereby as determined by the Administrative Borrower and the Required Lenders in their reasonable discretion.
i. Chief Transformation Officer and Investment Banker. Section 7.26 and 7.27 are hereby added to the Existing Credit Agreement after existing Section 7.25 of the Existing Credit Agreement:
“SECTION 7.26 CHIEF TRANSFORMATION OFFICER AND INVESTMENT BANKER.
The Borrower has retained Terence Cryan as its Chief Transformation Officer (the “Chief Transformation Officer”) in accordance with the terms of the engagement letter (the “CTO
Engagement Letter”) delivered to the Administrative Agent and the Lenders.
The Borrower shall, on or before the Third Amendment Effective Date, retain a suitable investment banker (the “Investment Banker”) in accordance with the terms of a satisfactory engagement letter (the “IB Engagement Letter”) delivered to the Administrative Agent and the Lenders.
The Administrative Borrower and the Investment Banker shall hold a weekly conference call with the Administrative Borrower’s CEO (and/or any designee of such CEO selected by such CEO) and the Lenders to discuss such matters concerning the Borrowers and any other Loan Parties and their respective Subsidiaries, their properties or business, as the Required Lenders may reasonably request.
SECTION 7.27 EMPLOYEE AGREEMENTS. Neither Parent nor its Subsidiaries shall, without the prior written consent of the Required MIP Approving Lenders, enter into any agreements, plans, or programs, or change any existing agreements, plans, or programs (other than, in each case, agreements, plans, and programs providing for ordinary course wags, salaries, and benefits), implementing any incentive or retention compensation, payments, distributions, benefits or other consideration for the benefit of directors, company management or employees.
j. Events of Default. Section 8.01(b) (Specific Covenants) of the Existing Credit Agreement is hereby amended to add a reference to “Section 6.25” and “Section 10.25” to the list of Sections in clause (i) therein.
k. Application of Proceeds. Section 8.02(d)(A) (Application of Funds) of the Existing Credit Agreement is hereby stricken and deleted and replaced with the following in lieu thereof:
(A) first, (i) to the Administrative Agent, to pay all fees, costs, expenses and indemnification payments then due to Administrative Agent under the Loan Documents (excluding any Protective Advances made by Administrative Agent) and (ii) to Brown Rudnick LLP as counsel for the Lenders to pay all amounts then due to Brown Rudnick LLP under the Lender Fee Letter, provided, however, that no payments shall be made under this clause (ii) until all payments then due under clause (i) have been paid in full;
l. Amendments. Section 10.01 of the Existing Credit Agreement is hereby amended to add the following clause (c) to the end thereof:
(e) Notwithstanding anything else to the contrary herein, including without limitation Section 10.01(a)(i)(A), the last paragraph of 10.01(a), and Section 10.01(a)(iii)(B), each Lender agrees that if the Required DDTL Approving Lenders elect in their sole and absolute discretion to make the Third Amendment First Delayed Draw as defined under and in accordance with the terms of the Third Amendment, each Lender, whether or not included among such Required DDTL Approving Lenders, shall advance its Percentage Share of the Third Amendment First Delayed Draw.
m. Inter-Lender Agreements. Article X of the Existing Credit Agreement is hereby amended to add the following Section 10.24 after the end of Section 10.23 of the Existing Credit Agreement:
SECTION 10.24 INTER-LENDER AGREEMENTS
Each Lender party to this Agreement at any time or from time to time, whether as an initial party, by assignment, or by joinder or otherwise, hereby agrees that it shall promptly at the request of the Required Lenders, whether in its capacity as a holder of Term Loan Debt, Convertible Notes Debt, Equity Interests of Parent, or otherwise, or as an Affiliate of a holder of Term Loan Debt, Convertible Notes Debt, Equity Interests of Parent, or otherwise, execute and deliver, and cause to be executed and delivered (to the fullest extent the Lender or its Affiliate in any capacity has the power or authority to do so) any and all applicable waivers, amendments, and agreements necessary or appropriate for the CF Transition Date to occur in all respects or in such limited respects as the Required Lenders may determine in their sole and absolute discretion, and further agrees to execute and deliver, and cause to be executed and delivered (to the fullest extent the Lender or its Affiliate in any capacity has the power or authority to do so):
(a) Any and all applicable waivers and amendments, necessary or requested by Required Lenders for the consummation of the transactions and distributions contemplated by the Master Equity Agreement, including, without limitation, the issuance of, and distributions to or on account of, the Intermediate Preferred Stock, the New Parent Preferred B Stock, Intermediate Warrants and Invacare Warrants (each as defined in the Master Equity Agreement).
(b) Waiver/consents of the Agent and Lenders for the Term Loan Debt and the Trustee and majority or all Holders of the Convertible Notes Debt, including:
(i) To increase the permitted caps on the amount of the so-called “Revolving Loan” under the Intercreditor Agreement;
(ii) To waive the Affiliate transactions restrictions in the Agreement to the extent they relate to the transactions contemplated by the Third Amendment;
(iii) To permit an earlier Maturity Date;
(iv) To increase the standstill periods imposed on the holders of Term Loan and Convertible Debt and their agents and trustees;
(v) To permit the interest rate to be increased as set forth following the CF Transition Date;
(vi) To permit International Holdings and subsidiaries designated by the Required Lenders to provide guaranties to secure the repayment of the Facility, subject to subordination of lien and payment and standstills to be determined by the Required Lenders in their sole and absolute discretion;
(vii) To amend the Intercreditor Agreement to allow for the proceeds of assets, after payment of the Term Loan (but prior to the repayment of the Convertible Notes), to permanently pay down the Obligations (without delay or escrow); and
(viii) To provide for the exchange of all Convertible Notes held by such Lender and its affiliates for new Convertible Notes to be held by the same Lender (with any remaining Convertible Notes under pre-exchange issuances to be amended to remove covenants to be determined that would otherwise impair rights of Lenders under this Agreement or prohibit the occurrence of the CF Transition Date or the transactions or the application of provisions stated as applying from and after the CF Transition Date.
Each Lender party to this Agreement at any time or from time to time, whether as an initial party, by assignment, or by joinder or otherwise, hereby agrees that it shall promptly at the request of the Required Lenders, whether in its capacity as a holder of Term Loan Debt, Convertible Notes Debt, Equity Interests of Parent, or otherwise, or as an Affiliate of a holder of Term Loan Debt, Convertible Notes Debt, Equity Interests of Parent or otherwise, further agrees that: (a) it shall not take, and it shall cause its Affiliates not to take, any action, whether pursuant to Article 15 of the indenture for the Convertible Notes or otherwise, to exercise any option or election or to require the repurchase or redemption of the Convertible Notes at any time prior to the International Business Disposition; and (b) it shall take, and shall cause its Affiliates to take, all steps necessary or appropriate for the Convertible Notes held by it or any of its Affiliates to be redeemed, repurchased, and cancelled upon the International Business Disposition, unless the net proceeds thereof which are offered to be made available to the holders of Convertible Notes are insufficient to pay the Convertible Notes in full.
n. Purchase Price Allocation; Tax Treatment. Article X of the Existing Credit Agreement is hereby amended to add the following Section 10.25 after the end of Section 10.24 of the Credit Agreement:
SECTION 10.25 Purchase Price Allocation; Tax Treatment. Each Lender and each Loan Party agree that (i) the Second Amendment Advance and the common stock of Parent issued to certain of the First Amendment Lenders pursuant to the Subscription Agreements shall be treated as an “investment unit” as that term is defined in Section 1273(c)(2) of the Code, and the aggregate fair market value allocable to the common stock shall be determined in the reasonable discretion of the First Amendment Lenders. Each First Amendment Lender to whom such common stock was issued and each Loan Party shall report and cause each of its Affiliates to report the transaction contemplated by this Agreement (including any original issue discount calculations) in a manner consistent with this Section 10.25 for all tax purposes and none of them shall take any position or permit any of its Affiliates to take any position (whether in audits, tax returns or otherwise) that is inconsistent with this Section 10.25 unless required to do so by applicable law.
4. Representations and Warranties; Loan Document. Each of the Borrowers, each of the Guarantors and each other Loan Party hereby represents and warrants to the Administrative Agent and the Lenders that as of the date hereof the representations and warranties of the
Borrowers, the Guarantors or such other Loan Party set forth in the Loan Documents are true and correct in all material respects (except that any representation or warranty which is already qualified as to materiality or by reference to Material Adverse Effect is true and correct in all respects) on and as of such date, with the same effect as if made on and as of such date (other than those representations and warranties that by their terms expressly relate to an earlier date, in which case such representations and warranties were true and correct in all material respects as of such earlier date); provided, however, that (1) to the extent, but only to the extent, of the Junior Portion of the Third Amendment First Delayed Draw and the Junior Portion of the Third Amendment Second Delayed Draw, such Junior Portion of the Third Amendment First Delayed Draw and the Junior Portion of the Third Amendment Second Delayed Draw shall be Revolving Credit Excess Principal Obligations as defined in the Intercreditor Agreement and the remainder of the Obligations shall constitute Revolving Priority Obligations as defined in the Intercreditor Agreement; and (2) to the extent, but only to the extent, required to avoid a Default under the Term Loan Documents and the Convertible Notes Documents, and only until the CF Transition Date, the Obligations under the Junior Portion of the Third Amendment Second Delayed Draw shall not be secured by the Collateral, provided that for the avoidance of doubt all other Obligations shall be secured by the Collateral.
5. Conditions. The effectiveness of this Amendment on the date at the time hereof (the “Third Amendment Effective Time”) is subject to the satisfaction of each of the following conditions precedent:
a. The Lenders and the Administrative Agent shall have received (each in form and substance satisfactory to the Required Lenders):
(i) counterparts of this Amendment duly executed and delivered by the Borrowers, the Guarantors, the Lenders and the Administrative Agent;
(ii) the fully-executed Master Equity Agreement dated as of even date herewith, together will all other agreements, documents, and instruments sufficient to evidence the satisfaction of all conditions precedent to the effectiveness of such Master Equity Agreement;
(iii) the Parent Certificate of Designations shall have been amended in a manner acceptable to the Required Lenders;
(iv) such documents and certifications as the Lenders may reasonably require to evidence that each Loan Party is duly organized or formed, and that each Loan Party is validly existing, in good standing and qualified to engage in business in its jurisdiction of organization or formation;
(v) such certificates of resolutions or other action, incumbency certificates or other certificates of Responsible Officers of each Loan Party as any Lender may reasonably require evidencing the identity,
authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with the Loan Documents to which such Loan Party is a party; and
(vi) the initial Budget for the month of April 2024, which Required Lenders shall have approved and shall be the Approved Budget for April 2024, together with a tentative budget for the 13-week period following the Third Amendment Effective Time;
b. At the time of Third Amendment Effective Time and immediately after giving effect to this Amendment, there shall have been declared no Event of Default under the Term Debt or the Convertible Notes Debt;
c. At the time of Third Amendment Effective Time and immediately after giving effect to this Amendment, no Default or Event of Default shall have occurred and be continuing;
d. The representations and warranties of each Loan Party set forth in Section 4 above are true and correct on and as of the date hereof; and
e. The Agent and Lenders and their counsel shall have received all fees, costs and expenses (including, without limitation, legal fees and expenses) required to be paid on the date of this Amendment pursuant to this Amendment and the Lender Fee Letter.
6. Form 8-K. The Borrower shall use reasonable efforts to, prior to 5:30 PM (New York City time) on April 10, 2024, make a filing on Form 8-K with the U.S. Securities and Exchange Commission announcing the execution of this Amendment and material terms and conditions of the transactions contemplated hereby, any such filing on Form 8-K to be in form and substance satisfactory to the Required Lenders.
7. Fees and Expenses. The Loan Parties shall jointly and severally pay or reimburse the Lenders and the Agent, or pay directly, for all reasonable and documented out-of-pocket fees and expenses incurred in connection with the preparation, negotiation, execution and delivery of this Amendment and the Finance Documents, the Lenders’ and the Agent’s due diligence and other underwriting activities related to this Amendment, including, without limitation, all reasonable and documented fees and expenses of the Lenders’ counsel and the Agent’s counsel incurred in connection with the preparation, negotiation, execution and delivery of this Amendment and the related documents, and all of such counsels’ other services rendered on behalf of the Lenders and the Agent; provided (i) that the obligation to pay or reimburse Brown Rudnick LLP (counsel to the Lenders) shall be subject to the terms of the Lender Fee Letter and shall constitute Obligations, (ii) Brown Rudnick LLP is an intended third party beneficiary of the provisions in this Third Amendment and the Loan Documents addressing the Lender Fee Letter, and (iii) no amendment, modification, consent, or waiver in respect of such provisions will be effective without the express written consent of Brown Rudnick LLP.
8. Continuing Effect; No Other Amendments or Modifications; Reaffirmation. Except as expressly provided herein, all of the terms and provisions of the Credit Agreement and the other Loan Documents are and shall remain in full force and effect. The amendments provided for herein are limited to the specific subsections of the Credit Agreement specified herein and shall not constitute a waiver of, consent to a departure from, or an amendment or other modification of, or an indication of the Administrative Agent’s or the Lenders’ willingness to waive, consent to a departure from, amend or modify, any other provisions of the Credit Agreement or any of the other Loan Documents. Each of the Borrowers and each other Loan Party hereby acknowledges and agrees that, after giving effect to this Amendment, except as expressly set forth in this Amendment, all of its respective obligations and liabilities under the Loan Documents to which it is a party are reaffirmed, and remain in full force and effect. Except as expressly provided herein, the execution, delivery and performance of this Amendment shall not constitute a waiver of any provision of, or operate as a waiver of any right, power or remedy of the Administrative Agent, the Collateral Agent or any Lender under, the Credit Agreement or any of the other Loan Documents.
9. Headings. Section headings herein are included for convenience of reference only and shall not affect the interpretation of this Amendment.
10. Counterparts. This Amendment may be executed in one or more counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute one and the same instrument. Delivery by telecopier or other electronic transmission of an executed counterpart of a signature page of this Amendment shall be effective as delivery of a manually executed counterpart of this Amendment.
11. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. SECTIONS 10.17 (GOVERNING LAW; JURISDICTION; ETC.) AND 10.18 (WAIVER OF RIGHT TO TRIAL BY JURY) OF THE CREDIT AGREEMENT ARE INCORPORATED BY REFERENCE HEREIN MUTATIS MUTANDIS.
12. Authorization. The Lenders signatory hereto (which collectively constitute all of the Lenders) authorize and direct the Administrative Agent and the Collateral Agent to execute and deliver (a) this Amendment, and (b) any other agreements or documents required in connection herewith.
13. Ratification and Incorporation of Credit Agreement and Other Loan Documents. Except as expressly modified under this Amendment, (a) the Borrowers and each other Loan Party hereby acknowledges, confirms and ratifies all of the terms and conditions set forth in, and all of its obligations under, the Credit Agreement and the other Loan Documents, and (b) all of the terms and conditions set forth in the Credit Agreement and the other Loan Documents are incorporated herein by this reference as if set forth in full herein. The Borrowers and each other Loan Party (i) represents that it has no offset, defense, counterclaim, dispute or disagreement of any kind or nature whatsoever with respect to the amount of the Existing Principal Obligations, (ii) reaffirms the giving of guarantees (other than with respect to the Borrowers) previously given
and the granting of all Liens previously granted pursuant to the Loan Documents to secure all Obligations, and (iii) reaffirms the validity and enforceability of any appointment of the Collateral Agent as proxy or attorney-in-fact under the Loan Documents, and the Borrowers and each other Loan Party reappoints the Collateral Agent as its proxy and attorney-in-fact in accordance with the terms of the Loan Documents, as applicable, which appointment is irrevocable and coupled with an interest, for the purpose of carrying out the provisions of the Loan Documents, as applicable. All financing statements, including without limitation all financing statements filed pursuant to the Existing Credit Agreement in favor of the Collateral Agent, filed before the date of this Agreement to perfect the Security Interest in the Collateral were authorized by the Borrowers and each other Loan Party and are hereby ratified.
14. Loan Document. Notwithstanding anything to the contrary in any Loan Document, this Amendment shall constitute a “Loan Document,” as defined in the Credit Agreement.
15. Additional Waiver. In addition to the waiver provided in Section 13 of the Second Amendment, the Administrative Agent, the Collateral Agent and the Lenders hereby waive (a) any Default or Event of Default under Section 8.01(b) of the Credit Agreement resulting from a breach of Section 6.01(b) of the Credit Agreement as a result of the Administrative Borrower not delivering financial statements for the fiscal quarter ended September 30, 2023 within the time period required thereunder and (b) any Default or Event of Default that may result from the failure to deliver timely notice of any such Default or Event of Default under Section 8.01(b) (the “Specified Defaults”). The foregoing waiver of the Specified Defaults shall not constitute a modification or alteration of the terms, conditions, or covenants of the Credit Agreement or any other Loan Document, a waiver of, or consent to, any breach of, or any Event of Default (other than the Specified Defaults) under the Credit Agreement or any other Loan Document, or a waiver of the provisions of Section 8.01(b) or 6.01(b) for any other period, or, except with respect to the Specified Defaults, a waiver, release or limitation upon the exercise by Agents or any Lender of any of their respective rights, legal or equitable, under the Credit Agreement, the other Loan Documents or applicable law, all of which are hereby reserved. Nothing herein or in the Credit Agreement shall be construed to constitute a waiver of any other Defaults or Events of Default, even if the Lender Parties are aware thereof, and each of the parties party hereto acknowledge that any such other Defaults and Events of Default shall be continuing after giving effect to this Amendment until expressly waived in writing by the Lenders who collectively constitute the Required Lenders.
16. Release. The Borrowers and each other Loan Party, and their respective successors and assigns, hereby remises, releases and forever discharges each Agent, each Lender, and their respective present and former officers, directors, stockholders, employees, agents, attorneys, successors and assigns (collectively, the “Released Parties”) from any and all claims, rights, actions, causes of action, suits, liabilities, defenses, damages and costs now existing, heretofore existing or which may heretofore accrue against any of the Released Parties and arising from or otherwise relating to the Existing Credit Agreement, the Credit Agreement, the other Loan Documents or any transaction contemplated thereby, the administration of the Loans and other financial accommodations made thereunder, the collateral security given in connection
therewith, or any related discussions or negotiations, in each case whether known or unknown, suspected or unsuspected, but excluding any continuing express obligations set forth in the Existing Credit Agreement, the Credit Agreement or any other Loan Document. The Borrowers and each other Loan Party waives any and all claims, rights and benefits it may have under any law of any jurisdiction that would render ineffective a release made by a creditor of claims that the creditor does not know or suspect to exist in its favor at the time of executing the release and that, if known by it, would have materially affected its settlement with the applicable debtor. Without limiting the foregoing, the Borrowers and each other Loan Party waives the provisions of California Civil Code Section 1542, which provides as follows:
A general release does not extend to claims which the creditor does not know or suspect exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor.
Each Borrower and each other Loan Party acknowledges that it has been represented by independent legal counsel of its own choice throughout all of the negotiation that preceded the execution of this Amendment and that it has executed this Amendment after receiving the advice of such independent legal counsel.
Each Borrower and each other Loan Party understands, acknowledges and agrees that the release set forth above may be pleaded as a full and complete defense and may be used as a basis for an injunction against any action, suit or other proceeding which may be instituted, prosecuted or attempted in breach of the provisions of such release.
Each Borrower and each other Loan Party and their respective successors and assigns, hereby absolutely, unconditionally and irrevocably, covenants and agrees with and in favor of each Agent, each Lender and each of the other Released Parties that it will not sue (at law, in equity, in any regulatory proceeding or otherwise) any Agent, any Lender or any other Released Party on the basis of any claim released, remised and discharged by the Borrowers or such Loan Party pursuant to this Section 15. If the Borrowers or any other Loan Party, or their respective successors or assigns, violates the foregoing covenant, the Borrowers and each other Loan Party, including on behalf of their respective successors and assigns, jointly and severally agrees to pay, in addition to such other damages as any Agent, any Lender or any other Released Party may sustain as a result of such violation, all attorneys’ fees and costs incurred by any such Agent, any such Lender or any such other Released Party.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective authorized officers as of the day and year first above written.
BORROWERS:
INVACARE CORPORATION
By: /s/ Kai Zhu
Name: Zhu, Kai
Title: Senior Vice President and Chief Financial Officer
FREEDOM DESIGNS, INC.,
By: /s/ Kai Zhu
Name: Zhu, Kai
Title: President
MEDBLOC, INC.
By: /s/ Kai Zhu
Name: Zhu, Kai
Title: President
INVACARE CANADA L.P.
By Invacare Canada General Partner Inc. its general partner
By: /s/ Kai Zhu
Name: Zhu, Kai
Title: Treasurer
MOTION CONCEPTS L.P.
By Carroll Healthcare Inc. its general partner
By: /s/ Kai Zhu
Name: Zhu, Kai
Title: Vice President
PERPETUAL MOTION ENTERPRISES LIMITED
By: /s/ Anthony C. LaPlaca
Name: LaPlaca, Anthony C.
Title: Secretary
GUARANTORS:
CARROLL HEALTHCARE GENERAL PARTNER, INC.
By: /s/ Kai Zhu
Name: Zhu, Kai
Title: Vice President
CARROLL HEALTHCARE INC.
By: /s/ Kai Zhu
Name: Zhu, Kai
Title: Vice President
INVACARE CANADA GENERAL PARTNER INC.
By: /s/ Kai Zhu
Name: Zhu, Kai
Title: Treasurer
INVAMEX HOLDINGS LLC, successor-in-interest to INVAMEX HOLDINGS INC.
By: /s/ Kai Zhu
Name: Zhu, Kai
Title: President
INVACARE HOLDINGS CORPORATION, and
By: /s/ Kai Zhu
Name: Zhu, Kai
Title: Senior Vice President and Chief Financial Officer
ADAPTIVE SWITCH LABORATORIES, INC.
By: /s/ Kai Zhu
Name: Zhu, Kai
Title: President
INTERNATIONAL HOLDINGS
INVACARE INTERNATIONAL HOLDINGS CORP.
By: /s/ Kai Zhu
Name: Zhu, Kai
Title: Senior Vice President and Chief Financial Officer
ADMINISTRATIVE AGENT:
WHITE OAK COMMERCIAL FINANCE, LLC,
a Delaware limited liability company
By: /s/ Thomas K. Otte
Name: Thomas K. Otte
Title: Chairman
COLLATERAL AGENT:
WHITE OAK COMMERCIAL FINANCE, LLC,
a Delaware limited liability company
By: /s/ Thomas K. Otte
Name: Thomas K. Otte
Title: Chairman
LENDER:
MIDTOWN ACQUISITIONS L.P.
By: Midtown Acquisitions GP LLC, its general partner
By: /s/ Conor Bastable
Name: Conor Bastable
Title: Manager
LENDER:
DG VALUE PARTNERS, LP
By: DG Capital Management, LLC, its investment manager
By: /s/ Dov Gertzulin
Name: Dov Gertzulin
Title: Managing Member
LENDER:
DG VALUE PARTNERS II MASTER FUND, LP
By: DG Capital Management, LLC, its investment manager
By: /s/ Dov Gertzulin
Name: Dov Gertzulin
Title: Managing Member
LENDER:
YAKAR ALTERNATIVES CLAT, LLC
By: DG Capital Management, LLC, its investment manager
By: /s/ Dov Gertzulin
Name: Dov Gertzulin
Title: Managing Member
LENDER:
YAKAR ALTERNATIVES LLC
By: DG Capital Management, LLC, its investment manager
By: /s/ Dov Gertzulin
Name: Dov Gertzulin
Title: Managing Member
LENDER:
PPG HEDGE FUND HOLDINGS LLC
By: DG Capital Management, LLC, its investment manager
By: /s/ Dov Gertzulin
Name: Dov Gertzulin
Title: Managing Member
LENDER:
MACYRC LLC
By: DG Capital Management, LLC, its investment manager
By: /s/ Dov Gertzulin
Name: Dov Gertzulin
Title: Managing Member
LENDER:
2016 ALAN SHAMAH DISCRETIONARY TRUST
By: DG Capital Management, LLC, its investment manager
By: /s/ Dov Gertzulin
Name: Dov Gertzulin
Title: Managing Member
LENDER:
THE SAM AND HELENE WIEDER FAMILY TRUST
By: DG Capital Management, LLC, its investment manager
By: /s/ Dov Gertzulin
Name: Dov Gertzulin
Title: Managing Member
LENDER:
TITAN EQUITY GROUP LLC
By: DG Capital Management, LLC, its investment manager
By: /s/ Dov Gertzulin
Name: Dov Gertzulin
Title: Managing Member
LENDER:
TENOR OPPORTUNITY MASTER FUND, LTD.
By: /s/ Daniel Kochav
Name: Daniel Kochav
Title: Director
LENDER:
SILVERBACK OPPORTUNISTIC CREDIT MASTER FUND LIMITED
By: /s/ Laura Kleber
Name: Laura Kleber
Title: CCO, Silverback Asset Management, LLC Investment Manager
LENDER:
BLACKWELL PARTNERS LLC-SERIES B
By: /s/ Laura Kleber
Name: Laura Kleber
Title: CCO, Silverback Asset Management, LLC Investment Manager
LENDER:
SILVERBACK CONVERTIBLE MASTER FUND LIMITED
By: /s/ Laura Kleber
Name: Laura Kleber
Title: CCO, Silverback Asset Management, LLC Investment Manager
LENDER:
KASAD 2, LP
By: /s/ Laura Kleber
Name: Laura Kleber
Title: CCO, Silverback Asset Management, LLC Investment Manager
LENDER:
PM MANAGER FUND, SPC-SEGREGATED PORTFOLIO 33
By: PAAMCO Prisma, its Advisor
By: /s/ Vincent Cuticello
Name: Vincent Cuticello
Title: Chief Operating Officer
LENDER:
ENDURANT HEALTH MASTER FUND LP
By: Endurant Capital Management LP, its Investment Manager
By: /s/ Chris Ronan
Name: Chris Ronan
Title: COO/CFO
LENDER:
ONE OAK MULTI-STRATEGY MASTER FUND, LTD.
By: Endurant Capital Management LP, its Sub-Advisor
By: /s/ Chris Ronan
Name: Chris Ronan
Title: COO/CFO
MASTER EQUITY AGREEMENT
This Master Equity Agreement (the “Agreement”) is entered into as of April 8, 2024 (the “Agreement Date”), by and among Invacare Holdings Corporation, a Delaware corporation (the “Parent”), Invacare International Holdings Corp., a Delaware corporation (“Intermediate Holdings”), Invacare Corporation, an Ohio corporation (“Reorganized Invacare”) and each Holder party hereto (collectively, the “Holders”).
WHEREAS, the parties hereto, together with certain other persons, are party to that certain Loan and Security Agreement dated as of May 5, 2023, among the borrowers from time to time party thereto, the guarantors from time to time party thereto, the lenders from time to time party thereto and White Oak Commercial Finance, LLC, as Administrative Agent and Collateral Agent (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”);
WHEREAS, the Holders, as lenders under the Credit Agreement, have agreed to amend the Credit Agreement as of the Agreement Date (the “Credit Agreement Amendment”) and as consideration therefor, Parent, Intermediate Holdings and Reorganized Invacare have agreed to issue certain equity securities to the Holders on the terms set forth herein, subject to the conditions set forth herein;
WHEREAS, the boards of directors of each of Parent, Intermediate Holdings and Reorganized Invacare have determined that the transaction contemplated hereby, including the transactions contemplated by the Exchange Agreement (as defined below) (the “Transactions”) are each in the best interest of the Parent, Intermediate Holdings and Reorganized Invacare and their stockholders and has approved and declared advisable this Agreement, the Transactions and the other transactions and agreements contemplated hereby and thereby; and
WHEREAS, the holders of capital stock of the Parent, Intermediate Holdings and Reorganized Invacare necessary to approve this Agreement, the Transactions, and the other transactions and agreements contemplated hereby have so approved this Agreement, the transactions and the other transactions and agreements contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, the parties hereto hereby agree as follows:
ARTICLE 1.
TRANSACTION; DELIVERIES
1.1 Definitions. Capitalized terms used, but not defined herein shall have the meanings ascribed to such terms in the Credit Agreement.
For purposes of this Agreement, “CF Transition Date” means the Business Day after the earliest date that: (a) the CF Debt Obligations (as defined in the Intercreditor Agreement) are
Paid in Full (as defined in the Intercreditor Agreement); or (b) the covenants in the Term Loan Documents or the Convertible Notes Documents applicable to the Transactions are either (i) no longer applicable to prohibit the Transactions; or (ii) waived or modified by the requisite CF Debt Creditors
“Majority Holders” means the holders of a majority of the Series A Preferred Stock of Parent held by all Holders who are not Defaulting Holders.
1.2 Holder’s Deliveries. Concurrently with the execution and delivery of this Agreement, the Holders and Parent are each delivering, the Exchange Agreement as set forth on Exhibit A (the “Exchange Agreement”), duly executed by the applicable Holders and Parent; provided, however, that the Exchange Agreement will not be effective until the CF Transition Date.
1.3 Parent’s Deliveries. Concurrently with the execution and delivery of this Agreement, Parent is delivering to the Holders the following:
(a) The Exchange Agreement, duly executed by the Holders and Parent; provided, however, that the Exchange Agreement will not be effective until the CF Transition Date; and
(b) a certificate of the secretary or an assistant secretary of Parent, dated the Agreement Date, in the form attached hereto as Exhibit B, as to the resolutions of the boards of directors of Parent, Intermediate Holdings and Reorganized Invacare authorizing the execution, delivery and performance of this Agreement, the Transactions, and the transactions and agreements contemplated hereby and thereby and a copy of the Requisite Stockholder Consents (defined below).
1.4 Actions Upon CF Transition Date.
(a) Immediately upon the occurrence of the CF Transition Date, without any further action of any party hereto, the Exchange Agreement shall become effective as of the CF Transition Date;
(b) No later than one (1) Business Day after the occurrence of the CF Transition Date (the “Effective Date”), Parent shall and shall cause Intermediate Holdings and Reorganized Invacare to the take the following actions:
(i) Parent shall file for immediate effectiveness the Amended and Restated Certificate of Designations of Series A Preferred Stock of Parent substantially in the form set forth on Exhibit C (with any edits to such form subject to the reasonable approval of Holders holding a majority of the shares of Series A Preferred Stock held by all Holders);
(ii) Parent shall file for immediate effectiveness the Certificate of Designations of Series B Preferred Stock of Parent substantially in the form set forth on Exhibit
D (with any edits to such form subject to the reasonable approval of Holders holding a majority of the shares of Series A Preferred Stock held by all Holders);
(iii) Intermediate Holdings shall file for immediate effectiveness the Amended and Restated Certificate of Incorporation of Intermediate Holdings substantially in the form set forth on Exhibit E (with any edits to such form subject to the reasonable approval of Holders holding a majority of the shares of Series A Preferred Stock held by all Holders);
(iv) Intermediate Holdings shall file for immediate effectiveness the Certificate of Designations of Intermediate Holdings substantially in the form set forth on Exhibit F (with any edits to such form subject to the reasonable approval of Holders holding a majority of the shares of Series A Preferred Stock held by all Holders);
(v) Reorganized Invacare shall file for immediate effectiveness an amendment to its Certificate of Incorporation increasing the number of authorized shares of common stock of Reorganized Invacare by an amount sufficient to satisfy any exercise of the Reorganized Invacare Warrants (with such amendment subject to the reasonable approval of Holders holding a majority of the shares of Series A Preferred Stock held by all Holders);
(vi) Within three (3) Business Days after the filing of the documents set forth in Sections 1.4(b)(i)-(iv), Parent shall issue to Intermediate Holdings 5,938,620 shares of Series B Preferred Stock of Parent (less any shares Series B Preferred Stock Parent that would have been exchanged pursuant to Section 1.4(b)(vii) for shares of Series A Preferred Stock of Parent held by any Defaulting Holder);
(vii) Immediately upon the issuance of such shares of Series B Preferred Stock of Parent, Intermediate Holdings, in accordance with the terms of the Exchange Agreement, shall exchange each share of Series A Preferred Stock of Parent held by the Holders for one share of Series B Preferred Stock of Parent held by Intermediate Holdings and one share of Intermediate Holdings Preferred Stock (the “Share Exchange”);
(viii) Within three (3) Business Days after the filing of the document set forth in Section 1.4(b)(iii), Intermediate Holdings shall, in accordance with the terms of the Exchange Agreement, issue the Intermediate Holdings Warrants to the applicable Holders (the “Intermediate Warrant Issuance”); and
(ix) Within three (3) Business Days after the filing of the document set forth in Section 1.4(b)(v), Reorganized Invacare shall, in accordance with the terms, and subject to the conditions, of the Exchange Agreement, issue the Reorganized Invacare Warrants to the applicable Holders (the “Reorganized Invacare Warrant Issuance”).
Notwithstanding the foregoing or anything to the contrary herein:
(i) in the event that any Holder or any Affiliate of a Holder, does not fund such Person’s Percentage Share of any Third Amendment Delayed Draw pursuant to the terms of the Credit Agreement, then such Holder (any such Holder, a “Defaulting Holder”) shall not be
entitled to exchange their Series A Preferred Stock of Parent pursuant to Section 1.4(b)(vii) nor shall such Defaulting Holder receive any Intermediate Holdings Warrant or Reorganized Invacare Warrants pursuant to Section 1.4(b)(viii) or Section 1.4(b)(ix) and the rights of such Defaulting Holder set forth in this Agreement and the Exchange Agreement shall be deemed null and void;
(ii) any Series B Preferred Stock of Parent or Intermediate Holdings Preferred Stock received by any Holder pursuant to the Share Exchange shall be deemed to have been issued or transferred to the relevant Holder and such Holder shall be deemed to be a holder of such Parent Series B Preferred Stock of Parent or Intermediate Holdings Preferred Stock as of the close of business on the day of the filing of the documents set forth in Sections 1.4(b)(i)-(iv) hereof and the register of stockholders of Intermediate Holdings and Parent, respectively, shall be updated accordingly;
(iii) the Intermediate Holdings Warrants shall be deemed to have been issued to the relevant Holder and such Holder shall be deemed to be the holder of such Intermediate Warrant as of the close of business on the date of the filing of the documents set forth in Section 1.4(b)(iii) hereof;
(iv) the Reorganized Invacare Warrants shall be deemed to have been issued to the relevant Holder and such Holder shall be deemed to be the holder of such Intermediate Warrant as of the close of business on the date of the filing of the documents set forth in Section 1.4(b)(v) hereof;
(v) for a period of thirty (30) days after the Share Exchange, Parent and Intermediate Holdings agree not to transfer or cause to be transferred the Series A Preferred Stock of Parent received pursuant to such exchange without the prior written consent of the Majority Shareholders; and
(vi) at any time following the Share Exchange, if the Majority Shareholders make a request, Parent shall cause to be cancelled the Series A Preferred Stock of Parent received pursuant to such exchange (the “Parent Preferred Cancellation”).
1.5 Holder Rights.
(a) Notwithstanding the foregoing or anything to the contrary herein, in the event that any of the Share Exchange, the Parent Preferred Cancellation, Intermediate Warrant Issuance above 19.9% of the sum of the shares of common stock outstanding at Intermediate Holdings as of such issuance plus the shares of common stock to be issued under the Intermediate Holdings Warrant and the Reorganized Invacare Warrant Issuance above 19.9% of the sum of the shares of common stock outstanding at Reorganized Invacare as of such issuance plus the shares of common stock to be issued under the Reorganized Invacare Warrant would, as reasonably determined by the Majority Holders in their sole discretion, result in a material adverse tax consequence to Parent or its Subsidiaries (an “Adverse Tax Determination”), then such Majority Holders may reasonably elect, in their sole discretion, to take any or all of the following actions prior to such Share Exchange, Parent Preferred Cancellation, Intermediate
Warrant Issuance or Reorganized Invacare Issuance: (1) require the Holders to retain an aggregate amount of Series A Preferred Stock of Parent held by such Holders as reasonably determined by the Majority Holders in their sole discretion (with each Holder to retain a pro rata portion of such aggregate amount based on the amount Series A Preferred Stock of Parent held by the Holders) (a “Share Reduction”); or (2) to reduce the aggregate percentage of Common Stock Deemed Outstanding (as defined in the Exchange Agreement) issuable to the Holders upon exercise of the Invacare Holdings Warrants or the Reorganized Invacare Warrants, respectively (the “Aggregate Common Stock Deemed Outstanding Percentage”), with each Holder to receive a percentage of Common Stock Deemed Outstanding upon the exercise of the applicable Intermediate Holdings Warrant or Reorganized Invacare Warrant equal to (x) the amount of Parent Series A Preferred Shares held by such Holder divided by the amount of Parent Series A Preferred Shares held by all Holders multiplied by (y) the Aggregate Common Stock Deemed Outstanding Percentage (a “Warrant Reduction” and together with a Share Reduction, an “Exchange Reduction”). Parent, Intermediate Holdings and Reorganized Invacare, as applicable agree to amend the provisions of this Agreement, the Exchange Agreement or the documents contemplated thereby as may be reasonably requested by the Majority Holders in furtherance of any Exchange Reduction and to do and take any such action reasonably requested by the Majority holders in furtherance of such Exchange Reduction.
(b) In the event of an Adverse Tax Determination the Majority Holders may in lieu of an Exchange Reduction, require the Parent, Intermediate Holdings or Reorganized Invacare to issue to the Holders in lieu of the Series B Preferred Stock of Parent, Series A Preferred Stock of Intermediate, the Intermediate Warrants and the Reorganized Warrants that would have been issued in accordance with Section 1.4, debt or security instruments that have the same value (as reasonably determined by the Majority Holders in their sole discretion) as the Series B Preferred Stock of Parent, Series A Preferred Stock of Intermediate, the Intermediate Warrants and the Reorganized Warrants that would have been issued to the Holders on terms reasonably agreed to by the Majority Holders in their sole discretion, and/or in lieu of the Parent Preferred Cancellation, require further amendment of the Amended and Restated Certificate of Designations of Series A Preferred Stock of Parent on terms reasonably agreed to by Majority Holders in their sole discretion, and Parent shall cause any such amendments to be made effective.
(c) Parent and shall cause its Subsidiaries, representatives, agents, financial advisors and accountants to, promptly (i) provide the Holders with such information, documents or access to personnel as the Holders may reasonably request in order to ascertain the tax consequences for the Parent or its subsidiaries of a Share Exchange, Reorganized Invacare Warrant Issuance or Intermediate Warrant Issuance and (ii) notify the Holders if any of the information or documents provided in clause (i) becomes incorrect, inaccurate or misleading in any respect.
1.6 Representations and Warranties of Parent, Intermediate Holdings and Reorganized Invacare. As an inducement to the Holders to enter into the Credit Agreement Amendment and this Agreement, the Parent, Intermediate Holdings and Reorganized Invacare
hereby represents and warrants, as of the Agreement Date and as of the Effective Date, as follows:
(a) Credit Agreement Representations. The representations and warranties of the Borrowers, the Guarantors or such other Loan Party set forth in the Loan Documents are true and correct in all material respects (except that any representation or warranty which is already qualified as to materiality or by reference to Material Adverse Effect is true and correct in all respects) on and as of such date, with the same effect as if made on and as of such date (other than those representations and warranties that by their terms expressly relate to an earlier date, in which case such representations and warranties were true and correct in all material respects as of such earlier date).
1.7 Authority.
(a) As of the date hereof and as of the Effective Date, upon the receipt of the Requisite Stockholder Consents, all corporate action on the part of Parent, Intermediate Holdings and Reorganized Invacare necessary for the authorization, execution, and delivery of this Agreement, the Exchange Agreement, the Intermediate Holdings Warrants, the Reorganized Invacare Warrants, and the agreements and other documents contemplated hereby and thereby, the performance of all obligations of Parent, Intermediate Holdings and Reorganized Invacare hereunder and thereunder and the consummation of the transactions contemplated hereby and thereby, including the Transactions (to the extent the CF Transition Date occurs), has been taken. The boards of directors of each of Parent, Intermediate Holdings and Reorganized Invacare have each unanimously determined that the Transactions are in the best interests of Parent, Intermediate Holdings and Reorganized Invacare, as applicable, have approved the transactions contemplated thereby, including the Transactions, and have unanimously recommended that the requisite stockholders of each of Parent, Intermediate Holdings and Reorganized Invacare approve the transactions contemplated thereby, including the Transactions, and such approval has not been amended, rescinded or modified. The stockholders of each of Parent, Intermediate Holdings and Reorganized Invacare whose consent is necessary to approve this Agreement, the Transactions, and the transactions contemplated hereby and thereby, have so consented to and approved this Agreement, the Transactions and the transactions contemplated hereby and thereby (the “Requisite Stockholder Consents”). As of the date hereof and as of the Effective Date, this Agreement, the Exchange Agreement, the Intermediate Holdings Warrants and the Reorganized Invacare Warrants and the agreements and other documents contemplated hereby and thereby to which Parent, Intermediate Holdings and Reorganized Invacare is a party are valid and legally binding obligations of Parent, Intermediate Holdings and Reorganized Invacare, as applicable, enforceable against Parent, Intermediate Holdings and Reorganized Invacare, as applicable, in accordance with their terms, subject to (i) the fact that the Exchange Agreement shall not be effective until the CF Transition Date, (ii) the fact that the Intermediate Holdings Warrants and Reorganized Invacare Warrants shall not be effective until the Effective Date, (iii) the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws relating to or affecting the enforcement of creditors’ rights generally and (iv) laws relating to the availability of specific performance, injunctive relief, or other equitable remedies.
(b) The execution and delivery of this Agreement, the Exchange Agreement, the Intermediate Holdings Warrants (after the CF Transition Date) and the Reorganized Invacare Warrants (after the CF Transition Date) by each of Parent, Intermediate Holdings or Reorganized Invacare, as applicable, does not, and the performance by Parent, Intermediate Holdings or Reorganized Invacare, as applicable of their respective obligations hereunder and thereunder and the consummation of the transactions contemplated hereby and thereby, including the Transactions (which shall only be effective as of the CF Transition Date or Effective Date, as applicable), and the other transactions contemplated hereby and thereby will not (i) contravene any provision of the organizational documents of Parent, Intermediate Holdings or Reorganized Invacare (with respect to the Transactions, after the filings set forth in Section 1.4(b)(i) - (v) have been filed and accepted by the Secretary of State of the State of Delaware), (ii) constitute a material breach by Parent, Intermediate Holdings, Reorganized Invacare or any of their Subsidiaries or result in a default (or an event which with the giving of notice or lapse of time or both could reasonably be expected to become a breach or default) by Parent, Intermediate Holdings, Reorganized Invacare under, any material contract (with respect to the performance by Parent, Intermediate Holdings or Reorganized Invacare as applicable of their respective obligations hereunder and thereunder, and the consummation of the transactions contemplated hereby and thereby, subject to the occurrence of the CF Transition Date) or (iii) violate in any material respect any provision of any laws to which Parent, Intermediate Holdings or Reorganized Invacare or any of their Subsidiaries, except in the cause of clauses (ii) and (iii), for any breach, default or violation that would not have a material adverse effect on Parent and its Subsidiaries taken as a whole or materially and adversely affect the ability of Parent or its Subsidiaries to consummate the transactions contemplated hereby. Notwithstanding the foregoing, the representations and warranties in this Section 1.7 regarding the execution and delivery of the Intermediate Holdings Warrants, the execution and delivery of the Reorganized Invacare Warrants and any transactions that are to take place simultaneously with or following the CF Transition Date shall be subject to the occurrence of the CF Transition Date.
1.8 Consents and Filings. No consents, approval or authorization of, or designation, declaration or filing with, any governmental entity or any other person on the part of the Parent, Intermediate Holdings or Reorganized Invacare is required in connection with the execution or delivery by Parent, Intermediate Holdings or Reorganized Invacare of this Agreement, the Exchange Agreement, the Intermediate Holdings Warrants (after the CF Transition Date), the Reorganized Invacare Warrants (after the CF Transition Date), or the consummation of the transactions contemplated hereby or thereby, including the Transactions (which shall only be effective as of the CF Transition Date or Effective Date, as applicable), other than (i) the filing of the documents set forth in Section 1.4(b)(i) through (v) in accordance with applicable law, (ii) those which have previously been obtained and provided to the Holders, (iii) with respect to the performance by Parent, Intermediate Holdings or Reorganized Invacare as applicable of their respective obligations hereunder and thereunder, and the consummation of the transactions contemplated hereby and thereby, any consents required to be obtained under the CF Debt Obligations, and (iv) any consent, approval or authorization or filing, the failure to obtain would not have a material adverse effect on Parent and its Subsidiaries taken as a whole or materially and adversely affect the ability of Parent or its Subsidiaries to consummate the transactions contemplated hereby. Notwithstanding the foregoing, the representations and warranties in this
Section 1.8 regarding the execution and delivery of the Intermediate Holdings Warrants, the execution and delivery of the Reorganized Invacare Warrants and any transactions that are to take place simultaneously with or following the CF Transition Date shall be subject to the occurrence of the CF Transition Date.
1.9 Representations and Warranties of Holders. As an inducement to Parent, Intermediate Holdings and Reorganized Invacare to enter into this Agreement, each Holder hereby represents and warrants severally (and not jointly), as of the Agreement Date and as of the Effective Date, as follows:
(a) As of the date hereof and as of the Effective Date, all corporate action on the part of each Holder necessary for the authorization, execution, and delivery of this Agreement, the Exchange Agreement, the Intermediate Holdings Warrants, the Reorganized Invacare Warrants, and the agreements and other documents contemplated hereby and thereby, the performance of all obligations of each Holder hereunder and thereunder and the consummation of the transactions contemplated hereby and thereby, including the Transactions (to the extent the CF Transition Date occurs), has been taken. As of the date hereof and as of the Effective Date, this Agreement, the Exchange Agreement, the Intermediate Holdings Warrants and the Reorganized Invacare Warrants and the agreements and other documents contemplated hereby and thereby to which each Holder is a party are valid and legally binding obligations of such Holder, as applicable, enforceable against such Holder, as applicable, in accordance with their terms, subject to (i) the fact that the Exchange Agreement shall not be effective until the CF Transition Date, (ii) the fact that the Intermediate Holdings Warrants and Reorganized Invacare Warrants shall not be effective until the Effective Date, (iii) the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws relating to or affecting the enforcement of creditors’ rights generally and (iv) laws relating to the availability of specific performance, injunctive relief, or other equitable remedies.
(b) Any securities issued pursuant to the Transactions (the “Securities”) are being acquired for such Holder’s own account, for investment and not with a view to the distribution or resale thereof. Such Holder understands that the Securities have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities or blue sky laws, by reason of their issuance in a transaction exempt from the registration requirements thereunder and may not be resold unless a subsequent disposition thereof is registered thereunder (it being understood that neither Parent, Intermediate Holdings, nor Reorganized Invacare is under any obligation to so register) or is exempt from registration thereunder (and acknowledges that an investment in the Securities is highly speculative and involves a high degree of risk of loss of such Holder’s entire investment in the Securities and neither Parent, Intermediate Holdings, nor Reorganized Invacare has provided such Holder with any indication of any value of the Securities). Such Holder has access to the same kind of information which would be available in a registration statement filed under the Securities Act. (i) Such Holder is an accredited investor as defined in Rule 501 promulgated by the Securities and Exchange Commission (“SEC”), (ii) none of the “Bad Actor” disqualifying events described in Rule 506(d)(1)(i) to (viii) promulgated under the Securities Act are applicable to such Holder, and (iii) such Holder has such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of an investment in the Securities (and is able to bear the risks of an investment in the Securities).
1.10 Cooperation. Parent, Intermediate Holdings and Reorganized Invacare each agree that they shall use reasonable best efforts to cooperate with the Holders, upon the reasonable request of the Holders, in seeking to obtain the consent or waiver of the CF Debt Creditors to the Transactions, including by delivery of any information reasonably requested by the CF Debt Creditors.
ARTICLE 2.
INDEMNIFICATION
2.1 Indemnification.
(a) Indemnification of the Holders. After the Agreement Date, Parent, Intermediate Holdings or Reorganized Invacare, jointly agree to indemnify and hold harmless the Holders, their Affiliates, and each of their respective officers, directors, employees, equityholders and agents (the “Indemnified Parties”) from and against any damage, claim, loss, injury, charge, cost, liability or expense, interest, penalties and expenses of any action (including reasonable attorneys’ fees and expenses) or remedial action, and including amounts actually paid or incurred in the absence of third party claims (collectively “Damages”) which any of the Indemnified Parties may sustain, or to which any of the Indemnified Parties may be subjected, that arise out of or result from:
(i) a breach or inaccuracy of any representation or warranty of Parent, Intermediate Holdings or Reorganized Invacare set forth in this Agreement or in the Secretary’s Certificate; or
(ii) a breach of any covenant or other agreement on the part of Parent, Intermediate Holdings or Reorganized Invacare set forth in this Agreement or in the Company Secretary’s Certificate.
2.2 Procedures of Claims.
(a) Defense of Third Party Claims. In the case of any claim for indemnification arising from a claim of a third party, the Indemnified Party shall give prompt written notice (but no later than ten Business Days) after Indemnified Party’s receipt of notice of such claim to Parent (the “Indemnifying Party”) of any claim of which such Indemnified Party has knowledge and as to which it reasonably believes it is entitled to indemnification hereunder. Notwithstanding anything to the contrary herein, it shall be reasonable for an Indemnified Party to provide such written notice upon receipt of a third party claim that could reasonably be expected to give rise to Damages even if no Damages with respect to such claim have been suffered as of the date of such notice. The written notice shall state in reasonable detail the nature and basis of such claims and the dollar amount of such claim, to the extent known or expected or estimated dollar amount. The failure to give such notice will not, however, relieve any Indemnifying Party of its indemnification obligations except to the extent that an
Indemnifying Party is actually harmed or prejudiced thereby. The Indemnifying Party will have the right to defend and to direct the defense against any such claim in its name and at its expense with counsel selected by the Indemnifying Party (that shall be reasonably acceptable to the Indemnified Party) unless Indemnified Party has been advised by counsel that there would be an actual conflict of interest between the Indemnified Party and the Indemnifying Party in the conduct of such defense; provided however, that the Indemnifying Party must demonstrate to the Indemnified Party, in writing, such Indemnifying Party’s financial ability to provide full indemnification to the Indemnified Party with respect to such matter. If the Indemnifying Party assumes the defense of a third party claim it shall be conclusively established for purposes of this Agreement that the claims made in such third party claim are within the scope of and subject to indemnification. In addition, the Indemnifying Party shall not be entitled to assume control of such defense if (i) the third party claim relates to or arises in connection with any criminal proceeding against the Indemnified Party, or (ii) the third party claim seeks an injunction or other similar form of equitable relief against the Indemnified Party as its principal claim for relief. If the Indemnifying Party is entitled to compromise or defend such claim, it will notify the Indemnified Party of its intent to do so, and the Indemnified Party must, at the request and expense of the Indemnifying Party, cooperate in the defense of such claim. If the Indemnifying Party elects, in a writing delivered to the Indemnified Party, not to compromise or defend such claim, the Indemnified Party may pay, compromise or defend such claim. Notwithstanding anything to the contrary contained herein, the Indemnifying Party will have no indemnification obligations with respect to any claim which has been or will be settled by the Indemnified Party without the prior written consent of the Indemnifying Party (such consent not to be unreasonably withheld, conditioned or delayed). The Indemnifying Party’s right to direct the defense will include the right to compromise or enter into an agreement settling any claim by a third party only with the consent of the Indemnified Party (such consent not to be unreasonably withheld, conditioned or delayed), unless the Indemnified Party receives a full release with respect to such claim and the sole relief in such settlement is that monetary damages are paid in full by the Indemnifying Party. Any Indemnified Party will have the right to participate in the Indemnifying Party’s defense of any claim with one counsel selected by it subject to the Indemnifying Party’s right to direct the defense. The reasonable and documented fees and disbursements of such counsel will be at the expense of the Indemnified Party (unless the Indemnified Party’s counsel shall have advised the Indemnified Party in writing, with a copy delivered to the Indemnifying Party, that there is an actual conflict of interest that could make it inappropriate under applicable standards of professional conduct for the Indemnifying Party and the Indemnified Party to have common counsel). An Indemnifying Party who is not permitted to direct the defense hereof will have the right to participate in the Indemnified Party’s defense of any claim with one (1) counsel selected by it subject to the Indemnified Party’s right to direct the defense. The fees and disbursements of such counsel will be at the expense of the Indemnifying Party.
(b) Non-Third Party Claims. Any claim which does not result from a third party claim will be asserted by a written notice from the Indemnified Party to the Indemnifying Party. The Indemnifying Party will have a period of thirty (30) days after receipt of such notice within which to respond thereto. If the Indemnifying Party does not respond within such thirty (30) days, the recipient will be deemed to have accepted responsibility for the Damages set forth in such notice and will have no further right to contest the validity of any claim (or the amount of
such claim) set forth in such notice. If the Indemnifying Party responds within such thirty (30) days after the receipt of the notice and rejects such claim in whole or in part, the Indemnified Party will be free to pursue such remedies as may be available to it under contract or applicable law, subject to the terms of this Agreement.
ARTICLE 3.
COVENANTS
3.1 Holder Covenant The Holders hereby agree and covenant that no Holder shall transfer its shares of Series A Preferred Stock of the Parent without the prior written consent of the Holders holding a majority of the Series A Preferred Stock of the Parent held by all Holders who are not transferring such Series A Preferred Stock and are not otherwise affiliates of the Holder transferring such Series A Preferred Stock of the Parent.
ARTICLE 4.
GENERAL PROVISIONS
4.1 Assignment, Successors and No Third-Party Rights. No party hereto may assign any of its rights or delegate any of its obligations under this Agreement without the prior written consent of the other parties; provided that, a Holder shall each be permitted to assign its respective rights, interests and obligations (in whole or in part) to any of its Affiliates without obtaining any consent. Any purported assignment or delegation, except as expressly permitted pursuant to this Section 4.1, shall be void and without effect. Subject to the foregoing, this Agreement will apply to, be binding in all respects upon and inure to the benefit of the successors and permitted assigns of the parties. Nothing expressed or referred to in this Agreement will be construed to give any person other than the parties to this Agreement any legal or equitable right, remedy or claim under or with respect to this Agreement or any provision of this Agreement, except such rights as shall inure to a successor or permitted assignee pursuant to this Section 4.1.
4.2 Notices. Unless otherwise expressly provided herein, any notice, request, instruction or other document to be given hereunder by any party hereto to another party hereto shall be in writing and shall be deemed to have been duly given (a) when delivered, if delivered by hand, (b) one (1) Business Day after being sent, if sent by overnight delivery via a national courier service, (c) when transmitted and receipt is confirmed, if sent via email or facsimile with confirmation of receipt, or (d) three (3) Business Days after mailing, if mailed by registered or certified mail (return receipt requested), to Parent at the addresses or electronic mail and marked to the attention of the individual (by name or title) set forth on Schedule 10.02 of the Credit Agreement (or at such other address for a party as shall be specified in a notice given in accordance with this Section 4.2) and if such notice is directed to a Holder to the address or electronic mail address set forth on the applicable signature pages hereto.
4.3 Choice of Law. This Agreement shall be construed, interpreted and the rights of the parties determined in accordance with the laws of the State of Delaware, without giving effect to any choice of law provision or rule that would cause the application of the laws of any jurisdiction other than the State of Delaware.
4.4 Entire Agreement; Amendments and Waivers. This Agreement, together with all exhibits and schedules hereto, constitute the entire agreement among the parties pertaining to the subject matter hereof and supersede all prior agreements, understandings, negotiations and discussions, whether oral or written, of the parties. No amendment, supplement, modification or waiver of this Agreement shall be binding unless consented in writing Parent and Holders holding a majority of the shares of Series A Preferred Stock held by all Holders; provided that, if any such amendment, supplement, modification or waiver materially adversely impacts any Holder disproportionately than other Holders the consent of such Holder shall be required. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof (whether or not similar), nor shall such waiver constitute a continuing waiver unless otherwise expressly provided.
4.5 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument, and shall become binding when one or more counterparts have been signed by each of the parties hereto and delivered to the other party. Delivery of an electronically executed counterpart of a signature page to this Agreement shall be as effective as delivery of a manually executed counterpart of this Agreement.
4.6 Invalidity. In the event that any one or more of the provisions contained in this Agreement or in any other instrument referred to herein, shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or any other such instrument.
4.7 Attorney Fees. If any party to this Agreement brings an Action to enforce its rights under this Agreement in accordance with the provisions hereof, the prevailing party shall be entitled to recover its actual out-of-pocket costs and expenses, including reasonable attorneys’ fees reasonably incurred in connection with such action, including any appeal of such action.
4.8 Service of Process; Consent to Jurisdiction; Waiver of Jury Trial.
(a) SERVICE OF PROCESS. EACH OF THE PARTIES HERETO IRREVOCABLY CONSENTS TO THE SERVICE OF ANY PROCESS, PLEADING, NOTICES OR OTHER PAPERS BY THE MAILING OF COPIES THEREOF BY REGISTERED, CERTIFIED OR FIRST CLASS MAIL, POSTAGE PREPAID, TO SUCH PARTY AT SUCH PARTY’S ADDRESS SET FORTH HEREIN, OR BY ANY OTHER METHOD PROVIDED OR PERMITTED UNDER DELAWARE LAW.
(b) CONSENT AND JURISDICTION. EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY (I) AGREES THAT ANY SUIT, ACTION OR OTHER LEGAL PROCEEDING ARISING OUT OF THIS AGREEMENT MAY BE BROUGHT IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE OR, IF SUCH COURT DOES NOT HAVE JURISDICTION OR WILL NOT ACCEPT JURISDICTION, IN ANY COURT OF GENERAL JURISDICTION IN DELAWARE; (II) CONSENTS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING; AND (III) WAIVES ANY OBJECTION WHICH
SUCH PARTY MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY SUCH COURT.
(c) WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY PROCEEDING (WHETHER BASED IN CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY TRANSACTION OR AGREEMENT CONTEMPLATED HEREBY OR THE ACTIONS OF ANY PARTY HERETO IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.
4.9 Specific Performance. The parties hereto agree that irreparable damage would occur to the Holders in the event of a breach or threatened breach of any covenant, obligation or other provision of this Agreement or the Exchange Agreement by Parent, Intermediate Holdings or Reorganized Invacare, including the performance of the obligations set forth in Article 2 of this Agreement. Each of Parent, Intermediate Holdings or Reorganized Invacare hereby agrees that, in the event of any breach of threatened breach by Parent, Intermediate Holdings or Reorganized Invacare of any covenant, obligation or other provisions of this Agreement or the Exchange Agreement, any Holder shall be entitled (in addition to any other remedy that may be available to them, including monetary damages) to obtain (a) a decree or order of specific performance or mandamus to enforce the observance and performance of such covenant, obligation or other provision, and (b) an injunction restraining such breach or threatened breach. The parties agree that no party shall be required to obtain, furnish or post any bond or similar instrument in connection with or as a condition to obtaining any remedy referred to in this Section, and the parties irrevocably waive any right they may have to require the obtaining, furnishing or posting of any such bond or similar instrument.
* * * * * *
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first written above.
PARENT:
Invacare Holdings Corporation
By: /s/ Kai Zhu
Name: Kai Zhu
Title: Senior Vice President and Chief Financial Officer
INTERMEDIATE HOLDINGS:
Invacare International Holdings Corp.
By: /s/ Kai Zhu
Name: Kai Zhu
Title: Senior Vice President and Chief Financial Officer
REORGANIZED INVACARE:
Invacare Corporation
By: /s/ Kai Zhu
Name: Kai Zhu
Title: Senior Vice President and Chief Financial Officer
IN WITNESS WHEREOF, each party hereto has executed this Agreement as of the day and year first written above.
HOLDER:
DG VALUE PARTNERS, LP
By: DG Capital Management, LLC, its investment manager
By: /s/ Dov Gertzulin
Name: Dov Gertzulin
Title: Managing Member
IN WITNESS WHEREOF, each party hereto has executed this Agreement as of the day and year first written above.
HOLDER:
DG VALUE PARTNERS II MASTER FUND, LP
By: DG Capital Management, LLC, its investment manager
By: /s/ Dov Gertzulin
Name: Dov Gertzulin
Title: Managing Member
IN WITNESS WHEREOF, each party hereto has executed this Agreement as of the day and year first written above.
HOLDER:
YAKAR ALTERNATIVES CLAT LLC
By: DG Capital Management, LLC, its investment manager
By: /s/ Dov Gertzulin
Name: Dov Gertzulin
Title: Managing Member
IN WITNESS WHEREOF, each party hereto has executed this Agreement as of the day and year first written above.
HOLDER:
YAKAR ALTERNATIVES LLC
By: DG Capital Management, LLC, its investment manager
By: /s/ Dov Gertzulin
Name: Dov Gertzulin
Title: Managing Member
IN WITNESS WHEREOF, each party hereto has executed this Agreement as of the day and year first written above.
HOLDER:
PPG HEDGE FUND HOLDINGS LLC
By: DG Capital Management, LLC, its investment manager
By: /s/ Dov Gertzulin
Name: Dov Gertzulin
Title: Managing Member
IN WITNESS WHEREOF, each party hereto has executed this Agreement as of the day and year first written above.
HOLDER:
MACYRC LLC
By: DG Capital Management, LLC, its investment manager
By: /s/ Dov Gertzulin
Name: Dov Gertzulin
Title: Managing Member
IN WITNESS WHEREOF, each party hereto has executed this Agreement as of the day and year first written above.
HOLDER:
2016 Alan Shamah Discretionary Trust
By: DG Capital Management, LLC, its investment manager
By: /s/ Dov Gertzulin
Name: Dov Gertzulin
Title: Managing Member
IN WITNESS WHEREOF, each party hereto has executed this Agreement as of the day and year first written above.
HOLDER:
THE SAM AND HELENE WIEDER FAMILY TRUST
By: DG Capital Management, LLC, its investment manager
By: /s/ Dov Gertzulin
Name: Dov Gertzulin
Title: Managing Member
IN WITNESS WHEREOF, each party hereto has executed this Agreement as of the day and year first written above.
HOLDER:
TITAN EQUITY GROUP LLC
By: DG Capital Management, LLC, its investment manager
By: /s/ Dov Gertzulin
Name: Dov Gertzulin
Title: Managing Member
IN WITNESS WHEREOF, each party hereto has executed this Agreement as of the day and year first written above.
HOLDER:
DAVIDSON KEMPNER ARBITRAGE,
EQUITIES AND RELATIVE VALUE LP
By: Davidson Kempner Multi-Strategy GP II LLC, its general manager
By: Davidson Kempner Liquid GP Topco LLC, its managing manager
By: /s/ Conor Bastable
Name: Conor Bastable
Title: Managing Member
IN WITNESS WHEREOF, each party hereto has executed this Agreement as of the day and year first written above.
HOLDER:
M.H. DAVIDSON & CO.
By: M.H. Davidson & Co. GP L.L.C., its general partner
By: Davidson Kempner Liquid GP Topco LLC, its managing manager
By: /s/ Conor Bastable
Name: Conor Bastable
Title: Managing Member
IN WITNESS WHEREOF, each party hereto has executed this Agreement as of the day and year first written above.
HOLDER:
ENDURANT HEALTH MASTER FUND LP
By: Endurant Capital Management LP, its Investment Manager
By: /s/ Chris Ronan
Name: Chris Ronan
Title: COO/CFO
IN WITNESS WHEREOF, each party hereto has executed this Agreement as of the day and year first written above.
HOLDER:
ONE OAK MULTI-STRATEGY MASTER FUND, LTD.
By: Endurant Capital Management LP, its Sub-Advisor
By: /s/ Chris Ronan
Name: Chris Ronan
Title: COO/CFO
IN WITNESS WHEREOF, each party hereto has executed this Agreement as of the day and year first written above.
HOLDER:
BLACKWELL PARTNERS LLC-SERIES B
By: Silverback Asset Management, LLC, its Investment Manager
By: /s/ Laura Kleber
Name: Laura Kleber
Title: CCO
IN WITNESS WHEREOF, each party hereto has executed this Agreement as of the day and year first written above.
HOLDER:
KASAD 2, LP
By: Silverback Asset Management, LLC, its Investment Manager
By: /s/ Laura Kleber
Name: Laura Kleber
Title: CCO
IN WITNESS WHEREOF, each party hereto has executed this Agreement as of the day and year first written above.
HOLDER:
SILVERBACK CONVERTIBLE MASTER
FUND LIMITED
By: Silverback Asset Management, LLC, its Investment Manager
By: /s/ Laura Kleber
Name: Laura Kleber
Title: COO
IN WITNESS WHEREOF, each party hereto has executed this Agreement as of the day and year first written above.
HOLDER:
SILVERBACK OPPORTUNISTIC CREDIT
MASTER FUND LIMITED
By: Silverback Asset Management, LLC, its Investment Manager
By: /s/ Laura Kleber
Name: Laura Kleber
Title: CCO
IN WITNESS WHEREOF, each party hereto has executed this Agreement as of the day and year first written above.
HOLDER:
PM MANANGER FUND, SPC-SEGREGATED
PORTFOLIO 33
By: PAAMCO Prisma, its Advisor
By: /s/ Vincent Cuticello
Name: Vincent Cuticello
Title: Chief Operating Officer
IN WITNESS WHEREOF, each party hereto has executed this Agreement as of the day and year first written above.
HOLDER:
TENOR OPPORTUNITY MASTER FUND,
LTD.
By: /s/ Daniel Kochav
Name: Daniel Kochav
Title: Director
Exhibit C
AMENDED AND RESTATED CERTIFICATE OF DESIGNATIONS
OF
9.00% SERIES A CONVERTIBLE PARTICIPATING PREFERRED STOCK
OF
INVACARE HOLDINGS CORPORATION
Invacare Holdings Corporation, a corporation organized under the laws of the State of Delaware (the “Corporation”), DOES HEREBY CERTIFY AS FOLLOWS:
I. The Board of Directors of the Corporation, by resolutions adopted on May 5, 2023, and a Certificate of Designations filed with the Secretary of State of the State of Delaware on May 5, 2023 (the “Original Certificate of Designations”) established a series of preferred stock of the Corporation designated as “9.00% Series A Convertible Participating Preferred Stock”.
II. The Corporation, pursuant to resolutions adopted by the Board of Directors on March 13, 2024 and the written consent of the requisite holders of Series A Preferred Stock (as defined below) dated March 14, 2024, filed that certain First Amendment to the Original Certificate of Designations with the Secretary of State of the State of Delaware on March 14, 2024 (the “First Amendment”).
III. The Corporation, pursuant to resolutions adopted by the Board of Directors on April [●], 2024 and the written consent of the requisite holders of Series A Preferred Stock (as defined below) dated April [●], 2024, filed that certain Second Amendment to the Original Certificate of Designations with the Secretary of State of the State of Delaware on April [●], 2024 (the “Second Amendment” and the Original Certificate of Designations as amended by the First Amendment and the Second Amendment, the “Existing Certificate of Designations”).
IV. The Board of Directors, by resolution adopted on April [●], 2024, determined that, subject to certain conditions, it was advisable and in the best interest of the Corporation and its stockholders to amend and restate the Existing Certificate of Designations as set forth herein.
V. The holders of a majority of the outstanding shares of Series A Preferred Stock and a majority of the Entitled Stockholders (as defined in the Existing Certificate of Designations), representing the votes necessary to authorize such action pursuant to Section 4.2 of the Certificate of Incorporation of the Corporation and Section 7(b) and Section 18 of the Existing Certificate of Designations, acting by written consent adopted on April [●], 2024, approved the amendment and restatement of the Existing Certificate of Designation.
NOW THEREFORE, the Corporation agrees that the Existing Certificate of Designations is hereby amended and restated in its entirety as follows:
Section 1 Designation and Number of Shares. Pursuant to the Charter, there is hereby created out of the authorized and unissued shares of preferred stock of the Corporation, par value $0.001 per share (“Preferred Stock”), a series of Preferred Stock consisting of 6,750,011 shares of Preferred Stock designated as the “9.00% Series A Convertible Participating Preferred Stock” (the “Series A Preferred Stock”). Such number of shares may be increased or decreased by resolution of the Board of Directors or any duly authorized committee thereof, subject to the terms and conditions hereof and the requirements of applicable law; provided that (i) no increase shall cause the number of authorized shares of Series A Preferred Stock to exceed the total number of authorized shares of Preferred Stock and (ii) no decrease shall reduce the number of shares of Series A Preferred Stock to a number less than the number of such shares then outstanding.
Section 2 General Matters; Ranking. Each share of Series A Preferred Stock shall be identical in all respects to every other share of Series A Preferred Stock. The Series A Preferred Stock, with respect to dividend rights and/or distribution rights upon the liquidation, winding‑up or dissolution, as applicable, of the Corporation, shall rank (i) senior to each class or series of Junior Stock, (ii) on parity with each class or series of Parity Stock, (iii) junior to each class or series of Senior Stock, and (iv) junior to the Corporation’s existing and future indebtedness and other liabilities.
Section 3 Standard Definitions. As used herein with respect to the Series A Preferred Stock:
“ABL Credit Agreement” shall mean that certain loan and security agreement dated May 5, 2023 among the Corporation and the other borrowers from time to time party thereto, the guarantors from time to time party thereto, the lenders from time to time party thereto and White Oak Commercial Finance, LLC, as Administrative Agent and Collateral Agent, as amended, restated, amended and restated, supplemented or otherwise modified from time to time..
“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, such Person.
“Agent Members” shall have the meaning set forth in Section 19(b).
“Average VWAP” per share of Common Stock over a certain period means the arithmetic average of the VWAP per share of Common Stock for each Trading Day in the relevant period.
“Backstop Commitment Agreement” shall have the meaning ascribed to the term in the Plan.
“Backstop Party” means the original signatories to the Backstop Commitment Agreement and any Person that, as of the Effective Date, is entitled to exercise Backstop Party Rights pursuant to, and as defined in, the Backstop Commitment Agreement.
“Bankruptcy Court” means the United States Bankruptcy Court for the Southern District of Texas, Houston Division.
“Board of Directors” shall have the meaning set forth in the Charter.
“Business Day” means any day other than a Saturday or Sunday or any other day on which commercial banks in New York City are authorized or required by law or executive order to close.
“Bylaws” means the Bylaws of the Corporation, as amended or restated from time to time.
“Certificate of Designations” means this document setting forth the designation, powers, preferences and rights, and the qualifications, limitations or restrictions thereto, of the Series A Preferred Stock, as amended from time to time in compliance with applicable laws, the Charter and the provisions hereof.
“Change of Control” means that (a) a Person or “group” (as the term is used for purposes of Section 13(d) of the Exchange Act), other than a Change of Control Excluded Person, becomes the direct or indirect beneficial owner (as determined pursuant to Rule 13d-3 or Rule 13d-5 under the Exchange Act) of securities representing more than 50% of the voting power of the Corporation; and (b) the Corporation has become aware of such development by virtue of a written notice, public report, filing pursuant to Section 13(d) of the Exchange Act, or otherwise.
“Change of Control Excluded Person” means: (a) a Person that is a Backstop Party (or a Backstop Party’s Related Fund), to the extent that prior to the date hereof neither such Backstop Party nor any of such Backstop Party’s Related Funds or Affiliates has filed a public report pursuant to Section 13(d) of the Exchange Act indicating that such Back Stop Party or such Backstop Party’s Related Funds or Affiliates delivered a letter to the Board indicating that such Person, either alone or together with other potential investors, had or was proposing to engage in discussions with the Corporation regarding the potential acquisition of the Corporation; (b) any Person that controls, is controlled by, or is under common control with a Person described in clause (a) of this definition; and (c) a “group” (as the term is used for purposes of Sections 13(d) of the Exchange Act) that includes one or more Change of Control Excluded Persons as defined under clauses (a) or (b) above, where such Change of Control Excluded Persons beneficially own capital stock of the Corporation having more the 50% of the combined voting power in the election of directors of all the capital stock of the Corporation held by such group.
“Charter” means the certificate of incorporation of the Corporation, as amended or restated from time to time.
“Close of Business” means 5:00 p.m., New York City time.
“Code” means the Internal Revenue Code of 1986, as amended.
“Common Stock” means the common stock, par value $0.001 per share, of the Corporation.
“Confirmation Order” means the Order Confirming the Debtors’ First Amended Joint Chapter 11 Plan of Invacare Corporation and its Debtor Affiliates entered by the Bankruptcy Court on April 28, 2023, in the Chapter 11 Case No. 23-90068 (CML).
“Conversion and Dividend Disbursing Agent” means American Stock Transfer & Trust Company, LLC, the Corporation’s duly appointed conversion and dividend disbursing agent for Series A Preferred Stock, and any successor appointed under Section 14.
“Conversion Date” shall have the meaning set forth in Section 10(b).
“Conversion Price” means, (a) as of the Effective Date, $1.72076211 (the “Initial Conversion Price”); and (b) as of any date thereafter, such Initial Conversion Price, as adjusted pursuant to the provisions of Section 13.
“Corporation” means Invacare Holdings Corporation, a Delaware corporation.
“Debt” shall mean, as to any Person as of any date of determination, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP: (a) all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments; (b) all direct or contingent obligations of such Person arising under letters of credit (including standby and commercial letters of credit), bankers’ acceptances, bank guaranties, surety bonds and similar instruments; and (c) indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse.
“Debt Group Members” shall mean each of Backstop Parties to the extent that each such Backstop Party has fully funded at least its pro rata portion of the aggregate principal under the ABL Credit Agreement as of any applicable date (with such pro rata portion being a fraction determined by dividing (x) the number of Series A Preferred Stock held by such Backstop Party or its Related Funds on the Effective Date and (y) the total number of Series A Preferred Stock owned by all of the Backstop Parties and their respective Related Funds) as of the Effective Date.
“Debt Offer Notice” shall have the meaning set forth in Section 6(f).
“Declining Group Member” shall have the meaning set forth in Section 6(f).
“Depositary” means DTC or its nominee or any successor appointed by the Corporation.
“Deemed Liquidation Event” means the occurrence of any of the following:
(i) a merger or consolidation in which the Corporation is a constituent party, or a Subsidiary of the Corporation is a constituent party and the Corporation issues shares of its capital stock pursuant to such merger or consolidation, unless the shares of capital stock of the Corporation outstanding immediately prior to such merger or consolidation continue to
represent, or are converted into or exchanged for shares of capital stock that represent, immediately following such merger or consolidation, at least a majority, by voting power, of the capital stock of (1) the surviving or resulting corporation; or (2) if the surviving or resulting corporation is a wholly owned subsidiary of another corporation immediately following such merger or consolidation, the parent corporation of such surviving or resulting corporation;
(ii) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the Corporation or any Subsidiary of the Corporation of all or substantially all the assets of the Corporation and its Subsidiaries taken as a whole, or
(iii) the sale or disposition (whether by merger, consolidation or otherwise, and whether in a single transaction or a series of related transactions) of one or more Subsidiaries of the Corporation if substantially all of the assets of the Corporation and its Subsidiaries taken as a whole are held by such Subsidiary or Subsidiaries, except where such sale, lease, transfer, exclusive license or other disposition is to a wholly owned Subsidiary of the Corporation;
provided, however, that, prior to the Exit Indebtedness Termination Date, a Deemed Liquidation Event shall not occur unless such Deemed Liquidation Event constitutes an event requiring payment in full of the Exit Term Loan Facility and the Exit Secured Convertible Notes; and provided, further, that no Deemed Liquidation Event shall occur if a majority of the Holders so determine by written notice to the Corporation prior to the effective date of any transaction described in clauses (i), (ii) or (iii) above; and provided, further, that no Deemed Liquidation Event shall occur upon the issuance of the Intermediate HoldCo Preferred Stock or the Series B Preferred Stock or the issuance or exercise of the Intermediate HoldCo Warrants or the Reorganized Invacare Warrants.
“Dividend Accrual Period” means (a) initially, the period from, and including, the Effective Date to, but excluding, the June 15, 2023 Dividend Payment Date; and (b) thereafter, the period from, and including, each Dividend Payment Date, to, but excluding the next Dividend Payment Date.
“Dividend Payment Date” means March 15, June 15, September 15 and December 15 of each year.
“Dividend Rate” means a rate of 9% per annum computed on the basis of a year of twelve thirty-day months and 360 days.
“Dividends” shall have the meaning set forth in Section 4(a).
“DTC” means The Depository Trust Company.
“Effective Date” has the meaning set forth in the Plan.
“Entitled Stockholder” has the meaning set forth in Section 6(e).
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
“Exercising Group Member” shall have the meaning set forth in Section 6(f).
“Exercise Period” shall have the meaning set forth in Section 6(f).
“Exit Indebtedness Termination Date” means the later of the (i) date on which the Exit Term Loan Facility is repaid in full and (ii) date on which none of the Exit Secured Convertible Notes remains outstanding.
“Exit Lender” means (a) each Backstop Party and (b) as of any date, each other Person (not a Backstop Party) who (1) participated in the Rights Offering and purchased thereunder, or otherwise acquired pursuant to the Plan, shares of Series A Preferred Stock representing more than 5% of all shares of Series A Preferred Stock issued and outstanding on the Effective Date, and (2) has beneficially owned at all times since the Effective Date, and continues to beneficially own, as of such date, more than 5% of the issued and outstanding shares of Common Stock as conclusively shown:
i. if the Corporation’s Common Stock has remained at all times registered under Section 12 of the Exchange Act, in filings pursuant to Section 13(d) or 16(a) of the Exchange Act made by such Person, but only to the extent that such filings disclose the individual holdings of such Person, its Affiliates and Related Funds, without giving effect to any holding of other members of any “group” (as the term is used for purposes of Sections 13(d) of the Exchange Act) to which such Person may belong; and
ii. otherwise, in Register entries evidencing direct ownership of securities of the Corporation in the name of such Person, its Affiliates and Related Funds.
For the purposes of clause (b)(2) of the foregoing definition, beneficial ownership of Common Stock shall be determined as provided in Rule 13d-3 under the Exchange Act, except that the total number of shares of Common Stock outstanding will be determined assuming that all outstanding shares of Series A Preferred Stock have been converted. For the avoidance of doubt, a Person that is not a Backstop Party and does not satisfy all the requirements of clause (b)(2) of the foregoing definition (including sub clauses (i) and (ii) thereof, shall not be an Exit Lender, regardless of the number of shares beneficially owned by such Person.
“Exit Secured Convertible Notes” means, collectively, the Exit Secured Convertible Tranche I Notes, and the Exit Secured Convertible Tranche II Notes.
“Exit Secured Convertible Tranche I Notes” means the Corporation’s 7.50% Convertible Senior Secured Notes due 2028, Tranche I, issued on the Effective Date pursuant to the Exit Secured Convertible Tranche I Notes Indenture.
“Exit Secured Convertible Tranche I Notes Indenture” means the indenture dated May 5, 2023, among the Corporation, as issuer, the guarantors listed therein, and GLAS Trust Company LLC, as trustee and notes collateral agent, as from time to time amended in compliance with the provisions thereof.
“Exit Secured Convertible Tranche II Notes” means the Corporation’s 7.50% Convertible Senior Secured Notes due 2028, Tranche II, issued on the Effective Date pursuant to the Exit Secured Convertible Tranche II Notes Indenture.
“Exit Secured Convertible Tranche II Notes Indenture” means the indenture dated May 5, 2023, among the Corporation, as issuer, the guarantors listed therein, and GLAS Trust Company LLC, as trustee and notes collateral agent, as from time to time amended in compliance with the provisions thereof.
“Exit Term Loan Agreement” means the Amended and Restated Credit Agreement dated as of May 5, 2023, among the Corporation, Reorganized Invacare, the lenders party thereto, Cantor Fitzgerald Securities, as Administrative Agent, and GLAS Trust Company LLC, as Collateral Agent, as from time to time amended in compliance with the provisions thereof.
“Exit Term Loan Facility” means the credit facility in the amount of $85,000,000 extended to Reorganized Invacare under the Exit Term Loan Agreement.
“Fair Value” of a share of Common Stock, as of any specified date, means:
i. if, at the time, the Common Stock is listed on a Relevant Stock Exchange, the Average VWAP of the Common Stock for the ten Trading Days immediately preceding the specified date (or, if the Common Stock has traded on such Relevant Stock Exchange for less than 10 Trading Days, the Average VWAP for such lesser period of time);
ii. if, at the time, the Common Stock is publicly traded but not listed on a Relevant Stock Exchange, the average of the reported closing bid and ask prices of a share of Common Stock in the over-the-counter market for the 10 Trading Days immediately preceding the specified date (or if the Common Stock has been publicly traded (but not listed) for less than 10 Trading Days, the average of the reported bid and ask prices for such lesser period of time); or
iii. in all other cases, such value as reasonably determined in good faith by the Board of Directors.
“Free Convertibility Date” shall mean the earlier to occur of:
i. November 6, 2023;
ii. a voluntary or involuntary liquidation, winding‑up or dissolution of the Corporation;
iii. an event that constitutes, or but for the operation of one or both of the provisos to the definition thereof would constitute, a Deemed Liquidation Event; and
iv. a Mandatory Redemption Event.
“Global Certificate” shall have the meaning set forth in Section 19(b).
“Global Certificate Shares” shall have the meaning set forth in Section 19(b).
“Holder” means each Person in whose name shares of Series A Preferred Stock are registered, who shall be treated by the Corporation and the Registrar as the absolute owner of those shares of Series A Preferred Stock for the purpose of making payment and settling conversions and for all other purposes.
“Intermediate HoldCo Certificate of Designations” means the document setting forth the designation, powers, preferences and rights, and the qualifications, limitations or restrictions thereto, of that certain series of preferred stock of Intermediate HoldCo, par value $0.001 per share, consisting of 5,938,620 shares of preferred stock of Intermediate HoldCo designated as the “9.00% Series A Preferred Stock” (the “Intermediate HoldCo Preferred Stock”), as amended from time to time in compliance with applicable laws, the certificate of incorporation of Intermediate HoldCo, as amended or restated from time to time, and the provisions thereof.
“Intermediate HoldCo” means Invacare International Holdings Corp., a Delaware corporation.
“Intermediate HoldCo Common Stock” means the common stock, par value $0.001 per share, of Intermediate HoldCo.
“Intermediate HoldCo Fundamental Change” means the consummation, at any time after the Effective Date, of (A) any transaction immediately following the consummation of which Intermediate HoldCo ceases to be a Wholly-Owned Subsidiary of the Corporation; (B) the voluntary or involuntary liquidation, winding‑up or dissolution of Intermediate HoldCo, (C) any consolidation, merger, binding share exchange, or other combination pursuant to which the Intermediate HoldCo Common Stock will be converted into, or exchanged for, stock, other securities, or other property or assets (including cash), or a combination thereof, in each case after which Intermediate HoldCo will no longer be a Wholly-Owned Subsidiary of the Corporation; or (D) any sale, lease, or other transfer or disposition in one transaction or a series of transactions of a material portion of the consolidated assets of Intermediate HoldCo and its Subsidiaries, taken as a whole, to any Person other than the Corporation or any of the Corporation’s Wholly‑Owned Subsidiaries (a “material portion” of the consolidated assets of the Intermediate HoldCo and its Subsidiaries, taken as a whole shall include, without limitation, assets sold, leased or transferred which results in net proceeds in excess of $10,000,000).
“Intermediate HoldCo Warrants” means those certain Warrants for Intermediate Holdco common stock issued by Intermediate HoldCo pursuant to the Master Equity Agreement.
“Junior Stock” means (i) the Common Stock and (ii) each other class or series of capital stock of the Corporation the terms of which do not expressly provide that such class or series ranks either (x) senior to the Series A Preferred Stock as to dividend rights and/or distribution rights upon the Corporation’s liquidation, winding‑up or dissolution or (y) on parity with the Series A Preferred Stock as to dividend rights and/or distribution rights upon the Corporation’s liquidation, winding‑up or dissolution.
“Liquidation Dividend Amount” shall have the meaning set forth in Section 5(a).
“Liquidation Preference” means, with respect to each share of Series A Preferred Stock, an amount initially equal to $25.00 (the “Initial Liquidation Preference”), which shall periodically be reset as follows (and until so reset shall remain at the most-recently set value):
(a) as of the Dividend Payment Date falling on June 15, 2023, the Liquidation Preference shall increase to the sum of (i) the Initial Liquidation Preference, plus (ii) Dividends accrued thereon at the Dividend Rate from, and including, the Effective Date to, but excluding, such Dividend Payment Date; and
(b) as of each Dividend Payment Date thereafter, the Liquidation Preference shall (subject to as provided below) increase to the sum of (i) the Liquidation Preference as re-computed on the immediately preceding Dividend Payment Date, plus (ii) Dividends accrued thereon at the Dividend Rate from, and including, such immediately preceding Dividend Payment Date to, but excluding, the Dividend Payment Date as of which the computation is made;
provided, however, that no adjustment or reset to the Liquidation Preference shall occur on any Dividend Payment Date on which the Corporation shall make a payment of Dividends in cash pursuant to Section 4(c).
“Mandatory Redemption Date” shall have the meaning set forth in Section 9(b).
“Mandatory Redemption Event” shall have the meaning set forth in Section 9(a).
“Mandatory Redemption Offer” shall have the meaning set forth in Section 9(b).
“Market Disruption Event” means (i) a failure by the Relevant Stock Exchange to open for trading during its regular trading session; or (ii) the occurrence or existence, prior to 1:00 p.m., New York City time, on any Scheduled Trading Day for the Common Stock, for more than a one half‑hour period in the aggregate during regular trading hours, of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the Relevant Stock Exchange or otherwise) in the Common Stock.
“Master Equity Agreement” shall mean that certain Master Equity Agreement dated April [__], 2024 among the Corporation and certain Holders, as amended, restated, amended and restated, supplemented or otherwise modified from time to time.
“Master Equity Group Member” means any holder of Common Stock who is a signatory to the Master Equity Agreement and is not otherwise a Defaulting Holder (as defined in the Master Equity Agreement).
“Master Equity Member Majority in Interest” shall mean the holders of a majority of the Common Stock held by all Master Equity Group Members.
“Material Terms” shall have the meaning set forth in Section 6(f).
“New Securities” has the meaning set forth in Section 6(e).
“Offer” has the meaning set forth in Section 6(e).
“Offeree” has the meaning set forth in Section 6(e).
“Offer Notice” has the meaning set forth in Section 6(e).
“Officer” means the Chairman, any Vice Chairman, any Chief Executive Officer, the Chief Administrative Officer, the Treasurer, any Vice President, any Assistant Treasurer, the Principal Accounting Officer, the Chief Financial Officer, the Chief Accounting Officer, the Chief Operating Officer, the General Counsel, the Secretary or any Assistant Secretary of the Corporation, as the case may be.
“Open of Business” means 9:00 a.m., New York City time.
“Parity Stock” means any class or series of capital stock of the Corporation the terms of which expressly provide that such class or series shall rank on parity with the Series A Preferred Stock as to dividend rights and/or distribution rights upon the Corporation’s liquidation, winding‑up or dissolution.
“Permitted Encumbrance” means encumbrances for taxes, assessments and other governmental charges not yet due and payable, that are being contested in good faith and for which appropriate reserves have been established.
“Person” means any individual, partnership, firm, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, governmental authority or other entity of whatever nature.
“Plan” means the First Amended Joint Chapter 11 Plan of Invacare Corporation and its Debtor Affiliates confirmed by the Bankruptcy Court in the Confirmation Order.
“Preferred Stock” shall have the meaning set forth in Section 1 of this Certificate of Designations.
“Pro Rata Portion” shall mean with respect to a Debt Group Members, a fraction determined by dividing (x) the number of Series A Preferred Stock held by such Debt Group Member or its Related Funds on the Effective Date and (y) the total number of Series A Preferred Stock owned
by all of the Exercising Group Members and their respective Related Funds as of the Effective Date.
“Redemption Date” means a Voluntary Redemption Date or a Mandatory Redemption Date, as applicable.
“Redemption Dividend Amount” means, as of a Redemption Date and in respect of each share of Series A Preferred Stock being redeemed on such Redemption Date, the Dividends accrued on the Liquidation Preference of such share, and not otherwise a part of the Liquidation Preference, from, and including, the last Dividend Payment Date immediately preceding such Redemption Date on which all Dividends then due were compounded or paid in cash to, but excluding, such Redemption Date.
“Redemption Notice” shall have the meaning set forth in Section 8(a).
“Register” means the records maintained by the Registrar reflecting ownership of the shares of Series A Preferred Stock issued in book-entry form pursuant to Section 19(a), or of the definitive stock certificates issued pursuant to Section 19(c).
“Registrar” initially means American Stock Transfer & Trust Company, LLC, the Corporation’s duly appointed registrar for the Series A Preferred Stock and any successor appointed under Section 14.
“Related Fund” means, with respect to a Backstop Party, any Affiliates (including at the institutional level) of such Backstop Party or any fund, account (including any separately managed accounts) or investment vehicle that is controlled, managed, advised or sub-advised by such Backstop Party, an Affiliate of such Backstop Party or by the same investment manager, advisor or subadvisor as such Backstop Party or an Affiliate of such Backstop Party. For purposes of this definition:
“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, such Person as of the date on which, or at any time during the period for which, the determination of affiliation is being made (including any Related Funds of such Person); provided that for purposes of this Certificate of Designations, no Backstop Party shall be deemed an Affiliate of the Company Parties or any of their Subsidiaries;
“Company Parties” means the Corporation, Intermediate HoldCo, Reorganized Invacare, Adaptive Switch Laboratories, Inc. a Texas corporation, and Freedom Designs, Inc., a California corporation;
“Subsidiary” means, with respect to any Person, any corporation, partnership, joint venture or other legal entity as to which such Person (either alone or through or together with any other subsidiary or Affiliate), (a) owns, directly or indirectly, more than fifty percent (50%) of the stock or other equity interests, (b) has the power to elect a majority
of the board of directors or similar governing body thereof or (c) has the power to direct, or otherwise control, the business and policies thereof;
“Contract” means any legally binding agreement, contract or instrument, including any loan, note, bond, mortgage, indenture, guarantee, deed of trust, license, franchise, commitment, lease, franchise agreement, letter of intent, memorandum of understanding or other obligation, and any amendments thereto, whether written or oral, but excluding the Plan; and
the term “control” (including the correlative meanings of the terms “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of such Person, whether through the ownership of voting securities, by Contract or otherwise.
“Relevant Stock Exchange” means, as of any date, the principal U.S. national securities exchange on which the Common Stock is then listed.
“Reorganized Invacare” means Invacare Corporation, a corporation organized under the laws of Ohio, following its emergence from the voluntary bankruptcy proceedings commenced before the Bankruptcy Court on January 31, 2023.
“Reorganized Invacare Common Stock” means the common stock, without par value, of Reorganized Invacare.
“Reorganized Invacare Fundamental Change” means the consummation, at any time after the Effective Date, of (A) any transaction immediately following the consummation of which Reorganized Invacare ceases to be a Wholly-Owned Subsidiary of the Corporation; (B) the voluntary or involuntary liquidation, winding‑up or dissolution of Reorganized Invacare, (C) any consolidation, merger, binding share exchange, or other combination pursuant to which the Reorganized Invacare Common Stock will be converted into, or exchanged for, stock, other securities, or other property or assets (including cash), or a combination thereof, in each case after which Reorganized Invacare will no longer be a Wholly-Owned Subsidiary of the Corporation; or (D) any sale, lease, or other transfer or disposition in one transaction or a series of transactions of all or a material portion of the consolidated assets of Reorganized Invacare and its Subsidiaries, taken as a whole, to any Person other than the Corporation or any of the Corporation’s Wholly‑Owned Subsidiaries (a “material portion” of the consolidated assets of Reorganized Invacare and its Subsidiaries, taken as a whole shall include, without limitation, assets sold, leased or transferred which results in net proceeds in excess of $10,000,000).
“Reorganized Invacare Warrants” means those certain Warrants for Reorganized Invacare common stock issued by Reorganized Invacare pursuant to the Master Equity Agreement.
“Restricted Debt Transaction” shall have the meaning set forth in Section 6(f).
“Rights Offering” shall have the meaning set forth in the Plan.
“Scheduled Trading Day” means any day that is scheduled to be a Trading Day.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
“Senior Stock” means each class or series of capital stock of the Corporation the terms of which expressly provide that such class or series shall rank senior to the Series A Preferred Stock as to dividend rights and/or distribution rights upon the Corporation’s liquidation, winding‑up or dissolution, including the Series B Preferred Stock.
“Series A Preferred Stock” shall have the meaning set forth in Section 1 of this Certificate of Designations.
“Series B Preferred Stock” means the series of Preferred Stock consisting of ___________ shares of Preferred Stock designated as the “Series B Preferred Stock”.
“Subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP, as well as any other corporation, limited liability company, partnership, association or other entity (a) of which equity interests representing more than 50.0% of the equity or more than 50.0% of the ordinary voting power or, in the case of a partnership, more than 50.0% of the general partnership interests are, as of such date, owned, controlled or held, or (b) that is, as of such date, otherwise controlled, by the parent or one or more Subsidiaries of the parent or by the parent and one or more Subsidiaries of the parent.
“Trading Day” means a day on which (i) there is no Market Disruption Event and (ii) trading in Common Stock generally occurs on the Relevant Stock Exchange; provided that if the Common Stock is not listed or admitted for trading, “Trading Day” means any Business Day.
“Transfer Agent” shall initially mean American Stock Transfer & Trust Company, LLC, the Corporation’s duly appointed transfer agent for the Series A Preferred Stock and any successor appointed under Section 14.
“Voluntary Conversion” shall have the meaning set forth in Section 10(a).
“Voluntary Redemption Date” shall have the meaning set forth in Section 8(a).
“VWAP” per share of Common Stock on any Trading Day means the per share volume‑weighted average price in respect of the period from the scheduled open of trading until the scheduled close of trading of the primary trading session on the Relevant Stock Exchange on such Trading Day; provided, that if such volume‑weighted average price is not available on any Trading Day, the market value per share of Common Stock on such Trading Day as determined by a nationally recognized independent investment banking firm retained by the Corporation for this purpose.
“Wholly-Owned Subsidiary” means, with respect to any Person, any Subsidiary of such Person, except that, solely for purposes of this definition, the reference to “more than 50%” in the definition of “Subsidiary” shall be deemed to be replaced by a reference to “100%”.
Section 4 Dividends.
(a) Accrual. From and after the Effective Date, Holders of Series A Preferred Stock shall be entitled to receive cumulative dividends, accruing daily, at the Dividend Rate on the Liquidation Preference thereof (the “Dividends”); when, as, and if declared by the Board of Directors, the Corporation shall pay such Dividends out of funds lawfully available therefor. The Board of Directors shall not be required to declare any Dividends, and any declaration of a Dividends shall be solely at the discretion of the Board of Directors of the Corporation; provided, that prior to the Exit Indebtedness Termination Date no Dividends shall be declared by the Board.
(b) Priority of Dividends. So long as any share of Series A Preferred Stock remains outstanding, no dividend or distribution shall be declared or paid on the Common Stock or any other class or series of Junior Stock. The foregoing limitation shall not apply to:
(i) any dividend or distribution payable in shares of Common Stock or other Junior Stock, together with cash in lieu of any fractional share;
(ii) purchases, redemptions or other acquisitions of Common Stock or other Junior Stock in connection with the administration in the ordinary course of business of any benefit or other incentive plan or employment contract, including (x) the forfeiture of unvested shares of restricted stock or share withholding or other acquisitions or surrender of shares to which the holder may otherwise be entitled upon exercise, delivery or vesting of equity awards (whether in payment of applicable taxes, the exercise price or otherwise), and (y) the payment of cash in lieu of fractional shares;
(iii) purchases or deemed purchases or acquisitions of fractional interests in shares of any Common Stock or other Junior Stock pursuant to the conversion or exchange provisions of such shares of other Junior Stock or any securities exchangeable for or convertible into shares of Common Stock or other Junior Stock;
(iv) any dividends or distributions of rights or Common Stock or other Junior Stock in connection with a stockholders’ rights plan or any redemption or repurchase of rights pursuant to any stockholders’ rights plan; and
(v) the exchange or conversion of Junior Stock for or into other Junior Stock or of Parity Stock for or into other Parity Stock (with the same or lesser aggregate liquidation preference) or Junior Stock and the payment of cash in lieu of fractional shares.
(c) Method of Payment of Dividends.
(i) Dividends shall be payable quarterly and shall compound quarterly and accrue, whether or not earned or declared, from the most recent date on which Dividends have been paid, or, if no Dividends have been paid, from the Effective Date.
(ii) If a Dividend is declared by the Board of Directors, then such Dividend shall be paid in cash.
(iii) If a cash dividend is not declared and paid in cash on a Dividend Payment Date, then in full discharge of any accrual of cash dividends for the corresponding Dividend Accrual Period, the Liquidation Preference of each outstanding share of Series A Preferred Stock, regardless of its date of issue, shall automatically increase on such Dividend Payment Date, pursuant to clause (a) or clause (b), as applicable, of the “Liquidation Preference” definition, by an amount equal to the Dividend Rate multiplied by the Liquidation Preference in effect immediately after the immediately prior Dividend Payment Date (or the Effective Date in respect of the first Dividend period).
Section 5 Liquidation, Dissolution or Winding‑Up.
(a) In the event of any voluntary or involuntary liquidation, winding‑up or dissolution of the Corporation, or if a Deemed Liquidation Event shall occur, each Holder shall be entitled to receive, out of the assets of the Corporation legally available for distribution to its stockholders, on the date (the “Final Distribution Date”) fixed for this purpose by the Corporation, which in the case of the occurrence of a Deemed Liquidation Event shall be no later than 20 Business Days following such occurrence, in respect of each share of Series A Preferred Stock owned by such Holder:
(i) after satisfaction of debt and other liabilities owed to the Corporation’s creditors, holders of shares of any Senior Stock, holders of shares of Series B Preferred Stock and holders of shares of Intermediate HoldCo Preferred Stock but before any payment or distribution is made to holders of any Junior Stock, including the Common Stock, an amount equal to the Liquidation Preference at the time in effect, together with Dividends thereon, from, and including, the last Dividend Payment Date immediately preceding the Final Distribution Date on which all Dividends then due were compounded or paid in cash to, but excluding, the Final Distribution Date (such Dividends amount, the “Liquidation Dividend Amount”); and
(ii) simultaneously with the distribution made to the holders of Common Stock, if any, ratably with such holders, an amount equal to the positive difference, if any, between (a) the fair market value (as determined in good faith by the Board of Directors) of all cash and other distributions to be received on a per-share basis by the holders of Preferred Stock in respect of the Common Stock that would have been received on
conversion had such Preferred Stock been converted to Common Stock immediately prior to the record date for such distribution in accordance with Section 10, and (b) the amount received in respect of the Liquidation Preference at the time in effect pursuant to the immediately preceding paragraph.
(b) If, upon the voluntary or involuntary liquidation, winding‑up or dissolution of the Corporation, the amounts payable with respect to (1) the Liquidation Preference plus the Liquidation Dividend Amount on the shares of the Series A Preferred Stock and (2) the liquidation preference of, and the amount of accrued and unpaid dividends (to, but excluding, the date fixed for liquidation, winding up or dissolution) on, all Parity Stock, if applicable, are not paid in full, the Holders and all holders of any such Parity Stock shall share equally and ratably in any distribution of the Corporation’s assets in proportion to their respective liquidation preferences and amounts equal to the accrued and unpaid dividends to which they are entitled.
(c) After the payment to any Holder of the aggregate amounts set forth in Section 5(a) above, such Holder as such shall have no right or claim to any of the remaining assets of the Corporation.
Section 6 Covenants.
(a) As long as any shares of Series A Preferred Stock remain outstanding, the Corporation shall, unless consented to by holders of a majority of the outstanding shares of Series A Preferred Stock and Series B Preferred Stock, voting together as a single class:
(i) provide the Holders with, (1) as soon as available, and in any event within one hundred twenty (120) days after the end of each fiscal year, audited consolidated balance sheets of the Corporation and any Corporation Subsidiaries as at the end of each such fiscal year and audited consolidated statements of income and cash flows for such year and (2) as soon as available, and in any event within sixty (60) days after the end of each quarterly accounting period in each fiscal year (other than the last fiscal quarter of the fiscal year), unaudited consolidated balance sheets of the Corporation and Corporation Subsidiaries as at the end of each such fiscal quarter and unaudited consolidated statements of income and cash flows for such fiscal quarter. The foregoing notwithstanding, the Corporation shall not be required to provide the Holders with (i) unaudited quarterly financial statements for the quarters ended June 30, 2023 and September 30, 2023 or (ii) audited financial statements for the year ended December 31, 2023 until June 30, 2024;
(ii) upon receipt of written request from Holders of at least 10% of all shares of Series A Preferred Stock and Series B Preferred Stock, taken together as a single class, at the time issued and outstanding, make available to the Holders one or more representatives of the senior management of the Corporation to discuss with the Holders, via secured video conference or
similar telecommunications means, the business and affairs of the Corporation and such other matters as shall be identified in the request to the Corporation; provided, that without the prior written consent of the Corporation, the rights contemplated in this paragraph shall not be exercised more than once per fiscal quarter of the Corporation; and provided, further, that the eligibility of one or more Persons to submit a request pursuant to this Section 6(a)(ii) shall be conclusively presumed if they can demonstrate their ownership of the requisite number of shares of Series A Preferred Stock pursuant to Rule 14a-8 under the Exchange Act (as amended from time to time or any successor rule or regulation) or as otherwise provided in the Bylaws of the Corporation;
(iii) ensure that each of Reorganized Invacare and Intermediate HoldCo remains, at all times, a direct, Wholly-Owned Subsidiary of the Corporation (other than as a result of the issuance of the Intermediate HoldCo Preferred Stock or the issuance or exercise of the Intermediate HoldCo Warrants or the Reorganized Invacare Warrants, respectively);
(iv) not create, nor authorize the creation of, nor issue or obligate itself to issue shares of Preferred Stock other than the issuance of shares of Series B Preferred Stock pursuant to the terms of and in accordance with the Master Equity Agreement;
(v) ensure that substantially all operations within North America are conducted solely through Subsidiaries that are directly or indirectly owned by Reorganized Invacare, and substantially all operations outside of North America are conducted solely through Subsidiaries that are directly or indirectly owned by Intermediate HoldCo; and
(vi) not, and shall cause Intermediate HoldCo not to, conduct, transact or otherwise engage in any business or operations, in each case, other than (1) the ownership of capital stock of Intermediate HoldCo and Reorganized Invacare (in the case of the Corporation), and of such Subsidiaries and other affiliates; (2) the performance of its respective obligations under its organizational documents, and the compliance with all laws, rules, regulations, orders, judgements, decrees, or permits applicable to it; (3) the participation in tax, accounting, cash management, cash pooling, transfer pricing, cost-sharing arrangements and other administrative matters related to it or any of its Subsidiaries; (4) the activities described in Section 6.06(a)(iv) and (v) of the Exit Term Loan Agreement, as in effect on the date hereof; (5) defend or exercise its rights, and discharge its obligations under, the Exit Secured Convertible Notes, the Exit Secured Convertible Tranche I Notes Indenture, and the Exit Secured Convertible Tranche II Notes Indenture; (6) incurring fees, costs and expenses relating to overhead and general operating including
professional fees for legal, tax and accounting issues and paying taxes, providing indemnification for its current and former officers, directors, members of management, managers, employees and advisors or consultants; and (7) activities incidental to the businesses or activities described in the foregoing clauses.
Notwithstanding the foregoing or anything to the contrary herein, in the event that at any point the Master Equity Group Members hold less than a majority of all outstanding shares of Series A Preferred Stock and Series B Preferred Stock, together as a single class, then the provisions of this Section 6(a) shall automatically be null and void, other than Section 6(a)(i).
(b) For so long as any Series B Preferred Stock is outstanding, the Corporation shall not, without the consent of the holders of at least a majority of the outstanding shares of Series A Preferred Stock and Series B Preferred Stock, voting together as a single class:
(i) make any cash payment with respect to any share of Series A Preferred Stock, including pursuant to Section 4, Section 8 or Section 9 hereof; and
(ii) make any payment with respect to any shares of capital stock of Intermediate HoldCo or Reorganized Invacare.
(c) The Corporation will use commercially reasonable efforts to ensure that, to the extent permitted by the Depositary, each of the shares of the Series A Preferred Stock and the Common Stock issuable upon the conversion of the Series A Preferred Stock are eligible for clearance and settlement through the facilities of the Depositary.
(d) Notwithstanding anything to the contrary in this Certificate of Designations, for U.S. federal and other applicable state and local income tax purposes, it is intended that (i) the Series A Preferred Stock will not be treated as “preferred stock” within the meaning of Section 305(b)(4) of the Code and Treasury Regulations Section 1.305-5(a); and (ii) no Holder will be required to include in income any amounts in respect of the Series A Preferred Stock by operation of Section 305(b) or (c) of the Code. The Corporation will, and will cause its Subsidiaries and agents to, report consistently with, and take no positions or actions inconsistent with, the foregoing treatment (including by way of withholding) unless otherwise required by a determination within the meaning of Section 1313(a) of the Code.
(e) If at any time prior to the second anniversary of the Effective Date, the Corporation or any of its Subsidiaries offers to issue or sell, or to enter into any agreement providing for the issuance or sale (contingent or otherwise) which is not prohibited by this Certificate of Designations (each, an “Offer”) of, any capital stock or securities convertible into capital stock of the Corporation (“New Securities”) to any Person (“Offeree”), the Corporation shall offer to sell to each Exit Lender that is an “accredited investor,” as defined in Rule 501(a) of Regulation D of the Securities Act (each, an “Entitled Stockholder”), on the terms set forth in this Section 6(e) a portion of such New Securities equal to (i) the number of such New Securities being offered to such Offeree multiplied by (ii) a fraction (A) the numerator of which is the aggregate number of outstanding shares of Series A Preferred Stock and Series B Preferred Stock
held by such Entitled Stockholder (which for purposes hereof shall include shares held by a depository, broker, financial advisor and/or other nominee for such stockholder) and (B) the denominator of which is the aggregate number of outstanding shares of Series A Preferred Stock and Series B Preferred Stock held by all Entitled Stockholders; provided that if the Corporation requires an Offeree to also purchase other equity securities or debt securities of the Corporation or any of its subsidiaries, any Entitled Stockholder shall also, as a condition to the exercise of such stockholder’s preemptive rights pursuant to this Section 6(e), be required to purchase the same class and type of securities of the Corporation or its subsidiaries on the same terms and conditions; and provided, further, that the term New Securities shall not include securities issued, or to be issued, (A) in a bona fide underwritten public offering having an aggregate offering price of at least $50,000,000; and (B) in transactions not of a capital-raising nature such as, for example, (i) securities issued to employees, officers or directors pursuant to compensation plans, agreements or other arrangements, (ii) securities issued to sellers of assets or entities acquired by the Corporation or any Subsidiary, whether by merger, asset purchase, reorganization or other transaction the primary purpose of which is not to provide financing to the Corporation or its Subsidiaries, or (iii) securities issued as “equity kickers” to unaffiliated parties providing financing to the Corporation or its Subsidiaries.
The Corporation shall deliver to each Entitled Stockholder a notice (the “Offer Notice”), describing in reasonable detail the New Securities being offered, the proposed purchase price thereof (which may be a price range), the expected use of proceeds thereof, the payment terms and conditions and the maximum amount and percentage of the offering such Entitled Stockholder is entitled to purchase.
In order to exercise its purchase rights hereunder, an Entitled Stockholder must, within 10 Business Days after delivery of the Offer Notice, deliver a written notice to the Corporation stating the exercise of such purchase right and the quantity or percentage of New Securities to be purchased by such Entitled Stockholder, which quantity or percentage may be all or any portion of the amount to which such Entitled Stockholder is entitled pursuant to this Section 6(e).
In the event any Entitled Stockholder fails to exercise its rights under this Section 6(e) with respect to any particular New Securities within such 10-Business Day period, the Corporation shall have 180 days thereafter to sell such New Securities, at a price not more favorable and upon general terms not materially more favorable to the purchaser of such New Securities than as specified in the Offer Notice. Any New Securities that are not sold within such 180-day period shall not thereafter be issued or sold without first being reoffered to the Entitled Stockholders pursuant to this Section 6(e).
Notwithstanding anything to the contrary set forth in this Section 6(e), the Corporation may comply with the provisions of this Section 6(e) by first selling to an Offeree, subject to the conditions contained in the following sentence, all of the New Securities contemplated to be issued and sold by the Corporation in an Offer and promptly thereafter offering to sell to the Entitled Stockholders the number of such New Securities such Entitled Stockholders are entitled to purchase pursuant to this Section 6(e). In the event that any Entitled Stockholder purchases securities from the Corporation pursuant to this Section 6(e), upon the request of the Board of Directors, the Offeree may, in its discretion, sell to the Corporation for a price per share of Common Stock or other equity security or debt security equal to the original
cost thereof, the same number and class of shares of Common Stock or other equity security or debt security acquired by the Offeree that are purchased by such Person(s) exercising their rights under this Section 6(e); provided that in the event the Offeree elects not to sell such securities back to the Corporation pursuant to this sentence, each Person exercising their rights under this Section 6(e) shall be entitled to purchase an amount of additional New Securities from the Corporation so that such Person’s Percentage Ownership vis-à-vis such Offeree is the same as it would have been had the Offeree sold such shares of Common Stock or other equity securities or debt securities back to the Corporation pursuant to this sentence.
In the event that the participation in the Offer by an Entitled Stockholder would require under applicable law the registration or qualification of such securities or of any Person as a broker or dealer or agent with respect to such securities, such Entitled Stockholder shall not have the right to participate in the Offer. Without limiting the generality of the foregoing, it is understood and agreed that neither the Corporation nor any Subsidiary shall be under any obligation to effect a registration of such securities under the Securities Act or similar state statutes.
Notwithstanding the foregoing or anything to the contrary herein, the provisions of this Section 6(e) shall not apply to any Offer of New Securities made pursuant to, as a result of or related to the ABL Credit Agreement, the Master Equity Agreement or the transactions contemplated thereby.
(f) If at any time prior to September 30, 2024, the Corporation or any of its Subsidiaries, offer to enter into any agreement, negotiate with, or consummate any transaction that would result in the Company or any of its Subsidiaries incurring Debt (a “Restricted Debt Transaction”), the Corporation shall offer to each Debt Group Member the right to participate in such Restricted Debt Transaction and fund such Debt Group Member’s Pro Rata Portion the aggregate principal amount of such Restricted Debt Transaction on the terms set forth in this Section 6(f).
(i) If the Corporation or any of its Subsidiaries wishes to enter into any agreement or consummate a Restricted Debt Transaction, the Corporation shall deliver to each Debt Group Member a prior written notice (the “Debt Offer Notice”) describing the material financial and other terms and conditions of such offer (the “Material Terms”), including, without limitation and as applicable, the principal, maturity date, interest rates, collateral, default provisions, guarantors premiums and prepayment penalties and each Debt Group Member’s Pro Rata Portion of the aggregate principal amount of such Restricted Debt Transaction.
(ii) In order to exercise its funding rights hereunder, a Debt Group Member must, within 5 Business Days after delivery of the Debt Offer Notice (the “Exercise Period”), deliver a written notice to the Corporation stating that the Debt Group Member exercises its participation and funding right and the amount such Debt Group Member, or any of its Related Funds, shall fund in accordance with the Material Terms, which amount shall be all or any portion of the Debt Group
Member’s Pro Rata Portion for such Restricted Debt Transaction (an “Exercising Group Member”).
(iii) In the event that any Debt Group Member fails to exercise its rights under this Section 6(f) with respect to any particular Restricted Debt Transaction within the Exercise Period (a “Declining Group Member”), the Corporation or its applicable Subsidiary may consummate the Restricted Debt Offer on Material Terms that are the same or more favorable to the Corporation or its applicable Subsidiary as the Material Terms set forth in the Debt Offer with any third party funding any Declining Members’ Pro Rata Portion of the Restricted Debt Transaction or any portion of the Restricted Debt Transaction not otherwise funded by Exercising Group Members. If such Restricted Debt Transaction is not consummated within such 20 day period, the terms and conditions of this Section 6(f) will again apply and Corporation shall not, and shall not permit any Subsidiary of the Corporation to enter into any Restricted Debt Transaction without affording all of the Debt Group Members the right to participate in such Restricted Debt Transaction on the terms and conditions of this Section 6(f).
Section 7 Voting Power.
(a) General. Except as otherwise provided by law, the Charter, or this Certificate of Designations, each Holder shall be entitled to cast, voting together as a single class with the holders of Series B Preferred Stock and Common Stock as a single class, with respect to any matter subject to the approval of holders of the Common Stock, a number of votes and fractions thereof equal to the number of shares of Common Stock and fractions thereof into which each share of Series A Preferred Stock held by such Holder could have been converted on the record date for the determination of the holders of Common Stock entitled to vote thereon. Except as otherwise provided by law, the Charter or this Certificate of Designations, each Holder shall be entitled to provide, acting together with the holders of Series B Preferred Stock and Common Stock as a single class, in connection with any matter submitted to the written consent of the holders of Common Stock, written consent with respect of the number of shares of Common Stock and fractions thereof into which each share of Series A Preferred Stock held by such Holder could have been converted on the record or other date used for the determination of the holders of Common Stock entitled to provide written consent thereon.
(b) Other Voting Powers. To the extent not otherwise contemplated by or permitted under the Master Equity Agreement, so long as any shares of Series A Preferred Stock are outstanding, the Corporation shall not, without the affirmative vote or consent of the holders of record of at least a majority of the outstanding shares of Series A Preferred Stock and Series B
Preferred Stock, voting together as a single class, given in person or by proxy, either in writing without a meeting or by vote at an annual or special meeting of stockholders:
(i) amend or alter the provisions of the Charter so as to authorize or create, or increase the authorized number of, any class or series of capital stock of the Corporation which would be Senior Stock or Parity Stock;
(ii) amend, alter or repeal any provision of the Charter, this Certificate of Designations, or the Bylaws so as to increase the authorized number of shares of Series A Preferred Stock, or to adversely affect the powers, preferences and rights, and the qualifications, limitations or restrictions thereto, of the Series A Preferred Stock, or the obligations of the Corporation to the Holders thereunder or hereunder;
(iii) issue, following the Effective Date, any shares of capital stock of the Corporation other than Common Stock;
(iv) sell, transfer, pledge, or otherwise dispose of any securities issued by Intermediate HoldCo or Reorganized Invacare;
(v) allow the issuance of any capital stock by Intermediate HoldCo or Reorganized Invacare to any Person other than the Corporation;
(vi) consummate, allow to become effective, or approve the consummation of a Deemed Liquidation Event;
(vii) authorize or allow to become effective an Intermediate HoldCo Fundamental Change or a Reorganized Invacare Fundamental Change; or
(viii) take any action to liquidate, dissolve or wind up the Corporation.
(c) Any action required or permitted to be taken at any annual meeting or special meeting of the Holders may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing or by electronic transmission, setting forth the action so taken, is or are signed by the Holders of outstanding shares of Series A Preferred Stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all holders of shares of Series A Preferred Stock entitled to vote thereon were present and voted.
(d) The rules and procedures for calling and conducting any meeting of the Holders (including, without limitation, the fixing of a record date in connection therewith), the solicitation and use of proxies at such a meeting, the obtaining of written consents and any other procedural aspect or matter with regard to such a meeting or such consents shall be governed by any rules the Board of Directors, in its discretion, may adopt from time to time, which rules and procedures shall conform to the requirements of the Charter, the Bylaws, applicable law, and the
rules of any national securities exchange or other trading facility on which the Series A Preferred Stock is listed or traded at the time.
(e) Notwithstanding the foregoing or anything to the contrary herein, in the event that at any point the Master Equity Group Members hold less than a majority of all outstanding shares of Series A Preferred Stock and Series B Preferred Stock, together as a single class, then the provisions of Section 7(a) through Section 7(e) shall automatically be null and void and the except as otherwise required by applicable law, the Charter, or this Certificate of Designations, holders of Series A Preferred Stock shall not be entitled to any vote on matters submitted to the Corporation’s stockholders for approval. In any case in which the holders of the Series A Preferred Stock shall be entitled to vote pursuant to applicable law, the Charter, or this Certificate of Designation, each holder of Series A Preferred Stock shall be entitled to cast with the holders of Series B Preferred Stock and Common Stock, voting together as a single class; a number of votes and fractions thereof equal to the number of shares of Common Stock and fractions thereof into which each share of Series A Preferred Stock held by such Holder could have been converted on the record date for the determination of the holders of Common Stock entitled to vote thereon. In any case in which the holders of the Series A Preferred Stock shall be entitled to vote pursuant to applicable law, the Charter, or this Certificate of Designation, each Holder shall be entitled to provide, acting together with the holders of Series B Preferred Stock and Common Stock as a single class, written consent with respect of the number of shares of Common Stock and fractions thereof into which each share of Series A Preferred Stock held by such Holder could have been converted on the record or other date used for the determination of the holders of Common Stock entitled to provide written consent thereon.
Section 8 Redemption at the Election of the Company.
(a) Following the occurrence of the Exit Indebtedness Termination Date and after redemption of all Series B Preferred Stock and all Intermediate Holdco Preferred Stock, the Corporation shall have the right, at any time and from time to time, to call for redemption all or some of the shares of Series A Preferred Stock at the time outstanding, by written notice (a “Redemption Notice”) sent to the Holders not less than 20 and not more than 35 calendar days prior to the date designated by the Corporation for such redemption (each such date, a “Voluntary Redemption Date”).
(b) The Redemption Notice shall identify the shares of Series A Preferred Stock to be redeemed and shall state:
(i) that Holders have the right to convert the shares of Series A Preferred Stock called for redemption, and the Conversion Price then in effect;
(ii) the Voluntary Redemption Date;
(iii) that any definitive stock certificates evidencing shares of Series A Preferred Stock being redeemed must be presented and surrendered to the
Registrar and Transfer Agent to receive the amounts due in connection with such redemption;
(iv) the name and address of the Registrar and Transfer Agent;
(v) that Holders who wish to convert shares of Series A Preferred Stock must exercise their right to do so in the form prescribed by Section 10(b) prior to 5:00 p.m., New York City time, on the Trading Day immediately preceding the Voluntary Redemption Date; and
(vi) that, unless the Corporation defaults on the payment of the amounts specified in Section 8(c) below, Dividends in respect of all shares of Series A Preferred Stock called for redemption shall cease to accrue on the Voluntary Redemption Date.
If some of the shares of Series A Preferred Stock to be redeemed are represented by a Global Certificate, the Corporation shall modify such notice to the extent necessary to accord with the procedures of the Depositary applicable to redemptions.
The Redemption Notice may, at the Corporation’s discretion, state that any such redemption is subject to the satisfaction of one or more conditions precedent.
(c) On the Voluntary Redemption Date, the Corporation shall pay to each Holder of shares to be redeemed on such date, per each share of Series A Preferred Stock being so redeemed, an amount equal to the Liquidation Preference at the time in effect, together with the corresponding Redemption Dividend Amount accrued thereon. After the payment to such Holder of the aggregate amount of the Liquidation Preference at the time in effect and the Redemption Dividend Amount corresponding to all of such Holder’s shares of Series A Preferred Stock being redeemed, such Holder shall have no rights or claims to any remaining assets of the Corporation with respect to such shares.
(d) The delivery of a notice of redemption by the Corporation pursuant to Section 8(a) above shall not impair the Holders’ right to convert their respective shares of Series A Preferred Stock as provided in Section 10 below.
(e) Any shares of Series A Preferred Stock that are redeemed pursuant to this Section 8 or pursuant to Section 9 shall be cancelled and may not be re-issued or included in authorized Series A Preferred Stock.
Section 9 Mandatory Redemption Offer.
(a) The provisions of this Section shall apply upon the occurrence, after the Exit Indebtedness Termination Date and after redemption of all Series B Preferred Stock and
Intermediate HoldCo Preferred Stock,, of any of the following (each, a “Mandatory Redemption Event”):
(i) a Change of Control;
(ii) an Intermediate HoldCo Fundamental Change; or
(iii) a Reorganized Invacare Fundamental Change.
(b) Upon the occurrence of a Mandatory Redemption Event, the Corporation shall promptly, and in no event more than five Business Days from the date of such occurrence, either (i) call for redemption pursuant to Section 8 all outstanding shares of Series A Preferred Stock and send to all Holders a Redemption Notice as provided therein, or (ii) make a written offer to all Holders (the “Mandatory Redemption Offer”) to redeem all of the issued and outstanding shares of Series A Preferred Stock on a date selected by the Corporation (such date, the “Mandatory Redemption Date”) that shall be not earlier than 20 and no more than 35 calendar days after the date the offer is delivered to the Holders. The Mandatory Redemption Offer shall specify:
(i) the nature of the Mandatory Redemption Event occurred;
(ii) the date of the Mandatory Redemption Event;
(iii) the Mandatory Redemption Date;
(iv) the last date on which a Holder may accept the Corporation’s offer to redeemed the shares of Series A Preferred Stock;
(v) that any definitive stock certificates evidencing shares of Series A Preferred Stock being redeemed must be presented and surrendered to the Registrar and Transfer Agent to receive the amounts due in connection with such redemption;
(vi) the name and address of the Registrar and Transfer Agent; and
(vii) that, unless the Corporation defaults on the payment of the amounts specified in Section 9(d) below, Dividends in respect of all shares of Series A Preferred Stock tendered for redemption shall cease to accrue on the Mandatory Redemption Date.
If some of the shares of Series A Preferred Stock to be redeemed are represented by a Global Certificate, the Corporation shall modify such notice to the extent necessary to accord with the procedures of the Depositary applicable to redemptions.
(c) Should the funds legally available to the Corporation for the redemption of the Series A Preferred Stock not be sufficient to pay to all Holders all amounts due pursuant to Section 9(d) below in respect of all shares of Series A Preferred Stock at the time outstanding,
the Mandatory Redemption Offer shall (i) indicate the total amount of funds legally available to the Corporation for redemptions of the Series A Preferred Stock, (ii) include an explanation of how such amount was determined, and (iii) set forth the method, or methods, of how the funds will be allocated among Holders, in the event the total number of shares of Series A Preferred Stock tendered for redemption exceeds the funds the Corporation has legally available for that purpose; provided, that any such method shall ensure that each share selected for redemption is redeemed in full.
(d) On the Mandatory Redemption Date, the Corporation shall pay to each Holder of shares of Series A Preferred Stock being redeemed, in respect of each such share, an amount equal to the Liquidation Preference at the time in effect, together with the corresponding Redemption Dividend Amount accrued thereon.
(e) After the payment by the Corporation to the respective Holder of the aggregate amount of the Liquidation Preference at the time in effect and the corresponding Redemption Dividend Amount in respect of each share of Series A Preferred Stock being redeemed, such Holder shall have no rights or claims to any remaining assets of the Corporation with respect to such share.
(f) Following each Mandatory Redemption Date on which the Corporation is unable to redeem all shares of Series A Preferred Stock timely tendered for redemption due to the insufficiency of funds legally available for that purpose, the Corporation shall be required to send to the Holders additional Mandatory Redemption Offers within 20 Business Days from each date on which the Corporation shall receive additional payments or proceeds from the transaction or occurrence that constituted the original Mandatory Redemption Event from which such Mandatory Redemption Date arose, provided that at least $10,000,000.00 (or such lesser amount as the Board of Directors may determine in its discretion) are legally available to pay for additional redemptions of Series A Preferred Stock.
(g) The delivery of a Mandatory Redemption Offer by the Corporation as provided above shall not impair the Holders’ right to convert their respective shares of Series A Preferred Stock as provided in Section 10 below.
(h) In connection with any redemption of Series A Preferred Stock pursuant to this Section 9, the Corporation shall (i) comply with the provisions of Rule 13e-4, Rule 14e-1 (or any successor provision) and any other tender offer rules under the Exchange Act that may then be applicable; and (ii) otherwise comply with all federal and state securities laws. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Section 9, the Corporation’s compliance with such laws and regulations shall not in and of itself cause a breach of its obligations under this Section 9.
(i) For the avoidance of doubt, the Corporation may waive the provisions of this Section 9, including the occurrence of a Mandatory Redemption Event, and all rights, preferences and privileges with respect thereto, for all Holders with the applicable approvals or consents set forth in Section 18.
Section 10 Voluntary Conversion at the Option of the Holder.
(a) Subject to satisfaction of the conversion procedures set forth below, the Holders shall have the option to convert (a “Voluntary Conversion”), at any time on or after the Free Convertibility Date, a share of Series A Preferred Stock into a number of shares of Common Stock equal to the quotient obtained by dividing (x) the Liquidation Preference as of the calendar day immediately preceding the Conversion Date, into (y) the Conversion Price in effect on the Conversion Date.
(b) To effect a Voluntary Conversion, a Holder must:
(i) complete and manually sign the conversion notice on the back of the Series A Preferred Stock certificate or a facsimile of such conversion notice;
(ii) deliver the completed conversion notice and the certificated shares of Series A Preferred Stock to be converted to the Conversion and Dividend Disbursing Agent;
(iii) if required, furnish appropriate endorsements and transfer documents; and
(iv) if required, pay all transfer or similar taxes or duties, if any.
Notwithstanding the foregoing, to effect a Voluntary Conversion of shares of Series A Preferred Stock held in global form, the Holder must, in lieu of the foregoing, comply with the applicable procedures of DTC (or any other Depositary for the shares of Series A Preferred Stock held in global form appointed by the Corporation).
The Voluntary Conversion shall be effective on the date on which a Holder has satisfied the foregoing requirements, to the extent applicable (“Conversion Date”).
Subject to any applicable rules and procedures of the Depositary, if more than one share of the Series A Preferred Stock is surrendered for conversion at one time by or for the same Holder, the number of full shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares of the Series A Preferred Stock so surrendered.
A Holder shall not be required to pay any transfer or similar taxes or duties relating to the issuance or delivery of Common Stock upon conversion, but such Holder shall be required to pay any tax or duty that may be payable relating to any transfer involved in the issuance or delivery of Common Stock in a name other than the name of such Holder.
A certificate representing the shares of Common Stock issuable upon conversion shall be issued and delivered to the converting Holder or, if the Series A Preferred Stock being converted are in book‑entry form, the shares of Common Stock issuable upon conversion shall be delivered to the converting Holder through book‑entry transfer through the facilities of the Depositary, to the extent permitted by the Depositary, in each case, together with delivery by the Corporation to
the converting Holder of any cash to which the converting Holder is entitled, only after all applicable taxes and duties, if any, payable by such converting Holder have been paid in full, and such shares and cash will be delivered on the latest of (i) the second Business Day immediately succeeding the Conversion Date, and (ii) the Business Day after the Holder has paid in full all applicable taxes and duties, if any.
The Person or Persons entitled to receive the shares of Common Stock issuable upon a Voluntary Conversion shall be treated for all purposes as the record holder(s) of such shares of Common Stock as of the Close of Business on the applicable Conversion Date. Prior to the Close of Business on such applicable Conversion Date, the shares of Common Stock issuable upon conversion of any shares of Series A Preferred Stock shall not be deemed to be outstanding for any purpose, and Holders shall have no rights, powers or preferences with respect to such shares of Common Stock, including voting powers, rights to respond to tender offers for the Common Stock and rights to receive any dividends or other distributions on the Common Stock, by virtue of holding shares of Series A Preferred Stock.
In the event that a Voluntary Conversion is effected with respect to shares of Series A Preferred Stock representing less than all the shares of the Series A Preferred Stock held by a Holder, upon such Voluntary Conversion, as applicable, the Corporation shall execute and instruct the Transfer Agent and Registrar to countersign and deliver to the Holder thereof, at the expense of the Corporation, a certificate evidencing the shares of Series A Preferred Stock as to which Voluntary Conversion was not effected, or, if such Holder’s Series A Preferred Stock is held in book‑entry form, the Corporation shall cause the Transfer Agent and Registrar to reduce the number of shares of the Series A Preferred Stock represented by the global certificate by making a notation on Schedule I attached to such global certificate, or otherwise notate such reduction in the Register maintained by such Transfer Agent and Registrar.
(c) In the event that a Holder shall not by written notice designate the name in which shares of Common Stock to be issued upon conversion of such Series A Preferred Stock should be registered or, if applicable, the address to which the certificate or certificates representing such shares of Common Stock should be sent, the Corporation shall be entitled to register such shares, and make such payment, in the name of the Holder as shown on the records of the Corporation and, if applicable, to send the certificate or certificates representing such shares of Common Stock to the address of such Holder shown on the records of the Corporation.
(d) If the Corporation has a shareholder rights plan in effect upon a conversion of shares of Series A Preferred Stock, each share of Common Stock issued upon such conversion shall be entitled to receive the appropriate number of rights, if any, and the certificates or book entries representing the shares of Common Stock issued upon such conversion shall bear such legends, if any, in each case as may be provided by the terms of any such shareholder rights plan, as the same may be amended from time to time. However, if, prior to a conversion of Series A Preferred Stock, the rights have separated from the shares of Common Stock in accordance with the provisions of the applicable shareholder rights plan, the provisions of Section 13(a)(ii) shall apply to such separated rights.
Section 11 Reservation of Common Stock.
(a) The Corporation shall at all times reserve and keep available out of its authorized and unissued Common Stock, solely for issuance upon the conversion of shares of Series A Preferred Stock as herein provided, free from any preemptive or other similar rights, a number of shares of Common Stock equal to the maximum number of shares of Common Stock deliverable upon conversion of all shares of Series A Preferred Stock (which shall initially equal 98,067,027 shares of Common Stock). For purposes of this Section 11(a), the number of shares of Common Stock that shall be deliverable upon the conversion of all outstanding shares of Series A Preferred Stock shall be computed as if at the time of computation all such outstanding shares were held by a single Holder.
(b) Notwithstanding the foregoing, the Corporation shall be entitled to deliver upon conversion of shares of Series A Preferred Stock or as payment of any dividend on such shares of Series A Preferred Stock, as herein provided, shares of Common Stock reacquired and held in the treasury of the Corporation (in lieu of the issuance of authorized and unissued shares of Common Stock), so long as any such treasury shares are free and clear of all liens, charges, security interests or encumbrances (other than liens, charges, security interests and other encumbrances created by the Holders).
(c) All shares of Common Stock delivered upon conversion or redemption of, or as payment of a dividend on, the Series A Preferred Stock shall be duly authorized, validly issued, fully paid and non‑assessable, free and clear of all liens, claims, security interests and other encumbrances (other than liens, charges, security interests and other encumbrances created by the Holders) and free of preemptive rights.
(d) The Corporation hereby covenants and agrees that, if at any time the Common Stock shall be listed on any national securities exchange or automated quotation system, the Corporation shall, if permitted by the rules of such exchange or automated quotation system, list and use its commercially reasonable efforts to keep listed, so long as the Common Stock shall be so listed on such exchange or automated quotation system, all Common Stock issuable upon conversion of the Series A Preferred Stock.
Section 12 Fractional Shares.
(a) No fractional shares of Common Stock shall be issued to Holders as a result of any conversion of shares of Series A Preferred Stock.
(b) In lieu of any fractional shares of Common Stock otherwise issuable in respect of the aggregate number of shares of the Series A Preferred Stock of any Holder that are converted hereunder, the Corporation shall pay an amount in cash (computed to the nearest cent) equal to the product of (i) that same fraction and (ii) the Fair Value of the Common Stock as of the Trading Day immediately preceding the Conversion Date.
Section 13 Anti‑Dilution Adjustments to the Conversion Price.
(a) The Conversion Price shall be adjusted as set forth in this Section 13, except that the Corporation shall not make any adjustments to the Conversion Price if each Holder is eligible to participate (other than in the case of a share split or share combination), at the same time and upon the same terms as holders of Common Stock and solely as a result of holding the Series A Preferred Stock, in any of the transactions set forth in Section 13(a)(i)‑(iv) without having to convert their Series A Preferred Stock as if such Holder held the number of shares of Common Stock into which the Series A Preferred Stock held by such Holder on the record date for such transaction could be converted into on such date.
(i) If the Corporation shall, after the Effective Date, (A) pay a dividend or make a distribution or bonus issue on any of its Common Stock in Common Stock, (B) subdivide (by way of a share split or otherwise) or reclassify any of its outstanding Common Stock into a greater number of shares, or (C) combine or reclassify (by way of reverse stock split or otherwise) any of its outstanding Common Stock into a smaller number of shares, then, in each event, the Conversion Price in effect immediately prior to the Close of Business on the relevant record date (in the case of the preceding clause (A)) or immediately prior to the Open of Business on the effective date of the subdivision or combination (in the case of the preceding clauses (B) and (C)) for such dividend, distribution, bonus issue, subdivision, reclassification, or combination shall be adjusted to the number obtained by multiplying such Conversion Price by a fraction (i) the numerator of which shall be the total number of Common Stock issued and outstanding immediately prior to the Close of Business on the relevant record date (in the case of the preceding clause (A)) or immediately prior to the Open of Business on the effective date of the subdivision, reclassification, or combination (in the case of the preceding clauses (B) and (C)) for such dividend, distribution, bonus issue, subdivision, reclassification, or combination, and (ii) the denominator of which shall be the number of Common Stock issued and outstanding immediately after giving effect to such dividend, distribution, bonus issue, subdivision, reclassification or combination.
Any adjustment made under this Section 13(a)(i) shall become effective immediately after the Close of Business on the relevant record date for such dividend, distribution, or bonus issue (in the case of clause (A)), or immediately after the Open of Business on the effective date for such subdivision, reclassification, or combination (in the case of clauses (B) and (C)). If any dividend or distribution of the type set forth in this Section 13(a)(i) is declared but not so paid or made, the Conversion Price shall be immediately readjusted, effective as of the date the Board of Directors or a committee thereof determines not to pay such dividend, distribution, or bonus issue to the Conversion Price that would then be in effect if such dividend, distribution, or bonus issue had not been declared. For the purposes of this Section 13(a)(i), the number of shares of Common Stock outstanding at any time shall not include shares that the Corporation holds in treasury. The Corporation shall not pay any dividend or make any distribution on shares of Common Stock that it holds in treasury.
(ii) If the Corporation issues to holders of its Common Stock, or shall fix a record date for the determination of holders of its Common Stock to receive, any right to subscribe for additional Common Stock pursuant to a rights offering at a price per share of Common Stock less than the Fair Value per share of Common Stock as of the Trading Day immediately preceding the date of announcement of such issuance (a “Rights Offering”), then the Conversion Price shall, with effect at the Open of Business on the Business Day immediately following the date on which such Rights Offering is consummated, be decreased to a price determined in accordance with the following formula:
CP2 = CP1 * (O + Y) ÷ (O + X)
where,
“CP2” shall mean the Conversion Price in effect immediately after the adjustment provided in this Section 13(a)(ii);
“CP1” shall mean the Conversion Price in effect immediately before the adjustment provided in this Section 13(a)(ii);
“O” shall mean the number of Common Stock outstanding immediately before the consummation of the Rights Offering;
“X” shall mean the number of Common Stock issuable upon exercise of such rights pursuant to the Rights Offering; and
“Y” shall mean the number of Common Stock equal to the aggregate price payable for the Common Stock in the Rights Offering divided by the Fair Value per share of Common Stock as of the Trading Day immediately preceding the announcement date of the Rights Offering.
Any adjustment made under this Section 13(a)(ii) shall be made successively whenever any such rights, options or warrants are issued and shall become effective as of the opening of business on the first Trading Day immediately following the date on which the Rights Offering is consummated.
For the purpose of this Section 13(a)(ii), in determining whether any rights, options or warrants entitle the holders of Common Stock to subscribe for or purchase shares of Common Stock at less than such Fair Value per share as of the Trading Day immediately preceding the date of announcement of such issuance, and in determining the aggregate offering price of such shares of Common Stock, there shall be taken into account any consideration received by the Corporation for such rights, options or warrants and any amount payable on exercise or conversion thereof, the
value of such consideration, if other than cash, to be determined by the Board of Directors or a committee thereof.
(iii) If the Corporation shall, at any time or from time to time after the Effective Date, distribute to the holders of Common Stock any dividend or other distribution of cash, evidences of its indebtedness, other securities or other properties or assets, or any options, warrants or other rights to subscribe for or purchase any of the foregoing (in each case other than (i) dividends or distributions of Common Stock referred to in Section 13(a)(i), or (ii) distributions of rights pursuant to Section 13(a)(ii)), then the Conversion Price shall be decreased to a price determined by multiplying the Conversion Price then in effect by a fraction, the numerator of which shall be the Fair Value per share of Common Stock as of the Trading Day immediately preceding the record date for such distribution less the sum of (A) the cash portion, if any, of such distribution per share of Common Stock outstanding (exclusive of any treasury shares) on the record date for such distribution plus (B) the fair market value (as determined in good faith by the Board of Directors) on the record date for such distribution of that portion, if any, of such distribution consisting of evidences of indebtedness, other securities, properties, assets, options, warrants or subscription or purchase rights, expressed as an amount per share of Common Stock outstanding as of the record date for such distribution (exclusive of any treasury shares), and the denominator of which shall be the Fair Value per share of Common Stock as of the Trading Day immediately preceding the record date for such distribution. The adjustments required by this Section 13(a)(iii) shall be made whenever any such distribution occurs retroactive to the record date for the determination of shareholders entitled to receive such distribution.
(iv) If the Corporation or any of its Subsidiaries shall, at any time or from time to time after the Effective Date, make a payment in respect of a tender or exchange offer, to the extent that the cash and value of any other consideration included in the payment per share of Common Stock exceeds the Fair Value per share of Common Stock as of the Trading Day immediately following the last date on which tenders or exchanges may be made pursuant to such tender or exchange offer (the “Expiration Date”), the Conversion Price shall be decreased to a price determined based on the following formula:
CP2 = CP1 * (FMV – P) ÷ FMV
where,
“CP2” shall mean the Conversion Price in effect immediately after the adjustment provided in this Section 13(a)(iv);
“CP1” shall mean the Conversion Price in effect immediately before the adjustment provided in this Section 13(a)(iv);
“FMV” shall mean the product of (x) the total number of shares of Common Stock issued and outstanding immediately prior to the Expiration Date (without giving effect to the purchase of shares accepted for purchase or exchange in such tender or exchange offer), and (y) the Fair Value per share of Common Stock as of the Trading Day immediately following the Expiration Date; and
“P” shall mean the excess paid or payable by the Corporation or its Subsidiary in connection with the tender or exchange offer, over the amount that would have been paid or payable if all shares of Common Stock eligible to participate in the tender or exchange offer were payable at the Fair Value per share of Common Stock as of the Trading Day immediately following the Expiration Date.
The Corporation shall not adjust the Conversion Price:
(A) upon the issuance of shares of Common Stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on securities of the Corporation and the investment of additional optional amounts in Common Stock under any plan;
(B) upon the issuance of any shares of Common Stock or rights or warrants to purchase such shares of Common Stock pursuant to any present or future benefit or other incentive plan or program of or assumed by the Corporation or any of its Subsidiaries;
(C) upon the issuance of any shares of Common Stock pursuant to any option, warrant, right or exercisable, exchangeable or convertible security not described in (B) above and outstanding as of the Effective Date;
(D) for a change in par value of the Common Stock; or
(E) for any other issuance of shares of Common Stock or any securities convertible into or exchangeable for shares of Common
Stock or the right to purchase shares of Common Stock or such convertible or exchangeable securities, except as otherwise stated herein.
(b) Whenever the Conversion Price is to be adjusted, the Corporation shall:
(i) compute such adjusted Conversion Price;
(ii) within 10 Business Days after the Conversion Price is to be adjusted, provide or cause to be provided, a written notice to the Holders of the occurrence of such event; and
(iii) within 10 Business Days after the Conversion Price is to be adjusted, provide or cause to be provided, to the Holders, a statement setting forth in reasonable detail the method by which the adjustments to the Conversion Price was determined and setting forth such adjusted Conversion Price.
Section 14 Transfer Agent, Registrar, and Conversion and Dividend Disbursing Agent. The duly appointed Transfer Agent, Registrar and Conversion and Dividend Disbursing Agent for Series A Preferred Stock shall be American Stock Transfer & Trust Company, LLC. The Corporation may, in its sole discretion, remove the Transfer Agent, Registrar or Conversion and Dividend Disbursing Agent in accordance with the agreement between the Corporation and the Transfer Agent, Registrar or Conversion and Dividend Disbursing Agent, as the case may be; provided that if the Corporation removes American Stock Transfer & Trust Company, LLC, the Corporation shall appoint a successor transfer agent, registrar or conversion and dividend disbursing agent, as the case may be, who shall accept such appointment prior to the effectiveness of such removal. Upon any such removal or appointment, the Corporation shall give notice thereof to the Holders.
Section 15 Record Holders. To the fullest extent permitted by applicable law, the Corporation and the Transfer Agent may deem and treat the Holder of any shares of Series A Preferred Stock as the true and lawful owner thereof for all purposes.
Section 16 Notices. All notices or communications in respect of Series A Preferred Stock shall be sufficiently given if given in writing and delivered by first class mail, postage prepaid, or if given in such other manner as may be permitted in this Certificate of Designations, in the Charter or the Bylaws and by applicable law. Notwithstanding the foregoing, if the shares of Series A Preferred Stock are represented by a Global Certificate, such notices may also be given to the Holders in any manner permitted by DTC or any similar facility used for the settlement of transactions in Series A Preferred Stock.
Section 17 Other Rights. The shares of Series A Preferred Stock shall not have any rights, preferences, privileges or voting powers or relative, participating, optional or other special rights, or qualifications, limitations or restrictions thereof, other than as set forth herein or in the Charter or as provided by applicable law.
Section 18 Amendments. The Corporation reserves the right at any time, and from time to time, to amend, alter, change, waive or repeal any provision contained in this Certificate of Designations, and any other provisions authorized by the laws of the State of Delaware at the time in force may be added or inserted, in the manner now or hereafter prescribed herein or by applicable law, and all rights, preferences and privileges of whatsoever nature conferred upon shareholders, directors or any other persons whomsoever by and pursuant to this Certificate of Designations in their present form or as hereafter amended are granted subject to this reservation; provided, however, that (a) any amendment, alteration, waiver or repeal of this Certificate of Designations, or any provision hereof, shall require an affirmative vote of holders of at least a majority of the outstanding shares of Series A Preferred Stock and Series B Preferred Stock, voting together as a single class, (b) any amendment, alteration, waiver or repeal of this Certificate of Designations, or any provision hereof, that would adversely affect the rights of the Entitled Stockholders under Section 6(e) will require the consent of the Entitled Holders that hold a majority of the shares of Series B Preferred Stock held by all Entitled Holders or their Affiliates, and (c) in the event that the Master Equity Group Members hold less than a majority of all outstanding shares of Series A Preferred Stock and Series B Preferred Stock at any time, then any amendment, alteration, waiver or repeal of this Certificate of Designations, or any provision hereof, shall also require the consent of a Master Equity Member Majority in Interest.
Section 19 Book‑Entry Form; Global and Definitive Certificates.
(a) Except as provided in Section 19(b) and (c) below, shares of the Series A Preferred Stok will be issued only in the form of book entries maintained by the Corporation’s Registrar and Transfer Agent. If necessary to comply with applicable laws, such entries may include notations or other legends reflecting any restrictions applicable to the shares evidenced thereby; subject to the foregoing, the Registrar and Transfer Agent may, in consultation with the Corporation, adopt and implement procedures that allow Holders, or their prospective transferees, to hold their shares of Series A Preferred Stock in the form of a book entry pursuant to this Section 19(a), as Global Certificate Shares pursuant to Section 19(b), in the form of definitive stock certificates pursuant to Section 19(c), or any combination thereof.
(b) When and if accepted for clearance and settlement through the facilities of the Depositary, shares of the Series A Preferred Stock may be issued in the form of one or more permanent global shares of Series A Preferred Stock in definitive, fully registered form with the global legend as set forth on the form of Series A Preferred Stock certificate attached hereto as Exhibit A (each, a “Global Certificate” and the shares of Series A Preferred Stock represented by such Global Certificate, the “Global Certificate Shares”), which is hereby incorporated in and expressly made part of this Certificate of Designations. The Global Certificates shall be signed by the Corporation and countersigned by the Registrar as provided in Section 19(d), and may have notations, legends or endorsements required by law, stock exchange rules, agreements to which the Corporation is subject, if any, or usage (provided that any such notation, legend or endorsement is in a form acceptable to the Corporation).
Each Global Certificate shall be (i) registered in the name of Cede & Co. or other nominee of the Depositary, and (ii) delivered by the Registrar to, or pursuant to instructions
received from, Cede & Co., or held by the Registrar as custodian for the Depositary pursuant to an agreement between the Depositary and the Registrar. Members of, or participants in, the Depositary (“Agent Members”) shall have no rights under this Certificate of Designations with respect to any Global Certificate Share held on their behalf by the Depositary or by the Registrar as the custodian of the Depositary, or under such Global Certificate Share, and the Depositary may be treated by the Corporation, the Registrar and any agent of the Corporation or the Registrar as the absolute owner of such Global Certificate Share for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Corporation, the Registrar or any agent of the Corporation or the Registrar from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Agent Members, the operation of customary practices of the Depositary governing the exercise of the rights of a holder of a beneficial interest in any Global Certificate Share. The Holder of the Global Certificate Shares may grant proxies or otherwise authorize any Person to take any action that a Holder is entitled to take pursuant to the Global Certificate Shares, this Certificate of Designations or the Charter.
(c) Holders of shares of Series A Preferred Stock represented by book entries maintained by the Corporation’s Registrar and Transfer Agent pursuant to Section 19(a), and owners of beneficial interests in Global Certificate Shares shall be entitled to receive physical delivery of certificated shares of Series A Preferred Stock evidenced by definitive stock certificates in the form of the Series A Preferred Stock certificate attached hereto as Exhibit A, without the global legend, provided that such Holder (in the case of shares of Series A Preferred Stock represented by book entries maintained by the Corporation’s Registrar and Transfer Agent pursuant to Section 19(a)), or the relevant Agent Member (in the case of beneficial interests in Global Certificate Shares), as applicable, submit a written request to the Registrar setting forth the number of shares of Series A Preferred Stock to be evidenced by definitive stock certificates, the number of definitive stock certificates requested, the name or names of the Persons to be identified as Holders in such definitive stock certificates, together with their respective notice details, and the manner how the requested definitive stock certificates shall be delivered. Upon receipt of such request, together with such additional documentation or information as the Corporation or the Registrar may request to verify the authenticity of the request and compliance with any applicable federal or state securities and other laws, the Corporation shall issue, and the Registrar shall authenticate and deliver in the manner indicated in the request such definitive stock certificates and shall enter in the Register the names of the Holders of the shares of Series A Preferred Stock evidenced thereby, and, if applicable, decrease by appropriate entries in Schedule I attached to the Global Certificate(s) the total number of shares represented thereby.
Except as provided in the preceding paragraph, owners of beneficial interests in Global Certificate Shares shall not be entitled to receive physical delivery of certificated shares of Series A Preferred Stock, unless (x) the Depositary notifies the Corporation that it is unwilling or unable to continue as Depositary for the Global Certificate Shares and the Corporation does not appoint a qualified replacement for the Depositary within 90 days or (y) the Depositary ceases to be a “clearing agency” registered under the Exchange Act and the Corporation does not appoint a qualified replacement for the Depositary within 90 days. In any such case, the Global Certificates shall be exchanged in whole for definitive stock certificates that are not issued in
global form, with the same terms and of an equal aggregate Liquidation Preference, and such definitive stock certificates shall be registered in the name or names of the Person or Persons specified by the Depositary in a written instrument to the Registrar.
If necessary to comply with applicable laws, definitive stock certificates issued pursuant to this Section 19(c) may include notations or other legends reflecting any restrictions the shares evidenced thereby may be subject to. The Corporation may instruct the Registrar to remove any such notation or legend upon receipt from the relevant Holder of evidence reasonably satisfactory to the Corporation (which may be in the form of a legal opinion of counsel reasonably satisfactory to the Corporation) that the protections of such notation or legend are no longer necessary to ensure compliance with the securities laws.
(d) Each Global Certificate shall be executed on behalf of the Corporation in accordance with the Corporation’s Bylaws and applicable Delaware law, by manual or facsimile signature. If an Officer whose signature is on a Global Certificate no longer holds that office at the time the Registrar countersigned such Global Certificate, such Global Certificate shall be valid nevertheless. A Global Certificate shall not be valid until an authorized signatory of the Registrar manually countersigns such Global Certificate. Each Global Certificate shall be dated the date of its countersignature.
The foregoing paragraph shall likewise apply to any definitive stock certificate representing shares of Series A Preferred Stock.
EXHIBIT A
(See attachment)
FORM OF FACE OF 9.00% SERIES A CONVERTIBLE PARTICIPATING PREFERRED STOCK CERTIFICATE
[GLOBAL CERTIFICATE LEGEND]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE CORPORATION OR THE TRANSFER AGENT NAMED ON THE FACE OF THIS CERTIFICATE, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO. HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE STATEMENT WITH RESPECT TO SHARES. IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE TRANSFER AGENT NAMED ON THE FACE OF THIS CERTIFICATE SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.
[RESTRICTED TRANSFER LEGEND]
THIS SECURITY AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE ACQUIRER:
(1) REPRESENTS THAT IT AND ANY ACCOUNT FOR WHICH IT IS ACTING IS A “QUALIFIED INSTITUTIONAL BUYER” (WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT) AND THAT IT EXERCISES SOLE INVESTMENT DISCRETION WITH RESPECT TO EACH SUCH ACCOUNT, AND
(2) AGREES FOR THE BENEFIT OF INVACARE HOLDINGS CORPORATION (THE “COMPANY”) THAT IT WILL NOT OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER THIS SECURITY OR ANY BENEFICIAL INTEREST HEREIN PRIOR TO THE DATE THAT IS THE LATER OF (X) ONE YEAR AFTER THE ORIGINAL ISSUE DATE HEREOF
OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144 UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THERETO AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW, EXCEPT:
(A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, OR
(B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BECOME EFFECTIVE UNDER THE SECURITIES ACT, OR
(C) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, OR
(D) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT OR ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
PRIOR TO THE REGISTRATION OF ANY TRANSFER IN ACCORDANCE WITH CLAUSE (2)(D) ABOVE, THE COMPANY AND THE REGISTRAR RESERVE THE RIGHT TO REQUIRE THE DELIVERY OF SUCH LEGAL OPINIONS, CERTIFICATIONS OR OTHER EVIDENCE AS MAY REASONABLY BE REQUIRED IN ORDER TO DETERMINE THAT THE PROPOSED TRANSFER IS BEING MADE IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. NO REPRESENTATION IS MADE AS TO THE AVAILABILITY OF ANY EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
Certificate Number [ ]
[Initial] Number of Shares: [ ]
CUSIP [ ]1
INVACARE HOLDINGS CORPORATION
9.00% Series A Convertible Participating Preferred Stock
(par value $0.001 per share)
(Liquidation Preference as specified below)
Invacare Holdings Corporation, a Delaware corporation (the “Corporation”), hereby certifies that [Cede & Co.]2 [ ]3 (the “Holder”), is the registered owner of [the number shown on Schedule I hereto]2 [ ]3 of fully paid and non‑assessable shares of the Corporation’s 9.00% Series A Convertible Participating Preferred Stock, with a par value of $0.001 per share and a Liquidation Preference of $25.00 per share (the “Series A Preferred Stock”). The shares of Series A Preferred Stock are transferable on the books and records of the Registrar, in person or by a duly authorized attorney, upon surrender of this certificate duly endorsed and in proper form for transfer. The designations, rights, restrictions, preferences and other terms and provisions of Series A Preferred Stock represented hereby are and shall in all respects be subject to the provisions of the Certificate of Designations of 9.00% Series A Convertible Participating Preferred Stock of Invacare Holdings Corporation dated May [ ], 2023, as the same may be amended from time to time (the “Certificate of Designations”). Capitalized terms used herein but not defined shall have the meaning given them in the Certificate of Designations. The Corporation will provide a copy of the Certificate of Designations to the Holder without charge upon written request to the Corporation at its principal place of business. In the case of any conflict between this Certificate and the Certificate of Designations, the provisions of the Certificate of Designations shall control and govern.
Reference is hereby made to the provisions of Series A Preferred Stock set forth on the reverse hereof and in the Certificate of Designations, which provisions shall for all purposes have the same effect as if set forth at this place.
Upon receipt of this executed certificate, the Holder is bound by the Certificate of Designations and is entitled to the benefits thereunder.
Unless the Transfer Agent and Registrar have properly countersigned, these shares of Series A Preferred Stock shall not be entitled to any benefit under the Certificate of Designations or be valid or obligatory for any purpose.
1 46124A 309 (unrestricted)/ 46124A 200 (144A)
2 Include for Global Certificates.
3 Include for definitive certificates
IN WITNESS WHEREOF, this certificate has been executed on behalf of the Corporation by the below authorized Officer of the Corporation this [ ] of [ ], 2024.
INVACARE HOLDINGS CORPORATION
By: ______________________________________
Name:
Title:
COUNTERSIGNATURE
These are shares of Series A Preferred Stock referred to in the within‑mentioned Certificate of Designations.
Dated: [ ], [ ]
American Stock Transfer & Trust Company, LLC
as Transfer Agent and Registrar
By: ______________________________________
Name:
Title:
[FORM OF REVERSE OF CERTIFICATE FOR
9.00% SERIES A CONVERTIBLE PARTICIPATING PREFERRED STOCK]
Cumulative dividends on each share of Series A Preferred Stock shall be payable at the rate and in the manner provided in the Certificate of Designations.
The shares of Series A Preferred Stock shall be convertible in accordance with the terms set forth in the Certificate of Designations.
The Corporation shall furnish without charge to each Holder who so requests the powers, designations, limitations, preferences and relative, participating, optional or other special rights of each class or series of stock of the Corporation and the qualifications, limitations or restrictions of such preferences and/or rights.
NOTICE OF CONVERSION
(To be Executed by the Holder
in order to Convert 9.00% Series A Convertible Participating Preferred Stock)
The undersigned hereby irrevocably elects to convert (the “Conversion”) [ ] shares of 9.00% Series A Convertible Participating Preferred Stock (the “Series A Preferred Stock”), of Invacare Holdings Corporation (the “Corporation”), represented by stock certificate No(s). [ ] (the “Series A Preferred Stock Certificates”), into common stock, par value $0.001 per share, of the Corporation (the “Common Stock”) according to the conditions of the Certificate of Designations of the Series A Preferred Stock (the “Certificate of Designations”), as of the date written below.
If Common Stock is to be issued in the name of a Person other than the undersigned, the undersigned shall pay all transfer taxes payable with respect thereto, if any. Each Series A Preferred Stock Certificate (or evidence of loss, theft or destruction thereof) is attached hereto.
Capitalized terms used but not defined herein shall have the meanings ascribed thereto in or pursuant to the Certificate of Designations.
Date of
Conversion:
Conversion
Price:
Shares of Series A Preferred
Stock to be Converted:
Shares of Common Stock
to be Issued:*
Signature:
Name:
Address:**
Telephone No.:
E-mail: _____________________________
* The Corporation is not required to issue Common Stock until the original definitive stock certificates representing Series A Preferred Stock (or evidence of loss, theft or destruction thereof) to be converted are received by the Corporation or the Conversion and Dividend Disbursing Agent.
** Address where Common Stock and any other payments or certificates shall be sent by the Corporation.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers the shares of 9.00% Series A Convertible Participating Preferred Stock evidenced hereby to:
_____________________________________________
(Insert full legal name of assignee)
________________________________________________________
(Insert assignee’s social security or taxpayer identification number, if any)
___________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints:
as agent to transfer the shares of 9.00% Series A Convertible Participating Preferred Stock evidenced hereby on the books of the Transfer Agent. The agent may substitute another to act for him or her.
Date:
Signature:
(Sign exactly as your name appears on the other side of this Certificate)
Signature
Guarantee:
(Signature must be guaranteed by an “eligible guarantor institution” that is a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Transfer Agent, which requirements include membership or participation in the Securities Transfer Agents Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Transfer Agent in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.)
SCHEDULE I4
INVACARE HOLDINGS CORPORATION
Global Certificate
9.00% Series A Convertible Participating Preferred Stock
Certificate Number: [ ]
The number of shares of 9.00% Series A Convertible Participating Preferred Stock (the “Series A Preferred Stock”) initially represented by this Global Certificate shall be [ ].
Thereafter the Transfer Agent and Registrar shall note changes in the number of shares of Series A Preferred Stock evidenced by this Global Certificate in the table set forth below:
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Amount of Decrease in Number of Shares Represented by this Global Certificate | Amount of Increase in Number of Shares Represented by this Global Certificate | Number of Shares Represented by this Global Certificate following Decrease or Increase |
Signature of Authorized Officer of Transfer Agent and Registrar |
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4 Attach Schedule I only to Global Certificate.
Exhibit D
INVACARE HOLDINGS CORPORATION
CERTIFICATE OF DESIGNATION
Pursuant to Section 151 of the General
Corporation Law of the State of Delaware
SERIES B REDEEMABLE PREFERRED STOCK
(Par Value $0.001 Per Share)
Invacare Holdings Corporation (the “Corporation”), a corporation organized and existing under and by virtue of the provisions of the General Corporation Law of the State of Delaware (the “General Corporation Law”), hereby certifies that, pursuant to the authority expressly granted to and vested in the Board of Directors of the Corporation (the “Board of Directors”) by the Amended and Restated Certificate of Incorporation of the Corporation (as amended from time to time in accordance with its terms and the General Corporation Law, the “Certificate of Incorporation”), which authorizes the Board of Directors, by resolution, to provide out of the unissued shares of the preferred stock (the “Preferred Stock”) for one or more series of Preferred Stock and to establish from time to time the number of shares to be included in each such series and to fix the voting rights (if any), designations, powers, preferences and relative, participating, optional, special and other rights (if any) of each such serries and any qualifications, limitations and restrictions thereof, and in accordance with the provisions of Section 151 of the General Corporation Law, the Board of Directors duly adopted on [●], 2024 the following resolution:
RESOLVED, that pursuant to the authority expressly vested by Article IV of the Amended and Restated Certificate of Incorporation of the Corporation and in accordance with Section 151(g) of the General Corporation Law of the State of Delaware, the Board hereby creates, authorizes and provides for the issuance of a new series of preferred stock out of the authorized and unissued shares of the Corporation’s preferred stock, par value $0.001 per share, and that the designation, rights, powers and preferences, and the qualifications, limitations and restrictions, of such Series B Preferred Stock are hereby approved and adopted by the Board and the form, terms and provisions of the Certificate of Designation of such Series B Preferred Stock are hereby approved, adopted, ratified and confirmed in all respects as follows:
1. General.
(a) The shares of such series shall be designated the Series B Redeemable Preferred Stock (hereinafter referred to as the “Series B Preferred Stock”).
(b) Each share of Series B Preferred Stock shall be identical in all respects with the other shares of Series B Preferred Stock.
(c) The authorized number of shares of Series B Preferred Stock shall initially be 5,938,620, which number may from time to time be increased or decreased by resolution of the Board of Directors as permitted by the General Corporation Law.
(d) Except in all cases in connection with the consummation of the transactions contemplated by the Master Equity Agreement, each share of Series B Preferred Stock shall be dealt with together with each share of Intermediate HoldCo Series A Preferred stock as a unit (each an “Invacare Share Unit”) on a one-for-one basis and no shares of Series B Preferred Stock or Intermediate HoldCo Series A Preferred may be dealt with individually or one without the other. In no event shall the shares of either Series B Preferred Stock or Intermediate HoldCo Series A Preferred be split, divided, or combined unless the outstanding shares of the other class shall be proportionately split, divided or combined.
(e) Except in all cases in connection with the consummation of the transactions contemplated by the Master Equity Agreement, shares of Series B Preferred Stock may be issued or transferred only in connection with the simultaneous issuance or transfer of an identical number of shares of Intermediate HoldCo Series A Preferred stock.
Any purported issuance or transfer of shares of Series B Preferred Stock not accompanied by an issuance or transfer of the identical number of shares of Intermediate HoldCo Series A Preferred stock shall be null and void and of no force or effect, and the shares of Series B Preferred Stock so issued or transferred shall automatically and without further action on the part of the Corporation or any holder of Series B Preferred Stock be transferred to the Corporation and cancelled for no consideration and thereupon shall be retired.
(f) So long as any of the Series B Preferred Stock are issued and outstanding, the Corporation shall not issue any shares of its preferred stock that are senior to the Series B Preferred Stock without the approval of the Holders of at least a majority percent of the issued and outstanding shares of Series B Preferred Stock and Series A Preferred Stock voting together as a class.
(g) For purposes of this Certificate of Designation, “Capital Stock” of any person means any and all shares, interests, participations or other equivalents however designated of corporate stock or other equity participations, whether general or limited, of such person and any rights (other than debt securities convertible or exchangeable into an equity interest), warrants or options to acquire an equity interest in such person. The Series B Preferred Stock shall, with respect to dividend rights and rights upon a liquidation, winding-up or dissolution of the Corporation, rank:
(i) senior to the Common Stock, par value $0.001 per share, of the Corporation (“Common Stock”), the Series A Preferred Stock, par value $0.001 per share, of the Corporation (“Series A Preferred”), and any other class or series of Capital Stock of the Corporation, the terms of which do not expressly provide that such class or series ranks senior to or on a parity with the Series B Preferred Stock with respect to dividend rights or rights upon a liquidation, winding-up or dissolution of the Corporation (collectively, together with any warrants, rights, calls or options exercisable for or convertible into such Capital Stock, the “Junior Stock”);
(ii) on a parity with any class or series of Capital Stock of the Corporation, the terms of which provide that such class or series ranks on a parity with the Series B Preferred Stock with respect to dividend rights or rights upon a liquidation, winding-up or dissolution of the Corporation (collectively, together with any warrants, rights, calls or options exercisable for or convertible into such Capital Stock, the “Parity Stock”); and
(iii) junior to any class or series of Capital Stock of the Corporation (other than the Common Stock and Series A Preferred), the terms of which expressly provide that such class or series ranks senior to the Series B Preferred Stock with respect to dividend rights or rights upon a liquidation, winding-up or dissolution of the Corporation (collectively, together with any warrants, rights, calls or options exercisable for or convertible into such Capital Stock, the “Senior Stock”).
(h) In addition to the capitalized terms defined elsewhere in this Certificate of Designation, for purposes hereof, the following terms mean:
“ABL Credit Agreement” means that certain loan and security agreement dated May 5, 2023 among the Corporation and the other borrowers from time to time party thereto, the guarantors from time to time party thereto, the lenders from time to time party thereto and White Oak Commercial Finance, LLC, as Administrative Agent and Collateral Agent, as amended, restated, amended and restated, supplemented or otherwise modified from time to time.
“Backstop Commitment Agreement” shall have the meaning ascribed to the term in the First Amended Joint Chapter 11 Plan of Invacare Corporation and its Debtor Affiliates confirmed by the Bankruptcy Court.
“Backstop Party” means the original signatories to the Backstop Commitment Agreement and any Person that, as of the Effective Date, is entitled to exercise Backstop Party Rights pursuant to, and as defined in, the Backstop Commitment Agreement.
“Bylaws” means the Bylaws of the Corporation, as amended or restated from time to time.
“Change of Control” means that (a) a Person or “group” (as the term is used for purposes of Section 13(d) of the Exchange Act), other than a Change of Control Excluded Person, becomes the direct or indirect beneficial owner (as determined pursuant to Rule 13d-3 or Rule 13d-5 under the Exchange Act) of securities representing more than 50% of the voting power of the Corporation.
“Change of Control Excluded Person” means: (a) a Person that is a Backstop Party (or a Backstop Party’s Related Fund), to the extent that prior to the date hereof neither such Backstop Party nor any of such Backstop Party’s Related Funds or Affiliates has filed a public report pursuant to Section 13(d) of the Exchange Act indicating that such Back Stop Party or such Backstop Party’s Related Funds or Affiliates delivered a letter to the Board of Directors of the Parent indicating that such Person, either alone or together with other potential investors, had or was proposing to engage in discussions with the Parent regarding the potential acquisition of the Parent; (b) any Person that controls, is controlled by, or is under common control with a Person described in clause (a) of this definition; and (c) a “group” (as the term is used for purposes of Sections 13(d) of the Exchange Act) that includes one or more Parent Change of Control Excluded Persons as defined under clauses (a) or (b) above, where such Parent Change of Control Excluded Persons beneficially own capital stock of the Parent having more the 50% of the combined voting power in the election of directors of all the capital stock of the Parent held by such group.
“Common Stock” means the common stock of the Corporation, $0.001 par value per share.
“Deemed Liquidation Event” means the occurrence of any of the following:
(i) a merger or consolidation in which the Corporation is a constituent party, or a Subsidiary of the Corporation is a constituent party and the Corporation issues shares of its capital stock pursuant to such merger or consolidation, unless the shares of capital stock of the Corporation outstanding immediately prior to such merger or consolidation continue to represent, or are converted into or exchanged for shares of capital stock that represent, immediately following such merger or consolidation, at least a majority, by voting power, of the capital stock of (1) the surviving or resulting corporation; or (2) if the surviving or resulting corporation is a wholly owned subsidiary of another corporation immediately following such merger or consolidation, the parent corporation of such surviving or resulting corporation;
(ii) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the Corporation or any Subsidiary of the Corporation of all or substantially all the assets of the Corporation and its Subsidiaries taken as a whole, or
(iii) the sale or disposition (whether by merger, consolidation or otherwise, and whether in a single transaction or a series of related transactions) of one or more Subsidiaries of the Corporation if substantially all of the assets of the Corporation and its Subsidiaries taken as a whole are held by such Subsidiary or Subsidiaries, except where such sale, lease, transfer, exclusive license or other disposition is to a wholly owned Subsidiary of the Corporation;
provided, however, that, prior to the Exit Indebtedness Termination Date, a Deemed Liquidation Event shall not occur unless such Deemed Liquidation Event constitutes an event requiring payment in full of the Exit Term Loan Facility and the Exit Secured Convertible Notes; and provided, further, that no Deemed Liquidation Event shall occur if a majority of the Holders so determine by written notice to the Corporation prior to the effective date of any transaction described in clauses (i), (ii) or (iii) above.
“Exit Indebtedness Termination Date” means the later of the (i) date on which the Exit Term Loan Facility is repaid in full and (ii) date on which none of the Exit Secured Convertible Notes remains outstanding.
“Exit Secured Convertible Notes” means, collectively, the Exit Secured Convertible Tranche I Notes, and the Exit Secured Convertible Tranche II Notes.
“Exit Secured Convertible Tranche I Notes” means the Corporation’s 7.50% Convertible Senior Secured Notes due 2028, Tranche I, issued on the Effective Date pursuant to the Exit Secured Convertible Tranche I Notes Indenture.
“Exit Secured Convertible Tranche I Notes Indenture” means the indenture dated May 5, 2023, among the Corporation, as issuer, the guarantors listed therein, and GLAS Trust Company LLC, as trustee and notes collateral agent, as from time to time amended in compliance with the provisions thereof.
“Exit Secured Convertible Tranche II Notes” means the Corporation’s 7.50% Convertible Senior Secured Notes due 2028, Tranche II, issued on the Effective Date pursuant to the Exit Secured Convertible Tranche II Notes Indenture.
“Exit Secured Convertible Tranche II Notes Indenture” means the indenture dated May 5, 2023, among the Corporation, as issuer, the guarantors listed therein, and GLAS Trust Company LLC, as trustee and notes collateral agent, as from time to time amended in compliance with the provisions thereof.
“Exit Term Loan Agreement” means the Amended and Restated Credit Agreement dated as of May 5, 2023, among the Corporation, Reorganized Invacare, the lenders party thereto, Cantor Fitzgerald Securities, as Administrative Agent, and GLAS Trust Company LLC, as Collateral Agent, as from time to time amended in compliance with the provisions thereof.
“Fundamental Change” means (a) the voluntary or involuntary liquidation, winding‑up or dissolution of the Corporation, or (b) any sale, lease, or other transfer or disposition in one transaction or a series of transactions of all or any material portion of the consolidated assets of the Corporation and its Subsidiaries, taken as a whole, to any Person other than the Corporation or any of the Corporation’s Wholly‑Owned Subsidiaries (a “material portion” of the consolidated assets of the Corporation and its Subsidiaries, taken as a whole shall include, without limitation, assets sold, leased or transferred which results in net proceeds in excess of $10,000,000).
“Exit Term Loan Facility” means the credit facility in the amount of $85,000,000 extended to Reorganized Invacare under the Exit Term Loan Agreement.
“Holders” means each Person in whose name shares of Series B Preferred Stock are registered, who shall be treated by the Corporation as the absolute owner of those shares of Series B Preferred Stock for all purposes.
“Intermediate HoldCo” means Invacare International Holdings Corp., a Delaware corporation.
“Intermediate HoldCo Change of Control” means that a Person or “group” (as the term is used for purposes of Section 13(d) of the Exchange Act), other than an Intermediate HoldCo Change of Control Excluded Person, becomes the direct or indirect beneficial owner (as determined pursuant to Rule 13d-3 or Rule 13d-5 under the Exchange Act) of securities representing more than 50% of the voting power of the Corporation.
“Intermediate HoldCo Change of Control Excluded Person” means: (a) a Person that is a Holder on the Issuance Date (or such Holder’s Related Fund) to the extent that prior to the date hereof neither such Holder nor any of such Holder’s Related Funds or Affiliates has filed a public report pursuant to Section 13(d) of the Exchange Act indicating that such Holder or such Holder’s Related Funds or Affiliates delivered a letter to the Board of Directors of the Corporation indicating that such Person, either alone or together with other potential investors, had or was proposing to engage in discussions with the Corporation regarding the potential acquisition of any Subsidiary; (b) any Person that controls, is controlled by, or is under common control with a Person described in clause (a) of this definition; and (c) a “group” (as the term is used for purposes of Sections 13(d) of the Exchange Act) that includes one or more Intermediate HoldCo Change of Control Excluded Persons as defined under clauses (a) or (b) above, where such Change of Control Excluded Persons beneficially own Capital stock of the Corporation having more the 50% of the combined voting power in the election of directors of all the Stock of the Corporation held by such group.
“Intermediate HoldCo Fundamental Change” means any sale, lease, or other transfer or disposition in one transaction
or a series of transactions of all or any material portion of the consolidated assets of Intermediate HoldCo and its Subsidiaries, to any Person other than the Corporation or any of the Corporation’s Wholly‑Owned Subsidiaries (a “material portion” of the consolidated assets of Intermediate HoldCo and its Subsidiaries, taken as a whole shall include, without limitation, assets sold, leased or transferred which results in net proceeds in excess of $10,000,000).
“Intermediate HoldCo Series A Preferred” means the 9.00% Series A Preferred Stock of Intermediate Holdco.
“Intermediate HoldCo Warrants” means those certain Warrants for Intermediate HoldCo common stock issued by Intermediate HoldCo pursuant to the Master Equity Agreement.
“Issuance Date” means the date that the Intermediate HoldCo transferred the Series B Preferred Stock to the Holders in accordance with the Master Equity Agreement.
“Master Equity Agreement” means that certain Master Equity Agreement dated [●], 2024 among the Corporation, Parent, Reorganized Invacare and the other parties thereto.
“Redemption Dividend Amount” means, as of a Redemption Date, the declared but unpaid dividends on each share of Series B Preferred Stock, and in respect of each share of Intermediate HoldCo Series A Preferred Stock being redeemed on such Redemption Date the Dividends accrued on the applicable liquidation preference of each such share and not otherwise a part of the liquidation preference, from, and including, the last date on which a dividend was paid thereon immediately preceding such Redemption Date on which all dividends then due were compounded or paid in cash to, but excluding, such Redemption Date.
“Register” means the records maintained by the Registrar reflecting ownership of the shares of Series B Preferred Stock issued in book-entry form pursuant to this Certificate of Designation, or of the definitive stock certificates issued pursuant to this Certificate of Designation.
“Registrar” initially means Equiniti Trust Company, LLC, the Corporation’s duly appointed registrar for the Series B Preferred Stock and any successor appointed thereto.
“Related Fund” means, with respect to a Backstop Party, any Affiliates (including at the institutional level) of such Backstop Party or any fund, account (including any separately managed accounts) or investment vehicle that is controlled, managed, advised or sub-advised by such Backstop Party, an Affiliate of such Backstop Party or by the same investment manager, advisor or subadvisor as such Backstop Party or an Affiliate of such Backstop Party. For purposes of this definition:
“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, such Person as of the date on which, or at any time during the period for which, the determination of affiliation is being made (including any Related Funds of such Person); provided that for purposes of this Certificate of Designation, no Backstop Party shall be deemed an Affiliate of the Corporation or any of its Subsidiaries;
“Subsidiary” means, with respect to any Person, any corporation, partnership, joint venture or other legal entity as to which such Person (either alone or through or together with any other subsidiary or Affiliate), (a) owns, directly or indirectly, more than fifty percent (50%) of the stock or other equity interests, (b) has the power to elect a majority of the board of directors or similar governing body thereof or (c) has the power to direct, or otherwise control, the business and policies thereof;
“Contract” means any legally binding agreement, contract or instrument, including any loan, note, bond, mortgage, indenture, guarantee, deed of trust, license, franchise, commitment, lease, franchise agreement, letter of intent, memorandum of understanding or other obligation, and any amendments thereto, whether written or oral, but excluding the Plan; and
the term “control” (including the correlative meanings of the terms “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of such Person, whether through the ownership of voting securities, by Contract or otherwise.
“Reorganized Invacare” means Invacare Corporation, a corporation organized under the laws of Ohio, following its emergence from the voluntary bankruptcy proceedings commenced before the Bankruptcy Court on January 31, 2023.
“Reorganized Invacare Common Stock” means the common stock, without par value, of Reorganized Invacare.
“Reorganized Invacare Fundamental Change” means the consummation, at any time after the Issuance Date, of (A) any transaction immediately following the consummation of which Reorganized Invacare ceases to be a Wholly-Owned Subsidiary of the Corporation (other than as a result of the issuance or exercise of the Reorganized Invacare Warrants); (B) the voluntary or involuntary liquidation, winding‑up or dissolution of Reorganized Invacare, (C) any consolidation, merger, binding share exchange, or other combination pursuant to which the Reorganized Invacare Common Stock will be converted into, or exchanged for, stock, other securities, or other property or assets (including cash), or a combination thereof, in each case after which Reorganized Invacare will no longer be a Wholly-Owned Subsidiary of the Corporation (other than as a result of the issuance or exercise of the Reorganized Invacare Warrants); or (D) any sale, lease, or other transfer or disposition in one transaction or a series of transactions of all or any material
portion of the consolidated assets of Reorganized Invacare and its Subsidiaries, taken as a whole, to any Person other than the Corporation or any of the Corporation’s Wholly‑Owned Subsidiaries (a “material portion” of the consolidated assets of Reorganized Invacare and its Subsidiaries, taken as a whole shall include, without limitation, assets sold, leased or transferred which results in net proceeds in excess of $10,000,000).
“Reorganized Invacare Warrants” means those certain warrants for Reorganized Invacare Common Stock issued by Reorganized Invacare to certain parties in accordance with the Master Equity Agreement.
“Series A Preferred Stock” means the Corporation’s Series A Preferred Stock, $0.001 par value per share.
“Subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP, as well as any other corporation, limited liability company, partnership, association or other entity (a) of which equity interests representing more than 50.0% of the equity or more than 50.0% of the ordinary voting power or, in the case of a partnership, more than 50.0% of the general partnership interests are, as of such date, owned, controlled or held, or (b) that is, as of such date, otherwise controlled, by the parent or one or more Subsidiaries of the parent or by the parent and one or more Subsidiaries of the parent.
“Wholly‑Owned Subsidiary” means, with respect to any Person, any Subsidiary of such Person, except that, solely for purposes of this definition, the reference to “more than 50%” in the definition of “Subsidiary” shall be deemed to be replaced by a reference to “100%.”
2. Dividends. Dividends and other distributions shall not be declared or paid on the Series B Preferred Stock unless the dividend consists of shares of Series B Preferred Stock or Common Stock or of rights, options, warrants or other securities convertible into or exercisable, exchangeable or redeemable for, shares of Series B Preferred Stock or Common Stock, paid proportionally with respect to each outstanding share of Series B Preferred Stock. If a dividend is declared on the Series A Preferred Stock that is payable in shares of Series A Preferred Stock or Common Stock (or securities convertible into, or exercisable, exchangeable or redeemable for, Series A Preferred Stock or Common Stock), then such dividends shall be paid in the same number of shares on a per share basis in shares of Series B Preferred Stock or Common Stock, as applicable, to the Holders. Dividends shall accrue on each share of Intermediate HoldCo Series A Preferred as provided in the Intermediate HoldCo Series A Preferred Certificate of Designation as amended from time to time (the “Intermediate HoldCo Certificate of Designation”).
3. Liquidation.
(a) Prior to the redemption of each share of Series B Preferred Stock (and therefore each Invacare Share Unit) pursuant hereto, or to the Intermediate HoldCo Certificate of Designation, in the event of a liquidation (complete or partial), dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, or a Deemed Liquidation Event shall occur (a “Liquidation”), after payment or provision for payment of the debts and other liabilities of the Corporation, including, without limitation, the amount of the liquidation preference then accumulated on the Intermediate HoldCo Series A Preferred to the holders of Intermediate HoldCo Series A Preferred, the holders of Series B Preferred Stock shall be entitled to receive, in respect of any shares of Series B Preferred Stock held by them, out of assets of the Corporation available for distribution to stockholders of the Corporation or their assignees, and subject to the rights of any outstanding shares of Senior Stock and before any amount shall be distributed to the holders of Junior Stock, a liquidating distribution (the “Liquidation Distribution”) in an amount equal to the par value per share of such share of Series B Preferred Stock (the “Liquidation Preference”). If, upon a Liquidation, the assets of the Corporation, or proceeds thereof, distributable among the holders of the then outstanding shares of Series B Preferred Stock and the holders of any shares of Parity Stock ranking on a parity with the Series B Preferred Stock with respect to any distribution of assets upon Liquidation are insufficient to pay in full the amount of all such Liquidation Preference payable with respect to the Series B Preferred Stock and any such Parity Stock, then the holders of Series B Preferred Stock and such Parity Stock shall share ratably in any distribution of assets in proportion to the full respective preferential amounts to which they are entitled.
(b) The Corporation shall provide the holders of Series B Preferred Stock appearing on the stock books of the Corporation as of the date of such notice at the address of said holder shown therein with written notice of (i) any voluntary Liquidation promptly after such Liquidation has been approved by the Board of Directors and at least five (5) days prior to the effective date of such Liquidation and (ii) any involuntary Liquidation promptly upon the Corporation becoming aware of any instituted proceeding in respect thereof. Such notice shall state a distribution or payment date, the amount of the Liquidation Preference and the place where the Liquidation Preference shall be distributable or payable.
(c) After the payment in cash or proceeds in an amount equal to the liquidation preference on the Intermediate HoldCo Series A Preferred to the holders thereof, and payment to the Holders of the full amount of the Liquidation Distribution with respect to outstanding shares of Series B Preferred Stock, the Holders shall have no right or claim, based on their ownership of shares of Series B Preferred Stock, to the remaining assets of the Corporation, if any. Whenever any such distribution shall be paid in property other than cash, the value of such distribution shall be the fair market value of such property as determined in the good faith reasonable discretion of the Board of Directors or liquidating trustee, as the case may be.
4. Voting.
(a) General. Except as otherwise prohibited by the General Corporation Law, other applicable law, the Certificate of Incorporation, or this Certificate of Designation, each Holder shall be entitled to (i) voting together with the holders of the Series A Preferred Stock as a single class, vote on any matters submitted to the holders of the Series A Preferred Stock for approval, and (ii) voting together with the holders of Common Stock and the Series A Preferred Stock as a single class, vote on matters submitted to the Corporation's stockholders for approval. In any case in which the holders of the Series B Preferred Stock shall be entitled to vote pursuant to the General Corporation Law, other applicable law, the Certificate of Incorporation, or this Certificate of Designation, each Holder entitled to vote with respect to such matter shall be entitled to and have that number of votes per share that each share of Series A Preferred Stock would be entitled to with respect to such vote assuming a holder of Series A Preferred Stock could vote on such matter, provided that at no time will a Holder have less than one vote per share of Series B Preferred Stock.
(b) Protective Provisions. In addition to any vote required by the General Corporation Law, other applicable law, the Certificate of Incorporation, or this Certificate of Designation, and other than as contemplated by or permitted under the Master Equity Agreement, for so long as any shares of Series B Preferred Stock shall remain outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation or otherwise, take any of the following actions, including whether by merger, consolidation or otherwise, without (in addition to any other vote required the General Corporation Law, other applicable law, the Certificate of Incorporation, or this Certificate of Designation) the written consent or affirmative vote of the holders of at least a majority of the then outstanding shares of Series B Preferred Stock:
(i) authorize or create, or increase the authorized amount of, or issue any shares, class or series of Capital Stock or reclassify or amend the provisions of any existing class of Capital Stock of the Corporation or any of the Corporation’s Subsidiaries, including without limitation any stock split;
(ii) authorize, create or issue any stock or debt instrument or other obligation that is convertible or exchangeable into shares of its Senior Stock or Parity Stock (or that is accompanied by options or warrants to purchase such Senior Stock or Parity Stock);
(iii) amend, alter or repeal (1) any provision of the Certificate of Incorporation or this Certificate of Designation, or the Bylaws, or (2) any provision of the organizational documents of Intermediate HoldCo or Reorganized Invacare;
(iv) redeem, repurchase, recapitalize or acquire shares of its Junior Stock or Series A Preferred Stock or allow the redemption, repurchase, recapitalization or acquisition of shares of Capital Stock of any of the Corporation’s Subsidiaries (other than with respect to customary repurchase rights or tax withholding arrangements with respect to equity awards or benefit plans and the exchange of outstanding warrants or as contemplated by the Certificate of Incorporation as in effect on the date hereof with respect to the Class B Common Stock and the Intermediate HoldCo Series A Preferred Stock);
(v) sell, transfer, pledge, or otherwise dispose of any securities issued by any of the Corporation’s Subsidiaries;
(vi) declare or pay any dividends or other distributions in cash or property with respect to its Capital Stock or allow the payment of any dividends on any Capital Stock by the Corporation’s Subsidiaries (other than dividends or other distributions of cash or property paid on the Series B Preferred Stock or the Intermediate HoldCo Series A Preferred Stock);
(vii) allow the issuance of any Capital Stock by any of the Corporation’s Subsidiaries to any Person other than the Corporation or its Wholly-Owned Subsidiaries;
(viii) consummate, allow to become effective, or approve the consummation of a Deemed Liquidation Event;
(vii) authorize or allow to become effective any Fundamental Change;
(viii) take any action to liquidate, dissolve or wind up the Corporation or any of the Corporation’s Subsidiaries; or
(ix) take any action, or enter into an agreement, to undertake any of the foregoing.
If the Corporation shall propose to take any action enumerated above in clauses (i) through (viii) of this Section 4(b) then, and in each such case, the Corporation shall give notice of such proposed action to each holder of record of the shares of Series B Preferred Stock appearing on the Register and each holder of record of the shares of Intermediate HoldCo Series A Preferred Stock appearing on the stock books of the Corporation’s Subsidiaries as of the date of such notice at the address of said holder shown therein. Such notice shall specify, inter alia (x) the proposed effective date of such action; (y) the date on which a record is to be taken for the purposes of such action, if applicable; and (z) the other material terms of such action. Such notice shall be given at least ten (10) calendar days prior to the applicable date or effective date specified above. For the purposes of this Certificate of Designation, “Business Day” means each day that is not a Saturday, Sunday or other day on which banking institutions in New York, New York are authorized or required by law to close. If at any time the Corporation shall cancel any of the proposed actions for which notice has been given under this Section 4(b) prior to the consummation thereof, the Corporation shall give prompt notice of such cancellation to each holder of record of the shares of Series B Preferred Stock appearing on the stock books of the Corporation and each holder of record of the shares of Intermediate HoldCo Series A Preferred Stock appearing on the stock books of the Corporation’s Subsidiaries as of the date of such notice at the address of said holder shown therein. For the avoidance of doubt, if a holder of record of shares of Series B Preferred Stock or the Intermediate HoldCo Series A Preferred Stock does not respond to the aforementioned notice, such non-response shall in no way be deemed to constitute the written consent or affirmative vote of such holder regarding any of the aforementioned actions in this Section 4(b) or described within such notice.
(c) Any action required or permitted to be taken at any annual meeting or special meeting of the Holders may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing or by electronic transmission, setting forth the action so taken, is or are signed by the Holders of outstanding shares of Series B Preferred Stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares of Series B Preferred Stock entitled to vote thereon were present and voted.
(d) The rules and procedures for calling and conducting any meeting of the Holders (including, without limitation, the fixing of a record date in connection therewith), the solicitation and use of proxies at such a meeting, the obtaining of written consents and any other procedural aspect or matter with regard to such a meeting or such consents shall be governed by any rules the Board of Directors, in its discretion, may adopt from time to time, which rules and procedures shall conform to the requirements of the Certificate of Incorporation, the Bylaws, applicable law, and the rules of any national securities exchange or other trading facility on which the Series B Preferred Stock is listed or traded at the time.
5. Covenants.
(a) As long as any shares of Series B Preferred Stock remain outstanding, the Corporation shall:
(i) provide the Holders with, (1) as soon as available, and in any event within one hundred twenty (120) days after the end of each fiscal year, audited consolidated balance sheets of the Corporation and any Corporation Subsidiaries as at the end of each such fiscal year and audited consolidated statements of income and cash flows for such year and (2) as soon as available, and in any event within sixty (60) days after the end of each quarterly accounting period in each fiscal year (other than the last fiscal quarter of the fiscal year), unaudited consolidated balance sheets of the Corporation and Corporation Subsidiaries as at the end of each such fiscal quarter and unaudited consolidated statements of income and cash flows for such fiscal quarter. The foregoing notwithstanding, the Corporation shall not be required to provide the Holders with (i) unaudited quarterly financial statements for the quarters ended June 30, 2023 and September 30, 2023 or (ii) audited financial statements for the year ended December 31, 2023 until June 30, 2024;
(ii) on the written request of any Holder, (1) provide such Holder with a copy of the Register of the Corporation and (2) provide such Holder, with any additional information that such Holder may reasonably request as required for regulatory, tax or compliance purposes;
(iii) ensure that Intermediate HoldCo remains, at all times, a direct, Wholly-Owned Subsidiary of the Corporation (other than as a result of the issuance of the Intermediate HoldCo Series A Preferred or the issuance or exercise of the Intermediate HoldCo Warrants) and substantially all business operations outside of North America are conducted solely through Subsidiaries that are directly or indirectly owned by Intermediate HoldCo;
(iv) ensure that Reorganized Invacare remains, at all time, a direct, Wholly-Owned Subsidiary of the Corporation (other than as a result of the issuance or exercise of the Reorganized Invacare Warrants)
(v) except as otherwise specifically provided herein (including with respect to the issuance of the Intermediate HoldCo Warrants or Reorganized Invacare Warrants), ensure that all business operations of the Corporation are conducted solely through Subsidiaries that are directly or indirectly owned by the Corporation; and
(vi) not, and shall cause Intermediate HoldCo not to, conduct or otherwise engage in any business or operations, in each case, other than (1) the ownership of the Capital Stock of Intermediate HoldCo and Reorganized Invacare (in the case of the Corporation), and of such Subsidiaries and other affiliates; (2) the performance of its respective obligations under its organization documents, and the compliance with all laws, rules, regulations, orders, judgements, decrees, or permits applicable to it; (3) the participation in tax, accounting, cash management, cash pooling, transfer pricing, cost-sharing arrangements and other administrative matters related to it or any of its Subsidiaries; (4) defend or exercise its rights, and discharge its obligations under the Exit Secured Convertible Tranche I Notes Indenture, and the Exit Secured Convertible Tranche II Notes Indenture, as applicable; (5) incurring fees, costs and expenses relating to overhead and general operating including professional fees for legal, tax and accounting issues and paying taxes, providing indemnification for its current and former officers, directors, members of management, managers, employees and advisors or consultants; (6) as permitted by the Master Equity Agreement or the ABL Credit Agreement and (7) activities incidental to the businesses or activities described in the foregoing clauses.
(b) As long as any shares of Series B Preferred Stock or Intermediate HoldCo Series A Preferred Stock remain outstanding, the Corporation shall not, nor shall it permit any Subsidiary of the Corporation to, without the consent of the majority of the Holders (determined on the basis of the aggregate number of shares of Series B Preferred Stock held by each as of the date of determination):
(i) make any cash payment with respect to any share of Junior Stock or Series A Preferred Stock;
(ii) make any cash payment with respect to any shares of Capital Stock of any of the Corporation’s Subsidiaries; or
(iii) permit or cause Intermediate HoldCo and any of its Subsidiaries to sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with the Corporation, Reorganized Invacare or any Reorganized Invacare’s Subsidiaries outside of the ordinary course of business consistent with past practices.
(c) Notwithstanding anything to the contrary in this Certificate of Designation, for U.S. federal and other applicable state and local income tax purposes, it is intended that (i) the Series B Preferred Stock will not be treated as “preferred stock” within the meaning of Section 305(b)(4) of the Code and Treasury Regulations Section 1.305-5(a); and (ii) no Holder will be required to include in income any amounts in respect of the Series B Preferred Stock by operation of Section 305(b) or (c) of the Code. The Corporation will, and will cause its Subsidiaries and agents to, report consistently with, and take no positions or actions inconsistent with, the foregoing treatment (including by way of withholding) unless otherwise required by a determination within the meaning of Section 1313(a) of the Code.
(d) If at any time prior to May 5, 2025, the Corporation or any of its Subsidiaries offers to issue or sell, or to enter into any agreement providing for the issuance or sale (contingent or otherwise) (each, an “Offer”) of, any capital stock or securities convertible into capital stock of the Corporation (“New Securities”) to any Person (“Offeree”), the Corporation shall, or shall cause its Subsidiaries to, offer to sell to each Holder that is an “accredited investor,” as defined in Rule 501(a) of Regulation D of the Securities Act (each, an “Entitled Stockholder”), on the terms set forth in this Section 6(d) a portion of such New Securities equal to (i) the number of such New Securities being offered to such Offeree multiplied by (ii) a fraction (A) the numerator of which is the aggregate number of outstanding shares of Series B Preferred Stock held by such Entitled Stockholder (which for purposes hereof shall include shares held by a depository, broker, financial advisor and/or other nominee for such stockholder) and (B) the denominator of which is the aggregate number of outstanding shares of Series B Preferred Stock held by all Entitled Stockholders; provided that if the Corporation requires an Offeree to also purchase other equity securities or debt securities of the Corporation or any of its subsidiaries, any Entitled Stockholder shall also, as a condition to the exercise of such stockholder’s preemptive rights pursuant to this Section 6(d), be required to purchase the same class and type of securities of the Corporation or its subsidiaries on the same terms and conditions.
The Corporation shall deliver to each Entitled Stockholder a notice (the “Offer Notice”), describing in reasonable detail the New Securities being offered, the proposed purchase price thereof (which may be a price range), the expected use of proceeds thereof, the payment terms and conditions and the maximum amount and percentage of the offering such Entitled Stockholder is entitled to purchase.
In order to exercise its purchase rights hereunder, an Entitled Stockholder must, within 10 Business Days after delivery of the Offer Notice, deliver a written notice to the Corporation stating the exercise of such purchase right and the quantity or percentage of New Securities to be purchased by such Entitled Stockholder, which quantity or percentage may be all or any portion of the amount to which such Entitled Stockholder is entitled pursuant to this Section 6(d).
In the event any Entitled Stockholder fails to exercise its rights under this Section 6(d) with respect to any particular New Securities within such 10-Business Day period, the Corporation shall have 180 days thereafter to sell such New Securities, at a price not more favorable and upon general terms not materially more favorable to the purchaser of such New Securities than as specified in the Offer Notice. Any New Securities that are not sold within such 180-day period shall not thereafter be issued or sold without first being reoffered to the Entitled Stockholders pursuant to this Section 6(d).
Notwithstanding anything to the contrary set forth in this Section 6(d), the Corporation may comply with the provisions of this Section 6(d) by first selling to an Offeree, subject to the conditions contained in the following sentence, all of the New Securities contemplated to be issued and sold by the Corporation in an Offer and promptly thereafter offering to sell to the Entitled Stockholders the number of such New Securities such Entitled Stockholders are entitled to purchase pursuant to this Section 6(d). In the event that any Entitled Stockholder purchases securities from the Corporation pursuant to this Section 6(d), upon the request of the Board of Directors, the Offeree may, in its discretion, sell to the Corporation for a price per share of Common Stock or other equity security or debt security equal to the original cost thereof, the same number and class of shares of Common Stock or other equity security or debt security acquired by the Offeree that are purchased by such Person(s) exercising their rights under this
Section 6(d); provided that in the event the Offeree elects not to sell such securities back to the Corporation pursuant to this sentence, each Person exercising their rights under this Section 6(d) shall be entitled to purchase an amount of additional New Securities from the Corporation so that such Person’s Percentage Ownership vis-à-vis such Offeree is the same as it would have been had the Offeree sold such shares of Common Stock or other equity securities or debt securities back to the Corporation pursuant to this sentence.
In the event that the participation in the Offer by an Entitled Stockholder would require under applicable law the registration or qualification of such securities or of any Person as a broker or dealer or agent with respect to such securities, such Entitled Stockholder shall not have the right to participate in the Offer. Without limiting the generality of the foregoing, it is understood and agreed that neither the Corporation nor any Subsidiary shall be under any obligation to effect a registration of such securities under the Securities Act or similar state statutes.
Notwithstanding the foregoing or anything to the contrary herein, the provisions of this Section 6(d) shall not apply to any Offer of New Securities made pursuant to, as a result of or related to the Master Equity Agreement or the transactions contemplated thereby.
6. Uncertificated Shares.
The Series B Preferred Stock shall be uncertificated and evidenced by registration in the holder’s name in book-entry form in the Register with the Registrar.
7. Redemption at the Election of the Corporation.
(a) Following the occurrence of the Exit Indebtedness Termination Date, the Corporation may at its option in its sole discretion, from time to time other than in connection with a Liquidation, redeem all, but not less than all, of the then outstanding shares of Series B Preferred Stock, for an amount per share of Series B Preferred Stock equal to the Liquidation Preference as of the date of redemption (the “Redemption Price”), provided, however, that such redemption must occur in connection and simultaneously with, and the Corporation shall cause, the redemption of the Intermediate HoldCo Series A Preferred Stock in accordance with the Intermediate HoldCo Certificate of Designation such that at the conclusion of the redemption no Invacare Share Units remain issued and outstanding. The Corporation may exercise its redemption option under this Section 7(a) by delivery of written notice to the holders of shares of the Series B Preferred Stock and the Intermediate HoldCo Series A Preferred Stock (the “Redemption Notice”) sent to the Holders not less than 20 and not more than 35 calendar days prior to the date designated by the Corporation for such redemption (such date, the “Voluntary Redemption Date”).
(b) The Redemption Notice shall identify the shares of Series B Preferred Stock and Intermediate HoldCo Series A Preferred Stock to be redeemed and shall state:
(i) the Voluntary Redemption Date;
(ii) the name and address of the Registrar and Transfer Agent;
(iii) that, unless the Corporation defaults on the payment of the amounts specified in Section 7(c) below, dividends in respect of all shares of Intermediate HoldCo Series A Preferred Stock called for redemption shall cease to accrue on the Voluntary Redemption Date.
(c) On the Voluntary Redemption Date, in addition to any amounts due to the Holder in connection with the redemption of the Intermediate HoldCo Series A Preferred Stock, the Corporation shall pay to each Holder of shares to be redeemed on such date, per each share of Series B Preferred Stock being so redeemed, an amount equal to the Liquidation Preference at the time in effect, together with any declared but unpaid dividends thereon. After the payment to such Holder of the aggregate amount of the Liquidation Preference at the time in effect and all declared but unpaid dividends corresponding to all of such Holder’s shares of Series B Preferred Stock being redeemed and all amounts due to such Holder in connection with the redemption of such Holder’s Intermediate HoldCo Series A Preferred Stock, such Holder shall have no rights or claims to any remaining assets of the Corporation with respect to such shares of Series B Preferred Stock and Intermediate HoldCo Series A Preferred Stock.
(d) Any shares of Series B Preferred Stock that are redeemed pursuant to this Section 7 or pursuant to Section 8 shall be cancelled and may not be re-issued or included in authorized Series B Preferred Stock.
8. Mandatory Redemption.
(a) The provisions of this Section 8 shall apply upon the occurrence, after the Exit Indebtedness Termination Date, of any of the following (a “Mandatory Redemption Event”):
a Change of Control of the Corporation;
a Fundamental Change;
a Reorganized Invacare Fundamental Change;
an Intermediate HoldCo Change of Control; or
an Intermediate HoldCo Fundamental Change.
(b) On the occurrence of a Mandatory Redemption Event, the Corporation shall (and shall cause Intermediate HoldCo simultaneously) promptly, and in no event more than five Business Days from the date of such occurrence, either (i) call for redemption pursuant to Section 8 all outstanding shares of Series B Preferred Stock (and all shares of Intermediate HoldCo Series A Preferred Stock) and send to all Holders a Redemption Notice as provided therein, or (ii) make a written offer to all Holders (the “Mandatory Redemption Offer”) to redeem all of the issued and outstanding shares of Series B Preferred Stock (and all shares of Intermediate HoldCo Series A Preferred Stock), such that if fully redeemed no Invacare Share Units would remain outstanding, on a date selected by the Corporation (such date, the “Mandatory Redemption Date”) that shall be not earlier than 20 and no more than 35 calendar days after the date the offer is delivered to the Holders. The Mandatory Redemption Offer shall specify:
(i) the nature of the Mandatory Redemption Event occurred;
(ii) the date of the Mandatory Redemption Event;
(iii) the Mandatory Redemption Date;
(iv) the last date on which a Holder may accept the Corporation’s offer to redeem the shares of Series B Preferred Stock and the Intermediate HoldCo Series A Preferred Stock;
(v) the name and address of the Registrar and Transfer Agent; and
(vi) that, unless the Corporation defaults on the payment of the amounts specified in this Section 8(d), dividends in respect of all shares of Capital Stock tendered for redemption shall cease to accrue on the Mandatory Redemption Date.
(c) Should the funds legally available to the Corporation for the redemption of each Invacare Share Unit (the shares of Series B Preferred Stock and the Intermediate HoldCo Series A Preferred Stock) not be sufficient to pay to all Holders all amounts due pursuant to Section 8(d) below in respect of all Invacare Share Unites at the time outstanding, the Mandatory Redemption Offer shall (i) indicate the total amount of funds legally available to the Corporation for redemptions of such Capital Stock, (ii) include an explanation of how such amount was determined, and (iii) set forth the method, or methods, of how the funds will be allocated among Holders, in the event the total number of Invacare Share Units tendered for redemption exceeds the funds the Corporation has legally available for that purpose; provided, that any such method shall ensure that each Invacare Share Unit selected for redemption is redeemed in full.
(d) On the Mandatory Redemption Date, the Corporation shall pay to each Holder of Invacare Share Units being redeemed, in respect of each such share, an amount equal to the applicable liquidation preference for each share of Series B Preferred Stock and each share of Intermediate HoldCo Series A Preferred Stock at the time in effect, together with the corresponding Redemption Dividend Amount accrued thereon.
(e) After the payment by the Corporation to the respective Holder of the aggregate amount of the applicable liquidation preference at the time in effect and the corresponding Redemption Dividend Amount in respect of each Invacare Share Unit being redeemed, such Holder shall have no rights or claims to any remaining assets of the Corporation with respect to such share.
(f) Following each Mandatory Redemption Date on which the Corporation is unable to redeem all Invacare Share Units timely tendered for redemption due to the insufficiency of funds legally available for that purpose, the Corporation shall be required to send to the Holders additional Mandatory Redemption Offers within 20 Business Days from each date on which the Corporation shall receive additional payments or proceeds from the transaction or occurrence that constituted the original Mandatory Redemption Event from which such Mandatory Redemption Date arose, provided that at least $10,000,000.00 (or such lesser amount as the Board of Directors may determine in its discretion) are legally available to pay for additional redemptions of Invacare Share Units.
(g) In connection with any redemption of Series B Preferred Stock and Intermediate HoldCo Series A Preferred Stock pursuant to this Section 8, the Corporation shall (i) comply with the provisions of Rule 13e-4, Rule 14e-1 (or any successor provision) and any other tender offer rules under the Exchange Act that may then be applicable; and (ii) otherwise comply with all federal and state securities laws. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Section 8, the Corporation’s compliance with such laws and regulations shall not in and of itself cause a breach of its obligations under this Section 8.
(h) For the avoidance of doubt, the Corporation may waive the provisions of this Section 8, including the occurrence of a Mandatory Redemption Event, and all rights, preferences and privileges with respect thereto, for all Holders with the applicable approvals or consents set forth in Section 14.
9. [Intentionally Omitted].
10. Transfer Agent and Registrar. The duly appointed Transfer Agent and Registrar for Series B Preferred Stock shall be Equiniti Trust Company, LLC. The Corporation may, in its sole discretion, remove the Transfer Agent or Registrar in accordance with the agreement between the Corporation and the Transfer Agent or Registrar, as the case may be; provided that if the Corporation removes Equiniti Trust Company, LLC, the Corporation shall appoint a successor transfer agent, or registrar, as the case may be, who shall accept such appointment prior to the effectiveness of such removal. Upon any such removal or appointment, the Corporation shall give notice thereof to the Holders.
11. Record Holders. To the fullest extent permitted by applicable law, the Corporation and the Transfer Agent may deem and treat the Holder of any shares of Series B Preferred Stock as the true and lawful owner thereof for all purposes.
12. Notices. All notices or communications in respect of Series B Preferred Stock shall be sufficiently given if given in writing and delivered by first class mail, postage prepaid, or if given in such other manner as may be permitted in this Certificate of Designations, in the Certificate of Incorporation or the Bylaws and by applicable law.
13. Other Rights. The shares of Series B Preferred Stock shall not have any rights, preferences, privileges or voting powers or relative, participating, optional or other special rights, or qualifications, limitations or restrictions thereof, other than as set forth herein or in the Certificate of Incorporation or as provided by applicable law.
14. Amendments. The Corporation reserves the right at any time, and from time to time, to amend, alter, change, waive or repeal any provision contained in this Certificate of Designation, and any other provisions authorized by the laws of the State of Delaware at the time in force may be added or inserted, in the manner now or hereafter prescribed herein or by applicable law, and all rights, preferences and privileges of whatsoever nature conferred upon shareholders, directors or any other persons whomsoever by and pursuant to this Certificate of Designation in their present form or as hereafter amended are granted subject to this reservation; provided, however, that (a) any amendment, alteration, waiver or repeal of this Certificate of Designation, or any provision hereof, shall require an affirmative vote of a majority of the shares of Series B Preferred Stock at the time outstanding voting as a separate class, and (b) any amendment that would adversely affect the rights of the Entitled Stockholders under Section 5(d)
will require the consent of Entitled Stockholders holding a majority of the shares of Series B Preferred Stock held by all Entitled Stockholders.
15. Book‑Entry Form Shares of the Series B Preferred Stock will be issued only in the form of book entries maintained by the Corporation’s Registrar and Transfer Agent.
16. Effective Date.
This Certificate of Designation shall become effective on filing with the Secretary of State of the State of Delaware.
[The Remainder of this Page Intentionally Left Blank]
Invacare Holdings Corporation has caused this Certificate of Designation to be duly executed this day of 2024.
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[Signature Page to Certificate of Designation]
65307306 v7-WorkSiteUS-040329/0001
65307306 v12-WorkSiteUS-040329/0001
Exhibit E
SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
INVACARE INTERNATIONAL HOLDINGS CORP.
Invacare International Holdings Corp. (the “Corporation”), a corporation organized and existing under the General Corporation Law of the State of Delaware (the “DGCL”), hereby certifies as follows:
1. The original Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on April 24, 2023 and subsequently amended and restated pursuant to that certain Amended and Restated Certificate of Incorporation of this Corporation filed with the Secretary of State of the State of Delaware on May 5, 2023 (the “A&R Certificate of Incorporation”).
2. This Second Amended and Restated Certificate of Incorporation (this “Second A&R Certificate of Incorporation”), which restates and amends the A&R Certificate of Incorporation, has been declared advisable and duly adopted by the Board of Directors of the Corporation (the “Board of Directors”) and the stockholders of the Corporation in accordance with Sections 228, 242 and 245 of the DGCL.
3. The A&R Certificate of Incorporation is hereby amended and restated in its entirety to read as follows:
ARTICLE I
NAME
The name of the Corporation is Invacare International Holdings Corp.
ARTICLE II
REGISTERED OFFICE; REGISTERED AGENT
The address of the registered office of the Corporation in the State of Delaware is c/o Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle, Delaware, 19801. The name of its registered agent at such address is The Corporation Trust Company.
ARTICLE III
PURPOSE
The purpose of the Corporation is to engage in any lawful act or activity for which corporations may now or hereafter be organized under the DGCL, as the same exists or may hereafter be amended from time to time.
ARTICLE IV
CAPITALIZATION
Section 4.1 Authorized Shares. The aggregate number of shares of capital stock that the Corporation will have authority to issue is [_________]shares, which shall consist of [_________] shares of common stock, par value $0.001 per share (the “Common Stock”), and 5,938,620 shares of preferred stock, par value $0.001 per share (“Preferred Stock”).
Section 4.2 Common Stock. Each holder of Common Stock, as such, shall be entitled to one vote for each share of Common Stock held by such holder on all matters on which stockholders generally are entitled to vote under applicable law. Except as otherwise provided in this Second A&R Certificate of Incorporation or required by applicable law, the holders of Common Stock shall vote together as a single class (or, if the holders of one or more series of Preferred Stock are entitled to vote together with the holders of Common Stock, as a single class with the holders of such series of Preferred Stock) on all matters submitted to a vote of the stockholders generally. Notwithstanding the foregoing, to the fullest extent permitted by applicable law, holders of Common Stock, as such, shall have no voting power with respect to, and shall not be entitled to vote on, any amendment to this Second A&R Certificate of Incorporation (including any certificate of designation relating to any series of Preferred Stock) that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to this Second A&R Certificate of Incorporation (including any certificate of designation relating to any series of Preferred Stock) or pursuant to the DGCL.
Subject to applicable law, to the rights, if any, of the holders of any outstanding series of Preferred Stock having a preference over or the right to participate with the Common Stock with respect to the payment of dividends and other distributions in cash, property or securities of the Corporation, and to Article XIV, such dividends and other distributions may be declared and paid ratably on the Common Stock out of the assets of the Corporation that are by applicable law available therefor at such times and in such amounts as the Board of Directors in its discretion shall determine.
In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, after payment or provision for payment of the debts and other liabilities of the Corporation and subject to the rights, if any, of the holders of Preferred Stock having a preference over or the right to participate with the Common Stock as to distributions upon liquidation, dissolution or winding up, the holders of all outstanding shares of Common Stock shall be entitled to receive the remaining assets of the Corporation available for distribution ratably in proportion to the number of shares held by each such stockholder.
Section 4.3 Preferred Stock. Authority is hereby expressly vested in the Board of Directors, subject to any limitations prescribed by the DGCL, to establish one or more series of Preferred Stock from time to time by adoption of a resolution or resolutions setting forth the designation of the series and fixing and determining the designations, powers, preferences, limitations and relative rights, including voting powers, of the shares of any such series to the
same extent that such designations, powers, preferences, limitations and relative rights could be stated if fully set forth in this Second A&R Certificate of Incorporation.
The Board of Directors may increase or decrease the authorized number of shares within each established series of Preferred Stock pursuant to the DGCL; provided, however, that the Board of Directors may not decrease the number of shares within a series to less than the number of shares within such series that are then issued and outstanding.
ARTICLE V
BYLAWS
In furtherance and not in limitation of the powers conferred by statute, the bylaws of the Corporation (the “Bylaws”) may be amended or repealed, and new bylaws may be adopted, by the Board of Directors without any action on the part of the stockholders, and the stockholders may make additional bylaws and may adopt, amend or repeal any bylaws, whether such bylaws were originally adopted by them or otherwise.
ARTICLE VI
BOARD OF DIRECTORS
Section 6.1 General. Except as provided in this Second A&R Certificate of Incorporation or the DGCL, the business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors.
Section 6.2 Number and Term. Subject to any rights of the holders of any series of Preferred Stock to elect additional directors under specified circumstances, the total number of directors shall be no more than nine (9) as fixed from time to time in accordance with the Bylaws. Notwithstanding the foregoing, if at any time a vacancy is created on the Board of Directors by reason of the incapacity, death, removal or resignation of a director, such vacancy shall automatically reduce the number of directors pro tanto, until such time as such vacancy is filled, whereupon the number of directors shall be automatically increased pro tanto. The directors shall consist of a single class, and each director shall hold office until his or her successor shall have been duly elected and qualified, subject, however, to such director’s earlier death, resignation, retirement, disqualification or removal.
Section 6.3 No Requirement of Written Ballot. Unless and except to the extent that the Bylaws shall so require, the election of the directors need not be by written ballot.
ARTICLE VII
INDEMNIFICATION
Section 7.1 Right to Indemnification. To the fullest extent permitted by applicable law, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (“Proceeding”), whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation), by reason of the fact that he or she is or was a director or officer of the
Corporation or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee, fiduciary or agent of another corporation, partnership, joint venture, limited liability company, trust or other enterprise (“Other Entity”), against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such Proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person’s conduct was unlawful, provided, however, that except as set forth in Section 7.3, the Corporation shall not be required to indemnify a person in connection with a Proceeding (or part thereof) commenced by such person unless the commencement of such Proceeding (or part thereof) by such person was authorized in the specific case by the Board of Directors. The termination of any Proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that the person’s conduct was unlawful. To the fullest extent permitted by applicable law, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that the person is or was a director or officer of the Corporation or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee, fiduciary or agent of an Other Entity against expenses (including attorneys’ fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the Corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery of the State of Delaware (the “Court of Chancery”) or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. Persons who are not directors or officers of the Corporation (or otherwise entitled to indemnification pursuant to this Section 7.1) may be similarly indemnified in respect of service to the Corporation or to an Other Entity at the request of the Corporation to the extent the Board at any time specifies that such persons are entitled.
Section 7.2 Right to Advancement of Expenses. The Corporation shall, from time to time, reimburse or advance to any director or officer or other person entitled to indemnification hereunder the funds necessary for payment of expenses, including attorneys’ fees and disbursements, incurred in connection with any Proceeding, in advance of the final disposition of such Proceeding; provided, however, that, if required by the DGCL, such expenses incurred by or on behalf of any director or officer or other person may be paid in advance of the final disposition of a Proceeding only upon receipt by the Corporation of an undertaking, by or on behalf of such director or officer (or other person indemnified hereunder), to repay any such amount so advanced if it shall ultimately be determined by final judicial decision from which
there is no further right of appeal that such director, officer or other person is not entitled to be indemnified for such expenses.
Section 7.3 Claims by Indemnifiable Persons. If a claim for indemnification or advancement of expenses under this Article VII is not paid in full within 30 days after a written claim therefor by any person entitled to indemnification and/or advancement of expenses under this Article VII (an “Indemnifiable Person”) has been received by the Corporation (and any undertaking required under Section 7.2), the Indemnifiable Person may file suit to recover the unpaid amount of such claim. If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses, the Indemnifiable Person shall be entitled to be paid the expense of prosecuting or defending such claim to the fullest extent permitted by applicable law. In any such action the Corporation shall have the burden of proving that the Indemnifiable Person is not entitled to the requested indemnification or advancement of expenses under applicable law. Neither the failure of the Corporation (including the Board of Directors or a committee thereof, its independent legal counsel and its stockholders) to have made a determination prior to the commencement of such action that such indemnification or reimbursement or advancement of expenses is proper in the circumstances nor an actual determination by the Corporation (including the Board of Directors or a committee thereof, its independent legal counsel and its stockholders) that such Indemnifiable Person is not entitled to such indemnification or reimbursement or advancement of expenses shall constitute a defense to the action or create a presumption that such Indemnifiable Person is not so entitled. Such an Indemnifiable Person shall also be indemnified, to the fullest extent permitted by applicable law, for any expenses incurred in connection with successfully establishing his or her right to such indemnification or reimbursement or advancement of expenses, in whole or in part, in any such action. Any right to indemnification or reimbursement or advancement of expenses shall be determined by the applicable law in effect at the time indemnification or reimbursement or advancement of expenses is sought.
Section 7.4 Indemnification Not Exclusive. The rights to indemnification and reimbursement or advancement of expenses provided by, or granted pursuant to, this Article VII shall not be deemed exclusive of any other rights to which a person seeking indemnification or reimbursement or advancement of expenses may have or hereafter be entitled under any statute, the Bylaws, this Second A&R Certificate of Incorporation, any agreement (including any policy of insurance purchased or provided by the Corporation under which directors, officers, employees and other agents of the Corporation are covered), any vote of the holders of capital stock of the Corporation entitled to vote or disinterested directors or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding such office.
Section 7.5 Continuing Rights. The rights to indemnification and reimbursement or advancement of expenses provided by, or granted pursuant to, this Article VII shall continue as to a person who has ceased to be a director or officer (or other person indemnified hereunder) and shall inure to the benefit of the executors, administrators, legatees and distributees of such person.
Section 7.6 Insurance. The Corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, member, manager, employee or agent of an Other Entity, against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the Corporation would have the power to indemnify such person against such liability under the provisions of this Article VII, the Bylaws, the DGCL or any other applicable law.
Section 7.7 Contract Rights; Amendment or Repeal. The provisions of this Article VII shall be a contract between the Corporation, on the one hand, and each director and officer who serves in such capacity at any time while this Article VII is in effect and any other person indemnified hereunder, on the other hand, pursuant to which the Corporation and each such director, officer or other person intend to be legally bound. Notwithstanding anything to the contrary contained in this Second A&R Certificate of Incorporation, no amendment, repeal or modification of this Article VII shall affect any rights or obligations with respect to any state of facts then or theretofore existing or any proceeding theretofore or thereafter brought or threatened based in whole or in part upon any such state of facts.
Section 7.8 Requested Services. Any director, officer, employee, fiduciary or agent of the Corporation serving in any capacity in (a) another corporation of which the majority of the shares entitled to vote in the election of its directors is held, directly or indirectly, by the Corporation or (b) any employee benefit plan of the Corporation or any corporation referred to in clause (a) shall be deemed to be doing so at the request of the Corporation.
Section 7.9 Indemnitor of First Resort. It is the intent that with respect to all advancement, reimbursement and indemnification obligations under this Article VII, the Corporation shall be the indemnitor of first resort (i.e., its obligations to Indemnifiable Persons under this Second A&R Certificate of Incorporation are primary and any obligation of any other person to provide advancement or indemnification for the same losses incurred by any Indemnifiable Person are secondary), and if any person pays or causes to be paid, for any reason, any amounts otherwise indemnifiable hereunder or under any other indemnification agreement (whether pursuant to this Second A&R Certificate of Incorporation, the Bylaws, contract, applicable law or regulation), then (a) such person shall be fully subrogated to all rights hereunder of the Indemnifiable Person with respect to such payment and (b) the Corporation shall reimburse such person for the payments actually made and waive any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of such person.
Section 7.10 Conversion, Merger or Consolidation. For purposes of this Article VII, references to the “Corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a conversion, consolidation or merger that, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was or agreed to be a director, officer, employee or agent of such constituent corporation, or is
or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, limited liability company, trust or other enterprise, shall stand in the same position under the provisions of this Article VII with respect to the resulting or surviving corporation as he or she would have with respect to such constituent corporation if its separate existence had continued.
ARTICLE VIII
NO MONETARY LIABILITY OF DIRECTORS OR OFFICERS
To the fullest extent permitted by the DGCL as it now exists or may hereafter be amended, a director or officer of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for any breach of fiduciary duty as a director or officer.
Neither the amendment nor repeal of this Article VIII, nor the adoption of any provision of this Second A&R Certificate of Incorporation, nor, to the fullest extent permitted by the DGCL, any modification of law shall eliminate, reduce or otherwise adversely affect any right or protection of a current or former director or officer of the Corporation existing at the time of such amendment, repeal, adoption or modification.
ARTICLE IX
AMENDMENT
The Corporation reserves the right at any time, and from time to time, to amend, alter, change or repeal any provision contained in this Second A&R Certificate of Incorporation, and any other provisions authorized by the laws of the State of Delaware at the time in force may be added or inserted, in the manner now or hereafter prescribed herein or by applicable law, and all rights, preferences and privileges of whatsoever nature conferred upon stockholders, directors or any other persons whomsoever by and pursuant to this Second A&R Certificate of Incorporation in their present form or as hereafter amended are granted subject to this reservation; provided that this Article IX is subject to the second paragraph of Article XIV.
ARTICLE X
STOCKHOLDER ACTION
Special meetings of the stockholders (including without limitation, special meetings of the holders of any class or series capital stock of the Corporation) unless otherwise prescribed by statute, shall be called by the Secretary of the Corporation, or such other officer or director of the Corporation as may be designated by the Board of Directors, stating the purpose or purposes therefor, if requested by either (a) a resolution adopted by not less than the majority of the whole Board of Directors or (b) the written request of any holder or holders of shares having not less than 20% of the voting power at a meeting at which the holders of all shares entitled to vote on the action or actions, as set forth in the proposed purpose or purposes of the meeting, were present and voted. The business conducted at any special meeting shall be confined to the purpose or purposes described in the notice thereof.
Any action required or permitted to be taken at any annual meeting or special meeting of the stockholders of the Corporation may be taken without a meeting, without prior notice and without a vote of stockholders, if a consent or consents in writing or by electronic transmission, setting forth the action so taken, is or are signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted.
ARTICLE XI
CORPORATE OPPORTUNITIES
Nothing contained in this Second A&R Certificate of Incorporation or in any other agreement delivered pursuant hereto shall be construed to create any agency relationship among the stockholders.
(I) Members of the Board of Directors who are not employees or officers of the Corporation and (II) stockholders of the Corporation, solely by virtue of each such stockholder’s status as a stockholder of the Corporation (such members of the Board of Directors and stockholders and their respective Affiliates and the partners, principals, directors, officers, members and/or employees of each of the foregoing, collectively, the “Identified Persons” and each, individually, an “Identified Person”), shall, to the fullest extent permitted by applicable law, have no duty to refrain from, directly or indirectly, (a) engaging in the same or similar activities or lines of business in which the Corporation or any of its Affiliates, directly or indirectly, now engages or may engage or (b) otherwise competing with the Corporation or any of its Affiliates, and, to the fullest extent permitted by applicable law, no Identified Person shall be liable to the Corporation or its stockholders or to any Affiliate of the Corporation for breach of any fiduciary duty solely by reason of the fact that such Identified Person engages in any such activities. To the fullest extent permitted by applicable law, the Corporation, pursuant to Section 122(17) of the DGCL, hereby renounces any interest or expectancy in, or right to be offered an opportunity to participate in, any potential transaction or business opportunity for an Identified Person and the Corporation or any of its Affiliates, except as provided in the immediately below paragraph. Subject to the immediately below paragraph, in the event that any Identified Person acquires knowledge of a potential transaction or other business opportunity that may be a corporate opportunity for itself, herself or himself and the Corporation or any of its Affiliates, such Identified Person shall, to the fullest extent permitted by applicable law, have no duty to communicate or offer such transaction or other business opportunity to the Corporation or any of its Affiliates and, to the fullest extent permitted by applicable law, shall not be liable to the Corporation or its stockholders or to any Affiliate of the Corporation for breach of any fiduciary duty as a stockholder, director or officer of the Corporation solely by reason of the fact that such Identified Person pursues or acquires such corporate opportunity for itself, herself or himself, or offers or directs such corporate opportunity to another Person.
Notwithstanding the immediately preceding paragraph, the Corporation does not renounce its interest in any corporate opportunity offered to any Identified Person if such opportunity is (a) expressly offered to such person solely in his or her capacity as a director,
officer, consultant or employee of the Corporation or (b) identified by an Identified Person solely through the disclosure of information by or on behalf of the Corporation.
In addition to and notwithstanding the foregoing provisions of this Article XI, a corporate opportunity shall not be deemed to be a potential corporate opportunity for the Corporation if it is a business opportunity that (a) the Corporation is neither financially or legally able, nor contractually permitted to undertake, (b) from its nature, is not in the line of the Corporation’s business or is of no practical advantage to the Corporation or (c) is one in which the Corporation has no interest or reasonable expectancy.
The Identified Persons may now own, may continue to own, and from time to time may acquire and own, investments in one or more other entities (such entities collectively, “Related Companies”) that are direct competitors of, or that otherwise may have interests that do or could conflict with those of, the Corporation, any of the Corporation’s stockholders or any of their respective Affiliates, and (a) the enjoyment, exercise and enforcement of the rights, interests, privileges, powers and benefits granted or available to the Identified Persons under this Second A&R Certificate of Incorporation shall not be in any manner reduced, diminished, affected or impaired, and the obligations of the Identified Persons under this Second A&R Certificate of Incorporation shall not be in any manner augmented or increased, by reason of any act, circumstance, occurrence or event arising from or in any respect relating to (i) the ownership by an Identified Person of any interest in any Related Company, (ii) the affiliation of any Related Company with an Identified Person or (iii) any action taken or omitted by an Identified Person in respect of any Related Company, (b) no Identified Person shall, by reason of such ownership, affiliation or action, become subject to any fiduciary duty to the Corporation, any of the Corporation’s stockholders or any of their respective Affiliates, (c) none of the duties imposed on an Identified Person, whether by contract or law, do or shall limit or impair the right of any Identified Person lawfully to compete with the Corporation, any of the Corporation’s stockholders or any of their respective Affiliates and (d) the Identified Persons are not and shall not be obligated to disclose to the Corporation, any of the Corporation’s stockholders or any of their respective Affiliates any information related to their respective businesses or opportunities, including acquisition opportunities, or to refrain from or in any respect to be restricted in competing against the Corporation, any of the Corporation’s stockholders or any of their respective Affiliates in any such business or as to any such opportunities.
ARTICLE XII
SEVERABILITY
If any provision or provisions of this Second A&R Certificate of Incorporation shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever: (a) the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Second A&R Certificate of Incorporation (including each portion of any paragraph of this Second A&R Certificate of Incorporation containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not, to the fullest extent permitted by applicable law, in any way be affected or impaired thereby and (b) to the fullest extent permitted by applicable law,
the provisions of this Second A&R Certificate of Incorporation (including each such portion of any paragraph of this Second A&R Certificate of Incorporation containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to permit the Corporation to protect its directors, officers, employees and agents from personal liability in respect of their good faith service to or for the benefit of the Corporation to the fullest extent permitted by applicable law.
ARTICLE XIII
FORUM
Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery (of, if the Court of Chancery does not have jurisdiction, the federal district court for the State of Delaware) shall, to the fullest extent permitted by applicable law, be the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of the Corporation, (b) any action asserting a claim of breach of a fiduciary duty owed by any director, officer, employee or agent of the Corporation to the Corporation or the Corporation’s stockholders, (c) any action asserting a claim against the Corporation or any director or officer of the Corporation arising pursuant to any provision of the DGCL, this Second A&R Certificate of Incorporation or the Bylaws (as either may be amended and/or restated from time to time) or as to which the DGCL confers jurisdiction on the Court of Chancery or (d) any action asserting a claim governed by the internal affairs doctrine. If any action the subject matter of which is within the scope of this Article XIII is filed in a court other than a court located within the State of Delaware (a “Foreign Action”) in the name of any stockholder, such stockholder shall be deemed to have consented to: (i) the personal jurisdiction of the state and federal courts located within the State of Delaware in connection with any action brought in any such court to enforce this Article XIII (an “Enforcement Action”); and (ii) having service of process made upon such stockholder in any such Enforcement Action by service upon such stockholder’s counsel in the Foreign Action as agent for such stockholder. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article XIII.
ARTICLE XIV
COVENANTS
Prior to the Payment in Full of (x) the Credit Agreement Obligations, the Corporation shall comply (or, in the case of Section 6.08, shall not take, or permit to be taken, any action that would result in non-compliance) with the provisions of Sections 6.08 and 6.21 of the Credit Agreement, (y) the Tranche I Notes Obligations, the Corporation shall comply (or, in the case of Section 4.17, shall not take, or permit to be taken, any action that would result in non-compliance) with the provisions of Sections 4.17 and 4.34 of the Tranche I Indenture and (z) the Tranche II Notes Obligations, the Corporation shall comply (or, in the case of Section 4.17, shall not take, or permit to be taken, any action that would result in non-compliance) with the provisions of Sections 4.17 and 4.34 of the Tranche II Indenture, except, in each case, to the extent permitted by any waiver granted by the applicable Required Holders in writing.
The Corporation will not amend this Article XIV (including by merger or otherwise) without the consent of the Required Holders in respect of (i) the Credit Agreement Obligations (unless they have been Paid in Full), (ii) the Tranche I Notes Obligations (unless they have been Paid in Full) and (iii) Tranche II Notes Obligations (unless they have been Paid in Full).
For purposes of this Article XIV, the following terms have the following meanings:
“Credit Agreement” means the Amended and Restated Credit Agreement dated as of May 5, 2023 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time), by and among Invacare Holding Corporation, as holdings, Invacare Corporation, as borrower, the lenders from time to time party thereto and the administrative agent and collateral agent referred to therein.
“Credit Agreement Obligations” means (a) the due and punctual payment by Invacare Corporation of (i) the principal of and interest at the applicable rate or rates provided in the Credit Agreement (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the loans under the Credit Agreement, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, and (ii) all other monetary obligations of Invacare Corporation under or pursuant to the Credit Agreement and each of the other Loan Documents, including obligations to pay fees, expense reimbursement obligations and indemnification obligations, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), (b) the due and punctual payment and performance of all other obligations of Invacare Corporation under or pursuant to the Credit Agreement and each of the other Loan Documents and (c) the due and punctual payment and performance of all the obligations of each other Loan Party (as defined in the Credit Agreement) under or pursuant to the Credit Agreement and each of the other Loan Documents (including interest and monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding).
“Loan Documents” has the meaning assigned to such term in the Credit Agreement.
“Required Holders” means (i) in the case of the Credit Agreement Obligations, the Required Lenders (as defined in the Credit Agreement), (ii) in the case of the Tranche I Notes Obligations, the Required Holders (as defined in the Tranche I Indenture) and (iii) in the case of the Tranche II Notes Obligations, the Required Holders (as defined in the Tranche II Indenture).
“Tranche I Indenture” means the indenture dated as of May 5, 2023 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time), among Invacare Holding Corporation, as issuer, the guarantors listed therein, the collateral agent and trustee referred to therein pursuant to which the 7.50% Convertible Senior Secured Notes due 2028, Tranche I are issued.
“Tranche II Indenture” means the indenture dated as of May 5, 2023 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time), among Invacare Holding Corporation, as issuer, the guarantors listed therein, the collateral agent and trustee referred to therein pursuant to which the 7.50% Convertible Senior Secured Notes due 2028, Tranche II are issued.
“Tranche I Notes Documents” has the meaning assigned to the term “Notes Documents” in the Tranche I Indenture.
“Tranche II Notes Documents” has the meaning assigned to the term “Notes Documents” in the Tranche II Indenture.
“Tranche I Notes Obligations” means all obligations of Invacare Holding Corporation and the guarantors listed in the Tranche I Indenture under or in respect of the 7.50% Convertible Senior Secured Notes due 2028, Tranche I of Invacare Holding Corporation, the Tranche I Indenture and the other Tranche I Notes Documents.
“Tranche II Notes Obligations” means all obligations of Invacare Holding Corporation and the guarantors listed in the Tranche II Indenture under or in respect of the 7.50% Convertible Senior Secured Notes due 2028, Tranche II of Invacare Holding Corporation, the Tranche II Indenture and the other Tranche II Notes Documents.
“Payment in Full” means (i) with respect to the Credit Agreement Obligations, the termination of all commitments of the lenders under the Credit Agreement to extend credit thereunder and (ii) with respect to the Credit Agreement Obligations, the Tranche I Notes Obligations and the Tranche II Notes Obligations, the payment in full in cash of all of such obligations, including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding (other than contingent obligations for which no claim has been made at such time), and “Paid in Full” will have a correlative meaning.
IN WITNESS WHEREOF, the undersigned has executed this Second Amended and Restated Certificate of Incorporation as of this ________ day of ___ 2024.
INVACARE INTERNATIONAL HOLDINGS CORP.
By:
Name: Anthony LaPlaca
Title: Senior Vice President, General Counsel, Chief Administrative Officer & Secretary
65302458 v2-WorkSiteUS-040329/0001
Exhibit F
CERTIFICATE OF DESIGNATIONS
OF
9.00% SERIES A PREFERRED STOCK
OF
INVACARE INTERNATIONAL HOLDINGS CORP.
Section 1 Designation and Number of Shares. Pursuant to the Charter, there is hereby created out of the authorized and unissued shares of preferred stock of the Corporation, par value $0.001 per share (“Preferred Stock”), a series of Preferred Stock consisting of 5,938,620 shares of Preferred Stock designated as the “9.00% Series A Preferred Stock” (the “Series A Preferred Stock”). Such number of shares may be increased or decreased by resolution of the Board of Directors or any duly authorized committee thereof, subject to the terms and conditions hereof and the requirements of applicable law; provided that (i) no increase shall cause the number of authorized shares of Series A Preferred Stock to exceed the total number of authorized shares of Preferred Stock and (ii) no decrease shall reduce the number of shares of Series A Preferred Stock to a number less than the number of such shares then outstanding.
Section 2 General Matters; Ranking.
(a) Each share of Series A Preferred Stock shall be identical in all respects to every other share of Series A Preferred Stock. The Series A Preferred Stock, with respect to dividend rights and/or distribution rights upon the liquidation, winding‑up or dissolution, as applicable, of the Corporation, shall rank (i) senior to each class or series of Junior Stock, (ii) on parity with each class or series of Parity Stock, (iii) junior to each class or series of Senior Stock, and (iv) junior to the Corporation’s existing and future indebtedness and other liabilities.
(b) Each share of Series A Preferred Stock shall be dealt with together with each share of Parent Series B Preferred Stock as a unit (each an “Invacare Share Unit”) on a one-for-one basis and no shares of Parent Series B Preferred Stock or Series A Preferred Stock may be dealt with individually or one without the other.
(c) Shares of Series A Preferred Stock may be issued or transferred only in connection with the simultaneous issuance or transfer of an identical number of shares of Parent Series B Preferred Stock. Any purported issuance or transfer of shares of Series A Preferred Stock not accompanied by an issuance or transfer of the identical number of shares of Parent Series B Preferred Stock shall be null and void and of no force or effect, and the shares of Series A Preferred Stock so issued or transferred shall automatically and without further action on the part of the Corporation or any holder of Series A Preferred Stock be transferred to the Corporation and cancelled for no consideration and thereupon shall be retired.
Section 3 Standard Definitions. As used herein with respect to the Series A Preferred Stock:
“ABL Credit Agreement” shall mean that certain loan and security agreement dated May 5, 2023 among the Corporation and the other borrowers from time to time party thereto, the guarantors from time to time party thereto, the lenders from time to time party thereto and White Oak Commercial Finance, LLC, as Administrative Agent and Collateral Agent, as amended, restated, amended and restated, supplemented or otherwise modified from time to time.
“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, such Person.
“Backstop Commitment Agreement” shall have the meaning ascribed to the term in the Plan.
“Backstop Party” means the original signatories to the Backstop Commitment Agreement and any Person that, as of the Effective Date, is entitled to exercise Backstop Party Rights pursuant to, and as defined in, the Backstop Commitment Agreement.
“Bankruptcy Court” means the United States Bankruptcy Court for the Southern District of Texas, Houston Division.
“Board of Directors” shall have the meaning set forth in the Charter.
“Business Day” means any day other than a Saturday or Sunday or any other day on which commercial banks in New York City are authorized or required by law or executive order to close.
“Bylaws” means the Bylaws of the Corporation, as amended or restated from time to time.
“Certificate of Designations” means this document setting forth the designation, powers, preferences and rights, and the qualifications, limitations or restrictions thereto, of the Series A Preferred Stock, as amended from time to time in compliance with applicable laws, the Charter and the provisions hereof.
“Change of Control” means that a Person or “group” (as the term is used for purposes of Section 13(d) of the Exchange Act), other than a Change of Control Excluded Person, becomes the direct or indirect beneficial owner (as determined pursuant to Rule 13d-3 or Rule 13d-5 under the Exchange Act) of securities representing more than 50% of the voting power of the Corporation.
“Change of Control Excluded Person” means: (a) a Person that is a Holder on the Issuance Date (or such Holder’s Related Fund) to the extent that prior to the date hereof neither such Holder nor any of such Holder’s Related Funds or Affiliates has filed a public report pursuant to Section 13(d) of the Exchange Act indicating that such Holder or such Holder’s Related Funds or Affiliates delivered a letter to the Board of Directors of Parent indicating that such Person, either alone or together with other potential investors, had or was proposing to engage in discussions with Parent regarding the potential acquisition of the Parent; (b) any Person that controls, is controlled by, or is under common control with a Person described in clause (a) of this definition; and (c) a “group” (as the term is used for purposes of Sections 13(d) of the Exchange Act) that includes one or more Change of Control Excluded Persons as defined under clauses (a) or (b)
above, where such Change of Control Excluded Persons beneficially own capital stock of the Corporation having more the 50% of the combined voting power in the election of directors of all the capital stock of the Corporation held by such group.
“Charter” means the certificate of incorporation of the Corporation, as amended or restated from time to time.
“Close of Business” means 5:00 p.m., New York City time.
“Code” means the Internal Revenue Code of 1986, as amended.
“Common Stock” means the common stock, par value $0.001 per share, of the Corporation.
“Corporation” means Invacare International Holdings Corp., a Delaware corporation.
“Deemed Liquidation Event” means the occurrence of any of the following:
(i) a merger or consolidation in which the Corporation is a constituent party, or a Subsidiary of the Corporation is a constituent party and the Corporation issues shares of its capital stock pursuant to such merger or consolidation, unless the shares of capital stock of the Corporation outstanding immediately prior to such merger or consolidation continue to represent, or are converted into or exchanged for shares of capital stock that represent, immediately following such merger or consolidation, at least a majority, by voting power, of the capital stock of (1) the surviving or resulting corporation; or (2) if the surviving or resulting corporation is a wholly owned subsidiary of another corporation immediately following such merger or consolidation, the parent corporation of such surviving or resulting corporation;
(ii) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the Corporation or any Subsidiary of the Corporation of all or substantially all the assets of the Corporation and its Subsidiaries taken as a whole, or
(iii) the sale or disposition (whether by merger, consolidation or otherwise, and whether in a single transaction or a series of related transactions) of one or more Subsidiaries of the Corporation of substantially all of the assets of the Corporation and its Subsidiaries taken as a whole are held by such Subsidiary or Subsidiaries, except where such sale, lease, transfer, exclusive license or other disposition is to a wholly owned Subsidiary of the Corporation;
provided, however, that, prior to the Exit Indebtedness Termination Date, a Deemed Liquidation Event shall not occur unless such Deemed Liquidation Event constitutes an event requiring
payment in full of the Exit Term Loan Facility and the Exit Secured Convertible Notes; and provided, further, that no Deemed Liquidation Event shall occur if a majority of the Holders so determine by written notice to the Corporation prior to the effective date of any transaction described in clauses (i), (ii) or (iii) above.
“Dividend Accrual Period” means (a) initially, the period from, and including, March 16, 2024; and (b) thereafter, the period from, and including, each Dividend Payment Date, to, but excluding the next Dividend Payment Date.
“Dividend Payment Date” means March 15, June 15, September 15 and December 15 of each year.
“Dividend Rate” means a rate of 9% per annum computed on the basis of a year of twelve thirty-day months and 360 days.
“Dividends” shall have the meaning set forth in Section 4(a).
“Effective Date” has the meaning set forth in the Plan.
“Entitled Stockholder” has the meaning set forth in Section 6(e).
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
“Exit Indebtedness Termination Date” means the later of the (i) date on which the Exit Term Loan Facility is repaid in full and (ii) date on which none of the Exit Secured Convertible Notes remains outstanding.
“Exit Secured Convertible Notes” means, collectively, the Exit Secured Convertible Tranche I Notes, and the Exit Secured Convertible Tranche II Notes.
“Exit Secured Convertible Tranche I Notes” means the Corporation’s 7.50% Convertible Senior Secured Notes due 2028, Tranche I, issued on the Effective Date pursuant to the Exit Secured Convertible Tranche I Notes Indenture.
“Exit Secured Convertible Tranche I Notes Indenture” means the indenture dated May 5, 2023, among the Corporation, as issuer, the guarantors listed therein, and GLAS Trust Company LLC, as trustee and notes collateral agent, as from time to time amended in compliance with the provisions thereof.
“Exit Secured Convertible Tranche II Notes” means the Corporation’s 7.50% Convertible Senior Secured Notes due 2028, Tranche II, issued on the Effective Date pursuant to the Exit Secured Convertible Tranche II Notes Indenture.
“Exit Secured Convertible Tranche II Notes Indenture” means the indenture dated May 5, 2023, among the Corporation, as issuer, the guarantors listed therein, and GLAS Trust Company LLC, as trustee and notes collateral agent, as from time to time amended in compliance with the provisions thereof.
“Exit Term Loan Agreement” means the Amended and Restated Credit Agreement dated as of May 5, 2023, among the Corporation, Reorganized Invacare, the lenders party thereto, Cantor Fitzgerald Securities, as Administrative Agent, and GLAS Trust Company LLC, as Collateral Agent, as from time to time amended in compliance with the provisions thereof.
“Exit Term Loan Facility” means the credit facility in the amount of $85,000,000 extended to Reorganized Invacare under the Exit Term Loan Agreement.
“Fundamental Change” means any sale, lease, or other transfer or disposition in one transaction or a series of transactions of all or any material portion of the consolidated assets of the Corporation and its Subsidiaries, to any Person other than the Corporation or any of the Corporation’s Wholly‑Owned Subsidiaries (a “material portion” of the consolidated assets of the Corporation and its Subsidiaries, taken as a whole shall include, without limitation, assets sold, leased or transferred which results in net proceeds in excess of $10,000,000).
“Holder” means each Person in whose name shares of Series A Preferred Stock are registered, who shall be treated by the Corporation and the Registrar as the absolute owner of those shares of Series A Preferred Stock for the purpose of making payment and settling conversions and for all other purposes.
“Issuance Date” means the date that the Corporation issued the Series A Preferred Stock to the Holders in accordance with the Master Equity Agreement.
“Junior Stock” means (i) the Common Stock, and (ii) each other class or series of capital stock of the Corporation the terms of which do not expressly provide that such class or series ranks either (x) senior to the Series A Preferred Stock as to dividend rights and/or distribution rights upon the Corporation’s liquidation, winding‑up or dissolution or (y) on parity with the Series A Preferred Stock as to dividend rights and/or distribution rights upon the Corporation’s liquidation, winding‑up or dissolution.
“Liquidation Dividend Amount” shall have the meaning set forth in Section 5(a).
“Liquidation Preference” means, with respect to each share of Series A Preferred Stock, an amount initially equal to $27.01289529 (the “Initial Liquidation Preference”), which shall periodically be reset as follows (and until so reset shall remain at the most-recently set value):
(a) as of the Dividend Payment Date falling on June 15, 2024, the Liquidation Preference shall increase to the sum of (i) the Initial Liquidation Preference, plus (ii) Dividends accrued thereon at the Dividend Rate from, and including, March 16, 2024 to, but excluding, such Dividend Payment Date; and
(b) as of each Dividend Payment Date thereafter, the Liquidation Preference shall (subject to as provided below) increase to the sum of (i) the Liquidation Preference as re-computed on the immediately preceding Dividend Payment Date, plus (ii) Dividends accrued thereon at the Dividend Rate from, and including,
such immediately preceding Dividend Payment Date to, but excluding, the Dividend Payment Date as of which the computation is made;
provided, however, that no adjustment or reset to the Liquidation Preference shall occur on any Dividend Payment Date on which the Corporation shall make a payment of Dividends in cash pursuant to Section 4(c).
“Mandatory Redemption Date” shall have the meaning set forth in Section 9(b).
“Mandatory Redemption Event” shall have the meaning set forth in Section 9(a).
“Mandatory Redemption Offer” shall have the meaning set forth in Section 9(b).
“Master Equity Agreement” means that certain Master Equity Agreement dated April 8, 2024 among the Corporation, Parent, Reorganized Invacare and the other parties thereto.
“New Securities” has the meaning set forth in Section 6(e).
“Offer” has the meaning set forth in Section 6(e).
“Offeree” has the meaning set forth in Section 6(e).
“Offer Notice” has the meaning set forth in Section 6(e).
“Officer” means the Chairman, any Vice Chairman, any Chief Executive Officer, the Chief Administrative Officer, the Treasurer, any Vice President, any Assistant Treasurer, the Principal Accounting Officer, the Chief Financial Officer, the Chief Accounting Officer, the Chief Operating Officer, the General Counsel, the Secretary or any Assistant Secretary of the Corporation, as the case may be.
“Open of Business” means 9:00 a.m., New York City time.
“Parent” means Invacare Holdings Corporation, a Delaware corporation.
“Parent Change of Control” means (a) a Person or “group” (as the term is used for purposes of Section 13(d) of the Exchange Act), other than Parent Change of Control Excluded Person, becomes the direct or indirect beneficial owner (as determined pursuant to Rule 13d-3 or Rule 13d-5 under the Exchange Act) of securities representing more than 50% of the voting power of Parent.
“Parent Change of Control Excluded Person” means: (a) a Person that is a Backstop Party (or a Backstop Party’s Related Fund), to the extent that prior to the date hereof neither such Backstop Party nor any of such Backstop Party’s Related Funds or Affiliates has filed a public report pursuant to Section 13(d) of the Exchange Act indicating that such Back Stop Party or such Backstop Party’s Related Funds or Affiliates delivered a letter to the Board of Directors of the Parent indicating that such Person, either alone or together with other potential investors, had or was proposing to engage in discussions with the Parent regarding the potential acquisition of the
Parent; (b) any Person that controls, is controlled by, or is under common control with a Person described in clause (a) of this definition; and (c) a “group” (as the term is used for purposes of Sections 13(d) of the Exchange Act) that includes one or more Parent Change of Control Excluded Persons as defined under clauses (a) or (b) above, where such Parent Change of Control Excluded Persons beneficially own capital stock of the Parent having more the 50% of the combined voting power in the election of directors of all the capital stock of the Parent held by such group.
“Parent Fundamental Change” means (a) the voluntary or involuntary liquidation, winding‑up or dissolution of Parent, or (b) any sale, lease, or other transfer or disposition in one transaction or a series of transactions of all or any material portion of the consolidated assets of Parent and its Subsidiaries, taken as a whole, to any Person other than Parent or any of the Parent’s Wholly‑Owned Subsidiaries (a “material portion” of the consolidated assets of the Parent and its Subsidiaries, taken as a whole shall include, without limitation, assets sold, leased or transferred which results in net proceeds in excess of $10,000,000).
“Parent Series B Preferred Stock Certificate of Designations” means the document setting forth the designation, powers, preferences and rights, and the qualifications, limitations or restrictions thereto, of that certain series of preferred stock of Parent, par value $0.001 per share, consisting of 5,938,620 shares of preferred stock of Parent designated as the “Series B Redeemable Preferred Stock” (the “Parent Series B Preferred Stock”), as amended from time to time in compliance with applicable laws, the certificate of incorporation of Parent, as amended or restated from time to time, and the provisions thereof.
“Parity Stock” means any class or series of capital stock of the Corporation the terms of which expressly provide that such class or series shall rank on parity with the Series A Preferred Stock as to dividend rights and/or distribution rights upon the Corporation’s liquidation, winding‑up or dissolution.
“Permitted Encumbrance” means encumbrances for taxes, assessments and other governmental charges not yet due and payable, that are being contested in good faith and for which appropriate reserves have been established.
“Person” means any individual, partnership, firm, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, governmental authority or other entity of whatever nature.
“Preferred Stock” shall have the meaning set forth in Section 1 of this Certificate of Designations.
“Redemption Date” means a Voluntary Redemption Date or a Mandatory Redemption Date, as applicable.
“Redemption Dividend Amount” means, as of a Redemption Date and in respect of each share of Series A Preferred Stock being redeemed on such Redemption Date, the Dividends accrued on the Liquidation Preference of such share, and not otherwise a part of the Liquidation Preference,
from, and including, the last Dividend Payment Date immediately preceding such Redemption Date on which all Dividends then due were compounded or paid in cash to, but excluding, such Redemption Date.
“Redemption Notice” shall have the meaning set forth in Section 8(a).
“Register” means the records maintained by the Registrar reflecting ownership of the shares of Series A Preferred Stock issued in book-entry form pursuant to Section 19(a), or of the definitive stock certificates issued pursuant to Section 19(b).
“Registrar” initially means American Stock Transfer & Trust Company, LLC, the Corporation’s duly appointed registrar for the Series A Preferred Stock and any successor appointed under Section 14.
“Related Fund” means, with respect to a Backstop Party, any Affiliates (including at the institutional level) of such Backstop Party or any fund, account (including any separately managed accounts) or investment vehicle that is controlled, managed, advised or sub-advised by such Backstop Party, an Affiliate of such Backstop Party or by the same investment manager, advisor or subadvisor as such Backstop Party or an Affiliate of such Backstop Party. For purposes of this definition:
“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, such Person as of the date on which, or at any time during the period for which, the determination of affiliation is being made (including any Related Funds of such Person); provided that for purposes of this Certificate of Designations, no Backstop Party shall be deemed an Affiliate of the Corporation or any of its Subsidiaries;
“Subsidiary” means, with respect to any Person, any corporation, partnership, joint venture or other legal entity as to which such Person (either alone or through or together with any other subsidiary or Affiliate), (a) owns, directly or indirectly, more than fifty percent (50%) of the stock or other equity interests, (b) has the power to elect a majority of the board of directors or similar governing body thereof or (c) has the power to direct, or otherwise control, the business and policies thereof;
“Contract” means any legally binding agreement, contract or instrument, including any loan, note, bond, mortgage, indenture, guarantee, deed of trust, license, franchise, commitment, lease, franchise agreement, letter of intent, memorandum of understanding or other obligation, and any amendments thereto, whether written or oral, but excluding the Plan; and
the term “control” (including the correlative meanings of the terms “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of such Person, whether through the ownership of voting securities, by Contract or otherwise.
“Relevant Stock Exchange” means, as of any date, the principal U.S. national securities exchange on which the Common Stock is then listed.
“Reorganized Invacare” means Invacare Corporation, a corporation organized under the laws of Ohio, following its emergence from the voluntary bankruptcy proceedings commenced before the Bankruptcy Court on January 31, 2023.
“Reorganized Invacare Common Stock” means the common stock, without par value, of Reorganized Invacare.
“Reorganized Invacare Fundamental Change” means the consummation, at any time after the Issuance Date, of (A) any transaction immediately following the consummation of which Reorganized Invacare ceases to be a Wholly-Owned Subsidiary of Parent (other than as a result of the issuance or exercise of the Reorganized Invacare Warrants); (B) the voluntary or involuntary liquidation, winding‑up or dissolution of Reorganized Invacare, (C) any consolidation, merger, binding share exchange, or other combination pursuant to which the Reorganized Invacare Common Stock will be converted into, or exchanged for, stock, other securities, or other property or assets (including cash), or a combination thereof, in each case after which Reorganized Invacare will no longer be a Wholly-Owned Subsidiary of the Parent (other than as a result of the issuance or exercise of the Reorganized Invacare Warrants); or (D) any sale, lease, or other transfer or disposition in one transaction or a series of transactions of all or any material portion of the consolidated assets of Reorganized Invacare and its Subsidiaries, taken as a whole, to any Person other than Parent or any of the Parent’s Wholly‑Owned Subsidiaries (a “material portion” of the consolidated assets of Reorganized Invacare and its Subsidiaries, taken as a whole shall include, without limitation, assets sold, leased or transferred which results in net proceeds in excess of $10,000,000).
“Reorganized Invacare Warrants” means those certain Warrants for Reorganized Invacare Common Stock issued by Reorganized Invacare to certain parties in accordance with the Master Equity Agreement.
“Rights Offering” shall have the meaning set forth in the Plan.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
“Senior Stock” means each class or series of capital stock of the Corporation the terms of which expressly provide that such class or series shall rank senior to the Series A Preferred Stock as to dividend rights and/or distribution rights upon the Corporation’s liquidation, winding‑up or dissolution.
“Series A Preferred Stock” shall have the meaning set forth in Section 1 of this Certificate of Designations.
“Subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be
consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP, as well as any other corporation, limited liability company, partnership, association or other entity (a) of which equity interests representing more than 50.0% of the equity or more than 50.0% of the ordinary voting power or, in the case of a partnership, more than 50.0% of the general partnership interests are, as of such date, owned, controlled or held, or (b) that is, as of such date, otherwise controlled, by the parent or one or more Subsidiaries of the parent or by the parent and one or more Subsidiaries of the parent.
“Transfer Agent” shall initially mean American Stock Transfer & Trust Company, LLC, the Corporation’s duly appointed transfer agent for the Series A Preferred Stock and any successor appointed under Section 14.
“Voluntary Redemption Date” shall have the meaning set forth in Section 8(a).
“Wholly‑Owned Subsidiary” means, with respect to any Person, any Subsidiary of such Person, except that, solely for purposes of this definition, the reference to “more than 50%” in the definition of “Subsidiary” shall be deemed to be replaced by a reference to “100%”.
Section 4 Dividends.
(a) Accrual. From and after March 16, 2024, Holders of Series A Preferred Stock shall be entitled to receive cumulative dividends, accruing daily, at the Dividend Rate on the Liquidation Preference thereof (the “Dividends”); when, as, and if declared by the Board of Directors, the Corporation shall pay such Dividends out of funds lawfully available therefor. For the avoidance of doubt, the Dividends shall accrue in accordance with this Section 4(a) on a retrospective basis commencing as of the March 16, 2024, as if the shares of Series A Preferred Stock were issued on such date. The Board of Directors shall not be required to declare any Dividends, and any declaration of a Dividends shall be solely at the discretion of the Board of Directors of the Corporation; provided, that prior to the Exit Indebtedness Termination Date no Dividends shall be declared by the Board.
(b) Priority of Dividends. So long as any share of Series A Preferred Stock remains outstanding, no dividend or distribution shall be declared or paid on the Common Stock or any other class or series of Junior Stock.
(c) Method of Payment of Dividends.
(i) Dividends shall be payable quarterly and shall compound quarterly and accrue, whether or not earned or declared, from the most recent date on
which Dividends have been paid, or, if no Dividends have been paid, from March 16, 2024.
(ii) If a Dividend is declared by the Board of Directors, then such Dividend shall be paid in cash.
(iii) If a cash dividend is not declared and paid in cash on a Dividend Payment Date, then in full discharge of any accrual of cash dividends for the corresponding Dividend Accrual Period, the Liquidation Preference of each outstanding share of Series A Preferred Stock, regardless of its date of issue, shall automatically increase on such Dividend Payment Date, pursuant to clause (a) or clause (b), as applicable, of the “Liquidation Preference” definition, by an amount equal to the Dividend Rate multiplied by the Liquidation Preference in effect immediately after the immediately prior Dividend Payment Date (or March 16, 2024 in respect of the first Dividend period).
Section 5 Liquidation, Dissolution or Winding‑Up.
(a) In the event of any voluntary or involuntary liquidation, winding‑up or dissolution of the Corporation, or if a Deemed Liquidation Event shall occur, each Holder shall be entitled to receive, out of the assets of the Corporation legally available for distribution to its stockholders, on the date (the “Final Distribution Date”) fixed for this purpose by the Corporation, which in the case of the occurrence of a Deemed Liquidation Event shall be no later than 20 Business Days following such occurrence, in respect of each share of Series A Preferred Stock owned by such Holder, after satisfaction of debt and other liabilities owed to the Corporation’s creditors and holders of shares of any Senior Stock and before any payment or distribution is made to holders of any Junior Stock, including the Common Stock, an amount equal to the Liquidation Preference at the time in effect, together with Dividends thereon, from, and including, the last Dividend Payment Date immediately preceding the Final Distribution Date on which all Dividends then due were compounded or paid in cash to, but excluding, the Final Distribution Date (such Dividends amount, the “Liquidation Dividend Amount”).
(b) If, upon the voluntary or involuntary liquidation, winding‑up or dissolution of the Corporation, the amounts payable with respect to (1) the Liquidation Preference plus the Liquidation Dividend Amount on the shares of the Series A Preferred Stock and (2) the liquidation preference of, and the amount of accrued and unpaid dividends (to, but excluding, the date fixed for liquidation, winding up or dissolution) on, all Parity Stock, if applicable, are not paid in full, the Holders and all holders of any such Parity Stock shall share equally and ratably in any distribution of the Corporation’s assets in proportion to their respective liquidation preferences and amounts equal to the accrued and unpaid dividends to which they are entitled.
(c) After the payment to any Holder of the aggregate amounts set forth in Section 5(a) above, such Holder as such shall have no right or claim to any of the remaining assets of the Corporation.
Section 6 Covenants.
(a) As long as any shares of Series A Preferred Stock remain outstanding, the Corporation shall:
(i) provide the Holders with, (1) as soon as available, and in any event within one hundred twenty (120) days after the end of each fiscal year, audited consolidated balance sheets of the Parent and its Subsidiaries as at the end of each such fiscal year and audited consolidated statements of income and cash flows for such year and (2) as soon as available, and in any event within sixty (60) days after the end of each quarterly accounting period in each fiscal year (other than the last fiscal quarter of the fiscal year), unaudited consolidated balance sheets of the Parent and its Subsidiaries as at the end of each such fiscal quarter and unaudited consolidated statements of income and cash flows for such fiscal quarter. The foregoing notwithstanding, the Corporation shall not be required to provide the Holders with (i) unaudited quarterly financial statements for the quarters ended June 30, 2023 and September 30, 2023 or (ii) audited financial statements for the year ended December 31, 2023 until June 30, 2024;
(ii) upon the written request of any Holder, (1) provide such Holder with a a copy of the Register of the Company and (2) provide such Holder, with any additional information that such Holder may reasonably request as required for regulatory, tax or compliance purposes;
(iii) upon receipt of written request from Holders of at least 10% of all shares of Series A Preferred Stock at the time issued and outstanding, make available to the Holders one or more representatives of the senior management of the Corporation to discuss with the Holders, via secured video conference or similar telecommunications means, the business and affairs of the Corporation and such other matters as shall be identified in the request to the Corporation; provided, that without the prior written consent of the Corporation, the rights contemplated in this paragraph shall not be exercised more than once per fiscal quarter of the Corporation; and provided, further, that the eligibility of one or more Persons to submit a request pursuant to this Section 6(a)(iii) shall be conclusively presumed if they can demonstrate their ownership of the requisite number of shares of Series A Preferred Stock or as otherwise provided in the Bylaws of the Corporation;
(iv) ensure that all operations are conducted solely through Subsidiaries that are directly or indirectly owned by the Corporation; and
(v) not conduct, transact or otherwise engage in any business or operations, in each case, other than (1) the ownership of the capital stock of the Corporation’s Subsidiaries and other affiliates; (2) the performance of its
respective obligations under its organization documents, and the compliance with all laws, rules, regulations, orders, judgements, decrees, or permits applicable to it; (3) the participation in tax, accounting, cash management, cash pooling, transfer pricing, cost-sharing arrangements and other administrative matters related to it or any of its Subsidiaries; (4) defend or exercise its rights, and discharge its obligations under the Exit Secured Convertible Tranche I Notes Indenture, and the Exit Secured Convertible Tranche II Notes Indenture, as applicable; (5) incurring fees, costs and expenses relating to overhead and general operating including professional fees for legal, tax and accounting issues and paying taxes, providing indemnification for its current and former officers, directors, members of management, managers, employees and advisors or consultants; and (6) activities incidental to the businesses or activities described in the foregoing clauses.
(b) For as long as any Series A Preferred Stock is outstanding, the Corporation shall not, nor shall it permit any Subsidiary of the Corporation, without the consent of the majority of the Holders (determined on the basis of the aggregate number of shares of Series A Preferred Stock held by each as of the date of determination):
(i) make any cash payment with respect to any share of Series A Preferred Stock or Common Stock, including pursuant to Section 4, Section 8 or Section 9 hereof;
(ii) make any payment with respect to any shares of capital stock of the Corporation’s Subsidiaries.
(c) [Intentionally Omitted].
(d) [Intentionally Omitted].
(e) If at any time prior to May 5, 2025, the Corporation or any of its Subsidiaries offers to issue or sell, or to enter into any agreement providing for the issuance or sale (contingent or otherwise) (each, an “Offer”) of, any capital stock or securities convertible into capital stock of the Corporation (“New Securities”) to any Person (“Offeree”), the Corporation shall offer to sell to each Holder that is an “accredited investor,” as defined in Rule 501(a) of Regulation D of the Securities Act (each, an “Entitled Stockholder”), on the terms set forth in this Section 6(e) a portion of such New Securities equal to (i) the number of such New Securities being offered to such Offeree multiplied by (ii) a fraction (A) the numerator of which is the aggregate number of outstanding shares of Series A Preferred Stock held by such Entitled Stockholder (which for purposes hereof shall include shares held by a depository, broker, financial advisor and/or other nominee for such stockholder) and (B) the denominator of which is the aggregate number of outstanding shares of Series A Preferred Stock held by all Entitled Stockholders; provided that if the Corporation requires an Offeree to also purchase other equity securities or debt securities of the Corporation or any of its subsidiaries, any Entitled Stockholder shall also, as a condition to the exercise of such stockholder’s preemptive rights pursuant to this
Section 6(e), be required to purchase the same class and type of securities of the Corporation or its subsidiaries on the same terms and conditions.
The Corporation shall deliver to each Entitled Stockholder a notice (the “Offer Notice”), describing in reasonable detail the New Securities being offered, the proposed purchase price thereof (which may be a price range), the expected use of proceeds thereof, the payment terms and conditions and the maximum amount and percentage of the offering such Entitled Stockholder is entitled to purchase.
In order to exercise its purchase rights hereunder, an Entitled Stockholder must, within 10 Business Days after delivery of the Offer Notice, deliver a written notice to the Corporation stating the exercise of such purchase right and the quantity or percentage of New Securities to be purchased by such Entitled Stockholder, which quantity or percentage may be all or any portion of the amount to which such Entitled Stockholder is entitled pursuant to this Section 6(e).
In the event any Entitled Stockholder fails to exercise its rights under this Section 6(e) with respect to any particular New Securities within such 10-Business Day period, the Corporation shall have 180 days thereafter to sell such New Securities, at a price not more favorable and upon general terms not materially more favorable to the purchaser of such New Securities than as specified in the Offer Notice. Any New Securities that are not sold within such 180-day period shall not thereafter be issued or sold without first being reoffered to the Entitled Stockholders pursuant to this Section 6(e).
Notwithstanding anything to the contrary set forth in this Section 6(e), the Corporation may comply with the provisions of this Section 6(e) by first selling to an Offeree, subject to the conditions contained in the following sentence, all of the New Securities contemplated to be issued and sold by the Corporation in an Offer and promptly thereafter offering to sell to the Entitled Stockholders the number of such New Securities such Entitled Stockholders are entitled to purchase pursuant to this Section 6(e). In the event that any Entitled Stockholder purchases securities from the Corporation pursuant to this Section 6(e), upon the request of the Board of Directors, the Offeree may, in its discretion, sell to the Corporation for a price per share of Common Stock or other equity security or debt security equal to the original cost thereof, the same number and class of shares of Common Stock or other equity security or debt security acquired by the Offeree that are purchased by such Person(s) exercising their rights under this Section 6(e); provided that in the event the Offeree elects not to sell such securities back to the Corporation pursuant to this sentence, each Person exercising their rights under this Section 6(e) shall be entitled to purchase an amount of additional New Securities from the Corporation so that such Person’s Percentage Ownership vis-à-vis such Offeree is the same as it would have been had the Offeree sold such shares of Common Stock or other equity securities or debt securities back to the Corporation pursuant to this sentence.
In the event that the participation in the Offer by an Entitled Stockholder would require under applicable law the registration or qualification of such securities or of any Person as a broker or dealer or agent with respect to such securities, such Entitled Stockholder shall not have the right to participate in the Offer. Without limiting the generality of the foregoing, it is understood and agreed that neither the Corporation nor any Subsidiary shall be under any obligation to effect a registration of such securities under the Securities Act or similar state statutes.
Notwithstanding the foregoing or anything to the contrary herein, the provisions of this Section 6(e) shall not apply to any Offer of New Securities made pursuant to, as a result of or related to the Master Equity Agreement or the transactions contemplated thereby.
Section 7 Voting Power.
(a) General. Except as otherwise required by applicable law, the Charter, or this Certificate of Designations, holders of Series A Preferred Stock shall not be entitled to any vote on matters submitted to the Corporation’s stockholders for approval. In any case in which the holders of the Series A Preferred Stock shall be entitled to vote pursuant to applicable law, the Certificate of Incorporation, or this Certificate of Designation, each holder of Series A Preferred Stock entitled to vote with respect to such matter shall be entitled to one vote per share of Series A Preferred Stock.
(b) Other Voting Powers. So long as any shares of Series A Preferred Stock are outstanding, the Corporation shall not, without the affirmative vote or consent of the holders of record of at least a majority of the outstanding shares of the Series A Preferred Stock, given in person or by proxy, either in writing without a meeting or by vote at an annual or special meeting of stockholders:
(i) amend or alter the provisions of the Charter so as to authorize or create, or increase the authorized number of, any class or series of capital stock of the Corporation;
(ii) amend, alter or repeal any provision of the Charter, this Certificate of Designations, or the Bylaws;
(iii) issue any shares of capital stock of the Corporation;
(iv) sell, transfer, pledge, or otherwise dispose of any securities issued by the Corporation’s Subsidiaries;
(v) allow the issuance of any capital stock by the Corporation’s Subsidiaries to any Person other than the Corporation or its Wholly-Owned Subsidiaries;
(vi) consummate, allow to become effective, or approve the consummation of a Deemed Liquidation Event;
(vii) authorize or allow to become effective a Fundamental Change;
(viii) take any action to liquidate, dissolve or wind up the Corporation or any or the Corporation’s Subsidiaries.
(c) Any action required or permitted to be taken at any annual meeting or special meeting of the Holders may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing or by electronic transmission, setting forth the action so taken, is or are signed by the Holders of outstanding shares of Series A Preferred Stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares of Series A Preferred Stock entitled to vote thereon were present and voted.
(d) The rules and procedures for calling and conducting any meeting of the Holders (including, without limitation, the fixing of a record date in connection therewith), the solicitation and use of proxies at such a meeting, the obtaining of written consents and any other procedural aspect or matter with regard to such a meeting or such consents shall be governed by any rules the Board of Directors, in its discretion, may adopt from time to time, which rules and procedures shall conform to the requirements of the Charter, the Bylaws, applicable law, and the rules of any national securities exchange or other trading facility on which the Series A Preferred Stock is listed or traded at the time.
Section 8 Redemption at the Election of the Company.
(a) Following the occurrence of the Exit Indebtedness Termination Date, the Corporation shall have the right, at any time and from time to time, to call for redemption from all the Holders on a pro rata basis, all or some of the shares of Series A Preferred Stock at the time outstanding, by written notice (a “Redemption Notice”) sent to the Holders not less than 20 and not more than 35 calendar days prior to the date designated by the Corporation for such redemption (each such date, a “Voluntary Redemption Date”).
(b) The Redemption Notice shall identify the shares of Series A Preferred Stock to be redeemed and shall state:
(i) the Voluntary Redemption Date;
(ii) the name and address of the Registrar and Transfer Agent;
(iii) that, unless the Corporation defaults on the payment of the amounts specified in Section 8(c) below, Dividends in respect of all shares of Series A Preferred Stock called for redemption shall cease to accrue on the Voluntary Redemption Date.
The Redemption Notice may, at the Corporation’s discretion, state that any such redemption is subject to the satisfaction of one or more conditions precedent.
(c) On the Voluntary Redemption Date, the Corporation shall pay to each Holder of shares to be redeemed on such date, per each share of Series A Preferred Stock being so redeemed, an amount equal to the Liquidation Preference at the time in effect, together with the corresponding Redemption Dividend Amount accrued thereon. After the payment to such Holder of the aggregate amount of the Liquidation Preference at the time in effect and the Redemption Dividend Amount corresponding to all of such Holder’s shares of Series A Preferred Stock being redeemed, such Holder shall have no rights or claims to any remaining assets of the Corporation with respect to such shares.
(d) Any shares of Series A Preferred Stock that are redeemed pursuant to this Section 8 or pursuant to Section 9 shall be cancelled and may not be re-issued or included in authorized Series A Preferred Stock.
Section 9 Mandatory Redemption Offer.
(a) The provisions of this Section shall apply upon the occurrence, after the Exit Indebtedness Termination Date, of any of the following (a “Mandatory Redemption Event”):
(i) a Change of Control;
(ii) a Fundamental Change;
(iii) a Reorganized Invacare Fundamental Change;
(iv) a Parent Change of Control; or
(v) a Parent Fundamental Change.
(b) Upon the occurrence of a Mandatory Redemption Event, the Corporation shall promptly, and in no event more than five Business Days from the date of such occurrence, either (i) call for redemption pursuant to Section 8 all outstanding shares of Series A Preferred Stock and send to all Holders a Redemption Notice as provided therein, or (ii) make a written offer to all Holders (the “Mandatory Redemption Offer”) to redeem all of the issued and outstanding shares of Series A Preferred Stock on a date selected by the Corporation (such date, the “Mandatory Redemption Date”) that shall be not earlier than 20 and no more than 35 calendar days after the date the offer is delivered to the Holders. The Mandatory Redemption Offer shall specify:
(i) the nature of the Mandatory Redemption Event occurred;
(ii) the date of the Mandatory Redemption Event;
(iii) the Mandatory Redemption Date;
(iv) the last date on which a Holder may accept the Corporation’s offer to redeemed the shares of Series A Preferred Stock;
(v) the name and address of the Registrar and Transfer Agent; and
(vi) that, unless the Corporation defaults on the payment of the amounts specified in Section 9(d) below, Dividends in respect of all shares of Series A Preferred Stock tendered for redemption shall cease to accrue on the Mandatory Redemption Date.
(c) Should the funds legally available to the Corporation for the redemption of the Series A Preferred Stock not be sufficient to pay to all Holders all amounts due pursuant to Section 9(d) below in respect of all shares of Series A Preferred Stock at the time outstanding, the Mandatory Redemption Offer shall (i) indicate the total amount of funds legally available to the Corporation for redemptions of the Series A Preferred Stock, (ii) include an explanation of how such amount was determined, and (iii) set forth the method, or methods, of how the funds will be allocated among Holders, in the event the total number of shares of Series A Preferred Stock tendered for redemption exceeds the funds the Corporation has legally available for that purpose; provided, that any such method shall ensure that each share selected for redemption is redeemed in full.
(d) On the Mandatory Redemption Date, the Corporation shall pay to each Holder of shares of Series A Preferred Stock being redeemed, in respect of each such share, an amount equal to the Liquidation Preference at the time in effect, together with the corresponding Redemption Dividend Amount accrued thereon.
(e) After the payment by the Corporation to the respective Holder of the aggregate amount of the Liquidation Preference at the time in effect and the corresponding Redemption Dividend Amount in respect of each share of Series A Preferred Stock being redeemed, such Holder shall have no rights or claims to any remaining assets of the Corporation with respect to such share.
(f) Following each Mandatory Redemption Date on which the Corporation is unable to redeem all shares of Series A Preferred Stock timely tendered for redemption due to the insufficiency of funds legally available for that purpose, the Corporation shall be required to send to the Holders additional Mandatory Redemption Offers within 20 Business Days from each date on which the Corporation shall receive additional payments or proceeds from the transaction or occurrence that constituted the original Mandatory Redemption Event from which such Mandatory Redemption Date arose, provided that at least $10,000,000.00 (or such lesser amount
as the Board of Directors may determine in its discretion) are legally available to pay for additional redemptions of Series A Preferred Stock.
(g) In connection with any redemption of Series A Preferred Stock pursuant to this Section 9, the Corporation shall (i) comply with the provisions of Rule 13e-4, Rule 14e-1 (or any successor provision) and any other tender offer rules under the Exchange Act that may then be applicable; and (ii) otherwise comply with all federal and state securities laws. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Section 9, the Corporation’s compliance with such laws and regulations shall not in and of itself cause a breach of its obligations under this Section 9.
(h) For the avoidance of doubt, the Corporation may waive the provisions of this Section 9, including the occurrence of a Mandatory Redemption Event, and all rights, preferences and privileges with respect thereto, for all Holders with the applicable approvals or consents set forth in Section 18.
Section 10 [Intentionally Omitted].
Section 11 [Intentionally Omitted].
Section 12 [Intentionally Omitted].
Section 13 [Intentionally Omitted].
Section 14 Transfer Agent and Registrar. The duly appointed Transfer Agent and Registrar for Series A Preferred Stock shall be American Stock Transfer & Trust Company, LLC. The Corporation may, in its sole discretion, remove the Transfer Agent or Registrar in accordance with the agreement between the Corporation and the Transfer Agent or Registrar, as the case may be; provided that if the Corporation removes American Stock Transfer & Trust Company, LLC, the Corporation shall appoint a successor transfer agent, or registrar, as the case may be, who shall accept such appointment prior to the effectiveness of such removal. Upon any such removal or appointment, the Corporation shall give notice thereof to the Holders.
Section 15 Record Holders. To the fullest extent permitted by applicable law, the Corporation and the Transfer Agent may deem and treat the Holder of any shares of Series A Preferred Stock as the true and lawful owner thereof for all purposes.
Section 16 Notices. All notices or communications in respect of Series A Preferred Stock shall be sufficiently given if given in writing and delivered by first class mail, postage prepaid, or if given in such other manner as may be permitted in this Certificate of Designations, in the Charter or the Bylaws and by applicable law.
Section 17 Other Rights. The shares of Series A Preferred Stock shall not have any rights, preferences, privileges or voting powers or relative, participating, optional or other special rights, or qualifications, limitations or restrictions thereof, other than as set forth herein or in the Charter or as provided by applicable law.
Section 18 Amendments. The Corporation reserves the right at any time, and from time to time, to amend, alter, change, waive or repeal any provision contained in this Certificate of Designations, and any other provisions authorized by the laws of the State of Delaware at the time in force may be added or inserted, in the manner now or hereafter prescribed herein or by applicable law, and all rights, preferences and privileges of whatsoever nature conferred upon shareholders, directors or any other persons whomsoever by and pursuant to this Certificate of Designations in their present form or as hereafter amended are granted subject to this reservation; provided, however, that any amendment, alteration, waiver or repeal of this Certificate of Designations, or any provision hereof, shall require an affirmative vote of a majority of the shares of Series A Preferred Stock at the time outstanding voting as a separate class.
Section 19 Book‑Entry Form
(a) Shares of the Series A Preferred Stok will be issued only in the form of book entries maintained by the Corporation’s Registrar and Transfer Agent.
(b) Holders of shares of Series A Preferred Stock represented by book entries maintained by the Corporation’s Registrar and Transfer Agent pursuant to Section 19(a) shall be entitled to receive physical delivery of certificated shares of Series A Preferred Stock evidenced by definitive stock certificates in the form of the Series A Preferred Stock certificate attached hereto as Exhibit A, without the global legend, provided that such Holder submit a written request to the Registrar setting forth the number of shares of Series A Preferred Stock to be evidenced by definitive stock certificates, the number of definitive stock certificates requested, the name or names of the Persons to be identified as Holders in such definitive stock certificates, together with their respective notice details, and the manner how the requested definitive stock certificates shall be delivered. Upon receipt of such request, together with such additional documentation or information as the Corporation or the Registrar may request to verify the authenticity of the request and compliance with any applicable federal or state securities and other laws, the Corporation shall issue, and the Registrar shall authenticate and deliver in the manner indicated in the request such definitive stock certificates and shall enter in the Register the names of the Holders of the shares of Series A Preferred Stock evidenced thereby.
If necessary to comply with applicable laws, definitive stock certificates issued pursuant to this Section 19(b) may include notations or other legends reflecting any restrictions the shares evidenced thereby may be subject to. The Corporation may instruct the Registrar to remove any such notation or legend upon receipt from the relevant Holder of evidence reasonably satisfactory to the Corporation (which may be in the form of a legal opinion of counsel reasonably satisfactory to the Corporation) that the protections of such notation or legend are no longer necessary to ensure compliance with the securities laws
.
(c) Each definitive stock certificate shall be executed on behalf of the Corporation in accordance with the Corporation’s Bylaws and applicable Delaware law, by manual or facsimile signature. If an Officer whose signature is on a definitive stock certificate no longer holds that office at the time the Registrar countersigned such definitive stock certificate, such definitive stock certificate shall be valid nevertheless. A definitive stock certificate shall not
be valid until an authorized signatory of the Registrar manually countersigns such definitive stock certificate. Each definitive stock certificate shall be dated the date of its countersignature.
EXHIBIT A
(See attachment)
FORM OF FACE OF 9.00% SERIES A PREFERRED STOCK CERTIFICATE
[RESTRICTED TRANSFER LEGEND]
THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE ACQUIRER:
(1) REPRESENTS THAT IT AND ANY ACCOUNT FOR WHICH IT IS ACTING IS A “QUALIFIED INSTITUTIONAL BUYER” (WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT) AND THAT IT EXERCISES SOLE INVESTMENT DISCRETION WITH RESPECT TO EACH SUCH ACCOUNT, AND
(2) AGREES FOR THE BENEFIT OF INVACARE INTERNATIONAL HOLDINGS CORP. (THE “COMPANY”) THAT IT WILL NOT OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER THIS SECURITY OR ANY BENEFICIAL INTEREST HEREIN PRIOR TO THE DATE THAT IS THE LATER OF (X) ONE YEAR AFTER THE ORIGINAL ISSUE DATE HEREOF OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144 UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THERETO AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW, EXCEPT:
(A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, OR
(B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BECOME EFFECTIVE UNDER THE SECURITIES ACT, OR
(C) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, OR
(D) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT OR ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
PRIOR TO THE REGISTRATION OF ANY TRANSFER IN ACCORDANCE WITH CLAUSE (2)(D) ABOVE, THE COMPANY AND THE REGISTRAR RESERVE THE RIGHT TO REQUIRE THE DELIVERY OF SUCH LEGAL OPINIONS, CERTIFICATIONS OR OTHER EVIDENCE AS MAY REASONABLY BE REQUIRED IN ORDER TO DETERMINE THAT THE PROPOSED TRANSFER IS BEING MADE IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. NO REPRESENTATION IS MADE AS TO THE AVAILABILITY OF ANY EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
Certificate Number [ ]
[Initial] Number of Shares: [ ]
CUSIP [ ]5
INVACARE INTERNATIONAL HOLDINGS CORP.
9.00% Series A Preferred Stock
(par value $0.001 per share)
(Liquidation Preference as specified below)
Invacare International Holdings Corp. , a Delaware corporation (the “Corporation”), hereby certifies that [ ]6 (the “Holder”), is the registered owner of [the number shown on Schedule I hereto] [ ] of fully paid and non‑assessable shares of the Corporation’s 9.00% Series A Preferred Stock, with a par value of $0.001 per share and a Liquidation Preference of $27.01289529 per share (the “Series A Preferred Stock”). The shares of Series A Preferred Stock are transferable on the books and records of the Registrar, in person or by a duly authorized attorney, upon surrender of this certificate duly endorsed and in proper form for transfer. The designations, rights, restrictions, preferences and other terms and provisions of Series A Preferred Stock represented hereby are and shall in all respects be subject to the provisions of the Certificate of Designations of 9.00% Series A Preferred Stock of Invacare International Holdings Corp. dated [ ], 2024, as the same may be amended from time to time (the “Certificate of Designations”). Capitalized terms used herein but not defined shall have the meaning given them in the Certificate of Designations. The Corporation will provide a copy of the Certificate of Designations to the Holder without charge upon written request to the Corporation at its principal place of business. In the case of any conflict between this Certificate and the Certificate of Designations, the provisions of the Certificate of Designations shall control and govern.
Reference is hereby made to the provisions of Series A Preferred Stock set forth on the reverse hereof and in the Certificate of Designations, which provisions shall for all purposes have the same effect as if set forth at this place.
Upon receipt of this executed certificate, the Holder is bound by the Certificate of Designations and is entitled to the benefits thereunder.
Unless the Transfer Agent and Registrar have properly countersigned, these shares of Series A Preferred Stock shall not be entitled to any benefit under the Certificate of Designations or be valid or obligatory for any purpose.
5 46124A 309 (unrestricted)/ 46124A 200 (144A)
6 Include for definitive certificates
IN WITNESS WHEREOF, this certificate has been executed on behalf of the Corporation by the below authorized Officer of the Corporation this [ ] of [ ], 2024.
INVACARE INTERNATIONAL HOLDINGS CORP.
By: ______________________________________
Name:
Title:
COUNTERSIGNATURE
These are shares of Series A Preferred Stock referred to in the within‑mentioned Certificate of Designations.
Dated: [ ], [ ]
American Stock Transfer & Trust Company, LLC
as Transfer Agent and Registrar
By: ______________________________________
Name:
Title:
[FORM OF REVERSE OF CERTIFICATE FOR
9.00% SERIES A PREFERRED STOCK]
Cumulative dividends on each share of Series A Preferred Stock shall be payable at the rate and in the manner provided in the Certificate of Designations.
The Corporation shall furnish without charge to each Holder who so requests the powers, designations, limitations, preferences and relative, participating, optional or other special rights of each class or series of stock of the Corporation and the qualifications, limitations or restrictions of such preferences and/or rights.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers the shares of 9.00% Series A Preferred Stock evidenced hereby to:
_____________________________________________
(Insert full legal name of assignee)
________________________________________________________
(Insert assignee’s social security or taxpayer identification number, if any)
___________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints:
as agent to transfer the shares of 9.00% Series A Preferred Stock evidenced hereby on the books of the Transfer Agent. The agent may substitute another to act for him or her.
Date:
Signature:
(Sign exactly as your name appears on the other side of this Certificate)
Signature
Guarantee:
(Signature must be guaranteed by an “eligible guarantor institution” that is a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Transfer Agent, which requirements include membership or participation in the Securities Transfer Agents Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Transfer Agent in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.)
EXCHANGE AGREEMENT
This Exchange Agreement (this “Agreement”) is made and entered as of April 8, 2024 (the “Execution Date”) by and among Invacare Holdings Corporation, a Delaware corporation (“Parent”), Invacare International Holdings Corp., a Delaware corporation (“Intermediate Holdings”), Invacare Corporation, an Ohio corporation (“Reorganized Invacare”), and the parties listed on Schedule I that are signatory hereto (each a “Holder”). Capitalized terms used, but not defined herein shall have the meanings ascribed to such terms in the Credit Agreement (as defined below).
WHEREAS, the parties hereto, together with certain other persons, are party to that certain Loan and Security Agreement dated as of May 5, 2023, among the borrowers from time to time party thereto, the guarantors from time to time party thereto, the lenders from time to time party thereto and White Oak Commercial Finance, LLC, as Administrative Agent and Collateral Agent (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”);
WHEREAS, the parties hereto, together with certain other persons, are party to that certain Master Equity Agreement dated as of April 8, 2024 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Master Equity Agreement”);
WHEREAS, each Holder owns the number of shares of 9.00% Series A Convertible Participating Preferred Stock of Parent (the “Parent Series A Preferred Shares”) set forth across such Holder’s name on Schedule I;
WHEREAS, Parent has issued to Intermediate Holdings, a certain number of Series B Preferred Stock of Parent, par value $0.001 per share pursuant to the terms of the Master Equity Agreement (“Parent Series B Preferred Shares”);
WHEREAS, Holder desires to transfer and exchange the Parent Series A Preferred Shares for a number of shares of (i) Series B Preferred Stock of Parent and (ii) 9.00% Series A Preferred Stock of Intermediate Holdings, par value $0.001 per share (the “Intermediate Holdings Preferred Shares”), set forth on Schedule I; and
WHEREAS, immediately thereafter, subject to the conditions set forth herein, (i) Intermediate Holdings shall issue to each Holder a warrant (the “Intermediate Holdings Warrant”) to purchase a number of shares of common stock, par value $0.001 per share, of Intermediate Holdings equal to the percentage of Common Stock Deemed Outstanding (as defined in the Intermediate Holdings Warrant) set forth opposite such Holder’s name on Schedule I on the exercise date thereof, in substantially the form attached hereto as Exhibit A and (ii) Reorganized Invacare shall issue to Holder a warrant (the “Reorganized Invacare Warrant” and together with the Parent Series B Preferred Shares, the Intermediate Holdings Preferred Shares, and the Intermediate Holdings Warrant, the “Securities”) to purchase a number of shares of common stock, no par value per share, of Reorganized Invacare equal to the percentage of the Common Stock Deemed Outstanding (as defined in the Reorganized Invacare Warrant) set forth opposite such Holder’s name on Schedule I on the exercise date thereof, in substantially the form attached hereto as Exhibit B.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, and for other good and valuable considerations, the sufficiency and receipt of which are hereby acknowledged, the parties hereto agree as follows:
1. Effective Date. This Agreement shall take effect upon the CF Transition Date (as defined in the Master Equity Agreement) and prior to the CF Transition Date it shall be of no force or effect.
2. Exchange. Immediately following the filing of the documents set forth in Sections 1.4(b)(i)-(v) of the Master Equity Agreement and immediately following the issuance of the Parent Series B Preferred Shares to Intermediate Holdings and subject to the terms and conditions of this Agreement, (i) each Holder shall transfer to Intermediate Holdings, and Intermediate Holdings shall accept from each Holder, all of the Parent Series A Preferred Shares and any right, title and interest in Parent arising out of Parent Series A Preferred Shares of such Holder set forth opposite such Holder’s name on Schedule I, (ii) Intermediate Holdings shall transfer the number of Parent Series B Preferred Shares held by Intermediate Holdings to each Holder as set forth across such Holder’s name on Schedule I (the “Transferred Parent Series B Preferred Shares”) and (iii) Intermediate Holdings shall issue to each Holder the number of Intermediate Holdings Preferred Shares set forth across such Holder’s name on Schedule I (the “Share Exchange”). On or promptly following the Share Exchange, but in no event more than three (3) Business Days following the Share Exchange, (i) Parent and Intermediate Holdings shall cause its transfer agent to transfer the Transferred Parent Series B Preferred Shares from Intermediate Holdings to Holder on Parent’s books and records, in book-entry form and (ii) Intermediate Holdings shall issue and deliver the Intermediate Holdings Preferred Shares to in book-entry form, registered in the name of Holder, reflecting the Intermediate Holdings Preferred Shares. Notwithstanding the foregoing, any Parent Series B Preferred Shares or Intermediate Holdings Preferred Shares received by any Holder pursuant to Share Exchange shall be deemed to have been issued or transferred to the relevant Holder and such Holder shall be deemed to be a holder of such Parent Series B Preferred Shares or Intermediate Holdings Preferred Shares as of the close of business on the day of the filing of the documents set forth in Sections 1.4(b)(i)-(iv) of the Master Equity Agreement and the register of stockholders of Parent shall be updated accordingly
3. Intermediate Holdings Warrant. Subject to the terms of this Agreement, immediately following the filing of the documents set forth in Section 1.4(b)(iii) of the Master Equity Agreement, Intermediate Holdings shall issue to each Holder the Intermediate Holdings Warrant across from such Holder’s name on Schedule I (the “Intermediate Warrant Issuance”). On or promptly following the Intermediate Warrant Issuance, but in no event more than three (3) Business Days following the Intermediate Warrant Issuance, Intermediate Holdings shall cause its transfer agent to register the original issuance of the Intermediate Holdings Warrants on the warrant register for Intermediate Holdings. Notwithstanding the foregoing, the issuance of the Intermediate Holdings Warrants shall be deemed to have been issued to the relevant Holder and such Holder shall be deemed to be the holder of such Intermediate Warrant as of the close of business on the date of the filing of the documents set forth in Section 1.4(b)(iii) of the Master Equity Agreement.
4. Reorganized Invacare Warrant. Subject to the terms of this Agreement, immediately following the filing of the documents set forth in Section 1.4(b)(v) of the Master Equity Agreement, Reorganized Invacare shall issue to each Holder the Reorganized Invacare Warrant across from such Holder’s name on Schedule I (the “Reorganized Invacare Warrant Issuance”). On or promptly following Reorganized Invacare Warrant Issuance, but in no event more than three (3) Business Days following the Reorganized Invacare Warrant Issuance, Reorganized Invacare shall cause its transfer agent to register the
original issuance of the Reorganized Invacare Warrants on the warrant register for Reorganized Invacare. Notwithstanding the foregoing, the issuance of the Reorganized Invacare Warrants shall be deemed to have been issued to the relevant Holder and such Holder shall be deemed to be the holder of such Intermediate Warrant as of the close of business on the date of the filing of the documents set forth in Section 1.4(b)(v) of the Master Equity Agreement.
5. Defaulting Holder. Notwithstanding the foregoing or anything to the contrary herein in the event that any Holder or any Affiliate of a Holder, does not fund such Person’s Percentage Share of any Third Amendment Delayed Draw pursuant to the terms of the Credit Agreement, then such Holder (any such Holder, a “Defaulting Holder”) shall not be entitled to exchange their Parent Series A Preferred Shares pursuant to Section 2 hereof nor shall such Defaulting Holder receive any Intermediate Holdings Warrant or Reorganized Invacare Warrants pursuant to Section 3 and Section 4 hereof, respectively, and the rights of such Defaulting Holder set forth in this Agreement and the Master Equity Agreement shall be deemed null and void. Furthermore, in the event of a Defaulting Holder, Schedule I hereof shall automatically and without any further action on the part of the parties hereto be deemed amended so that the Intermediate Holdings Warrants and the Reorganized Invacare Warrants issuable to such Defaulting Holder shall be deleted and the percentage of Common Stock Deemed Outstanding issuable to the remaining Holders who are not Defaulting Holders (the “Remaining Holders”) with respect to the Intermediate Holdings Warrants and Reorganized Invacare Warrants shall be adjusted so that the percentage of Common Stock Deemed Outstanding shall with respect such Intermediate Holdings Warrants and Reorganized Invacare Warrants to be issued to such Remaining Holder shall be a percentage equal to (a) the amount of Parent Series A Preferred Shares held by such Remaining Holder divided by the amount of Parent Series A Preferred Shares held by all such Remaining Holders multiplied by (b) 0.49 (or such other number as consented to by the Remaining Holders who hold a majority of the Parent Series A Preferred Shares held by such Remaining Holders).
6. Representations and Warranties. Parent, Intermediate Holdings and Reorganized Invacare hereby represents and warrants to each Holder as follows as of the Execution Date and as of the CF Transition Date:
(a) Credit Agreement Representations. The representations and warranties of the Borrowers, the Guarantors or such other Loan Party set forth in the Loan Documents are true and correct in all material respects (except that any representation or warranty which is already qualified as to materiality or by reference to Material Adverse Effect is true and correct in all respects) on and as of such date, with the same effect as if made on and as of such date (other than those representations and warranties that by their terms expressly relate to an earlier date, in which case such representations and warranties were true and correct in all material respects as of such earlier date).
(b) Master Equity Agreement Representations. The representations and warranties of Parent, Intermediate Holdings and Reorganized Invacare set forth in the Master Equity Agreement are true and correct in all material respects on and as of such date, with the same effect as if made on and as of such date (other than those representations and warranties that by their terms expressly relate to an earlier date, in which case such representations and warranties were true and correct in all material respects as of such earlier date).
(c) Valid Issuance of Securities. Upon the consummation of the transactions hereunder, the Securities will be duly authorized and validly issued and will be fully paid and non-assessable. All shares
issuable upon the exercise of the Intermediate Holdings Warrant and the Reorganized Invacare Warrant shall be, upon issuance, validly issued, fully paid, and non-assessable.
(d) Capitalization.
i. Other than (A) that warrant issued to Azurite Management LLC pursuant to that certain Warrant Agreement, dated as of September 15, 2023, by and between Parent and Azurite Management LLC; (B) as set forth in or expressly permitted by that certain Chapter 11 plan of reorganization of Parent and its debtor subsidiaries in the Bankruptcy Case [Docket No. 502], as confirmed by the Bankruptcy Court in its Order Confirming the Debtors’ First Amended Joint Chapter 11 Plan of Invacare Corporation and its Debtor Affiliates (Technical Modifications) [Docket No. 522], including, for the avoidance of doubt, the 16,180,905 shares of common stock, par value $0.001 per share (“Common Stock”) issuable upon the exercise of outstanding restricted stock units and stock options under the Invacare Holdings Corporation 2023 Management Incentive Plan; and (C) the issuance of 10,407,745 shares of Common Stock, of Parent to certain Lenders or their Affiliates pursuant to those certain Common Stock Subscription Agreements, dated as of March 13, 2024: (i) Parent has not issued any capital stock of Parent and there are no outstanding or authorized options, warrants, convertible securities or other rights, agreements, arrangements or commitments of any character relating to the capital stock of Parent or obligating Parent to issue or sell any shares of capital stock of, or any other interest in, Parent, (ii) Parent does not have outstanding or authorized any stock appreciation, phantom stock, profit participation or similar rights, and (iii) there are no voting trusts, stockholder agreements, proxies or other agreements or understandings in effect with respect to the voting or transfer of any of the capital stock of Parent. Furthermore, Parent represents and warrants that since May 5, 2023, Parent has not received any notice to convert any of its outstanding options, warrants, convertible securities or debt, or similar rights into common shares or other capital stock of Parent.
ii. The authorized capital stock of Intermediate Holdings consists of (i) one hundred shares of Common Stock, par value $0.001 per share, one hundred shares of which are issued and outstanding as of the Effective Date. Other than as contemplated by the Master Equity Agreement, there are no other warrants, preemptive or other rights, options, calls, commitments, conversion privileges, or other agreements (all of the foregoing being collectively referred to as the “Intermediate Holdings Options”) of Intermediate Holdings outstanding on the date hereof and there are no existing Intermediate Holdings Options obligating Intermediate Holdings to issue any or all of its authorized and unissued capital stock, or any Intermediate Holdings Option convertible into and/or exchangeable for capital stock of Intermediate Holdings. Other than any class of capital stock authorized in accordance with the terms of the Master Equity Agreement, Intermediate Holdings has no capital stock of any class authorized or outstanding.
iii. The authorized capital stock of Reorganized Invacare consists of (i) one hundred shares of Common Stock, no par value per share, one hundred shares of which are issued and outstanding as of the Effective Date. Other than contemplated hereby or by the Master Equity Agreement, there are no other warrants, preemptive or other rights, options, calls, commitments, conversion privileges, or other agreements (all of the foregoing being collectively referred to as the “Reorganized Invacare Options”) of Reorganized Invacare outstanding on the date hereof and there are no existing Reorganized Invacare Options obligating Reorganized Invacare to issue any or all of its authorized and unissued capital stock, or any Reorganized Invacare Option convertible into and/or exchangeable for capital stock of Reorganized Invacare. Other than any class of capital stock authorized in accordance with the terms of the
Master Equity Agreement, Reorganized Invacare has no capital stock of any class authorized or outstanding except as identified herein.
(e) No Litigation. To the knowledge of Parent, Intermediate Holdings and Reorganized Invacare, as of the date of this Agreement, no action, suit, proceeding is pending against Parent, Intermediate Holdings and Reorganized Invacare with respect to execution and delivery of this Agreement or the consummation of the transactions contemplated hereby.
8. Representations and Warranties of Holder. Each Holder hereby represents severally and not jointly to Parent, Intermediate Holdings and Reorganized Invacare as follows as of the Execution Date and the CF Transition Date:
a. Investigation; Accredited Investor. The Securities are being acquired for such Holder’s own account, for investment and not with a view to the distribution or resale thereof. Such Holder understands that the Securities have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities or blue sky laws, by reason of their issuance in a transaction exempt from the registration requirements thereunder and may not be resold unless a subsequent disposition thereof is registered thereunder (Parent, Intermediate Holdings and Reorganized Invacare being under no obligation to so register) or is exempt from registration thereunder (and acknowledges that an investment in Securities is highly speculative and involves a high degree of risk of loss of such Holder’s entire investment in Securities and Parent, Intermediate Holdings and Reorganized Invacare have not provided such Holder with any indication of any value of the Securities). Such Holder has access to the same kind of information which would be available in a registration statement filed under the Securities Act. (i) Such Holder is an accredited investor as defined in Rule 501 promulgated by the Securities and Exchange Commission (“SEC”), (ii) none of the “Bad Actor” disqualifying events described in Rule 506(d)(1)(i) to (viii) promulgated under Securities Act are applicable to such Holder, and (iii) such Holder has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Securities (and is able to bear the risks of an investment in the Securities).
b. Title to Shares. Such Holder has valid title to the Shares of Parent Series A Preferred Shares set forth across its name on Schedule I, and such shares of Parent Series A Preferred Shares are owned by such Holder free and clear of any security interest, lien or any restriction on transfer (collectively, “Encumbrances”), other than those imposed by the Securities Act or other securities laws, and will be transferred to Intermediate Holdings free of any Encumbrances (other than those imposed by the Securities Act or other securities laws).
c. Master Equity Agreement. The representations and warranties of such Holder set forth in the Master Equity Agreement are true and correct in all material respects on and as of such date, with the same effect as if made on an as of such date (other than those representations and warranties that by their terms expressly relate to an earlier date, in which case such representations and warranties were true and correct in all material respects as of such earlier date).
d. No Litigation. To the knowledge of such Holder, as of the date of this Agreement, no action, suit or proceeding is pending against such Holder with respect to the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby.
9. Miscellaneous
(a) Governing Law. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of Delaware, without giving effect to principles of conflicts of law.
(b) Notices. All notices and other communications under this Agreement must be in writing and are deemed duly delivered when (a) delivered, if delivered personally or by nationally recognized overnight courier service (costs prepaid), (b) sent by facsimile with confirmation of transmission by the transmitting equipment (or, the first business day following such transmission if the date of transmission is not a business day), or (c) sent by electronic mail with confirmation of delivery; in each case to the addresses, facsimile numbers or electronic mail address and marked to the attention of the individual (by name or title) set forth on the signature pages hereto (or to such other address, facsimile number or individual as a party may designate by notice to the other parties).
(c) Entire Agreement; Amendment and Waiver. This Agreement constitutes the entire understanding and agreement between the parties hereto with respect to the subject matter hereof, and supersedes all prior agreements and understandings, inducements and conditions, express or implied, oral or written. This Agreement may only be waived or amended in a writing executed by each party hereto. Without limiting the foregoing, any edits to the form of Intermediate Holdings Warrant or the form of Reorganized Invacare Warrant shall require the reasonable approval of Holders holding a majority of the Parent Series A Preferred Shares held by all Holders. No waiver of any provision of this Agreement shall constitute a waiver of any other provision hereof or constitute a similar waiver. In the event of any conflict between the terms of the Master Equity Agreement and the terms hereof, the terms of the Master Equity Agreement shall control.
(d) Counterparts. This Agreement may be executed in one or more counterparts, each of which when executed shall be deemed to be an original but all of which shall constitute one and the same agreement.
(e) Severability. In the event that any provision of this Agreement or the application of any provision hereof is declared to be illegal, invalid or otherwise unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall not be affected except to the extent necessary to delete such illegal, invalid or unenforceable provision unless that provision held invalid shall substantially impair the benefits of the remaining portions of this Agreement.
(f) Further Assurances. The parties hereto shall take all such reasonable and lawful actions which may be necessary or appropriate in order to effectuate the Exchange or the issuance of the Intermediate Holdings Warrants or the Reorganized Invacare Warrants.
(g) Assignment. No party hereto may assign any of its rights or delegate any of its obligations under this Agreement without the prior written consent of the other parties; provided that, a Holder shall each be permitted to assign its respective rights, interests and obligations (in whole or in part) to any of its Affiliates (as defined in the Credit Agreement) without obtaining any consent; provided that prior written notice is provided to Parent. Any purported assignment or delegation, except as expressly permitted pursuant to this Section 9(g), shall be void and without effect. Subject to the
foregoing, this Agreement will apply to, be binding in all respects upon and inure to the benefit of the successors and permitted assigns of the parties.
[The remainder of this page is intentionally blank.]
IN WITNESS WHEREOF, the parties hereto have executed this Exchange Agreement as of the date first above written.
PARENT:
Invacare Holdings Corporation
By: /s/ Kai Zhu
Name: Kai Zhu
Title: Senior Vice President and Chief Financial Officer
INTERMEDIATE HOLDINGS:
Invacare International Holdings Corp.
By: /s/ Kai Zhu
Name: Kai Zhu
Title: Senior Vice President and Chief Financial Officer
REORGANIZED INVACARE:
Invacare Corporation
By: /s/ Kai Zhu
Name: Kai Zhu
Title: Senior Vice President and Chief Financial Officer
IN WITNESS WHEREOF, each party hereto has executed this Agreement as of the day and year first written above.
HOLDER:
DG VALUE PARTNERS, LP
By: DG Capital Management, LLC, its investment manager
By: /s/ Dov Gertzulin
Name: Dov Gertzulin
Title: Managing Member
IN WITNESS WHEREOF, each party hereto has executed this Agreement as of the day and year first written above.
HOLDER:
DG VALUE PARTNERS II MASTER FUND, LP
By: DG Capital Management, LLC, its investment manager
By: /s/ Dov Gertzulin
Name: Dov Gertzulin
Title: Managing Member
IN WITNESS WHEREOF, each party hereto has executed this Agreement as of the day and year first written above.
HOLDER:
YAKAR ALTERNATIVES CLAT LLC
By: DG Capital Management, LLC, its investment manager
By: /s/ Dov Gertzulin
Name: Dov Gertzulin
Title: Managing Member
IN WITNESS WHEREOF, each party hereto has executed this Agreement as of the day and year first written above.
HOLDER:
YAKAR ALTERNATIVES LLC
By: DG Capital Management, LLC, its investment manager
By: /s/ Dov Gertzulin
Name: Dov Gertzulin
Title: Managing Member
IN WITNESS WHEREOF, each party hereto has executed this Agreement as of the day and year first written above.
HOLDER:
PPG HEDGE FUND HOLDINGS LLC
By: DG Capital Management, LLC, its investment manager
By: /s/ Dov Gertzulin
Name: Dov Gertzulin
Title: Managing Member
IN WITNESS WHEREOF, each party hereto has executed this Agreement as of the day and year first written above.
HOLDER:
MACYRC LLC
By: DG Capital Management, LLC, its investment manager
By: /s/ Dov Gertzulin
Name: Dov Gertzulin
Title: Managing Member
IN WITNESS WHEREOF, each party hereto has executed this Agreement as of the day and year first written above.
HOLDER:
2016 Alan Shamah Discretionary Trust
By: DG Capital Management, LLC, its investment manager
By: /s/ Dov Gertzulin
Name: Dov Gertzulin
Title: Managing Member
IN WITNESS WHEREOF, each party hereto has executed this Agreement as of the day and year first written above.
HOLDER:
THE SAM AND HELENE WIEDER FAMILY TRUST
By: DG Capital Management, LLC, its investment manager
By: /s/ Dov Gertzulin
Name: Dov Gertzulin
Title: Managing Member
IN WITNESS WHEREOF, each party hereto has executed this Agreement as of the day and year first written above.
HOLDER:
TITAN EQUITY GROUP LLC
By: DG Capital Management, LLC, its investment manager
By: /s/ Dov Gertzulin
Name: Dov Gertzulin
Title: Managing Member
IN WITNESS WHEREOF, each party hereto has executed this Agreement as of the day and year first written above.
HOLDER:
DAVIDSON KEMPNER ARBITRAGE,
EQUITIES AND RELATIVE VALUE LP
By: Davidson Kempner Multi-Strategy GP II LLC, its general manager
By: Davidson Kempner Liquid GP Topco LLC, its managing manager
By: /s/ Conor Bastable
Name: Conor Bastable
Title: Managing Member
IN WITNESS WHEREOF, each party hereto has executed this Agreement as of the day and year first written above.
HOLDER:
M.H. DAVIDSON & CO.
By: M.H. Davidson & Co. GP L.L.C., its general partner
By: Davidson Kempner Liquid GP Topco LLC, its managing manager
By: /s/ Conor Bastable
Name: Conor Bastable
Title: Managing Member
IN WITNESS WHEREOF, each party hereto has executed this Agreement as of the day and year first written above.
HOLDER:
ENDURANT HEALTH MASTER FUND LP
By: Endurant Capital Management LP, its Investment Manager
By: /s/ Chris Ronan
Name: Chris Ronan
Title: COO/CFO
IN WITNESS WHEREOF, each party hereto has executed this Agreement as of the day and year first written above.
HOLDER:
ONE OAK MULTI-STRATEGY MASTER FUND, LTD.
By: Endurant Capital Management LP, its Sub-Advisor
By: /s/ Chris Ronan
Name: Chris Ronan
Title: COO/CFO
IN WITNESS WHEREOF, each party hereto has executed this Agreement as of the day and year first written above.
HOLDER:
PM MANANGER FUND, SPC-SEGREGATED
PORTFOLIO 33
By: PAAMCO Prisma, its Advisor
By: /s/ Vincent Cuticello
Name: Vincent Cuticello
Title: Chief Operating Officer
IN WITNESS WHEREOF, each party hereto has executed this Agreement as of the day and year first written above.
HOLDER:
SILVERBACK CONVERTIBLE MASTER
FUND LIMITED
By: Silverback Asset Management, LLC, its Investment Manager
By: /s/ Laura Kleber
Name: Laura Kleber
Title: CCO
IN WITNESS WHEREOF, each party hereto has executed this Agreement as of the day and year first written above.
HOLDER:
SILVERBACK OPPORTUNISTIC CREDIT
MASTER FUND LIMITED
By: Silverback Asset Management, LLC, its Investment Manager
By: /s/ Laura Kleber
Name: Laura Kleber
Title: CCO
IN WITNESS WHEREOF, each party hereto has executed this Agreement as of the day and year first written above.
HOLDER:
KASAD 2, LP
By: Silverback Asset Management, LLC, its Investment Manager
By: /s/ Laura Kleber
Name: Laura Kleber
Title: CCO
IN WITNESS WHEREOF, each party hereto has executed this Agreement as of the day and year first written above.
HOLDER:
BLACKWELL PARTNERS LLC-SERIES B
By: Silverback Asset Management, LLC, its Investment Manager
By: /s/ Laura Kleber
Name: Laura Kleber
Title: CCO
IN WITNESS WHEREOF, each party hereto has executed this Agreement as of the day and year first written above.
HOLDER:
TENOR OPPORTUNITY MASTER FUND,
LTD.
By: /s/ Daniel Kochav
Name: Daniel Kochav
Title: Director
Schedule I
Exhibit A
Form of Intermediate Holdings Warrant
(see attached)
WARRANT
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR QUALIFIED UNDER ANY STATE OR FOREIGN SECURITIES LAWS, AND MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED OR ASSIGNED UNLESS (I) A REGISTRATION STATEMENT COVERING SUCH SHARES IS EFFECTIVE UNDER THE ACT AND IS QUALIFIED UNDER APPLICABLE STATE AND FOREIGN LAW OR (II) THE TRANSACTION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS UNDER THE ACT AND THE QUALIFICATION REQUIREMENTS UNDER APPLICABLE STATE AND FOREIGN LAW AND, IF THE CORPORATION REQUESTS, AN OPINION SATISFACTORY TO THE CORPORATION TO SUCH EFFECT HAS BEEN RENDERED BY COUNSEL.
Warrant Certificate No.: [________]
Original Issue Date: [_________]
FOR VALUE RECEIVED, Invacare International Holdings Corp., a Delaware corporation (the “Company”), hereby certifies that [__________], or its registered assigns (the “Holder”) is entitled to purchase from the Company a number of shares of duly authorized, validly issued, fully paid, and nonassessable shares of Common Stock equal to (a) [_________] percent ([_____]%) of the Common Stock Deemed Outstanding on the date of any exercise of this Warrant less (b) the aggregate number of shares of Common Stock previously issued as adjusted from time to time as a result of any partial exercise of this Warrant in accordance with Section 3, at a purchase price per share equal to the Exercise Price (as defined below), all subject to the terms, conditions, and adjustments set forth below in this Warrant. Certain capitalized terms used herein are defined in Section 1 hereof.
1. Definitions. As used in this Warrant, the following terms have the respective meanings set forth below:
“Aggregate Exercise Price” means an amount equal to the product of (a) the number of Warrant Shares in respect of which this Warrant is then being exercised pursuant to Section 3 hereof, multiplied by (b) the Exercise Price.
“Board” means the board of directors of the Company.
“Business Day” means any day except Saturday, Sunday, or any other day on which commercial banks are authorized to close under the laws of, or are in fact closed in, the state of New York.
“Common Stock” means (i) the common stock, par value $0.001 per share, of the Company, (ii) any capital stock on parity with such common stock with respect to dividends rights and/or distribution rights upon the liquidation, winding-up or dissolution (“Parity”), and (iii) any capital stock into which any such capital stock described in clauses (1) or (ii) above shall have been converted, exchanged, or reclassified following the date hereof, including any capital stock on Parity with respect thereto consistent with the adjustment provision provided in Section 4(a).
“Common Stock Deemed Outstanding” means, at any given time prior to the expiration of this Warrant, the sum of (a) the number of shares of Common Stock actually outstanding at such time, plus (b) the number of shares of Common Stock reserved for issuance at such time under stock option or other equity incentive plans approved by the Board, regardless of whether the shares of Common Stock are actually subject to outstanding Options at such time or whether any outstanding Options are actually exercisable at such time, plus (c) the number of shares of Common Stock issuable upon exercise of any other Options (other than Options described in clause (b) above) actually outstanding at such time, plus (d) the number of shares of Common Stock issuable upon conversion or exchange of Convertible Securities actually outstanding at such time (treating as actually outstanding any Convertible Securities issuable upon exercise of Options actually outstanding at such time), in each case, regardless of whether the Options or Convertible Securities are actually exercisable at such time.
“Company” has the meaning set forth in the preamble.
“Convertible Securities” means any securities (directly or indirectly) convertible into or exchangeable for Common Stock, but excluding Options.
“Exercise Date” means, for any given exercise of this Warrant, the date on which the conditions to such exercise as set forth in Section 3 shall have been satisfied at or prior to 5:00 p.m., New York time, on a Business Day, including, without limitation, the receipt by the Company of the Exercise Agreement, the Warrant, and the Aggregate Exercise Price.
“Exercise Agreement” has the meaning set forth in Section 3(a)(i).
“Exercise Period” has the meaning set forth in Section 2.
“Exercise Price” means $0.01.
“Fair Market Value” of the Common Stock shall be the fair market value per share as determined jointly by the Board and the Holder.
“Holder” has the meaning set forth in the preamble.
“Options” means any warrants or other rights or options to subscribe for or purchase Common Stock or Convertible Securities.
“Original Issue Date” means the date hereof.
“Person” means any individual, sole proprietorship, partnership, limited liability company, corporation, joint venture, trust, incorporated organization, or government or department or agency thereof.
“Transfer Agent” shall mean the then Transfer Agent for the Common Stock, which shall initially be [_______].
“Warrant” means this Warrant and all warrants issued upon division or combination of, or in substitution for, this Warrant.
“Warrant Shares” means the shares of Common Stock or other capital stock of the Company then purchasable upon exercise of this Warrant in accordance with the terms of this Warrant.
2. Term of Warrant. Subject to the terms and conditions hereof, at any time or from time to time after the date hereof and prior to 5:00 p.m., New York time, on the 2nd anniversary of the date hereof or, if such day is not a Business Day, on the next preceding Business Day (the “Exercise Period”), the Holder of this Warrant may exercise this Warrant for all or any part of the Warrant Shares purchasable hereunder (subject to adjustment as provided herein).
3. Exercise of Warrant.
(a) Exercise Procedure. This Warrant may be exercised from time to time on any Business Day during the Exercise Period, for all or any part of the unexercised Warrant Shares, upon:
(i) an Exercise Agreement in the form attached hereto as Exhibit A (each, an “Exercise Agreement”), duly completed (including specifying the number of Warrant Shares to be purchased) and executed; and
(ii) payment to the Company of the Aggregate Exercise Price in accordance with Section 3(b).
(b) Payment of the Aggregate Exercise Price. Payment of the Aggregate Exercise Price shall be made, at the option of the Holder as expressed in the Exercise Agreement, by delivery to the Company of a certified or official bank check payable to the order of the Company or by wire transfer of immediately available funds to an account designated in writing by the Company, in the amount of such Aggregate Exercise Price.
(c) Delivery of Warrant Shares. Upon receipt by the Company of the Exercise Agreement, surrender of this Warrant, and payment of the Aggregate Exercise Price (in accordance with Section 3(a) hereof), the Company shall, as promptly as practicable, and in any event within two (2) Business Days thereafter, cause the Transfer Agent to issue in book-entry form on the Warrant Register maintained by the Transfer Agent for such purpose, the Warrant Shares, the Warrant Shares issuable upon such exercise, together with cash in lieu of any fraction of a share, as provided in Section 3(d) hereof. The Warrant Shares so delivered shall be, to the extent possible, in such denomination or denominations as the exercising Holder shall reasonably request in the Exercise Agreement and shall be registered in the name of the Holder or, subject to compliance with Section 7 below, such other Person's name as shall be designated in the Exercise Agreement. This Warrant shall be deemed to have been exercised and such Warrant Shares shall be deemed to have been issued, and the Holder or any other Person so designated to be named therein shall be deemed to have become a holder of record of such Warrant Shares for all purposes, as of the Exercise Date.
(d) Fractional Shares. The Company shall not be required to issue a fractional Warrant Share upon exercise of any Warrant.
(e) Valid Issuance of Warrant and Warrant Shares; Payment of Taxes. With respect to the exercise of this warrant, the Company hereby represents, covenants, and agrees:
(i) This Warrant is, and any Warrant issued in substitution for or replacement of this Warrant shall be, upon issuance, duly authorized and validly issued.
(ii) All Warrant Shares issuable upon the exercise of this Warrant pursuant to the terms hereof shall be, upon issuance, and the Company shall take all such actions as may be necessary or appropriate in order that such Warrant Shares are, validly issued, fully paid, and non-assessable, issued without violation of any preemptive or similar rights of any stockholder of the Company and free and clear of all taxes, liens, and charges.
(iii) The Company shall take all such actions as may be necessary to ensure that all such Warrant Shares are issued without violation by the Company of any applicable law or governmental regulation or any requirements of any national securities exchange upon which shares of Common Stock or other securities constituting Warrant Shares may be listed at the time of such exercise (except for official notice of issuance which shall be immediately delivered by the Company upon each such issuance).
(iv) At all times that (a) this Warrant is outstanding and (b) the Common Stock or other securities constituting Warrant Shares are quoted on or
listed for trading on a national securities exchange and registered under the Securities Exchange Act of 1934, as amended, the Company shall use its commercially reasonable efforts to cause the Warrant Shares, upon exercise of this Warrant, to be listed on any such national securities exchange upon which shares of Common Stock or other securities constituting Warrant Shares are listed.
(v) The Company shall pay all expenses in connection with, and all taxes and other governmental charges that may be imposed with respect to, the issuance or delivery of Warrant Shares upon exercise of this Warrant; provided, that the Company shall not be required to pay any tax or governmental charge that may be imposed with respect to any applicable withholding or the issuance or delivery of the Warrant Shares to any Person other than the Holder, and no such issuance or delivery shall be made unless and until the Person requesting such issuance has paid to the Company the amount of any such tax, or has established to the satisfaction of the Company that such tax has been paid.
(f) Conditional Exercise. Notwithstanding any other provision hereof, if an exercise of any portion of this Warrant is to be made in connection with a public offering or a sale of the Company (pursuant to a merger, sale of stock, or otherwise), such exercise may at the election of the Holder be conditioned upon the consummation of such transaction, in which case such exercise shall not be deemed to be effective until immediately prior to the consummation of such transaction.
(g) Reservation of Shares. During the Exercise Period, the Company shall at all times reserve and keep available out of its authorized but unissued Common Stock or other securities constituting Warrant Shares, solely for the purpose of issuance upon the exercise of this Warrant, the maximum number of Warrant Shares issuable upon the exercise of this Warrant, and the par value per Warrant Share shall at all times be less than or equal to the applicable Exercise Price. The Company shall not increase the par value of any Warrant Shares receivable upon the exercise of this Warrant above the Exercise Price then in effect, and shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant.
4. Effect of Certain Events on Warrant Shares.
(a) Adjustment to Warrant Shares Upon Reorganization, Reclassification, Consolidation, or Merger. In the event of any (i) capital reorganization of the Company, (ii) reclassification of the stock of the Company (other than a change in par value or from par value to no par value or from no par value to par value or as a result of a stock dividend or subdivision, split-up, or combination of shares), (iii) consolidation or merger of the Company with or into another Person, (iv) sale of all or substantially all of the Company's assets to another Person or (v) other similar transaction, in each case which
entitles the holders of Common Stock to receive (either directly or upon subsequent liquidation) stock, securities, or assets with respect to or in exchange for Common Stock, each Warrant shall, immediately after such reorganization, reclassification, consolidation, merger, sale, or similar transaction, remain outstanding and shall thereafter, in lieu of or in addition to (as the case may be) the number of Warrant Shares then exercisable under this Warrant, be exercisable for the kind and number of shares of stock or other securities or assets of the Company or of the successor Person resulting from such transaction to which the Holder would have been entitled upon such reorganization, reclassification, consolidation, merger, sale, or similar transaction if the Holder had exercised this Warrant in full immediately prior to the time of such reorganization, reclassification, consolidation, merger, sale, or similar transaction and acquired the applicable number of Warrant Shares then issuable hereunder as a result of such exercise (without taking into account any limitations or restrictions on the exercisability of this Warrant); and, in such case, appropriate adjustment (in form and substance satisfactory to the Holder) shall be made with respect to the Holder's rights under this Warrant to insure that the provisions of this Warrant shall thereafter be applicable, as nearly as possible, to any shares of stock, securities, or assets thereafter acquirable upon exercise of this Warrant. The provisions of this Section 4(a) shall similarly apply to successive reorganizations, reclassifications, consolidations, mergers, sales, or similar transactions. The Company shall not effect any such reorganization, reclassification, consolidation, merger, sale, or similar transaction unless, prior to the consummation thereof, the successor Person (if other than the Company) resulting from such reorganization, reclassification, consolidation, merger, sale, or similar transaction, shall assume, by written instrument substantially similar in form and substance to this Warrant and satisfactory to the Holder, the obligation to deliver to the Holder such shares of stock, securities, or assets which, in accordance with the foregoing provisions, such Holder shall be entitled to receive upon exercise of this Warrant. Notwithstanding anything to the contrary contained herein, with respect to any corporate event or other transaction contemplated by the provisions of this Section 4(a), the Holder shall have the right to elect prior to the consummation of such event or transaction, to give effect to the exercise rights contained in Section 2 instead of giving effect to the provisions contained in this Section 4(a) with respect to this Warrant.
(b) Dividends and Distributions. Subject to the provisions of Section 4(a), as applicable, if the Company shall, at any time or from time to time after the Original Issue Date, make or declare, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or any other distribution payable in securities of the Company (other than a dividend or distribution of shares of Common Stock, Options, or Convertible Securities in respect of outstanding shares of Common Stock), cash or other property, then, and in each such event, provision shall be made so that the Holder shall receive upon exercise of the Warrant, in addition to the number of Warrant Shares receivable thereupon, the kind and amount of securities of the Company, cash, or other property which the Holder would have been entitled to receive had the Warrant been exercised in full into Warrant Shares on the date of such event and had the Holder
thereafter, during the period from the date of such event to and including the Exercise Date, retained such securities, cash, or other property receivable by them as aforesaid during such period, giving application to all adjustments called for during such period under this Section 4(b) with respect to the rights of the Holder; provided, that no such provision shall be made if the Holder receives, simultaneously with the distribution to the holders of Common Stock, a dividend or other distribution of such securities, cash, or other property in an amount equal to the amount of such securities, cash, or other property as the Holder would have received if the Warrant had been exercised in full into Warrant Shares on the date of such event.
(c) Certificate as to Adjustment.
(i) As promptly as reasonably practicable following any adjustment of the kind and number of Warrant Shares pursuant to the provisions of Section 4(a), but in any event not later than ten (10) Business Days thereafter, the Company shall furnish to the Holder a certificate of an executive officer setting forth in reasonable detail such adjustment and the facts upon which it is based and certifying the calculation thereof.
(ii) As promptly as reasonably practicable following the receipt by the Company of a written request by the Holder, but in any event not later than ten (10) Business Days thereafter, the Company shall furnish to the Holder a certificate of an executive officer certifying the amount of Warrant Shares or the amount, if any, of other shares of stock, securities, or assets then issuable upon exercise of the Warrant.
(d) Notices. In the event:
(i) that the Company shall take a record of the holders of its Common Stock (or other capital stock or securities at the time issuable upon exercise of the Warrant) for the purpose of entitling or enabling them to receive any dividend or other distribution, to vote at a meeting (or by written consent), to receive any right to subscribe for or purchase any shares of capital stock of any class or any other securities, or to receive any other security; or
(ii) of any capital reorganization of the Company, any reclassification of the Common Stock of the Company, any consolidation or merger of the Company with or into another Person, or sale of all or substantially all of the Company's assets to another Person; or
(iii) of the voluntary or involuntary dissolution, liquidation, or winding-up of the Company;
then, and in each such case, the Company shall send or cause to be sent to the Holder at least five (5) days prior to the applicable record date or the applicable expected effective date, as the case may be, for the event, a written notice specifying, as the case may be, (A) the record date for such dividend, distribution, meeting, or consent or other right or action, and a description of such dividend, distribution, or other right or action to be taken at such meeting or by written consent, or (B) the effective date on which such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation, or winding-up is proposed to take place, and the date, if any is to be fixed, as of which the books of the Company shall close or a record shall be taken with respect to which the holders of record of Common Stock (or such other capital stock or securities at the time issuable upon exercise of the Warrant) shall be entitled to exchange their shares of Common Stock (or such other capital stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation, or winding-up, and the amount per share and character of such exchange applicable to the Warrant and the Warrant Shares.
5. Purchase Rights. In addition to any adjustments pursuant to Section 4(a) above, if at any time the Company grants, issues, or sells any shares of Common Stock, Options, Convertible Securities, or rights to purchase stock, warrants, securities, or other property pro rata to the record holders of Common Stock (the “Purchase Rights”), then the Holder shall be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder would have acquired if the Holder had held the number of Warrant Shares acquirable upon complete exercise of this Warrant immediately before the date on which a record is taken for the grant, issuance, or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined for the grant, issue, or sale of such Purchase Rights.
6. [Intentionally Omitted].
7. Transfer of Warrant. Subject to the transfer conditions referred to in the legend endorsed hereon and the terms and conditions of this Warrant, this Warrant and all rights hereunder are transferable, in whole or in part, by the Holder without charge to the Holder, upon surrender of this Warrant to the Company at its then principal executive offices with a properly completed and duly executed Assignment in the form attached hereto as Exhibit B, together with funds sufficient to pay any transfer taxes described in Section 3(f)(v) in connection with the making of such transfer. Upon such compliance, surrender, and delivery and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants (in book-entry form) in the name of the assignee or assignees and in the denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant, if any, not so assigned and this Warrant shall promptly be cancelled.
8. Holder Not Deemed a Stockholder; Limitations on Liability. Except as otherwise specifically provided herein (including Section 4(b)), prior to the issuance to the Holder of the Warrant Shares to which the Holder is then entitled to receive upon the due exercise of this
Warrant, the Holder shall not be entitled to vote or receive dividends or be deemed the holder of shares of capital stock of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, as such, any of the rights of a stockholder of the Company or any right to vote, give, or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance, or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company. Notwithstanding this Section 8, the Company shall provide the Holder with copies of the same notices and other information given to the stockholders of Company or the stockholders of the Company’s affiliate, Invacare Holdings Corporation, contemporaneously with the giving thereof to such stockholders.
9. Division and Combination. Subject to compliance with the applicable provisions of this Warrant as to any transfer or other assignment which may be involved in such division or combination, this Warrant may be divided or, following any such division of this Warrant, subsequently combined with other Warrants, upon the surrender of this Warrant or Warrants to the Company at its then principal executive offices, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the respective Holders or their agents or attorneys. Subject to compliance with the applicable provisions of this Warrant as to any transfer or assignment which may be involved in such division or combination, the Company shall at its own expense execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants so surrendered in accordance with such notice. Such new Warrant or Warrants shall be of like tenor to the surrendered Warrant or Warrants and shall be exercisable in the aggregate for an equivalent number of Warrant Shares as the Warrant or Warrants so surrendered in accordance with such notice.
10. No Impairment. The Company shall not, by amendment of its Certificate of Incorporation or Bylaws, or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed by it hereunder, but shall at all times in good faith assist in the carrying out of all the provisions of this Warrant and in the taking of all such action as may reasonably be requested by the Holder in order to protect the exercise rights of the Holder against dilution or other impairment, consistent with the tenor and purpose of this Warrant.
11. Compliance with the Securities Act.
(a) Agreement to Comply with the Securities Act; Legend. The Holder, by acceptance of this Warrant, agrees to comply in all respects with the provisions of this Section 11 and the restrictive legend requirements set forth on the face of this Warrant and further agrees that such Holder shall not offer, sell, or otherwise dispose of this Warrant or any Warrant Shares to be issued upon exercise hereof except under
circumstances that will not result in a violation of the Securities Act of 1933, as amended (the “Securities Act”). This Warrant and all Warrant Shares issued upon exercise of this Warrant (unless registered under the Securities Act) shall be stamped or imprinted with a legend in substantially the following form:
“THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR QUALIFIED UNDER ANY STATE OR FOREIGN SECURITIES LAWS, AND MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED OR ASSIGNED UNLESS (I) A REGISTRATION STATEMENT COVERING SUCH SHARES IS EFFECTIVE UNDER THE ACT AND IS QUALIFIED UNDER APPLICABLE STATE AND FOREIGN LAW OR (II) THE TRANSACTION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS UNDER THE ACT AND THE QUALIFICATION REQUIREMENTS UNDER APPLICABLE STATE AND FOREIGN LAW AND, IF THE CORPORATION REASONABLY REQUESTS, AN OPINION REASONABLY SATISFACTORY TO THE CORPORATION TO SUCH EFFECT HAS BEEN RENDERED BY COUNSEL.”
(b) Representations of the Holder. In connection with the issuance of this Warrant, the Holder specifically represents, as of the date hereof, to the Company by acceptance of this Warrant as follows:
(i) The Holder is an “accredited investor” as defined in Rule 501 of Regulation D promulgated under the Securities Act. The Holder is acquiring this Warrant and the Warrant Shares to be issued upon exercise hereof for investment for its own account and not with a view towards, or for resale in connection with, the public sale or distribution of this Warrant or the Warrant Shares, except pursuant to sales registered or exempted under the Securities Act.
(ii) The Holder understands and acknowledges that this Warrant and the Warrant Shares to be issued upon exercise hereof are “restricted securities” under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that, under such laws and applicable regulations, such securities may be resold without registration under the Securities Act only in certain limited circumstances. In addition, the Holder represents that it is familiar with Rule 144 under the Securities Act, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act.
(iii) The Holder acknowledges that it can bear the economic and financial risk of its investment for an indefinite period, and has such knowledge
and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Warrant and the Warrant Shares. The Holder has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Warrant and the business, properties, prospects, and financial condition of the Company.
12. Warrant Register. The Transfer Agent shall keep, at an office designated for such purpose, books (the “Warrant Register”) in which, subject to such reasonable regulations as it may prescribe, it shall register the original issuance of the Warrant and any assignment, division, combination, or other transfer of the Warrant. The Company and the Transfer Agent may deem and treat the Person in whose name the Warrant is registered on such Warrant Register as the Holder thereof for all purposes, and the Company shall not be affected by any notice to the contrary, except any assignment, division, combination, or other transfer of the Warrant effected in accordance with the provisions of this Warrant.1
13. Notices. All notices, requests, consents, claims, demands, waivers, and other communications hereunder shall be in writing and shall be deemed to have been given: (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or email of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient; or (d) on the third (3rd) day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the Company parties at the addresses indicated in that certain Loan and Security Agreement dated as of May 5, 2023, among the borrowers from time to time party thereto, the guarantors from time to time party thereto, the lenders from time to time party thereto and White Oak Commercial Finance, LLC, as Administrative Agent and Collateral Agent (as amended, restated, amended and restated, supplemented or otherwise modified from time to time), and the address for the Holder set forth on the signature page hereto, or at such other address for a party as shall be specified in a notice given in accordance with this Section 13.
14. Cumulative Remedies. Except to the extent expressly provided in Section 8 to the contrary, the rights and remedies provided in this Warrant are cumulative and are not exclusive of, and are in addition to and not in substitution for, any other rights or remedies available at law, in equity, or otherwise.
15. Equitable Relief. Each of the Company and the Holder acknowledges that a breach or threatened breach by such party of any of its obligations under this Warrant would give rise to irreparable harm to the other party hereto for which monetary damages would not be an adequate remedy and hereby agrees that in the event of a breach or a threatened breach by such party of any such obligations, the other party hereto shall, in addition to any and all other rights and remedies that may be available to it in respect of such breach, be entitled to equitable relief,
1 Note to Draft: Subject to review by the Transfer Agent.
including a restraining order, an injunction, specific performance, and any other relief that may be available from a court of competent jurisdiction.
16. Entire Agreement. This Warrant constitutes the sole and entire agreement of the parties to this Warrant with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter.
17. Successor and Assigns. This Warrant and the rights evidenced hereby shall be binding upon and shall inure to the benefit of the parties hereto and the successors of the Company and the successors and permitted assigns of the Holder. Such successors and/or permitted assigns of the Holder shall be deemed to be a Holder for all purposes hereunder.
18. No Third-Party Beneficiaries. This Warrant is for the sole benefit of the Company and the Holder and their respective successors and, in the case of the Holder, permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit, or remedy of any nature whatsoever, under or by reason of this Warrant.
19. Headings. The headings in this Warrant are for reference only and shall not affect the interpretation of this Warrant.
20. Amendment and Modification; Waiver. This Warrant is one of a series of warrants issued by the Company on the date hereof (the “International Holdings Warrants”). The provisions of this Warrant may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of either (a) the Holder of this Warrant or (b) the holders of International Holdings Warrants representing at least 50% of the Warrant Shares to be issued, cumulatively, upon the exercise of all the International Holdings Warrants; provided that no such action may increase the Exercise Price of this Warrant or decrease the number of shares or class of stock to be issued upon exercise of this Warrant without the written consent of the Holder of this Warrant. No waiver by the Company or the Holder of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach, or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any rights, remedy, power, or privilege arising from this Warrant shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power, or privilege.
21. Severability. If any term or provision of this Warrant is invalid, illegal, or unenforceable in any jurisdiction, such invalidity, illegality, or unenforceability shall not affect
any other term or provision of this Warrant or invalidate or render unenforceable such term or provision in any other jurisdiction.
22. Governing Law and Submission to Jurisdiction. This Warrant shall be governed by and construed in accordance with the internal laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of laws of any jurisdiction other than those of the State of Delaware. Each party hereto irrevocably and unconditionally (i) agrees that any suit, action or other legal proceeding arising out of this Warrant may be brought in the United States District Court for the District of Delaware or, if such court does not have jurisdiction or will not accept jurisdiction, in any court of general jurisdiction in Delaware; (ii) consents to the jurisdiction of any such court in any such suit, action or proceeding; and (iii) waives any objection which such party may have to the laying of venue of any such suit, action or proceeding in any such court.
23. Waiver of Jury Trial. Each party acknowledges and agrees that any controversy which may arise under this Warrant is likely to involve complicated and difficult issues and, therefore, each such party irrevocably and unconditionally waives any right it may have to a trial by jury in respect of any legal action arising out of or relating to this Warrant or the transactions contemplated hereby.
24. Counterparts. This Warrant may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Warrant delivered by facsimile, e-mail, or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Warrant.
25. No Strict Construction. This Warrant shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Company has duly executed this Warrant on the Original Issue Date.
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| INVACARE INTERNATIONAL HOLDINGS CORP. |
| By: __________________________ Name:__________________________ Title: _________________________ |
| |
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| Accepted and agreed, |
| [______________] | |
By: __________________________ Name:__________________________ Title: _________________________ Address:________________________ | |
EXHIBIT A
EXERCISE AGREEMENT
Invacare International Holdings Corp
[Address]
[Date]
Reference is hereby made to that certain Warrant, dated as of [______], 2024, by and between Invacare International Holdings Corp., a Delaware corporation the “Company”) and [______] (as amended, restated, supplemented or otherwise modified from time to time, the “Warrant”). Capitalized terms used but not otherwise defined herein having the meanings set forth in the Warrant.
The undersigned hereby agrees to subscribe to purchase from the Company a number of shares of Common Stock equal to percent ([_____]%) of the Common Stock Deemed Outstanding, which as of the date hereof equals [______] shares of Common Stock, and makes payment herewith in full therefor at a purchase price per share equal to the Exercise Price.
The undersigned hereby elects to pay the Aggregate Exercise Price by one or more of the following methods (check all that apply):
__ Certified or official bank check payable to the order of the Company (enclosed herewith) (specify amount: $_______________)
__ Wire transfer of immediately available funds to an account designated by the Company (specify amount: $________________)
The undersigned hereby represents, as of the date hereof, to the Company as follows:
i. The undersigned is an “accredited investor” as defined in Rule 501 of Regulation D promulgated under the Securities Act. The undersigned is acquiring the Warrant Shares to be issued upon exercise hereof for investment for its own account and not with a view towards, or for resale in connection with, the public sale or distribution of the Warrant Shares, except pursuant to sales registered or exempted under the Securities Act.
ii. The undersigned understands and acknowledges that the Warrant Shares to be issued upon exercise hereof are “restricted securities” under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that, under such laws and applicable regulations, such securities may be resold without registration under the Securities Act only in certain limited circumstances. In addition, the undersigned represents that it is familiar with Rule 144 under the Securities Act, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act.
iii. The undersigned acknowledges that it can bear the economic and financial risk of its investment for an indefinite period, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Warrant Shares. The undersigned has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Warrant and the business, properties, prospects, and financial condition of the Company.
[Signature Pages to Follow]
[HOLDER]
By: __________________________
Name:__________________________
Title: _________________________
Address:
INVACARE INTERNATIONAL HOLDINGS CORP.
By: __________________________
Name:__________________________
Title: _________________________
EXHIBIT B
ASSIGNMENT
Reference is hereby made to that certain Warrant, dated as of [______], 2024, by and between Invacare International Holdings Corp., a Delaware corporation the “Company”) and [______] (as amended, restated, supplemented or otherwise modified from time to time, the “Warrant”). Capitalized terms used but not otherwise defined herein having the meanings set forth in the Warrant.
FOR VALUE RECEIVED, hereby sells, assigns and transfers all of the rights of the undersigned under the Warrant, unto:
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| Names of Assignee | | Address | |
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Exhibit B
Form of Reorganized Invacare Warrant
(see attached)
WARRANT
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR QUALIFIED UNDER ANY STATE OR FOREIGN SECURITIES LAWS, AND MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED OR ASSIGNED UNLESS (I) A REGISTRATION STATEMENT COVERING SUCH SHARES IS EFFECTIVE UNDER THE ACT AND IS QUALIFIED UNDER APPLICABLE STATE AND FOREIGN LAW OR (II) THE TRANSACTION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS UNDER THE ACT AND THE QUALIFICATION REQUIREMENTS UNDER APPLICABLE STATE AND FOREIGN LAW AND, IF THE CORPORATION REQUESTS, AN OPINION SATISFACTORY TO THE CORPORATION TO SUCH EFFECT HAS BEEN RENDERED BY COUNSEL.
Warrant Certificate No.: [________]
Original Issue Date: [_________]
FOR VALUE RECEIVED, Invacare Corporation, an Ohio corporation (the “Company”), hereby certifies that [__________], or its registered assigns (the “Holder”) is entitled to purchase from the Company a number of shares of duly authorized, validly issued, fully paid, and nonassessable shares of Common Stock equal to (a) [_________] percent ([_____]%) of the Common Stock Deemed Outstanding on the date of any exercise of this Warrant less (b) the aggregate number of shares of Common Stock previously issued as adjusted from time to time as a result of any partial exercise of this Warrant in accordance with Section 3, at a purchase price per share equal to the Exercise Price (as defined below), all subject to the terms, conditions, and adjustments set forth below in this Warrant. Certain capitalized terms used herein are defined in Section 1 hereof.
26. Definitions. As used in this Warrant, the following terms have the respective meanings set forth below:
“Aggregate Exercise Price” means an amount equal to the product of (a) the number of Warrant Shares in respect of which this Warrant is then being exercised pursuant to Section 3 hereof, multiplied by (b) the Exercise Price.
“Board” means the board of directors of the Company.
“Business Day” means any day except Saturday, Sunday, or any other day on which commercial banks are authorized to close under the laws of, or are in fact closed in, the state of New York.
“Common Stock” means (i) the common stock, par value $0.001 per share, of the Company, (ii) any capital stock on parity with such common stock with respect to dividends rights and/or distribution rights upon the liquidation, winding-up or
dissolution (“Parity”), and (iii) any capital stock into which any such capital stock described in clauses (1) or (ii) above shall have been converted, exchanged, or reclassified following the date hereof, including any capital stock on Parity with respect thereto consistent with the adjustment provision provided in Section 4(a).
“Common Stock Deemed Outstanding” means, at any given time prior to the expiration of this Warrant, the sum of (a) the number of shares of Common Stock actually outstanding at such time, plus (b) the number of shares of Common Stock reserved for issuance at such time under stock option or other equity incentive plans approved by the Board, regardless of whether the shares of Common Stock are actually subject to outstanding Options at such time or whether any outstanding Options are actually exercisable at such time, plus (c) the number of shares of Common Stock issuable upon exercise of any other Options (other than Options described in clause (b) above) actually outstanding at such time, plus (d) the number of shares of Common Stock issuable upon conversion or exchange of Convertible Securities actually outstanding at such time (treating as actually outstanding any Convertible Securities issuable upon exercise of Options actually outstanding at such time), in each case, regardless of whether the Options or Convertible Securities are actually exercisable at such time.
“Company” has the meaning set forth in the preamble.
“Convertible Securities” means any securities (directly or indirectly) convertible into or exchangeable for Common Stock, but excluding Options.
“Exercise Date” means, for any given exercise of this Warrant, the date on which the conditions to such exercise as set forth in Section 3 shall have been satisfied at or prior to 5:00 p.m., New York time, on a Business Day, including, without limitation, the receipt by the Company of the Exercise Agreement, the Warrant, and the Aggregate Exercise Price.
“Exercise Agreement” has the meaning set forth in Section 3(a)(i).
“Exercise Period” has the meaning set forth in Section 2.
“Exercise Price” means $0.01.
“Fair Market Value” of the Common Stock shall be the fair market value per share as determined jointly by the Board and the Holder.
“Holder” has the meaning set forth in the preamble.
“Options” means any warrants or other rights or options to subscribe for or purchase Common Stock or Convertible Securities.
“Original Issue Date” means the date hereof.
“Person” means any individual, sole proprietorship, partnership, limited liability company, corporation, joint venture, trust, incorporated organization, or government or department or agency thereof.
“Transfer Agent” shall mean the then Transfer Agent for the Common Stock, which shall initially be [_______].
“Warrant” means this Warrant and all warrants issued upon division or combination of, or in substitution for, this Warrant.
“Warrant Shares” means the shares of Common Stock or other capital stock of the Company then purchasable upon exercise of this Warrant in accordance with the terms of this Warrant.
27. Term of Warrant. Subject to the terms and conditions hereof, at any time or from time to time after the date hereof and prior to 5:00 p.m., New York time, on the 2nd anniversary of the date hereof or, if such day is not a Business Day, on the next preceding Business Day (the “Exercise Period”), the Holder of this Warrant may exercise this Warrant for all or any part of the Warrant Shares purchasable hereunder (subject to adjustment as provided herein).
28. Exercise of Warrant.
(a) Exercise Procedure. This Warrant may be exercised from time to time on any Business Day during the Exercise Period, for all or any part of the unexercised Warrant Shares, upon:
(i) an Exercise Agreement in the form attached hereto as Exhibit A (each, an “Exercise Agreement”), duly completed (including specifying the number of Warrant Shares to be purchased) and executed; and
(ii) payment to the Company of the Aggregate Exercise Price in accordance with Section 3(b).
(b) Payment of the Aggregate Exercise Price. Payment of the Aggregate Exercise Price shall be made, at the option of the Holder as expressed in the Exercise Agreement, by delivery to the Company of a certified or official bank check payable to the order of the Company or by wire transfer of immediately available funds to an account designated in writing by the Company, in the amount of such Aggregate Exercise Price.
(c) Delivery of Warrant Shares. Upon receipt by the Company of the Exercise Agreement, surrender of this Warrant, and payment of the Aggregate Exercise Price (in accordance with Section 3(a) hereof), the Company shall, as promptly as practicable, and in any event within two (2) Business Days thereafter, cause the Transfer Agent to issue in book-entry form on the Warrant Register maintained by the Transfer Agent for such
purpose, the Warrant Shares, the Warrant Shares issuable upon such exercise, together with cash in lieu of any fraction of a share, as provided in Section 3(d) hereof. The Warrant Shares so delivered shall be, to the extent possible, in such denomination or denominations as the exercising Holder shall reasonably request in the Exercise Agreement and shall be registered in the name of the Holder or, subject to compliance with Section 7 below, such other Person's name as shall be designated in the Exercise Agreement. This Warrant shall be deemed to have been exercised and such Warrant Shares shall be deemed to have been issued, and the Holder or any other Person so designated to be named therein shall be deemed to have become a holder of record of such Warrant Shares for all purposes, as of the Exercise Date.
(d) Fractional Shares. The Company shall not be required to issue a fractional Warrant Share upon exercise of any Warrant.
(e) Valid Issuance of Warrant and Warrant Shares; Payment of Taxes. With respect to the exercise of this warrant, the Company hereby represents, covenants, and agrees:
(i) This Warrant is, and any Warrant issued in substitution for or replacement of this Warrant shall be, upon issuance, duly authorized and validly issued.
(ii) All Warrant Shares issuable upon the exercise of this Warrant pursuant to the terms hereof shall be, upon issuance, and the Company shall take all such actions as may be necessary or appropriate in order that such Warrant Shares are, validly issued, fully paid, and non-assessable, issued without violation of any preemptive or similar rights of any stockholder of the Company and free and clear of all taxes, liens, and charges.
(iii) The Company shall take all such actions as may be necessary to ensure that all such Warrant Shares are issued without violation by the Company of any applicable law or governmental regulation or any requirements of any national securities exchange upon which shares of Common Stock or other securities constituting Warrant Shares may be listed at the time of such exercise (except for official notice of issuance which shall be immediately delivered by the Company upon each such issuance).
(iv) At all times that (a) this Warrant is outstanding and (b) the Common Stock or other securities constituting Warrant Shares are quoted on or listed for trading on a national securities exchange and registered under the Securities Exchange Act of 1934, as amended, the Company shall use its commercially reasonable efforts to cause the Warrant Shares, upon exercise of this Warrant, to be listed on any such national securities exchange upon which shares of Common Stock or other securities constituting Warrant Shares are listed.
(v) The Company shall pay all expenses in connection with, and all taxes and other governmental charges that may be imposed with respect to, the issuance or delivery of Warrant Shares upon exercise of this Warrant; provided, that the Company shall not be required to pay any tax or governmental charge that may be imposed with respect to any applicable withholding or the issuance or delivery of the Warrant Shares to any Person other than the Holder, and no such issuance or delivery shall be made unless and until the Person requesting such issuance has paid to the Company the amount of any such tax, or has established to the satisfaction of the Company that such tax has been paid.
(f) Conditional Exercise. Notwithstanding any other provision hereof, if an exercise of any portion of this Warrant is to be made in connection with a public offering or a sale of the Company (pursuant to a merger, sale of stock, or otherwise), such exercise may at the election of the Holder be conditioned upon the consummation of such transaction, in which case such exercise shall not be deemed to be effective until immediately prior to the consummation of such transaction.
(g) Reservation of Shares. During the Exercise Period, the Company shall at all times reserve and keep available out of its authorized but unissued Common Stock or other securities constituting Warrant Shares, solely for the purpose of issuance upon the exercise of this Warrant, the maximum number of Warrant Shares issuable upon the exercise of this Warrant, and the par value per Warrant Share shall at all times be less than or equal to the applicable Exercise Price. The Company shall not increase the par value of any Warrant Shares receivable upon the exercise of this Warrant above the Exercise Price then in effect, and shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant.
29. Effect of Certain Events on Warrant Shares.
(a) Adjustment to Warrant Shares Upon Reorganization, Reclassification, Consolidation, or Merger. In the event of any (i) capital reorganization of the Company, (ii) reclassification of the stock of the Company (other than a change in par value or from par value to no par value or from no par value to par value or as a result of a stock dividend or subdivision, split-up, or combination of shares), (iii) consolidation or merger of the Company with or into another Person, (iv) sale of all or substantially all of the Company's assets to another Person or (v) other similar transaction, in each case which entitles the holders of Common Stock to receive (either directly or upon subsequent liquidation) stock, securities, or assets with respect to or in exchange for Common Stock, each Warrant shall, immediately after such reorganization, reclassification, consolidation, merger, sale, or similar transaction, remain outstanding and shall thereafter, in lieu of or in addition to (as the case may be) the number of Warrant Shares then exercisable under this Warrant, be exercisable for the kind and number of shares of stock or other securities or assets of the Company or of the successor Person resulting from such transaction to
which the Holder would have been entitled upon such reorganization, reclassification, consolidation, merger, sale, or similar transaction if the Holder had exercised this Warrant in full immediately prior to the time of such reorganization, reclassification, consolidation, merger, sale, or similar transaction and acquired the applicable number of Warrant Shares then issuable hereunder as a result of such exercise (without taking into account any limitations or restrictions on the exercisability of this Warrant); and, in such case, appropriate adjustment (in form and substance satisfactory to the Holder) shall be made with respect to the Holder's rights under this Warrant to insure that the provisions of this Warrant shall thereafter be applicable, as nearly as possible, to any shares of stock, securities, or assets thereafter acquirable upon exercise of this Warrant. The provisions of this Section 4(a) shall similarly apply to successive reorganizations, reclassifications, consolidations, mergers, sales, or similar transactions. The Company shall not effect any such reorganization, reclassification, consolidation, merger, sale, or similar transaction unless, prior to the consummation thereof, the successor Person (if other than the Company) resulting from such reorganization, reclassification, consolidation, merger, sale, or similar transaction, shall assume, by written instrument substantially similar in form and substance to this Warrant and satisfactory to the Holder, the obligation to deliver to the Holder such shares of stock, securities, or assets which, in accordance with the foregoing provisions, such Holder shall be entitled to receive upon exercise of this Warrant. Notwithstanding anything to the contrary contained herein, with respect to any corporate event or other transaction contemplated by the provisions of this Section 4(a), the Holder shall have the right to elect prior to the consummation of such event or transaction, to give effect to the exercise rights contained in Section 2 instead of giving effect to the provisions contained in this Section 4(a) with respect to this Warrant.
(b) Dividends and Distributions. Subject to the provisions of Section 4(a), as applicable, if the Company shall, at any time or from time to time after the Original Issue Date, make or declare, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or any other distribution payable in securities of the Company (other than a dividend or distribution of shares of Common Stock, Options, or Convertible Securities in respect of outstanding shares of Common Stock), cash or other property, then, and in each such event, provision shall be made so that the Holder shall receive upon exercise of the Warrant, in addition to the number of Warrant Shares receivable thereupon, the kind and amount of securities of the Company, cash, or other property which the Holder would have been entitled to receive had the Warrant been exercised in full into Warrant Shares on the date of such event and had the Holder thereafter, during the period from the date of such event to and including the Exercise Date, retained such securities, cash, or other property receivable by them as aforesaid during such period, giving application to all adjustments called for during such period under this Section 4(b) with respect to the rights of the Holder; provided, that no such provision shall be made if the Holder receives, simultaneously with the distribution to the holders of Common Stock, a dividend or other distribution of such securities, cash, or other property in an amount equal to the amount of such securities, cash, or other
property as the Holder would have received if the Warrant had been exercised in full into Warrant Shares on the date of such event.
(c) Certificate as to Adjustment.
(i) As promptly as reasonably practicable following any adjustment of the kind and number of Warrant Shares pursuant to the provisions of Section 4(a), but in any event not later than ten (10) Business Days thereafter, the Company shall furnish to the Holder a certificate of an executive officer setting forth in reasonable detail such adjustment and the facts upon which it is based and certifying the calculation thereof.
(ii) As promptly as reasonably practicable following the receipt by the Company of a written request by the Holder, but in any event not later than ten (10) Business Days thereafter, the Company shall furnish to the Holder a certificate of an executive officer certifying the amount of Warrant Shares or the amount, if any, of other shares of stock, securities, or assets then issuable upon exercise of the Warrant.
(d) Notices. In the event:
(i) that the Company shall take a record of the holders of its Common Stock (or other capital stock or securities at the time issuable upon exercise of the Warrant) for the purpose of entitling or enabling them to receive any dividend or other distribution, to vote at a meeting (or by written consent), to receive any right to subscribe for or purchase any shares of capital stock of any class or any other securities, or to receive any other security; or
(ii) of any capital reorganization of the Company, any reclassification of the Common Stock of the Company, any consolidation or merger of the Company with or into another Person, or sale of all or substantially all of the Company's assets to another Person; or
(iii) of the voluntary or involuntary dissolution, liquidation, or winding-up of the Company;
then, and in each such case, the Company shall send or cause to be sent to the Holder at least five (5) days prior to the applicable record date or the applicable expected effective date, as the case may be, for the event, a written notice specifying, as the case may be, (A) the record date for such dividend, distribution, meeting, or consent or other right or action, and a description of such dividend, distribution, or other right or action to be taken at such meeting or by written consent, or (B) the effective date on which such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation, or winding-up is proposed to take place, and the date, if any is to be fixed, as of which the books of the Company shall close or a record shall be taken with respect to
which the holders of record of Common Stock (or such other capital stock or securities at the time issuable upon exercise of the Warrant) shall be entitled to exchange their shares of Common Stock (or such other capital stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation, or winding-up, and the amount per share and character of such exchange applicable to the Warrant and the Warrant Shares.
30. Purchase Rights. In addition to any adjustments pursuant to Section 4(a) above, if at any time the Company grants, issues, or sells any shares of Common Stock, Options, Convertible Securities, or rights to purchase stock, warrants, securities, or other property pro rata to the record holders of Common Stock (the “Purchase Rights”), then the Holder shall be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder would have acquired if the Holder had held the number of Warrant Shares acquirable upon complete exercise of this Warrant immediately before the date on which a record is taken for the grant, issuance, or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined for the grant, issue, or sale of such Purchase Rights.
31. [Intentionally Omitted].
32. Transfer of Warrant. Subject to the transfer conditions referred to in the legend endorsed hereon and the terms and conditions of this Warrant, this Warrant and all rights hereunder are transferable, in whole or in part, by the Holder without charge to the Holder, upon surrender of this Warrant to the Company at its then principal executive offices with a properly completed and duly executed Assignment in the form attached hereto as Exhibit B, together with funds sufficient to pay any transfer taxes described in Section 3(f)(v) in connection with the making of such transfer. Upon such compliance, surrender, and delivery and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants (in book-entry form) in the name of the assignee or assignees and in the denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant, if any, not so assigned and this Warrant shall promptly be cancelled.
33. Holder Not Deemed a Stockholder; Limitations on Liability. Except as otherwise specifically provided herein (including Section 4(b)), prior to the issuance to the Holder of the Warrant Shares to which the Holder is then entitled to receive upon the due exercise of this Warrant, the Holder shall not be entitled to vote or receive dividends or be deemed the holder of shares of capital stock of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, as such, any of the rights of a stockholder of the Company or any right to vote, give, or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance, or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors
of the Company. Notwithstanding this Section 8, the Company shall provide the Holder with copies of the same notices and other information given to the stockholders of Company or the stockholders of the Company’s affiliate, Invacare Holdings Corporation., contemporaneously with the giving thereof to such stockholders.
34. Division and Combination. Subject to compliance with the applicable provisions of this Warrant as to any transfer or other assignment which may be involved in such division or combination, this Warrant may be divided or, following any such division of this Warrant, subsequently combined with other Warrants, upon the surrender of this Warrant or Warrants to the Company at its then principal executive offices, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the respective Holders or their agents or attorneys. Subject to compliance with the applicable provisions of this Warrant as to any transfer or assignment which may be involved in such division or combination, the Company shall at its own expense execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants so surrendered in accordance with such notice. Such new Warrant or Warrants shall be of like tenor to the surrendered Warrant or Warrants and shall be exercisable in the aggregate for an equivalent number of Warrant Shares as the Warrant or Warrants so surrendered in accordance with such notice.
35. No Impairment. The Company shall not, by amendment of its Certificate of Incorporation or Bylaws, or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed by it hereunder, but shall at all times in good faith assist in the carrying out of all the provisions of this Warrant and in the taking of all such action as may reasonably be requested by the Holder in order to protect the exercise rights of the Holder against dilution or other impairment, consistent with the tenor and purpose of this Warrant.
36. Compliance with the Securities Act.
(a) Agreement to Comply with the Securities Act; Legend. The Holder, by acceptance of this Warrant, agrees to comply in all respects with the provisions of this Section 11 and the restrictive legend requirements set forth on the face of this Warrant and further agrees that such Holder shall not offer, sell, or otherwise dispose of this Warrant or any Warrant Shares to be issued upon exercise hereof except under circumstances that will not result in a violation of the Securities Act of 1933, as amended (the “Securities Act”). This Warrant and all Warrant Shares issued upon exercise of this Warrant (unless registered under the Securities Act) shall be stamped or imprinted with a legend in substantially the following form:
“THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR QUALIFIED UNDER ANY STATE OR FOREIGN SECURITIES LAWS, AND MAY NOT
BE OFFERED FOR SALE, SOLD, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED OR ASSIGNED UNLESS (I) A REGISTRATION STATEMENT COVERING SUCH SHARES IS EFFECTIVE UNDER THE ACT AND IS QUALIFIED UNDER APPLICABLE STATE AND FOREIGN LAW OR (II) THE TRANSACTION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS UNDER THE ACT AND THE QUALIFICATION REQUIREMENTS UNDER APPLICABLE STATE AND FOREIGN LAW AND, IF THE CORPORATION REASONABLY REQUESTS, AN OPINION REASONABLY SATISFACTORY TO THE CORPORATION TO SUCH EFFECT HAS BEEN RENDERED BY COUNSEL.”
(b) Representations of the Holder. In connection with the issuance of this Warrant, the Holder specifically represents, as of the date hereof, to the Company by acceptance of this Warrant as follows:
(i) The Holder is an “accredited investor” as defined in Rule 501 of Regulation D promulgated under the Securities Act. The Holder is acquiring this Warrant and the Warrant Shares to be issued upon exercise hereof for investment for its own account and not with a view towards, or for resale in connection with, the public sale or distribution of this Warrant or the Warrant Shares, except pursuant to sales registered or exempted under the Securities Act.
(ii) The Holder understands and acknowledges that this Warrant and the Warrant Shares to be issued upon exercise hereof are “restricted securities” under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that, under such laws and applicable regulations, such securities may be resold without registration under the Securities Act only in certain limited circumstances. In addition, the Holder represents that it is familiar with Rule 144 under the Securities Act, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act.
(iii) The Holder acknowledges that it can bear the economic and financial risk of its investment for an indefinite period, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Warrant and the Warrant Shares. The Holder has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Warrant and the business, properties, prospects, and financial condition of the Company.
37. Warrant Register. The Transfer Agent shall keep, at an office designated for such purpose, books (the “Warrant Register”) in which, subject to such reasonable regulations as it may prescribe, it shall register the original issuance of the Warrant and any assignment, division, combination, or other transfer of the Warrant. The Company and the Transfer Agent may deem
and treat the Person in whose name the Warrant is registered on such Warrant Register as the Holder thereof for all purposes, and the Company shall not be affected by any notice to the contrary, except any assignment, division, combination, or other transfer of the Warrant effected in accordance with the provisions of this Warrant.2
38. Notices. All notices, requests, consents, claims, demands, waivers, and other communications hereunder shall be in writing and shall be deemed to have been given: (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or email of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient; or (d) on the third (3rd) day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the Company parties at the addresses indicated in that certain Loan and Security Agreement dated as of May 5, 2023, among the borrowers from time to time party thereto, the guarantors from time to time party thereto, the lenders from time to time party thereto and White Oak Commercial Finance, LLC, as Administrative Agent and Collateral Agent (as amended, restated, amended and restated, supplemented or otherwise modified from time to time), and the address for the Holder set forth on the signature page hereto, or at such other address for a party as shall be specified in a notice given in accordance with this Section 13.
39. Cumulative Remedies. Except to the extent expressly provided in Section 8 to the contrary, the rights and remedies provided in this Warrant are cumulative and are not exclusive of, and are in addition to and not in substitution for, any other rights or remedies available at law, in equity, or otherwise.
40. Equitable Relief. Each of the Company and the Holder acknowledges that a breach or threatened breach by such party of any of its obligations under this Warrant would give rise to irreparable harm to the other party hereto for which monetary damages would not be an adequate remedy and hereby agrees that in the event of a breach or a threatened breach by such party of any such obligations, the other party hereto shall, in addition to any and all other rights and remedies that may be available to it in respect of such breach, be entitled to equitable relief, including a restraining order, an injunction, specific performance, and any other relief that may be available from a court of competent jurisdiction.
41. Entire Agreement. This Warrant constitutes the sole and entire agreement of the parties to this Warrant with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter.
42. Successor and Assigns. This Warrant and the rights evidenced hereby shall be binding upon and shall inure to the benefit of the parties hereto and the successors of the
2 Note to Draft: Subject to review by the Transfer Agent.
Company and the successors and permitted assigns of the Holder. Such successors and/or permitted assigns of the Holder shall be deemed to be a Holder for all purposes hereunder.
43. No Third-Party Beneficiaries. This Warrant is for the sole benefit of the Company and the Holder and their respective successors and, in the case of the Holder, permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit, or remedy of any nature whatsoever, under or by reason of this Warrant.
44. Headings. The headings in this Warrant are for reference only and shall not affect the interpretation of this Warrant.
45. Amendment and Modification; Waiver. This Warrant is one of a series of warrants issued by the Company on the date hereof (the “International Holdings Warrants”). The provisions of this Warrant may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of either (a) the Holder of this Warrant or (b) the holders of International Holdings Warrants representing at least 50% of the Warrant Shares to be issued, cumulatively, upon the exercise of all the International Holdings Warrants; provided that no such action may increase the Exercise Price of this Warrant or decrease the number of shares or class of stock to be issued upon exercise of this Warrant without the written consent of the Holder of this Warrant. No waiver by the Company or the Holder of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach, or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any rights, remedy, power, or privilege arising from this Warrant shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power, or privilege.
46. Severability. If any term or provision of this Warrant is invalid, illegal, or unenforceable in any jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other term or provision of this Warrant or invalidate or render unenforceable such term or provision in any other jurisdiction.
47. Governing Law and Submission to Jurisdiction. This Warrant shall be governed by and construed in accordance with the internal laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of laws of any jurisdiction other than those of the State of Delaware. Each party hereto irrevocably and unconditionally (i) agrees that any suit, action or other legal proceeding arising out of this Warrant may be brought in the United States District Court for the District of Delaware or, if such court does not have jurisdiction or will not accept jurisdiction, in any court of general jurisdiction in Delaware; (ii) consents to the
jurisdiction of any such court in any such suit, action or proceeding; and (iii) waives any objection which such party may have to the laying of venue of any such suit, action or proceeding in any such court.
48. Waiver of Jury Trial. Each party acknowledges and agrees that any controversy which may arise under this Warrant is likely to involve complicated and difficult issues and, therefore, each such party irrevocably and unconditionally waives any right it may have to a trial by jury in respect of any legal action arising out of or relating to this Warrant or the transactions contemplated hereby.
49. Counterparts. This Warrant may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Warrant delivered by facsimile, e-mail, or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Warrant.
50. No Strict Construction. This Warrant shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Company has duly executed this Warrant on the Original Issue Date.
| | | | | |
| INVACARE CORPORATION |
| By: __________________________ Name:__________________________ Title: _________________________ |
| |
| | | | | |
| Accepted and agreed, |
| [______________] | |
By: __________________________ Name:__________________________ Title: _________________________ Address:________________________ | |
EXHIBIT A
EXERCISE AGREEMENT
Invacare Corporation
[Address]
[Date]
Reference is hereby made to that certain Warrant, dated as of [______], 2024, by and between Invacare Corporation., an Ohio corporation the “Company”) and [______] (as amended, restated, supplemented or otherwise modified from time to time, the “Warrant”). Capitalized terms used but not otherwise defined herein having the meanings set forth in the Warrant.
The undersigned hereby agrees to subscribe to purchase from the Company a number of shares of Common Stock equal to percent ([_____]%) of the Common Stock Deemed Outstanding, which as of the date hereof equals [______] shares of Common Stock, and makes payment herewith in full therefor at a purchase price per share equal to the Exercise Price.
The undersigned hereby elects to pay the Aggregate Exercise Price by one or more of the following methods (check all that apply):
__ Certified or official bank check payable to the order of the Company (enclosed herewith) (specify amount: $_______________)
__ Wire transfer of immediately available funds to an account designated by the Company (specify amount: $________________)
The undersigned hereby represents, as of the date hereof, to the Company as follows:
iv. The undersigned is an “accredited investor” as defined in Rule 501 of Regulation D promulgated under the Securities Act. The undersigned is acquiring the Warrant Shares to be issued upon exercise hereof for investment for its own account and not with a view towards, or for resale in connection with, the public sale or distribution of the Warrant Shares, except pursuant to sales registered or exempted under the Securities Act.
v. The undersigned understands and acknowledges that the Warrant Shares to be issued upon exercise hereof are “restricted securities” under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that, under such laws and applicable regulations, such securities may be resold without registration under the Securities Act only in certain limited circumstances. In addition, the undersigned represents that it is familiar with Rule 144 under the Securities Act, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act.
vi. The undersigned acknowledges that it can bear the economic and financial risk of its investment for an indefinite period, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Warrant Shares. The undersigned has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Warrant and the business, properties, prospects, and financial condition of the Company.
[Signature Pages to Follow]
[HOLDER]
By: __________________________
Name:__________________________
Title: _________________________
Address:
INVACARE CORPORATION
By: __________________________
Name:__________________________
Title: _________________________
EXHIBIT B
ASSIGNMENT
Reference is hereby made to that certain Warrant, dated as of [______], 2024, by and between Invacare Corporation, an Ohio corporation the “Company”) and [______] (as amended, restated, supplemented or otherwise modified from time to time, the “Warrant”). Capitalized terms used but not otherwise defined herein having the meanings set forth in the Warrant.
FOR VALUE RECEIVED, hereby sells, assigns and transfers all of the rights of the undersigned under the Warrant, unto:
| | | | | | | | | | | |
| Names of Assignee | | Address | |
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Invacare (NYSE:IVC)
過去 株価チャート
から 10 2024 まで 11 2024
Invacare (NYSE:IVC)
過去 株価チャート
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