Invacare 2014 Annual Report Download - page 29

I-25
Notwithstanding the Company's expectations, if the Company's operating results decline more than it currently anticipates, or if
the Company is unable to successfully complete the final consent decree-related third-party expert certification audit and FDA
inspection within the currently estimated time frame, the Company may be unable to comply with the financial covenants, and its
lenders could demand repayment of the amounts outstanding under the Company's credit facility.
If necessary to maintain compliance with the Company's credit agreements, the Company may examine raising additional
capital, which may be dilutive to the Company's results. In addition, if necessary or advisable, the Company may seek to renegotiate
its New Credit Agreement in order to remain in compliance. The Company can make no assurances that under such circumstances
its financing arrangements could be renegotiated, or that alternative financing would be available on terms acceptable to the
Company, if at all.
The Company also has an agreement with De Lage Landen, Inc. (“DLL”), a third party financing company, to provide the
majority of future lease financing to the Company's North America customers. Either party could terminate this agreement with
180 days' notice or 90 days' notice by DLL upon the occurrence of certain events. Should this agreement be terminated, the
Company's borrowing needs under the New Credit Agreement could increase.
The holders of the Company’s Class B Common Shares own shares representing a substantial percentage of the Company’s
voting power, and their interests may differ from other shareholders.
The Company has two classes of common stock. The Common Shares have one vote per share and the Class B Common
Shares have 10 votes per share. As of December 31, 2014, the Class B Common Shares represented approximately 24% of the
combined voting power of the Company’s Common Shares and Class B Common Shares. Substantially all of such Class B Common
Shares are beneficially owned by a director of the Company and by a former executive. Together, their beneficial ownership
(including the right to acquire) of approximately 28% of the combined voting power could influence the outcome of a corporate
transaction or other matter submitted to the shareholders for approval, including mergers, consolidations and the sale of all or
substantially all of the Company’s assets. They also will have the power to influence or make more difficult a change in control.
It is possible that the interests of some or all of the holders of Class B Common Shares may differ from the interests of the other
shareholders, and they could take actions with which some shareholder may disagree.
The Company's capital expenditures could be higher than anticipated.
Unanticipated maintenance issues, changes in government regulations or significant investments in technology and new
product development could result in higher than anticipated capital expenditures, which could impact the Company's debt, interest
expense and cash flows.
The Company’s operating results and financial condition could be adversely affected if the Company becomes involved in
litigation regarding its patents or other intellectual property rights.
Litigation involving patents and other intellectual property rights is common in the Company’s industry, and other companies
within the Company’s industry have used intellectual property litigation in an attempt to gain a competitive advantage. The
Company in the past has been, and in the future may become, a party to lawsuits involving patents or other intellectual property.
If the Company receives an adverse judgment in any of these proceedings, a court or a similar foreign governing body could
invalidate or render unenforceable the Company’s owned or licensed patents, require the Company to pay significant damages,
seek licenses and/or pay ongoing royalties to third parties, require the Company to redesign its products, or prevent the Company
from manufacturing, using or selling its products, any of which would have an adverse effect on the Company’s results of operations
and financial condition. The Company in the past has brought, and may in the future also bring, actions against third parties for
infringement of the Company’s intellectual property rights. The Company may not succeed in these actions. The defense and
prosecution of intellectual property suits, proceedings before the U.S. Patent and Trademark Office or its foreign equivalents and
related legal and administrative proceedings are both costly and time consuming. Protracted litigation to defend or prosecute the
Company’s intellectual property rights could seriously detract from the time the Company’s management would otherwise devote
to running its business. Intellectual property litigation relating to the Company’s products could cause its customers or potential
customers to defer or limit their purchase or use of the affected products until resolution of the litigation.
If the Company is unable to protect its intellectual property rights or resolve successfully claims of infringement brought
against it, the Company's product sales and business could be affected adversely.
The Company's business depends in part on its ability to establish, protect, safeguard and enforce its intellectual property
and contractual rights and to defend against any claims of infringement, both of which involve complex legal, factual and
marketplace uncertainties. The Company relies on a combination of patent, trade secret, copyright and trademark law and security