Invacare 2015 Annual Report Download - page 31

I-25
representations or warranties, bankruptcy, the occurrence of a material adverse effect, exclusion from any medical reimbursement
program, and an interruption of any material manufacturing facilities for more than ten consecutive days.
The restrictive terms of the company's credit agreement may limit the company’s ability to conduct and expand its business
and pursue its business strategies. The company’s ability to comply with the provisions of its credit agreements can be affected
by events beyond its control, including changes in general economic and business conditions, or by government enforcement
actions, such as, for example, adverse impacts from the FDA consent decree of injunction. If the company is unable to comply
with the provisions in the credit agreement, it could result in a default which could trigger acceleration of, or the right to accelerate,
the related debt. Because of cross-default provisions in its agreements and instruments governing certain of the company's
indebtedness, a default under the credit agreement could result in a default under, and the acceleration of, certain other company
indebtedness. In addition, the company's lenders would be entitled to proceed against the collateral securing the indebtedness.
The company's ability to meet its liquidity needs will depend on many factors, including the operating performance of the
business, the company's ability to obtain the FDA acceptance of the final third-party expert certification report and the company's
own report, to successfully complete the FDA inspection contemplated under the consent decree and to obtain receipt of the written
notification from the FDA permitting the company to resume full operations, as well as the company's continued compliance with
the covenants under its credit agreement. Notwithstanding the company's expectations, if the company's operating results decline
more than it currently anticipates, or if the company is unable to obtain FDA acceptance of the final third-party expert certification
report and the company's own report or to successfully complete the FDA inspection, 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.
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 credit agreement could increase.
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 were to receive an adverse judgment in any such proceeding, 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 could 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
measures to protect its intellectual property, but effective intellectual property protection may not be available in all places that
the company sells its products or services, particularly in certain foreign jurisdictions. In addition, the company uses nondisclosure,
confidentiality agreements and invention assignment agreements with many of its employees, and nondisclosure and confidentiality