401(K) Plus Benefit Equalization Plan

INVACARE CORPORATION


401(K) PLUS BENEFIT EQUALIZATION PLAN


(As amended and restated effective January 1, 2003)
INVACARE CORPORATION
401(K) PLUS BENEFIT EQUALIZATION PLAN
(As amended and restated effective January 1, 2003)


Table of Contents


Page


Article I INTRODUCTION........................................................1
1.1 Name of Plan......................................................1
1.2 Purposes of Plan..................................................1
1.3 "Top Hat" Pension Benefit Plan....................................1
1.4 Plan Unfunded.....................................................1
1.5 Effective Date....................................................1
1.6 Administration....................................................1


Article II DEFINITIONS AND CONSTRUCTION.......................................2
2.1 Definitions.......................................................2
2.2 Number and Gender.................................................5
2.3 Headings..........................................................5


Article III PARTICIPATION AND ELIGIBILITY.....................................6
3.1 Participation.....................................................6
3.2 Commencement of Participation.....................................6
3.3 Cessation of Active Participation.................................6


Article IV DEFERRALS, MATCHING & PROFIT SHARING CONTRIBUTIONS.................7
4.1 Deferrals by Participants.........................................7
4.2 Effective Date of Participation and Deferral Election Form........7
4.3 Modification or Revocation of Election by Participant.............7
4.4 Matching Contributions............................................8
4.5 Make Whole Contributions..........................................8
4.6 Discretionary Contributions.......................................8
4.7 Hardship Distribution Under 401(k) Plan...........................8


Article V VESTING, DEFERRAL PERIODS AND EARNINGS ELECTIONS....................9
5.1 Vesting...........................................................9
5.2 Deferral Periods..................................................9
5.3 Earnings Elections................................................9


Article VI ACCOUNTS..........................................................10
6.1 Establishment of Bookkeeping Accounts............................10
6.2 Subaccounts......................................................10
6.3 Hypothetical Nature of Accounts..................................10 Article VII PAYMENT OF ACCOUNT...............................................11
7.1 Timing of Distribution of Benefits...............................11
7.2 Adjustment for Investment Gains and Losses Upon a Distribution...12
7.3 Form of Payment or Payments......................................12
7.4 Accelerated Distribution.........................................12
7.5 Designation of Beneficiaries.....................................13
7.6 Amendments.......................................................13
7.7 Change in Marital Status.........................................13
7.8 No Beneficiary Designation.......................................14
7.9 Unclaimed Benefits...............................................14
7.10 Hardship Withdrawals.............................................14
7.11 Withholding......................................................14


Article VIII ADMINISTRATION..................................................15
8.1 Committee........................................................15
8.2 General Powers of Administration.................................15
8.3 Indemnification of Committee.....................................15


Article IX DETERMINATION OF BENEFITS, CLAIMS PROCEDURE AND ADMINISTRATION....16
9.1 Claims...........................................................16
9.2 Claim Decision...................................................16
9.3 Request for Review...............................................16
9.4 Review of Decision...............................................17
9.5 Discretionary Authority..........................................18


Article X MISCELLANEOUS......................................................19
10.1 Plan Not a Contract of Employment................................19
10.2 Non-Assignability of Benefits....................................19
10.3 Amendment and Termination........................................19
10.4 Unsecured General Creditor Status Of Employee....................20
10.5 Severability.....................................................20
10.6 Governing Laws...................................................20
10.7 Binding Effect...................................................20
10.8 Entire Agreement.................................................20
10.9 No Guaranty of Tax Consequences..................................20
INVACARE CORPORATION
401(K) PLUS BENEFIT EQUALIZATION PLAN
(As amended and restated effective January 1, 2003)


Article I
INTRODUCTION


1.1 Name of Plan.


Invacare Corporation (the "Company") hereby amends in its entirety and
restates the Invacare Corporation 401(k) Plus Benefit Equalization Plan
(the "Plan").


1.2 Purposes of Plan.


The purposes of the Plan are to provide deferred compensation for a
select group of management or highly compensated Employees of the Company
and to provide eligible Employees the opportunity to maximize their
elective contributions to the Invacare Retirement Savings Plan (the "401(k)
Plan") notwithstanding certain limitations in the Code.


1.3 "Top Hat" Pension Benefit Plan.


The Plan is an "employee pension benefit plan" within the meaning of
ERISA Section 3(2). The Plan is maintained, however, for a select group of
management or highly compensated employees and, therefore, is exempt from
Parts 2, 3 and 4 of Title 1 of ERISA. The Plan is not intended to qualify
under Code Section 401(a).


1.4 Plan Unfunded.


The Plan is unfunded. All benefits will be paid from the general
assets of the Company, which will continue to be subject to the claims of
the Company's creditors. No amounts will be set aside for the benefit of
Plan Participants or their Beneficiaries.


1.5 Effective Date and Restatement Date.


The Plan was originally effective as of March 1, 1994. The amended and
restated Plan is effective as of the Restatement Date.


1.6 Administration.


The Plan shall be administered by the Committee or its delegates, as
set forth in Section 8.1.


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Article II
DEFINITIONS AND CONSTRUCTION


2.1 Definitions.


For purposes of the Plan, the following words and phrases shall have
the respective meanings set forth below, unless their context clearly
requires a different meaning:


(a) "Account" means the bookkeeping account maintained by the Company
on behalf of each Participant pursuant to Section 6.1.


(b) "Base Salary" means the base rate of cash compensation, including
commissions, paid by the Company to or for the benefit of a Participant for
services rendered or labor performed while a Participant, including base
pay a Participant could have received in cash in lieu of (A) deferrals
pursuant to Section 4.1 and (B) contributions made on his behalf to any
qualified plan maintained by the Company or to any cafeteria plan under
Section 125 of the Code maintained by the Company.


(c) "Base Salary Deferral" means the amount of a Participant's Base
Salary which the Participant elects to have withheld on a pre tax basis and
credited to his Account pursuant to Section 4.1.


(d) "Beneficiary" means the person or persons designated by the
Participant in accordance with Section 7.5 or, in the absence of an
effective designation, the person or entity described in Section 7.8.


(e) "Board" means the Board of Directors of the Company.


(f) "Bonus Compensation" means the amount awarded to a Participant for
a Plan Year under any bonus arrangement maintained by the Company.


(g) "Bonus Deferral" means the amount of a Participant's Bonus
Compensation which the Participant elects to have withheld on a pre tax
basis and credited to his Account pursuant to Section 4.1.


(h) "Change In Control" means the happening of any of the following
events:


(i) Any person or entity (other than any employee benefit plan or
employee stock ownership plan of Invacare Corporation, or any person
or entity organized, appointed, or established by Invacare
Corporation, for or pursuant to the terms of any such plan), alone or
together with any of its Affiliates or Associates, becomes the
Beneficial Owner of thirty percent (30%) or more of the total
outstanding voting power of Invacare Corporation, as reflected by the
power to vote in connection with the election of directors, or
commences or publicly announces an intent to commence a tender offer
or exchange offer the consummation of which would result in the Person
becoming the Beneficial Owner of thirty percent (30%) or more of the
total outstanding voting power of Invacare Corporation as reflected by
the power to vote in connection with the election of directors. For
purposes of this Section 2.1(h)(i), the terms "Affiliates,"
"Associates," and "Beneficial Owner" will have the meanings given them
in the Rights Agreement, dated as of April 2, 1991, between Invacare
Corporation and National City Bank, as Rights Agent, as amended from
time to time.


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(ii) At any time during a period of twenty-four (24) consecutive
months, individuals who were directors at the beginning of the period
no longer constitute a majority of the members of the Board, unless
the election, or the nomination for election by the Invacare
Corporation's shareholders, of each director who was not a director at
the beginning of the period is approved by at least a majority of the
directors who are in office at the time of the election or nomination
and were either directors at the beginning of the period or are
continuing directors.


(iii) A record date is established for determining shareholders
entitled to vote upon:


(A) A merger or consolidation of the Invacare Corporation
with another corporation (which is not an affiliate of Invacare
Corporation) in which Invacare Corporation is not the surviving
or continuing company or in which all or part of the outstanding
common shares are to be converted into or exchanged for cash,
securities, or other property;


(B) a sale or other disposition of all or substantially all
of the assets of Invacare Corporation; or


(C) the dissolution or liquidation (but not partial
liquidation) of Invacare Corporation.


(i) "Code" means the Internal Revenue Code of 1986, as amended.


(j) "Committee" means the administrative committee named to administer
the Plan pursuant to Section 8.1.


(k) "Company" means Invacare Corporation and any successor thereto.


(l) "Deferral Period" means the period of time for which a Participant
elects to defer receipt of the Base Salary Deferrals and Bonus Deferrals
credited to such Participant's Account. Deferral Periods shall be measured
on the basis of Plan Years, beginning with the Plan Year that commences
immediately following the Plan Year for which the applicable Base Salary
Deferrals and Bonus Deferrals are credited to the Participant's Account.


(m) "Directors" means the Board of Directors of the Company.


(n) "Discretionary Contribution" means the Company's contribution, if
any, made pursuant to Section 4.6.


(o) "Restatement Date" means January 1, 2003, except where a different
date is specifically set forth. In addition, Section 4.7 and Article IX are
each effective January 1, 2002.


(p) "Employee" means any common-law employee of the Company.


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(q) "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.


(r) "401(k) Plan" means the Invacare Retirement Savings Plan, as
amended from time to time.


(s) "IQC Quarterly Employer Contribution" means a contribution equal
to the contribution that would have been made to the 401(k) Plan for a
Participant but for the limitation on compensation contained in Section
401(a)(17) of the Code. Make Whole Contributions commenced as of January 1,
2001.


(t) "Matching Contribution" means the amount, as determined by the
Company on an annual basis, that would be credited to the Participant's
Base Salary Deferrals and Bonus Deferrals if such deferrals had been
deferred by the Participant into the 401(k) Plan, which is credited by the
Company to the Account of each Participant based on such Participant's Base
Salary and Bonus Deferrals.


(u) "Participant" means each Employee who has been selected for
participation in the Plan and who has become a Participant pursuant to
Article III.


(v) "Participation and Deferral Election Form" means the written
agreement pursuant to which the Participant elects the amount of his Base
Salary and/or his Bonus Compensation to be deferred pursuant to the Plan,
the Deferral Period, if any, the deemed investment of amounts deferred and
the time and form of payment of such amounts and such other matters as the
Committee shall determine from time to time.


(w) "Plan" means the Invacare Corporation 401(k) Plus Benefit
Equalization Plan, as in effect on the Restatement Date and as amended from
time to time hereafter.


(x) "Plan Year" means the twelve-consecutive month period commencing
January 1 of each year ending on the following December 31.


(y) "Profit Sharing Contribution" means the amount, if any, as
determined by the Company of non-elective non-matching contribution which
would have been made for or allocated to a Participant under the 401(k)
Plan for a Plan Year, but which is not made or allocated because of the
limitation on compensation which may be taken into account under Code
Section 401(a)(17) and/or the Participant's participation in this Plan.
Annual Profit Sharing Contributions ceased as of December 31, 2000.
"Retirement" means the termination of employment after the attainment of
age fifty-five (55) and upon completion of ten (10) or more years of
service.


(z) "Retirement" means the termination of employment after the
attainment of age fifty-five (55) and upon completion of ten (10) or more
years of service.


(aa) "Valuation Date" means the last business day of each calendar
month and each special valuation date designated by the Committee.


(bb) "Years of Service" shall have the same meaning as in the 401(k)
Plan.


2.2 Number and Gender.


4
Wherever appropriate herein, words used in the singular shall be
considered to include the plural and words used in the plural shall be
considered to include the singular. The masculine gender, where appearing
in the Plan, shall be deemed to include the feminine gender.


2.3 Headings.


The headings of Articles and Sections herein are included solely for
convenience, and if there is any conflict between such headings and the
rest of the Plan, the text shall control.


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Article III
PARTICIPATION AND ELIGIBILITY


3.1 Participation.


Participants in the Plan are those Employees who are (a) subject to
the income tax laws of the United States, (b) members of a select group of
highly compensated or management Employees of the Company, and (c) selected
by the Committee or its delegates, in its sole discretion, as Participants.
The Committee shall notify each Participant of his selection as a
Participant.


3.2 Commencement of Participation.


Except as provided in the following sentence, an Employee shall become
a Participant effective as of the first day of the Plan Year following the
date on which his Participation and Deferral Election Form becomes
effective. A newly hired Employee who completes a Participation and
Deferral Election Form within 30 days of the date on which his employment
commences shall become a Participant as of the date on which his
Participation and Deferral Election Form becomes effective under Section
4.2.


3.3 Cessation of Active Participation.


Notwithstanding any provision herein to the contrary, an individual
who has become a Participant in the Plan shall cease to be a Participant
hereunder effective as of any date designated by the Committee. In the
event of such cessation, the last four sentences of Section 4.1 shall apply
as if such cessation had been a termination of employment. Any such
Committee action shall be communicated to such Participant prior to the
effective date of such action.


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Article IV
DEFERRALS, MATCHING & PROFIT SHARING CONTRIBUTIONS


4.1 Deferrals by Participants.


Before the first day of each Plan Year, a Participant may file with
the Committee a Participation and Deferral Election Form pursuant to which
such Participant elects to make Base Salary Deferrals and/or Bonus
Deferrals. Any such Participant election shall be subject to a maximum of
fifty percent (50%) of Base Salary and one hundred percent (100%) of Bonus
Compensation, an annual minimum of two thousand dollars ($2000), and to any
other rules prescribed by the Committee in its sole discretion. Base Salary
Deferrals will be credited to the Account of each Participant as of the
last day of each calendar month, if and to the e ...