Exhibit 10(i)
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 |
Table of Contents
Page | ||
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.
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.
(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.
(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.
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.
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.
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 extent that the Participant
earned such Base Salary as an Employee in such calendar month. Bonus
Deferrals will be credited to the Account of each Participant as of the
last day of the month in which such Bonus Compensation otherwise would have
been paid to the Participant in cash, provided that the Participant is an
Employee at the time such Bonus Compensation would have been paid. A
Participant whose employment terminates prior to or during the calendar
month in which his Bonus Compensation would have been paid to him in cash
will be paid his Bonus Deferral in cash. Such termination of employment
shall not affect Base Salary Deferrals and Bonus Deferrals previously
credited to the Account of a Participant whose employment terminates.
4.2 Effective Date of Participation and Deferral Election Form.
A Participant's annual Participation and Deferral Election Form shall
become effective on the first day of the Plan Year to which it relates. The
Participation and Deferral Election Form of Employees who are first
employed by the Company during a Plan Year shall become effective as of the
first 401(k) Plan enrollment date following his date of employment on which
the Employee is eligible to participate in the 401(k) Plan provided the
Participation and Deferral Election Form is completed prior to that date.
If a Participant fails to complete a Participation and Deferral Election
Form before the first day of the Plan Year in which Participant shall earn
the compensation to which the Participation and Deferral Election Form
relates or if a newly hired Employee fails to complete the Participation
and Deferral Election Form prior to the first 401(k) Plan enrollment date
following his date of hire, the Participant or Employee, as the case may
be, shall be deemed to have elected not to make Base Salary Deferrals
and/or Bonus Deferrals for such Plan Year.
4.3 Modification or Revocation of Election by Participant.
A Participant may change the amount of his Base Salary or Bonus
Deferrals during a Plan Year as of the first day of each calendar quarter
provided that such change is made no later than the day immediately
preceding the first day of the calendar quarter or unless the Committee
determines that he has suffered a severe, sudden and unforeseeable hardship
as is more fully described in Section 7.10. Under no circumstances may a
Participant's Participation and Deferral Election Form be made, modified or
revoked retroactively.
4.4 Matching Contributions.
Each Participant who elects to make Base Salary and/or Bonus Deferrals
to the Plan and who has completed at least six (6) months of service will
receive a Matching Contribution equal to a certain percentage of the sum of
Participant's Base Salary and Bonus Deferrals. The Matching Contribution
percentage to be contributed to the Plan shall be equal to the matching
contribution percentage provided in the 401(k) Plan. Matching Contributions
will be credited to the Participant's Account as of the last day of the
calendar month in which the Base Salary and/or Bonus Deferrals to which the
Matching Contributions relate are credited to the Participant's Account.
4.5 IQC Quarterly Employer Contributions.
For each calendar quarter, the Account of each Participant shall be
credited with such Make Whole Contribution, if any, to which he is entitled
under Section 2.1(s).
4.6 Discretionary Contributions.
For each Plan Year, the Account of each Participant shall be credited
with such Discretionary Contribution, if any, as is determined by the
Company for such Plan Year.
4.7 Hardship Distribution Under 401(k) Plan.
If required by the terms of the 401(k) Plan, a Participant who
receives a hardship distribution under the 401(k) Plan shall not be
eligible to make deferrals for a six (6) month period after receipt of the
hardship distribution.
Article V
VESTING, DEFERRAL PERIODS AND EARNINGS ELECTIONS
5.1 Vesting.
A Participant shall be 100% vested at all times in the amount of his
Account which is attributable to Base Compensation Deferrals and Bonus
Deferrals. Matching Contributions, IQC Quarterly Employer Contributions and
Profit Sharing Contributions shall vest in accordance with the terms of the
401(k) Plan. Discretionary Contributions shall vest in accordance with the
Company's determination which shall be made when such contributions are
made. Notwithstanding the foregoing, all Matching Contributions, Profit
Sharing Contributions, Discretionary Contributions and IQC Quarterly
Employer Contributions shall be 100% vested immediately upon a Change in
Control. Any provisions of the Plan relating to the distribution of a
Participant's Account shall mean only the vested portion of such Account.
Since the Plan is unfunded, the portion of a Participant's Account which is
not vested and therefore not distributed with the vested portion of his
Account shall remain property of the Company and not be allocated to
Accounts of other Participants or otherwise inure to their benefit.
5.2 Deferral Periods.
A Deferral Period may be (a) for any period of five (5) years or more
but may not end later than the year in which the Participant would attain
age 70 or (b) until a Participant's termination of employment. A
Participant must specify on the Participation and Deferral Election Form
the Deferral Period for the Base Salary Deferrals and Bonus Deferrals to be
made to the Plan for the Plan Year to which the Participation and Deferral
Election Form relates, subject to the provisions of Section 7.1(a) and
rules determined by the Committee from time to time. In the event a
Participant does not elect a Deferral Period for any Base Salary Deferrals
or Bonus Deferrals for a Plan Year, such Participant shall be deemed to
have elected a Deferral Period of five (5) years. If the Participant elects
a period of years (option (a)) and is entitled to a distribution pursuant
to such election prior to the events listed in Sections 7.1(b)(i),
7.1(b)(ii), and 7.1(b)(iii), distribution pursuant to such election shall
not include Matching Contributions, Profit Sharing Contributions,
Discretionary Contributions and Make Whole Contributions and earnings on
those amounts. Any such distribution must be in a lump sum.
5.3 Earnings Elections.
Amounts credited to a Participant's Account shall be credited or
charged with earnings and losses based on hypothetical investments elected
by the Participant. A Participant may elect different investment
allocations for new contributions (contributions made by the Participant
and by the Company) and existing Account balances. Only whole percentages
may be elected, and the total elections must allocate 100% of all new
contributions and 100% of all existing Account balances. Investment
elections may be changed once per calendar quarter, effective as of the
first day of such quarter, by written direction given at least seven days
before the start of such quarter. The hypothetical investment alternatives
and the procedures relating to the election of such investments, other than
those set forth in this Section 5.3, shall be determined by the Committee
from time to time. A Participant's Account shall be adjusted as of each
Valuation Date to reflect investment gains and losses.
Article VI
ACCOUNTS
6.1 Establishment of Bookkeeping Accounts.
A separate bookkeeping Account shall be maintained for each
Participant. Such account shall be credited with the Base Salary Deferrals
and Bonus Deferrals made by the Participant pursuant to Section 4.1,
Matching Contributions made by the Company pursuant to Section 4.4, IQC
Quarterly Employer Contributions made pursuant to Section 4.5,
Discretionary Contributions made pursuant to Section 4.6 and Profit Sharing
Contributions, if any, made prior to January 1, 2001, credited (or charged,
as the case may be) with the hypothetical investment results determined
pursuant to Section 5.3, and charged with distributions made to or with
respect to a Participant.
6.2 Subaccounts.
Within each Participant's bookkeeping Account, separate subaccounts
shall be maintained to the extent necessary for the administration of the
Plan.
6.3 Hypothetical Nature of Accounts.
The Account established under this Article VI shall be hypothetical in
nature and shall be maintained for bookkeeping purposes only, so that Base
Salary Deferrals, Bonus Deferrals, Matching Contributions, Discretionary
Contributions, IQC Quarterly Employer Contributions and Profit Sharing
Contributions can be credited to the Participant and so that earnings and
losses on such amounts so credited can be credited (or charged, as the case
may be). Neither the Plan nor any of the Accounts (or subaccounts) shall
hold any actual funds or assets. The right of any person to receive one or
more payments under the Plan shall be an unsecured claim against the
general assets of the Company. Any liability of the Company to any
Participant, former Participant, or Beneficiary with respect to a right to
payment shall be based solely upon contractual obligations created by the
Plan. Neither the Company, the Board, nor any other person shall be deemed
to be a trustee of any amounts to be paid under the Plan. Nothing contained
in the Plan, and no action taken pursuant to its provisions, shall create
or be construed to create a trust of any kind, or a fiduciary relationship,
between the Company and a Participant, former Participant, Beneficiary, or
any other person.
Article VII
PAYMENT OF ACCOUNT
7.1 Timing of Distribution of Benefits.
(a) Distribution of Contribution to 401(k) Plan. As soon as
practicable, but in no event later than March 15 of the Plan Year following
the Plan Year for which the Participant executed the Participation and
Deferral Election Form, the lesser of.
(i) the allowable before-tax contribution which may be made on
behalf of the Participant to the 401(k) Plan for the Plan Year for
which the Participant executed the Participation and Deferral Election
Form, and
(ii) the sum of the Base Salary Deferral and the Bonus Deferral
for the Plan Year for which the Participant executed the Participation
and Deferral Election Form,
shall be paid directly to Participant as compensation earned in the Plan
Year for which the Participant executed the Participation and Deferral
Election Form, unless the Participant previously elected (in both the
Participation and Deferral Election Form and his 401(k) Plan elections) to
have such amount contributed to the 401(k) Plan as an elective before-tax
contribution.
If the Participant elected to have such amount contributed to the 401(k)
Plan as an elective before-tax contribution, such amount together with an
amount equal to the applicable Matching Contributions shall be transferred
directly to the Participant's Account in the 401(k) Plan and the
appropriate subaccounts of Participant's Account shall be charged
accordingly. Notwithstanding the preceding, the Plan shall not make
distributions to the Participant or the 401(k) Plan in excess of the
Participant's Account balance. Distributions pursuant to this Section
7.1(a) may be made in one or more installments in the sole discretion of
the Committee.
(b) Distribution After Deferral Period. Distribution of that portion
of a Participant's Account which is not distributed under Section 7.1(a)
shall be made as soon as practicable following the date the Deferral Period
for such amounts ends and following the valuation described in Section 7.2.
Notwithstanding the foregoing, the Participant's entire Account shall be
distributed to him (or his Beneficiary in the event of his death) as soon
as practicable following the earliest to occur of the following and after
the valuation described in 7.2:
(i) the Participant's death;
(ii) the Participant's permanent disability (as defined in the
Company's long-term disability program); or
(iii) the Participant's termination of employment.
7.2 Adjustment for Investment Gains and Losses Upon a Distribution.
Upon a distributable event described in Section 7.1(b), the balance of
a Participant's Account shall be determined as of the Valuation Date
immediately following such event.
7.3 Form of Payment or Payments.
Except as provided below, benefits as a result of death or other
termination of employment shall be paid in the form elected by the
Participant. The form elected shall apply to the entire Account. The
election may be amended, provided that the amended election does not
increase the duration of payments in the previous election. Any amendment
to the form of benefits shall be effective beginning in the calendar year
following the submission of the amendment. If a Participant terminates
employment and qualifies as "Retirement" as defined under Section 2.1(z),
the form of benefit shall be:
(a) A lump sum amount which is equal to the applicable Account
balance; or
(b) Substantially equal installments of the Account amortized over a
period of five (5), ten (10) or fifteen (15) years or sixty (60), one
hundred twenty (120), or one hundred eighty (180) months. Gains and losses
on the unpaid balance shall continue to be credited or charged to the
Account in accordance with the provisions of Section 5.3. The amount of the
installments payable may be changed periodically to reflect investment
results.
Notwithstanding the form elected, if a Participant terminates
employment prior to qualifying for "Retirement" as defined under Section
2.1(z) or if the Participant's total Account is no more than twenty
thousand dollars ($20,000) on the last Valuation Date prior to the
commencement of distribution, the benefit shall be paid in a lump sum.
7.4 Accelerated Distribution.
Notwithstanding any other provision of the Plan, a Participant shall
be entitled to receive, upon written request to the Committee or its
delegates, a lump sum distribution of his vested Account balance, subject
to the following penalty:
(a) If the distribution is requested within twenty-four (24) months
following a Change in Control, five percent (5%) of the Account shall be
forfeited and ninety-five percent (95%) of the Account paid to the
Participant.
(b) If the distribution is requested following termination of
employment and the Account is in pay status, five percent (5%) of the
previously unpaid Account shall be forfeited and ninety-five percent (95%)
of the previously unpaid Account paid to the Participant.
(c) If the distribution is requested at any time other than that in
(a) or (b) above, five percent (5%) of the vested Account shall be
forfeited and ninety-five percent (95%) of the vested Account shall be paid
to the Participant. The unvested portion of the Account shall be forfeited.
The Account balance shall be determined as of the Valuation Date
immediately following the date on which the Committee receives the written
request. A Participant who receives a distribution under this section shall
forfeit participation in the Plan with regard to his election to defer
compensation for the remainder of the Plan Year and the following Plan
Year. The amount payable under this section shall be paid in a lump sum as
soon as practical following the receipt of the Participant's written
request by the Committee and the valuation of his Account.
7.5 Designation of Beneficiaries.
Each participant shall have the right, at any time, to designate one
(1) or more persons or an entity as Beneficiary (both primary as well as
secondary) to whom benefits under this Plan shall be paid in the event of a
Participant's death prior to complete distribution of the Participant's
Account. Each Beneficiary designation shall be in a written form prescribed
by the Committee and will be effective only when filed with the Committee
during the Participant's lifetime. Designation by a married Participant of
a Beneficiary other than the Participant's spouse shall not be effective
unless the spouse executes a written consent that acknowledges the effect
of the designation and is witnessed by a notary public, or the consent
cannot be obtained because the spouse cannot be located.
7.6 Change of Beneficiary Designation.
Except as provided below, any nonspousal designation of Beneficiary
may be changed by a Participant without the consent of such Beneficiary by
the filing of a new designation with the Committee. The filing of a new
designation shall cancel all designations previously filed.
7.7 Change in Marital Status.
If the Participant's marital status changes after the Participant has
designated a Beneficiary, the following shall apply:
(a) If the Participant is married at death but was unmarried when the
designation was made, the designation shall be void unless the spouse has
consented to it in the manner prescribed above.
(b) If the Participant is unmarried at death but was married when the
designation was made:
(i)The designation shall be void if the spouse was named as
Beneficiary.
(ii)The designation shall remain valid if a nonspouse
Beneficiary was named.
(c) If the Participant was married when the designation was made and
is married to a different spouse at death, the designation shall be void
unless the new spouse has consented to it in the manner prescribed above.
7.8 No Beneficiary Designation.
If any Participant fails to designate a Beneficiary in the manner
provided above, or if the Beneficiary designated by a deceased Participant
dies before the Participant or before complete distribution of the
Participant's benefits, the Participant's Beneficiary shall be the person
in the first of the following classes in which there is a survivor:
(a) The Participant's surviving spouse;
(b) The Participant's children in equal shares, except that if any of
the children predeceases the Participant but leaves issue surviving, then
such issue shall take by right of representation the share the parent would
have taken if living;
(c) The Participant's parents;
(d) The Participant's estate.
7.9 Unclaimed Benefits.
In the case of a benefit payable on behalf of a Participant, if the
Committee is unable to locate the Participant or Beneficiary to whom such
benefit is payable, such benefit may be forfeited to the Company, upon the
Committee's determination. Notwithstanding the foregoing, if subsequent to
any such forfeiture the Participant or Beneficiary to whom such benefit is
payable makes a valid claim for such benefit, such forfeited benefit shall
be paid by the Company or restored to the Plan by the Company.
7.10 Hardship Withdrawals.
A Participant may apply in writing to the Committee for, and the
Committee may permit, a hardship withdrawal of all or any part of a
Participant's Account derived from Base Salary and Bonus Deferrals if the
Committee, in its sole discretion, determines that the Participant has
incurred a severe financial hardship resulting from a sudden and unexpected
illness or accident of the Participant or of a dependent (as defined in
section 152(a) of the Code) of the Participant, loss of the Participant's
property due to casualty, or other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the
Participant, as determined by the Committee, in its sole and absolute
discretion. The amount that may be withdrawn shall be limited to the amount
reasonably necessary to relieve the hardship or financial emergency upon
which the request is based, plus the federal and state taxes due on the
withdrawal, as determined by the Committee. The Committee may require a
Participant who requests a hardship withdrawal to submit such evidence as
the Committee, in its sole discretion, deems necessary or appropriate to
substantiate the circumstances upon which the request is based. In the
event of a hardship withdrawal, a Participant shall not be permitted to
make deferrals for the remainder of the Plan Year and the following Plan
Year
7.11 Withholding.
All deferrals and distributions shall be subject to legally required
income and employment tax withholding. Article VIII ADMINISTRATION
Article VIII
ADMINISTRATION
8.1 Committee.
The Plan shall be administered by a Committee, which shall include the
Senior Vice President of Human Resources and the Chief Financial Officer.
The Committee shall be responsible for the general operation and
administration of the Plan and for carrying out the provisions thereof. The
Committee may delegate to others certain aspects of the management and
operational responsibilities of the Plan including the employment of
advisors and the delegation of ministerial duties to qualified individuals,
provided that such delegation is in writing. No member of the Committee who
is a Participant shall participate in any matter relating to his status as
a Participant or his rights or entitlement to benefits as a Participant.
8.2 General Powers of Administration.
The Committee shall have all powers necessary or appropriate to enable
it to carry out its administrative duties. Not in limitation, but in
application of the foregoing, the Committee shall have discretionary
authority to construe and interpret the Plan and determine all questions
that may arise hereunder as to the status and rights of Employees,
Participants, and Beneficiaries. The Committee may exercise the powers
hereby granted in its sole and absolute discretion. The Committee may
promulgate such regulations as it deems appropriate for the operation and
administration of the Plan. No member of the Committee shall be personally
liable for any actions taken by the Committee unless the member's action
involves willful misconduct.
8.3 Indemnification of Committee.
The Company shall indemnify the members of the Committee against any
and all claims, losses, damages, expenses, including attorney's fees,
incurred by them, and any liability, including any amounts paid in
settlement with their approval, arising from their action or failure to
act, except when the same is judicially determined to be attributable to
their gross negligence or willful misconduct.
Article IX
DETERMINATION OF BENEFITS,
CLAIMS PROCEDURE AND ADMINISTRATION
9.1 Claims.
A Participant, Beneficiary or other person who believes that he or she
is being denied a benefit to which he or she is entitled (hereinafter
referred to as "Claimant"), or his or her duly authorized representative,
may file a written request for such benefit with the Committee setting
forth his or her claim. The request must be addressed to the Committee at
the Company at its then principal place of business.
9.2 Claim Decision.
Upon receipt of a claim, the Committee shall advise the Claimant that
a reply will be forthcoming within a reasonable period of time, but
ordinarily not later than ninety days, and shall, in fact, deliver such
reply within such period. However, the Committee may extend the reply
period for an additional ninety days for reasonable cause. If the reply
period will be extended, the Committee shall advise the Claimant in writing
during the initial 90-day period indicating the special circumstances
requiring an extension and the date by which the Committee expects to
render the benefit determination.
If the claim is denied in whole or in part, the Committee will render
a written opinion, using language calculated to be understood by the
Claimant, setting forth:
(a) the specific reason or reasons for the denial;
(b) the specific references to pertinent Plan provisions on which the
denial is based;
(c) a description of any additional material or information necessary
for the Claimant to perfect the claim and an explanation as to why such
material or such information is necessary;
(d) appropriate information as to the steps to be taken if the
Claimant wishes to submit the claim for review, including a statement of
the Claimant's right to bring a civil action under Section 502(a) of ERISA
following an adverse benefit determination on review; and
(e) the time limits for requesting a review of the denial under
Section 9.3 and for the actual review of the denial under Section 9.4.
9.3 Request for Review.
Within sixty days after the receipt by the Claimant of the written
opinion described above, the Claimant may request in writing that the
Senior Vice President of Human Resources of the Company ("Executive
Officer") review the Committee's prior determination. Such request must be
addressed to the Executive Officer at the Company at its then principal
place of business. The Claimant or his or her duly authorized
representative may submit written comments, documents, records or other
information relating to the denied claim, which information shall be
considered in the review under this Section without regard to whether such
information was submitted or considered in the initial benefit
determination.
The Claimant or his or her duly authorized representative shall be
provided, upon request and free of charge, reasonable access to, and copies
of, all documents, records and other information which (i) was relied upon
by the Committee in making its initial claims decision, (ii) was submitted,
considered or generated in the course of the Committee making its initial
claims decision, without regard to whether such instrument was actually
relied upon by the Committee in making its decision or (iii) demonstrates
compliance by the Committee with its administrative processes and
safeguards designed to ensure and to verify that benefit claims
determinations are made in accordance with governing Plan documents and
that, where appropriate, the Plan provisions have been applied consistently
with respect to similarly situated claimants. If the Claimant does not
request a review of the Committee's determination within such 60-day
period, he or she shall be barred and estopped from challenging such
determination.
9.4 Review of Decision.
Within a reasonable period of time, ordinarily not later than sixty
days, after the Executive Officer's receipt of a request for review, it
will review the Committee's prior determination. If special circumstances
require that the sixty-day time period be extended, the Executive Officer
will so notify the Claimant within the initial 60-day period indicating the
special circumstances requiring an extension and the date by which the
Executive Officer expects to render its decision on review, which shall be
as soon as possible but not later than 120 days after receipt of the
request for review. In the event that the Executive Officer extends the
determination period on review due to a Claimant's failure to submit
information necessary to decide a claim, the period for making the benefit
determination on review shall not take into account the period beginning on
the date on which notification of extension is sent to the Claimant and
ending on the date on which the Claimant responds to the request for
additional information.
Benefits under the Plan will be paid only if the Executive Officer
decides in its discretion that the Claimant is entitled to such benefits.
The decision of the Executive Officer shall be final and non-reviewable,
unless found to be arbitrary and capricious by a court of competent review.
Such decision will be binding upon the Company and the Claimant.
If the Executive Officer makes an adverse benefit determination on
review, the Executive Officer will render a written opinion, using language
calculated to be understood by the Claimant, setting forth:
(a) the specific reason or reasons for the denial;
(b) the specific references to pertinent Plan provisions on which the
denial is based;
(c) a statement that the Claimant is entitled to receive, upon request
and free of charge, reasonable access to, and copies of, all documents,
records and other information which (i) was relied upon by the Executive
Officer in making its decision, (ii) was submitted, considered or generated
in the course of the Executive Officer making its decision, without regard
to whether such instrument was actually relied upon by the Executive
Officer in making its decision or (iii) demonstrates compliance by the
Executive Officer with its administrative processes and safeguards designed
to ensure and to verify that benefit claims determinations are made in
accordance with governing Plan documents, and that, where appropriate, the
Plan provisions have been applied consistently with respect to similarly
situated claimants; and
(d) a statement of the Claimant's right to bring a civil action under
Section 502(a) of ERISA following the adverse benefit determination on such
review.
9.5 Discretionary Authority.
The Committee and Executive Officer shall both have discretionary
authority to determine a Claimant's entitlement to benefits upon his claim
or his request for review of a denied claim, respectively.
Article X
MISCELLANEOUS
10.1 Plan Not a Contract of Employment.
The adoption and maintenance of the Plan shall not be or be deemed to
be a contract between the Company and any person or to be consideration for
the employment of any person. Nothing herein contained shall give or be
deemed to give any person the right to be retained in the employ of the
Company or to restrict the right of the Company to discharge any person at
any time; nor shall the Plan give or be deemed to give the Company the
right to require any person to remain in the employ of the Company or to
restrict any person's right to terminate his employment at any time.
10.2 Non-Assignability of Benefits.
No Participant, Beneficiary or distributee of benefits under the Plan
shall have any power or right to transfer, assign, anticipate, hypothecate
or otherwise encumber any part or all of the amounts payable hereunder,
which are expressly declared to be unassignable and non-transferable. Any
such attempted assignment or transfer shall be void. No amount payable
hereunder shall, prior to actual payment thereof, be subject to seizure by
any creditor of any such Participant, Beneficiary or other distributee for
the payment of any debt, judgment, or other obligation, by a proceeding at
law or in equity, nor transferable by operation of law in the event of the
bankruptcy, insolvency or death of such Participant, Beneficiary or other
distributee hereunder.
10.3 Amendment and Termination.
The Board may from time to time, in its discretion, amend, in whole or
in part, any or all of the provisions of the Plan; provided, however, that
no amendment may be made which would impair the rights of a Participant
with respect to amounts already credited to his Account. The Board may
terminate the Plan at any time. In the event that the Plan is terminated,
the balance in a Participant's Account shall be paid to such Participant or
his Beneficiary in a lump sum or in equal monthly installments over the
following period, unless the Committee determines otherwise:
Account Balance Payout Period
--------------- -------------
$50,000 or less Lump Sum
More than $50,000 but less than $250,000 3 Years
$250,000 or more 5 Years
Gains and Losses shall continue to be credited or charged to the
Account in accordance with the provisions of Section 5.3. The Company
reserves the right to pay each Account in a lump sum, notwithstanding the
above schedule.
10.4 Unsecured General Creditor Status Of Employee.
The payments to a Participant, his Beneficiary or any other
distributee hereunder shall be made from assets which shall continue, for
all purposes, to be a part of the general, unrestricted assets of the
Company; no person shall have nor acquire any interest in any such assets
by virtue of the provisions of this Agreement. The Company's obligation
hereunder shall be an unfunded and unsecured promise to pay money in the
future. To the extent that the Participant, a Beneficiary, or other
distributee acquires a right to receive payments from the Company under the
provisions hereof, such right shall be no greater than the right of any
unsecured general creditor of the Company; no such person shall have nor
acquire any legal or equitable right, interest or claim in or to any
property or assets of the Company.
In the event that, in its discretion, the Company purchases an
insurance policy or policies insuring the life of a Participant (or any
other property) to allow the Company to recover the cost of providing the
benefits, in whole, or in part, hereunder, neither the Participant, his
Beneficiary or other distributee shall have nor acquire any rights
whatsoever therein or in the proceeds therefrom. The Company shall be the
sole owner and beneficiary of any such policy or policies and, as such,
shall possess and may exercise all incidents of ownership therein. No such
policy, policies or other property shall be held in any trust for a
Participant, Beneficiary or other distributee or held as collateral
security for any obligation of the Company hereunder.
10.5 Severability.
If any provision of this Plan shall be held illegal or invalid for any
reason, said illegality or invalidity shall not affect the remaining
provisions hereof; instead, each provision shall be fully severable and the
Plan shall be construed and enforced as if said illegal or invalid
provision had never been included herein.
10.6 Governing Laws.
All provisions of the Plan shall be construed in accordance with the
internal laws (but not the choice of laws) of Ohio, except to the extent
preempted by federal law.
10.7 Binding Effect.
This Plan shall be binding on each Participant and his heirs and legal
representatives and on the Company and its successors and assigns.
10.8 Entire Agreement.
This document and any amendments contain all the terms and provisions
of the Plan and shall constitute the entire Plan, any other alleged terms
or provisions being of no effect.
10.9 No Guaranty of Tax Consequences.
While the Company has established, and will maintain, the Plan, the
Company makes no representation, warranty, commitment, or guaranty
concerning the income, employment, or other tax consequences of
participation in the Plan under federal, state, or local law.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed on
this 13th day of May, 2004.
INVACARE CORPORATION
By: /s/ Gregory C. Thompson
---------------------------------------
Title: Senior Vice President and
Chief Financial Officer
---------------------------------------
By: /s/ A. Malachi Mixon, III
---------------------------------------
Title: Chairman and Chief Executive Officer
---------------------------------------
AMENDMENT NO. 1
TO
INVACARE CORPORATION 401(k) PLUS BENEFIT EQUALIZATION PLAN
This Amendment No. 1 is executed as of the date set forth below by
Invacare Corporation (the "Company").
WITNESSETH:
WHEREAS, the Company maintains the Invacare Corporation 401(k) Plus
Benefit Equalization Plan, as amended and restated effective January 1,
2003 (the "Plan"), to provide nonqualified retirement benefits for certain
employees of the Company; and
WHEREAS, pursuant to Section 10.3 of the Plan, the Company has
retained the right to make amendments thereto; and
WHEREAS, the Company desires to amend the Plan in order to permit
participants to change their investment elections on a daily basis;
NOW, THEREFORE, pursuant to Section 10.3 of the Plan, the Company
hereby amends Section 5.3 of Article V of the Plan, effective as of
December 1, 2003, by the deletion of said Section 5.3 in its entirety and
the substitution in lieu thereof of a new Section 5.3 to read as follows:
5.3 Earnings Elections.
Amounts credited to a Participant's Account shall be credited or
charged with earnings and losses based on hypothetical investments elected
by the Participant. A Participant may elect different investment
allocations for new contributions and existing Account balances. Only whole
percentages may be elected, the minimum percentage for any allocation is
10%, and the total elections must allocate 100% of all new contributions
and 100% of all existing Account balances. Investment elections may be
<page>
changed daily, by written direction. The hypothetical investment
alternatives and the procedures relating to the election of such
investments, other than those set forth in this Section 5.3, shall be
determined by the Committee from time to time. A Participant's Account
shall be adjusted as of each Valuation Date to reflect investment gains and
losses."
IN WITNESS WHEREOF, Invacare Corporation, by its proper officer, has
caused this Amendment No. 1 to be executed as of the 30th day of April,
2004.
INVACARE CORPORATION
By: /s/ Gregory C. Thompson
AMENDMENT NO. 2
TO
INVACARE CORPORATION 401(K) PLUS BENEFIT EQUALIZATION PLAN
This Amendment No. 2 to the Invacare Corporation 401(k) Plus Benefit Equalization Plan is hereby adopted as of the date set forth below by Invacare Corporation, an Ohio corporation (the “Company”).
WITNESSETH:
WHEREAS, the Company has established a deferred savings plan known as the Invacare Corporation 401(k) Plus Benefit Equalization Plan (the “Plan”) to provide unfunded deferred compensation to certain management and highly compensated employees of the Company; and
WHEREAS, pursuant to Section 10.3 of the Plan, the Company has retained the right to make amendments thereto; and
WHEREAS, the Company desires to amend the Plan in order to prevent further deferrals thereunder;
NOW, THEREFORE, effective as of December 31, 2004, the Company hereby adopts this Amendment No. 2 as follows:
1. Freeze of Plan. Subject to Section 2 of this Amendment, effective December 31, 2004 (the “Freeze Date”), the Plan shall be frozen. Thereafter, no additional deferrals may be made under the Plan. Otherwise the Plan shall be administered after the Freeze Date as provided in the Plan, subject to permissible amendments to the Plan, including amendments made after the Freeze Date.
2. Material Modification. The provisions of Section 1 of this Amendment No. 2 are intended to prevent further deferral under the Plan so that all deferrals will be subject to rules in effect prior to the effective date of Section 409A of the Code. If this Amendment No. 2 would otherwise be deemed a “material modification” of the Plan under such Section 409A, this Amendment No. 2 shall at all times be deemed void ab initio.
IN WITNESS WHEREOF, the Company, by its appropriate officers duly authorized, has caused this Amendment No. 2 to be executed as of this day of December, 2004.
INVACARE CORPORATION
By /s/ Gregory C. Thompson
And /s/ Joseph Usaj
AMENDMENT NO. 3
TO
INVACARE CORPORATION 401(K) PLUS BENEFIT EQUALIZATION PLAN
This Amendment No. 3 to the Invacare Corporation 401(k) Plus Benefit Equalization Plan is hereby adopted as of the date set forth below by Invacare Corporation, an Ohio corporation (the “Company”).
WITNESSETH:
WHEREAS, the Company has established a deferred savings plan known as the Invacare Corporation 401(k) Plus Benefit Equalization Plan (the “Plan”) to provide unfunded deferred compensation to certain management and highly compensated employees of the Company; and
WHEREAS, Code Section 409A became effective January 1, 2005, to impose various restrictions on deferred compensation; and
WHEREAS, effective December 31, 2004, the Company amended the Plan to cease further deferrals for the purpose of grandfathering the exemption from Code Section 409A of those deferrals which were vested as of that date; and
WHEREAS, those deferrals which were not vested under the Plan as of December 31, 2004 (the “Post-2004 Deferrals”) will be governed under the Plan as it will be amended to provide for a segregated component consistent with Code Section 409A for such Post-2004 Deferrals; and
WHEREAS, Code Section 409A generally requires that the time and form of payment of deferred compensation be fixed at the time the compensation is deferred,
and requires that any later election to change the time or form of payment be subject to restrictions which include a 12-month notice period and a 5-year postponement of the payment commencement date (the “Election Restrictions”);
WHEREAS, the Post-2004 Deferrals have been administered consistent with Code Section 409A and are paid in a single lump sum unless the participant: (a) terminates employment after reaching age fifty-five (55) and completing ten (10) years of service, (b) the participant’s account is more than twenty thousand dollars ($20,000), and (c) the participant has in effect an election to instead receive payment in substantially equal monthly installments over a period of five (5), ten (10), or fifteen (15) years; and
WHEREAS, the participants have not yet been afforded the opportunity to make a payment election with regard to their Post-2004 Deferrals; and
WHEREAS, Code Section 409A permits the Plan to provide a “transition election” in 2006 by which participants can, on or before December 31, 2006 and subject to certain conditions, elect to change the form of payment of their Post 2004 Deferrals without being subject to the Election Restrictions; and
WHEREAS, the Company desires to provide the Plan participants with such a transition election for 2006; and
WHEREAS, pursuant to Section 10.3 of the Plan, the Company has retained the right to make amendments thereto; and
NOW, THEREFORE, the Company hereby amends the Plan, effective as of the dates indicated below, as follows:
1. Effective November 1, 2006, a new Section 7.3A is added after Section 7.3 as it pertains to Post-2004 Deferrals to read as follows:
“7.3A Special Transition Election in 2006.
Pursuant to the relief granted in IRS Notice 2005-1, Q&A-19(c) as extended in the Proposed Treasury Regulations under Code Section 409A (Section XI.C. of the Preambles), a Participant shall be permitted to make a new election in 2006 regarding the form of distribution of the Participant’s Account, provided that such election is made in writing and filed with the Committee no later than December 31, 2006. Such election shall be immediately effective; provided, however, that such election shall not operate to change the form of distribution of amounts that otherwise would be payable in 2006, nor will it operate to make payable in 2006 amounts that would not otherwise be payable in that year.”
IN WITNESS WHEREOF, the Company, by its appropriate officers duly authorized, has caused this Amendment No. 3 to be executed as of this 28th day of December, 2006.
INVACARE CORPORATION
By /s/ Joseph Usaj
By /s/ Gregory C. Thompson