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Invacare Corporation Supplemental Executive Retirement Plan
1 Purpose of the
Plan..........................................................................2
2
Definitions...................................................................2
3 Administration and Interpretation of the Plan...............................5
4 Eligibility and
Enrollment....................................................................5
5 Determination of Plan Benefits..............................................6
6 Payment of Plan
Benefits......................................................................8
7 Disqualification and Reduction, Loss, Forfeiture or Denial of Benefits.....10
8
Miscellaneous................................................................10
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Invacare Corporation Supplemental Executive Retirement Plan
1 PURPOSE OF THE PLAN
1.1 The purpose of the Invacare Corporation Supplemental Executive
Retirement Plan is to attract, retain, motivate, and provide financial security
to executive officers who participate in the Plan. The Plan is intended to
supplement other retirement and savings plans offered by the Company to provide
a specific level of replacement of compensation into retirement.
1.2 The actual amount of retirement income a Participant may receive will
vary by factors such as retirement age, the value of the benefits received from
other plans, and the manner in which the Participant elects to receive benefits
under this Plan.
1.3 The Plan is a nonqualified Plan, and benefits accrued under this plan
are subject to the claims of the Company's general creditors in the event of the
Company's bankruptcy.
2 DEFINITIONS
2.1 "Agreement" means a written agreement between an Employee and the
Company, wherein the Employee is designated eligible to become a Participant,
and the Employee and the Company agree to be bound by the terms and conditions
of the Plan.
2.2 "Beneficiary" means the person, persons, or entities designated by the
Participant to receive proceeds in the event of death, if any are due.
2.3 "Bonus Plan" means the Management Incentive Plan of Invacare
Corporation.
2.4 "Change in Control" shall have the same meaning as under the 401(k)
Plus Benefit Equalization Plan.
2.5 "Company" means Invacare Corporation and its successors or assigns.
2.6 "Company Contribution Offset" means the value of contributions made by
the Company on behalf of the Participant to the 401(k) Plan, 401(k) Plus Plan,
and the Profit Sharing Plan, as determined in Article 5.
2.7 "Date of Employment" means the date the Participant began service with
the Company.
2.8 "Date of Enrollment" means the date the Participant began participation
in this Plan.
2.9 "Death" means Termination of Employment by reason of death of the
Participant.
2.10 "Disability" shall have the same meaning as under the Invacare Group
Long Term Disability Plan.
2.11 "Early Retirement" means Termination of Employment on or after the
Participant attains age 55 and after the Participant has attained 10 years of
Employment Service, unless such Termination of Service is defined as a Normal
Retirement, pursuant to Section 2.18.
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2.12 "Earnings" means the Participant's annual base salary in effect the
immediately preceding April 1st or on the date of the Participant's Termination
of Employment, if such termination occurs on April 1st, plus the Participant's
Target Bonus.
2.13 "Effective Date" means May 1, 1995.
2.14 "Employee" means an individual who receives salary for personal
services rendered to the Company.
2.15 "Employment Service" means the Participant's number of years of
continuous employment with the Company, including periods of Disability,
beginning at the Participant's Date of Employment, rounded to the nearest whole
number.
2.16 "Final Earnings" means the Participant's Earnings in effect on his/her
Termination of Employment, except in the case of Disability, where the Final
Earnings are the Earnings in effect on the last day preceding the disability.
2.17 "IRC" means the Internal Revenue Code of 1986, as amended.
2.18 "Normal Retirement" means Termination of Employment on or after the
Participant attains age 62 with at least 15 years of Employment Service or age
65.
2.19 "Participant" means an Employee of the Company who is designated
eligible to participate in the Plan and who has met all applicable eligibility
requirements provided in article 4 of the Plan.
2.20 "Plan" means Invacare Corporation Supplemental Executive Retirement
Plan.
2.21 "Plan Administrator" means the Compensation Committee of the Board of
Directors of Invacare Corporation.
2.22 "Plan Committee" means the members of the senior management nominated
to administer the Plan by the Plan Administrator.
2.23 "Prior Distribution Offset" means the annual value of the sum of
benefit payments previously distributed under the plan as provided in Article 5.
2.24 "Salary" means a Participant's annual base salary, before any
deductions for taxes, salary reduction agreements, and before inclusion of other
benefits.
2.25 "SERP Benefit" means the benefit payable under the Plan, as determined
in Article 5.
2.26 "Service Ratio" means the lesser of 1 or the ratio of Employment
Service to 15, unless otherwise provided in Appendix A.
2.27 "Social Security Offset" means 50% of the projected primary insurance
amount ("PIA") for which the Participant would be eligible under Social Security
at the earliest age benefits would commence under Social Security.
2.28 "Target Bonus" means the annual base salary in effect on the
immediately preceding April 1st or on the date of a Participant's Termination of
Employment, if any such termination occurs on April 1st, times the target bonus
percentage in effect on that same under the Company's Bonus Plan.
2.29 "Target Replacement Ratio" means 50% of a Participant's Final
Earnings.
2.30 "Termination" means a Termination of Employment not caused by death,
Disability, Normal Retirement, or Early Retirement, and not within 2 years
following a Change in Control.
2.31 "Termination of Employment" means the Participant ceasing his/her
employment with the Company for any reason whatsoever, whether voluntary,
including by reason of retirement, death, or disability.
2.32 "Vesting Service" means the Participant's number of years elapsed
since his/her Date of Enrollment in the Plan, rounded to the nearest whole
number. In exception of the foregoing, if a Participant's number of years of
elapsed since his/her Date of Employment in the Plan, rounded to the nearest
whole number is at least 2, Vesting Service shall be the number of years elapsed
since his/her Date of Employment, rounded to the nearest whole number.
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3 ADMINISTRATION AND INTERPRETATION OF THE PLAN
3.1 Plan Administration. Except as otherwise provided in the Plan, the Plan
Administrator shall have control over the administration and interpretation of
the Plan, with all powers necessary to enable it to carry out its duties in that
respect. The Plan Administrator may adopt such rules and regulations relating to
the Plan as the Plan administrator may deem necessary or advisable for the
administration of the Plan. The Plan Administrator may delegate administrative
responsibilities to advisors or to other persons and may rely on the information
or opinions of legal counsel or experts selected to render advice with respect
to the Plan.
3.2 Actuarial Valuation for Mortality. Where necessary, actuarial
valuations that require adjustments for mortality shall use the 1983 Group
Annuity Mortality Table.
3.3 Actuarial Valuation for Interest Rate. Where necessary, actuarial
valuations that require adjustments for interest shall use the greater of 8% or
the prior year's Moody's Corporate Bond Yield Average.
4 ELIGIBILITY AND ENROLLMENT
4.1 Eligibility to Participate in the Plan. To become a Participant in the
Plan, an Employee must meet all the following requirements:
4.1.1 Be designated eligible to participate in the Plan by the Plan
Committee; and
4.1.2 Sign all documents presented by the Plan Administrator necessary or
appropriate to carry out the intent of the Plan.
4.2 Date of Enrollment in the Plan. An Employee who is designated eligible
to participate in the plan, and meets the criteria for eligibility described in
Section 4.1, will enter the plan at the first day of the month following the
date the Employee completes the requirements for eligibility pursuant to section
4.1.
5 DETERMINATION OF PLAN BENEFITS
5.1 Eligibility for Plan Benefits. A Participant shall be eligible for
benefits under the following events:
5.1.1 Normal Retirement.
5.1.2 Early Retirement.
5.1.3 Disability.
5.1.4 Death.
5.1.5 Termination.
5.1.6 Voluntary or involuntary Termination of Service
within 2 years following a Change in Control.
5.2 Annual Benefits as Annuities. All benefit determinations in Article 5
relate to annual single-life annuity payments. Benefits may be distributed in
other forms, pursuant to article 6, subject to any applicable actuarial
adjustments relating to the form of the benefit payment.
5.3 Value of Company Contributions. The Company's contributions on behalf
of a Participant, and any earnings thereon, under the plans listed below shall
be used to determine the Company Contribution Offset under the Plan.
5.3.1 Contributions by the Company to the 401(k) plan.
5.3.2 Contributions by the Company to the 401(k) Plus plan.
5.3.3 Contributions by the Company to the Profit Sharing plan.
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5.4 Company Contribution Offset. The amount, if any, under Section 5.3
shall be multiplied by the appropriate factors for mortality and the interest,
as provided in Article 3, to determine the annual value of the Company's
Contribution. This annual value shall be the Company Contribution Offset.
5.5 Offset for Prior Distributions. Any distributions or payments under
this Plan made on behalf of a Participant prior to an event creating an
entitlement to benefits under Section 5.1, the annual value of the cumulative
amount of prior benefits, calculated using appropriate factors for morality and
interest pursuant to Article 3, shall be the Prior Distribution Offset. In
amplification, but not in limitation, of the foregoing, if a Participant
receives benefits from the Plan for Disability, subsequently ends Disability,
and is eligible for benefits under Section 5.1 for benefits from the Plan,
amounts previously distributed for Disability shall constitute an offset to
subsequent benefit payments.
5.6 Vesting of Plan Benefits. The vested portion of a Participant's benefit
will be lesser of 100% or 20% times the years of Vesting Service.
Notwithstanding the foregoing, a Participant's benefit is 100% vested at age 65
if the attainment of age 65 occurs prior to a Termination of Employment
5.7 Formula for SERP Benefit. The formula used for determining the SERP
Benefit shall be: Final Earnings times Target Replacement Ratio times Service
Ratio less Social Security Offset less Company Contribution Offset less Prior
Distribution Offset. 5.8 Normal Retirement Benefit. The annual SERP Benefit,
payable to a Participant who is eligible to receive benefits pursuant to Section
5.1.1 shall be the amount calculated under Section 5.7. This benefit is subject
to vesting under Section 5.6.
5.8 Normal Retirement Benefit. The annual SERP Benefit, payable to a
Participant who is eligible to recieve benefits pursuant to Section 5.1.1 shall
be the amount calculated under Section 5.7. This benefit is subject to vesting
under Section 5.6.
5.9 Early Retirement Benefit. The annual SERP Benefit, payable to a
Participant who is eligible to receive benefits pursuant to Section 5.1.2 shall
be the SERP Benefit calculated under Section 5.7 less 6% of this amount for each
year prior to qualification for Normal Retirement if the Participant had
remained in full service with the Company. This benefit is subject to vesting
under Section 5.6.
5.10 Disability Benefit. The annual SERP Benefit payable to a Participant
who is eligible to receive benefits pursuant to Section 5.1.3 shall be the
annual SERP Benefit payable under Section 5.7. This benefit is not subject to
vesting under Section 5.6.
5.11 Death Benefit. If a Participant is eligible for benefits pursuant to
Section 5.1.4, the amount of death benefit payable to the Participant's
Beneficiary shall be 1 times the Participant's Final Earnings. Notwithstanding
Section 5.2, this amount shall be a lump sum. This benefit is not subject to
vesting under Section 5.6.
5.12 Termination Benefit. The annual SERP Benefit payable under the Plan to
a Participant who is eligible for benefits pursuant to Section 5.1.5 shall be
the amount calculated under Section 5.7. This benefit is subject to vesting
under Section 5.6, and reduction for benefit commencement prior to Participant's
Normal Retirement under Section 5.9.
5.13 Change in Control Benefit. The SERP Benefit payable to a Participant
who is eligible for benefits pursuant to Section 5.1.6 shall be the actuarial
equivalent of an annual SERP Benefit payable under Section 5.7 calculated using
a Service Ratio equal to 1. Notwithstanding Section 5.2, this amount shall be a
lump sum. This benefit is not subject to vesting under Section 5.6.
5.14 Retirement with Permission. The Plan Committee, at its sole
discretion, may elect to waive age and service requirements for Normal
Retirement and treat any Termination of Employment, for reason other than Death
or Change in Control, as a Normal Retirement. Benefits under a retirement with
permission are calculated pursuant to Section 5.8.
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6 PAYMENT OF PLAN BENEFITS
6.1 Events Triggering Distribution. Benefits shall be payable from this
Plan to a Participant eligible for benefits pursuant to Section 5.1 beginning
upon the occurrence of one of the following events:
6.1.1 Normal Retirement, if a Participant is eligible for benefits pursuant
to Section 5.1.1.
6.1.2 Early Retirement, if a Participant is eligible for benefits pursuant
to Section 5.1.2.
6.1.3 Disability, if a Participant is eligible for benefits pursuant to
Section 5.1.3.
6.1.4 Death, if a Participant is eligible for benefits pursuant to Section
5.1.4.
6.1.5 The earliest date the Participant's Normal Retirement or Early
Retirement, based on the Participant's years of Employment Service at his/her
termination of service with the Company, if a Participant is eligible for
benefits pursuant to Section 5.1.5.
6.1.6 Termination of Service, if a Participant is eligible for benefits
pursuant to Section 5.1.6.
6.2 Commencement of Benefit Payments. Benefit payments shall commence on
the first day of the month following the later of notification of the Plan
Committee of an event triggering distributions pursuant to Section 6.1, or the
occurrence of such event., Subsequent payments, if any, shall be paid on the
first day of each month. Benefit payments, if any are payable under the form of
benefit payment, shall continue as long as the Participant remains eligible for
benefits under section 5.1.
6.3 Normal Form of Payment of Benefits. Benefits other than pursuant to
Section 5.1.4 and Section 5.1.6 shall be paid monthly in amount equal to 1/12 of
the SERP Benefit for the life of the Participant.
6.4 Alternate Benefit Payment Forms-Retirement, Early Retirement, and
Disability Benefits. Subject to an election made by the Participant prior to an
event triggering distribution, amounts payable under Section 5.8, Section 5.9,
Section 5.1, and Section 5.12 may be paid in a lump sum, a 10 year certain
annuity, a joint and 75% survivor annuity, or a joint and 50% survivor annuity.
The Benefit payments shall be subject to actuarial adjustment for mortality and
interest rate, as provided under Article 3, including any adjustments for the
age of the joint annuitant, if applicable.
6.5 Withholding for Taxes. To the extent required by law in effect at the
time payments are made, the Company shall withhold from benefit payments made
pursuant to the Plan any taxes required to be withheld by the Federal or any
state or local government.
6.6 Recipients of Benefit Payments. All benefit payments made under this
Plan shall be made by the Company to the Participant during his/her lifetime.
All subsequent payments, if any, under the Plan shall be made by the Company to
the Participant's designated Beneficiary.
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7 DISQUALIFICATION AND REDUCTION, LOSS, FORFEITURE OR DENIAL OF BENEFITS
7.1 Participants are General Creditors. Participants under this Plan are
general creditors of the Company with respect to benefits accrued under the
Plan.
7.2 No claim on Assets. The benefits due under this plan are general
obligations of the Company, and Participants have no claim to any assets of the
Company, including, but not limited to, assets used by the Company to informally
fund its obligations under the Plan.
7.3 Benefits may not be used as Collateral. Benefits due from the Plan may
not be used by the Participant as collateral in any form to obtain or secure
personal debt.
8 MISCELLANEOUS
8.1 Employment not Guaranteed by the Plan. Neither this plan nor any action
taken hereunder shall be construed as giving a Participant a right to be
retained as an Employee by the Company for any period.
8.2 Governing Law. The Plan shall be constructed according to the laws of
the state of Ohio.
8.3 Form of Communication. Any election, application, claim, notice, or
other communication required or permitted to be made by a Participant to the
Plan Administrator shall be made in writing and in such form as the Plan
Administrator shall prescribe. Such communication shall be effective upon
mailing if sent by first-class mail, postage prepaid and addressed to the
Company's office at 899 Cleveland Street, Elyria, OH 44036-2125.
8.4 Amendment and Termination. The Board of Directors may, at any time,
amend or terminate the Plan.
8.5 Agent for Service of Process. The Plan Administrator is designated as
the agent to receive service of the legal process on behalf of the Plan.
8.6 Constructional Rules. When appropriate, the singular used in this Plan
shall include the plural, and vice versa, and the masculine shall include the
female, and vice versa.
IN WITNESS WHEREOF, the Company has adopted the Invacare Corporation
Supplemental Executive Retirement Plan as of May 1, 1995.
Invacare Corporation
/S/ Thomas R. Miklich
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(Signature)
Thomas R. Miklich
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(Print Name)
Chief Financial Officer
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(Title)
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(Date)
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Appendix A
Supplemental Executive Retirement Plan
In recognition of valuable service rendered to Invacare Corporation, the
following Participants in the Invacare Supplemental Executive Retirement Plan
shall, upon remaining fully employed with the Company through May 1, 1997, be
granted a Service Ratio of one ("1"):
Richard Sayers
Thomas Miklich
Louis Slangen
Gerald Blouch
This Appendix shall be effective beginning May 1, 1996.
Invacare Corporation
/S/ Thomas R. Miklich
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(Signature)
Thomas R. Miklich
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(Print Name)
Chief Financial Officer
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(Title)
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(Date)