1994 PERFORMANCE PLAN
The Invacare Corporation 1994 Performance Plan, as the same may be amended
(the "Plan"), is designed to foster the long-term growth and performance of the
Company by: (a) enhancing the Company's ability to attract and retain highly
qualified employees and (b) motivating employees to serve and promote the
long-term interests of the Company and its shareholders through stock ownership
and performance-based incentives. To achieve this purpose, the Plan provides
authority for the grant of Stock Options, Restricted Stock, Stock Equivalent
Units, Stock Appreciation Rights, and other stock and performance-based
(a) "Affiliate" -- means the same definition as under Rule 12b-2 under the
(b) "Award" -- means the grant of Stock Options, Restricted Stock, Stock
Equivalent Units, Stock Appreciation Rights, Cash Awards, and other stock and
performance-based incentives under this Plan.
(c) "Award Agreement" -- means any agreement between the Company and a
Participant that sets forth terms, conditions, and restrictions applicable to an
(d) "Board of Directors" -- means the Board of Directors of the Company.
(e) "Cash Award" -- is defined in Section 6(b) (iv).
(f) "Change in Control" -- means, at any time after the date of the
adoption of this Plan, the occurrence of any one or more of the following:
(i) Any Person (other than any employee benefit plan or employee
stock ownership plan of the Company, or any Person organized,
appointed, or established by the Company, 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 30% or
more of the total outstanding voting power of the Company, 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
30% or more of the total outstanding voting power of the Company
as reflected by the power to vote in connection with the election
of Directors. For purposes of this Section 2 (f) (i), the terms
"Affiliates," "Associates," and "Beneficial Owner," will have the
meanings given to 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 24 consecutive months, individuals
who were Directors at the beginning of the period no longer
constitute a majority of the members of the Board of Directors,
unless the election, or the nomination for election by the
Company'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 Invacare
Corporation with another corporation (which is not an affiliate
of Invacare Corporation) in which Invacare Corporation is not the
surviving or continuing corporation 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.
(g) "Class B Common Shares" -- means Class B Common Shares, without par
value, of Invacare Corporation, including authorized and unissued Common Shares.
(h) "Code" -- means the Internal Revenue Code of 1986, or any law that
supersedes or replaces it, as amended from time to time.
(i) "Committee" -- means the Compensation Committee of the Board of
Directors, or any other committee of the Board of Directors that the Board of
Directors authorizes to administer this Plan. The Committee will be constituted
in a manner that satisfies the disinterested administration standard set forth
in Rule 16b-3.
(j) "Common Shares" -- means Common Shares, without par value, of Invacare
Corporation, including authorized and unissued Common Shares and treasury Common
(k) "Company" -- means Invacare Corporation, an Ohio corporation, and its
direct and indirect subsidiaries.
(l) "Continuing Director" -- means a Director who was a Director prior to a
Change in Control or was recommended or elected to succeed a Continuing Director
by a majority of the Continuing Directors then in office.
(m) "Director" -- means a director of Invacare Corporation.
(n) "Exchange Act" -- means the Securities Exchange Act of 1934, and any
law that supersedes or replaces it, as amended from time to time.
(o) "Fair Market Value" of Common Shares -- means the value of the Common
Shares determined by the Committee, or pursuant to rules established by the
Committee on a basis consistent with regulations under the Code.
(p) "Incentive Stock Option" -- means a Stock Option that meets the
requirements of Section 422 of the Code.
(q) "Notice of Award" -- means any notice by the Committee to a Participant
that advises the Participant of the grant of an Award or sets forth terms,
conditions, and restrictions applicable to an Award.
(r) "Participant" -- means any person to whom an Award has been granted
under this Plan.
(s) "Person" -- means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture or other entity, or a governmental authority.
(t) "Restricted Stock" -- means an Award of Common Shares that are subject
to restrictions or risk of forfeiture.
(u) "Rule 16b-3" -- means Rule 16b-3 under the Exchange Act, or any rule
that supersedes or replaces it, as amended from time to time.
(v) "Stock Appreciation Right" -- is defined in Section 6(b) (ii).
(w) "Stock Award" -- is defined in Section 6(b) (ii).
(x) "Stock Equivalent Unit" -- means an Award that is valued by reference
to the value of Common Shares.
(y) "Stock Option" -- is defined in Section 6(b) (iii).
All employees of the Company and its Affiliates, whether or not Directors,
are eligible for the grant of Awards. The selection of any such employees to
receive Awards will be within the discretion of the Committee. More than one
Award may be granted to the same employee.
Notwithstanding the foregoing, any individual that renounces in writing any
right that he or she may have to receive Awards under the Plan shall not be
eligible to receive any Awards hereunder.
4. Common Shares Available for Awards; Adjustment
(a) Number of Common Shares. The aggregate number of Common Shares that may
be subject to Awards, including Stock Options, granted under this Plan during
the term of this Plan will be equal to One Million (1,000,000) Common Shares,
subject to any adjustments made in accordance with the terms of this Section 4.
The assumption of obligations in respect of awards granted by an
organization acquired by the Company, or the grant of Awards under this Plan in
substitution for any such awards, will not reduce the number of Common Shares
available in any fiscal year for the grant of Awards under this Plan.
Common Shares subject to an Award that is forfeited, terminated, or
canceled without having been exercised (other than Common Shares subject to a
Stock Option that is canceled upon the exercise of a related Stock Appreciation
Right) will again be available for grant under this Plan, without reducing the
number of Common Shares available in any fiscal year for grant of Awards under
this Plan, except to the extent that the availability of those Common Shares
would cause this Plan or any Awards granted under this Plan to fail to qualify
for the exemption provided by Rule 16b-3. In addition, any Common Shares which
are retained to satisfy a Participant's withholding tax obligations or which are
transferred to the Company by a Participant to satisfy such obligations or to
pay all or any portion of the exercise price of the Award in accordance with the
terms of the Plan, the Award Agreement or the Notice of Award, may be made
available for reoffering under the Plan to any Participant, except to the extent
that the availability of those Common Shares would cause this Plan or any Awards
granted under this Plan to fail to qualify for the exemption provided by Rule
(b) No Fractional Common Shares. No fractional Common Shares will be
issued, and the Committee will determine the manner in which the value of
fractional Common Shares will be treated.
(c) Adjustment. In the event of any change in the Common Shares by reason
of a merger, consolidation, reorganization, recapitalization, or similar
transaction, including any transaction described under Section 424(a) of the
Code, or in the event of a stock dividend, stock split, or distribution to
shareholders (other than normal cash dividends), the Committee will have
authority to adjust, in any manner that it deems equitable, the number and class
of Common Shares that may be issued under this Plan, the number and class of
Common Shares subject to outstanding Awards, the exercise price applicable to
outstanding Awards, and the Fair Market Value of the Common Shares and other
value determinations applicable to outstanding Awards, including as may be
allowed or required under Section 424(a) of the Code.
(a) Committee. This Plan will be administered by the Committee. The
Committee will, subject to the terms of this Plan, have the authority to: (i)
select the eligible employees who will receive Awards, (ii) grant Awards, (iii)
determine the number and types of Awards to be granted to eligible employees,
(iv) determine the terms, conditions, vesting periods, and restrictions
applicable to Awards, including timing and price, (v) adopt, alter, and repeal
administrative rules and practices governing this Plan, (vi) interpret the terms
and provisions of this Plan and any Awards granted under this Plan, including,
where applicable, determining the method of valuing any Award and certifying as
to the satisfaction of such Awards, (vii) prescribe the forms of any Notices of
Award, Award Agreements, or other instruments relating to Awards, and (viii)
otherwise supervise the administration of this Plan.
(b) Delegation. The Committee may delegate any of its authority to any
other person or persons that it deems appropriate, provided the delegation does
not cause this Plan or any Awards granted under this Plan to fail to qualify for
the exemption provided by Rule 16b-3 or for the exemption from Section 162(m) of
the Code for performance-based compensation.
(c) Decisions Final. All decisions by the Committee, and by any other
Person or Persons to whom the Committee has delegated authority, to the extent
permitted by law, will be final and binding on all Persons.
(d) No Liability. Neither the Committee nor any of its members shall be
liable for any act taken by the Committee pursuant to the Plan. No member of the
Committee shall be liable for the act of any other member.
(a) Grant of Awards. The Committee will determine the type or types of
Awards to be granted to each Participant and will set forth in the related
Notice of Award or Award Agreement the terms, conditions, vesting periods, and
restrictions applicable to each Award. Awards may be granted singly or in
combination or tandem with other Awards. Awards may also be granted in
replacement of, or in substitution for, other awards granted by the Company,
whether or not granted under this Plan; without limiting the foregoing, if a
Participant pays all or part of the exercise price or taxes associated with an
Award by the transfer of Common Shares or the surrender of all or part of an
Award (including the Award being exercised), the Committee may, in its
discretion, grant a new Award to replace the Common Shares that were transferred
or the Award that was surrendered. The Company may assume obligations in respect
of awards granted by any Person acquired by the Company or may grant Awards in
replacement of, or in substitution for, any such awards.
(b) Types of Awards. Awards may include, but are not limited to, the
(i) Stock Appreciation Right -- means a right to receive a payment,
in cash or Common Shares, equal to the excess of (A) the Fair
Market Value, or other specified valuation, of a specified number
of Common Shares on the date the right is exercised over (B) the
Fair Market Value, or other specified valuation, of such Common
Shares on the date the right is granted, all as determined by the
Committee. The right may be conditioned upon the occurrence of
certain events, such as a Change in Control of the Company, or
may be unconditional, as determined by the Committee.
(ii) Stock Award -- means an Award that is made in Common Shares,
Restricted Stock, or Stock Equivalent Units or that is otherwise
based on, or valued in whole or in part by reference to, the
Common Shares. All or part of any Stock Award may be subject to
conditions, restrictions, and risks of forfeiture, as and to the
extent established by the Committee. Stock Awards may be based on
the Fair Market Value of the Common Shares, or on other specified
values or methods of valuation, as determined by the Committee.
(iii)Stock Option -- means a right to purchase a specified number of
Common Shares, during a specified period, and at a specified
exercise price, all as determined by the Committee. A Stock
Option may be an Incentive Stock Option or a Stock Option that
does not qualify as an Incentive Stock Option. In addition to the
terms, conditions, vesting periods, and restrictions established
by the Committee, Incentive Stock Options must comply with the
requirements of Section 422 of the Code. The exercise price of a
Stock Option that does not qualify as an Incentive Stock Option
may be more or less than the Fair Market Value of the Common
Shares on the date the Stock Option is granted.
(iv) Cash Award -- An Award denominated in cash. All or part of any
Cash Award may be subject to conditions established by the
Committee, including but not limited to future service with the
Company or the achievement of specific performance objectives.
(c) Limits on Awards. The maximum aggregate number of Common Shares (i) for
which Stock Options may be granted, and (ii) with respect to which Stock
Appreciation Rights may be granted, to any particular employee during any
calendar year during the term of this Plan is 200,000 Common Shares, subject to
adjustment in accordance with Section 4(c).
7. Deferral of Payment
With the approval of the Committee, the delivery of the Common Shares,
cash, or any combination thereof subject to an Award may be deferred, either in
the form of installments or a single future delivery. The Committee may also
permit selected Participants to defer the receipt of some or all of their
Awards, as well as other compensation, in accordance with procedures established
by the Committee to assure that the recognition of taxable income is deferred
under the Code. Deferred amounts may, to the extent permitted by the Committee,
be credited as cash or Stock Equivalent Units. The Committee may also establish
rules and procedures for the crediting of interest on deferred cash payments and
dividend equivalents on Stock Equivalent Units.
8. Payment of Exercise Price
The exercise price of a Stock Option (other than an Incentive Stock Option)
and any Stock Award for which the Committee has established an exercise price
may be paid in cash, by the transfer of Common Shares, by the surrender of all
or part of an Award (including the Award being exercised), or by a combination
of these methods, as and to the extent permitted by the Committee. The exercise
price of an Incentive Stock Option may be paid in cash, by the transfer of
Common Shares, or by a combination of these methods, as and to the extent
permitted by the Committee but may not be paid by the surrender of all or part
of an Award. The Committee may prescribe any other method of paying the exercise
price that it determines to be consistent with applicable law and the purpose of
In the event Common Shares that are Restricted Stock are used to pay the
exercise price of a Stock Award, that number of the Common Shares issued upon
the exercise of the Award equal to the number of Common Shares that are
Restricted Stock that have been used to pay the exercise price will be subject
to the same restrictions as the Restricted Stock.
9. Taxes Associated with Award
Prior to the payment of an Award or upon the exercise or release thereof,
the Company may withhold, or require a Participant to remit to the Company, an
amount sufficient to pay any Federal, state, and local taxes associated with the
Award. The Committee may, in its discretion and subject to such rules as the
Committee may adopt, permit a Participant to pay any or all taxes associated
with the Award (other than an Incentive Stock Option) in cash, by the transfer
of Common Shares, by the surrender of all or part of an Award (including the
Award being exercised), or by a combination of these methods. The Committee may
permit a Participant to pay any or all taxes associated with an Incentive Stock
Option in cash, by the transfer of Common Shares, or by a combination of these
methods or by any other method which does not disqualify the option as an
Incentive Stock Option under applicable provisions of the Code.
10. Termination of Employment
If the employment of a Participant terminates for any reason, all
unexercised, deferred, and unpaid Awards may be exercisable or paid only in
accordance with rules established by the Committee or as specified in the
particular Award Agreement or Notice of Award. Such rules may provide, as the
Committee deems appropriate, for the expiration, continuation, or acceleration
of the vesting of all or part of the Awards.
11. Termination of Awards Under Certain Conditions
The Committee may cancel any unexpired, unpaid, or deferred Awards at any
time if the Participant is not in compliance with all applicable provisions of
this Plan or with any Notice of Award or Award Agreement or if the Participant,
without the prior written consent of the Company, engages in any of the
(i) Renders services for an organization, or engages in a business,
that is, in the judgment of the Committee, in competition with
(ii) Discloses to anyone outside of the Company, or uses for any
purpose other than the Company's business any confidential
information or material relating to the Company, whether acquired
by the Participant during or after employment with the Company,
in a fashion or with a result that the Committee, in its
judgment, deems is or may be injurious to the best interests of
The Committee may, in its discretion and as a condition to the exercise of
an Award, require a Participant to acknowledge in writing that he or she is in
compliance with all applicable provisions of this Plan and of any Notice of
Award or Award Agreement and has not engaged in any activities referred to in
clauses (i) and (ii) above.
12. Change in Control
In the event of a Change in Control of the Company, unless and to the
extent otherwise determined by the Board of Directors, (i) all Stock
Appreciation Rights and Stock Options then outstanding will become fully
exercisable as of the date of the Change in Control, (ii) all restrictions and
conditions applicable to Restricted Stock and other Stock Awards will be deemed
to have been satisfied as of the date of the Change in Control, and (iii) all
Cash Awards will be deemed to have been fully earned as of the date of the
Change in Control. Any such determination by the Board of Directors that is made
after the occurrence of a Change in Control will not be effective unless a
majority of the Directors then in office are Continuing Directors and the
determination is approved by a majority of the Continuing Directors.
13. Amendment, Suspension, or Termination of this Plan; Amendment of
(a) Amendment, Suspension, or Termination of this Plan. The Board of
Directors may amend, suspend, or terminate this Plan at any time; provided,
however, that in no event, without the approval of the Company's shareholders,
shall any action of the Committee or the Board of Directors result in:
(i) Increasing, except as provided in Section 4(c) hereof, the
maximum number of Common Shares that may be subject to Awards
granted under the Plan;
(ii) Making any change which would cause any option granted under the
Plan as an Incentive Stock Option not to qualify as an Incentive
Stock Option within the meaning of Section 422 of the Code; or
(iii)Making any change which would eliminate the exemption provided
by Rule 16b-3 for this Plan and for Awards granted under this
(b) Amendment of Outstanding Awards. The Committee may, in its discretion,
amend the terms of any Award, prospectively or retroactively, but no such
amendment may impair the rights of any Participant without his or her consent.
The Committee may, in whole or in part, waive any restrictions or conditions
applicable to, or accelerate the vesting of, any Award.
14. Awards to Foreign Nationals and Employees Outside the United States
To the extent that the Committee deems appropriate to comply with foreign
law or practice and to further the purpose of this Plan, the Committee may,
without amending this Plan, (i) establish special rules applicable to Awards
granted to Participants who are foreign nationals, are employed outside the
United States, or both, including rules that differ from those established under
this Plan, and (ii) grant Awards to such Participants in accordance with those
Unless otherwise determined by the Committee, (i) no award granted under
the Plan may be transferred or assigned by the Participant to whom it is granted
other than by will, pursuant to the laws of descent and distribution, and (ii)
an Award granted under this Plan may be exercised, during the Participant's
lifetime, only by the Participant or by the Participant's guardian or legal
representative; except that, no Incentive Stock Option may be transferred or
assigned pursuant to a qualified domestic relations order or exercised, during
the Participant's lifetime, by the Participant's guardian or legal
16. Governing Law
The interpretation, validity, and enforcement of this Plan will, to the
extent not otherwise governed by the Code or the securities laws of the United
States, be governed by the laws of the State of Ohio.
17. No Rights as Employees/Shareholders
Nothing in the Plan or in any Award Agreement or Notice of Award shall
confer upon any Participant any right to continue in the employ of the Company
or an Affiliate, or to serve as a member of the Board of Directors or to be
entitled to receive any remuneration or benefits not set forth in the Plan or
such Award Agreement or Notice of Award, or to interfere with or limit either
the right of the Company or an Affiliate to terminate the employment of such
Participant at any time or the right of the shareholders of the Company to
remove him or her as a member of the Board of Directors with or without cause.
Nothing contained in the Plan or in any Award Agreement or Notice of Award shall
be construed as entitling any Participant to any rights of a shareholder as a
result of the grant of an Award until such time as Common Shares are actually
issued to such Participant pursuant to the exercise of a Stock Option, Stock
Appreciation Right or other Stock Award.
18. Effective and Termination Dates
(a) Effective Date. This Plan was approved by the Board of Directors on
January 28, 1994 and becomes effective upon adoption by the affirmative vote of
the holders of a majority of the voting power of the Company represented by the
Class A and Class B Common Shares, represented in person or by proxy, at any
annual or special meeting of shareholders at which a quorum is present. The Plan
shall be deemed to be adopted on the date of such shareholder meeting.
(b) Termination Date. This Plan will continue in effect until midnight on
May 23, 2004; provided, however, that Awards granted on or before that date may
extend beyond that date and restrictions and other terms and conditions imposed
on Restricted Stock or any other Award granted on or before that date may extend
beyond such date.
IN WITNESS WHEREOF, the undersigned by its duly authorized officer, has
hereunto set forth its signatures as of the effective date of the Plan.
By: /s/ A.M. Mixon
A.M. Mixon, Chairman, Chief Executive Officer and
By: /s/ Thomas R. Miklich
Thomas R. Miklich, Chief Financial Officer and