RECEIVABLES PURCHASE AGREEMENT

Receivables Purchase Transfer Agreement

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INVACARE CORP | INVACARE RECEIVABLES CORPORATION | PARK AVENUE RECEIVABLES COMPANY, LLC

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Title: RECEIVABLES PURCHASE AGREEMENT
Governing Law: New York Date: 10/5/2005
Industry: Medical Equipment and Supplies Sector: Healthcare

Exhibit 10.1

RECEIVABLES PURCHASE AGREEMENT

DATED AS OF SEPTEMBER 30, 2005

AMONG

INVACARE RECEIVABLES CORPORATION, AS SELLER,

INVACARE CORPORATION, AS SERVICER,

PARK AVENUE RECEIVABLES COMPANY, LLC

AND

JPMORGAN CHASE BANK, N.A., AS AGENT

<PAGE>

TABLE OF CONTENTS

Page

ARTICLE I. PURCHASE ARRANGEMENTS..............................................1

Section 1.1 Purchase Facility...........................................1

Section 1.2 Incremental Purchases.......................................2

Section 1.3 Incremental Reductions......................................2

Section 1.4 Payment Requirements........................................2

Section 1.5 Extension of Liquidity Termination Date.....................3

Section 1.6 Clean Up Call...............................................3

ARTICLE II. PAYMENTS AND COLLECTIONS..........................................3

Section 2.1 Payments....................................................3

Section 2.2 Collections Prior to Amortization...........................4

Section 2.3 Collections Following Amortization..........................4

Section 2.4 Application of Collections..................................4

Section 2.5 Payment Rescission..........................................5

Section 2.6 Maximum Purchaser Interests.................................5

ARTICLE III. CONDUIT FUNDING..................................................5

Section 3.1 CP Costs....................................................5

Section 3.2 CP Costs Payments...........................................6

Section 3.3 Calculation of CP Costs.....................................6

ARTICLE IV. FINANCIAL INSTITUTION FUNDING.....................................6

Section 4.1 Financial Institution Funding...............................6

Section 4.2 Yield Payments..............................................6

Section 4.3 Selection and Continuation of Tranche Periods...............6

Section 4.4 Financial Institution Discount Rates........................7

Section 4.5 Suspension of the LIBO Rate.................................7

Section 4.6 Terminating Financial Institutions..........................7

ARTICLE V. REPRESENTATIONS AND WARRANTIES.....................................8

Section 5.1 Representations and Warranties of The Seller Parties........8

Section 5.2 Financial Institution Representations and Warranties.......12

ARTICLE VI. CONDITIONS OF PURCHASES..........................................13

Section 6.1 Conditions Precedent to Initial Incremental Purchase.......13

Section 6.2 Conditions Precedent to All Purchases and Reinvestments....13

ARTICLE VII. COVENANTS.......................................................14

Section 7.1 Affirmative Covenants of the Seller Parties................14

Section 7.2 Negative Covenants of the Seller Parties...................22

ARTICLE VIII. ADMINISTRATION AND COLLECTION..................................23

Section 8.1 Designation of Servicer....................................23

Section 8.2 Duties of Servicer.........................................24

Section 8.3 Collection Notices.........................................25

Section 8.4 Responsibilities of Seller.................................25

Section 8.5 Reports....................................................26

Section 8.6 Servicing Fees.............................................26

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ARTICLE IX. AMORTIZATION EVENTS..............................................26

Section 9.1 Amortization Events........................................26

Section 9.2 Remedies...................................................29

ARTICLE X. INDEMNIFICATION...................................................29

Section 10.1 Indemnities................................................29

Section 10.2 Increased Cost and Reduced Return..........................32

Section 10.3 Other Costs and Expenses...................................33

ARTICLE XI. THE AGENT........................................................34

Section 11.1 Authorization and Action...................................34

Section 11.2 Delegation of Duties.......................................34

Section 11.3 Exculpatory Provisions.....................................34

Section 11.4 Reliance by Agent..........................................35

Section 11.5 Non-Reliance on Agent and Other Purchasers.................35

Section 11.6 Reimbursement and Indemnification..........................35

Section 11.7 Agent in its Individual Capacity...........................36

Section 11.8 Successor Agent............................................36

ARTICLE XII. ASSIGNMENTS; PARTICIPATIONS.....................................36

Section 12.1 Assignments................................................36

Section 12.2 Participations.............................................37

ARTICLE XIII.................................................................38

MISCELLANEOUS................................................................38

Section 13.1 Waivers and Amendments.....................................38

Section 13.2 Notices....................................................39

Section 13.3 Ratable Payments...........................................39

Section 13.4 Protection of Ownership Interests of the Purchasers........39

Section 13.5 Confidentiality............................................40

Section 13.6 Bankruptcy Petition........................................40

Section 13.7 Limitation of Liability....................................41

Section 13.8 CHOICE OF LAW..............................................41

Section 13.9 CONSENT TO JURISDICTION....................................41

Section 13.10 WAIVER OF JURY TRIAL.......................................41

Section 13.11 Integration; Binding Effect; Survival of Terms.............42

Section 13.12 Counterparts; Severability; Section References.............42

Section 13.13 JPMorgan Chase Roles.......................................42

Section 13.14 Characterization...........................................42

<PAGE>

EXHIBITS AND SCHEDULES

Exhibit I Definitions

Exhibit II Form of Purchase Notice

Exhibit III State of Organization; Places of Business; Locations of

Records; Federal Employer Identification Number and

Organizational Identification Number

Exhibit IV Names of Collection Banks; Collection Accounts

Exhibit V Form of Compliance Certificate

Exhibit VI Form of Collection Account Agreement

Exhibit VII Form of Assignment Agreement

Exhibit VIII Credit and Collection Policy

Exhibit IX Form of Monthly Report

Exhibit X Form of Performance Undertaking

Schedule A Commitments

Schedule B Closing Documents

<PAGE>

RECEIVABLES PURCHASE AGREEMENT

THIS RECEIVABLES PURCHASE AGREEMENT dated as of September 30, 2005 is among

Invacare Receivables Corporation, a Delaware corporation ("Seller"), Invacare

Corporation, an Ohio corporation ("Invacare"), as initial Servicer (the Servicer

together with Seller, the "Seller Parties" and each a "Seller Party"), the

entities listed on Schedule A to this Agreement (together with any of their

respective successors and assigns hereunder, the "Financial Institutions"), Park

Avenue Receivables Company, LLC ("Conduit") and JPMorgan Chase Bank, N.A., as

agent for the Purchasers hereunder or any successor agent hereunder (together

with its successors and assigns hereunder, the "Agent"). Unless defined

elsewhere herein, capitalized terms used in this Agreement shall have the

meanings assigned to such terms in Exhibit I.

PRELIMINARY STATEMENTS

Seller desires to transfer and assign Purchaser Interests to the

Purchasers from time to time.

Conduit may, in its absolute and sole discretion, purchase

Purchaser Interests from Seller from time to time.

In the event that Conduit declines to make any such purchase, the

Financial Institutions shall make such purchase in accordance with the

terms hereof.

JPMorgan Chase Bank, N.A. has been requested and is willing to

act as Agent on behalf of Conduit and the Financial Institutions in

accordance with the terms hereof.

ARTICLE I.

PURCHASE ARRANGEMENTS

Section 1.1 Purchase Facility. (a) Upon the terms and subject to the

conditions hereof, Seller may from time to time prior to the Facility

Termination Date, at its option, sell and assign Purchaser Interests to the

Agent for the benefit of one or more of the Purchasers by delivering (or causing

the Servicer to deliver on its behalf) a Purchase Notice to the Agent in

accordance with Section 1.2. Upon the Agent's receipt of a Purchase Notice from

Seller or Servicer, in accordance with the terms and conditions set forth

herein, Conduit may, at its option, instruct the Agent to purchase on behalf of

Conduit, or if Conduit shall decline to purchase, the Agent shall purchase, on

behalf of the Financial Institutions, Purchaser Interests from time to time in

an aggregate amount not to exceed at such time the lesser of (i) the Purchase

Limit and (ii) the aggregate amount of the Commitments.

(b) Seller may, upon at least 5 Business Days' notice to the Agent,

terminate in whole or reduce in part (and ratably among the Financial

Institutions), the unused portion of the Purchase Limit; provided that each

partial reduction of the Purchase Limit shall be in an aggregate amount equal to

$10,000,000 or a larger integral multiple of $1,000,000 thereof.

<page>

Section 1.2 Incremental Purchases. Seller (or Servicer on Seller's behalf)

shall provide the Agent with at least two (2) Business Days' prior notice in a

form set forth as Exhibit II hereto of each Incremental Purchase (a "Purchase

Notice"). Each Purchase Notice shall be subject to Section 6.2 hereof and,

except as set forth below, shall be irrevocable and shall specify the requested

Purchase Price (which shall not be less than $1,000,000) and date of purchase

(which, in the case of any Incremental Purchase (after the initial Incremental

Purchase hereunder), shall only be on a Settlement Date) and, in the case of an

Incremental Purchase to be funded by the Financial Institutions, the requested

Discount Rate and Tranche Period. Following receipt of a Purchase Notice, the

Agent will determine whether Conduit agrees to make the purchase. If Conduit

declines to make a proposed purchase, Agent shall provide Seller notice thereof,

and Seller may then cancel the Purchase Notice or, in the absence of such a

cancellation, the Incremental Purchase of the Purchaser Interest will be made by

the Financial Institutions. On the date of each Incremental Purchase, upon

satisfaction of the applicable conditions precedent set forth in Section 6.2

(but for the initial Incremental Purchase, all of Article VI), each of Conduit

or the Financial Institutions, as applicable, shall wire-transfer to the

Facility Account, in immediately available funds, no later than 12:00 noon

(Chicago time), an amount equal to (i) in the case of Conduit, the aggregate

Purchase Price of the Purchaser Interests Conduit is then purchasing or (ii) in

the case of a Financial Institution, such Financial Institution's Pro Rata Share

of the aggregate Purchase Price of the Purchaser Interests the Financial

Institutions are then purchasing.

Section 1.3 Incremental Reductions. Seller (or Servicer on its behalf)

shall provide the Agent with prior written notice in conformity with the

Required Notice Period (a "Reduction Notice") of any proposed reduction of

Aggregate Capital. Such Reduction Notice shall designate (i) the date (the

"Proposed Reduction Date") upon which any such reduction of Aggregate Capital

shall occur (which date shall give effect to the applicable Required Notice

Period), and (ii) the amount of Aggregate Capital to be reduced (the "Aggregate

Reduction") which shall be applied ratably to the Purchaser Interests of Conduit

and the Financial Institutions in accordance with the amount of Capital (if any)

owing to Conduit, on the one hand, and the amount of Capital (if any) owing to

the Financial Institutions (ratably, based on their respective Pro Rata Shares),

on the other hand. Only one (1) Reduction Notice shall be outstanding at any

time.

Section 1.4 Payment Requirements. All amounts to be paid or deposited by

any Seller Party pursuant to any provision of this Agreement shall be paid or

deposited in accordance with the terms hereof no later than 11:00 a.m. (Chicago

time) on the day when due in immediately available funds, and if not received

before 11:00 a.m. (Chicago time) shall be deemed to be received on the next

succeeding Business Day. If such amounts are payable to a Purchaser they shall

be paid to the Agent, for the account of such Purchaser, at 1 Bank One Plaza,

Chicago, Illinois 60670 until otherwise notified by the Agent. All computations

of Yield, per annum fees calculated as part of any CP Costs, per annum fees

hereunder and per annum fees under the Fee Letter shall be made on the basis of

a year of 360 days for the actual number of days elapsed; provided that any

interest or per annum fees calculated based on the Prime Rate shall be made on

the basis of a year of 365 days. If any amount hereunder shall be payable on a

day which is not a Business Day, such amount shall be payable on the next

succeeding Business Day.

<page>

Section 1.5 Extension of Liquidity Termination Date. Provided that no

Amortization Event or Potential Amortization Event has occurred and is

continuing, the Seller (or Servicer on Seller's behalf) may request an extension

of the Liquidity Termination Date by submitting a request for an extension

(each, an "Extension Request") to the Agent no more than 120 days and not less

than 60 days prior to the then current Liquidity Termination Date. Upon receipt

of such an Extension Request, the Agent shall notify the Purchasers of the

contents thereof and shall request each Purchaser to approve the Extension

Request. Each Purchaser shall deliver its written notice indicating whether such

Purchaser intends to renew its Commitment hereunder to the Agent no later than

thirty (30) days after the request (the "Response Date"), whereupon the Agent

shall notify the Seller within one Business Day thereafter as to whether all

Purchasers have approved the Extension Request. If all Purchasers have approved

the Extension Request by the Response Date, the Liquidity Termination Date shall

be extended to the date which is 364 days from the Response Date (such date, the

"Extension Date"). If any Financial Institution does not agree to an Extension

Request, the Liquidity Termination Date as to such Financial Institution shall

remain unchanged and Conduit shall have the rights set forth in Section 4.6.

Section 1.6 Clean Up Call. Each of Seller and Servicer shall have the right

(after providing written notice to the Agent in accordance with the Required

Notice Period), at any time following the reduction of the Aggregate Capital to

a level that is less than 50.0% of the original Purchase Limit, to repurchase

all, but not less than all, of the then outstanding Purchaser Interests. The

purchase price in respect thereof shall be an amount equal to the Aggregate

Unpaids through the date of such repurchase, payable in immediately available

funds to the Agent. Such repurchase shall be without representation, warranty or

recourse of any kind by, on the part of, or against Conduit or the Agent.

ARTICLE II.

PAYMENTS AND COLLECTIONS

Section 2.1 Payments. Notwithstanding any limitation on recourse contained

in this Agreement, Seller (or Servicer on Seller's behalf) shall immediately pay

to the Agent when due, for the account of the relevant Purchaser or Purchasers

on a full recourse basis, (i) such fees as set forth in the Fee Letter (which

fees shall be sufficient to pay all fees owing to the Financial Institutions),

(ii) all CP Costs, (iii) all amounts payable as Yield, (iv) all amounts payable

as Deemed Collections (which shall be immediately due and payable by Seller and

applied to reduce outstanding Aggregate Capital hereunder in accordance with

Sections 2.2 and 2.3 hereof but which, unless an Amortization Event has occurred

and is continuing, shall not be applied until the next Settlement Date, (v) all

amounts required pursuant to Section 2.6, (vi) all amounts payable pursuant to

Article X, if any, (vii) the Servicing Fee and all Servicer costs and expenses

in connection with servicing, administering and collecting the Receivables,

(viii) all Broken Funding Costs and (ix) all Default Fees (collectively, the

"Obligations"). If Seller fails to pay any of the Obligations when due, Seller

agrees to pay, on demand, the Default Fee in respect thereof (other than with

respect to clauses (vii) and (ix) thereof) until paid. Notwithstanding the

foregoing, no provision of this Agreement or the Fee Letter shall require the

payment or permit the collection of any amounts hereunder in excess of the

maximum permitted by applicable law. If at any time Seller receives any

Collections or Deemed Collections, Seller shall immediately pay such Collections

<page>

or Deemed Collections to the Servicer for application in accordance with the

terms and conditions hereof and, at all times prior to such payment, such

Collections or Deemed Collections shall be held in trust by Seller for the

exclusive benefit of the Purchasers and the Agent.

Section 2.2 Collections Prior to Amortization. Prior to the Amortization

Date, any Collections and/or Deemed Collections received by the Servicer shall

be set aside and held in trust by the Servicer (but the Servicer shall not be

required to segregate such Collections or Deemed Collections) for the payment of

any accrued and unpaid Aggregate Unpaids or for a Reinvestment as provided in

this Section 2.2. If on any Business Day prior to the Amortization Date,

Collections are received by the Servicer after payment of any Obligations that

are due and occurring, Seller hereby requests and the Purchasers hereby agree to

make, simultaneously with such receipt, a reinvestment (each a "Reinvestment")

with that portion of the balance of each and every Collection received by the

Servicer that is part of any Purchaser Interest, such that after giving effect

to such Reinvestment, the amount of Capital of such Purchaser Interest

immediately after such receipt and corresponding Reinvestment shall be equal to

the amount of Capital immediately prior to such receipt. On each Settlement Date

prior to the occurrence of the Amortization Date, the Servicer shall remit to

the Agent's account the amounts set aside during the preceding Settlement Period

that have not been subject to a Reinvestment and apply such amounts (if not

previously paid in accordance with Section 2.1) to reduce the Obligations. Once

such Obligations shall be reduced to zero, any additional Collections received

by the Servicer (i) if applicable, shall be remitted to the Agent's account no

later than 11:00 a.m. (Chicago time) to the extent required to fund any

Aggregate Reduction on such Settlement Date and (ii) any balance remaining

thereafter shall be remitted from the Servicer to Seller on such Settlement

Date.

Section 2.3 Collections Following Amortization. On the Amortization Date

and on each day thereafter, the Servicer shall set aside and hold in trust, for

the holder of each Purchaser Interest, all Collections received on such day and

an additional amount for the payment of any accrued and unpaid Obligations owed

by Seller and not previously paid by Seller in accordance with Section 2.1. On

and after the Amortization Date, the Servicer shall, at any time upon the

request from time to time by (or pursuant to standing instructions from) the

Agent (i) remit to the Agent's account the amounts set aside pursuant to the

preceding sentence, and (ii) apply such amounts to reduce the Capital associated

with each such Purchaser Interest and any other Aggregate Unpaids.

Section 2.4 Application of Collections. If there shall be insufficient

funds on deposit for the Servicer to distribute funds in payment in full of the

aforementioned amounts pursuant to Section 2.2 or 2.3 (as applicable), the

Servicer shall distribute funds:

first, to the payment of the Servicer's reasonable out-of-pocket

costs and expenses in connection with servicing, administering and

collecting the Receivables, including the Servicing Fee, to the extent

such costs and expenses are documented in reasonable detail,

second, to the reimbursement of the Agent's costs of collection

and enforcement of this Agreement,

<page>

third, ratably to the payment of all accrued and unpaid fees

under the Fee Letter, CP Costs and Yield,

fourth, for the ratable payment of Aggregate Capital to the

extent required by any Section of this Agreement,

fifth, unless the Amortization Date has occurred or a Reduction

Notice has been delivered, to the making of a Reinvestment,

sixth, to the ratable reduction of all other Obligations, and

seventh, after the Aggregate Unpaids have been indefeasibly

reduced to zero, to Seller.

Collections applied to the payment of Aggregate Unpaids shall be distributed in

accordance with the aforementioned provisions, and, giving effect to each of the

priorities set forth above in this Section 2.4, shall be shared ratably (within

each priority) among the Agent and the Purchasers in accordance with the amount

of such Aggregate Unpaids owing to each of them in respect of each such

priority.

Section 2.5 Payment Rescission. No payment of any of the Aggregate Unpaids

shall be considered paid or applied hereunder to the extent that, at any time,

all or any portion of such payment or application is rescinded by application of

law or judicial authority, or must otherwise be returned or refunded for any

reason. Seller shall remain obligated for the amount of any payment or

application so rescinded, returned or refunded, and shall promptly pay to the

Agent (for application to the Person or Persons who suffered such rescission,

return or refund) the full amount thereof together with, in the case of Capital,

Yield thereon from the date of any such rescission, return or refunding at the

Prime Rate.

Section 2.6 Maximum Purchaser Interests. Seller shall ensure that the

Purchaser Interests of the Purchasers shall at no time exceed in the aggregate

100%. If the aggregate of the Purchaser Interests of the Purchasers exceeds

100%, Seller shall pay to the Agent on the earlier of (a) the day that is two

(2) Business Days after the date thereof or (b) the next Settlement Date, an

amount to be applied to reduce the Aggregate Capital (as allocated by the

Agent), such that after giving effect to such payment the aggregate of the

Purchaser Interests equals or is less than 100%, except for a representation and

warranty that such reconveyance to Seller is being made free and clear of any

Adverse Claim created by the Agent or any Purchaser.

ARTICLE III.

CONDUIT FUNDING

Section 3.1 CP Costs. Seller shall pay CP Costs with respect to the Capital

associated with each Purchaser Interest of Conduit for each day that any Capital

in respect of such Purchaser Interest is outstanding. Each Purchaser Interest

funded substantially with Pooled Commercial Paper will accrue CP Costs each day

on a pro rata basis, based upon the percentage share the Capital in respect of

such Purchaser Interest represents in relation to all assets held by Conduit and

funded substantially with related Pooled Commercial Paper.

<page>

Section 3.2 CP Costs Payments. On each Settlement Date, Seller shall pay to

the Agent (for the benefit of Conduit) an aggregate amount equal to all accrued

and unpaid CP Costs in respect of the Capital associated with all Purchaser

Interests of Conduit for the immediately preceding Accrual Period in accordance

with Article II.

Section 3.3 Calculation of CP Costs. On the third Business Day immediately

preceding each Settlement Date, Conduit shall calculate the aggregate amount of

CP Costs allocated to the Capital of the Purchaser Interests for the applicable

Accrual Period and shall notify Seller of such aggregate amount.

ARTICLE IV.

FINANCIAL INSTITUTION FUNDING

Section 4.1 Financial Institution Funding. Each Purchaser Interest of the

Financial Institutions shall accrue Yield for each day during its Tranche Period

at either the LIBO Rate or the Prime Rate in accordance with the terms and

conditions hereof. Until Seller gives notice to the Agent of another Discount

Rate in accordance with Section 4.4, the initial Discount Rate for any Purchaser

Interest transferred to the Financial Institutions by Conduit pursuant to the

terms and conditions hereof shall be the Prime Rate. If the Financial

Institutions acquire by assignment from Conduit any Purchaser Interest pursuant

to a Funding Agreement, each Purchaser Interest so assigned shall each be deemed

to have a new Tranche Period commencing on the date of any such assignment.

Section 4.2 Yield Payments. On the Settlement Date for each Purchaser

Interest of the Financial Institutions, Seller shall pay to the Agent (for the

benefit of the Financial Institutions) an aggregate amount equal to the accrued

and unpaid Yield for the entire Tranche Period of each such Purchaser Interest

in accordance with Article II.

Section 4.3 Selection and Continuation of Tranche Periods.

(a) With consultation from (and approval by) the Agent (which approval

shall not be unreasonably withheld), Seller shall from time to time request

Tranche Periods for the Purchaser Interests of the Financial Institutions,

provided that, if at any time the Financial Institutions shall have a Purchaser

Interest, Seller shall always request Tranche Periods such that at least one

Tranche Period shall end on the date specified in clause (A) of the definition

of Settlement Date.

(b) Seller or the Agent, upon notice to and consent by the other (such

consent not to be unreasonably withheld) received at least three (3) Business

Days prior to the end of a Tranche Period (the "Terminating Tranche") for any

Purchaser Interest, may, effective on the last day of the Terminating Tranche:

(i) divide any such Purchaser Interest into multiple Purchaser Interests, (ii)

combine any such Purchaser Interest with one or more other Purchaser Interests

that have a Terminating Tranche ending on the same day as such Terminating

Tranche or (iii) combine any such Purchaser Interest with a new Purchaser

Interests to be purchased on the day such Terminating Tranche ends, provided,

that in no event may a Purchaser Interest of Conduit be combined with a

Purchaser Interest of the Financial Institutions.

<page>

Section 4.4 Financial Institution Discount Rates. Seller may select the

LIBO Rate or the Prime Rate for each Purchaser Interest of the Financial

Institutions. Seller shall by 11:00 a.m. (Chicago time): (i) at least three (3)

Business Days prior to the expiration of any Terminating Tranche with respect to

which the LIBO Rate is being requested as a new Discount Rate and (ii) on the

day of the expiration of any Terminating Tranche with respect to which the Prime

Rate is being requested as a new Discount Rate, give the Agent irrevocable

notice of the new Discount Rate for the Purchaser Interest associated with such

Terminating Tranche. Until Seller gives notice to the Agent of another Discount

Rate, the initial Discount Rate for any Purchaser Interest transferred to the

Financial Institutions pursuant to the terms and conditions hereof (including

Section 4.1) shall be the Prime Rate.

Section 4.5 Suspension of the LIBO Rate

(a) If any Financial Institution notifies the Agent that it has determined

that funding its Pro Rata Share of the Purchaser Interests of the Financial

Institutions at a LIBO Rate would violate any applicable law, rule, regulation,

or directive of any governmental or regulatory authority, whether or not having

the force of law, or that (i) deposits of a type and maturity appropriate to

match fund its Purchaser Interests at such LIBO Rate are not available or (ii)

such LIBO Rate does not, in its reasonable determination, accurately reflect the

cost of acquiring or maintaining a Purchaser Interest at such LIBO Rate, then

the Agent shall suspend the availability of such LIBO Rate and require Seller to

select the Prime Rate for any Purchaser Interest accruing Yield at such LIBO

Rate; provided that before making any such suspension, the applicable Financial

Institution shall use reasonable efforts (consistent with its internal policy

and legal and regulatory restrictions and so long as such efforts would not be

disadvantageous to it) to designate, in consultation with Seller and the Agent,

a different LIBO Rate lending office if the making of such designation would

allow such Financial Institution or its LIBO Rate lending office to continue to

fund its Pro Rata Share of the Purchaser Interests at a LIBO Rate and avoid the

situations set forth in clauses (i) - (iii) above.

(b) If less than all of the Financial Institutions give a notice to the

Agent pursuant to Section 4.5(a), each Financial Institution which gave such a

notice shall be obliged, at the request of Seller, Conduit or the Agent, to

assign all of its rights and obligations hereunder to (i) another Financial

Institution or (ii) another funding entity nominated by Seller or the Agent that

is acceptable to Conduit and willing to participate in this Agreement through

the Liquidity Termination Date in the place of such notifying Financial

Institution; provided that (i) the notifying Financial Institution receives

payment in full, pursuant to an Assignment Agreement, of an amount equal to such

notifying Financial Institution's Pro Rata Share of the Capital and Yield owing

to all of the Financial Institutions and all accrued but unpaid fees and other

costs and expenses payable in respect of its Pro Rata Share of the Purchaser

Interests of the Financial Institutions, and (ii) the replacement Financial

Institution otherwise satisfies the requirements of Section 12.1(b).

Section 4.6 Terminating Financial Institutions.

(a) If any Financial Institution fails to deliver notice pursuant to

Section 1.5 by the Response Date, such Financial Institution will be deemed to

have declined to renew its Commitment (each Financial Institution which has

<page>

declined or has been deemed to have declined to renew its Commitment hereunder,

a "Non-Renewing Financial Institution"). The Agent shall promptly notify Conduit

of each Non-Renewing Financial Institution and Conduit, in its sole discretion,

may (A) to the extent of Commitment Availability, declare that such Non-Renewing

Financial Institution's Commitment shall, to such extent, automatically

terminate on the Liquidity Termination Date or (B) upon one (1) Business Days'

notice to such Non-Renewing Financial Institution assign to such Non-Renewing

Financial Institution on a date specified by Conduit its Pro Rata Share of the

aggregate Purchaser Interests then held by Conduit, subject to, and in

accordance with, the Funding Agreement. In addition, Conduit may, in its sole

discretion, at any time (x) to the extent of Commitment Availability, declare

that any Affected Financial Institution's Commitment shall automatically

terminate on a date specified by Conduit or (y) assign to any Affected Financial

Institution on a date specified by Conduit its Pro Rata Share of the aggregate

Purchaser Interests then held by Conduit, subject to, and in accordance with,

the Funding Agreement (each Affected Financial Institution or each Non-Renewing

Financial Institution is hereinafter referred to as a "Terminating Financial

Institution"). The parties hereto expressly acknowledge that any declaration of

the termination of any Commitment, any assignment pursuant to this Section 4.6

and the order of priority of any such termination or assignment among

Terminating Financial Institutions shall be made by Conduit in its sole and

absolute discretion.

(b) Upon any assignment to a Terminating Financial Institution as provided

in this Section 4.6, any remaining Commitment of such Terminating Financial

Institution shall automatically terminate. Upon reduction to zero of the Capital

of all of the Purchaser Interests of a Terminating Financial Institution (after

application of Collections thereto pursuant to Sections 2.2 and 2.3) all rights

and obligations of such Terminating Financial Institution hereunder shall be

terminated and such Terminating Financial Institution shall no longer be a

"Financial Institution" hereunder; provided, however, that the provisions of

Article X shall continue in effect for its benefit with respect to Purchaser

Interests held by such Terminating Financial Institution prior to its

termination as a Financial Institution.

ARTICLE V.

REPRESENTATIONS AND WARRANTIES

Section 5.1 Representations and Warranties of The Seller Parties. As of the

date of each Incremental

Purchase and the date of each Reinvestment:

(a) Corporate Existence and Power. Each of Seller and Servicer represents

and warrants that it is a Person duly organized, validly existing and in good

standing under the laws of the state or other political subdivision of its

jurisdiction of incorporation or organization, as the case may be, and is duly

qualified to do business, and is in good standing, in all additional

jurisdictions where such qualification is necessary under applicable law, except

where the failure to be so qualified would not have a Material Adverse Effect.

(b) Power and Authority. Each of Seller and Servicer represents and

warrants that it has all requisite corporate power to own or lease the

properties used in its business and to carry on its business as now being

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conducted and as proposed to be conducted, and to execute and deliver the

Transaction Documents to which it is a party and to engage in the transactions

contemplated by the Transaction Documents.

the execution and delivery by it of this Agreement and each other Transaction

Document to which it is a party, and the performance of its obligations

hereunder and thereunder do not contravene or violate (i) its certificate or

articles of incorporation or by-laws, (ii) any law, rule or regulation

applicable to it, (iii) any restrictions under any agreement, contract or

instrument to which it is a party or by which it or any of its property is

bound, or (iv) any order, writ, judgment, award, injunction or decree of which

it is aware binding on or affecting it or its property, and do not result in the

creation or imposition of any Adverse Claim on its assets or the assets of its

Subsidiaries (except as created hereunder) except, in each of the foregoing

cases, where such contravention or violation would not have a Material Adverse

Effect. The Seller represents and warrants that no transaction contemplated

hereunder requires compliance with any bulk sales act or similar law.

(d) Governmental Authorization. Each of Seller and Servicer represents and

warrants that, other than the filing of the financing statements required

hereunder, no authorization or approval or other action by, and no notice to or

filing with, any Governmental Authority is required for the due execution and

delivery by Seller of this Agreement and each other Transaction Document to

which it is a party and the performance of its obligations hereunder and

thereunder, except in the case of Seller (i) with respect to Governmental

Receivables, compliance with any Assignment of Claims Act and (ii) any such

authorization, approval or other action that may be required by any foreign

Governmental Authority with respect to Foreign Receivables.

(e) Actions, Suits. Each of Seller and Servicer represents and warrants

that there is no action, suit or proceeding pending or, to the best of its

knowledge, threatened against or affecting such Seller Party before or by any

court, Governmental Authority or arbitrator, which is likely to have, either

individually or collectively, a Material Adverse Effect, and to the best of such

Seller Party's knowledge, there is no basis for any such action, suit or

proceeding

(f) Binding Effect. Each of Seller and Servicer represents and warrants

that the Transaction Documents executed by it, will be at all times from and

after the date of delivery thereof, its legal, valid and binding obligations

enforceable against it in accordance with their respective terms; except as such

enforceability may be limited by bankruptcy, insolvency, reorganization,

moratorium or other similar laws relating to creditors' rights and except that

the remedy of specific performance and injunctive and other forms of equitable

relief are subject to equitable defenses and to the discretion of the court

before which any proceedings may be brought.

(g) Accuracy of Information. Each of Seller and Servicer represents and

warrants that all information heretofore furnished by an Authorized Officer of

such Seller Party or any Originator to the Agent or the Purchasers for purposes

of or in connection with this Agreement, any of the other Transaction Documents

or any transaction contemplated hereby or thereby is, and all such information

hereafter furnished by an Authorized Officer of such Seller Party or any

Originator to the Agent or the Purchasers will be, true and accurate in every

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material respect on the date such information is stated or certified (unless

otherwise disclosed to Agent or Purchasers at such time) and does not and will

not contain any material misstatement of fact or omit to state a material fact

or any fact necessary to make the statements contained therein not misleading.

(h) Use of Proceeds. Seller represents and warrants that no proceeds of any

purchase hereunder will be used (i) for a purpose that violates Regulation T, U

or X promulgated by the Board of Governors of the Federal Reserve System from

time to time or (ii) to acquire any security in any transaction which is subject

to Section 12, 13 or 14 of the Securities Exchange Act of 1934, as amended.

(i) Good Title. Seller represents and warrants that, immediately prior to

each purchase hereunder, Seller shall be the legal and beneficial owner of the

Receivables and Related Security with respect thereto, free and clear of any

Adverse Claim (except with respect to Foreign Receivables), except as created by

the Transaction Documents. Seller represents and warrants that there have been

duly filed all financing statements or other similar instruments or documents

necessary under the UCC (or any comparable law) of all appropriate jurisdictions

to perfect Seller's ownership interest in each Receivable (other than Foreign

Receivables), its Collections and the Related Security, except that Seller's

rights with respect to any Government Receivable may be restricted by an

applicable Assignment of Claims Act.

(j) Perfection. Seller represents and warrants that, this Agreement,

together with the filing of the financing statements contemplated hereby, is

effective to, and shall, upon each purchase hereunder, transfer to the Agent for

the benefit of the relevant Purchaser or Purchasers (and the Agent for the

benefit of such Purchaser or Purchasers shall acquire from Seller) a valid and

perfected first priority undivided percentage ownership or security interest in

each Receivable (other than Foreign Receivables) existing or hereafter arising

and in the Related Security (to the extent covered by Article 9 of the UCC) and

Collections with respect thereto, free and clear of any Adverse Claim, except as

created by the Transactions Documents. Seller represents and warrants that there

have been duly filed all financing statements or other similar instruments or

documents necessary under the UCC (or any comparable law) of all appropriate

jurisdictions to perfect the Agent's (on behalf of the Purchasers) ownership or

security interest in the Receivables (other than Foreign Receivables), the

Related Security (to the extent covered by Article 9 of the UCC) and the

Collections, except that Seller's rights with respect to any Government

Receivable may be restricted by an applicable Assignment of Claims Act.

(k) Places of Business and Locations of Records. Seller represents and

warrants that (i) its state of organization, principal places of business, chief

executive office and the offices where it keeps all of its Records are located

at the addresses listed on Exhibit III or such other locations of which the

Agent has been notified in accordance with Section 7.2(a) in jurisdictions where

all action required by Section 13.4(a) has been taken and completed, and (ii)

Seller's Federal Employer Identification Number and Organizational

Identification Number are correctly set forth on Exhibit III.

(l) Collections. Each of Seller and Servicer represents and warrants that

(i) the conditions and requirements set forth in Section 7.1(j) and Section 8.2

have at all times been satisfied and duly performed, and (ii) the names and

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addresses of all Collection Banks, together with the account numbers of the

Collection Accounts of Seller at each Collection Bank and the post office box

number of each Lock-Box, are listed on Exhibit IV. Seller represents and

warrants that Seller has not granted any Person, other than the Agent as

contemplated by this Agreement, dominion and control of any Lock-Box or

Collection Account, or the right to take dominion and control of any such

Lock-Box or Collection Account at a future time or upon the occurrence of a

future event. Notwithstanding the foregoing, Seller confirms that it has granted

the Servicer a right of access to the Lock-Boxes and Collection Accounts to the

extent permitted in the Collection Account Agreements.

(m) Material Adverse Effect. (i) The initial Servicer represents and

warrants that since September 30, 2004, no event has occurred that would have a

Material Adverse Effect and (ii) Seller represents and warrants that since the

date of this Agreement, no event has occurred that would have a Material Adverse

Effect on Seller.

(n) Names. Seller represents and warrants that, in the past five (5) years,

Seller has not used any corporate names, trade names or assumed names other than

the name in which it has executed this Agreement.

(o) Ownership of Seller. Seller represents and warrants that the

Originators own, directly or indirectly, 100% of all classes of the issued and

outstanding capital stock of Seller, free and clear of any Adverse Claim. Seller

represents and warrants that such capital stock is validly issued, fully paid

and nonassessable, and that there are no options, warrants or other rights to

acquire securities of Seller.

(p) Not a Holding Company or an Investment Company. Seller represents and

warrants that Seller is not a "holding company" or a "subsidiary holding

company" of a "holding company" within the meaning of the Public Utility Holding

Company Act of 1935, as amended, or any successor statute. Seller represents and

warrants that Seller is not an "investment company" within the meaning of the

Investment Company Act of 1940, as amended, or any successor statute.

(q) Compliance with Law. Each of Seller and Servicer represents and

warrants that it has complied with all applicable laws, rules, regulations and

orders of any Governmental Authority (including, without limitation, laws, rules

and regulations relating to truth in lending, fair credit billing, fair credit

reporting, equal credit opportunity, fair debt collection practices and privacy)

in effect, except in each of the foregoing cases, where failure to comply could

not reasonably be expected to have a Material Adverse Effect. Each Eligible

Receivable, together with the Contract related thereto, does not contravene any

laws, rules or regulations applicable thereto (including, without limitation,

laws, rules and regulations relating to truth in lending, fair credit billing,

fair credit reporting, equal credit opportunity, fair debt collection practices

and privacy), and no part of such Contract is in violation of any such law, rule

or regulation, except where such contravention or violation could not reasonably

be expected to have a Material Adverse Effect.

(r) Compliance with Credit and Collection Policy. Each of Seller and

Servicer represents and warrants that it has complied in all material respects

with the Credit and Collection Policy with regard to each Eligible Receivable

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and the related Contract, and has not made or authorized any material change to

such Credit and Collection Policy, except such material change as to which the

Agent has been notified in accordance with Section 4.1(a)(vii) of the

Receivables Sale Agreement.

(s) Payments to Originators. Seller represents and warrants that, with

respect to each Receivable transferred to Seller pursuant to the Receivables

Sale Agreement, Seller has given reasonably equivalent value to the applicable

Originator in consideration therefor and such transfer was not made for or on

account of an antecedent debt. No transfer by any Originator of any Receivable

under the Receivables Sale Agreement is or may be voidable under any section of

the Bankruptcy Reform Act of 1978 (11 U.S.C. ss.ss. 101 et seq.), as amended.

(t) Enforceability of Contracts. Seller represents and warrants that each

Contract with respect to each Eligible Receivable is effective to create, and

has created, a legal, valid and binding obligation of the related Obligor to pay

the Outstanding Balance of the Eligible Receivable created thereunder and any

accrued interest thereon, enforceable against the Obligor in accordance with its

terms, except as such enforcement may be limited by applicable bankruptcy,

insolvency, reorganization or other similar laws relating to or limiting

creditors' rights generally and by general principles of equity (regardless of

whether enforcement is sought in a proceeding in equity or at law).

(u) Eligible Receivables. Seller represents and warrants that each

Receivable included in the Net Receivables Balance as an Eligible Receivable on

the date of its purchase under the Receivables Sale Agreement was an Eligible

Receivable on such purchase date, and Servicer represents that, to the extent it

compiles any report computing the Net Receivables Balance based upon information

received by it from Seller or any Originator, it has not included any Receivable

in the Net Receivables Balance other than a Receivable identified by Seller or

such Originator as an Eligible Receivable.

(v) Net Receivables Balance. Each of Seller and Servicer represents and

warrants that it has determined that, immediately after giving effect to each

purchase hereunder, the Net Receivables Balance is at least equal to the sum of

(i) the Aggregate Capital, plus (ii) the Aggregate Reserves.

(w) Accounting. The manner in which such Seller Party accounts for the

transactions contemplated by this Agreement and the Receivables Sale Agreement

does not jeopardize the true sale nature of the transaction between the

Originators and Seller under the Receivables Sale Agreement.

Section 5.2 Financial Institution Representations and Warranties. Each

Financial Institution hereby represents and warrants to the Agent and Conduit

that:

(a) Existence and Power. Such Financial Institution is a corporation or a

banking association duly organized, validly existing and in good standing under

the laws of its jurisdiction of incorporation or organization, and has all

corporate power to perform its obligations hereunder.

(b) No Conflict. The execution and delivery by such Financial Institution

of this Agreement and the performance of its obligations hereunder are within

its corporate powers, have been duly authorized by all necessary corporate

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action, do not contravene or violate (i) its certificate or articles of

incorporation or association or by-laws, (ii) any law, rule or regulation

applicable to it, (iii) any restrictions under any agreement, contract or

instrument to which it is a party or any of its property is bound, or (iv) any

order, writ, judgment, award, injunction or decree binding on or affecting it or

its property, and do not result in the creation or imposition of any Adverse

Claim on its assets. This Agreement has been duly authorized, executed and

delivered by such Financial Institution.

action by, and no notice to or filing with, any governmental authority or

regulatory body is required for the due execution and delivery by such Financial

Institution of this Agreement and the performance of its obligations hereunder.

(d) Binding Effect. This Agreement constitutes the legal, valid and binding

obligation of such Financial Institution enforceable against such Financial

Institution in accordance with its terms, except as such enforcement may be

limited by applicable bankruptcy, insolvency, reorganization or other similar

laws relating to or limiting creditors' rights generally and by general

principles of equity (regardless of whether such enforcement is sought in a

proceeding in equity or at law).

ARTICLE VI.

CONDITIONS OF PURCHASES

Section 6.1 Conditions Precedent to Initial Incremental Purchase. The

initial Incremental Purchase of a Purchaser Interest under this Agreement is

subject to the conditions precedent that (a) the Agent shall have received on or

before the date of such purchase those documents listed on Schedule B and (b)

the Agent shall have received all fees and expenses required to be paid on such

date pursuant to the terms of this Agreement and the Fee Letter.

Section 6.2 Conditions Precedent to All Purchases and Reinvestments. Each

purchase of a Purchaser Interest and each Reinvestment shall be subject to the

further conditions precedent that (a) in the case of each such purchase or

Reinvestment the Servicer shall have delivered to the Agent on or prior to the

date of such purchase, in form and substance satisfactory to the Agent, all

Monthly Reports and other interim reports as and when due under Section 8.5; (b)

the Facility Termination Date shall not have occurred; (c) the Agent shall have

received such other approvals, opinions or documents as it may reasonably

request; and (d) on the date of each such Incremental Purchase or Reinvestment,

the following statements shall be true (and acceptance of the proceeds of such

Incremental Purchase or Reinvestment shall be deemed a representation and

warranty by Seller that such statements are then true):

(i) the representations and warranties set forth in Section 5.1

are true and correct on and as of the date of such Incremental

Purchase or Reinvestment as though made on and as of such date;

(ii) no event has occurred and is continuing, or would result

from such Incremental Purchase or Reinvestment, that will constitute

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an Amortization Event, and no event has occurred and is continuing, or

would result from such Incremental Purchase or Reinvestment, that

would constitute a Potential Amortization Event; and

(iii) the Aggregate Capital does not exceed the Purchase Limit

and the aggregate Purchaser Interests do not exceed 100%.

It is expressly understood that each Reinvestment shall, unless otherwise

directed by the Agent or any Purchaser, occur automatically on each day that the

Servicer shall receive any Collections without the requirement that any further

action be taken on the part of any Person and notwithstanding the failure of

Seller to satisfy any of the foregoing conditions precedent in respect of such

Reinvestment. The failure of Seller to satisfy any of the foregoing conditions

precedent in respect of any Reinvestment shall give rise to a right of the

Agent, which right may be exercised at any time on demand of the Agent, to

rescind such Reinvestment and direct Seller to pay to the Agent for the benefit

of the Purchasers an amount equal to the Collections prior to the Amortization

Date that shall have been applied to the affected Reinvestment.

ARTICLE VII.

COVENANTS

Section 7.1 Affirmative Covenants of the Seller Parties. Until the date on

which the Aggregate Unpaids have been paid in full and this Agreement terminates

in accordance with its terms:

(a) Financial Reporting. Each Seller Party will maintain, for itself and

each of its Subsidiaries, a system of accounting established and administered in

accordance with GAAP. Seller will furnish or cause to be furnished to the Agent:

(i) Annual Reporting. As soon as available and in any event

within the earlier of (A) five (5) days after the time period

specified by the Securities and Exchange Commission under the Exchange

Act for annual reporting or (B) within 90 days after the end of each

fiscal year of Invacare, (a) a copy of the consolidated balance sheet

of Invacare and its Subsidiaries as of the end of such fiscal year and

the related consolidated statements of income and cash flow of

Invacare and its Subsidiaries for such fiscal year, with a customary

audit report of Ernst & Young, or other nationally recognized

independent certified public accountants selected by Invacare, without

qualifications unacceptable to the Purchasers and (b) comparable

unaudited financial statements of Seller in reasonable detail and duly

certified by an Authorized Officer of Seller as having been prepared

in accordance with GAAP.

(ii) Quarterly Reporting. As soon as available and in any event

within the earlier of (A) five (5) days after the time period

specified by the Securities and Exchange Commission under the Exchange

Act for quarterly reporting or (B) within 50 days after the end of

each of the first three fiscal quarters of each fiscal year of

Invacare, (a) the consolidated balance sheet of Invacare and its

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Subsidiaries as of the end of such quarter, and the related

consolidated statements of income and cash flow for the period

commencing at the end of the previous fiscal year and ending with the

end of such quarter, setting forth in each case in comparative form

the corresponding figures for the corresponding date or period of the

preceding fiscal year, all in reasonable detail and duly certified

(subject to normal year-end adjustments) by an Authorized Officer of

Invacare as having been prepared in accordance with GAAP and (b)

comparable unaudited financial statements of Seller in reasonable

detail and duly certified by an Authorized Officer of Seller as having

been prepared in accordance with GAAP.

(iii) Compliance Certificate. Together with the financial

statements required in clauses (i) and (ii) above, a compliance

certificate in substantially the form of Exhibit V signed by an

Authorized Officer of the applicable Seller Party and dated the date

of such annual financial statement or such quarterly financial

statement, as the case may be.

(iv) Shareholders Statements and Reports. Promptly upon the

furnishing thereof to the shareholders of Invacare, copies of all

financial statements, reports and proxy statements so furnished.

(v) S.E.C. Filings. Promptly upon the filing thereof, copies of

all registration statements (other than registration statements on SEC

Form S-8) which Invacare or any of its Subsidiaries files with the

Securities and Exchange Commission.

(vi) Copies of Notices. Promptly upon its receipt of any notice,

request for consent, financial statements, certification, report or

other communication under or in connection with any Transaction

Document from an Originator, the Provider or any Collection Bank,

copies of the same.

(vii) Other Information. To the extent it may lawfully do so,

promptly, from time to time, such other information, documents,

records or reports relating to the Receivables or the financial

condition, operations or business of such Seller Party as the Agent

may from time to time reasonably request in order to protect the

interests of the Agent and the Purchasers under or as contemplated by

this Agreement.

(b) Notices. Such Seller Party will notify the Agent in writing of any of

the following promptly upon learning of the occurrence thereof, describing the

same and, if applicable, the steps being taken with respect thereto:

(i) Amortization Events or Potential Amortization Events. The

occurrence of each Amortization Event and each Potential Amortization

Event, by a statement of an Authorized Officer of such Seller Party.

(ii) Judgment and Proceedings. (A) (1) The entry of any judgment

or decree against the Servicer or any of its respective Subsidiaries

if the aggregate amount of all judgments and decrees then outstanding

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against the Servicer and its Subsidiaries exceeds $10,000,000 after

deducting (a) the amount with respect to which the Servicer or any

such Subsidiary is insured and with respect to which the insurer has

acknowledged responsibility in writing, and (b) the amount for which

the Servicer or any such Subsidiary is otherwise indemnified if the

terms of such indemnification are reasonably satisfactory to the

Agent, and (2) the institution of any litigation, arbitration

proceeding or governmental proceeding against the Servicer which,

individually or in the aggregate, could reasonably be expected to have

a Material Adverse Effect; and (B) the entry of any judgment or decree

or the institution of any litigation, arbitration proceeding or

governmental proceeding against Seller.

(iii) Material Adverse Effect. The occurrence of any event or

condition that has had, or could reasonably be expected to have, a

Material Adverse Effect.

(iv) Termination Date. The occurrence of the "Termination Date"

under and as defined in the Receivables Sale Agreement.

(v) Defaults Under Other Agreements. The occurrence of a default

or an event of default under any other financing arrangement pursuant

to which Seller is a debtor or an obligor, or the occurrence of a

default or an event of default under any financing arrangement

pursuant to which Servicer is a debtor or an obligor if such financing

arrangement involves a monetary obligation or line of credit of at

least $5,000,000 in aggregate amount.

(vi) Downgrade of Invacare. At any time while Invacare has rated

debt securities outstanding, any downgrade in the rating of any

Indebtedness of Invacare by Standard & Poor's Ratings Group or by

Moody's Investors Service, Inc., setting forth the Indebtedness

affected and the nature of such change.

Seller Party will comply with all applicable laws, rules, regulations, orders,

writs, judgments, injunctions, decrees or awards to which it may be subject,

except where the failure to so comply could not reasonably be expected to have a

Material Adverse Effect. Such Seller Party will preserve and maintain its

corporate existence, rights, franchises and privileges in the jurisdiction of

its incorporation, and qualify and remain qualified in good standing as a

foreign corporation in each jurisdiction where its business is conducted, except

where the failure to so preserve and maintain or qualify could not reasonably be

expected to have a Material Adverse Effect.

(d) Audits. Such Seller Party will furnish to the Agent from time to time

such information with respect to it and the Receivables as the Agent may

reasonably request. Such Seller Party will, from time to time during regular

business hours as requested by the Agent upon reasonable notice and at the sole

cost of such Seller Party, permit the Agent, or its agents or representatives

(and shall cause each Originator to permit the Agent or its agents or

representatives), (i) to examine and make copies of and abstracts from all

Records in the possession or under the control of such Person relating to the

Receivables and the Related Security, including, without limitation, the related

Contracts, and (ii) to visit the offices and properties of such Person for the

purpose of examining such materials described in clause (i) above, and to

discuss matters relating to such

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Person's financial condition or the Receivables and the Related Security or

any Person's performance under any of the Transaction Documents or any

Person's performance under the Contracts and, in each case, with any of the

officers or employees of Seller or the Servicer having knowledge of such

matters (each of the forgoing examinations and visits constituting a

"Review"); provided, however, that unless an Amortization Event occurs and

is continuing, the Seller Parties shall only be responsible for the costs

and expenses of one Review in any one calendar year.

(e) Keeping and Marking of Records and Books.

(i) The Servicer will (and will cause each Originator to)

maintain and implement administrative and operating procedures

(including, without limitation, an ability to recreate records

evidencing Receivables in the event of the destruction of the

originals thereof), and keep and maintain all documents, books,

records and other information reasonably necessary or advisable for

the collection of all Receivables (including, without limitation,

records adequate to permit the immediate identification of each new

Receivable and all Collections of and adjustments to each existing

Receivable). The Servicer will (and will cause each Originator to)

give the Agent notice of any material change in the administrative and

operating procedures referred to in the previous sentence.

(ii) The Servicer will (and will cause each Originator to) (A) on

or prior to the date hereof, mark its master data processing records

and other books and records relating to the Purchaser Interests with a

legend, acceptable to the Agent, describing the Purchaser Interests

and (B) upon the request of the Agent following the occurrence and

continuance of an Amortization Event, deliver to the Agent all

invoices included in the Contracts (including, without limitation, all

multiple originals of any such invoice) relating to the Receivables.

(f) Compliance with Contracts and Credit and Collection Policy. Servicer

will (and will cause each Originator to) timely and fully (i) perform and comply

in all material respects with all provisions, covenants and other promises

required to be observed by it under the Contracts related to the Receivables,

and (ii) comply in all material respects with the Credit and Collection Policy

in regard to each Receivable and the related Contract.

(g) Performance and Enforcement of Receivables Sale Agreement. Seller will,

and will require each Originator to, perform each of their respective

obligations and undertakings under and pursuant to the Receivables Sale

Agreement, will purchase Receivables thereunder in strict compliance with the

terms thereof and will diligently enforce the rights and remedies accorded to

Seller under the Receivables Sale Agreement. Seller will take all actions to

perfect and enforce its rights and interests (and the rights and interests of

the Agent and the Purchasers as assignees of Seller) under the Receivables Sale

Agreement as the Agent may from time to time reasonably request, including,

without limitation, making claims to which it may be entitled under any

indemnity, reimbursement or similar provision contained in the Receivables Sale

Agreement.

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(h) Ownership. Seller will (or will cause each Originator to) take all

necessary action to (i) vest legal and equitable title to the Receivables (other

than Foreign Receivables), the Related Security (to the extent covered by

Article 9 of the UCC) and the Collections purchased under the Receivables Sale

Agreement irrevocably in Seller, free and clear of any Adverse Claims other than

Adverse Claims in favor of the Agent and the Purchasers, including, without

limitation, the filing of all financing statements or other similar instruments

or documents necessary under the UCC (or any comparable law) of all appropriate

jurisdictions to perfect Seller's interest in such Receivables (other than

Foreign Receivables), Related Security (to the extent covered by Article 9 of

the UCC) and Collections and such other action to perfect, protect or more fully

evidence the interest of Seller therein as the Agent may reasonably request);

provided that Seller shall not be required to comply with any Assignment of

Claims Acts, and (ii) establish and maintain, in favor of the Agent, for the

benefit of the Purchasers, a valid and perfected first priority undivided

percentage ownership interest (and/or a valid and perfected first priority

security interest) in all Receivables (other than Foreign Receivables), Related

Security (to the extent covered by Article 9 of the UCC) and Collections to the

full extent contemplated herein, free and clear of any Adverse Claims other than

Adverse Claims in favor of the Agent for the benefit of the Purchasers

(including, without limitation, the filing of all financing statements or other

similar instruments or documents necessary under the UCC (or any comparable law)

of all appropriate jurisdictions to perfect the Agent's (for the benefit of the

Purchasers) interest in such Receivables (other than Foreign Receivables),

Related Security (to the extent covered by Article 9 of the UCC) and Collections

and such other action to perfect, protect or more fully evidence the interest of

the Agent for the benefit of the Purchasers as the Agent may reasonably

request); provided that Seller shall not be required to comply with any

Assignment of Claims Acts.

(i) Purchasers' Reliance. Seller acknowledges that the Purchasers are

entering into the transactions contemplated by this Agreement in reliance upon

Seller's identity as a legal entity that is separate from each Originator, the

Provider and their respective Affiliates (collectively, the "Invacare Group").

Therefore, from and after the date of execution and delivery of this Agreement,

Seller shall take all reasonable steps, including, without limitation, all steps

that the Agent or any Purchaser may from time to time reasonably request, to

maintain Seller's identity as a separate legal entity and to make it manifest to

third parties that Seller is an entity with assets and liabilities distinct from

those of the members of the Invacare Group and not just a division of any member

thereof. Without limiting the generality of the foregoing and in addition to the

other covenants set forth herein, Seller will:

(A) conduct its own business in its own name and not have

any employees;

(B) compensate all employees, consultants and agents

directly, from Seller's own funds, for services provided to

Seller by such employees, consultants and agents and, to the

extent any employee, consultant or agent of Seller is also an

employee, consultant or agent of any member of the Invacare

Group, allocate the compensation of such employee, consultant or

agent between Seller and such member of the Invacare Group, as

applicable, on a basis that reflects the services rendered to

Seller and member of the Invacare Group, as applicable;

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as its offices and, if such office is located in the offices of a

member of the Invacare Group, Seller shall lease such office at a

fair market rent;

(D) have a separate telephone number, which will be answered

only in its name and separate stationery, invoices and checks in

its own name;

(E) conduct all transactions with each member of the

Invacare Group strictly on an arm's-length basis, allocate all

overhead expenses (including, without limitation, telephone and

other utility charges) for items shared between Seller and such

member of the Invacare Group on the basis of actual use to the

extent practicable and, to the extent such allocation is not

practicable, on a basis reasonably related to actual use;

(F) at all times have a Board of Directors consisting of not

less than three members, at least one member of which is an

Independent Director;

(G) observe all corporate formalities as a distinct entity,

and ensure that all corporate actions relating to (A) the

selection, maintenance or replacement of the Independent

Director, (B) the dissolution or liquidation of Seller or (C) the

initiation of, participation in, acquiescence in or consent to

any bankruptcy, insolvency, reorganization or similar proceeding

involving Seller, are duly authorized by unanimous vote of its

Board of Directors (including the Independent Director);

(H) maintain Seller's books and records separate from those

of any member of the Invacare Group and otherwise readily

identifiable as its own assets rather than assets of any member

of the Invacare Group;

(I) prepare its financial statements separately from those

of any member of the Invacare Group and insure that any

consolidated financial statements of any member of the Invacare

Group that include Seller and that are filed with the Securities

and Exchange Commission or any other governmental agency have

notes clearly stating that Seller is a separate corporate entity

and that its assets will be available first and foremost to

satisfy the claims of the creditors of Seller;

(J) except as herein specifically otherwise provided,

maintain the funds or other assets of Seller separate from, and

not commingled with, those of any other member of the Invacare

Group and only maintain bank accounts or other depository

accounts to which Seller alone (or Servicer on Seller's behalf)

is the account party, into which Seller alone (or Servicer on

Seller's behalf) makes deposits and from which Seller alone (or

Servicer on Seller's behalf, or the Agent hereunder) has the

power to make withdrawals;

(K) pay all of Seller's on-going operating expenses from

Seller's own assets (except for certain payments by a member of

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the Invacare Group pursuant to allocation arrangements that

comply with the requirements of this Section 7.1(i));

(L) operate its business and activities such that: it does

not engage in any business or activity of any kind, or enter into

any transaction or indenture, mortgage, instrument, agreement,

contract, lease or other undertaking, other than the transactions

contemplated and authorized by this Agreement, the Receivables

Sale Agreement and the other Transaction Documents; and does not

create, incur, guarantee, assume or suffer to exist any

indebtedness or other liabilities, whether direct or contingent,

other than (1) as a result of the endorsement of negotiable

instruments for deposit or collection or similar transactions in

the ordinary course of business, (2) the incurrence of

obligations under this Agreement, (3) the incurrence of

obligations, as expressly contemplated in the Receivables Sale

Agreement, to make payment to each Originator thereunder for the

purchase of Receivables from such Originator under the

Receivables Sale Agreement, and (4) the incurrence of operating

costs and expenses in the ordinary course of business of the type

otherwise contemplated by this Agreement (including, without

limitation, any necessary insurance, third-party service

provider, Independent Director, Lock-Box and legal costs and

expenses);

(M) maintain its corporate charter in conformity with this

Agreement, such that it does not amend, restate, supplement or

otherwise modify its Certificate of Incorporation or By-Laws in

any respect that would impair its ability to comply with the

terms or provisions of any of the Transaction Documents,

including, without limitation, this Section 7.1(i);

(N) maintain its legal separateness such that it does not

merge or consolidate with or into, or convey, transfer, lease or

otherwise dispose of (whether in one transaction or in a series

of transactions, and except as otherwise contemplated herein) all

or substantially all of its assets (whether now owned or

hereafter acquired) to, or acquire all or substantially all of

the assets of, any Person, nor at any time create, have, acquire,

maintain or hold any interest in any Subsidiary.

(O) maintain at all times the Required Capital Amount (as

defined in the Receivables Sale Agreement) and refrain from

making any dividend, distribution, redemption of capital stock or

payment of any subordinated indebtedness which would cause the

Required Capital Amount to cease to be so maintained; and

(P) take such other actions as are necessary on its part to

ensure that the facts and assumptions set forth in the

non-consolidation opinion issued by Calfee, Halter & Griswold

LLP, as counsel for Seller, in connection with the closing or

initial Incremental Purchase under this Agreement and relating to

substantive consolidation issues, and in the certificates

accompanying such opinion, remain true and correct in all

material respects at all times.

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(j) Collections. Such Seller Party will cause (1) all proceeds from all

Lock-Boxes to be directly deposited by a Collection Bank into a Collection

Account and (2) each Lock-Box and Collection Account to be subject at all times

to a Collection Account Agreement that is in full force and effect. In the event

any payments relating to Receivables are remitted directly to Seller or any

Affiliate of Seller, Seller will remit (or will cause all such payments to be

remitted) directly to a Collection Bank and deposited into a Collection Account

within two (2) Business Days following receipt thereof, and, at all times prior

to such remittance, Seller will itself hold or, if applicable, will cause such

payments to be held in trust for the exclusive benefit of the Agent and the

Purchasers. Seller will maintain exclusive ownership of, and (together with the

Agent) dominion and control (subject to the terms of this Agreement and the

applicable Collection Account Agreement) over, each Lock-Box and Collection

Account and shall not grant the right to take dominion and control of any

Lock-Box or Collection Account at any time or upon the occurrence of a future

event to any Person, except to the Agent as contemplated by this Agreement and,

except that prior to the delivery of a Collection Notice with respect to a

Collection Account by the Agent in accordance with the terms hereof, Seller may

authorize the Servicer to make deposits to and withdrawals from such Collection

Account.

(k) Taxes. Such Seller Party will file all tax returns and reports required

by law to be filed by it and will promptly pay all taxes and governmental

charges at any time owing, except any such taxes which are not yet delinquent or

are being diligently contested in good faith by appropriate proceedings and for

which adequate reserves in accordance with GAAP shall have been set aside on its

books. Seller will pay when due any taxes payable in connection with the

Receivables, exclusive of franchise taxes and taxes on or measured by income or

gross receipts of Conduit, the Agent or any Financial Institution.

(l) Insurance. Seller will maintain in effect, or cause to be maintained in

effect, at Seller's own expense, such casualty and liability insurance as Seller

shall deem appropriate in its good faith business judgment.

(m) Payment to Originators. With respect to any Receivable purchased by

Seller from an Originator, such sale shall be effected under, and in strict

compliance with the terms of, the Receivables Sale Agreement, including, without

limitation, the terms relating to the amount and timing of payments to be made

to such Originator in respect of the purchase price for such Receivable.

(n) Receivables Sale Agreement and Performance Undertaking Seller will

maintain the effectiveness of, and diligently enforce the provisions of, the

Receivables Sale Agreement and the Performance Undertaking. Seller will perform

its obligations as "Buyer" under the Receivables Sale Agreement. Seller will not

amend, restate, supplement, cancel, terminate or otherwise modify the

Receivables Sale Agreement or the Performance Undertaking, or give any consent,

waiver, directive or approval thereunder or waive any default, action, omission

or breach under the Receivables Sale Agreement or Performance Undertaking or

otherwise grant any indulgence thereunder, without (in each case) the prior

written consent of the Agent.

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Section 7.2 Negative Covenants of the Seller Parties. Until the date on

which the Aggregate Unpaids have been paid in full and this Agreement terminates

in accordance with its terms:

(a) Name Change, Offices and Records. Seller will not change its name,

identity or corporate structure (within the meaning of Section 9-507(c) of any

applicable enactment of the UCC), change its state of organization or relocate

any office where Records are kept unless it shall have: (i) given the Agent at

least forty-five (45) days' prior written notice thereof and (ii) delivered to

the Agent all financing statements, instruments and other documents reasonably

requested by the Agent in connection with such change or relocation.

(b) Change in Payment Instructions to Obligors. Except as may be required

by the Agent pursuant to Section 8.2(b), such Seller Party will not add or

terminate any bank as a Collection Bank, or make any change in the instructions

to Obligors regarding payments to be made to any Lock-Box or Collection Account,

unless the Agent shall have received, at least ten (10) days before the proposed

effective date therefor, (i) written notice of such addition, termination or

change and (ii) with respect to the addition of a Collection Bank or a

Collection Account or Lock-Box, an executed Collection Account Agreement with

respect to the new Collection Account or Lock-Box; provided, however, that the

Servicer may make changes in instructions to Obligors regarding payments if such

new instructions require such Obligor to make payments to another existing

Collection Account or Lock-Box, as applicable.

Party will, and no Seller Party will permit any Originator to, make any change

to the Credit and Collection Policy that could reasonably be expected to

materially and adversely affect the collectibility of the Receivables or

decrease the credit quality of any newly created Receivables. Except as provided

in Section 8.2(d), the Servicer will not, and will not permit any Originator to,

extend, amend or otherwise modify the terms of any Receivable or any Contract

related thereto in any material respect other than in accordance with the Credit

and Collection Policy.

(d) Sales, Liens. Seller will not sell, assign (by operation of law or

otherwise) or otherwise dispose of, or grant any option with respect to, or

create or suffer to exist any Adverse Claim upon (including, without limitation,

the filing of any financing statement) or with respect to, any Receivable (other

than Foreign Receivables), Related Security or Collections, or upon or with

respect to any Contract under which any such Receivable arises, or any Lock-Box

or Collection Account, or assign any right to receive income with respect

thereto (other than, in each case, the creation of the interests therein in

favor of the Agent and the Purchasers provided for herein), and Seller will

defend the right, title and interest of the Agent and the Purchasers in, to and

under any of the foregoing property, against all claims of third parties

claiming through or under Seller or any Originator.

(e) Net Receivables Balance. At no time prior to the Amortization Date

shall Seller permit the Net Receivables Balance to be less than an amount equal

to the sum of (i) the Aggregate Capital plus (ii) the Aggregate Reserves.

(f) Termination Date Determination. Seller will not designate the

Termination Date (as defined in the Receivables Sale Agreement), or send any

written notice to any Originator in respect thereof, without the prior written

consent of the Agent (not to be unreasonably withheld or delayed), except with

respect to the occurrence of such Termination Date arising pursuant to Section

5.1(d) of the Receivables Sale Agreement.

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(g) Restricted Junior Payments. From and after the occurrence and

continuance of any Amortization Event, Seller will not make any Restricted

Junior Payment if, after giving effect thereto, Seller would fail to meet its

obligations set forth in Section 7.2(e).

ARTICLE VIII.

ADMINISTRATION AND COLLECTION

Section 8.1 Designation of Servicer.

(a) The servicing, administration and collection of the Receivables shall

be conducted by such Person (the "Servicer") so designated from time to time in

accordance with this Section 8.1. Invacare is hereby designated as, and hereby

agrees to perform the duties and obligations of, the Servicer pursuant to the

terms of this Agreement. The Agent may at any time during the continuance an

Amortization Event, designate as Servicer any Person to succeed Invacare or any

successor Servicer.

(b) Invacare may delegate, and Invacare hereby advises the Purchasers and

the Agent that it has delegated, to each of the other Originators, as a

sub-servicer of the Servicer, certain of its duties and responsibilities as

Servicer hereunder in respect of the Receivables originated by such Originator.

Without the prior written consent of the Agent and the Required Financial

Institutions (such consent not to be unreasonably withheld or delayed), Invacare

shall not be permitted to delegate any of its duties or responsibilities as

Servicer to any Person other than (i) the other Originators and (ii) with

respect to Charged-Off Receivables, outside collection agencies in accordance

with its customary practices. The Originators, as sub-servicers, shall not be

permitted to further delegate to any other Person any of the duties or

responsibilities of the Servicer delegated to it by Invacare. If at any time

during the continuance of an Amortization Event, the Agent shall designate as

Servicer any Person other than Invacare, all duties and responsibilities

theretofore delegated by Invacare to any Originator may, at the discretion of

the Agent, be terminated forthwith on notice given by the Agent to Invacare and

to Seller.

of its Affiliates is Servicer, Invacare shall be and remain primarily liable to

the Agent and the Purchasers for the full and prompt performance of all duties

and responsibilities of the Servicer hereunder regardless of the appointment of

any sub-servicer, and (ii) while Invacare or any of its Affiliates is Servicer,

the Agent and the Purchasers shall be entitled to deal exclusively with Invacare

in matters relating to the discharge by the Servicer of its duties and

responsibilities hereunder. The Agent and the Purchasers shall not be required

to give notice, demand or other communication to any Person other than Invacare

in order for communication to the Servicer and its sub-servicer or other

delegate with respect thereto to be accomplished. Invacare, at all times that it

is the Servicer, shall be responsible for providing any sub-servicer or other

delegate of the Servicer with any notice given to the Servicer under this

Agreement.

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Section 8.2 Duties of Servicer.

(a) The Servicer shall take or cause to be taken all such actions as may be

necessary or advisable to collect each Receivable from time to time, all in

accordance with applicable laws, rules and regulations, with reasonable care and

diligence, and in accordance with the Credit and Collection Policy.

(b) The Servicer will instruct all Obligors to pay all Collections directly

to a Lock-Box or Collection Account. The Servicer shall effect a Collection

Account Agreement substantially in the form of one of the agreements included in

Exhibit VI hereto with each bank maintaining a Collection Account at any time.

In the case of any remittances received in any Lock-Box or Collection Account

that shall have been identified, to the satisfaction of the Servicer, to not

constitute Collections or other proceeds of the Receivables or the Related

Security, the Servicer shall promptly remit such items to the Person identified

to it as being the owner of such remittances. From and after the date the Agent

delivers to any Collection Bank a Collection Notice pursuant to Section 8.3, the

Agent may request that the Servicer, and the Servicer thereupon promptly shall

instruct all Obligors with respect to the Receivables, to remit all payments

thereon to a new depositary account specified by the Agent and, at all times

thereafter, Seller and the Servicer shall not authorize any Person to deposit or

otherwise credit to such new depositary account any cash or payment item other

than Collections.

procedures described herein and in Article II. The Servicer shall set aside and

hold in trust (but, prior to the occurrence of an Amortization Event, shall not

be required to segregate) for the account of Seller and the Purchasers their

respective shares of the Collections in accordance with Article II. The Servicer

shall, upon the request of the Agent during the continuance of an Amortization

Event, segregate, in a manner acceptable to the Agent, all cash, checks and

other instruments received by it from time to time constituting Collections from

the general funds of the Servicer or Seller prior to the remittance thereof in

accordance with Article II. If the Servicer shall be required to segregate

Collections pursuant to the preceding sentence, the Servicer shall segregate and

deposit with a bank designated by the Agent such allocable share of Collections

of Receivables set aside for the Purchasers on the first Business Day following

receipt by the Servicer of such Collections, duly endorsed or with duly executed

instruments of transfer.

(d) Prior to the occurrence and continuance of an Amortization Event, the

Servicer may, in accordance with the Credit and Collection Policy, extend the

maturity of any Receivable or adjust the Outstanding Balance of any Receivable

as the Servicer determines to be appropriate to maximize Collections thereof;

provided, however, that such extension or adjustment shall not alter the status

of such Receivable as a Delinquent Receivable, Defaulted Receivable or

Charged-Off Receivable or limit the rights of the Agent or the Purchasers under

this Agreement. Notwithstanding anything to the contrary contained herein, from

and after the occurrence of an Amortization Event and during the continuance

thereof, the Agent shall have the absolute and unlimited right to direct the

Servicer to commence or settle any legal action with respect to any Receivable

or to foreclose upon or repossess any Related Security.

(e) The Servicer shall hold in trust for Seller and the Purchasers all

Records that (i) evidence or relate to the Receivables, the related Contracts

and Related Security or (ii) are otherwise necessary or desirable

<page>

to collect the Receivables and shall, as soon as practicable upon demand of the

Agent during the continuance of an Amortization Event, deliver or make available

to the Agent all such Records, at a place reasonably selected by the Agent. The

Servicer shall, as soon as practicable following receipt thereof turn over to

Seller any cash collections or other cash proceeds received with respect to

Indebtedness not constituting Receivables. The Servicer shall, from time to time

at the request of any Purchaser, furnish to the Purchasers (promptly after any

such request) a calculation of the amounts set aside for the Purchasers pursuant

to Article II; provided, however, that at such times that an Amortization Event

shall not be in existence, the Purchasers shall not request such computation

more frequently than once per month.

(f) Any payment by an Obligor in respect of any indebtedness owed by it to

any Originator or Seller shall, except as otherwise specified by such Obligor or

otherwise required by contract or law and unless otherwise instructed by the

Agent, be applied as a Collection of any Receivable of such Obligor (starting

with the oldest such Receivable) to the extent of any amounts then due and

payable thereunder before being applied to any other receivable or other

obligation of such Obligor.

Section 8.3 Collection Notices. At any time during the continuance of an

Amortization Event or a Potential Amortization Event, the Agent is authorized to

date and to deliver to the Collection Banks the Collection Notices. Seller

hereby transfers to the Agent for the benefit of the Purchasers, effective when

the Agent delivers such notice, the exclusive ownership and control of each

Lock-Box and the Collection Accounts. In case any authorized signatory of Seller

whose signature appears on a Collection Account Agreement shall cease to have

such authority before the delivery of such notice, such Collection Notice shall

nevertheless be valid as if such authority had remained in force. Seller hereby

authorizes the Agent, and agrees that the Agent shall be entitled during the

continuance of an Amortization Event to (i) endorse Seller's name on checks and

other instruments representing Collections, (ii) enforce the Receivables, the

related Contracts and the Related Security and (iii) take such action as shall

be necessary or desirable to cause all cash, checks and other instruments

constituting Collections of Receivables to come into the possession of the Agent

rather than Seller.

Section 8.4 Responsibilities of Seller. Anything herein to the contrary

notwithstanding, the exercise by the Agent and the Purchasers of their rights

hereunder shall not release the Servicer, any Originator or Seller from any of

their duties or obligations with respect to any Receivables or under the related

Contracts. The Purchasers shall have no obligation or liability with respect to

any Receivables or related Contracts, nor shall any of them be obligated to

perform the obligations of Seller.

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Section 8.5 Reports. The Servicer shall prepare and forward to the Agent

(i) on the 12th Business Day of each month, a Monthly Report, (ii) from and

after the occurrence of an Amortization Event, at such times as Agent shall

request, an interim report in form reasonably acceptable to the Agent showing

the amount of Eligible Receivables, and (iii) at such times as the Agent shall

reasonably request, a listing by Obligor of all Receivables together with an

aging of such Receivables.

Section 8.6 Servicing Fees. The Purchasers hereby agree that Seller shall

pay over to Servicer a fee (the "Servicing Fee") on the first calendar day of

each month, in arrears for the immediately preceding month, equal to 1.00% per

annum of the average aggregate Outstanding Balance of all Receivables during

such period, as compensation for its servicing activities.

ARTICLE IX.

AMORTIZATION EVENTS

Section 9.1 Amortization Events. The occurrence of any one or more of the

following events shall constitute an Amortization Event:

(a) Any Seller Party shall fail (i) to make any payment or deposit required

hereunder when due and, solely in the case of any Aggregate Unpaids that do not

constitute Capital, such failure shall continue for one (1) Business Day, or

(ii) to perform or observe any term, covenant or agreement hereunder (other than

as referred to in clause (i) of this paragraph (a) and paragraph 9.1(e)) and

such failure shall continue for three (3) consecutive Business Days following

the earlier of (A) notice from any Agent of such non-performance or

non-observance, or (B) the date on which an Authorized Officer of such Seller

Party otherwise becomes aware of such non-performance or non-observance.

(b) Any representation, warranty, certification or statement made by any

Seller Party in this Agreement, any other Transaction Document or in any other

document delivered pursuant hereto or thereto shall prove to have been incorrect

in any material respect (unless already qualified as to materiality) when made

or deemed made.

other Seller Party to pay any part of the principal of, the premium, if any, or

the interest on, or any other payment of money due under any of its Indebtedness

(other than Indebtedness hereunder), beyond any period of grace provided with

respect thereto, which individually or together with other such Indebtedness as

to which any such failure exists has an aggregate outstanding principal amount

in excess of $10,000,000; or any Seller Party or any of their respective

Subsidiaries shall fail to perform or observe any other term, covenant or

agreement contained in any agreement, document or instrument evidencing or

securing any such Indebtedness having such aggregate outstanding principal

amount, or under which any such Indebtedness was issued or created, beyond any

period of grace, if any, provided with respect thereto and such Seller Party has

been notified by such creditor of such default, the effect of any such failure

is either (i) to cause, or permit the holders of such Indebtedness (or a trustee

on behalf of such holders) to cause, any payment of such Indebtedness to become

due prior to its due date or (ii) to permit the holders of such Indebtedness (or

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a trustee on behalf of such holders) to elect a majority of the board of

directors of such Seller Party.

(d) (i) Any Seller Party or any "Borrower" under the Five-Year Credit

Agreement (each, a "Material Party") shall be dissolved or liquidated (or any

judgment, order or decree therefor shall be entered) or shall generally not pay

its debts as they become due, or shall admit in writing its inability to pay its

debts generally, or shall make a general assignment for the benefit of

creditors, or shall institute, or (ii) there shall be instituted against such

Material Party, any proceeding or case seeking to adjudicate it bankrupt or

insolvent or seeking liquidation, winding up, reorganization, arrangement,

adjustment, protection, relief or composition of it or its debts under any law

relating to bankruptcy, insolvency or reorganization or relief or protection of

debtors or seeking the entry of an order for relief, or the appointment of a

receiver, trustee, custodian or other similar official for it or for any

substantial part of its assets, rights, revenues or property, and, with respect

to any Material Party other than Seller, if such proceeding is instituted

against such Material Party and is being contested by such Material Party in

good faith by appropriate proceedings, such proceeding shall remain undismissed

or unstayed for a period of 60 days or any writ or warrant of attachment or

execution or similar process is issued or levied against all or any material

part of the property of any Material Party and, with respect to any Material

Party other than Seller, is not released, vacated or fully bonded within 60 days

after its issue or levy; or (iii) any Material Party shall take any action

(corporate or other) to authorize or further any of the actions described above

in this subsection (d).

(e) Seller shall fail to comply with the terms of Section 2.6 hereof.

(f) As at the end of any calendar month:

(i) the average of the Delinquency Ratios for the three months then

most recently ended shall exceed 18%;

(ii) the average of the Default Ratios for the three months then most

recently ended shall exceed 8%; or

(iii) the average of the Dilution Ratios for the three months then

most recently ended shall exceed 9%

(g) A Change of Control shall occur.

(h) The Interest Coverage Ratio shall be less than 3.0 to 1.0; calculated

as of the end of each fiscal quarter for the four most recently ended fiscal

quarters.

(i) The Consolidated Net Worth of Invacare and its Subsidiaries (as defined

in the Five-Year Credit Agreement) at any time shall be less than the sum of (i)

$525,000,000, plus (ii) 50% of cumulative Consolidated Net Income of Invacare

and its Subsidiaries (as defined in the Five-Year Credit Agreement), if any, for

the three-month periods ending September 30, 2004 and December 31, 2004, and for

each fiscal year of Invacare ending December 31, 2005 and thereafter.

<page>

(j) The ratio, determined as of the end of each of Invacare's fiscal

quarters for the four most recently ended fiscal quarters, of Consolidated Total

Debt of Invacare and its Subsidiaries (as defined in the Five-Year Credit

Agreement) to Consolidated Adjusted EBITDA of Invacare and its Subsidiaries (as

defined in the Five-Year Credit Agreement) for the four most recently ended

fiscal quarters shall exceed (i) during the period from and including the

Effective Date (as defined in the Five-Year Credit Agreement) through December

30, 2006, 3.50 to 1.0, and (ii) commencing December 31, 2006 and thereafter,

3.25 to 1.0.

(k) (i) One or more final judgments for the payment of money shall be

entered against Seller or (ii) one or more judgments or orders shall be rendered

against or shall affect Servicer or any of its Subsidiaries which does or could

have a Material Adverse Effect, and either, as relates to clause (ii), (a) such

judgment or order shall have remained unsatisfied or uninsured for a period of

21 days and Servicer or Subsidiary, as applicable, shall not have taken action

necessary to stay enforcement thereof by reason of pending appeal or otherwise,

prior to the expiration of the applicable period of limitations for taking such

action or, if such action shall have been taken, a final order denying such stay

shall have been rendered or (ii) enforcement proceedings shall have been

commenced by any creditor upon any such judgment or order.

(l) The "Termination Date" under and as defined in the Receivables Sale

Agreement shall occur under the Receivables Sale Agreement or any Originator

shall for any reason cease to transfer, or cease to have the legal capacity to

transfer, or otherwise be incapable of transferring Receivables to Seller under

the Receivables Sale Agreement; provided that upon 30 days' prior written notice

to the Agent, an Originator may cease to sell or contribute Receivables (as

defined in the Receivables Sale Agreement) to the Seller under the Receivables

Sale Agreement without causing an Amortization Event under this Agreement if

such Originator has consolidated or merged with or into another Originator, and

provided further, upon 30 days' prior written notice to the Agent, Healthtech

Products, Inc. may cease to sell or contribute Receivables (as defined in the

Receivables Sale Agreement) to the Seller under the Receivables Sale Agreement

without causing an Amortization Event under this Agreement if the average

Outstanding Balance of Healthtech Products, Inc.'s Receivables in each of the

preceding 4 months represent less than 5% of the average total Outstanding

Balance of all Receivables in such months.

(m) This Agreement shall terminate in whole or in part (except in

accordance with its terms), or shall cease to be effective or to be the legally

valid, binding and enforceable obligation of Seller, or any Obligor shall

directly or indirectly contest in any manner such effectiveness, validity,

binding nature or enforceability, or the Agent for the benefit of the Purchasers

shall cease to have a valid and perfected first priority security interest in

the Receivables (other than Foreign Receivables), the Related Security and the

Collections with respect thereto and the Collection Accounts.

(n) Provider shall fail to perform or observe any term, covenant or

agreement required to be performed by it under the Performance Undertaking, or

the Performance Undertaking shall cease to be effective or to be the legally

valid, binding and enforceable obligation of Provider, or Provider shall

directly or indirectly contest in any manner such effectiveness, validity,

binding nature or enforceability.

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Section 9.2 Remedies. Upon the occurrence and during the continuation of an

Amortization Event, the Agent may, or upon the direction of the Required

Financial Institutions shall, take any of the following actions: (i) replace the

Person then acting as Servicer, (ii) declare the Amortization Date to have

occurred, whereupon the Amortization Date shall forthwith occur, without demand,

protest or further notice of any kind, all of which are hereby expressly waived

by each Seller Party; provided, however, that upon the occurrence of an

Amortization Event described in Section 9.1(d)(ii), or of an actual or deemed

entry of an order for relief with respect to any Seller Party under the Federal

Bankruptcy Code, the Amortization Date shall automatically occur, without

demand, protest or any notice of any kind, all of which are hereby expressly

waived by each Seller Party, (iii) to the fullest extent permitted by applicable

law, declare that the Default Fee shall accrue with respect to any of the

Aggregate Unpaids outstanding at such time, (iv) deliver the Collection Notices

to the Collection Banks, and (v) notify Obligors of the Purchasers' interest in

the Receivables. The aforementioned rights and remedies shall be without

limitation, and shall be in addition to all other rights and remedies of the

Agent and the Purchasers otherwise available under any other provision of this

Agreement, by operation of law, at equity or otherwise, all of which are hereby

expressly preserved, including, without limitation, all rights and remedies

provided under the UCC, all of which rights shall be cumulative.

ARTICLE X.

INDEMNIFICATION

Section 10.1 Indemnities.

10.1.1 Indemnity by Seller. Without limiting any other rights that the

Agent or any Purchaser may have hereunder or under applicable law, Seller hereby

agrees to indemnify (and pay upon demand to) the Agent and each Purchaser and

their respective assigns, officers, directors, agents and employees (each, an

"Indemnified Party") from and against any and all damages, losses, claims,

taxes, liabilities, costs, expenses and for all other amounts payable, including

reasonable attorneys' fees (which attorneys may be employees of the Agent or

such Purchaser) and disbursements (all of the foregoing being collectively

referred to as "Indemnified Amounts") awarded against or incurred by any of them

arising out of or as a result of this Agreem

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