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Exhibit 10(O)
STOCK PLEDGE AGREEMENT
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THIS PLEDGE AGREEMENT made and entered into as of this 2nd day of
April, 2001, at Glenwillow, Ohio, by and between ROYAL APPLIANCE MFG. CO., an
Ohio corporation ("Pledgee"), and MICHAEL J. MERRIMAN ("Pledgor") is to evidence
the following agreements and understandings:
WITNESSETH:
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WHEREAS, Pledgee has loaned ("Loan") to Pledgor the sum of Five Hundred
Forty-Two Thousand Seven Hundred Fifty Dollars ($542,750) to fund the exercise
by Pledgor of options to purchase 167,000 Common Shares;
WHEREAS, Pledgor has executed a Promissory Note dated of even date
herewith (the "Note") which evidences Pledgor's obligation to repay the Loan;
WHEREAS, Pledgor's obligations under the Note are to be secured by a
pledge of the Pledged Stock.
NOW THEREFORE, in consideration of the mutual promises contained
herein, and other good and valuable consideration, the receipt, adequacy and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. DEPOSIT OF COLLATERAL. Pledgor hereby deposits with Kahn, Kleinman,
Yanowitz & Arnson Co., L.P.A. as Agent (the "Agent"), a stock certificate
representing the Pledged Shares, and an Irrevocable Stock Power duly endorsed by
Pledgor to transfer the Pledged Shares. Such stock certificate and stock power
shall be held by the Agent, on behalf of Pledgee, subject to the terms and
conditions of this Agreement in order to secure the payment obligations of
Pledgor to Pledgee pursuant to the Note. Upon the payment in full of the Note,
such certificate of stock and stock power shall be returned by the Agent to the
Pledgor.
2. DEFAULT.
(a) In the event that Pledgor fails to make any payment of principal
and, if applicable, interest due under the terms of the Note (a "default"), and
such default continues without cure for a period of fifteen (15) days, Pledgee
shall be entitled to exercise concurrently or successively any one or more of
the following rights and remedies as well as any other right or remedy which
Pledgee may possess hereunder, at law or in equity:
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(i) Agent may exercise, on behalf of the Pledgee, all rights
of a shareholder of record of Royal Appliance Mfg. Co. (the "Company"),
including, without limitation, the right, with or without effecting a
transfer of the shares on the books of the Company, to receive and
collect for Pledgee's account any and all amounts which are payable to
or on account of the Pledged Shares (including, without limitation,
dividends and distributions), or may otherwise be considered proceeds
of the Pledged Shares to the extent of the amount then owning on the
Note; and
(ii) Agent, on behalf of the Pledgee, may sell, assign,
transfer or otherwise dispose of the Pledged Shares or any portion
thereof, for cash, upon credit or upon such other commercially
reasonable terms and conditions as Pledgee shall deem appropriate,
PROVIDED, HOWEVER, that if the proceeds from such sale, transfer or
disposition exceed the amount then due and owning from Pledgor to
Pledgee under the Note, then such excess shall be promptly paid over to
Pledgor; and PROVIDED FURTHER, that if such proceeds are not sufficient
to pay the amounts due and owing from Pledgor to Pledgee, then Pledgor
shall remain obligated for any amounts still owing under the Note.
Nothing contained in this Section 2(a) shall prevent Pledgee from seeking a
judgment against Pledgor pursuant to the Note or otherwise pursuing its other
rights available at law or in equity.
(b) Anything contained herein to the contrary notwithstanding, any
funds, monies, proceeds or other property received by Agent, on behalf of
Pledgee upon exercise of any right or remedy hereunder, may be retained by
Pledgee only to the extent of actual damages suffered by Pledgee on account of a
default by Pledgor hereunder, and the balance of such funds, monies, proceeds or
other property shall be delivered promptly to Pledgor.
(c) So long as there exists no default under the Note, (i) Pledgor
shall be entitled to receive, retain and use any and all dividends or
distributions made on account of the Pledged Shares, such dividends or
distributions being and remaining the property of Pledgor, and (ii) as owner of
the Pledged Shares, Pledgor shall be entitled to exercise all rights and
privileges attendant thereto.
3. TERMINATION. This Pledge Agreement and all of its terms and
conditions shall remain in full force and effect for so long as the Note remains
unpaid, in whole or in part, or until the Pledged Shares are sold, liquidated or
disposed of by Pledgee, as the case may be. At such time as the Note is paid in
full, or deemed paid, this Pledge Agreement shall terminate and shall cease to
be of further force and effect. At such time of termination, Agent shall deliver
to Pledgor the certificates representing the Pledged
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Shares and the Irrevocable Stock Power, together with an instrument signed by
Pledgee relinquishing all right, title and interest of Pledgee in and to the
Pledged Shares.
4. TRANSFERS AND OTHER LIENS. Pledgor agrees that he will not (a) sell
or otherwise dispose of, or grant any option with respect to, any of the Pledged
Shares, except that Pledgor may effect a sale of all or a portion of the Pledged
Shares provided that he complies with the terms set forth in Section 4 of the
Note, (b) create or permit to exist any other lien upon or with respect to any
of the Pledged Shares or (c) enter into any obligations that may restrict or
inhibit Pledgee's rights or ability to sell or otherwise dispose of the Pledged
Shares or any part thereof after the occurrence and during the continuance of an
event of default under the terms of the Note.
5. INDEMNIFICATION OF AGENT. Pledgor and Pledgee will indemnify, hold
harmless and defend against any claim, loss, liability, or damage, incurred by
Agent in connection with carrying out its duties under this Agreement. In the
event that any legal action is instituted against Agent as such, Agent may
implead or interplead the parties hereto in such action and may deposit with the
court in which such action is pending the Pledged Shares which is the subject of
this Agreement, and which is also the subject matter of such action. Agent shall
thereupon be relieved and discharged from any and all obligations and
liabilities under and pursuant to this Agreement and Pledgor and Pledgee shall
thereupon release Agent from any and all further obligations and liabilities
under and pursuant to this Agreement.
In the event Agent impleads or interpleads Pledgor or Pledgee, such
party or parties shall pay Agent's cost in connection therewith.
6. MISCELLANEOUS.
(a) Any notice or other communications under this Agreement to any
party will be adequately given when it is personally delivered or when it is
sent by fax, with confirmation of receipt, or one day after it is sent by
overnight courier, or three days after it is sent by certified mail, return
receipt requested, addressed in any case as follows:
to Pledgor: Michael J. Merriman
c/o Royal Appliance Mfg. Co.
7005 Cochran Road
Glenwillow, Ohio 44139
Facsimile No.: 440-996-2027
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to Pledgee: Royal Appliance Mfg. Co.
7005 Cochran Road
Glenwillow, Ohio 44139
ATTN: Richard Vasek, Chief Financial Officer
Facsimile No.: 440-996-2027
to Agent: Kahn, Kleinman, Yanowitz & Arnson Co., L.P.A.
The Tower at Erieview, Suite 2600
1301 East Ninth Street
Cleveland, Ohio 44114-1824
ATTN: Michael A. Ellis, Esq.
Facsimile No.: 216-623-4912
(b) This Agreement, which shall be governed by and interpreted in
accordance with the laws of the State of Ohio, shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.
(c) This Agreement, together with the Note, constitutes the entire
agreement between the parties hereto with respect to the matters herein
addressed. Any modification or amendment to this Agreement shall be effective
only if in writing and executed by Pledgor and Pledgee.
(d) All rights and remedies provided herein or otherwise existing at
law or in equity are cumulative, and the exercise of one or more of such rights
or remedies by Pledgee shall not preclude or waive its right to exercise any or
all of the other rights and remedies.
(e) The captions in this Agreement are included for convenience of
reference only and shall be of no force and effect in construing the provisions
hereof.
(f) Any provisions contained in this Agreement which are contrary to,
prohibited by, or invalid under applicable laws or regulations shall be modified
and enforced to the greatest extent permitted by law and shall not invalidate
the remaining provisions hereof.
(g) This Agreement may be executed in counterparts, each of which shall
be deemed an original and all of which together shall constitute one agreement.
[THIS SPACE LEFT BLANK INTENTIONALLY.]
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IN WITNESS WHEREOF, the parties hereto have executed this Pledge
Agreement the day and year first above written.
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Michael J. Merriman
"Pledgor"
ROYAL APPLIANCE MFG. CO.
an Ohio corporation
By:
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Richard Vasek, Chief Financial Officer
"Pledgee"
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