Exhibit 10(q)
2002
ROYAL APPLIANCE
PHANTOM STOCK PLAN
Effective Date: February 11, 2002
TABLE OF CONTENTS
ARTICLE NUMBER
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PURPOSE I
DEFINITIONS II
ELIGIBILITY AND PARTICIPATION III
AWARD OF PHANTOM SHARES IV
VESTING OF PHANTOM SHARES V
EVENTS OF FORFEITURE VI
TERMINATION OF EMPLOYMENT VII
DISABILITY OF A PARTICIPANT VIII
DEATH OF A PARTICIPANT IX
PAYMENT OF PHANTOM SHARES X
NONTRANSFERABILITY OF PHANTOM SHARES XI
ADMINISTRATION XII
AMENDMENT AND TERMINATION XIII
PARTICIPATING EMPLOYERS XIV
PHANTOM STOCK AGREEMENTS XV
MISCELLANEOUS XVI
ARTICLE I
PURPOSE
1.1 This 2002 Royal Appliance Phantom Stock Plan is intended to serve as an
incentive to key employees of the Company and Participating Employers, and to
attract and retain in their employ persons of outstanding abilities upon whom
the future success of the Company largely depends. This Plan shall become
effective February 11, 2002.
ARTICLE II
DEFINITIONS
2.1 ACTUAL SHARES. The words "Actual Shares" shall mean the common
shares, without par value, of the Company.
2.2 ADMINISTRATOR. The word "Administrator" shall mean the Compensation
Committee or the person, persons, committee, corporation, partnership or other
entity designated as Administrator under Article XII.
2.3 APPEALS COMMITTEE. The words "Appeals Committee" shall mean the
Appeals Committee established pursuant to Article XII.
2.4 BENEFICIARY The word "beneficiary" shall mean any person who
receives or is designated to receive payment of any amounts under the terms of
this Plan because of the participation of another person in this Plan.
2.5 BOARD. The word "Board" shall mean the Board of Directors of the
Company, as the same may change from time to time.
2.6 CAUSE. The word "Cause" shall mean for purposes of this Plan any of
the following occurring while a Participant or former Participant is an employee
of the Company or any Participating Employer:
(a) his engaging in any act of fraud or gross dishonesty or
criminal activity with respect to the Company or any
Participating Employer; or
(b) his conviction of any felony; or
(c) his engaging in any act of willful misconduct or gross
negligence which adversely affects the Companies or any
Participating Employer; or
(d) his refusal to submit to a medical examination if directed to
do so by the Company or Participating Employer to determine
whether the Participant is disabled under this Plan.
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2.7 CHANGE IN CONTROL. The words "Change in Control" shall mean a
change in control of a nature that would be required to be reported in response
to Item 6(e) of Schedule 14A of Regulation 14A or Item 1 of Form 8-K (or any
similar item or successor schedule, form, or report) promulgated under the
Securities Exchange Act of 1934 as amended ("Exchange Act"); provided that,
without limitation, such a change in control shall be deemed to have occurred if
and at such times as (i) any "person" (as such term is used in Sections 13(d)(3)
and 14(d)(2) of the Exchange Act) becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding securities, or (ii)
during any period of two consecutive years, individuals who at the beginning of
such period constitute the Board cease for any reason to constitute at least a
majority (i.e., more than one-half) thereof unless the election, or the
nomination for election by the Company's shareholders, of each new director
during such two-year period was approved by an affirmative vote of at least
two-thirds of the directors then still in office who were directors at the
beginning of said two-year period. In addition, a change of control shall be
deemed to have occurred if there is (a) the sale, lease or other transfer in one
or more transactions not in the ordinary course of business of a total of
seventy percent (70%) or more of the Company's assets, or (b) any merger or
consolidation between the Company and another corporation or other legal entity
immediately after which the Company's stockholders immediately prior to the
transaction hold, directly or indirectly, less than fifty percent (50%) of the
combined voting power of the Company or its successor.
2.8 COMMITTEE. The word "Committee" shall mean the Compensation
Committee of the Board of Directors of Royal Appliance Mfg. Co., which shall
consist of three (3) or more members designated by the Board of Directors.
2.9 COMPANY. The word "Company" shall mean Royal Appliance Mfg. Co.,
and any successor corporation or business organization which shall assume the
duties and obligations of Royal Appliance Mfg. Co. under this Plan.
2.10 DISABILITY. The word "Disability" shall mean a physical or mental
condition of a Participant resulting from bodily injury, disease, or mental
disorder which renders him incapable of continuing his usual and customary
employment with the Company. A licensed physician chosen by the Administrator
shall determine whether a Participant has a disability. The criteria for
determining Disability status shall be applied uniformly to all Participants.
2.11 EFFECTIVE DATE. The words "Effective Date" shall mean February 11,
2002.
2.12 HE, HIM, HIS. The words "he," "him," and "his" shall mean, in
addition to their common meaning, "she," "her," "hers," "it" or "its," as the
context may require, and generally, whenever any pronoun is used herein, it
shall be construed to include the masculine pronoun, the feminine pronoun or the
neuter pronoun, as shall be appropriate.
2.13 PARTICIPANT. The word "Participant" shall mean any individual who
is designated by the Board and who takes the necessary actions to participate in
the Plan pursuant to Article III hereof.
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2.14 PARTICIPATING EMPLOYER. The words "Participating Employer" shall
mean the Company and such subsidiaries and affiliated companies of the Company
which participate in the Plan with the consent of the Board of Directors.
2.15 PHANTOM SHARE. The words "Phantom Share" shall mean a phantom unit
of ownership awarded to a Participant pursuant to this Plan that represents one
(1) Actual Share.
2.16 PHANTOM SHARE VALUE. The words "Phantom Share Value" shall mean
the fair market value of an Actual Share. The fair market value of an Actual
Share shall be the closing price of an Actual Share on the New York Stock
Exchange or other applicable national stock exchange with which the Company is
registered for the trading date for which the fair market value of an Actual
Share is reported which is coincident with or immediately prior to the date the
Phantom Share Value is determined under this Plan
2.17 PHANTOM STOCK AGREEMENT. The words "Phantom Stock Agreement" shall
mean an agreement entered into by the Company or other Participating Employer
and a Participant for the purpose of awarding Phantom Shares to the Participant
in accordance with Section 4.2 of this Plan.
2.18 PLAN. The word "Plan" shall mean the 2002 Royal Appliance Phantom
Stock Plan as originally effective February 11, 2002, and as amended from time
to time.
2.19 PLAN YEAR. The words "Plan Year" shall mean the calendar year.
2.20 TERMINATION OF EMPLOYMENT. The words "Termination of Employment"
shall mean the Participant's cessation of his service with a Participating
Employer for any reason whatsoever, whether voluntarily or involuntarily,
including by reason of retirement, death, or Disability.
2.21 VESTED PERCENTAGE. The words "Vested Percentage" shall mean, with
respect to any Phantom Shares in the account of a Participant, the applicable
percentage determined pursuant to Article V hereof.
2.22 VESTED PHANTOM SHARES. The words "Vested Phantom Shares" shall
mean the number of Phantom Shares in a Participant's account multiplied by the
applicable Vested Percentage determined pursuant to Article V hereof.
2.23 VESTING SERVICE. The words "Vesting Service" shall mean a
Participant's period of continuous employment with the Company and a
Participating Employer commencing on the date the Phantom Shares are awarded to
him under the Plan and ending on his Termination of Employment.
2.24 YEARS OF SERVICE. The words "Years of Service" shall mean a
Participant's period of continuous employment with the Company and a
Participating Employer commencing on his most recent date of hire and ending on
his Termination of Employment.
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ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 ELIGIBILITY. The employees who shall be eligible to participate
under this Plan shall be such employees as are designated by the Committee and
qualify as members of a "select group of management or highly compensated
employees" as provided in Sections 201(2), 301(a)(3), 401(a)(1) and 4021(b)(6)
of the Employee Retirement Income Security Act of 1974, as amended.
3.2 PARTICIPATION. The Committee shall notify an employee upon his or
her selection for participation under the Plan of such selection. If a selected
employee desires to become a Participant, the employee shall, within such time
as the Committee specifies:
(a) furnish to the Committee all information requested by it;
(b) execute such documents and such instruments as the Committee
may require to facilitate the administration of this Plan;
(c) agree in such form and manner as the Committee may require to
be bound by the terms of this Plan and any amendments hereto;
and
(d) truthfully and fully answer any questions and supply any
information which the Committee deems necessary or desirable
for the proper administration of this Plan, without any
reservations whatsoever.
An employee who is selected by the Committee to participate in the Plan and who
performs timely all acts required to become a Participant, shall become a
Participant on or as of such date as is specified by the Committee.
3.3 TERMINATION OF PARTICIPATION. The Committee may terminate the
participation of any Participant at any time. Except as otherwise provided in
Article VI, such termination of participation shall not affect the rights of the
terminated Participant to the payment of the Vested Phantom Shares previously
awarded to such Participant pursuant to Article X. A Participant shall
automatically cease to be a Participant on the date of his or her Termination of
Employment.
ARTICLE IV
AWARD OF PHANTOM SHARES
4.1 AUTHORIZATION OF PHANTOM SHARES. The Company has authorized three
hundred thousand (300,000) Phantom Shares which may be awarded under the Plan.
In the event there shall be a change in the number of Actual Shares by reason of
a stock split, stock dividend, reorganization, recapitalization, cash dividend,
or other similar event, a similar change shall be made in the number of Phantom
Shares. The determination of the Committee with
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respect to any such adjustment shall be conclusive and binding upon the
Participants and their beneficiaries.
4.2 AWARD OF PHANTOM SHARES. The Committee may, from time to time and
in its sole discretion, award Phantom Shares to a Participant pursuant to a
Phantom Stock Agreement. Subject to all the terms and conditions of this Plan,
each awarded Phantom Share which becomes a Vested Phantom Share (or is deemed to
be a Vested Phantom Share hereunder) shall entitle the Participant to receive
Actual Shares of the Company equal to the number of the Vested Phantom Shares
awarded to a Participant hereunder, on the dates and under the method of payment
as set forth in this Plan. Each Participant shall be notified by the Committee
of the number of Phantom Shares which have been awarded to him.
4.3 RIGHTS UNDER PHANTOM SHARES. Phantom Shares awarded under this Plan
shall have no voting rights and shall not be entitled to receive cash or other
dividends declared and paid, and the Participant shall have no other rights as a
shareholder of the Company under the Ohio General Corporation Law or common law.
4.4 BOOKKEEPING ENTRIES. All grants of Phantom Shares awarded under
this Plan shall be simple bookkeeping entries for the convenience of the
Company. The Company shall not be require to segregate any funds with respect to
the Phantom Shares granted under this Plan. All rights of Participants, former
Participants and beneficiaries under this Plan shall constitute only contractual
claims against the Company and no such claim against the Company shall be
secured or deemed to be secured in any manner.
ARTICLE V
VESTING OF PHANTOM SHARES
5.1 VESTING SCHEDULE. Subject to the provisions of Section 6.2, the
Vested Percentage applicable to a Participant shall be determined on the basis
of his Vesting Service in accordance with the following table:
Vesting Vested
Service Percentage
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Fewer than 3 years 0%
At least 3 but fewer than 4 years 60%
At least 4 but fewer than 5 years 80%
5 or more years 100%
5.2 DEATH OR DISABILITY. Notwithstanding anything in this Article to
the contrary but subject to the provisions of this Section, upon the death of a
Participant or the Termination of Employment of a Participant due to Disability,
the Vested Percentage applicable to a Participant shall be determined by
multiplying his months of Vesting Service with the Company (measured from the
date the Phantom Shares were awarded to him until his date of
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death or Termination of Employment due to Disability) by one-sixtieth (1/60). A
fractional month of Vesting Service shall be counted as one (1) month. The
Vested Percentage determined under this Section shall not exceed one hundred
percent (100%).
5.3 CHANGE IN CONTROL. Notwithstanding anything in this Article to the
contrary, but subject to the provisions of this Section, the Vested Percentage
applicable to a Participant shall become one hundred percent (100%) with respect
to all Phantom Shares previously granted to him pursuant to this Plan (other
than Phantom Shares previously forfeited pursuant to Article VI) upon the
occurrence of a Change in Control.
ARTICLE VI
EVENTS OF FORFEITURE
6.1 FORFEITURE. Except as provided in Section 6.2, in the event that a
Participant has a Termination of Employment before he is one hundred percent
(100%) vested under the provisions of Article V, he shall forfeit all rights
whatsoever he shall have to receive any payments on account of the Phantom
Shares that are not vested on the date of his Termination of Employment.
6.2 TERMINATION FOR CAUSE. Notwithstanding any other provision of this
Plan, in the event that a Participant's Termination of Employment shall be for
Cause, the Participant shall forfeit all Phantom Shares granted to him and shall
forfeit all rights whatsoever he shall have to receive any payments of Actual
Shares or other amounts under this Plan. If a Participant's employment could be
terminated for Cause hereunder, it shall be considered so terminated regardless
of whether actually so terminated or terminated voluntarily by the Participant
through retirement or otherwise.
6.3 EFFECT OF FORFEITURE. Upon the occurrence of an event described in
this Article which results in forfeiture of a Participant's Phantom Shares, such
Phantom Shares shall be canceled and neither the Participant nor his beneficiary
shall have any further rights with respect thereto. If a Participant forfeits
all rights to receive payment hereunder as a result of a Termination of
Employment for Cause pursuant to Section 6.2, he shall forfeit all rights to any
further payments hereunder but he shall not be required to repay amounts
previously received by him hereunder. Forfeited Phantom Shares shall not be
reinstated by subsequent rehire of the Participant by the Company or a
Participating Employer. Forfeited Phantom Shares shall be available for
reissuance under the Plan.
ARTICLE VII
TERMINATION OF EMPLOYMENT
7.1 TERMINATION OF EMPLOYMENT OTHER THAN FOR CAUSE. In the event of a
Participant's Termination of Employment for a reason other than death or
Disability, and if there
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is no Cause for the Company or any Participating Employer to terminate his
employment, such Participant shall be entitled to receive a distribution of his
Phantom Shares multiplied by his Vested Percentage.
7.2 PAYMENT OF VESTED PHANTOM SHARES. A Participant's Vested Phantom
Shares shall be paid to such Participant as provided in Article X.
ARTICLE VIII
DISABILITY OF A PARTICIPANT
8.1 BENEFITS PAYABLE DUE TO DISABILITY. In the event of a Participant's
Termination of Employment due to his Disability, all Phantom Shares awarded to
such disabled Participant which have not vested previously pursuant to this Plan
shall become vested in accordance with the pro-rata vesting formula set out in
Section 5.2 as of the date the Participant's Termination of Employment due to
his Disability.
8.2 PAYMENT OF VESTED PHANTOM SHARES. A Participant's Vested Phantom
Shares shall be paid to such disabled Participant as provided in Article X.
ARTICLE IX
DEATH OF A PARTICIPANT
9.1 BENEFITS PAYABLE DUE TO DEATH. In the event of the Termination of
Employment of a Participant by reason of his death, his beneficiary shall be
entitled to receive a distribution of his Vested Phantom Shares. All Phantom
Shares awarded to such Participant which have not vested previously pursuant to
this Plan shall become vested in accordance with the pro-rata vesting formula
set out in Section 5.2 as of the Participant's date of Termination of Employment
by reason of his death.
9.2 PAYMENT OF VESTED PHANTOM SHARES. A Participant's Vested Phantom
Shares shall be paid as provided in Article X to the beneficiary of the
Participant.
9.3 DEFAULT BENEFICIARY. Unless a Participant or former Participant has
designated a beneficiary in accordance with the provisions of Section 9.4, his
beneficiary shall be deemed to be the person or persons in the first of the
following classes in which there are any survivors of such Participant or former
Participant:
(a) his spouse at the time of his death;
(b) his issue, per stirpes;
(c) his parents; or
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(d) the executor or administrator of his estate.
9.4 DESIGNATED BENEFICIARY. In lieu of having the Vested Phantom Shares
distributable pursuant to this Article distributed to a beneficiary determined
in accordance with the provisions of Section 9.3, a Participant may sign a
document designating a beneficiary or beneficiaries to receive such Vested
Phantom Shares.
9.5 PARTIAL DISPOSITION. In the event that a Participant or former
Participant, dies at a time when he has a designation on file with the
Administrator which does not fully dispose of his Vested Phantom Shares under
this Plan upon his death, then the Vested Phantom Shares distributable on behalf
of said Participant or former Participant, the disposition of which was not
determined by the deceased Participant's or former Participant's designation,
shall be distributed to a beneficiary determined under the provisions of Section
9.3.
9.6 AMBIGUITY AS TO BENEFICIARY. Any ambiguity in a Participant's
beneficiary designation shall be resolved by the Administrator. Subject to
Section 9.4, the Administrator may direct a Participant to clarify his
beneficiary designation and if necessary execute a new beneficiary designation
containing such clarification.
ARTICLE X
PAYMENT OF PHANTOM SHARES
10.1 PAYMENTS BEFORE TERMINATION OF EMPLOYMENT. Subject to Sections
10.2 and 10.4, a Participant who has not had a Termination of Employment may
request a distribution of all or a portion of his Vested Phantom Shares. Such
request shall be made in writing in a form and manner specified by the Company
and must specify the number of Vested Phantom Shares to be distributed and the
date upon which such Vested Phantom Shares shall be paid which must be as soon
as administratively possible following a date that is at least one (1) year
after the date on which the request is made. A Participant may request a
distribution before the date on which his Phantom Shares actually become vested
subject to the other requirements set forth in this Section. Any distribution
request shall be irrevocable unless, prior to payment, the Participant dies, has
a Termination of Employment due to Disability or has a Termination of Employment
at which time the request shall become null and void and the Participant's
Vested Phantom Shares shall be paid as provided in Section 10.2.
10.2 PAYMENTS ON OR AFTER A TERMINATION OF EMPLOYMENT. Upon a
Participant's Termination of Employment for any reason, including death or
Disability, the Participant or the beneficiary of the deceased Participant shall
be entitled to a distribution equal to his Vested Phantom Shares. Such
distribution shall be in a single lump sum payment on the date determined under
Section 10.5 and shall be in lieu of all other benefits under this Plan.
10.3 CHANGE IN CONTROL. Any Phantom Shares held by a Participant under
this Plan or any Phantom Shares remaining to be paid to a Participant or
beneficiary under a prior
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distribution election shall be paid immediately to such Participant or
beneficiary in a single lump sum payment upon the occurrence of a Change in
Control.
10.4 FORM AND AMOUNT OF PAYMENT.
(a) Subject to such rules, procedures, limits and restrictions
as the Administrator may establish from time to time, a
Participant, may elect that distributions payable under
Section 10.1 be made in a single sum or in the form of
annual installments over a period of no fewer than two (2)
calendar years and no more than ten (10) calendar years.
(b) Any installment form of payment shall be equal to the
number of Vested Phantom Shares to be distributed to a
Participant divided by the number of remaining installments
to be paid.
(c) The Administrator, with the consent of the Company, may
establish procedures to permit some or all Participants to
request to change their prior elections regarding the form
of their benefit payments under Section 10.1, provided that
any such procedures shall either require such request be
made a reasonable period of time before the Phantom Shares
affected by such request shall be distributable, as
determined by the Company in its sole discretion, or
require forfeiture of a significant portion of such Phantom
Shares. The Administrator may, but is not required to,
grant any such requests.
(d) All payments under the Plan shall be made in Actual Shares
of the Company. Actual Shares shall be distributed first
from treasury shares and then, to the extent treasury
shares are not available, from any authorized and unissued
Company shares.
10.5 COMMENCEMENT OF PAYMENTS.
(a) Payments under Section 10.1 shall be made as soon as
administratively possible following the date elected by the
Participant which is at least one (1) year after the date
such election is made by the Participant.
(b) The Administrator, with the consent of the Company, may
establish procedures to permit some or all Participants who
have made a distribution election pursuant to Section 10.1
to request to change their prior elections regarding the
time of commencement of benefits hereunder, provided that
any such procedures shall either require that the request
be made a reasonable period of time before the amounts
affected by such request shall be distributable, as
determined by the Company in its sole discretion, or
require forfeiture of a significant portion of such
amounts. The Administrator may, but is not required to,
grant any such requests.
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(c) Single lump sum payments made under Section 10.2 shall be
made as soon as administratively possible following a
Participant's Termination of Employment and, in any event,
no later than ninety (90) days after a Participant's
Termination of Employment.
(d) Single lump sum payments made under Section 10.3 shall be
made immediately upon a Change in Control.
10.6 PROTECTIVE DISTRIBUTIONS. In the event that the Administrator
determines, in its sole discretion, that a Participant is not, or may not be, a
member of a "select group of management or highly compensated employees" within
the meaning of Sections 201(2), 301(a)(3), 401(a)(1) or 4021(b)(6) of the
Employee Retirement Income Security Act of 1974, as amended, then the
Administrator may, in its sole discretion, terminate such Participant's
participation in this Plan, and distribute such Participant's Vested Phantom
Shares in a single lump sum payment. Any such distribution shall be made at such
time as the Administrator determines in its sole discretion.
10.7 TAX WITHHOLDING. A Participating Employer may withhold from any
payment made by it under the Plan the number of Vested Phantom Shares equal in
value to such amount or amounts as may be required for purposes of complying
with the tax withholding or other provisions of the Internal Revenue Code or the
Social Security Act or any state or local income or employment tax act or for
purposes of paying any estate, inheritance or other tax attributable to any
amounts payable hereunder.
10.8 CANCELLATION OF PHANTOM SHARES. As of the date of payment with
respect to a Phantom Share of a Participant, such Phantom Share shall be deemed
canceled.
ARTICLE XI
NONTRANSFERABILITY OF PHANTOM SHARES
11.1 NONTRANSFERABILITY. Except as provided in Article IX with respect
to the designation of beneficiaries, Phantom Shares awarded pursuant to this
Plan and the right to receive payments of Vested Phantom Shares, if any,
attributable thereto, are nontransferable directly, indirectly, as security for
a loan or otherwise by any means, either voluntarily or by operation of law.
ARTICLE XII
ADMINISTRATION
12.1 ADMINISTRATION. The Compensation Committee shall be the
Administrator unless and until the Board shall appoint some other person,
persons, committee, corporation, partnership or other entity as Administrator.
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12.2 POWERS OF THE ADMINISTRATOR. The Administrator shall administer
and interpret this Plan. In so doing, it shall have full power and discretion:
(a) to interpret this Plan and any related documents, to
resolve ambiguities, inconsistencies and omissions, to
determine any questions of fact, to determine the right to
benefits of, and the amount of benefits, if any, payable to
any person in accordance with the provisions of this Plan;
(b) to enact such rules, regulations, and procedures and to
prescribe the use of such administrative forms as it shall
deem advisable; and
(c) to appoint or employ such agents, attorneys, appraisers,
accountants and assistants at the expense of the Company,
as it may deem necessary to keep its records or to assist
it in taking any other action authorized or required
hereunder.
12.3 DENIAL OF BENEFITS. If any Participant or beneficiary shall file
an application for benefits hereunder and such application is denied in whole or
in part by the Administrator, the applicant shall be notified in writing of the
specific reason or reasons for such denial. The notice shall also set forth the
specific Plan provisions upon which the denial is based, an explanation of the
provisions of Section 12.4, and any other information deemed necessary or
advisable by the Administrator.
12.4 APPEALS PROCEDURE. Any Participant, any beneficiary, or any
authorized representative of a Participant or beneficiary whose application for
benefits hereunder has been denied, in whole or in part, by the Administrator
may upon written notice to the Appeals Committee request a review by the Appeals
Committee of such denial of his application. Such review may be made by written
briefs submitted by the applicant and the Administrator or at a hearing, or by
both, as shall be deemed necessary by the Appeals Committee. Any such hearing
shall be held in the main office of the Company on such date and at such time as
the Appeals Committee shall designate upon not less than seven (7) days' notice
to the applicant and the Administrator unless both of them accept shorter
notice. The Appeals Committee shall make every effort to schedule the hearing on
a day and at a time which is convenient to both the applicant and the
Administrator. After the review has been completed, the Appeals Committee shall
render a decision in writing, a copy of which shall be sent to both the
applicant and the Administrator. Such decision shall be made no later than sixty
(60) days following the applicant's request for review; provided, however, that
in the event that a hearing is held with respect to the review of the claim,
such decision shall be rendered no later than one hundred twenty (120) days
following the applicant's request for review. In rendering its decision, the
Appeals Committee shall have full power and discretion to interpret this Plan
and related documents, to resolve ambiguities, inconsistencies and omissions, to
determine any question of fact, to determine the right to benefits of, and the
amount of benefits, if any, payable to, the applicant in accordance with the
provisions of this Plan. Such decision shall set forth the specific reason or
reasons for the decision and the specific Plan provisions upon which the
decision is based. Such decision shall be final and binding on the applicant and
the Administrator.
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12.5 ESTABLISHMENT OF APPEALS COMMITTEE. The Company shall appoint the
members of an Appeals Committee which shall consist of three (3) or more
members. The Company may appoint one Appeals Committee to hear all appeals of
denied benefits that may arise under the Plan or a number of Appeals Committees
with different members to hear the appeals of denied benefits that arise from
Participants employed by a Participating Employer or group of Participating
Employers. The members of the Appeals Committee shall remain in office at the
will of the Company and the Company may, from time to time, remove any of said
members with or without cause. A member of the Appeals Committee may resign upon
written notice to the remaining member or members of the Appeals Committee and
to the Company, respectively. The fact that a person is a Participant or a
former Participant or a prospective Participant shall not disqualify him from
acting as a member of the Appeals Committee, nor shall any member of the Appeals
Committee be disqualified from acting on any question because of his interest
therein, except that no member of the Appeals Committee may act on any claim
which such member has brought as a Participant, former Participant, or
Beneficiary under this Plan. In case of the death, resignation or removal of any
member of the Appeals Committee, the remaining members shall act until a
successor-member shall be appointed by the Company. At the Administrator's
request, the Secretary of the Company shall notify the Administrator in writing
of the names of the original members of the Appeals Committee, of any and all
changes in the membership of the Appeals Committee, of the member designated as
Chairman, and the member designated as Secretary, and of any changes in either
office. Until notified of a change, the Administrator shall be protected in
assuming that there has been no change in the membership of the Appeals
Committee or the designation of Chairman or of Secretary since the last
notification was filed with it. The Administrator shall be under no obligation
at any time to inquire into the membership of the Appeals Committee or its
officers. All communications to the Appeals Committee shall be addressed to its
Secretary at the address of the Company.
12.6 OPERATIONS OF APPEALS COMMITTEE. On all matters and questions, the
decision of a majority of the members of the Appeals Committee shall govern and
control; but a meeting need not be called or held to make any decision. The
Appeals Committee shall appoint one of its members to act as its Chairman and
another member to act as Secretary. The terms of office of these members shall
be determined by the Appeals Committee, and the Secretary and/or Chairman may be
removed by the other members of the Appeals Committee for any reason which such
other members may deem just and proper. The Secretary shall do all things
directed by the Appeals Committee. Although the Appeals Committee shall act by
decision of a majority of its members as above provided, nevertheless in the
absence of written notice to the contrary, every person may deal with the
Secretary and consider his acts as having been authorized by the Appeals
Committee. Any notice served or demand made on the Secretary shall be deemed to
have been served or made upon the Appeals Committee.
12.7 DELEGATION OF POWERS. The Administrator may by appropriate
resolution delegate to one or more of its members the authority to exercise any
of its powers in administering and interpreting this Plan.
12.8 LIMITATION OF LIABILITY. The Administrator and the Appeals
Committee shall not be liable for any action or determination made with respect
to this Plan and awards under it and the Company shall indemnify all such
persons, individually and collectively, against
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any and all losses, costs or expenses which may be incurred by them,
individually or collectively, in connection with their administration of this
Plan.
ARTICLE XIII
AMENDMENT AND TERMINATION
13.1 POWER TO AMEND AND TERMINATE PLAN. This Plan may be amended by the
Company at any time, or from time to time, and may be terminated by the Company
with respect to any or all Participants at any time, but no such amendment or
termination will deprive any Participant of the right to receive any payment in
accordance with the terms of the Plan as of the date of such amendment or
termination.
ARTICLE XIV
PARTICIPATING EMPLOYERS
14.1 LIST OF PARTICIPATING EMPLOYERS. The initial Participating
Employers as of the Effective Date are as follows:
PARTICIPATING EMPLOYERS
Royal Appliance Mfg. Co.
The Company may designate additional Participating Employers or remove
Participating Employers by action of an appropriate officer of Company
authorized or ratified by the Board. Such addition or deletion shall not require
a formal Plan amendment.
ARTICLE XV
PHANTOM STOCK AGREEMENTS
15.1 EXECUTION OF PHANTOM STOCK AGREEMENTS. The Committee may, from
time to time and in its sole discretion, award Phantom Shares to a Participant
under this Plan by executing a Phantom Stock Agreement. Any Phantom Stock
Agreement entered into pursuant to this Plan shall be in such form, and contain
such terms and conditions, as the Committee may require.
15.2 MODIFICATION OF PLAN PROVISIONS. Notwithstanding anything
contained in this Plan, the Committee may, with the approval of the Board of
Directors, execute a Phantom Stock Agreement with senior executives of the
Company pursuant to this Plan containing terms and conditions different from, or
in addition to, the terms and conditions set forth in this Plan.
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The terms and conditions that may be modified or added include, but are not
limited to, those relating to:
(a) vesting;
(b) forfeitures;
(c) the definition and effect of termination of employment;
(d) distributions;
(e) the definition and effect of death or disability;
(f) offsets; and
(g) any other provisions that the Board of Directors approves.
ARTICLE XVI
MISCELLANEOUS
16.1 NO IMPLIED RIGHTS. Neither the establishment of the Plan nor any
amendment thereof shall be construed as giving any Participant, beneficiary or
any other person any legal or equitable right unless such right shall be
specifically provided for in the Plan or conferred by specific action of the
Company in accordance with the terms and provisions of the Plan. Except as
expressly provided in this Plan, neither the Company nor any other Participating
Employer shall be required or be liable to make any payment under the Plan.
16.2 NO RIGHT TO PARTICIPATING EMPLOYER ASSETS. Neither the Participant
nor any other person shall acquire, by reason of the Plan, any right in or title
to any assets, funds or property of a Participating Employer whatsoever
including, without limiting the generality of the foregoing, any specific funds,
assets or other property which a Participating Employer, in its sole discretion,
may set aside in anticipation of a liability hereunder. The Participant shall
have only a contractual right to the amounts, if any, payable hereunder
unsecured by any asset of a Participating Employer. Nothing contained in the
Plan constitutes a guarantee by a Participating Employer that the assets of a
Participating Employer shall be sufficient to pay any benefit to any person.
16.3 NO EMPLOYMENT RIGHTS CREATED. This Plan shall not be deemed to
constitute a contract of employment between any of the Participating Employers
and any Participant, nor confer upon any Participant or employee the right to be
retained in the service of any Participating Employer for any period of time,
nor shall any provision hereof restrict the right of any Participating Employer
to discharge or otherwise deal with any Participant or other employees, with or
without cause. Nothing herein shall be construed as fixing or regulating the
compensation, salary, bonus or other remuneration payable to any Participant or
other employee of a Participating Employer.
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16.4 OFFSET. If, at the time payments or installments of payments are
to be made hereunder, the Participant or the beneficiary or both are indebted or
obligated to a Participating Employer, then the payments remaining to be made to
the Participant or the beneficiary or both may, at the discretion of the
Company, be reduced by the amount of such indebtedness or obligation, provided,
however, that an election by the Company not to reduce any such payment or
payments shall not constitute a waiver of its claim for such indebtedness or
obligation.
16.5 NON-ASSIGNABILITY. Neither the Participant nor any other person
shall have any voluntary or involuntary right to commute, sell, assign, pledge,
anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey in
advance of actual receipt the amounts, if any, payable hereunder, or any part
thereof, and any attempt to do so shall be void. All amounts payable under this
Plan are expressly declared to be unassignable and non-transferable. No part of
the amounts payable under this Plan shall be, prior to actual payment, subject
to seizure or sequestration for the payment of any debts, judgments, alimony or
separate maintenance owed by the Participant or any other person, or be
transferable by operation of law in the event of the Participant's or any other
person's bankruptcy or insolvency.
16.6 NOTICE. Any notice required or permitted to be given under the
Plan shall be sufficient if in writing and hand delivered, or sent by registered
or certified mail, and if given to the Company, delivered to the principal
office of the Company, directed to the attention of the Secretary of the
Company. Such notice shall be deemed given as of the date of delivery or, if
delivery is made by mail, as of the date shown on the postmark or the receipt
for registration or certification.
16.7 GOVERNING LAWS. The Plan shall be construed and administered
according to the laws of the State of Ohio to the extent not preempted by the
laws of the United States of America.
16.8 INCAPACITY. If the Administrator determines that any Participant
or beneficiary entitled to payments under the Plan is incompetent by reason of
physical or mental disability and is consequently unable to give a valid receipt
for payments made hereunder, or is a minor, the Administrator may order the
payments becoming due to such Participant or beneficiary to be made to another
person for the benefit of such Participant or beneficiary, without
responsibility on the part of the Administrator to follow the application of
amounts so paid. Payments made pursuant to this Section shall completely
discharge the Plan, the Administrator, the Participating Employers and the
Appeals Committee with respect to such payments.
16.9 ADMINISTRATIVE FORMS. All applications, elections and designations
in connection with the Plan made by a Participant or beneficiary shall become
effective only when duly executed on forms provided by the Administrator and
filed with the Administrator.
16.10 INDEPENDENCE OF PLAN. Except as otherwise expressly provided
herein, this Plan shall be independent of, and in addition to, any other
employee benefit agreement or plan or any rights that may exist from time to
time thereunder.
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16.11 RESPONSIBILITY FOR LEGAL EFFECT. Neither the Company, any other
Participating Employer, the Administrator, the Appeals Committee, nor any
officer, member, delegate or agent of any of them, makes any representations or
warranties, express or implied, or assumes any responsibility concerning the
legal, tax, or other implications or effects of this Plan.
16.12 SUCCESSORS. The terms and conditions of this Plan shall inure to
the benefit of and bind the Company, the Participating Employers, the
Administrator, the Appeals Committee and its members, the Participants, their
beneficiaries, and the successors, assigns, and personal representatives of any
of them.
16.13 HEADINGS AND TITLES. The Section headings and titles of Articles
used in this Plan are for convenience of reference only and shall not be
considered in construing this Plan.
16.14 GENERAL RULES OF CONSTRUCTION. The masculine gender shall include
the feminine and neuter, and vice versa, as the context shall require. The
singular number shall include the plural, and vice versa, as the context shall
require. The present tense of a verb shall include the past and future tenses,
and vice versa, as the context may require.
16.15 SEVERABILITY. In the event that any provision or term of this
Plan, or any agreement or instrument required by the Administrator hereunder, is
determined by a judicial, quasi-judicial or administrative body to be void or
not enforceable for any reason, all other provisions or terms of this Plan or
such agreement or instrument shall remain in full force and effect and shall be
enforceable as if such void or nonenforceable provision or term had never been a
part of this Plan, or such agreement or instrument.
16.16 ACTIONS BY THE COMPANY. Except as otherwise provided herein, all
actions of the Company under this Plan shall be taken by the Board, by any
officer of the Company, or by any other person designated by any of the
foregoing.
IN WITNESS WHEREOF, Royal Appliance Mfg. Co., by its duly authorized
officers, has caused this 2002 Royal Appliance Phantom Stock Plan to be executed
as of this 11th day of February 2002.
ROYAL APPLIANCE MFG. CO.
By
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And
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