Exhibit 10(r)
2002
ROYAL APPLIANCE MFG. CO.
PHANTOM STOCK PLAN
FOR DIRECTORS
Effective Date: April 1, 2002
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 DIRECTORSHIP 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
PHANTOM STOCK AGREEMENTS XIV
MISCELLANEOUS XV
ARTICLE I
PURPOSE
1.1 This 2002 Royal Appliance Mfg. Co. Phantom Stock Plan for Directors
is intended to serve as an incentive to the non-employee members of the Board of
Directors of the Company and to enable the Company to attract and retain persons
of outstanding abilities upon whom the future success of the Company largely
depends. This Plan shall become effective April 1, 2002.
ARTICLE II
DEFINITIONS
2.1 ACTUAL SHARES. The words "Actual Shares" shall mean 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 or BOARD OF DIRECTORS. The word "Board" or "Board of
Directors" 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 Outside
Director of the Company:
(a) his engaging in any act of fraud or gross dishonesty or
criminal activity with respect to the Company; 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
(d) his refusal to submit to a medical examination if directed to
do so by the Company to determine whether he 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
duties 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 April 1,
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 OUTSIDE DIRECTOR. The words "Outside Director" shall mean a member
of the Board of Directors of the Company who is not:
(a) a current employee of the Company;
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(b) a former employee of the Company receiving compensation for
prior services (other than retirement benefits); or
(c) a former officer of the Company.
2.14 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.
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 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 Mfg. Co.
Phantom Stock Plan for Directors as originally effective April 1, 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 DIRECTORSHIP. The words "Termination of
Directorship" shall mean the Participant's cessation of his services as an
Outside Director of the Company 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.
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.
2.23 VESTING SERVICE. The words "Vesting Service" shall mean a
Participant's period of continuous service with the Company commencing on the
date the Phantom Shares are awarded to him under the Plan and ending on his
Termination of Directorship.
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2.24 YEARS OF SERVICE. The words "Years of Service" shall mean a
Participant's period of continuous service with the Company commencing on his
most recent date of hire or appointment and ending on his Termination of
Directorship.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 ELIGIBILITY. The individuals who shall be eligible to participate
under this Plan shall be such Outside Directors as are designated by the
Committee.
3.2 PARTICIPATION. The Committee shall notify an individual upon his or
her selection for participation under the Plan of such selection. If a selected
individual desires to become a Participant, the individual 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 individual 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
Directorship.
ARTICLE IV
AWARD OF PHANTOM SHARES
4.1 AUTHORIZATION OF PHANTOM SHARES. The Company has authorized
twenty-five thousand (25,000) Phantom Shares which may be awarded under the
Plan. In the event
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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 corresponding change shall be made in the number of Phantom
Shares. The determination of the Committee with 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 federal law, 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 Directorship of a Participant due to
Disability, the Vested Percentage applicable
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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 death or Termination of Directorship 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 Directorship 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 Directorship.
6.2 TERMINATION FOR CAUSE. Notwithstanding any other provision of this
Plan, in the event that a Participant's Termination of Directorship 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 directorship 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
Directorship 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 reinstatement of the Participant as an Outside
Director. Forfeited Phantom Shares shall be available for reissuance under the
Plan.
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ARTICLE VII
TERMINATION OF DIRECTORSHIP
7.1 TERMINATION OF DIRECTORSHIP OTHER THAN FOR CAUSE. In the event of a
Participant's Termination of Directorship for a reason other than death or
Disability, and if there is no Cause for the Company to terminate his
directorship, 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 Directorship 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 Directorship 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
Directorship 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
Directorship 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:
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(a) his spouse at the time of his death;
(b) his issue, per stirpes;
(c) his parents; or
(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 DIRECTORSHIP. Subject to Sections
10.2 and 10.4, a Participant who has not had a Termination of Directorship 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 Directorship due to Disability or has a Termination of
Directorship, 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 DIRECTORSHIP. Upon a
Participant's Termination of Directorship 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
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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 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
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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.
(c) Single lump sum payments made under Section 10.2 shall be
made as soon as administratively possible following a
Participant's Termination of Directorship and, in any
event, no later than ninety (90) days after a Participant's
Termination of Directorship.
(d) Single lump sum payments made under Section 10.3 shall be
made immediately upon a Change in Control.
10.6 TAX WITHHOLDING. The Company 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.
10.7 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.
12.2 POWERS OF THE ADMINISTRATOR. The Administrator shall administer
and interpret this Plan. In so doing, it shall have full power and discretion:
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(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.
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
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arise under the Plan or a number of Appeals Committees with different members to
hear the appeals of denied benefits that arise from Participants. 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 any and all losses, costs or
expenses which may be incurred by them, individually or collectively, in
connection with their administration of this Plan.
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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
PHANTOM STOCK AGREEMENTS
14.1 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.
ARTICLE XV
MISCELLANEOUS
15.1 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, the Company shall not be required or be liable
to make any payment under the Plan.
15.2 NO RIGHT TO COMPANY 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 the Company whatsoever including, without limiting
the generality of the foregoing, any specific funds, assets or other property
which the Company, 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 the Company.
Nothing contained in the Plan constitutes a guarantee by the Company that the
assets of the Company shall be sufficient to pay any benefit to any person.
15.3 NO RIGHTS TO DIRECTORSHIP CREATED. This Plan shall not be deemed
to constitute a promise of continued directorship between the Company and any
Participant, nor confer upon any Participant the right to be retained as a
director of the Company for any period of time, nor shall any provision hereof
restrict the right of the Company to discharge or
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otherwise deal with any Participant, with or without cause. Nothing herein shall
be construed as fixing or regulating the fees or other remuneration payable to
any Participant.
15.4 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 the Company, 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.
15.5 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.
15.6 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.
15.7 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.
15.8 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 Company and the Appeals Committee
with respect to such payments.
15.9 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.
15.10 INDEPENDENCE OF PLAN. Except as otherwise expressly provided
herein, this Plan shall be independent of, and in addition to, any other
agreement or director compensation plan or any rights that may exist from time
to time thereunder.
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15.11 RESPONSIBILITY FOR LEGAL EFFECT. Neither the Company, 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.
15.12 SUCCESSORS. The terms and conditions of this Plan shall inure to
the benefit of and bind the Company, the Administrator, the Appeals Committee
and its members, the Participants, their beneficiaries, and the successors,
assigns, and personal representatives of any of them.
15.13 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.
15.14 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.
15.15 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.
15.16 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 Mfg. Co. Phantom Stock Plan for
Directors to be executed as of this _____ day of ________ 2002.
ROYAL APPLIANCE MFG. CO.
By
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And
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