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Exhibit 10(j)
ROYAL APPLIANCE
DEFERRED COMPENSATION PLAN
FOR OUTSIDE DIRECTORS
EFFECTIVE: APRIL 1, 1998
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DEFERRED COMPENSATION PLAN
FOR OUTSIDE DIRECTORS
This Plan is hereby adopted on this ___ day of ________, 1998,
effective April 1, 1998, by ROYAL APPLIANCE MFG. CO. (the "Company").
I. NAME AND PURPOSE
1.1. NAME. The name of this Plan shall be the ROYAL APPLIANCE DEFERRED
COMPENSATION PLAN FOR OUTSIDE DIRECTORS.
1.2. PURPOSE. This Plan is hereby established to provide unfunded
deferred compensation to Directors under certain conditions
specified herein.
1.3. NOT A FUNDED PLAN. It is the intention and purpose of the Company
that this Plan shall be deemed to be "unfunded" for tax purposes
as well as any other purpose. This Plan shall be administered in
such a manner, notwithstanding any contrary provision of this
Plan, that it will be so deemed and would be so described.
II. DEFINITIONS
2.1. "ACCOUNTS" mean the Participants' Elective Accounts maintained on
the books of the Company for Participants under this Plan. A
Participant's Account shall not constitute or be treated as a
trust fund of any kind.
2.2. "ADMINISTRATOR" means the person, persons, corporation,
partnership or other entity designated as Administrator under
Section 7.1.
2.3. "AGREEMENT" means the Deferred Compensation Deferral Agreement(s)
executed between a Participant and the Company, whereby a
Participant agrees to defer a portion of his Compensation in
accordance with the provisions of the Plan.
2.4. "APPEALS COMMITTEE" means the Appeals Committee established
pursuant to Article VII.
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2.5. "BENEFICIARY" means the person, persons or entity so designated,
or deemed to be so designated, by a Participant pursuant to
Section 4.11.
2.6. "BOARD OF DIRECTORS" means the Board of Directors of the Company.
2.7. "CODE" means the Internal Revenue Code of 1986, as amended and
any lawful regulations or other pronouncements promulgated
thereunder.
2.8. "COMPANY" means 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.
2.9. "COMPENSATION" means for any Participant the retainer fees paid
to him for his services as a Director.
2.10. "DETERMINATION DATE" means the last day of each calendar
quarter.
2.11. "DIRECTOR" shall mean a member of the Board of Directors of the
Company or any of its subsidiaries or affiliated companies, who
is not otherwise employed by the Company or any of its
subsidiaries or affiliated companies.
2.12. "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 as a Director.
2.13. "EFFECTIVE DATE" means the date this Plan shall become effective
which date shall be April 1, 1998.
2.14. "ELECTION YEAR" means the period from the Effective Date through
December 31, 1998 and any calendar year thereafter.
2.15. "ELECTIVE AMOUNT" means for each Participant an amount equal to
the amount by which his Compensation is reduced pursuant to
Section 3.4 hereof.
2.16. "ENTRY DATE" means, with respect to any Participant with
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respect to any Election Year, the beginning of such Election Year
or, if, pursuant to Section 3.2, such Participant first becomes
eligible to participate in the Plan on a date following the
commencement of an Election Year, then the first day of the month
coincident with or next following the date he first meets the
eligibility requirements in such Election Year.
2.17. "NORMAL RETIREMENT DATE" means the date a Participant attains
age 65.
2.18. "PARTICIPANT" means any Director who elects to participate in
the Plan in accordance with Section 3.1 hereof and who enters
into an Agreement and who has commenced Compensation reductions
pursuant to such Agreement. A Participant shall cease to be a
Participant, and shall become a former Participant, upon his
Termination of Service. However, the word Participant may also
include, where the context indicates, any former Participant in
this Plan.
2.19. "PARTICIPANT ELECTIVE ACCOUNT" means for each Participant the
bookkeeping account maintained by the Company on his behalf to
reflect his Elective Amounts for an Election Year and all
earnings, gains and losses thereon.
2.20. "PLAN" means the Royal Appliance Deferred Compensation Plan for
Outside Directors, as set forth in this instrument, as amended
from time to time.
2.21. "TERMINATION OF SERVICE" means the Participant's cessation of
his service as a Director for any reason whatsoever, whether
voluntarily or involuntarily, including by reason of retirement,
death, or Disability.
2.22. "TRUST" means any trust established pursuant to Article VI
hereof.
III. PARTICIPATION, COMPENSATION REDUCTIONS AND ACCOUNTS
3.1. ELIGIBILITY. A Director shall be eligible to participate in the
Plan for any Election Year as of the first date that the Director
has been elected a Director of the Company.
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3.2. PARTICIPATION. Each Director who has satisfied the eligibility
requirements set forth in Section 3.1 shall become a Participant
and actively participate for an Election Year by completing and
filing an Agreement described in Section 3.3 with the Company
prior to the first day of the Election Year (April 24, 1998, in
the case of the initial Election Year). In the event a Director
first meets such eligibility requirements after the beginning of
an Election Year, such Director may become a Participant and
actively participate for the period commencing on the first day
of the month coincident with or after which he meets the
eligibility requirements until the end of such Election Year by
completing and filing an Agreement described in Section 3.3 with
the Company prior to the first day of such month. Such Agreement
shall contain such provisions as the Company shall require and
shall otherwise be in such form as the Administrator shall
determine.
3.3. DEFERRAL ELECTIONS UNDER AN AGREEMENT. With respect to each
Election Year, each eligible Director may elect, under his
Agreement for such Election Year, to make a deferral of his
Compensation at least a reasonable time, as determined by the
Company in its sole discretion, prior to the time any such
deferred amounts would otherwise be payable to such Participants.
Any such deferral shall be evidenced by an Agreement in a form
acceptable to the Administrator.
3.4. COMPENSATION REDUCTIONS AND DEFERRAL Amounts. A Participant's
election to defer in accordance with 3.3 shall cause an
equivalent reduction in the Participant's Compensation at the
time such amounts would otherwise be payable.
An amount equal to such reductions in a Participant's
Compensation shall constitute an Elective Amount hereunder and
shall be credited to such Participant's Elective Account as of
the time of such reductions.
3.5. ALTERATION OF DEFERRALS. A Participant's deferral election made
pursuant to Section 3.3 above shall be irrevocable except that in
the event that the Participant has received a distribution on
account of an unforeseeable
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financial emergency pursuant to Section 4.3, the Administrator
may, at its option, discontinue the Participant's deferrals for
the remainder of the then current Election Year, and preclude the
Participant from making any deferrals for all or part of the
succeeding Election Year.
3.6. ESTABLISHMENT OF ACCOUNTS. The Company shall establish a
Participant Elective Account in the name of each Participant. All
amounts so credited to the Accounts of any Participant or former
Participant shall constitute a general, unsecured liability of
the Company to such person.
3.7. ALLOCATION OF ELECTIVE AMOUNTS. At the time a Participant's
Compensation is reduced pursuant to Section 3.4 hereof, the
Company shall credit the Participant Elective Account of such
Participant with the Participant's Elective Amount with respect
to such Compensation.
3.8. CREDITING OF EARNINGS. The Company shall credit the Account of
each Participant with earnings, gains and losses under one of the
following methods, as determined by the Company:
(a) crediting earnings, gains and losses on such Account as if
an amount equal to the Participant's Account balance had
been invested in accordance with any investment directions
the Company permits such Participant to make pursuant to
Section 6.4 hereof;
(b) crediting earnings, gains and losses on such Account as if
an amount equal to the Participant's Account balance had
been invested in the same manner as the assets of any Trust
established under Section 6.1 hereunder; or
(c) in such other manner as the Company may determine.
3.9. DETERMINATION OF ACCOUNT. The balance of each Participant's
Account as of each Determination Date shall be calculated as
follows, using the terms and methods in the order defined below:
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(a) Earnings, gains and losses determined pursuant to Section
3.8 shall be allocated based on the Participant's Adjusted
Account. A Participant's Adjusted Account is equal to the
Participant's Account as of the prior Determination Date,
plus transfers posted into the investment fund, plus 50% of
Elective Amounts, less transfers posted out of the
investment fund, less forfeitures, and less distributions,
which occurred after the prior Determination Date and up
through and including the current Determination Date.
(b) In the event that a Participant receives an Emergency
Benefit pursuant to Section 4.3 below, the Participant's
Adjusted Account will be reduced by the Weighted
Distribution Amount instead of the full distribution amount.
The Weighted Distribution Amount shall be equal to the
Emergency Benefit multiplied by the ratio of the number of
days that have elapsed between the Emergency Benefit payment
date and the current Determination Date, to 90. In no event
shall the ratio exceed 1.0.
IV. BENEFITS
4.1. IN-SERVICE DISTRIBUTION. A Participant who is an active Director
of the Company may request to withdraw all or a portion of his
Accounts, provided that any such amounts have been credited to
his Accounts for two (2) or more calendar years at the time of
distribution. Such request shall be made in writing in a form and
manner specified by the Company and must specify the amounts to
be withdrawn and the date upon which such amounts shall be paid
which must be as soon as administratively possible following a
Determination Date that is at least one (1) year after the date
on which the request is made. Any such request shall be
irrevocable unless, prior to payment, the Participant has a
Termination of Service, dies, or becomes disabled, at which time
the request shall become null and void and the Participant's
Accounts shall be paid as provided in Section 4.4, 4.5, 4.6, or
4.7 hereof, whichever shall be applicable.
4.2. PARTICIPANT CALL PROVISION. A Participant (or the
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Participant's Beneficiary in the case of the death of the
Participant) at any time may request an accelerated distribution
of all or a portion of the amounts credited to his Accounts
except those amounts that have been contributed during the
Election Year when such request is made, subject to the
forfeiture of an amount equal to ten percent (10%) of such
accelerated amount. Such request shall be made in writing in a
form and manner specified by the Company. The Company shall
distribute to the Participant or Beneficiary such accelerated
amount in the form of a lump sum as soon as administratively
possible after the Determination Date that coincides with or is
immediately after the date on which the Company receives the
request. Such distribution shall completely discharge the Company
from all liability with respect to the Participant's or
Beneficiary's Accounts or portion thereof that is either
distributed or forfeited as set forth herein. Further, if the
Participant is a Director at the time of the distribution, the
Participant may not make any further deferrals into the Plan
until January 1 of the second calendar year following the
calendar year in which the Participant receives the distribution.
4.3. EMERGENCY BENEFIT. In the event that the Administrator, upon
written petition of the Participant or his Beneficiary,
determines in its sole discretion, that the Participant or his
Beneficiary has suffered an unforeseeable financial emergency,
the Company shall pay to the Participant or his Beneficiary as
soon as practicable following such determination, an amount, not
in excess of the Participant's Accounts necessary to satisfy the
emergency, excluding, however, those amounts that have been
contributed during the Election Year when such unforeseeable
financial emergency occurs. The Administrator may, if it decides
in its sole discretion that it is necessary to do so, pay a
portion of an amount distributable under this Section 4.3 based
upon the value of the Participant's Accounts as of the
immediately prior Determination Date and the balance of such
amounts as soon as administratively possible after the
Determination Date that coincides with or is immediately after
the final determination that an amount is payable under this
Section 4.3. For purposes of this Plan, an unforeseeable
financial emergency is an unanticipated emergency that is caused
by an event beyond the control of the Participant
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or Beneficiary and that would result in severe financial hardship
to the individual if the emergency distribution were not
permitted, as may result from illness, casualty loss or sudden
financial reversal. Cash needs arising from foreseeable events,
such as the purchase of a residence or education expenses for
children shall not be considered the result of an unforeseeable
financial emergency.
4.4. TERMINATION BENEFIT. Upon the Termination of Service of a
Participant, for reasons other than death or Disability, he shall
be entitled to receive a distribution of the balance of his
Accounts. Such distribution shall be in the form of benefit
provided in Section 4.8 and shall be paid or commence to be paid
as soon as administratively possible after a Determination Date
that is at least one (1) year after the date on which such a
Participant makes a written request for distribution; provided,
however, that such payment or commencement date shall in no event
be later than a date which is as soon as administratively
possible after the January 1st coinciding with or immediately
after the later of either the Participant's Normal Retirement
Date or his date of actual retirement.
4.5. DEATH PRIOR TO BENEFIT COMMENCEMENT. Upon the Participant's death
prior to commencement of benefits hereunder, the Beneficiary of
the deceased Participant shall be entitled to a death benefit
equal to the balance of the Participant's Accounts. Such
distribution shall be in the form of benefit determined under
Section 4.8 shall commence as of the date determined under
Section 4.9 and shall be in lieu of all other benefits under this
Plan.
4.6. DEATH SUBSEQUENT TO BENEFIT Commencement. Upon the death of a
Participant subsequent to commencement of his benefits, the
Beneficiary of the deceased Participant shall be entitled to
receive a distribution of the Participant's remaining Accounts.
Such distribution shall be in the form of benefit determined
under Section 4.8, shall commence as of the date determined under
Section 4.9 and shall be in lieu of all other benefits under this
Plan.
4.7. DISABILITY. In the event the Administrator has determined that
the Participant has incurred a Termination of Service
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due to a Disability of at least six months duration which first
manifests itself after the Effective Date and prior to his Normal
Retirement Date, a disabled Participant shall be entitled to
receive a distribution of the balance of his Accounts. Such
distribution shall be in the form of benefit determined under
Section 4.8 and shall commence as of the date determined under
Section 4.9; provided, however, that the payment or commencement
date shall not be later than a date which is as soon as
administratively possible after the Determination Date coinciding
with or immediately following the Participant's Normal Retirement
Date.
4.8. FORM AND AMOUNT OF BENEFIT 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
Sections 4.4, 4.5, 4.6 and 4.7 shall be made in a single sum
or in the form of annual installments over a period of no
less than two (2) calendar years and no more than ten (10)
calendar years.
(b) Initially, the amount of any installments under any
installment form of payment shall be equal to the balance of
the Accounts to be distributed divided by the number of
installments to be paid. The amount of the installment
payments shall be recomputed annually and the installment
payments shall be increased or decreased to reflect any
changes in the Accounts due to fluctuations in earnings,
gains and losses on the remaining balance and the number of
remaining installments.
(c) In the event of the death of the Participant, as described
in Sections 4.5 or 4.6, the Participant's Beneficiary may,
with the consent of the Administrator, request an
alternative form of benefit payment, such as a lump-sum
payment or an installment form with an installment period of
less than ten (10) years. Such request shall be made in
accordance with such procedures as the Administrator may
establish. Any such procedures shall either require such
request be made a reasonable period of
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time, as determined by the Company in its sole discretion,
before the amounts affected by such a request shall be
distributable, or require a forfeiture of a significant
portion of such amounts. The Administrator may, but is not
required to, grant any such requests.
(d) 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 hereunder, provided that any such
procedures shall either require such request be made a
reasonable period of time, as determined by the Company in
its sole discretion, before the amounts affected by such
request shall be distributable, or require a forfeiture of a
significant portion of such amounts. The Administrator may,
but is not required to, grant any such requests.
(e) Notwithstanding anything in this Section IV to the contrary,
in no event shall any distribution under Section 4.1, 4.2 or
4.3 hereunder be less than the lesser of One Thousand
Dollars ($1,000.00) or the entire balance of the
Participant's Accounts hereunder.
4.9.COMMENCEMENT OF PAYMENTS.
(a) Except as otherwise provided, commencement of payments under
this Plan shall be as soon as administratively possible
following receipt of notice by the Administrator of an event
which entitles a Participant or a Beneficiary to payments
under this Plan. All payments shall be made as of the first
day of the month.
(b) Subject to such rules, procedures, limits and restrictions
as the Administrator may establish from time to time, a
Participant may elect that any single sum distributions
payable under this Article IV be made as soon as
administratively possible after the start of any calendar
year after the event permitting payment.
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(c) In the event of the death of the Participant, as described
in Sections 4.5 or 4.6, the Participant's Beneficiary may,
with the consent of the Administrator, request to change the
time of commencement of benefits hereunder. Such request
shall be made in accordance with such procedures as the
Administrator may establish. Any such procedures shall
either require such request be made a reasonable period of
time, as determined by the Company in its sole discretion,
before the amounts affected by such a request shall be
distributable, or require a forfeiture of a significant
portion of such amounts. The Administrator may, but is not
required to, grant any such requests.
(d) 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 time
of commencement of benefits hereunder, provided that any
such procedures shall either require that the request be
made a reasonable period of time, as determined by the
Company in its sole discretion, before the amounts affected
by such request shall be distributable, or require a
forfeiture of a significant portion of such amounts. The
Administrator may, but is not required to, grant any such
requests.
4.10. DESIGNATION OF BENEFICIARY. Subject to rules and procedures
promulgated by the Administrator, a Participant may sign a
document designating a Beneficiary or Beneficiaries. In the event
that a Participant fails to designate any Beneficiary in
accordance with the provisions of this Section, he shall be
deemed to have designated his spouse, or if no spouse is then
living, his estate, as his Beneficiary.
4.11. TAX WITHHOLDING. The Company may withhold from any payment made
by it under the Plan of such amount or amounts as may be required
for purposes of complying with the tax withholding or other
provisions of the 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
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payable hereunder.
V. RIGHTS OF PARTICIPANTS
5.1. CREDITOR STATUS OF PARTICIPANTS. The Elective Amounts of a
Participant shall be merely unfunded, unsecured promises of the
Company by which he is employed to make benefit payments in the
future and shall be liabilities solely against the general assets
of the Company. The Company shall not be required to segregate,
set aside or escrow the Elective Amounts nor any earnings, gains
and losses credited thereon. With respect to amounts credited to
any Accounts hereunder and any benefits payable hereunder, a
Participant and his Beneficiary shall have the status of general
unsecured creditors of the Company, and may look only to the
Company and its general assets for payment of such Accounts and
benefits.
5.2. RIGHTS WITH RESPECT TO THE TRUST. Any trust, and any assets held
thereby to assist the Company in meeting its obligations under
the Plan, shall in no way be deemed to controvert the provisions
of the preceding Section.
5.3. INVESTMENTS. In the Company's sole discretion, it may acquire
insurance policies, annuities or other financial vehicles for the
purpose of providing future assets of the Company to meet its
anticipated liabilities under this Plan. Such policies, annuities
or other investments, shall at all times be and remain
unrestricted general property and assets of the Company or
property of a trust established pursuant to Article VI hereof.
Participants and beneficiaries shall have no rights, other than
as general creditors, with respect to such policies, annuities or
other acquired assets.
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VI. TRUST.
6.1. ESTABLISHMENT OF TRUST. Notwithstanding any other provision or
interpretation of this Plan, the Company may establish a Trust in
which to hold cash, insurance policies or other assets to be used
to make, or reimburse the Company for, payments to the
Participants or beneficiaries of all or part of the benefits
under this Plan. Any Trust assets shall at all times remain
subject to the claims of general creditors of the Company in the
event of their insolvency as more fully described in the Trust.
6.2. OBLIGATION OF THE COMPANY. Notwithstanding the fact that a Trust
may be established under Section 6.1, the Company shall remain
liable for paying the benefits under this Plan. However, any
payment of benefits to a Participant or Beneficiary made by such
a Trust shall satisfy the Company's obligation to make such
payment to such person.
6.3. TRUST TERMS. A Trust established under Section 6.1 may contain
such terms as the Company may determine to be necessary or
desirable. The Company may terminate or amend a Trust established
under Section 6.1 at any time, and in any manner it deems
necessary or desirable, subject to the terms of any agreement
under which any such Trust is established or maintained.
6.4. INVESTMENT FUNDS AND ELECTIONS. The Company from time to time may
permit all or some of the Participants, former Participants, and
beneficiaries of deceased Participants to elect that their
Accounts shall be credited with earnings, gains and losses as if
such accounts held actual assets and such assets were invested in
accordance with such individuals' directions among such
Investment Funds as the Company may designate. Any such direction
of investment shall be subject to such rules as the Company and
Administrator may prescribe, including, without limitation, rules
concerning the manner of providing investment directions, the
frequency of changing such investment directions, and method of
crediting earnings, gains and losses for any portion of an
Account which is not covered by any valid investment directions.
The Investment Funds which the Company may designate shall
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include but not be limited to the following types of funds, which
can be managed on an individual basis or as part of a mutual
fund, as the Company shall determine:
(a) money market funds;
(b) common stock funds;
(c) bond funds;
(d) balanced funds; and
(e) investment funds which are primarily invested in insurance
contracts; and
(f) investment funds which are provided for under insurance
contracts.
The Company shall have the sole discretion to determine the
number of Investment Funds to be designated hereunder and the
nature of the funds and may change or eliminate the Investment
Funds provided hereunder from time to time. The Company shall in
its sole discretion determine the rate of earnings, gains and
losses to be credited to Accounts under this Plan with respect to
any such Investment Fund for any period, taking into account the
return, net of any expenses, of such Investment Funds for such
period.
VII. ADMINISTRATION AND CLAIMS PROCEDURE
7.1. ADMINISTRATOR. The Company shall be the Administrator unless and
until the Board shall appoint some other person, persons,
committee, corporation, partnership or other entity as
Administrator.
7.2. GENERAL RIGHTS, POWERS, AND DUTIES OF Administrator. The
Administrator shall be responsible for the general administration
of the Plan and shall have all powers as may be necessary to
carry out the provisions of the Plan and may, from time to time,
establish rules for the administration of the Plan and the
transaction of the Plan's business. In addition to any powers,
rights and duties set forth elsewhere in the Plan, it shall have
the following powers and duties:
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(a) To enact such rules, regulations, and procedures and to
prescribe the use of such forms as it shall deem advisable;
(b) To appoint or employ such agents, attorneys, actuaries,
accountants, assistants or other persons (who may also be
Participants in the Plan or be employed by or represent the
Company or any of it subsidiaries or affiliated companies)
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;
(c) To interpret the Plan, and 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, any person in accordance
with the provisions of the Plan and resolve all questions
arising under the Plan;
(d) To administer the Plan in accordance with its terms and any
rules and regulations it establishes; (e) To maintain such
records concerning the Plan as it deems sufficient to
prepare reports, returns and other information required by
the Plan or by law; and
(f) To direct the Company to pay benefits under the Plan, and to
give such other directions and instructions as may be
necessary for the proper administration of the Plan.
7.3. INFORMATION TO BE FURNISHED TO Administrator. The Company shall
furnish the Administrator with such data and information as it
may reasonably require. The records of the Company shall be
determinative of each Participant's period of service as a
Director, Termination of Service and the reason therefor, leave
of absence, years of service, personal data, and data regarding
Compensation and all reductions thereof under this Plan.
Participants and their Beneficiaries shall furnish to the
Administrator such evidence, data or information and execute such
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documents as the Administrator requests.
7.4. CLAIM FOR BENEFITS. Any claim for benefits under the Plan shall
be made in writing to the Administrator in such a manner as the
Administrator shall prescribe. The Administrator shall process
each such claim and determine entitlement to benefits within
ninety (90) days following its receipt of a completed application
for benefits unless special circumstances require an extension of
time for processing the claim. If such an extension of time for
processing is required, written notice of the extension shall be
furnished to the claimant prior to the termination of the initial
ninety (90) day period. In no event shall such extension exceed a
period of ninety (90) days from the end of such initial period.
The extension notice shall indicate the special circumstances
requiring an extension of time and the date as of which the
Administrator expects to render the final decision.
If such claim is wholly or partially denied by the Administrator,
the Administrator shall notify the claimant of the denial of the
claim in writing, delivered in person or mailed by first class
mail to the claimant's last known address. Such notice of denial
shall be in writing and shall contain:
(a) the specific reason or reasons for denial of the claim;
(b) a reference to the relevant Plan provisions upon which the
denial is based;
(c) a description of any additional material or information
necessary for the claimant to perfect the claim, together
with an explanation of why such material or information is
necessary; and
(d) an explanation of the Plan's claim review procedure.
If no such notice is provided, the claim shall be deemed
denied. The interpretations, determinations and decisions of the
Administrator shall be final and binding upon all persons with
respect to any right, benefit and privilege hereunder, subject to
the review procedures set forth in this Article.
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7.5. REQUEST FOR REVIEW OF A DENIAL OF A CLAIM FOR BENEFITS. Any
claimant or any authorized representative of such claimant whose
claim for benefits under this Plan has been denied or deemed
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 her or his claim for
benefits. Such claimant shall have sixty (60) days from the date
the claim is deemed denied, or sixty (60) days from receipt of
the notice denying the claim, as the case may be, in which to
request a review by written application delivered to the Appeals
Committee, which must specify the relief requested and the reason
such claimant believes the denial should be reversed.
7.6. APPEALS PROCEDURE. The Appeals Committee is hereby authorized to
review the facts and relevant documents as well as this Plan, to
interpret this Plan and other relevant documents and to render a
decision on the claim of the claimant. Such review may be made by
written briefs submitted by the claimant 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
offices of the Company or such other location as the Appeals
Committee shall select on such date and at such time as the
Appeals Committee shall designate upon not less than fifteen (15)
days notice to the claimant and the Administrator unless both of
them accept shorter notice. The notice shall specify that such
claimant must indicate in writing, at least five (5) days in
advance of the time established for such hearing, his intention
to appear at the appointed time and place, or the hearing will be
automatically cancelled. The reply shall specify any other
persons who will accompany him to the hearing, or such other
persons will not be admitted to the hearing. The Appeals
Committee shall make every effort to schedule the hearing on a
day and at a time which is convenient to both the claimant and
the Administrator. The claimant, or his duly authorized
representative, may review all pertinent documents relating to
the claim in preparation for the hearing and may submit issues
and comments in writing prior to or during the hearing.
7.7. DECISION UPON REVIEW OF DENIAL OF CLAIM FOR BENEFITS.
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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. In making its decision
the Appeals Committee shall have full power and discretion to
interpret the Plan, and 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, any person in accordance with the provisions of the
Plan. The Appeals Committee shall render a decision on the claim
review promptly, but no more than sixty (60) days after the
receipt of the claimant's request for review, unless special
circumstances (such as the need to hold a hearing) require an
extension of time, in which case the sixty (60) day period shall
be extended to one hundred twenty (120) days. Such decision shall
include specific reasons for the decision and contain specific
references to the relevant Plan provisions upon which the
decision is based. The decision on review shall be furnished to
the claimant within the appropriate time described above. If the
decision on review is not furnished within such time, the claim
shall be deemed denied on review. The decision of the Appeals
Committee shall be final and binding in all respects on the
Administrator and the Company and claimant involved. The review
procedures of this Article shall be the sole and exclusive remedy
and shall be in lieu of all actions at law, in equity, pursuant
to arbitration or otherwise.
7.8. 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. The members of the Appeals
Committee shall remain in office at the will of the Company and
the Company, from time to time, may 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
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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.
7.9. 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.
7.10. LIMITATION OF DUTIES. The Company, the Administrator, the
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Appeals Committee, and their respective officers, members,
employees and agents shall have no duty or responsibility under
the Plan other than the duties and responsibilities expressly
assigned to them herein or delegated to them pursuant hereto.
None of them shall have any duty or responsibility with respect
to the duties or responsibilities assigned or delegated to
another of them.
7.11. EXPENSES OF ADMINISTRATION AND THE APPEALS COMMITTEE. No fee or
compensation shall be paid to the Administrator or any member of
the Appeals Committee for his or its services as such, but the
Administrator and Appeals Committee may be reimbursed for its
expenses from any Trust established by the Company in connection
herewith, or, if no funds exist therein or if the Company
determines that they should not be paid by such Trust, by the
Company. The Appeals Committee and the Administrator may hire
such attorneys, accountants, actuaries, agents, clerks, and
secretaries as it may deem desirable in the performance of its
functions, any of whom may also be advisors to the Company or any
affiliated company, and the expense associated with the hiring or
retention of any such person or persons shall be paid directly by
the Company or from such Trust, as directed by the Company.
7.12. INDEMNIFICATION. In addition to whatever rights of
indemnification any individual who serves as a delegate of the
Administrator, Company and the members of the Appeals Committee
may be entitled to under the articles of incorporation,
regulations or bylaws of the Company, under any provision of law
or under any other agreement, the Company shall satisfy any
liability actually incurred by any such individual including
reasonable expenses and attorneys' fees, and any judgments,
fines, and amounts paid in settlement, in connection with any
threatened, pending or completed action, suit or proceeding which
is related to the exercise or failure to exercise by such
individual of any powers, authority, responsibilities or
discretion provided under this Plan or reasonably believed by
such member to be provided hereunder, and any action taken by
such individual in connection therewith. This indemnification for
all such acts taken or omitted is intentionally broad, but shall
not provide indemnification for embezzlement or diversion of Plan
funds for the benefit of any such individual. Such
indemnification will
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not be provided to any person who is not a present or former
employee the Company or a subsidiary or affiliated company
thereof nor shall it be provided for any claim by the Company or
a subsidiary or affiliated company thereof against any such
person. No indemnification shall be provided to any person who is
not an individual.
7.13. LIMITATION OF ADMINISTRATIVE LIABILITY. Neither the
Administrator nor the Appeals Committee while acting on behalf of
the Administrator, nor any of their respective officers, members,
employees, agents and delegates shall be liable for any act taken
by such person or entity pursuant to any provision of the Plan
except for gross abuse of the discretion given it and them
hereunder. No member of the Appeals Committee shall be liable for
the act of any other member. No member of the Board of Directors
of the Company shall be liable to any person for any action taken
or omitted in connection with the administration of this Plan.
7.14. LIMITATION OF SPONSOR LIABILITY. Any right or authority
exercisable by the Company or Board pursuant to any provision of
this Plan shall be exercised in the Company's capacity as sponsor
of the Plan, or on behalf of the Company in such capacity, and
not in a fiduciary capacity, and may be exercised without the
approval or consent of any person in a fiduciary capacity.
Neither the Company, nor the Board, nor any of their respective
officers, members, employees, agents and delegates, shall have
any liability to any party for its exercise of any such right or
authority.
VIII. AMENDMENT AND TERMINATION
8.1. AMENDMENT, MODIFICATION AND Termination. This Plan may be
amended, modified or terminated by the Company at any time, or
from time to time, by a document executed on behalf of the
Company by an officer thereof, which amendment, modification or
termination is authorized or ratified by the Board. No such
amendment, modification or termination shall reduce the amounts
credited to any Participant's Accounts, all determined as of the
date of such amendment, modification or termination.
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8.2. DISTRIBUTIONS ON TERMINATION. In the event this Plan is
terminated, the amounts then credited to all Participants'
Accounts may, in the Company's sole discretion, (i) be
distributed to the Participants in quarterly installments over
such period not more than fifteen (15) years as the Company may
determine, (ii) be distributed to the Participants in a lump sum,
or (iii) continue to be credited with earnings, gains and losses
pursuant to Article III and be distributed pursuant to Article
IV.
IX. MISCELLANEOUS
10.1. 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.
10.2. 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. Any benefits which become payable hereunder shall be
paid from the general assets of the Company. 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.
10.3. NO RIGHTS TO CONTINUE AS DIRECTOR Created. This Plan shall not
be deemed to constitute a contract for services between the
Company and any Participant, nor confer upon any Participant the
right to be retained in the service of Director for any period of
time. Nothing herein shall be construed as fixing or regulating
the Compensation payable to any Participant.
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10.4. 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.
10.5. 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 benefits or amounts credited
to Accounts under this Plan are expressly declared to be
unassignable and non-transferable. No part of the benefits or
amounts credited to Accounts 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.
10.6. 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 Vice President of Human
Resources. 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.
10.7. 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.
10.8. INCAPACITY. If the Administrator determines that any
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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, any Trust, the Administrator, the Company and the
Appeals Committee with respect to such payments.
10.9. 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.
10.10. 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.
10.11. 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.
10.12. 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.
10.13. 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.
10.14. SEVERABILITY. In the event that any provision or term of
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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.
10.15. 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, the Company, by two of its appropriate officers duly
authorized, has executed this Deferred Compensation Plan for Outside Directors
as of the date first above written.
ROYAL APPLIANCE MFG. CO.
("Company")
By______________________________
Title___________________________
And_____________________________
Title___________________________
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