<PAGE>
                                                                    Exhibit 10.1
                                                                  EXECUTION COPY

                              EMPLOYMENT AGREEMENT

         THIS AMENDED AND RESTATED EMPLOYMENTAGREEMENT ("Agreement"), dated as
of December 16, 2002 is between MICHAEL J. MERRIMAN ("Merriman") and ROYAL
APPLIANCE MFG. CO., an Ohio corporation ("Royal").

         WHEREAS, Merriman has been President and Chief Executive Officer of
Royal pursuant to an employment agreement dated March 14, 2002;

         WHEREAS, Royal intends to enter into an agreement and plan of merger
(the "Merger Agreement"), with TechTronic Industries Company Limited, a Hong
Kong limited liability company ("TTI"), pursuant to which TTI will acquire all
of the issued and outstanding common shares of Royal;

         WHEREAS, Royal desires to continue to employ Merriman following the
consummation of the transactions contemplated by the Merger Agreement (such
transactions shall collectively be referred to herein as the "Merger");

         WHEREAS, Royal and Merriman desire to amend and restate the Agreement
dated March 14, 2002, in order to reflect their agreement as to the terms of
Merriman's continuing employment following the Merger; and

         WHEREAS, Merriman desires to accept such continuing employment on the
revised terms set forth in this Agreement; and

         WHEREAS, the March 14, 2002 Agreement provides that it may be amended
by a written agreement signed by all parties thereto.

         NOW THEREFORE, in consideration of the premises and mutual covenants
set forth herein and for other good and valuable consideration the parties agree
as follows:

         1. Definition of Certain Terms. For the purposes of this Agreement, the
terms listed below shall be defined as follows:

                  "Affiliate" shall mean any corporation or other business
entity that directly or indirectly is controlled by the Company and any joint
venture, partnership or other legal entity in which the Company has a
significant ownership interest.

                  "Board" shall mean the Company's Board of Directors.

                  "Cause" shall have the meaning set forth in Section 7.C.

                  "Company" shall mean Royal and its successors and assigns.
<PAGE>
                  "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. Notwithstanding the foregoing, for purposes of this Agreement, in no
event shall a "Change in Control" be deemed to include any event associated or
in connection with the Merger or the Merger Agreement.

                  "Disability" shall mean Merriman's inability to perform all of
his duties for an aggregate of 90 days in any 12 consecutive month period due to
a physical or mental incapacity based upon evidence of a licensed physician who
has been mutually agreed to by Merriman (or his primary care giver if Merriman
is physically unable to agree) and Royal.

                  "Effective Date" shall mean the date of this Agreement as set
forth in the first line above.

                  "Executive" shall mean Merriman.

                  "Good Reason" shall have the meaning set forth in Section 7.C.

                  "Noncompete Period" shall have the meaning set forth in
Section 8.

                  "Term" shall have the meaning set forth in Section 2.

         2. Term of Employment. The initial term of this Agreement shall
commence on the Effective Date of this Agreement and shall expire on the first
anniversary thereof ("Term"); provided, however, that the Term shall be
automatically extended for successive one-year periods, unless not later than 60
days prior to the end of the initial term or any automatic extension thereof,
the Company or Merriman shall have given the other party written notice to the
contrary. If the Company gives notice of its intention not to renew this
Agreement, Merriman will be entitled to the severance benefits set forth in
Section 7.A. hereof.

                                       2
<PAGE>
         3. Position.

                  A. During the Term, Merriman will be employed as President and
Chief Executive Officer of the Company. Merriman will devote substantially all
his business time to the performance of his duties hereunder, will engage in no
other business activities without permission of the Board and will perform his
duties hereunder to the best of his abilities; provided, however, that (1) prior
to the Merger, Merriman may serve as an outside director for any three companies
that do not compete with the Company or any of its Affiliates; and (2) as of the
date of consummation of the Merger (the "Closing Date") and after, Merriman may
continue to serve as an outside director for those companies on whose board of
directors Merriman serves on the Closing Date and, with the written permission
of the Board, may serve as an outside director for one or more other companies
that do not compete with the Company or any of its Affiliates; and provided,
further, that such services do not adversely affect the performance of his
duties hereunder.

                  B. In his capacity as President and Chief Executive Officer of
the Company, Merriman shall have the executive authority, responsibilities and
duties typically held and executed by a chief executive officer of a nationally
recognized manufacturing and sales corporation.

                  C. Additionally, Merriman may make and manage personal
business investments of his choice and serve in any capacity with any civic,
educational or charitable organization, or trade association, without seeking or
obtaining written approval of the Board, if such investments, activities and
services do not interfere or conflict in any material respect with the
performance of his duties hereunder or the interests of the Company. Written
approval is required from the Board with respect to Merriman serving in any
capacity with any federal, state or local governmental entity.

                  D. Principal Office. Merriman's principal office and normal
place of work shall be at the Company's principal executive offices in
Glenwillow, Ohio.

         4. Obligations Upon Closing of Merger.

                  A. On or before the Closing Date, Merriman shall repay in full
the note payable to the Company in the original principal amount of $542,750
that Merriman signed on April 2, 2001; and

                  B. On the Closing Date, the Company shall make a single sum
cash payment to Merriman in the amount of $742,000.

         5. Compensation. During the Term, Merriman shall be entitled to the
following annual compensation from the Company:

                  A. Salary. The Company shall pay Merriman an annual base
salary ("Base Salary") of $400,000 payable in 24 equal semi-monthly
installments. State, local and federal

                                       3
<PAGE>
income tax withholdings and other normal employee deductions will be deducted
from the gross salary prior to payment to Merriman. Merriman's Base Salary shall
be reviewed annually by the Board and increases, if any, will be made at the
discretion of the Board. Merriman's Base Salary may not be reduced without his
consent.

                  B. 2002 MIP Cash Bonus Program. Merriman may earn a cash bonus
for the fiscal year 2002 pursuant to the Company's annual management incentive
plan ("MIP"). The MIP payment to Merriman will be calculated as a percentage of
Merriman's annual Base Salary, the percentage based upon the Company's actual
performance compared to the various targeted levels set forth by the Board at
the beginning of fiscal year 2002. The annual MIP payment will be paid to
Merriman as soon as reasonably practicable following fiscal year 2002, but in
any event not later than April 1st. If the MIP shall terminate prior to the end
of fiscal year 2002, Merriman shall be entitled to a pro rata MIP payment (based
on the period of time served during the year in which the MIP was in effect)
which shall be paid to Merriman as soon as reasonably practicable, but in any
event not later than April 1st. In the event that the Company fails to implement
the incentive compensation programs as described in Section 5.C and/or Section
5.D, the MIP shall be deemed to have been in effect for any such period(s), and
Merriman shall be entitled to a cash bonus payment thereunder with respect to
such period(s) consistent with the Company's historical practice.

                  C. 2003 EBITDA Bonus Pool. Merriman shall be entitled to a
cash bonus equal to 34% of the EBITDA Bonus Pool for fiscal year 2003, which
bonus payment will be paid to Merriman as soon as reasonably practicable
following fiscal year 2003, but in any event not later than April 1st. Such
EBITDA Bonus Pool shall be equal to 50% of the amount by which the Company's
EBITDA exceeds $35 million, up to $42 million for fiscal year 2003, excluding
bonuses and costs related to the Merger (including, but not limited to, legal
and professional fees related to the Merger; non-cash write-offs; and severance
costs related to 2003 terminations); provided, however, that the EBITDA Bonus
Pool shall not exceed $3.5 million, and provided, further, that, if the EBITDA
attributable to the Company's business excluding EBITDA attributable to the
Telezapper product for fiscal year 2003 does not equal or exceed $30 million,
then no such EBITDA Bonus Pool shall be created, and Merriman shall be entitled
to receive no payment under this Section 5.C. All determinations of EBITDA for
purposes of determining the amount of the EBITDA Bonus Pool and participants'
entitlement to a payment thereunder shall be made in accordance with generally
accepted accounting principles applied in the United States and consistent with
the Company's recent historical practices.

                  D. Annual Incentive Plan. The Company shall adopt an Annual
Incentive Plan for fiscal year 2004 and later fiscal years (the "AIP"), in which
Merriman shall participate on terms no less favorable than those applicable to
other Company senior management members who may participate in such plan. The
annual AIP payment to Merriman will be calculated as a percentage of Merriman's
annual Base Salary, the percentage based upon the Company's actual performance
compared to the various targeted levels set forth by the Board at the beginning
of each fiscal year. The annual AIP payment will be paid to Merriman as soon as
reasonably practicable following each annual calendar period, but in any event
not later than April 1st. Merriman's level of participation in the AIP may not
be reduced without his consent.

                                       4
<PAGE>
                  E. Stock Options and Phantom Stock Rights. Merriman may
receive, from time to time, during the Term, such stock options and phantom
stock rights as are awarded by the Board or a Committee of the Board under plans
authorized by the Board; provided that Merriman shall be granted options to
purchase 2,000,000 shares of TTI (the "TTI Options") in May 2003, following
TTI's earnings announcement for fiscal year 2002 or as soon thereafter as
practicable. Within 30 days after the date of execution of the Merger Agreement,
the Company shall transmit to Merriman an offer sheet containing the terms of
the TTI Options which is intended to reflect the terms of the TTI Options when
issued. The terms of such offer sheet shall be consistent with the following:

                           (i) the TTI Options shall have a term of five years
                  from the date of grant (subject to earlier termination in the
                  event of Merriman's termination of employment);

                           (ii) the TTI Options shall have the lowest per share
                  subscription price on the date of grant permitted by the terms
                  of the plan pursuant to which such options are issued;

                           (iii) the TTI Options shall vest ratably over a
                  period of 12 months; and

                           (iv) the TTI Options shall otherwise be subject to
                  the most favorable terms and conditions applicable to, and the
                  provisions of such options shall be interpreted consistently
                  with the provisions of any option agreement of, any member of
                  senior management of any subsidiary or affiliate of TTI who
                  has been granted options to purchase shares of TTI.

The Company shall cause to be obtained any and all approvals necessary for the
issuance of the TTI Options, and failure to obtain any such approval(s) shall
not excuse the Company's performance under this Section 5.E.

         6. Benefits and Expenses.

                  A. During the Term, the Company will provide benefits to
Merriman no less favorable than those benefits made available to other Company
senior management members, including participation in group term life insurance,
group health, hospitalization, dental and vision coverage, disability coverage,
the 401(k) retirement plan, and maintenance of the current vacation plan
providing for six weeks of paid vacation per year which will accrue year to year
if unused.

                  B. Reasonable travel, entertainment and other business
expenses incurred by Merriman in the performance of his duties hereunder shall
be reimbursed by the Company in accordance with Company policies in effect from
time to time.

                  C. During the Term, the Company shall provide Merriman with a
monthly car allowance for the sole purpose of defraying lease expenses, such
allowance not to exceed $775 per month. In lieu of such monthly car allowance,
the Company may, at its option, make a car lease payment directly to the lessor,
which in no event shall exceed $775 per month. The

                                       5
<PAGE>
Company shall also reimburse Merriman for monthly country club dues not to
exceed $700 per month. The Company shall also continue to pay all professional
dues currently paid for Merriman, including those to the Young Presidents
Organization.

                  D. Merriman shall be indemnified by the Company against claims
arising in connection with his status as an employee, officer, director or agent
of the Company in accordance with the Company's policies in effect from time to
time, subject to applicable law.

         7. Benefits Upon Termination.

                  A. Triggering Termination. In the event of Merriman's
termination without Cause or termination due to death or Disability, if Merriman
terminates his employment for Good Reason or if the Company gives notice of its
intention not to renew this Agreement (collectively, "Triggering Termination"),
Merriman, or his estate, shall be entitled to the following severance benefits:

                  (i) Prior to Merger. If the Triggering Termination occurs
         prior to the date of the Merger, Merriman shall be entitled to:

                           (1) basic severance equal to three times the sum of
                  Merriman's current annual Base Salary and Merriman's average
                  annual MIP earned over the three most recent completed fiscal
                  years of the Company, with such basic severance payable in six
                  equal semi-annual installments beginning within 30 days after
                  the effective date of the Triggering Termination.
                  Notwithstanding the foregoing, if there is a Change in Control
                  after the Effective Date but before the Triggering
                  Termination, the basic severance shall be accelerated and paid
                  in full as a lump sum (without any discount) within 30 days
                  after the Triggering Termination. The balance of any unpaid
                  basic severance shall be accelerated and paid in full (without
                  any discount), in a lump sum, upon any Change in Control that
                  occurs after a Triggering Termination;

                           (2) an additional lump sum severance, payable within
                  30 days of the Triggering Termination. This amount will be
                  determined and set annually each February by the Board and the
                  amount so set shall govern until the next determination by the
                  Board. Such additional lump sum severance amount will not be
                  adjusted up or down by more than 33% from the previous year's
                  amount. The additional lump sum severance amount for 2002
                  through February 2003 will be $1,500,000;

                           (3) forgiveness by the Company of any amount
                  remaining due from Merriman on the note payable to the Company
                  in the original principal amount of $542,750 that Merriman
                  signed on April 2, 2001; and

                           (4) payment of Merriman's Base Salary through the
                  date of termination; and

                                       6
<PAGE>
                           (5) any additional benefits or perquisites to which
                  Merriman and his dependents, as applicable, shall be entitled
                  (or would have been entitled, if Merriman or his dependents
                  would have been eligible for such benefits or perquisites but
                  for Merriman's termination of employment) under the Company's
                  benefit plans or perquisite arrangements generally applicable
                  to senior management as may be in effect from time to time,
                  including a pro rata MIP payment (based on the period of time
                  served during the year in which the Triggering Termination
                  occurs), if any, for the year in which the Triggering
                  Termination occurs to be paid to Merriman by the next April
                  1st and any unpaid MIP payment for a prior year, group health,
                  hospitalization, dental and vision coverage for him and his
                  family on the same basis as active senior management of the
                  Company for the 36 months subsequent to the Triggering
                  Termination, and accrued vacation. The Company agrees after a
                  Change in Control and/or for the period 36 months subsequent
                  to the Triggering Termination not to take any action that
                  would adversely affect the Executive's and his dependents'
                  participation in, or materially reduce the benefits under, any
                  of the Company's benefit plans or perquisite arrangements or
                  deprive the Executive or his dependents of any material fringe
                  benefit currently enjoyed, except to the extent that such
                  action, material reduction or deprivation is generally
                  applicable to active members of senior management of the
                  Company and their dependents.

                  (ii) Post-Merger. If the Triggering Termination occurs on or
         after the date of the Merger and is for any reason other than
         Merriman's death or Disability, Merriman shall be entitled to the
         following:

                           (1) a severance payment equal to one-half of the sum
                  of (a) Merriman's current annual Base Salary and (b)
                  Merriman's average annual bonus compensation under the MIP,
                  the AIP and/or the 2003 EBIDTA Bonus Pool, whichever shall be
                  applicable, earned over the three most recent completed fiscal
                  years of the Company; provided, however, that for the purposes
                  of computing such three-year average bonus compensation, the
                  amount deemed to have been earned under the 2003 EBITDA Bonus
                  Pool for fiscal year 2003, if applicable, shall be the lesser
                  of (1) the bonus amount earned by the Executive for fiscal
                  year 2002 under the MIP or (2) the actual bonus amount earned
                  under the 2003 EBITDA Bonus Pool.. Such severance payment
                  shall be paid in full as a lump sum within 30 days after the
                  Triggering Termination;

                           (2) payment of Merriman's Base Salary through the
                  date of termination;

                           (3) a pro rata payment under the MIP, the 2003 EBITDA
                  Bonus Pool and/or the AIP, as applicable, based on the period
                  of time served during the year in which the Triggering
                  Termination occurs, to be paid to Merriman at such time as
                  payments under such plan are customarily made to participants;
                  provided, however, that, if the Triggering Termination shall
                  occur in 2003, such pro rata payment shall be deemed to be the
                  greater of (a) the payment

                                       7
<PAGE>
                  to which Merriman would have been entitled if the Triggering
                  Termination had occurred on July 1, 2003; or (b) the payment
                  calculated using the actual date of the Triggering
                  Termination; and

                           (4) any additional benefits or perquisites to which
                  Merriman and his dependents, as applicable, shall be entitled
                  (or would have been entitled, if Merriman or his dependents
                  would have been eligible for such benefits or perquisites but
                  for Merriman's termination of employment) under the Company's
                  benefit plans and perquisite arrangements generally applicable
                  to senior management as may be in effect from time to time,
                  including any unpaid payment under the MIP, the 2003 EBITDA
                  Bonus Pool or the AIP for a prior year, group health,
                  hospitalization, dental and vision coverage for him and his
                  family on the same basis as active senior management of the
                  Company for the 36 months subsequent to the Triggering
                  Termination, and accrued vacation. The Company agrees after a
                  Change in Control and/or for the period 36 months subsequent
                  to the Triggering Termination not to take any action that
                  would adversely affect the Executive's and his dependents'
                  participation in, or materially reduce the benefits under, any
                  of the Company's benefit plans or perquisite arrangements or
                  deprive the Executive or his dependents of any material fringe
                  benefit currently enjoyed, except to the extent that such
                  action, material reduction or deprivation is generally
                  applicable to active members of senior management of the
                  Company and their dependents.

         B. Other Employment Terminations. If Merriman's employment (i) is
terminated by the Company for Cause, (ii) is voluntarily terminated by the
Executive for other than Good Reason, or (iii) is terminated due to Merriman's
death or Disability, the Company shall pay to Merriman, or his estate, his
unpaid Base Salary to the date of that termination and accrued vacation. In
addition, the Company shall pay to Merriman, or his estate, any benefits to
which Merriman shall be entitled under the Company's benefit plans, including
payment of amounts fully earned but not paid under the MIP, the 2003 EBITDA
Bonus Pool and/or the AIP, as applicable, for the year in which such termination
occurred (and any such unpaid amount for a prior year). Further, if Merriman's
termination of employment occurs prior to December 31 in a fiscal year due to
Merriman's death or Disability, the Company shall pay to Merriman, or his
estate, a pro rata payment, through the date of such termination, under the MIP,
the 2003 EBITDA Bonus Pool and/or the AIP, as applicable.

         C. Certain Definitions. The following terms shall have the meanings
specified below:

                  (i) "Cause" shall mean the following: (1) for the period prior
         to January 1, 2004, (a) an act or acts of dishonesty by the Executive
         constituting a felony and resulting or intended to result directly or
         indirectly in substantial gain or personal enrichment at the expense of
         the Company; or (b) the willful and continued failure by the Executive
         substantially to perform his duties with the Company (other than any
         such failure resulting from incapacity due to mental or physical
         illness) after a demand in writing for substantial performance is
         delivered by the Board, which demand specifically

                                       8
<PAGE>
         identifies the manner in which the Board believes that the Executive
         has not substantially performed his duties, and such failure results in
         demonstrable material injury to the Company; provided that the
         Executive's employment shall in no event be considered to have been
         terminated by the Company for Cause if such termination took place as
         the result of (I) bad judgment or negligence, or (II) any act or
         omission without intent of gaining therefrom directly or indirectly a
         profit to which the Executive was not legally entitled, or (III) any
         act or omission believed in good faith to have been in or not opposed
         to the interest of the Company, or (IV) any act or omission in respect
         of which a determination be made that the Executive met the applicable
         standard of conduct prescribed for indemnification or reimbursement or
         payment of expenses under the Regulations of the Company or the laws of
         the State of Ohio, in each case as in effect at the time of such act or
         omission; and (2) for the period on and after January 1, 2004, (a) an
         act or acts of dishonesty by the Executive constituting a felony and
         resulting or intended to result directly or indirectly in substantial
         gain or personal enrichment at the expense of the Company; (b) the
         willful and continued failure by the Executive substantially to perform
         his duties with the Company (other than any such failure resulting from
         incapacity due to mental or physical illness) after a demand in writing
         for substantial performance is delivered by the Board, which demand
         specifically identifies the manner in which the Board believes that the
         Executive has not substantially performed his duties, and such failure
         results in demonstrable material injury to the Company; (c) any
         material breach by the Executive of any provision of this Agreement,
         which is not cured by the Executive after having been afforded a
         reasonable opportunity to do so; or (d) any willful or reckless act or
         omission which has a material adverse impact on the business or
         reputation of the Company; provided that the Executive's employment
         shall in no event be considered to have been terminated by the Company
         for Cause if such termination took place as the result of bad judgment,
         negligence or any act or omission believed in good faith to have been
         in or not opposed to the interest of the Company. The Executive shall
         not be deemed to have been terminated for Cause unless and until there
         shall have been delivered to him a copy of a resolution duly adopted by
         the Board at a meeting of the Board called and held for that purpose
         (after reasonable notice to the Executive and an opportunity for him,
         together with his counsel, to be heard before the Board), finding that
         in the good faith opinion of the Board the Executive was guilty of the
         conduct constituting "Cause" as set forth above and specifying the
         particulars thereof in detail.

                           (ii) "Good Reason" will exist if any one or more of
                  the following occur:

                           (1) a material failure by the Company or its
         Affiliates to honor any of its obligations under Sections 4.B., 5.A.,
         5.B., 5.C., 5.D., 5.E., 6.A., 6.B., 6.C., 6.D., 15. or 20.C. which
         failure is not cured by the Company after having been afforded a
         reasonable opportunity to do so, or

                           (2) an adverse change in nature or scope of the
         authority, powers, functions, responsibilities or duties attached to
         the position of President and Chief Executive Officer with the Company
         (as such position existed on the

                                       9
<PAGE>
                           Effective Date) (including but not limited to
                           assignment by the Company to Merriman of duties
                           inconsistent with his current position, duties,
                           responsibilities, and status with the Company or a
                           change of his reporting responsibilities or titles
                           currently in effect) without the prior written
                           consent of Merriman, which is not remedied within ten
                           calendar days after receipt by the Company of written
                           notice from Merriman of such change; or

                                    (3) if a change in circumstances
                           significantly affecting Merriman's position has
                           occurred (including, without limitation, a change in
                           the scope of the business or other activities for
                           which he is responsible), and as a result thereof
                           Merriman has been rendered substantially unable to
                           carry out, has been substantially hindered in the
                           performance of, or has suffered a substantial
                           reduction in, any of the authorities, powers,
                           functions, responsibilities or duties attached to the
                           position of President and Chief Executive Officer (as
                           such position existed on the Effective Date), which
                           situation is not remedied within ten calendar days
                           after written notice to the Company from Merriman; or

                                    (4) the Company shall, without Merriman's
                           prior written consent, relocate its principal
                           executive offices, or require Merriman to have his
                           principal location of work changed, to any location
                           which is in excess of 30 miles from the current
                           location thereof or cause Merriman to travel away
                           from his office in the course of discharging his
                           responsibilities or duties significantly more (in
                           terms of consecutive days or aggregate days in any
                           calendar year) than was required of him previously;
                           or

                                    (5) failure to elect or reelect or maintain
                           Merriman as President and Chief Executive Officer.

                                    (6) After the Merger or a Change in Control,
                           any purported termination by the Company of
                           Executive's employment that is not effected pursuant
                           to a Notice of Termination satisfying the
                           requirements of Section 7.D., then, for purposes of
                           this Agreement, no such purported termination shall
                           be effective, provided, if the failure to comply with
                           Section 7.D. occurs despite the Company's good faith
                           efforts to comply, no Good Reason shall exist and the
                           provisions of Section 7.D. shall govern.

                  D. Notice of Termination. Any purported termination of
employment by the Company for Cause shall be communicated by written Notice of
Termination to Merriman in accordance with Section 16 hereof. For purposes of
this Agreement, a "Notice of Termination" shall mean a notice which shall
indicate the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of employment under the provision so indicated.
Any good faith failure to comply with the provisions of this Section D. or
Section 16 shall require that the process set forth in this Section 7D. be
repeated to comply with such provisions.

                                       10
<PAGE>
         8. Confidentiality; Nondisparagement; Nonsolicitation; Noncompetition.

                  A. Merriman acknowledges the time and expense incurred by the
Company and its subsidiaries in connection with developing proprietary and
confidential information in connection with its businesses and operations.
Merriman agrees that he will not at any time during the Term or after
termination of his employment, divulge, communicate, use to the detriment of the
Company or any of its subsidiaries or Affiliates (collectively, the "Group") or
for the benefit of any other person, firm or entity, or misappropriate in any
way, any confidential information or trade secrets relating to the Group,
including without limitation, business strategies, operating plans, acquisition
strategies (including the identities of (and any other information concerning)
possible acquisition candidates), pro forma financial information, marketing
analyses, acquisition terms and conditions, personnel information, trade
processes, manufacturing methods, know-how, customer lists and relationships,
supplier lists, or other non-public proprietary and confidential information
relating to the Group, except to the extent such information is lawfully
obtainable from public sources or such use or disclosure is (i) necessary to the
performance of Merriman's duties under this Agreement, (ii) required by
applicable laws, regulations, or by the rules of a self regulatory organization,
or (iii) authorized by the Company. Additionally, during the Noncompete Period,
Merriman will not make disparaging remarks about the Company or any of its
Subsidiaries, employees, directors, suppliers or customers.

                  B. During the six-month period following the termination of
Merriman's employment (the "Noncompete Period"), Merriman shall not, directly or
indirectly, for himself or on behalf of any other person, firm or entity,
employ, engage or retain any person who at any time during the preceding
12-month period was an employee or consultant of any member of the Group or
contact any supplier, customer, employee or consultant from the Group for the
purpose of soliciting or diverting any such supplier, customer, employee or
consultant from any member of the Group or otherwise interfering with the
business relationship of any member of the Group with any of the foregoing,
without prior written authorization from the Company.

                  C. During the Noncompete Period, Merriman shall not, directly
or indirectly, engage in, or serve as a principal, partner, joint venturer,
member, manager, trustee, agent, stockholder, director, officer, or employee of,
or consultant or advisor to, or in any other capacity, or in any manner, own,
control, manage, operate, or otherwise participate, invest, or have any interest
in, any person, firm or entity that engages in North America in the floor care
business or in any business that is competitive with any product code or any
other business that generated 10% of the revenues of the Group within the
preceding 24-month period, without prior written authorization from the Company;
provided, however, that the ownership of less than 5% of the outstanding equity
securities of a publicly traded corporation or other publicly traded legal
entity shall not in and of itself be a violation of this Section 8.C.

                  D. Merriman acknowledges that his employment by the Company
and agreements herein (including the agreements of this Section 8) are
reasonable and necessary for the protection of the Company and are essential
inducements to the Company entering into this Agreement. Accordingly, Merriman
shall be bound by the provisions hereof (including the provisions of this
Section 8) to the maximum extent permitted by law, it being the intent and
spirit of the parties that the foregoing shall be fully enforceable. However,
the parties further

                                       11
<PAGE>
agree that, if any of the provisions of this Section 8 shall for any reason be
held to be excessively broad as to duration, geographical scope, or subject
matter, such provision shall be construed by limiting and reducing it so as to
be enforceable to the extent compatible with the applicable law as it shall
herein pertain.

                  E. Merriman acknowledges that the services to be rendered
under the provisions of this Agreement are of a unique nature and that it would
be difficult or impossible to replace such services and that by reason thereof,
Merriman agrees and consents that if he violates the provisions of this Section
8, the Company, in addition to any other rights and remedies available under
this Agreement or otherwise, shall be entitled to an injunction to be issued or
specific performance to be required restricting Merriman from committing or
continuing any violation of the provisions of this Section 8.

         9. Governing Law; Jurisdiction and Venue. This Agreement shall be
governed by and construed in accordance with the laws of the State of Ohio,
without giving effect to the conflict of law provisions thereof. Any claim or
action arising hereunder shall be litigated exclusively in the Court of Common
Pleas, Cuyahoga County, Ohio or federal courts situated in the Northern District
of Ohio, Eastern Division, and each party irrevocably consents and submits to
the personal and subject matter jurisdiction of said courts.

         10. Entire Agreement. This Agreement sets forth the entire agreement
and understanding between the parties with respect to the subject matter hereof
and supersedes and cancels any and all prior discussions, correspondence,
agreements or understandings (whether oral or written) between the parties
hereto with respect to such matters, excluding any agreements relating to stock
option and phantom stock grants or indemnity as an employee, officer, director
or agent. Any representation, premise or condition, whether written or oral, not
specifically incorporated herein, shall be of no binding effect upon the
parties.

         11. Severability; Assignment.

                  A. Except for Section 8 hereof, if any portion of this
Agreement is held invalid or unenforceable by a court of competent jurisdiction,
such portion shall be deemed deleted as though it had never been included
herein, but the remainder of this Agreement shall remain in full force and
effect.

                  B. This Agreement shall not be assignable by Merriman except
pursuant to the laws of descent and distribution and then only for purposes of
enforcing Merriman's rights hereunder and shall be assignable by the Company
only with the consent of Merriman, provided, however, that the Company may
assign its rights and obligations under this Agreement without consent of
Merriman in the event that the Company shall effect a sale of the Company that
would constitute a Change in Control.

         12. Cooperation with Regard to Litigation. Merriman agrees to cooperate
with the Company during the Noncompete Period by making himself reasonably
available to testify on behalf of the Company or its Affiliates, in any action,
suit or proceeding, whether civil, criminal, administrative, or investigative
and to assist the Company or any of its Affiliates in any such

                                       12
<PAGE>
action, suit, or proceeding by providing information and meeting and consulting
with its counsel and representatives. Merriman shall be reimbursed promptly for
all out of pocket expenses incurred in satisfying his obligations under this
Section 12.

         13. Waiver; Amendment. No provision hereof may be waived except by a
written agreement signed by all parties hereto. The waiver of any term or of any
condition of this Agreement shall not be deemed to constitute a waiver of any
other term or condition. This Agreement may be amended only by a written
agreement signed by all parties hereto.

         14. Survival of Payment Provisions. The payment provisions of Sections
6, 7, 12, 15, 19, 20 and 21 hereof shall survive the expiration, suspension or
termination, for any reason, of this Agreement.

         15. Successors; Binding Agreement. This Agreement shall inure to the
benefit of, and be binding upon, the Company, its successors and permitted
assigns. The Company will require any successor or assignee (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance satisfactory to the Executive, to expressly assume and agree
to perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
Failure of the Company to obtain such agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement and shall entitle the
Executive to compensation from the Company in the same amount and on the same
terms as would apply if the Executive terminated his employment for Good Reason.
This Agreement shall also inure to the benefit of and be binding upon Merriman,
his personal or legal representatives, his executors, administrators, heirs,
distributees, devisees and legatees. If Merriman should die while any amount
would still be payable hereunder had Merriman continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to his devisee, legatee, or other designee or, if there
be no such designee, to his estate.

         16. Notice. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when personally delivered or delivered by
recognized overnight courier or mailed by United States registered mail, return
receipt requested, postage prepaid, addressed to the Secretary of the Company,
7005 Cochran Road, Glenwillow, Ohio 44139, and addressed to Merriman (currently,
16361 Misty Lake Glen, Chagrin Falls, Ohio 44023) at his last known address
contained in the personnel records of the Company, or to such other address as
either party may have furnished to the other in writing in accordance herewith,
except that notice of change of address shall be effective only upon receipt.

         17. Withholding Taxes. The Company may withhold from any amounts
payable under this Agreement such federal, state and local taxes as may be
required to be withheld pursuant to any applicable law or regulation.

                                       13
<PAGE>
         18. Counterparts. This Agreement may be signed in counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.

         19. Set-Off; Interest on Overdue Payments. There shall be no right of
set-off or counterclaim against, or delay in, any payment by the Company to
Merriman hereunder in respect of any claim against or debt or obligation of
Merriman, whether arising hereunder or otherwise. Without limiting the rights of
Merriman at law or in equity, if the Company fails to make any payments
hereunder on a timely basis, the Company shall pay interest on the amount
thereof at an annualized rate equal to the rate in effect, at the time such
payment should have been made, under the Company's 401(k) plan for loans to
participants in such plan.

         20. Parachute Payments.

                  A. Pre-Merger. If it shall be determined that any payment,
distribution or benefit received or to be received by Merriman from the Company
or any of its Affiliates, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise pursuant to
or by reason of any other agreement, policy, plan, program or arrangement,
including without limitation any stock option, phantom stock, performance share,
performance unit, restricted stock, stock appreciation right or similar right,
or the lapse or termination of any restriction on, or the vesting or
exercisability of, any of the foregoing in connection with a Change in Control
(individually and collectively, "Payments") which occurs prior to the Closing
Date would be subject to the excise tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended (the "Code") or to any similar tax imposed by
state or local law, or to any interest or penalties with respect to such taxes
(such tax or taxes, together with any such interest and penalties, being
hereafter collectively referred to as the "Excise Tax"), then Merriman shall be
entitled to receive an additional payment from the Company (the "Excise Tax
Gross-Up Payment") in an amount such that the net amount retained by Merriman,
after the calculation and deduction of any Excise Tax on the Payments (together
with any penalties and interest that have been or will be imposed on Merriman in
connection therewith) and any federal, state and local income taxes, Excise
Taxes and payroll taxes (including the tax imposed by Section 3101(b) of the
Code) on the Excise Tax Gross-Up Payment provided for in this Section 20, shall
be equal to the Payments. In computing the amount of this payment, it shall be
assumed that Merriman is subject to tax by each taxing jurisdiction at the
highest marginal tax rate in the respective taxing jurisdiction of Merriman,
taking into account the city and state in which Merriman resides, but giving
effect to the tax benefit, if any, which Merriman may enjoy to the extent that
any such tax is deductible in determining the tax liability of any other taxing
jurisdiction (provided that the highest marginal tax rate for federal income tax
purposes shall be determined under Section 1 of the Code).

                  B. Post-Merger. If it shall be determined that any Payment(s)
in connection with a Change in Control which occurs on or after the Closing Date
(including the payment described in Section 4.B. and payments received in
connection with the Merger) would be subject to the Excise Tax, Merriman shall
not be entitled to an Excise Tax Gross-Up Payment as described in Section 20.A.,
and instead the Payments otherwise payable to Merriman shall be reduced to the
minimum extent necessary (but in no event to less than zero) so that no portion
of the Payments, after such reduction, would be subject to the Excise Tax.

                                       14
<PAGE>
                  C. Method of Determinations; Timing of Excise-Tax Gross Up
Payment. All determinations required to be made under Section 20.A. and 20.B.,
including whether and when an Excise Tax Gross-Up Payment is required and the
amount of such Excise Tax Gross-Up Payment and the assumptions to be utilized in
arriving at such determination, except as specified in Section 20.A., shall be
made by the Company's independent auditors (the "Accounting Firm"), which shall
provide detailed supporting calculations both to the Company and Merriman within
15 business days after the Company makes any Payments to Merriman. The
determination of tax liability and the assumptions made by the Accounting Firm
shall be subject to review by Merriman's tax advisor, and, if Merriman's tax
advisor does not agree with the determination reached by the Accounting Firm,
then the Accounting Firm and Merriman's tax advisor shall jointly designate a
nationally-recognized public accounting firm within five business days after
notice has been given to the Company of Merriman's disagreement with the
Accounting Firm's calculation, which shall make the determination within 15
business days after its appointment. If the parties cannot agree on a nationally
recognized public accounting firm, then both parties shall select a nationally
recognized public accounting firm who shall then jointly select a third
nationally recognized public accounting firm which shall make the determination
within 15 business days after its appointment. All fees and expenses of the
accountants and tax advisors retained by either Merriman or the Company shall be
borne by the Company. Any Excise Tax Gross-Up Payment, as determined pursuant to
this Section 20, shall be paid by the Company to Merriman within five days after
the receipt of the determination, subject to applicable federal, state, local
and Excise Tax withholding requirements. Any determination by a jointly
designated public accounting firm shall be binding upon the Company and
Merriman. If an accounting firm determines that no Excise Tax is payable by
Merriman, it shall, at the same time as it makes such determination, furnish the
Company and Merriman an opinion that Merriman has substantial authority not to
report any Excise Tax on his federal, state or local income or other tax return.

                  D. Excise Tax Gross-Up Underpayment or Overpayment. As a
result of the uncertainty in the application of Section 4999 of the Code at the
time of the initial determination hereunder, it is possible that Excise Tax
Gross-Up Payments will not have been made by the Company that should have been
made consistent with the calculations required to be made hereunder
("Underpayment"). In the event that Merriman was entitled to an Excise Tax
Gross-Up Payment under Section 20.A. and the Internal Revenue Service ("IRS"),
on audit, asserts that Merriman has made an underpayment and Merriman is
required (by reason of settlement or otherwise) to make a payment of any Excise
Tax, or if Merriman is required to make one or more payments of Excise Tax to
the IRS (and/or interest or penalties thereon) upon the filing of his original
or amended tax returns which exceed the amounts taken into account in
determining the initial Excise Tax Gross-Up Payment made pursuant to Sections
20.A. and 20.C., then in either of such events, any such Underpayment calculated
in accordance with and in the same manner as the Excise Tax Gross-Up Payment in
Section 20.A. shall be promptly paid by the Company to or for the benefit of
Merriman. In addition, the Company will pay Merriman an amount equal to any
penalties, interest or additions to be assessed against him as a result of the
Underpayment, which amounts shall be grossed up for any federal, state, local or
Excise Taxes payable with respect to such penalties, interest or additions to
tax such that Merriman receives a net amount equal to the penalties, interest
and additions to tax assessed against him (determined in the same manner as
described in Section 20.A.). Merriman shall not be obligated to contest

                                       15
<PAGE>
any proposed assessment of any Underpayment and may settle any such audit action
or proceeding involving an Underpayment at his discretion; provided, however,
that Merriman shall, upon notice of examination by the IRS, give notice thereof
to the Company and the Company, at its sole cost and in its sole discretion,
may, on behalf of Merriman, defend and contest against any proposed IRS
deficiency. In the event that the Company assumes the defense of the proposed
deficiency, the Company shall immediately, upon written request of Merriman,
secure all of its possible obligations to Merriman as provided for in this
Section 20.D. by either posting cash collateral in escrow or providing Merriman
with a "clean irrevocable letter of credit" in the amount of all of the
Company's possible obligations to Merriman pursuant to this Section 20.D. The
terms of such escrow or clean irrevocable letter of credit shall be negotiated
by Company and Merriman at such time. Merriman agrees to execute any documents,
including Powers of Attorney, that may be necessary to facilitate Company's
defense and/or contesting the IRS's assertions. In the event that the Excise Tax
Gross-Up Payment exceeds the amount subsequently determined to be due, such
excess shall constitute a loan from the Company to Merriman payable on the fifth
day after demand by the Company (together with interest at the rate provided in
Section 1274(b)(2)(B) of the Code).

         21. Legal Fees and Expenses.

                  A. Each party shall bear its own legal fees and expenses in
connection with any dispute arising under this Agreement; provided, however,
that the Company: (1) irrevocably authorizes the Executive from time to time to
retain counsel of his choice to represent the Executive in connection with the
negotiation and interpretation or enforcement of this Agreement, including the
initiation or defense of any litigation or other legal action, whether by or
against the Company or any Director, officer, stockholder or other person
affiliated with the Company, in any jurisdiction; (2) notwithstanding any
existing or prior attorney-client relationship between the Company or any person
affiliated with the Company and such counsel, irrevocably consents to the
Executive's entering into an attorney-client relationship with such counsel and
in that connection the Company and the Executive agree that a confidential
relationship shall exist between the Executive and such counsel; and (3) shall
pay or cause to be paid and shall be solely responsible for any and all
reasonable attorneys' and related fees and expenses incurred by the Executive in
connection with any litigation or other legal action, whether by or against the
Company, or any Director, officer, stockholder or other person affiliated with
the Company, in any jurisdiction, arising out of any provision of this
Agreement, where and to the extent to which the Executive prevails as to
material issues in such litigation or other legal action. Such payment shall be
made to the Executive not later than seven days following the entry of judgment
in favor of the Executive or other resolution purported by the decision-maker to
be final, and shall not be withheld on account of a pending appeal from such
judgment or resolution, but the Company shall have the right to recover such
payment from the Executive if the Executive shall lose on appeal.

                  B. In the event that the Merger Agreement is terminated, the
foregoing provisions of Section 21.A. shall be void and of no effect, and this
Section 21.B. shall apply: It is the intent of the Company that the Executive
not be required to incur the legal expenses associated with (i) negotiation or
interpretation of any provision in, or obtaining of any right or benefit under,
this Agreement or (ii) the enforcement of his rights under this Agreement by

                                       16
<PAGE>
litigation or other legal action, because the cost and expense thereof would
substantially detract from the benefits intended to be extended to the Executive
hereunder. Accordingly, the Company irrevocably authorizes the Executive from
time to time to retain counsel of his choice, at the expense of the Company as
hereafter provided, to represent the Executive in connection with the
negotiation and interpretation or enforcement of this Agreement, including the
initiation or defense of any litigation or other legal action, whether by or
against the Company or any Director, officer, stockholder or other person
affiliated with the Company, in any jurisdiction. Notwithstanding any existing
or prior attorney-client relationship between the Company or any person
affiliated with the Company and such counsel, the Company irrevocably consents
to the Executive's entering into an attorney-client relationship with such
counsel, and in that connection the Company and the Executive agree that a
confidential relationship shall exist between the Executive and such counsel.
The Company shall pay or cause to be paid and shall be solely responsible for
any and all reasonable attorneys' and related fees and expenses incurred by the
Executive under this Section 21.B.

            [The remainder of this page is intentionally left blank.]

                                       17
<PAGE>
         Executed in Glenwillow, Ohio the 16th day of December, 2002.

ROYAL APPLIANCE MFG. CO.


By:
    ------------------------------------    ------------------------------------
              Richard G. Vasek,                      Michael J. Merriman
          Chief Financial Officer



                                       18