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                                                                   Exhibit 10(i)





                                 ROYAL APPLIANCE





                                401(K) PLUS PLAN





                                                      EFFECTIVE: OCTOBER 1, 1999



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                                401(K) PLUS PLAN


     This Plan is hereby adopted on this ___ day of ___________, 1999, effective
October 1, 1999, by ROYAL APPLIANCE MFG. CO. (the "Company"), on its behalf and
on behalf of certain of its subsidiaries and affiliated companies which are
Participating Employers hereunder.



I.       NAME AND PURPOSE



         1.1.NAME. The name of this Plan shall be the ROYAL APPLIANCE 401(K)
                  PLUS PLAN.



         1.2.PURPOSE. This Plan is hereby established to provide unfunded
                  deferred compensation to certain management and highly
                  compensated employees of the Company and other Participating
                  Employers under certain conditions specified herein.



         1.3.PLAN FOR A SELECT GROUP. This Plan shall only cover employees of a
                  Participating Employer who are members of a "select group of
                  management or highly compensated employees" as provided in
                  Sections 201(2), 301(a)(3), 401(a)(1) and 4021(b)(6) of ERISA.
                  This Plan shall be administered in such a manner, and benefits
                  hereunder shall be so limited, notwithstanding any contrary
                  provision of this Plan, that this Plan shall constitute such a
                  plan.

         1.4.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 being such a plan as would properly be
                  described as "unfunded" for purposes of Title I of ERISA. 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.

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II.      DEFINITIONS

           2.1.   "ACCOUNTS" mean the Participants' Elective Accounts and Match
                  Accounts maintained on the books of a Participating Employer
                  for a Participant under this Plan. A Participant's Accounts
                  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 401(k) Plus Plan Deferral Agreement(s)
                  executed between a Participant, the Company, and the
                  Participant's Participating Employer (if other than the
                  Company) whereby a Participant agrees to defer a portion of
                  his Compensation, Salary, Bonus or other remuneration pursuant
                  to the provisions of the Plan, and his Participating Employer
                  agrees to make benefit payments in accordance with the
                  provisions of the Plan.

           2.4.   "APPEALS COMMITTEE" means the Appeals Committee established
                  pursuant to Article VII.

           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.   "BONUS" means gross monies payable from a Participating
                  Employer under a pay incentive plan unreduced by any amounts
                  deferred under the Retirement Savings Plan or this Plan. In
                  all respects, the amount of Bonus shall be determined in
                  accordance with the information contained in the payroll
                  records of the Company and its subsidiaries and affiliated
                  companies.

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           2.8.   "CODE" means the Internal Revenue Code of 1986, as amended and
                  any lawful regulations or other pronouncements promulgated
                  thereunder.

           2.9.   "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.

          2.10.   "COMPENSATION" means for any Participant his Compensation
                  under the Retirement Savings Plan, except that such amount
                  shall not be subject to the limitation on the annual
                  compensation which may be taken into account under the
                  Retirement Savings Plan pursuant to Section 401(a)(17) of the
                  Code.. In all respects, the amount of Compensation shall be
                  determined in accordance with the information contained in the
                  payroll records of the Company and its subsidiaries and
                  affiliated companies.

         2.11.    "DETERMINATION DATE" means the date on which a Participant's
                  Accounts may be valued for purposes of investment direction
                  and distribution. Each business day during which the New York
                  Stock Exchange is open shall be considered a Determination
                  Date.

          2.12.   "DISABILITY" shall have the same meaning as the phrase "Total
                  and Permanent Disability" under the Retirement Savings Plan.

          2.13.   "EFFECTIVE DATE" means the date this Plan shall become
                  effective which date shall be October 1, 1999.

          2.14.   "ELECTION YEAR" means the period from the Effective Date
                  through December 31, 1999 and any calendar year thereafter.

          2.15.   "ELECTIVE AMOUNT" means for each Participant an amount equal
                  to the amount by which his Compensation, Salary, Bonus or
                  other remuneration are reduced pursuant to Section 3.4 hereof.

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          2.16.   "ENTRY DATE" means, with respect to any Participant with
                  respect to any Election Year, the beginning of such Election
                  Year or, if, pursuant to Section 3.2, such Participant first
                  participates for such Deferral Year as of October 1, then
                  October 1 of such Election Year.

          2.17.   "ERISA" means the Employee Retirement Income Security Act of
                  1974, as amended and any lawful regulations or other
                  pronouncements promulgated thereunder.

          2.18.   "MATCH ACCOUNTS" mean for each Participant the bookkeeping
                  account maintained by his Participating Employer on his behalf
                  to reflect his Match Amounts for an Election Year and all
                  earnings, gains and losses thereon.

          2.19.   "MATCH AMOUNTS" mean for each Participant the amounts credited
                  to a Match Account on behalf of such Participant pursuant to
                  Section 3.6 which match a portion of his Elective Amounts.

          2.20.   "NORMAL RETIREMENT DATE" means the date a Participant attains
                  age 65.

          2.21.   "PARTICIPANT" means an employee of a Participating Employer
                  who is designated to be an eligible employee pursuant to
                  Section 3.1 who enters into an Agreement, and who has
                  commenced Compensation, Salary, Bonus or other remuneration
                  reductions pursuant to such Agreement. A Participant shall
                  cease to be a Participant, and shall become a former
                  Participant, upon the earlier of his Termination of Employment
                  and the date the employee ceases to be designated by the
                  Company to be eligible to participate. However, the word
                  Participant may also include, where the context indicates, any
                  former Participant in this Plan.

          2.22.   "PARTICIPANT ELECTIVE ACCOUNT" means for each Participant the
                  bookkeeping account maintained by his Participating Employer
                  on his behalf to reflect his Elective Amounts for an Election
                  Year and all earnings, gains and losses thereon.

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          2.23.   "PARTICIPATING EMPLOYER" means the Company and such
                  subsidiaries and affiliated companies of the Company which
                  participate in the Plan with the consent of the Board of
                  Directors.

          2.24.   "PLAN" means the Royal Appliance 401(k) Plus Plan as set forth
                  in this instrument, as amended from time to time.

          2.25.   "RETIREMENT SAVINGS PLAN" means the Royal Appliance 401(k)
                  Retirement Savings Plan, as amended from time to time.

          2.26.   "SALARY" means the Participant's gross base salary, unreduced
                  by any amounts deferred under the Retirement Savings Plan or
                  this Plan, payable during a calendar year. In all respects,
                  the amount of Salary shall be determined in accordance with
                  the information contained in the payroll records of the
                  Company and its subsidiaries and affiliated companies.

          2.27.   "TERMINATION OF EMPLOYMENT" means the Participant's cessation
                  of his service with a Participating Employer for any reason
                  whatsoever, whether voluntarily or involuntarily, including by
                  reason of retirement, death, or Disability.

          2.28.   "TRUST" means any trust established pursuant to Article VI
                  hereof.

          2.29.   "YEARS OF SERVICE" means a Participant's period of continuous
                  employment with the Company and a Participating Employer
                  commencing on his most recent date of hire and ending on his
                  Termination of Employment.

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III.     PARTICIPATION, COMPENSATION REDUCTIONS AND ACCOUNTS

           3.1.   ELIGIBILITY. An employee of a Participating Employer shall be
                  eligible to participate in the Plan for any Election Year if
                  the employee is designated by the Company to qualify as a
                  member of a "select group of management or highly compensated
                  employees" as provided in Sections 201(2), 301(a)(3),
                  401(a)(1) and 4021(b)(6) of ERISA for such Election Year and
                  as a "highly compensated employee" as provided in Section
                  414(q) of the Code for such Election Year.

           3.2.   PARTICIPATION. Each employee 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 his Participating Employer
                  prior to the first day of the Election Year (October 1,
                  1999, in the case of the initial Election Year). In the
                  event an employee first meets such eligibility requirements
                  after the beginning of a Election Year, such employee 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 his Participating
                  Employer 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 employee may elect, under his
                  Agreement for such Election Year, to make one or more of the
                  deferrals described below for which he is eligible.

                    (a)  Salary Deferral: Each eligible employee may defer a
                         whole percentage of up to 100% of the Salary for the
                         Election Year which is payable each payroll period
                         commencing on or after such employee's Entry Date.

                    (b)  Bonus Deferral: (1) Each eligible employee may defer up
                         to 100% of his Bonus otherwise payable thereunder (to
                         the extent payable after his Entry Date) in 1%
                         increments.

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                    (c)  Other Deferrals: In addition, the Administrator, with
                         the consent of the Company, may establish procedures to
                         permit some or all Participants to elect to make
                         additional or other deferrals of their Compensation,
                         Salary, Bonus or other remuneration. Such elections
                         must be made 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 other deferral
                         shall be evidenced by an Agreement in a form acceptable
                         to the Administrator.

         3.4.COMPENSATION REDUCTIONS AND DEFERRAL AMOUNTS.

                    (a)  A Participant's election to defer pursuant to 3.3(a)
                         shall cause an equivalent reduction in the
                         Participant's Salary at the time such Salary would
                         otherwise be payable.

                    (b)  A Participant's election to defer pursuant to 3.3(b)
                         shall cause an equivalent reduction in the
                         Participant's Bonus at the time such Bonus would
                         otherwise be payable.

                    (c)  A Participant's election to defer in accordance with
                         3.3(c) shall cause an equivalent reduction in the
                         Participant's Compensation, Salary, Bonus or other
                         remuneration at the time such amounts would otherwise
                         be payable.



                  An amount equal to such reductions in a Participant's
                  Compensation, Salary, Bonus and other remuneration pursuant
                  to (a), (b) and (c) above 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 financial
                  emergency pursuant to Section 4.4, the Administrator may, at
                  its option, discontinue the Participant's

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                  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.   MATCH AMOUNTS. In the event that a Participant has elected
                  to make deferrals under Section 3.3 above then, for each
                  Election Year, his Participating Employer shall credit his
                  Match Account with an amount equal to the same amount that
                  would have been allocated to the Participant's account under
                  the Retirement Savings Plan for such Election Year, computed
                  as provided therein, but without regard to the limitations
                  of Code Sections 401(a)(17), 401(k)(3), 401(m)(2) and 415.
                  Notwithstanding the foregoing, a Participant under this Plan
                  who is not a participant under the Retirement Savings Plan
                  shall be entitled to a Match Amount under this Plan only
                  with respect to deferrals made under this Plan commencing on
                  the date that he first becomes eligible to participate in
                  the Retirement Savings Plan.

           3.7.   ESTABLISHMENT OF ACCOUNTS. Each Participating Employer shall
                  establish a Participant Elective Account and a Match Account
                  in the name of each Participant who is employed by it on the
                  books and records of such Participating Employer. All amounts
                  so credited to the Accounts of any Participant or former
                  Participant shall constitute a general, unsecured liability of
                  such Participating Employer to such person.

           3.8.   ALLOCATION OF ELECTIVE AMOUNTS AND MATCHING AMOUNTS. At the
                  time a Participant's Compensation, Salary, Bonus or other
                  remuneration are reduced pursuant to Section 3.4 hereof, the
                  Participating Employer employing such Participant shall credit
                  the Participant Elective Account of such Participant with the
                  Participant's Elective Amount with respect to such
                  Compensation, Salary, Bonus or other remuneration,
                  respectively. At the end of each calendar month, such
                  Participating Employer shall credit each Participant's Match
                  Account with his Match Amount for such calendar month, if any.



            3.9.  CREDITING OF EARNINGS. Each Participating Employer shall
                  credit each Account of each Participant who is an employee
                  for it with earnings, gains and losses under one of the
                  following methods, as determined by the Company:

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                  (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.

            3.10.  DETERMINATION OF ACCOUNT. The balance of each Participant's
                   Accounts as of each Determination Date shall be calculated
                   as follows, using the terms and methods in the order defined
                   below:

                  (a)      Earnings, gains and losses determined pursuant to
                           Section 3.9 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 and Match 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.

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IV.      BENEFITS

            4.1.    IN-SERVICE DISTRIBUTION. A Participant who is in the active
                    employ 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 Employment, 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,
                    4.7 or 4.8 hereof, whichever shall be applicable.

            4.2.    PARTICIPANT CALL PROVISION. A Participant (or the
                    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 in the
                    active employ of the Company 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, a Participating Employer 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

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                    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 4.4 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 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.    SHORT SERVICE TERMINATION BENEFIT. Upon the Termination of
                    Employment of a Participant, for reasons other than death or
                    Disability, before the date that he has completed five (5)
                    Years of Service, he shall be entitled to receive a
                    distribution of the balance of his Accounts. Unless
                    otherwise directed by the Administrator, this termination
                    benefit shall be payable in a lump sum as soon as
                    administratively as possible after the December 31st of the
                    calendar year in which his Termination of Employment occurs.

            4.5.    LONG SERVICE TERMINATION BENEFIT. Upon the Termination of
                    Employment of a Participant, for reasons other than death or
                    Disability, on or after the date that he has completed at
                    least five (5) Years of Service, 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 4.10 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.

            4.6.    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.

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                    Such distribution shall be in the form of benefit
                    determined under Section 4.9, shall commence as of the date
                    determined under Section 4.10 and shall be in lieu of all
                    other benefits under this Plan.

            4.7.    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 4.9, shall commence as
                    of the date determined under Section 4.10 and shall be in
                    lieu of all other benefits under this Plan.

            4.8.    DISABILITY. In the event the Administrator has determined
                    that the Participant has incurred a Termination of
                    Employment 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 4.9 and shall
                    commence as of the date determined under Section 4.10;
                    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.

            4.9.    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 4.5, 4.6, 4.7 and
                         4.8 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

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                         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 4.6 or 4.7, 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 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.

            4.10.   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.

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                    (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.

                    (c)  In the event of the death of the Participant, as
                         described in Sections 4.6 or 4.7, 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.

            4.11.   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.

            4.12.   PROTECTIVE DISTRIBUTIONS. In the event that the
                    Administrator determines, in its sole discretion, that a
                    Participant is not, or may not be, a member of a "select
                    group of management or highly compensated employees" within
                    the meaning of Sections 201(2), 301(a)(3), 401(a)(1) or
                    4021(b)(6) of ERISA or a "highly compensated

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                    employee" within the meaning of Section 414 (q) of the Code,
                    then the Administrator may, in its sole discretion,
                    terminate such Participant's participation in this Plan, and
                    distribute all amounts credited to such Participant's
                    Accounts in a single lump sum payment. Any such distribution
                    shall be made at such time as the Administrator determines
                    in its sole discretion.

            4.13.   TAX WITHHOLDING. A Participating Employer 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 payable
                    hereunder.

V.       RIGHTS OF PARTICIPANTS

           5.1.   CREDITOR STATUS OF PARTICIPANTS. The Elective Amounts and
                  Match Amounts of a Participant shall be merely unfunded,
                  unsecured promises of the Participating Employer by which he
                  is employed to make benefit payments in the future and shall
                  be liabilities solely against the general assets of such
                  Participating Employer. The Company and the other
                  Participating Employers shall not be required to segregate,
                  set aside or escrow the Elective Amounts or Match 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 Participating Employer by which such
                  Participant is employed, and may look only to such
                  Participating Employer 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 or other Participating
                  Employer 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, the
                  Participating Employers may acquire insurance policies,
                  annuities or other financial vehicles for the purpose of
                  providing future assets of Participating Employers to meet
                  their anticipated liabilities under this Plan. Such policies,
                  annuities or other investments, shall at all times be

                                       15
<PAGE>   17

                  and remain unrestricted general property and assets of the
                  Participating Employers 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.

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 or any other
                  Participating Employer 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 or any other
                  Participating Employer in the event of their insolvency as
                  more fully described in the Trust.

           6.2.   OBLIGATION OF THE PARTICIPATING EMPLOYERS. Notwithstanding the
                  fact that a Trust may be established under Section 6.1, the
                  Participating Employers 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 appropriate Participating Employer'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

                                       16
<PAGE>   18

                  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 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.

                                       17
<PAGE>   19

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 the Plan Administrator under ERISA. 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:

                    (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 a Participating Employer) at the expense of
                         the Participating Employers, 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;

                                       18
<PAGE>   20

                    (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 a Participating Employer 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. A
                    Participating Employer shall furnish the Administrator with
                    such data and information as it may reasonably require. The
                    records of a Participating Employer shall be determinative
                    of each Participant's period of employment, termination of
                    employment and the reason therefor, leave of absence,
                    reemployment, years of service, personal data, and data
                    regarding Compensation, Salary, Bonus and other
                    remuneration, and all reductions thereof under this Plan.
                    Participants and their Beneficiaries shall furnish to the
                    Administrator such evidence, data or information and execute
                    such 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:

                                       19
<PAGE>   21

                    (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.

           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

                                       20
<PAGE>   22

                    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. 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 Participating Employer 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 that arise from Participants
                    employed by a Participating Employer or group of
                    Participating Employers. The members of

                                       21
<PAGE>   23

                    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 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.

                                       22
<PAGE>   24

          7.10.   LIMITATION OF DUTIES. The Company, the Participating
                  Employers, the Administrator, the 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 one or more of the Participating
                 Employers as directed 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 any Participating Employer 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 or other Participating Employer
                 hereunder and the members of the Appeals Committee may be
                 entitled to under the articles of incorporation, regulations
                 or bylaws of the Participating Employers, under any
                 provision of law or under any other agreement, including the
                 Retirement Savings Plan, the Participating Employers 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 not be provided to any person who is
                 not a present or former employee of a Participating Employer
                 or a subsidiary or affiliated company thereof nor shall it
                 be provided for any claim by a Participating Employer or a

                                       23
<PAGE>   25

                 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.

           8.2.  ACTIONS BINDING ON PARTICIPATING EMPLOYERS. Any amendments
                 made to this Plan shall be binding on all the Participating
                 Employers without the approval or consent of such
                 Participating Employers. The Company may, by amendment, also
                 terminate this Plan on behalf of all or any one of the
                 Participating Employers in its sole discretion.

                                       24
<PAGE>   26

           8.3.  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.      PARTICIPATING EMPLOYERS

           9.1.  LIST OF PARTICIPATING EMPLOYERS. The initial Participating
                 Employers as of the Effective Date are as follows:

                       Participating Employers
                       -----------------------

                       Royal Appliance Mfg. Co.

                  The Company may designate additional Participating Employers
                  or remove Participating Employers during the period of the
                  Plan's existence by action of an appropriate officer of
                  Company authorized or ratified by the Board. Such addition or
                  deletion shall not require a formal amendment hereto.



           9.2.  DELEGATION OF AUTHORITY. The Company is hereby fully
                 empowered to act on behalf of itself and the other
                 Participating Employers as it may deem appropriate in
                 maintaining this Plan and any Trust. Furthermore, the
                 adoption by the Company of any amendment to the Plan or any
                 Trust, or the termination of the Plan or any Trust, will
                 constitute and represent, without any further action on the
                 part of any Participating Employer, the approval, adoption,
                 ratification or confirmation by each Participating Employer
                 of any such amendment or termination. In addition, the
                 appointment of or removal by the Company of any Appeals
                 Committee member, any Administrator, any trustee or other
                 person under the Plan or any Trust shall constitute and
                 represent, without any further action on the part of any
                 Participating

                                       25
<PAGE>   27

                 Employer, the appointment or removal by each Participating
                 Employer of such person.

X.       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, neither the
                 Company nor any other Participating Employer shall be required
                 or be liable to make any payment under the Plan.

           10.2. NO RIGHT TO PARTICIPATING EMPLOYER ASSETS. Neither the
                 Participant nor any other person shall acquire by reason of
                 the Plan any right in or title to any assets, funds or
                 property of a Participating Employer whatsoever including,
                 without limiting the generality of the foregoing, any
                 specific funds, assets or other property which a
                 Participating Employer, in its sole discretion, may set
                 aside in anticipation of a liability hereunder. Any benefits
                 which become payable hereunder shall be paid from the
                 general assets of a Participating Employer. The Participant
                 shall have only a contractual right to the amounts, if any,
                 payable hereunder unsecured by any asset of a Participating
                 Employer. Nothing contained in the Plan constitutes a
                 guarantee by a Participating Employer that the assets of a
                 Participating Employer shall be sufficient to pay any
                 benefit to any person.

           10.3. NO EMPLOYMENT RIGHTS CREATED. This Plan shall not be deemed
                 to constitute a contract of employment between any of the
                 Participating Employers and any Participant, nor confer upon
                 any Participant or employee the right to be retained in the
                 service of any Participating Employer for any period of
                 time, nor shall any provision hereof restrict the right of
                 any Participating Employer to discharge or otherwise deal
                 with any Participant or other employees, with or without
                 cause. Nothing herein shall be construed as fixing or
                 regulating the Compensation, Salary, Bonus or other
                 remuneration payable to any Participant or other employee of
                 a Participating Employer.

                                       26
<PAGE>   28

           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 a Participating Employer,
                 then the payments remaining to be made to the Participant or
                 the Beneficiary or both may, at the discretion of the Company,
                 be reduced by the amount of such indebtedness or obligation,
                 provided, however, that an election by the Company not to
                 reduce any such payment or payments shall not constitute a
                 waiver of its claim for such indebtedness or obligation.

           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
                 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

                                       27
<PAGE>   29

                 follow the application of amounts so paid. Payments made
                 pursuant to this Section shall completely discharge the
                 Plan, any Trust, the Administrator, the Participating
                 Employers 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.  INDEPENDENCE OF PLAN. Except as otherwise expressly provided
                 herein, this Plan shall be independent of, and in addition to,
                 any other employee benefit agreement or plan or any rights
                 that may exist from time to time thereunder.

         10.11.  RESPONSIBILITY FOR LEGAL EFFECT. Neither the Company, any
                 other Participating Employer, the Administrator, the Appeals
                 Committee, nor any officer, member, delegate or agent of any
                 of them, makes any representations or warranties, express or
                 implied, or assumes any responsibility concerning the legal,
                 tax, or other implications or effects of this Plan.

          10.12. SUCCESSORS. The terms and conditions of this Plan shall
                 inure to the benefit of and bind the Company, the
                 Participating Employers, the Administrator, the Appeals
                 Committee and its members, the Participants, their
                 beneficiaries, and the successors, assigns, and personal
                 representatives of any of them.

          10.13. HEADINGS AND TITLES. The Section headings and titles of
                 Articles used in this Plan are for convenience of reference
                 only and shall not be considered in construing this Plan.

         10.14.  GENERAL RULES OF CONSTRUCTION. The masculine gender shall
                 include the feminine and neuter, and vice versa, as the
                 context shall require. The singular number shall include the
                 plural, and vice versa, as the context shall require. The
                 present tense of a verb shall include the past and future
                 tenses, and vice versa, as the context may require.

                                       28
<PAGE>   30

         10.15.  SEVERABILITY. In the event that any provision or term of this
                 Plan, or any agreement or instrument required by the
                 Administrator hereunder, is determined by a judicial,
                 quasi-judicial or administrative body to be void or not
                 enforceable for any reason, all other provisions or terms of
                 this Plan or such agreement or instrument shall remain in full
                 force and effect and shall be enforceable as if such void or
                 nonenforceable provision or term had never been a part of this
                 Plan, or such agreement or instrument.

         10.16.  ACTIONS BY THE COMPANY. Except as otherwise provided herein,
                 all actions of the Company under this Plan shall be taken by
                 the Board, by any officer of the Company, or by any other
                 person designated by any of the foregoing.

                                       29
<PAGE>   31

IN WITNESS WHEREOF, the Company, by two of its appropriate officers duly
authorized, has executed this 401(k) Plus Plan as of the date first above
written.





                                   ROYAL APPLIANCE MFG. CO.

                                   ("Company")



                                   By______________________________


                                   Title___________________________






                                    And_____________________________



                                    Title___________________________


                                       30