Document:

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                                  EXHIBIT 10.31
                                  -------------

             FIRST AMENDMENT TO BENTON OIL AND GAS COMPANY CHANGE OF
                             CONTROL SEVERANCE PLAN

          THIS AGREEMENT by Benton Oil and Gas Company (the "Company"),

                               W I T N E S S E T H

         WHEREAS, the Company maintains the Benton Oil and Gas Company Change of
Control Severance Plan (the "Plan");

         WHEREAS, the Company retained the right to amend the Plan from time to
time; and

         WHEREAS, the Sponsor desires to amend the Plan, effective as of June 5,
2001;

         NOW THEREFORE, the Company agrees that the Plan is hereby amended to
provide as follows:

         (1) Article 2 of the Plan is hereby amended by adding the following
sentence to the end of the Article which will provide as follows:

                  Notwithstanding any other provision of the Plan, an individual
         who has, pursuant to the provisions of the Benton Oil and Gas Company
         Relocation/Reduction in Force Severance Plan or any other arrangement,
         (1) received notification of their employment termination date or (2)
         resigned prior to June 30, 2001 due to the relocation of the Company's
         headquarters, shall not be eligible to receive Benefits under the Plan.

         (2) Exhibit A of the Plan is hereby amended and restated in its
entirety to provide as follows:

                           BENTON OIL AND GAS COMPANY
                        CHANGE OF CONTROL SEVERANCE PLAN

                                    AGREEMENT
                                    ---------

                  This AGREEMENT is made by (the "Employee");

                  WHEREAS, Benton Oil and Gas Company (the "Company"), no longer
requires the services of the Employee;

<PAGE>   2
                                                                       EXHIBIT A

                  WHEREAS, the Employee desires to enter into this Agreement in
consideration of the severance benefits described herein;

                  NOW THEREFORE, the Employee agrees as follows:

         1. RELEASE BY EMPLOYEE. I, , on behalf of myself and my heirs and
assigns, in consideration of the Company's payment of the severance benefits in
the amount of $_____________ (less any amounts that the Company is required to
withhold under applicable laws), and other good and valuable consideration to be
furnished to me pursuant to the Benton Oil and Gas Company Change of Control
Severance Plan (the "Plan"), the sufficiency of which are hereby acknowledged,
and as a material inducement to the Company to enter into this agreement hereby
release and forever discharge the Company, and its directors, officers,
shareholders, partners, representatives, agents, employees, predecessors,
successors, affiliates, divisions, subsidiaries and related entities and their
respective directors, officers, shareholders, agents, representatives and
employees, from all claims of any nature whatsoever, from the beginning of time
to the date of the execution of this Agreement, known or unknown, suspected or
unsuspected, including but not limited to all claims arising out of, based upon,
or relating to my employment with the Company, or compensation for that
employment.

         Without limiting the generality of the foregoing, I understand and
agree that this release includes, but is not limited to, claims based on or
relating to: (a) any express or implied employment contract; (b) wrongful
discharge; (c) termination in breach of public policy ; (d) age discrimination
under the Age Discrimination in Employment Act of 1967, as amended ("ADEA"); (e)
claims of discrimination, harassment or retaliation under Title VII of the Civil
Rights Act of 1964, as amended, the Americans with Disabilities Act, or the
California Fair Employment and Housing Act; which prohibit discrimination based
on race, color, age, ancestry, national origin, sex, sexual orientation,
religion, mental or physical disabilities, or marital status; (f) any other
federal, state or local laws or regulations prohibiting employment
discrimination; (g) personal injury, defamation, assault, battery, invasion of
privacy, fraud, intentional or

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                                                                       EXHIBIT A

negligent misrepresentation of fact, intentional or negligent infliction of
emotional distress, or false imprisonment; (h) claims for additional wages,
compensation, overtime pay, severance pay, bonuses or welfare benefits, or any
other entitlements or benefits as an employee of the Company; (i) the Employee
Retirement Income Security Act of 1974; and (j) claims for attorneys' fees or
costs (except that this Agreement does not affect any claims or rights that may
arise on my behalf under ADEA after the date of the execution of this
Agreement).

         I UNDERSTAND THAT THIS RELEASE COVERS BOTH CLAIMS THAT I KNOW ABOUT AND
THOSE THAT I MAY NOT KNOW ABOUT. I WAIVE ANY RIGHTS AFFORDED BY SECTION 1542 OF
THE CALIFORNIA CIVIL CODE, WHICH READS AS FOLLOWS:

                  "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
         CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
         EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
         AFFECTED HIS SETTLEMENT WITH THE DEBTOR."

         2. COMPANY PROPERTY AND CONFIDENTIAL INFORMATION. I acknowledge that
the terms of the Company's Insider Trading Policy shall remain in effect. I
agree to immediately return to the Company any Company property in my
possession, including but not limited to any Confidential Information described
below. I acknowledge that any unauthorized use of such Confidential Information
will cause irreparable harm to the Company and will give rise to an immediate
action by the Company for injunctive relief and damages and any other remedies
provided by law.

         3. CONFIDENTIALITY. I covenant and agree that I will protect the
confidential, trade secret, and/or proprietary character of all of the Company's
Confidential Information. I further covenant and agree that I will not, directly
or indirectly, use or disclose any of the Company's Confidential Information,
for so long as it remains proprietary and capable of being protected as

                                       3
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                                                                       EXHIBIT A

confidential or trade secret information. For the purposes of this Agreement,
"Confidential Information" means, without limitation, all of the following,
irrespective of whether it is or was reduced to writing which you received, had
access to, in whole or in part, in connection with your employment with the
Company so long as such Confidential Information remains proprietary and capable
of being protected as confidential or trade secret information:

                  (a) geological and geophysical data and maps, models and
interpretations relating to the Company's assets, fields, production and wells;

                  (b) commercial, contractual, financial reserve and production
data related to the Company or its production, assets and fields;

                  (c) specialized production processes and marketing techniques
and arrangements to enhance or recover oil and gas from the Company's assets,
fields or wells;

                  (d) computer software specifically developed for the
enhancement of the production from the Company's assets, fields or wells; and

                  (e) any other materials and/or information materially related
to the business or activities of the Company which are not generally known to
others engaged in similar businesses or activities.

         4. INDEMNIFICATION AGREEMENT. I, for myself, my heirs, executors,
administrators and assigns, release and agree to indemnify and hold harmless the
Company and all other persons and firms released above from all claims and
causes of action of any nature, without limitation, which may be asserted by any
person, firm, or entity claiming by, through, or under me for any relief claimed
to be due me and released by this document.

         5. NO KNOWLEDGE OF LEGAL VIOLATIONS. I further assert that during my
employment with the Company and activities regarding any company or organization
affiliated with the Company, that I have no information or knowledge of any
legal irregularity, violation, or alleged violation of any law, regulation,
statute, or ordinance of any kind resulting from the operations of the Company,
or any other company or organization affiliated with the Company. I have never

                                       4
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                                                                       EXHIBIT A

reported any such irregularity or violation to any superior with respect to the
Company or any company or organization affiliated with the Company.

         6. FORTY-FIVE (45) DAY REVIEW PERIOD. I acknowledge that I am hereby
informed in writing to consult with an attorney prior to executing this
Agreement to discuss the contents of this document and its meaning. I understand
that I have forty-five (45) days within which to consider this waiver and
release of my rights. I understand the terms and conditions of this Agreement in
full, agree to abide by this, and knowingly and voluntarily execute it without
hidden reservations.

         7. SEVEN (7) DAY REVOCATION PERIOD. This waiver and release of claims
under the ADEA may be revoked by me within 7 days after the execution of this
Agreement, and the release of any claims under the ADEA shall not become
effective until the revocation period has expired. I understand that if I wish
to exercise this right of revocation to the Company's General Counsel or the
Chief Financial Officer before the expiration of the foregoing 7-day revocation
period.

         8. RECEIPT OF DISCLOSURES. I acknowledge that I have received the
Disclosures that are attached to this Agreement as Exhibit 1.

         9. ENTIRE AGREEMENT. I understand that this document contains the
entire agreement and understanding between me and the Company regarding my
employment and separation from that employment and that no other covenants or
promises have been made except those contained in this document. This document
supersedes all other agreements and arrangements between the Company and me,
whether written or oral.

         10. ARBITRATION. I agree to submit to final and binding arbitration any
and all disputes, claims (whether in tort, contract, statutory or otherwise)
and/or disagreements concerning the interpretation or application of this
Agreement and/or my employment by the Company and/or the termination of this
Agreement and/or my employment. Any such dispute, claim and/or disagreement
subject to arbitration pursuant to the terms of this paragraph 10 shall

                                       5
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                                                                       EXHIBIT A

be resolved by arbitration in accordance with the Commercial Arbitration Rules
of the American Arbitration Association (the "AAA") then in effect. No
arbitration proceeding relating to the Plan may be initiated unless I have
exhausted the claims review and appeals procedures specified in Article 9 of the
Plan. Arbitration under this provision must be initiated within 30 days of the
action, inaction or occurrence about which the party initiating the arbitration
is complaining, and must be initiated in the city where the headquarters of the
Company is located at the time such arbitration is initiated. Within ten (10)
days of the initiation of an arbitration hereunder, each party will designate an
arbitrator pursuant to Rule 14 of the AAA Rules. Within (10) ten days of
selection, the appointed arbitrators will appoint a neutral arbitrator from the
panel in the manner prescribed in Rule 13 of the AAA Rules. The arbitrators
shall issue their written decision (including a statement of finding of facts)
within fourteen (14) days from the date of the close of the arbitration hearing.
I agree that the decision of the arbitrators selected hereunder will be final
and binding on both parties, absent manifest error. This arbitration provision
is expressly made pursuant to and shall be governed by the Federal Arbitration
Act, 9 U.S.C. Sections 1-14. I agree that pursuant to Section 9 of the Act that
a judgment of the United States District Court for the District in which the
headquarters of the Company are located at the time of initiation of an
arbitration hereunder shall be entered upon the award made pursuant to the
arbitration.

         11. ATTORNEYS' FEES. I further agree I am fully responsible for any
attorneys' fees incurred by me in consulting with an attorney and will indemnify
and hold harmless the Company, and the other persons and entities released in
this document for any claims or fees asserted by any attorney claiming by and
through me for attorneys' fees or costs in connection with the review or
execution of this document.

         12. VENEZUELAN LABOR CLAIMS. Notwithstanding any other provision of the
Plan or this Agreement to the contrary, in the event I am or ever have been
resident in Venezuela, I

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                                                                       EXHIBIT A

further agree not to bring suit against the Company in any Venezuelan court of
law or other administrative body to recover any labor benefits that may be
provided for under applicable local law. In the event such a suit is initiated
by me or on my behalf, I understand that I will forfeit all benefits under the
Plan and will be liable to the Company for damages in an amount equal to any sum
awarded to me by the Venezuelan court of law or administrative body. In
addition, I hereby agree that if the Company has provided me with certain
transportation, food, and immigration expense allowances in accordance with
Venezuelan Organic Labor Law, such allowances have been provided solely to
comply with applicable local law and are not intended to be classified as wages
for any other purpose.

         13. RUSSIAN LABOR CLAIMS. Notwithstanding any other provision of the
Plan or this Agreement to the contrary, I understand that, in accordance with
the provisions of the Plan, in the event I become entitled to and receive any
payments mandated under Article 40.3 of the Russian Federation Code of Labor
Laws dated December 9, 1971, as amended, or any other applicable Article
thereof, I will be liable to the Company for an amount equal to the amount of
any benefits I may have previously received under the terms of the Plan.

         14. BENEFITS NOT REQUIRED UNDER EXISTING PROGRAM. I agree that unless I
execute this Agreement I am not entitled to receive the benefits described in
paragraph 1 of this Agreement.

         EXECUTED in multiple originals this __________ day of ______________ ,
2001.

                                 Signature of Employee

                                 ------------------------------------------

                                 ------------------------------------------
                                 WITNESS

                                       7
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                                                                       EXHIBIT A

                            NON-REVOCATION STATEMENT

         I, , acknowledge that at least seven (7) days have expired since the
execution of the Agreement by me on the day of , 2001, and I knowingly and
voluntarily elect not to revoke this waiver and release of my rights under the
Age Discrimination in Employment Act, as amended, 29 U.S.C. Section 621 et seq..

         EXECUTED in multiple originals this __________ day of ________________,
2001.

                                             ----------------------------------

                                                  Signature of Employee

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                                                                       EXHIBIT A

                                  45-DAY WAIVER

                                   DISCLOSURES

         COVERED CLASS OF EMPLOYEES , ELIGIBILITY AND TIME LIMITS.

                  The individuals selected to participate in the Plan are those
employees of ___________ (Company) who have completed six months of employment
with the Company and who incur Involuntary Terminations as defined in the Benton
Oil and Gas Company Change of Control Severance Plan (the "Plan"). This program
will end on the date of _________.

         ELIGIBLE EMPLOYEES.

                  The following is a list of the job titles and ages of all
employees who are eligible to participate in the Plan:

                         JOB TITLE                         AGE
                     ------------------------------------------------

                          ------                         ------
                          ------                         ------
                          ------                         ------
                          ------                         ------
                          ------                         ------
                          ------                         ------

         EMPLOYEES NOT ELIGIBLE.

                  The following is a list of the ages of employees who are not
eligible to participate in the Plan:

                         JOB TITLE                         AGE
                     ------------------------------------------------

                          ------                         ------
                          ------                         ------
                          ------                         ------
                          ------                         ------
                          ------                         ------
                          ------                         ------

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<PAGE>   10

         IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed as of the ____ day of June 2001.

                                       BENTON OIL AND GAS COMPANY

                                       By:
                                          ------------------------------------<PAGE>   1

                                                                   Exhibit 10(p)

                                 ROYAL APPLIANCE

                               PHANTOM STOCK PLAN

                                                  Effective Date: April 23, 2001

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                                TABLE OF CONTENTS

ARTICLE                                                    NUMBER
-------                                                    ------

PURPOSE                                                      I

DEFINITIONS                                                  II

ELIGIBILITY AND PARTICIPATION                                III

AWARD OF PHANTOM SHARES                                      IV

VESTING OF PHANTOM SHARES                                    V

EVENTS OF FORFEITURE                                         VI

TERMINATION OF EMPLOYMENT                                    VII

DISABILITY OF A PARTICIPANT                                  VIII

DEATH OF A PARTICIPANT                                       IX

PAYMENT OF PHANTOM SHARE VALUE                               X

NONTRANSFERABILITY OF PHANTOM SHARES                         XI

ADMINISTRATION                                               XII

AMENDMENT AND TERMINATION                                    XIII

PARTICIPATING EMPLOYERS                                      XIV

MISCELLANEOUS                                                XV

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                                   ARTICLE I

                                     PURPOSE
                                     -------

         1.1 This Plan is intended to serve as an incentive to key employees of
the Company and Participating Employers, and to attract and retain in their
employ persons of outstanding abilities upon whom the future success of the
Company largely depends. This Plan shall become effective April 23, 2001.

                                   ARTICLE II

                                   DEFINITIONS
                                   -----------

         2.1 The words "Actual Shares" shall mean the common shares, without par
value, of the Company.

         2.2 The word "Administrator" shall mean the Compensation Committee or
the person, persons, committee, corporation, partnership or other entity
designated as Administrator under Article XII.

         2.3 The words "Appeals Committee" shall mean the Appeals Committee
established pursuant to Article XII.

         2.4 The word "beneficiary" shall mean any person who receives or is
designated to receive payment of any amounts under the terms of this Plan
because of the participation of another person in this Plan.

         2.5 The word "Board" shall mean the Board of Directors of the Company,
as the same may change from time to time.

         2.6 The word "Cause" shall mean for purposes of this Plan any of the
following occurring while a Participant or former Participant is an employee of
the Company or any Participating Employer:

         (a)      his engaging in any act of fraud or gross dishonesty or
                  criminal activity with respect to the Company or any
                  Participating Employer; or

         (b)      his conviction of any felony; or

         (c)      his engaging in any act of willful misconduct or gross
                  negligence which adversely affects the Companies or any
                  Participating Employer; or

         (d)      his refusal to submit to a medical examination if directed to
                  do so by the Company or Participating Employer to determine
                  whether the Participant is disabled under this Plan.

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<PAGE>   4

         2.7 The words "Change in Control" shall mean:

         (a)      a change in the composition of the Board of Directors of the
                  Company such that a majority of the Board members are not the
                  same persons who were directors twelve (12) months earlier;

         (b)      approval by the stockholders of the Company of a
                  reorganization, merger or consolidation with respect to which,
                  in any such case, the persons who were the stockholders of the
                  Company immediately prior to such reorganization, merger or
                  consolidation do not, immediately thereafter, own more than
                  51% of the combined voting power entitled to vote in the
                  election of directors of the reorganized, merged or
                  consolidated company's then outstanding voting securities; or

         (c)      liquidation or dissolution of the Company or a sale of all or
                  substantially all of the assets of the Company.

         2.8 The word "Company" shall mean Royal Appliance Mfg. Co., and any
successor corporation or business organization which shall assume the duties an
obligations of Royal Appliance Mfg. Co. under this Plan.

         2.9 The words "Compensation Committee" shall mean a committee
consisting of three (3) or more members who are designated by the Board as the
Compensation Committee.

         2.10 The word "Disability" shall mean a physical or mental condition of
a Participant resulting from bodily injury, disease, or mental disorder which
renders him incapable of continuing his usual and customary employment with the
Company. The disability of Participant shall be determined by a licensed
physician chosen by the Administrator. The determination shall be applied
uniformly to all Participants.

         2.11 The words "he," "him," and "his" shall mean, in addition to their
common meaning, "she," "her," "hers," "it" or "its," as the context may require,
and generally, whenever any pronoun is used herein, it shall be construed to
include the masculine pronoun, the feminine pronoun or the neuter pronoun, as
shall be appropriate.

         2.12 The word "Participant" shall mean any individual who is designated
by the Board and who takes the necessary actions to participate in the Plan
pursuant to Article III hereof.

         2.13 The words "Participating Employer" shall mean the Company and such
subsidiaries and affiliated companies of the Company which participate in the
Plan with the consent of the Board of Directors.

         2.14 The words "Phantom Share" shall mean a phantom unit of ownership
awarded to a Participant pursuant to this Plan that represents one (1) Actual
Share.

         2.15 The words "Phantom Share Value" shall mean the fair market value
of an Actual Share. The fair market value of an Actual Share shall be the
closing price of an Actual

                                       2

<PAGE>   5

Share on the New York Stock Exchange or other applicable national stock exchange
with which the Company is registered for the trading date for which the fair
market value of an Actual Share is reported which is coincident with or
immediately prior to the date the Phantom Share Value is determined under this
Plan

         2.16 The word "Plan" shall mean the Royal Appliance Phantom Stock Plan
as set forth in this instrument, as amended from time to time.

         2.17 The words "Plan Year" shall mean the calendar year.

         2.18 The words "Termination of Employment" shall mean the Participant's
cessation of his service with a Participating Employer for any reason
whatsoever, whether voluntarily or involuntarily, including by reason of
retirement, death, or Disability.

         2.19 The words "Vested Percentage" shall mean, with respect to any
Phantom Shares in the account of a Participant, the applicable percentage
determined pursuant to Article V hereof.

         2.20 The words "Vested Phantom Shares" shall mean the number of Phantom
Shares in a Participant's account multiplied by the applicable Vested Percentage
determined pursuant to Article V hereof.

         2.21 The words "Vesting Service" shall mean a Participant's period of
continuous employment with the Company and a Participating Employer commencing
on the date the Phantom Shares are awarded to him under the Plan and ending on
his Termination of Employment.

         2.22 The words "Years of Service" shall mean a Participant's period of
continuous employment with the Company and a Participating Employer commencing
on his most recent date of hire and ending on his Termination of Employment.

                                  ARTICLE III

                          ELIGIBILITY AND PARTICIPATION
                          -----------------------------

         3.1 ELIGIBILITY. The employees who shall be eligible to participate
under this Plan shall be such employees as are designated by the Compensation
Committee (hereinafter the "Committee") 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 the Employee Retirement Income
Security Act of 1974, as amended.

         3.2 PARTICIPATION. The Committee shall notify an employee upon his or
her selection for participation under the Plan of such selection. If an
employee, upon such notification, desires to become a Participant, the employee
shall, within such time as the Committee specifies:

                                       3
<PAGE>   6

         (a)      furnish to the Committee all information requested by it;

         (b)      execute such documents and such instruments as the Committee
                  may require to facilitate the administration of this Plan;

         (c)      agree in such form and manner as the Committee may require to
                  be bound by the terms of this Plan and by the terms of such
                  amendments as may be made hereto; and

         (d)      truthfully and fully answer any questions and supply any
                  information which the Committee deems necessary or desirable
                  for the proper administration of this Plan, without any
                  reservations whatsoever.

An employee who is selected by the Committee to participate in the Plan and who
performs timely all acts required to become a Participant, shall become a
Participant on or as of such date as is specified by the Committee.

         3.3 TERMINATION OF PARTICIPATION. The Committee may terminate the
participation of any Participant at any time. Such termination of participation
shall not affect the rights of the terminated Participant to the payment,
pursuant to Article X, of the Vested Phantom Shares previously awarded to such
Participant (except as provided in Article VI). A Participant shall
automatically cease to be a Participant on the date of his or her Termination of
Employment.

                                   ARTICLE IV

                             AWARD OF PHANTOM SHARES
                             -----------------------

         4.1 AUTHORIZATION OF PHANTOM SHARES. The Company has authorized 50,000
Phantom Shares which may be awarded under the Plan. In the event there shall be
a change in the number of Actual Shares by reason of a stock split, stock
dividend, reorganization, recapitalization, cash dividend, or other similar
event, a similar change shall be made in the number of Phantom Shares. The
determination of the Compensation Committee with respect to any such adjustment
shall be conclusive and binding upon the Participants and their beneficiaries.

         4.2 AWARD. The Committee, in its sole discretion, may from time to time
award Phantom Shares to a Participant. Subject to all the terms and conditions
of this Plan, each awarded Phantom Share which becomes a Vested Phantom Share
(or is deemed to be a Vested Phantom Share hereunder) shall entitle the
Participant to receive Actual Shares of the Company equal to the number of the
Vested Phantom Shares awarded to a Participant hereunder, on the dates and under
the method of payment as set forth in this Plan. Each Participant shall be
notified by the Committee of the number of Phantom Shares which have been
awarded to him or her.

                                       4
<PAGE>   7

         4.3 RIGHTS UNDER PHANTOM SHARES. Phantom Shares awarded under this Plan
shall have no voting rights and shall not be entitled to receive cash or other
dividends declared and paid, and the Participant shall have no other rights as a
shareholder of the Company under the Ohio General Corporation Law or common law.

         4.4 BOOKKEEPING ENTRIES. All grants of Phantom Shares awarded under
this Plan shall be simple bookkeeping entries for the convenience of the
Company. The Company shall not be require to segregate any funds with respect to
the Phantom Shares granted under this Plan. All rights of Participants, former
Participants and beneficiaries under this Plan shall constitute only contractual
claims against the Company and no such claim against the Company shall be
secured or deemed to be secured in any manner.

                                   ARTICLE V

                            VESTING OF PHANTOM SHARES
                            -------------------------

         5.1 VESTING SCHEDULE. Subject to the provisions of Section 6.2 the
Vested Percentage applicable to a Participant shall be determined on the basis
of his Vesting Service in accordance with the following table:

                    Vesting                                     Vested
                    Service                                     Percentage
                    -------                                     ----------

                    Less than 3 years                                 0%
                    At least 3 but less than 4 years                 60%
                    At least 4 but less than 5 years                 80%
                    5 or more years                                 100%

         5.2 DEATH OR DISABILITY. Notwithstanding anything in this Article V to
the contrary but subject to the provisions of this Section 5.2 hereof, upon the
death of a Participant or the Termination of Employment of a Participant due to
Disability, the Vested Percentage applicable to a Participant shall be
determined by multiplying the number of his total months of Vesting Service with
the Company commencing the date the Phantom Shares were awarded to him and
ending on his date of death or Termination of Employment due to Disability by
1/60. A fractional month of Vesting Service shall be counted as one month. The
Vested Percentage determined under this Section 5.2 shall not exceed 100%.

         5.3 100% VESTING. Notwithstanding anything in this Article V to the
contrary but subject to the provisions of this Section 5.3 hereof, the Vested
Percentage applicable to a Participant shall become one hundred percent (100%)
with respect to all Phantom Shares previously granted to him pursuant to this
Plan (other than Phantom Shares previously forfeited pursuant to Article VI
hereof) upon the occurrence of a Change in Control.

                                       5
<PAGE>   8

                                   ARTICLE VI

                              EVENTS OF FORFEITURE
                              --------------------

         6.1 FORFEITURE. Except as set forth below in Section 6.2, in the event
that a Participant has a Termination of Employment before he is 100% vested
under the provisions of Article V, he shall forfeit all rights whatsoever he
shall have to receive any payments on account of the Phantom Shares that are not
vested on the date of his Termination of Employment.

         6.2 TERMINATION FOR CAUSE. Notwithstanding any other provision of this
Plan, in the event that a Participant's Termination of Employment shall be for
Cause, the Participant shall forfeit all Phantom Shares granted to him and shall
forfeit all rights whatsoever he shall have to receive any payments of Actual
Shares or other amounts under this Plan. If a Participant's employment could be
terminated for Cause hereunder, it shall be considered so terminated regardless
of whether actually so terminated or terminated voluntarily by the Participant
through retirement or otherwise.

         6.3 EFFECT OF FORFEITURE. Upon the occurrence of an event described in
this Article which results in forfeiture of a Participant's Phantom Shares, such
Phantom Shares shall be canceled and neither the Participant nor his beneficiary
shall have any further rights with respect thereto. If a Participant forfeits
all rights to receive payment hereunder as a result of a Termination of
Employment for Cause pursuant to Section 6.2 above, he shall forfeit all rights
to any further payments hereunder but he shall not be required to repay amounts
previously received by him hereunder. Forfeited Phantom Shares shall not be
reinstated by subsequent rehire of the Participant by the Company or a
Participating Employer. Forfeited Phantom Shares shall be available for
reissuance under the Plan.

                                  ARTICLE VII

                            TERMINATION OF EMPLOYMENT
                            -------------------------

         7.1 TERMINATION OF EMPLOYMENT OTHER THAN FOR CAUSE. In the event of a
Participant's Termination of Employment for a reason other than death or
Disability, and there is no Cause for the Company or any Participating Employer
to terminate his employment, such Participant shall be entitled to receive a
distribution of his Phantom Shares multiplied by his Vested Percentage.

         7.2 PAYMENT OF VESTED PHANTOM SHARES. A Participant's Vested Phantom
Shares shall be paid to such Participant as provided in Article X hereof.

                                       6
<PAGE>   9

                                  ARTICLE VIII

                           DISABILITY OF A PARTICIPANT
                           ---------------------------

         8.1 BENEFITS PAYABLE DUE TO DISABILITY. In the event of a Participant's
Termination of Employment due to his Disability, all Phantom Shares awarded to
such disabled Participant which have not vested previously pursuant to this Plan
shall become vested in accordance with the pro-rata vesting formula set out in
Section 5.2 as of the date the Participant's Termination of Employment due to
his Disability.

         8.2 PAYMENT OF VESTED PHANTOM SHARES. A Participant's Vested Phantom
Shares shall be paid to such disabled Participant as provided in Article X
hereof.

                                   ARTICLE IX

                             DEATH OF A PARTICIPANT
                             ----------------------

         9.1 BENEFITS PAYABLE DUE TO DEATH. In the event of the Termination of
Employment of a Participant by reason of his death, his beneficiary shall be
entitled to receive a distribution of his Vested Phantom Shares. All Phantom
Shares awarded to such Participant which have not vested previously pursuant to
this Plan shall become vested in accordance with the pro-rata vesting formula
set out in Section 5.2 as of the Participant's date of Termination of Employment
by reason of his death.

         9.2 PAYMENT OF VESTED PHANTOM SHARES. A Participant's Vested Phantom
Shares shall be paid as provided in Article X hereof to the beneficiary of the
Participant.

         9.3 DEFAULT BENEFICIARY. Unless a Participant or former Participant has
designated a beneficiary in accordance with the provisions of Section 9.4
hereof, his beneficiary shall be deemed to be the person or persons in the first
of the following classes in which there are any survivors of such Participant or
former Participant:

         (a)      his spouse at the time of his death;

         (b)      his issue, per stirpes;

         (c)      his parents; or

         (d)      the executor or administrator of his estate.

         9.4 DESIGNATED BENEFICIARY. In lieu of having the Vested Phantom Shares
distributable pursuant to this Article distributed to a beneficiary determined
in accordance with the provisions of Section 9.3 hereof, a Participant may sign
a document designating a beneficiary or beneficiaries to receive such Vested
Phantom Shares.

                                       7
<PAGE>   10

         9.5 PARTIAL DISPOSITION. In the event that a Participant or former
Participant, dies at a time when he has a designation on file with the
Administrator which does not fully dispose of his Vested Phantom Shares under
this Plan upon his death, then the Vested Phantom Shares distributable on behalf
of said Participant or former Participant, the disposition of which was not
determined by the deceased Participant's or former Participant's designation,
shall be distributed to a beneficiary determined under the provisions of Section
9.3 hereof.

         9.6 AMBIGUITY AS TO BENEFICIARY. Any ambiguity in a Participant's
beneficiary designation shall be resolved by the Administrator. Subject to
Section 9.4 hereof, the Administrator may direct a Participant to clarify his
beneficiary designation and if necessary execute a new beneficiary designation
containing such clarification.

                                   ARTICLE X

                            PAYMENT OF PHANTOM SHARES
                            -------------------------

         10.1 PAYMENTS BEFORE TERMINATION OF EMPLOYMENT. Subject to Sections
10.2 and 10.4, a Participant who has not had a Termination of Employment may
request a distribution of all or a portion of his Vested Phantom Shares. Such
request shall be made in writing in a form and manner specified by the Company
and must specify the number of Vested Phantom Shares to be distributed and the
date upon which such Vested Phantom Shares shall be paid which must be as soon
as administratively possible following a date that is at least one (1) year
after the date on which the request is made. A Participant may request a
distribution before the date on which his Phantom Shares actually become vested
subject to the other requirements set forth in this Section 10.1. Any
distribution request shall be irrevocable unless, prior to payment, the
Participant dies, has a Termination of Employment due to Disability or has a
Termination of Employment at which time the request shall become null and void
and the Participant's Vested Phantom Shares shall be paid as provided in Section
10.2.

         10.2 PAYMENTS ON OR AFTER A TERMINATION OF EMPLOYMENT. Upon a
Participant's Termination of Employment for any reason, including death or
Disability, the Participant or the beneficiary of the deceased Participant shall
be entitled to a distribution equal to his Vested Phantom Shares. Such
distribution shall be in a single lump sum payment on the date determined under
Section 10.5 and shall be in lieu of all other benefits under this Plan.

         10.3 CHANGE IN CONTROL. Any Phantom Shares held by a Participant under
this Plan or any Phantom Shares remaining to be paid to a Participant or
beneficiary under a prior distribution election shall be paid immediately to
such Participant or beneficiary in a single lump sum payment upon the occurrence
of a Change in Control.

         10.4 FORM AND AMOUNT OF PAYMENT.

                  (a)      Subject to such rules, procedures, limits and
                           restrictions as the Administrator may establish from
                           time to time, a Participant, may elect that
                           distributions payable under Section 10.1 shall be
                           made in a single sum or in the form of annual
                           installments over a period of no

                                       8
<PAGE>   11

                           less than two (2) calendar years and no more than ten
                           (10) calendar years.

                  (b)      Any installment form of payment shall be equal to the
                           number of Vested Phantom Shares to be distributed to
                           a Participant divided by the number of remaining
                           installments to be paid.

                  (c)      The Administrator, with the consent of the Company,
                           may establish procedures to permit some or all
                           Participants to request to change their prior
                           elections regarding the form of their benefit
                           payments under Section 10.1, provided that any such
                           procedures shall either require such request be made
                           a reasonable period of time, as determined by the
                           Company in its sole discretion, before the Phantom
                           Shares affected by such request shall be
                           distributable, or require a forfeiture of a
                           significant portion of such Phantom Shares. The
                           Administrator may, but is not required to, grant any
                           such requests.

                  (d)      All payments under the Plan shall be made in Actual
                           Shares of the Company. Actual Shares shall be
                           distributed first from treasury shares and then, to
                           the extent treasury shares are not available, from
                           any authorized and unissued Company shares.

         10.5 COMMENCEMENT OF PAYMENTS.

                  (a)      Payments under Section 10.1 of this Plan shall be
                           made as soon as administratively possible following
                           the date elected by the Participant which is at least
                           one (1) year after the date such election is made by
                           the Participant.

                  (b)      The Administrator, with the consent of the Company,
                           may establish procedures to permit some or all
                           Participants who have made a distribution election
                           pursuant to Section 10.1 to request to change their
                           prior elections regarding the time of commencement of
                           benefits hereunder, provided that any such procedures
                           shall either require that the request be made a
                           reasonable period of time, 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.

                  (c)      Single lump sum payments made under Section 10.2 of
                           this Plan shall be made as soon as administratively
                           possible following a Participant's Termination of
                           Employment and, in any event, no later than ninety
                           (90) days after a Participant's Termination of
                           Employment.

                                       9
<PAGE>   12

                  (d)      Single lump sum payments made under Section 10.3 of
                           this Plan shall be made immediately upon a Change in
                           Control.

         10.6 PROTECTIVE DISTRIBUTIONS. In the event that the Administrator
determines, in its sole discretion, that a Participant is not, or may not be, a
member of a "select group of management or highly compensated employees" within
the meaning of Sections 201(2), 301(a)(3), 401(a)(1) or 4021(b)(6) of the
Employee Retirement Income Security Act of 1974, as amended, then the
Administrator may, in its sole discretion, terminate such Participant's
participation in this Plan, and distribute such Participant's Vested Phantom
Shares in a single lump sum payment. Any such distribution shall be made at such
time as the Administrator determines in its sole discretion.

         10.7 TAX WITHHOLDING. A Participating Employer may withhold from any
payment made by it under the Plan the number of Vested Phantom Shares equal in
value to such amount or amounts as may be required for purposes of complying
with the tax withholding or other provisions of the Internal Revenue Code or the
Social Security Act or any state or local income or employment tax act or for
purposes of paying any estate, inheritance or other tax attributable to any
amounts payable hereunder.

         10.8 CANCELLATION OF PHANTOM SHARES. As of the date of payment with
respect to a Phantom Share of a Participant, such Phantom Share shall be deemed
canceled.

                                   ARTICLE XI

                      NONTRANSFERABILITY OF PHANTOM SHARES
                      ------------------------------------

         11.1 NONTRANSFERABLE. Except as provided in Article IX hereof with
respect to the designation of beneficiaries, Phantom Shares awarded pursuant to
this Plan and the right to receive payments of Vested Phantom Shares, if any,
attributable thereto, are nontransferable directly, indirectly, as security for
a loan or otherwise by any means, either voluntarily or by operation of law.

                                  ARTICLE XII

                                 ADMINISTRATION
                                 --------------

         12.1 ADMINISTRATION. The Compensation Committee shall be the
Administrator unless and until the Board shall appoint some other person,
persons, committee, corporation, partnership or other entity as Administrator.

         12.2 POWERS OF THE ADMINISTRATOR. The Administrator shall administer
and interpret this Plan. In so doing, it shall have full power and discretion:

                                       10
<PAGE>   13

                  (a)      to interpret this Plan and any related documents, to
                           resolve ambiguities, inconsistencies and omissions,
                           to determine any questions of fact, to determine the
                           right to benefits of, and the amount of benefits, if
                           any, payable to any person in accordance with the
                           provisions of this Plan;

                  (b)      to enact such rules, regulations, and procedures and
                           to prescribe the use of such administrative forms as
                           it shall deem advisable; and

                  (c)      to appoint or employ such agents, attorneys,
                           appraisers, accountants and assistants at the expense
                           of the Company, as it may deem necessary to keep its
                           records or to assist it in taking any other action
                           authorized or required hereunder.

         12.3 DENIAL OF BENEFITS. If any Participant or beneficiary shall file
an application for benefits hereunder and such application is denied in whole or
in part by the Administrator, the applicant shall be notified in writing of the
specific reason or reasons for such denial. The notice shall also set forth the
specific Plan provisions upon which the denial is based, an explanation of the
provisions of 12.4 hereof, and any other information deemed necessary or
advisable by the Administrator.

         12.4 APPEALS PROCEDURE. Any Participant, any beneficiary, or any
authorized representative of a Participant or beneficiary whose application for
benefits hereunder has been denied, in whole or in part, by the Administrator
may upon written notice to the Appeals Committee request a review by the Appeals
Committee of such denial of his application. Such review may be made by written
briefs submitted by the applicant and the Administrator or at a hearing, or by
both, as shall be deemed necessary by the Appeals Committee. Any such hearing
shall be held in the main office of the Company on such date and at such time as
the Appeals Committee shall designate upon not less than seven (7) days' notice
to the applicant and the Administrator unless both of them accept shorter
notice. The Appeals Committee shall make every effort to schedule the hearing on
a day and at a time which is convenient to both the applicant and the
Administrator. After the review has been completed, the Appeals Committee shall
render a decision in writing, a copy of which shall be sent to both the
applicant and the Administrator. Such decision shall be made no later than sixty
(60) days following the applicant's request for review; provided, however, that
in the event that a hearing is held with respect to the review of the claim,
such decision shall be rendered no later than one hundred twenty (120) days
following the applicant's request for review. In rendering its decision, the
Appeals Committee shall have full power and discretion to interpret this Plan
and related documents, to resolve ambiguities, inconsistencies and omissions, to
determine any question of fact, to determine the right to benefits of, and the
amount of benefits, if any, payable to, the applicant in accordance with the
provisions of this Plan. Such decision shall set forth the specific reason or
reasons for the decision and the specific Plan provisions upon which the
decision is based. Such decision shall be final and binding on the applicant and
the Administrator.

         12.5 ESTABLISHMENT OF APPEALS COMMITTEE. The Company shall appoint the
members of an Appeals Committee which shall consist of three (3) or more
members. The Company may appoint one Appeals Committee to hear all appeals of
denied benefits that may

                                       11
<PAGE>   14

arise under the Plan or a number of Appeals Committees with different members to
hear the appeals of denied benefits that arise from Participants employed by a
Participating Employer or group of Participating Employers. The members of the
Appeals Committee shall remain in office at the will of the Company and the
Company, 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.

         12.6 OPERATIONS OF APPEALS COMMITTEE. On all matters and questions, the
decision of a majority of the members of the Appeals Committee shall govern and
control; but a meeting need not be called or held to make any decision. The
Appeals Committee shall appoint one of its members to act as its Chairman and
another member to act as Secretary. The terms of office of these members shall
be determined by the Appeals Committee, and the Secretary and/or Chairman may be
removed by the other members of the Appeals Committee for any reason which such
other members may deem just and proper. The Secretary shall do all things
directed by the Appeals Committee. Although the Appeals Committee shall act by
decision of a majority of its members as above provided, nevertheless in the
absence of written notice to the contrary, every person may deal with the
Secretary and consider his acts as having been authorized by the Appeals
Committee. Any notice served or demand made on the Secretary shall be deemed to
have been served or made upon the Appeals Committee.

         12.7 DELEGATION OF POWERS. The Administrator may by appropriate
resolution delegate to one or more of its members the authority to exercise any
of its powers in administering and interpreting this Plan.

         12.8 LIMITATION OF LIABILITY. The Administrator and the Appeals
Committee shall not be liable for any action or determination made with respect
to this Plan and awards under it and the Company shall indemnify all such
persons, individually and collectively, against any and all losses, costs or
expenses which may be incurred by them, individually or collectively, in
connection with their administering this Plan.

                                       12
<PAGE>   15

                                  ARTICLE XIII

                            AMENDMENT AND TERMINATION
                            -------------------------

         13.1 POWER TO AMEND AND TERMINATE PLAN. This Plan may be amended by the
Company at any time, or from time to time, and may be terminated by the Company
with respect to any or all Participants at any time, but no such amendment or
termination will deprive any Participant of the right to receive any payment in
accordance with the terms of the Plan as of the date of such amendment or
termination.

                                  ARTICLE XIV

                             PARTICIPATING EMPLOYERS
                             -----------------------

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

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

                            Royal Appliance Mfg. Co.

The Company may designate additional Participating Employers or remove
Participating Employers 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.

                                   ARTICLE XV

                                  MISCELLANEOUS
                                  -------------

         15.1 NO IMPLIED RIGHTS. Neither the establishment of the Plan nor any
amendment thereof shall be construed as giving any Participant, beneficiary or
any other person any legal or equitable right unless such right shall be
specifically provided for in the Plan or conferred by specific action of the
Company in accordance with the terms and provisions of the Plan. Except as
expressly provided in this Plan, neither the Company nor any other Participating
Employer shall be required or be liable to make any payment under the Plan.

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

                                       13
<PAGE>   16

         15.3 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.

         15.4 OFFSET. If, at the time payments or installments of payments are
to be made hereunder, the Participant or the beneficiary or both are indebted or
obligated to 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.

         15.5 NON-ASSIGNABILITY. Neither the Participant nor any other person
shall have any voluntary or involuntary right to commute, sell, assign, pledge,
anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey in
advance of actual receipt the amounts, if any, payable hereunder, or any part
thereof, and any attempt to do so shall be void. All amounts payable under this
Plan are expressly declared to be unassignable and non-transferable. No part of
the amounts payable under this Plan shall be, prior to actual payment, subject
to seizure or sequestration for the payment of any debts, judgments, alimony or
separate maintenance owed by the Participant or any other person, or be
transferable by operation of law in the event of the Participant's or any other
person's bankruptcy or insolvency.

         15.6 NOTICE. Any notice required or permitted to be given under the
Plan shall be sufficient if in writing and hand delivered, or sent by registered
or certified mail, and if given to the Company, delivered to the principal
office of the Company, directed to the attention of the Secretary of the
Company. Such notice shall be deemed given as of the date of delivery or, if
delivery is made by mail, as of the date shown on the postmark or the receipt
for registration or certification.

         15.7 GOVERNING LAWS. The Plan shall be construed and administered
according to the laws of the State of Ohio to the extent not preempted by the
laws of the United States of America.

         15.8 INCAPACITY. If the Administrator determines that any Participant
or beneficiary entitled to payments under the Plan is incompetent by reason of
physical or mental disability and is consequently unable to give a valid receipt
for payments made hereunder, or is a minor, the Administrator may order the
payments becoming due to such Participant or beneficiary to be made to another
person for the benefit of such Participant or beneficiary, without
responsibility on the part of the Administrator to follow the application of
amounts so paid. Payments made pursuant to this Section shall completely
discharge the Plan, the Administrator, the Participating Employers and the
Appeals Committee with respect to such payments.

                                       14
<PAGE>   17

         15.9 ADMINISTRATIVE FORMS. All applications, elections and designations
in connection with the Plan made by a Participant or beneficiary shall become
effective only when duly executed on forms provided by the Administrator and
filed with the Administrator.

         15.10 INDEPENDENCE OF PLAN. Except as otherwise expressly provided
herein, this Plan shall be independent of, and in addition to, any other
employee benefit agreement or plan or any rights that may exist from time to
time thereunder.

         15.11 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.

         15.12 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.

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

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

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

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

                                       15
<PAGE>   18

         IN WITNESS WHEREOF, Royal Appliance Mfg. Co., by its duly authorized
officers, has caused this Phantom Stock Plan to be executed as of this 23rd day
of April 2001.

                                              ROYAL APPLIANCE MFG. CO.

                                              By___________________________

                                              And__________________________

                                       16

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