EXHIBIT 10.1
EMPLOYMENT AGREEMENT OF XXXX X. XXXXXXX
This Employment Agreement (this "AGREEMENT") is entered into as of this
4th day of January, 1999, by and between Steinway Musical Instruments, Inc., a
Massachusetts corporation (the "COMPANY"), and Xxxx X. Xxxxxxx (the
"EXECUTIVE").
1. TERM OF EMPLOYMENT. The Company agrees to employ the Executive, and
the Executive hereby agrees to accept employment, commencing on the date hereof,
and terminating December 31, 2006, unless otherwise terminated in accordance
with the terms set forth in PARAGRAPH 7 of this Agreement (including any
extensions, the "TERM").
2. DUTIES AND RESPONSIBILITIES. The Executive shall be employed as the
President and Chief Executive Officer of the Company, and shall perform such
duties as are from time to time assigned to him by the Board of Directors of the
Company (the "BOARD") and that are normally associated with such position.
3. COMPENSATION.
a. For all services to be performed by the Executive during the
Term, the Company shall pay to him, together with other compensation as
hereinafter provided, an annual salary of $200,000 (subject to such deductions
and withholdings as may be required by law or by further agreement with the
Executive), payable in arrears biweekly.
b. The Executive shall be eligible to receive annual salary
increases based on his performance of his duties, but any such increases shall
be in the sole and absolute discretion of the Board.
4. BENEFITS. In addition to any other items of compensation provided
for in this Agreement, the Executive shall be entitled to the following benefits
(the "BENEFITS"):
a. The Executive shall be entitled to participate in any
retirement, life insurance, health, medical, disability or other plans or
benefits, whether insured or self-insured, which the Company in its sole and
absolute discretion may make available generally from time to time to its
executives. The Company shall also reimburse the Executive for all medical
expenses incurred which are not otherwise covered by an existing benefit plan.
b. The Executive shall be entitled to vacation in accordance with
the Company's current vacation policy during each year of this Agreement.
5. REIMBURSEMENT OF EXPENSES. The Executive shall be entitled to be
reimbursed for all reasonable travel and entertainment expenses that are (a)
incurred by him in the performance of his duties hereunder and (b) evidenced by
appropriate documentation.
6. RESTRICTIVE COVENANTS. The Executive acknowledges that certain of
the Company's products and services are proprietary in nature and have been
manufactured, assembled and marketed through the use of customer lists, supplier
lists, trade secrets, methods of operation and other confidential information
possessed by the Company and disclosed in confidence to the Executive (the
"TRADE SECRETS"), which may not be easily accessible to other persons in the
trade. The Executive also acknowledges that he will have substantial and ongoing
contact with the Company's customers and suppliers and will thereby gain
knowledge of
customer needs and references, sources of equity funding, sources of supply,
methods of assembly and other valuable information necessary for the success of
the Company's business. Therefore, except as provided in SUBPARAGRAPHS (a) AND
(d) below, and except as provided in PARAGRAPH 8, during the time the Executive
is employed under the provisions of this Agreement and until the date of the
second anniversary of the termination of the executive's employment, the
Executive shall not, without the prior written consent of the Company:
a. During the Term, engage in any business activity that competes
with the Company in the manufacturing of musical instruments or other business
in which the Company is engaged, or exploits or utilizes any of the Trade
Secrets; PROVIDED, HOWEVER, that the Executive may invest in any publicly-traded
company that is similar in nature to the business in which the Company is
engaged, provided that such investment shall not exceed 5% of the equity
interest in such company on a fully diluted basis;
b. Solicit any person employed by the Company or any affiliate of
the Company, appointed as a representative of the Company, or any affiliate of
the Company, to join him as a partner, co-venturer, employee, investor or
otherwise, in any substantial business activity whatsoever;
c. Intentionally disclose or reveal any Trade Secrets or other
confidential information of the Company to anyone which disclosure results in
harm to the Company; or
d. Become employed by or associated with, any entity that owns,
operates, manages or has a substantial interest in any business activity that
competes with the Company in the manufacturing of musical instruments or other
significant business in which the Company is engaged, or exploits or utilizes
any of the Trade Secrets; PROVIDED, HOWEVER, if the Executive's employment is
terminated by the Company other than for Cause (as defined herein), said period
for the purposes of this SUBPARAGRAPH d shall be reduced to one year after the
termination of his employment.
7. TERMINATION.
a. The Company shall have the option to terminate the Executive's
employment for "CAUSE", which shall be defined as follows: (i) any felony
committed by the Executive in connection with the performance of the Executive's
duties to the Company that causes damage to the Company or any of its
properties, assets or businesses; (ii) any fraud, misappropriation or
embezzlement by the Executive involving properties, assets or funds of the
Company; (iii) a conviction of the Executive, or plea of NOLO CONTENDERE by the
Executive, to any crime or offense involving monies or other property of the
Company; or (iv) the violation by the Executive of any non-competition or
confidentiality agreement with the Company. In the event of termination of the
Executive's employment for Cause, any obligation of the Company to provide any
compensation and Benefits to him, as herein set forth, shall cease immediately
except as provided in PARAGRAPH 11.
b. In the event of termination of the Executive's employment by
reason of death or permanent disability, he and/or his estate shall be entitled
to his salary and Benefits under the terms of this Agreement for a period of six
months following the date of his death or the date upon which he becomes
permanently disabled, in addition to any other benefits provided by the Company.
c. In the event of termination of the Executive's employment by
reason of his registration, written notice of which shall be given by him to the
Company at least sixty days prior thereto, he shall be entitled to his salary
and Benefits hereunder up to the date of such termination, subject to extension
of Benefits required by any governmental laws and regulations.
8. NON-RENEWAL. If the Company does not offer to renew this Employment
Agreement at the expiration of the Term upon the same terms hereof or upon
modified terms as mutually agreed upon by the Executive and the Company, the
terms of PARAGRAPH 6(d) shall not apply and the Company shall pay to the
Executive a severance benefit on the date of the non-renewal of not less than
five times his latest annual salary plus bonus in consideration for which the
Executive agrees that he will not become employed by or associated with any
entity which owns, operates, manages, or has a substantial interest in any
business activity that competes with the Company as a manufacturer of musical
instruments for a period of five years after the date of the non-renewal.
9. INDEMNIFICATION. The Company agrees to indemnify the Executive to
the same extent that the Company agrees to indemnify other officers and
directors of the Company in their capacity as such. The Company further agrees
that such indemnification shall survive the Executive's resignation, termination
or expiration of this Agreement, with respect to actions taken by him during his
employment with the Company, unless such actions could have been grounds for
termination for Cause.
10. EMPLOYMENT BENEFITS TO CONTINUE AFTER TERMINATION. If the
Executive's employment is terminated by the Company with or without Cause, or by
resignation, he shall be entitled to continue to participate in any health and
medical plans maintained by the Company at his employee rate if he so elects and
pays the premium cost of such insurer in advance to the Company until such time
as he becomes a participant in another plan or for an additional period of time
in accordance with governmental laws and regulations. The Company is not
obligated to maintain any such benefit plans under this Agreement
11. LIMITATION ON ASSIGNMENT. The Company agrees that if the assets of
the business are transferred to any other entity the Executive shall have the
right to have this contract assigned to such entity.
12. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding between the parties in connection with the subject matter hereof
and supersedes any and all prior agreements or understandings between the
parties including that certain agreement dated August 1, 1996 among the parties
hereto and Xxxxxxxx Xxxxxxx, Inc. This Agreement may only be changed by a
written instrument duly executed by each party.
13. BINDING NATURE OF AGREEMENT ASSIGNMENT. This Agreement shall be
binding upon the parties hereto, the heirs and legal representatives of the
Executive and the successors and assigns of the Company.
14. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the Commonwealth of Massachusetts, without giving
effect to the conflict of laws principles thereof.
15. CONSTRUCTION AND JURISDICTION.
a. If any legal action relating to or other proceeding is brought
by any party for the enforcement of this Agreement, or because of an alleged
dispute, breach or default in connection with any provisions of this Agreement,
such action shall be commenced in the Commonwealth of Massachusetts, and the
parties hereto agree that such Commonwealth shall have exclusive jurisdiction
thereof; PROVIDED, HOWEVER, if any court in said Commonwealth shall decline to
afford injunctive relief to the Company on account of the breach or threatened
breach of this Agreement by the Executive, the Company shall be entitled to seek
such relief from any other court of competent jurisdiction, wherever located.
b. The prevailing party shall be entitled to recover reasonably
attorney's fees and other reasonable costs incurred in such action or proceeding
in addition to any other relief to which it may be entitled.
c. The parties hereby further agree that, in connection
therewith, service of process by registered or certified mail or in person shall
confer jurisdiction over them.
16. SERVERABILITY. The invalidity or unenforceability of any provision
of this Agreement shall not affect the other provisions hereof, and this
Agreement shall be construed in all respects as if such invalid or unenforceable
provision or provisions were omitted.
17. SECTION HEADINGS. The section headings herein have been inserted for
convenience of reference only and shall in no way modify or restrict any of the
terms or provisions hereof.
18. WAIVER OF BREACH. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver by
said party of any other or subsequent breach.
19. NOTICES. All notices and other communications required or permitted
to be given under the terms of this Agreement shall be given in writing and
shall be deemed to have been duly given (a) when delivered personally, (b) if
sent by telecopy, when receipt thereof is acknowledged at the telecopy number
listed below for the receiving party, (b) the day following the day on which the
same has been delivered prepaid for overnight delivery to a national air courier
service or (d) three days following deposit in the United States mail,
registered or certified, postage prepaid, in each case addressed as follows (or
to such other addresses that may have been designated by the respective parties
hereto for this purpose):
If to the Company:
Steinway Musical Instruments, Inc.
000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxxxxx 00000-0000
Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
With a copy to:
Milbank, Tweed, Xxxxxx & XxXxxx
601 South Xxxxxxxx Street, 30t Floor
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxx Xxxxxxxx
If to the Executive:
Xxxx X. Xxxxxxx
00000 Xxxxx Xxxxxx Xxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
Steinway Musical Instruments, Inc.
/s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
Vice President
/s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
