1
EXHIBIT 10.1
[LOGO XXXXXXX PIANO LETTERHEAD]
-------------------------------------------------------------------------------
July 29, 1997
Xx. Xxxxx X. Xxxxx
00000 Xxxxx Xx Xxx Xxxxx
Xxxxx, XX 00000
Dear Xxxxx:
This letter agreement is to formally outline the offer of employment by
Xxxxxxx Piano and Organ Company to employ you as Executive Vice President, Piano
Operations.
The following is more specific information about the offer. Of course,
all of these items are subject to the details of the specific plan documents
referred to herein. If you have any questions or want more detailed information,
please feel free to contact Xxxxx Xxxxxxx at 576-4652.
POSITION You would serve as Executive Vice President,
Piano Operations for the Company and would
report to the Chief Executive Officer of the
Company. You would be based at the Company's
Corporate Offices in Loveland, Ohio.
TERM OF
EMPLOYMENT The term of your employment with the Company
will commence on January 1, 1998 (the
"Commencement Date") and shall continue
through December 31, 2000 (the "Expiration
Date"), unless earlier terminated by the
Company or you as hereinafter provided. Upon
mutual agreement between you and the
Company, the term of your employment may be
extended beyond the Expiration Date.
COMPENSATION
Base Salary Your starting annual base salary will
be $215,000 (less withholdings and
deductions), which will be paid monthly on
the 25th of the month. The Company will
review your salary annually.
Annual Incentive You will be entitled to participate in
Xxxxxxx'x Management Incentive Plan ("MIP"),
which provides an opportunity for an annual
cash bonus. Pursuant to the MIP, you will be
eligible for an annual incentive of 24%,
30%, or 45% of your Base Salary, subject to
the level of the performance of the Company.
The plan runs on a fiscal year basis, and
your participation will begin in 1999 based
on performance of the Company for 1998. For
the period from the Commencement Date
through December 31, 1998, the Company will
agree that your cash bonus for
15
2
Xxxxx X. Xxxxx
July 29, 1997
Page 2
1998 will not be less than $38,700. (75% of
threshold, which is 24% of your base
salary.)
Annual Incentive
Stock Options In 1999, you will be eligible for an annual
incentive stock option grant, determined by
the CEO, based on your individual
contribution for fiscal 1998.
Special Stock
Option Grant On the Commencement Date, the Company will
grant you a qualified option to acquire
10,000 shares of the Company's common stock
and a non-qualified option to acquire an
additional 10,000 shares of the Company's
common stock. The per share exercise price
for all such options will equal the closing
share price of the Company's common stock on
the NASDAQ Market on the Commencement Date
or, if no trades are made on such date, the
next business day following such date on
which trades of the Company's common stock
are reported.. Your right to exercise 20% of
these options will vest immediately on the
Commencement Date, and an additional 20% of
the options will vest on each anniversary of
the Commencement Date. These options will
expire on the earlier of the following: ten
years from the date of the grant or three
months following termination of your
employment.
Long-Term
Incentive Plan You will be entitled to participate in any
Long-Term Incentive Plan which may be
adopted by the Company.
BENEFITS Pursuant to the Xxxxxxx Piano & Organ
Company Group Benefits Program, as outlined
in the booklet, "Your Group Benefits Plan
and the Long Term Disability Highlights
Summary Report" you will be entitled to the
following benefits:
Medical and
Dental Benefits You will be eligible to participate in the
medical and dental plan on the first of the
month following 90 days of employment. The
current medical plan is a point-of-service
plan, and you will select a primary care
physician, who will direct your medical
care. In 1997 the monthly employee
contribution for family medical and dental
coverage is $120.00. We anticipate a modest
increase in employee contribution rates in
1998. These premiums may be paid on a
pre-tax basis through the Xxxxxxx
16
3
Xxxxx X. Xxxxx
July 29, 1997
Page 3
Piano & Organ Company Cafeteria Plan (the
"Cafeteria Plan"). The maximum annual dental
benefit is $1,000 for each family member.
Co-pay for doctors' visits in the network is
$12.00. There is a prescription card with a
co-pay of $7.00 for generic drugs and $12.00
for branded drugs. Also, there is a mail
order prescription provision with a $7.00
co-pay for a three-month supply for
maintenance drugs.
Flexible Spending
Plan You also will be eligible under the
Cafeteria Plan to participate in the
flexible spending account arrangements which
allow you through salary deferrals to pay
certain items with pre-tax dollars. You may
defer up to $2,000 annually to the
Medical/Dental Reimbursement Account and up
to $5,000 to the Dependent Care
Reimbursement Account.
Retirement Plan After the prescribed waiting period, you
will be eligible to participate in the
Xxxxxxx Piano & Organ Company Retirement
Plan for Salaried Employees (the "Retirement
Plan"). After you have been employed for 30
days, you will be eligible to make salary
deferral contributions to the Retirement
Plan (up to a certain limit). Second, after
you have been employed for one year, the
Company will contribute on an annual basis
to your account an amount equal to 3% of
your salary, plus match your salary deferral
contributions at the rate of 50% (up to a
certain overall limit).
In addition, Xxxxxxx has a Nonqualified
Deferred Compensation Plan, to which you
also will be able to make salary deferral
contributions (up to a certain limit) after
30 days of employment. After one year of
employment, your deferrals to this Plan will
be matched at the rate of 50% (again, up to
a certain overall limit).
You will choose from the options available
in each plan how to direct the investment of
these funds.
You will be 100% vested in all Company
contributions after five years.
Vacation You will be entitled to four weeks of paid
vacation annually beginning in 1998.
17
4
Xxxxx X. Xxxxx
July 29, 1997
Page 4
Long-Term
Disability You will be offered long-term disability at
group rates.
Life Insurance The Company provides life insurance in an
amount equal to 1 1/2 times your annual W-2
earnings. This amount is adjusted annually.
Educational
Assistance You will be eligible for educational
assistance after one year of employment.
Relocation
Expenses We provide a comprehensive relocation
program, administered by Prudential
Relocation that provides assistance with
home marketing, home finding, closing
management, and other relocation services.
These are described in detail in our
relocation policy, of which you have already
received a copy.
Our policy includes a repayment provision.
If you voluntarily terminate your employment
with Xxxxxxx within twelve months of your
Commencement Date, you will be required to
pay up to 100% of the relocation expenses.
This provision is explained in detail in the
Repayment Agreement, which is attached to
the Relocation Policy. You are required to
sign this Repayment Agreement.
TERMINATION
Termination
Without Cause The Company may terminate your employment at
any time, whether or not for Cause (as
"Cause" is defined below). In the event the
Company terminates your employment without
Cause, the Company will continue to pay you
your Base Salary (less required withholdings
and deductions) through the Expiration Date
on a monthly basis. The Company shall have
no further obligation to you beyond the
above payments.
Termination
"For Cause" The Company may terminate your employment at
any time for Cause (as defined below)
effective immediately upon written notice to
you. In such event, you shall receive your
Base Salary through the effective date of
termination and all incentive payments
earned by you but not yet paid to you prior
to such date, and the Company shall have no
further obligation to you. For purposes of
this letter agreement, "Cause" shall mean a
violation by you of the Xxxxxxx Piano &
Organ Company Corporate
18
5
Xxxxx X. Xxxxx
July 29, 1997
Page 5
Policy on Ethics and Business, and/or any
acts by you against the Company amounting to
fraud, intentional misrepresentation and/or
embezzlement or breach of this letter
agreement.
Termination due
to Disability This letter agreement may be terminated, at
the option of the Company or you, if during
the term of your employment, you become
disabled, meaning because of ill health,
physical or mental disability, or for any
other disability ("disability"), and you
shall have been continuously unable or shall
have otherwise failed to perform the
essential functions of your job hereunder
for 90 days, or if, during any calendar year
during the term hereof because of
disability, you shall have been unable or
shall have otherwise failed to perform the
essential functions of your job hereunder
for a total period of 120 days regardless of
whether or not such days are consecutive.
Provided, however, that regardless of the
above definition of disability, a disability
may be deemed to exist regardless of your
failure to perform the essential functions
of your job for any specific time period, if
you shall be declared by a Court having
jurisdiction of that matter, or when you
have been declared by any two physicians
selected by the Company and acceptable to
you admitted to the practice of medicine in
the place where you are then domiciled. In
the event of the termination of your
employment due to disability, the Company
will pay your monthly Base Salary through
the end of month in which such termination
upon disability occurs and all incentive
payments earned by but not yet paid to you
prior to your termination upon disability.
All Stock Options granted to you as provided
herein and which have vested may continue to
be exercised within the applicable period
provided by the Internal Revenue Code of
1986, as amended, and the Company shall have
no further obligation to you. This provision
will be applied consistent with the
Company's obligations under applicable
federal and state law, including without
limitation the Americans with Disabilities
Act.
Termination as a
result of your
Death Should you die during the term of this
letter agreement, your employment will
terminate effective on the date of your
death. Your spouse or estate, as the case
may be, shall be entitled to retain your
salary installment for the month in which
you death occurs and shall be entitled to
all incentive payments earned by you but not
yet paid to you prior to the date of death.
All Stock Options granted to you as provided
herein shall remain exercisable for its
entire ten year term by the person or
persons to whom
19
6
Xxxxx X. Xxxxx
July 29, 1997
Page 6
the same is transferred by will or by the
applicable laws of descent and distribution.
Termination
By Employee If you terminate your employment with the
Company for any reason, you shall receive
your Base Salary through the effective date
of termination and all incentive payments
earned but not yet paid to you prior to such
date, and the Company shall have no further
obligation to you.
Acceleration of
Stock Options
Upon Termination If the Company elects to terminate your
employment without Cause, or
If you elect to terminate your employment
with the Company subsequent to June 30,
1999, and if at the time of such voluntary
termination of employment all of the
following circumstances exist:
(I) no circumstances which
would constitute "Cause"
as defined herein;
(ii) You have given the CEO at
least six months prior
written notice of
termination; and
(iii) You work with the Company
in good faith to recruit
a qualified successor,
and, if recruited, to
accomplish an effective
transition;
then, within ten (10) days of the effective
date of termination of employment, all stock
options granted to you at any time prior to
January 1 of the year in which your
termination of employment shall occur shall
immediately vest in you and may be exercised
within three months following termination of
your employment.
COVENANT NOT
TO COMPETE At all times during the term of your
employment and for a period of one year
thereafter, if your employment is terminated
by you for any reason or if terminated by
the Company for Cause, you agree that you
will not directly or indirectly enter into
or in any manner take part in any business
or endeavor, either as an employee, agent,
independent contractor, owner
20
7
Xxxxx X. Xxxxx
July 29, 1997
Page 7
or otherwise, which directly or indirectly
competes with the Company in any market in
which the Company does or may do business.
You agree that the covenants, restrictions
and obligations set forth in this letter
agreement are founded upon valuable
consideration and are reasonable in duration
and geographic scope.
In the event of a breach or threatened
breach by you of any of the covenants,
restrictions, agreements and obligations set
forth herein, monetary damages or the other
remedies at law that may be available to the
Company for such breach or threatened breach
will be inadequate and, without prejudice to
the Company's right to pursue any other
remedies at law or in equity available to it
for such breach or threatened breach,
including, without limitation, the recovery
of damages from you, the Company will be
entitled to injunctive relief.
The time period and geographical area set
forth herein are each divisible and
separable, and, in the event that the
covenants not to compete contained herein
are judicially held invalid or unenforceable
as to such time period and/or geographical
area, they will be valid and enforceable in
such geographical area(s) and for such time
period(s) which the court determines to be
reasonable and enforceable. You agree that
in the event any court of competent
jurisdiction determines that the above
covenants are invalid or unenforceable to
join with the Company in requesting that
court to construe the applicable provision
by limiting or reducing it so as to be
enforceable to the extent compatible with
the then applicable law. Furthermore, any
period of restriction or covenant herein
stated shall not include any period of
violation or period of time required for
litigation to enforce such restriction or
covenant.
This covenant not to compete shall survive
the termination of your employment and the
termination of this letter agreement.
CONFIDENTIAL INFORMATION You recognize and acknowledge that
information gained by you while in the
Company's employ, including without
limitation that concerning the Company's
customers and suppliers, and the methods,
techniques, devices and operations of the
Company, as they may exist from time to
time, are of a confidential nature and are
valuable, special and unique assets of the
Company's business. You shall not during the
term of, or after the termination of
employment, disclose in any way any such
confidential
21
8
Xxxxx X. Xxxxx
July 29, 1997
Page 8
information to any person, firm, corporation
or any other operation or entity, or use the
same on your own behalf, for any reason or
purpose. Upon termination of employment, you
shall deliver up to the Company all lists of
the Company's customers and suppliers and
all copies thereof, and all notes, records,
memoranda, complete correspondence files and
other papers, and all copies thereof,
relating to the methods, techniques, devices
and operations of the Company, and you do
not have nor can you acquire any property
right therein or claim thereto or in the
underlying confidential information. This
provision shall survive the termination of
your employment and the termination of this
letter agreement.
OTHER
Change of
Control Agreement Attached to this letter is the Change of
Control Agreement that has been approved by
the Board of Directors for a few select,
critical senior executives. This Change of
Control Agreement will supersede this
compensation package in the event of a
change of control as defined in the Change
of Control Agreement. This will give you
assurance of financial protection for a
period of time if the Company has a change
of control and your employment is terminated
either directly or constructively as a
result.
Drug Screen/
Background Check This letter agreement is contingent upon
successful completion of a pre- employment
drug screen and a background check.
Proof of Identity To comply with federal law, you will need
you to provide the Company with appropriate
proof of identity and an appropriate
document that establishes employment
eligibility.
Governing Law This letter agreement shall be governed by
the laws of the State of Ohio.
Entire Agreement This letter agreement sets forth the entire
agreement between you and the Company
regarding the terms of your employment with
the Company and cannot be modified except in
a writing signed by the Company and you.
22
9
Xxxxx X. Xxxxx
July 29, 1997
Page 9
Xxxxx, I am certainly looking forward to having you join us at Xxxxxxx.
If the terms of this offer are acceptable to you, please indicate your agreement
by returning a signed copy of this letter to me.
Sincerely,
Xxxxxxx Piano & Organ Company
By: /s/ Xxxxx X. Xxxxxxxxx
--------------------------------
Xxxxx X. Xxxxxxxxx, Chairman, Chief
Executive Officer and President
I have read, understand and agree to all of the provisions of this letter
agreement:
/s/ Xxxxx X. Xxxxx
--------------------------
Xxxxx X. Xxxxx
Date: _____________________
23
