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EXHIBIT 10.1
AGREEMENT OF EMPLOYMENT
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THIS AGREEMENT OF EMPLOYMENT ("Agreement") is made and entered into as
of June 19, 1997 by and between Xxxxxxx Piano & Organ Company, a Delaware
corporation having its principal office at 000 Xxxxx Xxxxxx Xxxx, Xxxxxxxx,
Xxxx (the "Company") and Xxxxx X. Xxxxxxxxx (the "Employee").
WITNESSETH:
WHEREAS, the Employee is currently employed as the Company's Chief
Executive Officer and President of the Company pursuant to that certain
Agreement of Employment by and between Employee and Company dated November 18,
1994, which expires by its terms on December 31, 1997 and is a member and
Chairman of the Board of the Company; and
WHEREAS, the Company and the Employee mutually desire that Employee
continues as the Company's Chief Executive Officer and President and as a
Director and Chairman of the Board of the Company; and
WHEREAS, the Company and Employee wish to enter into this new Agreement
to set forth their mutual understanding as to the terms and conditions of
Employee's continued employment by the Company.
It is therefore agreed between the parties as follows:
1. EMPLOYMENT. The Company agrees to employ the Employee as the
Company's Chief Executive Officer, President and Chairman of the Board, and the
Employee, in consideration of such employment, hereby accepts such employment.
During the term of her employment, the Employee shall use her best efforts to
do all things necessary and incident to her position and the dispatch of her
responsibilities as set forth from time to time by the Board of Directors.
Unless otherwise approved in advance by the Company's Board of Directors,
Employee shall devote her full business time and energy exclusively to the
business and affairs of the Company and in no event shall Employee engage in
any outside activities which would be reasonably expected to affect the Company
adversely or which would divert substantial time or effort from the business
affairs of the Company. The Company has previously approved the Employee
serving as a Director of X.X. Xxxxxxx Corporation and the continuance of such
activities is expressly permitted.
2. BOARD OF DIRECTORS. The Company further agrees that it will cause
Employee to be nominated for re-election to the Board during each year of her
employment hereunder, such election being subject only to the approval of the
Company's stockholders.
3. TERM. Employee's term of employment with the Company pursuant to
this Agreement shall begin as of January 1, 1997 (the "Commencement Date") and
shall continue
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through December 31, 1998, and thereafter, without a specified term, until
terminated by the Company or Employee pursuant to Section 5 hereof.
4. COMPENSATION AND BENEFITS. Except as otherwise provided upon a
termination of Employee's employment pursuant to Section 5 hereof, the Company
shall compensate Employee and provide the benefits as set forth in this Section
4. In addition, the Company shall reimburse Employee or pay directly for
reasonable business expenses incurred by her during her employment term.
4.1 BASE SALARY; PERFORMANCE REVIEW. The Company shall pay
Employee a minimum of $350,000 annual base salary during each year of
employment hereunder. For the year 1997, the salary adjustment shall be
effective as of January 1, 1997. Such salary will be payable in equal monthly
installments on the 25th day of each month. Employee shall receive an annual
formal performance review which shall be done in the last four months of each
calendar year by the entire Board of Directors of the Company, lead by the Lead
Director. Employee will also be eligible for an annual salary review (to be
completed by December 31) by the Executive Compensation Committee (the
"Committee") of the Company's Board of Directors and her annual base salary for
the following calendar year maybe adjusted as such Committee deems appropriate,
provided, however, that in no event shall Employee's annual base salary be less
than $350,000.
4.2 ANNUAL INCENTIVE. Employee shall participate in such Company
annual incentive compensation programs which include senior management as may
exist from time to time (the "MIP"). As a participant in any MIP, subject to
the attainment of performance goals as established by the Committee from time
to time, Employee will be eligible for annual incentive compensation.
4.3 STOCK OPTIONS. Immediately upon the Commencement Date, the
Company shall grant to Employee a non-qualified stock option to acquire 19,000
shares of the Company's common stock. The per share exercise price of such
option shall equal the last sale price of the Company's common stock on the
Nasdaq National Market on June 19, 1997 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. Employee's right to acquire the shares subject to
this option shall be immediately fully vested and exercisable. Such options
shall expire on the earlier of ten years from the date of grant or three months
following the termination of Employees employment for any reason other than
permanent disability or death, in which cases the option will continue to be
exercisable by Employee, her heirs or successors for the entire ten year term.
4.4 RESTRICTED STOCK GRANT. The Company hereby awards to Employee
12,500 shares of the Company's Common Stock subject to the terms and conditions
set forth herein.
(a) The Restricted Stock shall be issued to Employee in the
following amounts and on the following dates:
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On execution of the Agreement - 2,500 shares (20%)
First Anniversary (January 2, 1998) - 2,500 shares (20%)
Second Anniversary (January 2, 1999) - 2,500 shares (20%)
Third Anniversary (January 2, 2000) - 2,500 shares (20%)
Fourth Anniversary (January 2, 2001) - 2,500 shares (20%)
if Employee is employed as a full-time employee of the Company on such dates.
(b) Upon the occurrence of any of the following:
(i) death of Employee; or
(ii) the occurrence of a "Change of Control" as defined
in the Change of Control Agreement referenced in Section 5.6
hereof; or
(iii) the termination of Employee's employment for any
reasons other than for "cause" as defined in Section 5.2 hereof;
then the Company shall within ten (10) days issue all shares of Restricted
Stock to Employee which have been awarded but not yet issued.
(c) If Employee elects to terminate her employment with the
Company subsequent to December 31, 1998 and if at the time of termination of
employment all of the following circumstances exist:
(i) no circumstances which would constitute "cause" as
defined in Section 5.6 hereof exist;
(ii) Employee gives the Board of Directors at least nine
(9) months prior written notice of termination; and
(iii) Employees works with the Board 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,
Company shall issue all shares of Restricted Stock to Employee which have been
awarded, but not yet issued.
(d) At any time during the term of this Agreement, at the
direction of the Board of Directors, the Company may, but is not required to
register the Restricted Stock with the Securities and Exchange Commission for
resale by the Employee. If not registered previously, the Company shall
exercise its best efforts to so register the Restricted Stock, within ninety
(90) days of the termination of this Agreement other than in the event of a
termination for cause as set forth in Section 5.6 hereof.
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(e) In the discretion of the Committee, the Employee may
receive additional grants of Restricted Stock in subsequent years. Unless
otherwise provided by the Committee, all Restricted Stock awarded in future
years shall be issued on the First through Fifth Anniversary of such award in
the same relative percentages as set forth in subsection (a) hereof and shall
be subject to the provisions of subsection (b), (c) and (d) hereof.
4.5. RETIREMENT PLAN/401(K) SAVINGS PLAN AND OTHER GROUP BENEFITS.
Employee shall continue to be enrolled in the Xxxxxxx Piano & Organ Company
Retirement Plan for Salaried Employees, as amended and restated effective June
16, 1984, in accordance with the provisions of such Plan and shall continue to
participate in 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."
4.6. VACATION. Employee is entitled to, and expected to utilize, four
weeks of paid vacation in each calendar year.
4.7. ADDITIONAL INSURANCE. In addition to the various insurance
coverages available to Employee as describe in Section 4.5, the company shall
purchase as its own expense for Employee's benefit additional disability
insurance coverage and life insurance as set forth in this Section 4.7. For
each calendar year during the term of Employee's employment hereunder, the
Company shall purchase disability coverage covering employee such that, in the
event of her disability, Employee will receive $10,000 per month in addition to
all disability benefits provided to Employee through disability coverage she
elects to purchase pursuant to Section 4.5. for each calendar year during the
term of Employee's employment hereunder, the Company will purchase a $500,000
term life insurance policy on the life of Employee with the proceeds payable to
such beneficiaries as employee may designate.
5. TERMINATION OF AGREEMENT.
5.1. WITHOUT CAUSE. The Company may terminate Employee's employment
at any time, whether or not for cause (as "cause" is defined in Section 5.2.
below). In the event the Company terminates Employee's employment without
cause, the Company will pay Employee as severance a lump sum amount equal to
eighteen (18) months of Employees's base salary at the time of termination less
required withholdings and deductions; provided, however, if the Company
terminates Employee's employment without cause prior to December 31, 1998, the
Company shall pay employee as severance a lump sum amount equal to Employee's
base salary from the date of termination through December 31, 1998 plus
eighteen (18) months of Employee's base salary at the time of termination, less
required withholdings and deductions. Such severance payment shall be paid by
the Company within ninety (90) days following the date of Employee's
termination. In the event the Company terminates Employee's employment without
cause, the Company shall also pay the cost of out placement services for
Employee up to an amount equal to 15% of her annual base salary at the time her
employment is terminated. the Company shall have no further obligation to
Employee beyond the above payments.
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5.2 FOR CAUSE. The Company may terminate Employee's employment at any
time for cause (as defined below) effective immediately upon written notice to
Employees. In such event, Employee shall receive her salary through the
effective date of termination and all incentive payments earned by but not yet
paid to Employee prior to such date, and the Company shall have no further
obligation to Employee. Such amounts hall be paid by the Company within thirty
(30) days of the effective date of such termination. For purposes of this
Agreement, "cause" shall mean a violation by Employee of the Xxxxxxx Piano &
Organ Company Corporate Policy on Ethics and Business, and/or any acts by
Employee against the Company amounting to fraud, intentional misrepresentation
and/or embezzlement or breech of this Agreement.
5.3 DISABILITY. This Agreement may be terminated, at the option of the
Company or the Employee, if during the term hereof, the Employee is under a
disability, meaning because of ill health, physical or mental disability, or
for any other disability ("disability"), the Employee shall have been
continuously unable or shall have otherwise failed to perform the essential
functions of her job hereunder for one hundred twenty (120) consecutive working
days, or if, during any calendar year of the term hereof because of disability,
she shall have been unable or shall have otherwise failed to perform the
essential functions of her job hereunder for a total period of one hundred
eighty (180) working 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 the Employee's
failure to perform the essential functions of her job for any specific time
period, when the Employee shall be so declared by a Court having jurisdiction
of that matter, or when so declared by any two physicians selected by the
Company and acceptable to Employee admitted to the practice of medicine in the
place where the Employee is then domiciled. In the event of the termination of
Employee's employment due to disability, the Company will pay Employee her
monthly salary through the end of month in which such termination upon
disability occurs and all incentive payments earned by but not yet paid to
employee prior to her termination upon disability. Such amounts shall be paid
by the Company within thirty (30) days from the effective date of such
termination. All options granted to Employee in accordance with Section 4.4 and
which have vested may continue to be exercised within the applicable period
provided by the Internal Revenue Code of 1986, as amended. This Section 5.3
will be applied consistent with the Employer's obligations under applicable
federal and state law, including without limitation the Americans with
Disabilities Act.
5.4 DEATH. This Agreement shall be terminated on the death of the
Employee effective as of the date of her death. Employee's spouse or estate, as
the case may be, shall be entitled to retain the Employee's salary installment
for the month in which she dies and shall be entitled to all incentive payments
earned by but not yet paid to Employee prior to her death. Such amounts shall
be paid by the Company within thirty (30) days from the effective date of such
termination. the option granted to Employee in accordance with Section 4.3
shall remain exercisable for its entire ten year term by the person or persons
to whom the same is transferred by will or by the applicable laws of descent
and distribution.
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5.5 BY EMPLOYEE. If Employee terminates her employment with the Company
for any reason, Employee shall receive her salary through the effective date of
termination and all incentive payments earned but not yet paid to employee
prior to such date, and the Company shall have no further obligation to
Employee other than as set forth in Section 4.4 hereof. Such amount shall be
paid by the Company within thirty (30) days from the effective date of such
termination.
5.6 CHANGE IN CONTROL; ACCELERATED VESTING SCHEDULES. Notwithstanding
any other provision in this Agreement, in the event that Employee's employment
with the Company is terminated pursuant to the terms of that certain Change in
Control Agreement by and between the Company and Employee dated June 26, 1996
(the "Change in Control Agreement"), Employee shall be entitled solely to (i)
such benefits as are provided in the Change in Control Agreement plus (ii) the
Restricted Stock as provided in Section 4.4 hereof and the Company shall have no
further obligation to Employee beyond the provision of such benefits. The
parties hereby ratify and confirm each and every provision of the Change in
Control Agreement, provided, however, that in the event that the accelerated
vesting of the Restricted Stock would be treated as "Severance Payments"
subject to the provision of Section IV 2(g) of the Change in Control Agreement,
upon the Employee's written election, the provisions of this Section 5.6 shall
control and override the limitations of the Change in Control Agreement.
6. COVENANT NOT TO COMPETE.
6.1. At all times during the term of this Agreement, and for a
period of one year thereafter if terminated by Employee for any reason or if
terminated by the Company pursuant to Sections 5.2 or 5.3, Employee agrees that
she 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 or otherwise, which directly or indirectly competes with the Company.
6.2. The Company and Employee each hereby acknowledge and agree as
follows:
(a) The covenants, restrictions and obligations set forth in
Section 6.1 above are founded upon valuable consideration and are reasonable in
duration and geographic scope;
(b) In the event of a breach or threatened breach by Employee
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 Employee, the Company will be
entitled to injunctive relief;
(c) The time period and geographical area set forth in Section
6.1 hereof are each divisible and separable, and, in the event that the
covenants not to compete contained therein 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
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the court determines to be reasonable and enforceable. The Employee agrees 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; and
(d) The provisions of this Section 6 shall survive the termination
of the Agreement.
7. CONFIDENTIALITY. Employee hereby ratifies and confirms each and
every provision of that certain Agreement dated 5/31/97.
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8. BINDING EFFECT. This Agreement shall be binding upon the parties
hereto, the beneficiaries, heirs, executors, administrators and successors of
the Employee and the successors and assigns of the Company.
9. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, any one of which shall constitute an original without reference
to the others.
10. SEVERABILITY OF CLAUSES. Each of the paragraphs of this Agreement
shall stand independently and severable, and the invalidity of any one
paragraph or portion thereof shall not affect the validity of any other
provision. In the event any provision shall be construed to be invalid, no
other provision of this Agreement shall be affected thereby.
11. APPLICABLE LAW. This Agreement shall be governed in all respects by
the law of the State of Ohio. the Company and Employee hereby consent to
service of process, personal jurisdiction, and venue in the courts of general
jurisdiction of Cincinnati, Ohio, or Xxxxxxxx County, Ohio and any federal
court, with concurrent jurisdiction, with respect to any action or proceeding
brought to enforce any liability under this Agreement.
IN WITNESS WHEREOF, the parties have hereunto set their hands as of the
date first above written.
XXXXXXX PIANO & ORGAN COMPANY
Attest:
/s/ Xxxxx Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxxxx
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Title: Director
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"EMPLOYEE"
/s/ Xxxxx X. Xxxxxxxxx
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XXXXX X. XXXXXXXXX
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