EXHIBIT 10.6

 

EMPLOYMENT AGREEMENT

This Employment Agreement (this “Agreement”) is entered into as of the 1st day
of May, 2011, by and between Steinway, Inc., a Delaware corporation (the
“Company”), and Ronald Losby (the “Executive”).

 

WHEREAS, the Executive and the Company entered into an employment agreement
dated August 29, 2007 (the “2007 Agreement”), and

 

WHEREAS, the Company and Executive wish to make certain modifications to the
agreement as set forth herein.

 

NOW THEREFORE, in consideration of the mutual covenants contained herein, and
other good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

 

1.             Term of Employment.  The Company agrees to continue to employ the
Executive, and the Executive hereby agrees to continue performing his duties and
responsibilities until December 31, 2011, unless otherwise terminated in
accordance with the terms set forth in paragraph 7 of this Agreement or extended
in accordance with the terms sets forth in paragraph 8 (including any
extensions, the “Term”).

 

2.             Duties and Responsibilities.  The Executive shall be employed as
the President 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 $430,000 (subject to such deductions
and withholdings as may be required by law or by further agreement with the
Executive), payable in arrears biweekly.

 

b.             Without limiting and in addition to the foregoing, each year the
Executive shall be eligible to receive an annual bonus determined in the sole
and absolute discretion of the Board.

 

c.             On his annual review date, the Executive shall be eligible to
receive 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 all employee
benefit plans and programs, including, but not limited to any retirement
(including the Company’s Supplemental Executive Retirement Plan), life
insurance, health, medical, disability or other plans or benefits, whether
insured or self-insured, maintained by the Company that

 

1

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

 

are generally available, and on terms no less favorable than those applicable,
to its senior executives, in accordance with the general eligibility and
participation provisions of such plans or programs may be in effect from time to
time.  The Company shall pay the premium for additional life insurance up to the
maximum coverage available under the Company’s policy.

 

b.             The Executive shall be entitled to vacation in accordance with
the Company’s current vacation policy during each year of this Agreement.

 

c.             The Executive shall be entitled to a housing allowance of up to
$25,100 per year

 

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.  In addition, the Executive shall be entitled to
an annual, non-accountable expense allowance of $10,000.

 

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), (d) and (e) below, during the time the Executive is employed
under the provisions of this Agreement and until the date of the first
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;

 

2

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

 

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 Secretsor

 

e.             For a period of one year after the date of non-renewal pursuant
to paragraph 8 below, 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 as a manufacturer of musical instruments.

 

7.             Termination.

 

a.             Termination of Employment.  Either the Executive or the Company
may terminate the employment relationship at any time, for any reasons, subject
to the terms and conditions contained in this Agreement.

 

b.             Termination by the Company without Cause.  In the event the
Executive’s employment is terminated without Cause, the Company shall, in lieu
of any other payment due pursuant to this Agreement:

 

i.              Pay and/or provide to the Executive all accrued but unpaid
salary, any earned but unpaid annual bonus in respect of the year prior to the
year of termination, any earned but unpaid bonus in respect of the year of
termination to the extent earned pro rata through the date of termination,
reimbursement for all unreimbursed business expenses, accrued and unpaid
vacation days, and all accrued or vested compensation and benefits payable to
the Executive under all benefit plans and all compensation plans, programs or
arrangements in which the Executive participates (collectively, the “Accrued
Benefits”) within ten (10) days after the date of termination (except in the
case of compensation and benefits under plans, programs and arrangements, at
such other time and in such manner as determined under the terms and conditions
of such plans, programs and arrangements); and

 

ii.             Within ten (10) days following the date of termination, pay the
Executive a lump sum cash amount equal to the sum of his then-current annual
salary and the greater of his annual bonus in respect of the year prior to the
year of termination and his target bonus, if any, established by the Board in
respect of the year of termination.

 

c.             Termination by the Company for Cause.

 

i.              The Company may terminate the Executive’s employment with the
Company for Cause determined as described below upon written notice to the
Executive.  If the Company terminates the Executive’s employment for Cause, the
Company shall, in lieu of any other payment due pursuant to this Agreement, pay
and/or provide all Accrued Benefits to the Executive within ten (10) days after
the date of termination (except in the case of compensation and benefits under
plans, programs and arrangements, at such other time and in such manner as
determined under the terms and conditions of such plans, programs and
arrangements).  In the event of termination of the Executive’s employment for
Cause, any obligation of the Company to provide any

 

3

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

 

compensation and Benefits to him, as herein set forth, shall cease immediately
except as provided in this paragraph and in paragraph 10.

 

ii.             “Cause” shall be defined as follows:  (A) 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; (B) any fraud, misappropriation or embezzlement by the Executive
involving properties, assets or funds of the Company; (C) 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 (D) the violation by the
Executive of any non-competition or confidentiality agreement with the Company.

 

d.             Termination by the Executive for Good Reason.

 

i.              The Executive may voluntarily terminate his employment for “Good
Reason” by notifying the Company in writing, within ninety (90) days after the
Executive first obtains knowledge of the occurrence of one of the events below,
that the Executive is terminating his employment for Good Reason, provided that
the Company shall have forty-five (45) days to cure.  If such Good Reason is not
cured, the Executive must actually terminate employment no later than six months
following the initial existence of such Good Reason.

 

ii.             “Good Reason” means the occurrence of any of the following
events: (A) any reduction of the Executive’s annual salary, (B) any adverse
change in the Executive’s title or reporting relationship as provided herein,
(C) any material adverse change in the Executive’s duties or authority as
provided herein, (D) any relocation of the Executive’s principal place of
business by more than 25 miles from Long Island City, New York, or (D) any other
material breach by the Company of any of the provisions of this Agreement.

 

iii.            In the event the Executive terminates his employment for Good
Reason, the Company shall, in lieu of any other payment due pursuant to this
Agreement, pay and provide to the Executive the payments, benefits and rights
set forth, and at the times provided, in paragraph 7.b. above as if the
Executive’s employment was terminated without Cause.

 

e.             Resignation by Executive without Good Reason.  In the event of
termination of the Executive’s employment by reason of his resignation, written
notice of which shall be given by him to the Company at least sixty days prior
thereto, the Company shall pay and/or provide all Accrued Benefits to the
Executive within ten (10) days after the date of termination (except in the case
of compensation and benefits under plans, programs and arrangements, at such
other time and in such manner as determined under the terms and conditions of
such plans, programs and arrangements).

 

f.              Termination by Reason of Death or Disability.  In the event of
termination of the Executive’s employment by reason of death or permanent
disability, the Company shall, in lieu of any other payment due pursuant to this
Agreement, pay and/or provide Executive or his estate (A) all Accrued Benefits
within ten (10) days after the date

 

4

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

 

of termination (except in the case of compensation and benefits under plans,
programs and arrangements, at such other time and in such manner as determined
under the terms and conditions of such plans, programs and arrangements) and
(B) continued payment of the annual salary 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.

 

8.             Renewal.

 

a.             The Term shall automatically renew on an annual basis unless the
Company provides the Executive with written notice of its intent not to renew at
least sixty (60) days prior to the expiration of the then current Term.

 

b.             If this Agreement is not renewed by the Company, the Company
shall, in lieu of any other payment due pursuant to this Agreement, pay and/or
provide to the Executive the payments, benefits and rights set forth, and at the
times provided, in paragraph 7.b. above as if the Executive’s employment was
terminated without Cause.

 

9.             Indemnification.  The Company shall maintain an adequate level of
directors’ and officers’ liability insurance to protect the Executive from
liability related to his employment with the Company.  The Company agrees to
indemnify the Executive for liability related to his employment with the Company
to the extent Executive is not indemnified by such insurance to the maximum
extent permitted by applicable law.  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 for any reason 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.           Section 409A.  The parties intend that any compensation, benefits
and other amounts payable or provided to the Executive under this Agreement be
paid or provided in compliance with Section 409A of the Internal Revenue Code of
1986 and all regulations, guidance, and other interpretative authority issued
thereunder (collectively, “Section 409A”) such that there will be no adverse tax
consequences, interest or penalties for the Executive under Section 409A as a
result of the payments and benefits so paid or provided to him. The parties
agree to modify this Agreement, or the timing (but not the amount) of the
payment of the severance or other compensation, or both, to the extent necessary
to comply with Section 409A.  In addition, notwithstanding anything to the
contrary contained in any other provision of this Agreement, the payments and
benefits to be provided to the Executive under this Agreement shall be subject
to the provisions set forth below.

 

5

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

 

a.             Any payment subject to Section 409A that is triggered by a
termination from employment shall be triggered by a “separation from service,”
as defined in the regulations issued under Section 409A.

 

b.             Each payment under this Agreement will be considered a “separate
payment” and not one of a series of payments for purposes of Section 409A of the
Code.

 

c.             It is intended that the payments to be made to the Executive
under this Agreement upon a termination of employment shall be exempt from
Section 409A as a “short-term deferral” under applicable Treasury regulations. 
In the event that such exemption does not apply, and any payment (or portion
thereof) is not otherwise exempt from Section 409A, if the Executive is then a
“specified employee” within the meaning of Section 409A(a)(2)(B) of the Code (as
determined by the Company), then any such non-exempt payment otherwise due to
the Executive during the first six months following the Executive’s termination
of employment will be held until and paid on the day following the expiration of
such six-month period.

 

d.             All expenses eligible for reimbursement hereunder that are
taxable to the Executive shall be paid to the Executive no earlier than in the
seventh month after separation from service and no later than December 31 of the
calendar year following the calendar year in which such expenses were incurred. 
The expenses incurred by the Executive in any calendar year that are eligible
for reimbursement under this Agreement shall not affect the expenses incurred by
the Executive in any other calendar year that are eligible for reimbursement
hereunder.  The Executive’s right to receive any reimbursement hereunder shall
not be subject to liquidation or exchange for any other benefit.

 

12.           Limitation on Assignment.  No rights or obligations of the Company
under this Agreement may be assigned or transferred by the Company without the
Executive’s prior written consent, except that such rights or obligations may be
assigned or transferred pursuant to a merger or consolidation in which the
Company is not the continuing entity, or, with the consent of the Executive, a
sale, liquidation or other disposition of all or substantially all of the assets
of the Company, provided that the assignee or transferee is the successor to all
or substantially all of the assets of such Company and assumes the liabilities,
obligations and duties of the Company under this Agreement, either contractually
or by operation of law.

 

13.           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.   This Agreement may only be changed by a written instrument duly
executed by each party.

 

14.           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.

 

6

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

 

15.           Governing Law.  This Agreement shall be construed and enforced in
accordance with the laws of the state of New York, without giving effect to the
conflict of laws principles thereof.

 

16.                                 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 state of New York, and the parties hereto
agree that such state shall have exclusive jurisdiction thereof; provided,
however, if any court in said state 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 reasonable
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.

 

17.           Severability.  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.

 

18.           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.

 

19.           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.

 

20.           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, (c) 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):

 

7

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

 

Steinway, Inc.

800 South Street, Suite 305

Waltham, Massachusetts  02453-1472

Fax: (781) 894-9803

Attention:        Dennis M. Hanson

 

If to the Executive:

 

Ronald Losby

2-40 51st Avenue #3B

Long Island City, NY 11101

 

[SIGNATURE PAGE FOLLOWS]

 

8

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

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.

 

 

COMPANY

 

Steinway, Inc.

 

 

 

 

 

/s/ Dennis M. Hanson

 

Dennis M. Hanson

 

Executive Vice President

 

 

 

EXECUTIVE

 

 

 

/s/ Ronald Losby

 

Ronald Losby

 

9

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