-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AaEhIOVqS+oxzA9iPsQoSEhRM7/Cyhqs6hPCotjO8N0N7+FRTCMx1JNuN1e6GzVS p+0F14CJWaQBKKIDXcqjsQ== 0001214659-10-002614.txt : 20101008 0001214659-10-002614.hdr.sgml : 20101008 20101008162245 ACCESSION NUMBER: 0001214659-10-002614 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 10 FILED AS OF DATE: 20101008 DATE AS OF CHANGE: 20101008 GROUP MEMBERS: JONG SUP KIM GROUP MEMBERS: OPUS FIVE INVESTMENT 1, LP GROUP MEMBERS: OPUS FIVE INVESTMENT, LLC GROUP MEMBERS: SAM SONG CASTER CO., LTD. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: STEINWAY MUSICAL INSTRUMENTS INC CENTRAL INDEX KEY: 0000911583 STANDARD INDUSTRIAL CLASSIFICATION: MUSICAL INSTRUMENTS [3931] IRS NUMBER: 351910745 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-46651 FILM NUMBER: 101116322 BUSINESS ADDRESS: STREET 1: 800 SOUTH STREET STREET 2: SUITE 305 CITY: WALTHAM STATE: MA ZIP: 02453-1472 BUSINESS PHONE: 7818949770 MAIL ADDRESS: STREET 1: 800 SOUTH STREET STREET 2: SUITE 305 CITY: WALTHAM STATE: MA ZIP: 02453-1472 FORMER COMPANY: FORMER CONFORMED NAME: SELMER INDUSTRIES INC DATE OF NAME CHANGE: 19940209 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Samick Musical Instruments Co, Ltd. CENTRAL INDEX KEY: 0001476247 IRS NUMBER: 000000000 STATE OF INCORPORATION: M5 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: SAMICK PLAZA BUILDING 58-3 STREET 2: NONHYEON-DONG, GANGNAM-GU CITY: SEOUL STATE: M5 ZIP: 130-010 BUSINESS PHONE: (82)32-453-3169 MAIL ADDRESS: STREET 1: SAMICK PLAZA BUILDING 58-3 STREET 2: NONHYEON-DONG, GANGNAM-GU CITY: SEOUL STATE: M5 ZIP: 130-010 SC 13D/A 1 f107101sc13da2.txt AMENDMENT NO. 2 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D/A Under the Securities Exchange Act of 1934 (Amendment No. 2) Steinway Musical Instruments, Inc. (Name of Issuer) Ordinary Common Stock, Par Value $0.001 (Title of Class of Securities) 858495104 (CUSIP Number) Hansin Kim, Esq. KL & Kim PC 3435 Wilshire Blvd., Suite 2600 Los Angeles, California 90010 (213) 382-3500 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) October 6, 2010 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Section 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box / /. NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). SCHEDULE 13D CUSIP No. 858495104 1 NAME OF REPORTING PERSON Samick Musical Instruments Co, Ltd. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X] (b) [ ] 3 SEC USE ONLY 4 SOURCE OF FUNDS WC, BK 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] 6 CITIZENSHIP OR PLACE OF ORGANIZATION Republic of Korea NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH: 7 SOLE VOTING POWER 3,400,000 8 SHARED VOTING POWER 244,700 9 SOLE DISPOSITIVE POWER 3,400,000 10 SHARED DISPOSITIVE POWER 244,700 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,644,700 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ] 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 31.4%(1) 14 TYPE OF REPORTING PERSON CO (1) Based on 11,598,337 shares of Ordinary Common Stock issued and outstanding as of August 8, 2010 as reported by the Issuer in the Issuer's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 9, 2010. Any change in the percentage reported herein from the last statement is caused by the increase in the total number of issued and outstanding shares, and it does not indicate any change in the number of shares beneficially owned by the reporting person. SCHEDULE 13D CUSIP No. 858495104 1 NAME OF REPORTING PERSON Opus Five Investment 1, LP 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X] (b) [ ] 3 SEC USE ONLY 4 SOURCE OF FUNDS WC 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] 6 CITIZENSHIP OR PLACE OF ORGANIZATION California NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH: 7 SOLE VOTING POWER 0 8 SHARED VOTING POWER 244,700 9 SOLE DISPOSITIVE POWER 0 10 SHARED DISPOSITIVE POWER 244,700 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 244,700 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ] 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.1%(1) 14 TYPE OF REPORTING PERSON PN (1) Based on 11,598,337 shares of Ordinary Common Stock issued and outstanding as of August 8, 2010 as reported by the Issuer in the Issuer's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 9, 2010. Any change in the percentage reported herein from the last statement is caused by the increase in the total number of issued and outstanding shares, and it does not indicate any change in the number of shares beneficially owned by the reporting person. SCHEDULE 13D CUSIP No. 858495104 1 NAME OF REPORTING PERSON Opus Five Investment, LLC 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X] (b) [ ] 3 SEC USE ONLY 4 SOURCE OF FUNDS 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH: 7 SOLE VOTING POWER 0 8 SHARED VOTING POWER 244,700 9 SOLE DISPOSITIVE POWER 0 10 SHARED DISPOSITIVE POWER 244,700 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 244,700 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ] 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.1%(1) 14 TYPE OF REPORTING PERSON CO (1) Based on 11,598,337 shares of Ordinary Common Stock issued and outstanding as of August 8, 2010 as reported by the Issuer in the Issuer's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 9, 2010. Any change in the percentage reported herein from the last statement is caused by the increase in the total number of issued and outstanding shares, and it does not indicate any change in the number of shares beneficially owned by the reporting person. SCHEDULE 13D CUSIP No. 858495104 1 NAME OF REPORTING PERSON Jong Sup Kim 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X] (b) [ ] 3 SEC USE ONLY 4 SOURCE OF FUNDS 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] 6 CITIZENSHIP OR PLACE OF ORGANIZATION Republic of Korea NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH: 7 SOLE VOTING POWER 0 8 SHARED VOTING POWER 3,644,700(1) 9 SOLE DISPOSITIVE POWER 0 10 SHARED DISPOSITIVE POWER 3,644,700(1) 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,644,700(1) 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ] 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 31.6%(2) 14 TYPE OF REPORTING PERSON IN (1) As the chairman and the controlling shareholder of 20.5% of the equity interests in Samick, Kim can influence the voting and disposition of the Shares held by Samick and Opus LP. By virtue of his relationship to Samick, Kim may be deemed to have shared voting power and shared dispositive power with respect to such Shares. (2) Based on 11,598,337 shares of Ordinary Common Stock issued and outstanding as of August 8, 2010 as reported by the Issuer in the Issuer's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 9, 2010. Any change in the percentage reported herein from the last statement is caused by the increase in the total number of issued and outstanding shares, and it does not indicate any change in the number of shares beneficially owned by the reporting person. SCHEDULE 13D CUSIP No. 858495104 1 NAME OF REPORTING PERSON Sam Song Caster Co., Ltd. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X] (b) [ ] 3 SEC USE ONLY 4 SOURCE OF FUNDS 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] 6 CITIZENSHIP OR PLACE OF ORGANIZATION Republic of Korea NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH: 7 SOLE VOTING POWER 0 8 SHARED VOTING POWER 244,700 9 SOLE DISPOSITIVE POWER 0 10 SHARED DISPOSITIVE POWER 244,700 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 244,700 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ] 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.1%(1) 14 TYPE OF REPORTING PERSON CO (1) Based on 11,598,337 shares of Ordinary Common Stock issued and outstanding as of August 8, 2010 as reported by the Issuer in the Issuer's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 9, 2010. Any change in the percentage reported herein from the last statement is caused by the increase in the total number of issued and outstanding shares, and it does not indicate any change in the number of shares beneficially owned by the reporting person. SCHEDULE 13D Item 1. Security and Issuer This statement relates to the Ordinary Common Stock, par value $0.001 (the "Shares"), issued by Steinway Musical Instruments, Inc. (the "Issuer"). The address of the principal executive offices of the Issuer is 1 Steinway Place, Long Island City, New York 11105. Item 2. Identity and Background The persons filing this statement are Samick Musical Instruments Co., Ltd. ("Samick"), Opus Five Investment 1, LP ("Opus LP"), Opus Five Investment, LLC ("Opus LLC"), Sam Song Caster Co., Ltd. ("Sam Song") and Jong Sup Kim ("Kim") (collectively, the "Reporting Persons"). Samick Samick is a Korean corporation which is primarily engaged in the business of manufacturing musical instruments. Samick is also the holder of 99.8% of equity interests in Sam Song, which is the sole limited partner of Opus LP. The address of the principal business office of Samick is 58-3, Nonhyeon-Dong, Ganggam-Gu, Seoul, Korea 135-010. Kim Kim currently serves as (i) Chairman of the Board of Directors of Samick and (ii) Chairman and director of Samick's subsidiaries. Kim is the holder of approximately 20.5% shares of equity stocks of Samick. His principal business address is 58-3, Nonhyeon-Dong, Ganggam-Gu, Seoul, Korea 135-010. Opus LP Opus LP is a California limited partnership, which is primarily engaged in the business of investing in securities. The principal business address of Opus LP is 6655 Knott Ave., Buena Park, CA 90620. Opus LLC Opus LLC is a Delaware limited liability company and the sole general partner of Opus LP. Opus LLC is primarily engaged in the business of serving as the general partner of Opus LP. The principal business address of Opus LLC is 6655 Knott Ave., Buena Park, CA 90620. Sam Song Sam Song is a Korean corporation and the sole limited partner of Opus LP. Sam Song is primarily engaged in the business of manufacturing casters and wheels. The principal business address of Sam Song is 419-6 Cheongcheon-dong, Bupyeong-gu, Incheon, Korea 403-858. The name, citizenship, present principal occupation or employment and business address of each director and executive officer of the Reporting Persons are set forth in Schedule A attached hereto. None of the Reporting Persons nor any manager or executive officer of the Reporting Persons, has, during the past five years, (a) been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors), or (b) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting, or mandating activities subject to, Federal or State securities laws or a finding of any violation with respect to such laws. Item 3. Source and Amount of Funds or Other Consideration On November 5, 2009, the Issuer issued 1,700,000 Shares to Samick at a price of $16 per share, for an aggregate purchase price of $27.2 million paid by Samick (the "Initial Transaction") in accordance with the terms of the Subscription Agreement dated as of November 5, 2009 between the Issuer and Samick (the "Subscription Agreement"). On March 30, 2010, the Issuer issued additional 1,700,000 Shares to Samick at a price of $16 per share, for an aggregate purchase price of $27.2 million paid by Samick (the "Option Transaction" and together with the "Initial Transaction", the "Transaction") following Samick's election to exercise its option to purchase such additional shares under Section 2.02 of the Subscription Agreement. Samick provided the necessary funds for the Initial Transaction from its existing working capital and a loan from Hana Bank in Seoul, Korea. The principal amount of such loan was $16.8 million. For the Option Transaction, Samick provided the necessary funds from its working capital and loans from KDB Capital ("KDB") and Shinhan Capital ("Shinhan") in Seoul, Korea. The principal amounts of such loans from KDB Capital and Shinhan Capital were 10 billion Korean Won and 5 billion Korean Won respectively. In connection with the loans provided by KDB and Shinhan, on October 6, 2010, Samick entered into security agreements to secure its obligations to KDB and Shinhan. Pursuant to the security agreements, Samick has granted to each KDB and Shinhan a right of pledge over 800,000 Shares and 400,000 Shares respectively (collectively hereinafter, "Pledged Shares"). However, the voting rights attached to the Pledged Shares are not transferred under the security agreements, and Samick retains the exclusive right to vote the Pledged Shares. In addition, the Reporting Persons hold, as a group, 244,700 units of the Shares. Opus LP, in the course of its ordinary business, has acquired such shares from June 2008 to July 2009, and the aggregate purchase price of such 244,700 shares was $5,238,823. The source of funding for the purchase of these Shares was the general working capital of Opus LP. Item 4. Purpose of Transaction The 1,700,000 Shares purchased pursuant to the Initial Transaction, the indirectly owned Shares together with the additional 1,700,000 Shares acquired in the Option Transaction will represent up to 31.4% of the issued and outstanding Shares of the Issuer. In addition, pursuant to the terms of the Subscription Agreement, Jong Sup Kim has been elected to the Board of Directors of the Issuer. Jong Sup Kim will continue to hold a position in the Board as long as Samick holds 15% or more of the outstanding Shares. The Reporting Persons may, from time to time and at any time, acquire additional Shares and/or other equity, debt or other securities, notes or instruments (collectively, "Securities") of the Issuer in the open market subject to the Standstill clause set forth in the Subscription Agreement or otherwise and reserve the right to dispose of any or all of their Securities in the open market or otherwise, at any time and from time to time, and to engage in any hedging or similar transactions with respect to the Securities. Item 5. Interest in Securities of the Issuer (a) The following sets forth, as of October 6, 2010, information regarding the beneficial ownership of the Shares by each Reporting Person and by all Reporting Persons as a group. Samick and Kim. Samick and Kim may be deemed to beneficially own, in the aggregate, 3,644,700 Shares, representing approximately 31.4% of the Issuer's issued and outstanding Shares (on the basis of a total of 11,598,337 Shares, as reported by the Issuer in the Issuer's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 9, 2010). All Reporting Persons as a group. The Reporting Persons may be deemed to beneficially own, in the aggregate, 244,700 Shares, representing approximately 2.1% of the Issuer's outstanding Shares (on the basis of a total of 11,598,337 Shares, as reported by the Issuer in the Issuer's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 9, 2010). (b) Samick has sole voting power and sole dispositive power with regard to the 3,400,000 Shares it has acquired and holds as of March 10, 2010. Kim may be deemed to have shared voting power and shared dispositive power with respect to such Shares since Kim can influence the voting and disposition of such Shares as the chairman and controlling shareholder of 20.5% of the equity interests in Samick. By virtue of his relationship to Samick, as disclosed in Item 2 and herein, Kim may be deemed to indirectly beneficially own (as that term is defined in Rule 13d-3 under the Act) the Shares which Samick directly beneficially owns. ________________ All Reporting Persons have shared voting power and shared dispositive power with regard to 244,700 Shares held by Opus LP. Each of Opus LP, Opus LLC, Sam Song, Samick, and Kim, by virtue of their relationships (as disclosed in Item 2) and by virtue of their understanding (as disclosed in Item 6), may be deemed to indirectly beneficially own (as that term is defined in Rule 13d-3 under the Act) the 244,700 Shares which Opus LP directly beneficially owns. Beneficial ownership of the Shares referred to herein is being reported hereunder solely because the Reporting Persons may be deemed to have beneficial ownership of such shares by virtue of their relationships and their understandings as disclosed herein. Neither the filing of this Schedule 13D nor any of its contents shall be deemed to constitute an admission by the Issuer or each Reporting Person that it is the beneficial owner of any of the Shares referred to herein for purposes of Section 13(d) of the Act or for any other purpose, and such beneficial ownership is expressly disclaimed. (c) Other than as set forth in this Report, the Reporting Persons have not effected any transactions in the Share of the Issuer within the past 60 days. Item 6. Contracts, Arrangements, Understandings or Relationship with Respect to Securities of the Issuer The information contained in Item 3 and Item 4 is incorporated herein by reference. In addition, there is common understanding between Samick and Opus LLC that Samick will consult with and advise Opus LLC on voting of the Shares held by Opus LP. Except as otherwise described herein, there are no contracts, arrangements, understandings or relationships (legal or otherwise) among the persons named in Item 2 and between such persons and any person with respect to any securities of the Issuer, including but not limited to transfer or voting of any of the securities, finder's fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or loss, or the giving or withholding of proxies. Item 7. Material to be Filed as Exhibits 1 Joint Filing Agreement of the Reporting Persons. 2 Subscription Agreement between the Issuer and Samick. 3 Power of Attorney for Samick 4 Power of Attorney for Opus LP 5 Power of Attorney for Opus LLC 6 Power of Attorney for Sam Song 7 Power of Attorney for Kim 8 Security Agreement between Samick and Shinhan 9 Security Agreement between Samick and KDB SIGNATURE After reasonable inquiry and to the best of each of the undersigned knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct. Dated: October 6, 2010 Samick Musical Instruments Co., Ltd. By: /s/ Jong Sup Kim --------------------- Name: Jong Sup Kim Title: Chairman Opus Five Investment 1, LP By: /s/ Kyung Min Park --------------------- Name: Kyung Min Park Title: Sole Member of General Partner Opus Five Investment, LLC By: /s/ Kyung Min Park --------------------- Name: Kyung Min Park Title: Sole Member Sam Song Caster Co., Ltd. By: /s/ Kang Log Lee --------------------- Name: Kang Log Lee Title: Director Jong Sup Kim By: /s/ Jong Sup Kim --------------------- Name: Jong Sup Kim SCHEDULE A ---------- DIRECTORS AND EXECUTIVE OFFICERS OF THE REPORTING PERSONS The following sets forth the name, position, and principal occupation of each director and executive officer of each of the Reporting Persons. To the best of the Reporting Persons' knowledge, except as set forth in this statement on Amendment to Schedule 13D, none of the directors or executive officers of the Reporting Persons own any Shares. Samick Musical Instruments Co., Ltd - ----------------------------------- Name Position - ---- -------- Jong Sup Kim Chairman of the Board; Co-CEO Hyung Guk Lee Co-CEO; Director Min Soo Kim Director Duk Kyu Min Director Maeng Gi Chung Director Kwan Soon Jang Director Soo Kyun Jung Director Samick is a Korean corporation. The above listed persons are all citizens of the Republic of Korea. Each of those officers and directors' business address is Samick Plaza Building 58-3, Nonhyun-Dong, Ganggam-Gu, Seoul, Korea 135-010. Opus Five Investment 1, LP - -------------------------- Name Position - ---- -------- Opus Five Investment, LLC General Partner Sam Song Caster Co., Ltd. Limited Partner Opus LP is a California limited partnership, and Opus LLC is a Delaware limited liability company; thus, thereby, Opus LP and Opus LLC are the citizens of the United States. Sam Song is a corporation of the Republic of Korea and, thereby, the citizen of the Republic of Korea. The principal business address of each of (i) Opus LP and (ii) Opus LLC is 6655 Knott Ave., Buena Park, CA 90620 and (iii) Sam Song is 419-6 CheongCheon-Dong, Bupyeong-Gu, Incheon, Korea. Opus Five Investment, LLC - ------------------------- Name Position - ---- -------- Kyung Min Park Sole Member Park is a citizen of the United States. Park's principal business address is 6655 Knott Ave., Buena Park, CA 90620. Sam Song Caster Co., Ltd. - ------------------------- Name Position - ---- -------- Young Ho Lee CEO Soo Kyun Jung Director Kang Log Lee Director Sam Song is a Korean corporation and, thus, thereby a citizen of the Republic of Korea. The above listed persons are all citizens of the Republic of Korea. Each of those officers and directors' and Sam Song's business address is 419-6 CheongCheon-Dong, Bupyeong-Gu, Incheon, Korea. EX-99.1 2 ex99_1.txt Exhibit 99.1 JOINT FILING AGREEMENT In accordance with Rule 13d-1(k)(1) under the Securities Exchange Act of 1934, as amended, the persons named below agree to the joint filing on behalf of each of them of a statement on Schedule 13D (including amendments thereto) with respect to the Common Stock of Steinway Musical Instruments, Inc. and further agree that this Joint Filing Agreement be included as an Exhibit to such joint filings. In evidence thereof, the undersigned, being duly authorized, have executed this Joint Filing Agreement this 6th day of October, 2010. Samick Musical Instruments Co., Ltd. By: /s/ Jong Sup Kim --------------------- Name: Jong Sup Kim Title: Chairman Opus Five Investment 1, LP By: /s/ Kyung Min Park --------------------- Name: Kyung Min Park Title: Sole Member of General Partner Opus Five Investment, LLC By: /s/ Kyung Min Park --------------------- Name: Kyung Min Park Title: Sole Member Sam Song Caster Co., Ltd. By: /s/ Kang Log Lee --------------------- Name: Kang Log Lee Title: Director Jong Sup Kim By: /s/ Jong Sup Kim --------------------- Name: Jong Sup Kim EX-99.2 3 ex99_2.txt Exhibit 99.2 SUBSCRIPTION AGREEMENT This SUBSCRIPTION AGREEMENT (this "Agreement") is made and entered into as of November 5, 2009, by and among Samick Musical Instruments Co, Ltd., a Korean corporation (the "Subscriber"), and Steinway Musical Instruments, Inc., a Delaware corporation (the "Company"). The Subscriber and the Company may be referred to herein individually as a "Party" and collectively as the "Parties." RECITALS -------- WHEREAS, the Subscriber desires to purchase from the Company, and the Company desires to sell to the Subscriber, up to Three Million Four Hundred Thousand (3,400,000) shares of the Ordinary Common Stock, par value $0.001 per share, of the Company. NOW, THEREFORE, in consideration of the premises, agreements and covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree, upon the terms and subject to the conditions contained herein, as follows: ARTICLE I. DEFINITIONS ----------- Section 1.01 Definitions. "Action" shall have the meaning given to it in Section 3.01(a). "Affiliate" shall mean any corporation, limited liability company, partnership, trust, company, unincorporated entity or other legal entity which directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with, the legal entity specified, for which purposes "control" means the beneficial ownership of fifty percent (50%) or more of the voting interests of a legal entity or of the equivalent rights to determine the decision of such legal entity, including any investment advisor or investment manager to any fund or collective investment scheme. "Agreement" shall have the meaning given to it in the Preamble. "Closing" shall have the meaning given to it in Section 2.02. "Closing Date" shall have the meaning given to it in Section 2.02. "Company" shall have the meaning given to it in the Preamble. "Encumbrance" shall mean any security interest, deed of trust, mortgage, debenture, option, pledge, hypothecation, charge, lien (statutory or other, including any construction, mechanics, supplier's or repairer's lien), restrictive covenant, easement, right-of-way, Order, Contract, community property interest, equitable interest, right of first refusal, or restriction of any kind, including any restriction on use, voting, transfer, receipt of income, or exercise of any other attribute of ownership. "Equity Financing Transaction" shall mean the issuance and/or sale by the Company of shares of Ordinary Common Stock for cash in a bona fide financing transaction with a third party investor, the primary purpose of which is to raise funds for the Company, but excluding (a) any offering of shares which constitute less than five percent (5%) of the then outstanding number of shares of the Ordinary Common Stock, (b) any issuance of shares to, or issuance of shares upon exercise of options granted to, employees, officers or directors of the Company or any Affiliate of the Company, (c) any issuance of shares as an "equity kicker" in a debt financing, or upon conversion of debt securities or upon exercise of warrants issued in connection with any such debt financing, (d) any issuance of shares in connection with a transaction, the primary purpose of which is not to raise funds for the Company, including but not limited to a merger or share-for-share exchange or an acquisition of a business, or (e) a public offering of shares which is registered with the SEC under the Securities Act. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "Governmental Authority" shall mean any federal, state, county, municipal or other governmental authority, any political subdivision of any of the foregoing, or any governmental, quasi-governmental, judicial, public or statutory instrumentality, authority, body or entity. "HSR Act" shall mean Section 7A of the Clayton Act (Title II of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended) and the rules and regulations promulgated thereunder. "Initial Closing" shall have the meaning given to it in Section 2.01. "Initial Closing Date" shall have the meaning given to it in Section 2.01. "Initial Shares" shall have the meaning given to it in Section 2.01. "Laws" shall mean all statutes, regulations, conventions, treaties, protocols, by-laws, statutory orders, ministerial orders, governmental approvals, requisitions, rules, codes or specifications (and interpretations thereof), including those having application to the Parties and the transactions contemplated by this Agreement; all as of the date hereof and at any time thereafter in effect, and all as enacted, issued, promulgated, made, adopted or interpreted by any Governmental Authority, as amended, renewed and/or varied from time to time. "Material Adverse Effect" shall mean a material adverse effect on (i) the business or assets of the Company and its subsidiaries taken as a whole, (ii) the transactions contemplated by this Agreement, or (iii) the Shares. "Option Exercise Conditions" shall have the meaning given to it in Section 2.02(c). "Option Shares" shall have the meaning given to it in Section 2.02. "Option Closing" shall have the meaning given to it in Section 2.02. 2 "Option Closing Date" shall have the meaning given to it in Section 2.02. "Order" shall have the meaning given to it in Section 3.01(c). "Ordinary Common Stock" shall mean the Ordinary Common Stock, par value $0.001 per share, of the Company. "Party" or "Parties" shall have the meaning given to it in the Preamble. "Person" or "Persons" shall mean any individual, natural person, corporation, joint venture, partnership, limited partnership, limited liability company, trust, estate, business trust, association, or any other entity. "SEC" shall mean the United States Securities and Exchange Commission. "Securities Act" shall have the meaning given to it in Section 3.02(e)(ii). "Shares" shall have the meaning given to it in Section 2.02. "Subscriber" shall have the meaning given to it in the Preamble. "Subscriber Parties" shall have the meaning given to it in Section 5.02. ARTICLE II. SALE AND ISSUANCE ----------------- Section 2.01 Initial Sale and Issuance of Shares. Subject to the terms and conditions of this Agreement, the Subscriber agrees to purchase at the Initial Closing and the Company agrees to sell and issue to the Subscriber at the Initial Closing, One Million Seven Hundred Thousand (1,700,000) shares of the Ordinary Common Stock (the "Initial Shares") at a purchase price of $16.00 per share or $27,200,000 in the aggregate (the "Initial Payment"). The purchase and sale of the Initial Shares shall take place at the offices of Milbank, Tweed, Hadley & McCloy LLP, 601 S. Figueroa Street, Los Angeles, CA 90017 at 10:00 a.m., on November 5, 2009 (the "Initial Closing Date"), or at such other time and place as the Company and the Subscriber mutually agree upon orally or in writing (which time and place are designated as the "Initial Closing"). Section 2.02 Subsequent Sale and Issuance of Shares. (a) Subject to Section 2.02(c), the Subscriber shall have the right, but not the obligation, to purchase at the Option Closing (as defined below), and the Company agrees to sell and issue to the Subscriber at the Option Closing, up to One Million Seven Hundred Thousand (1,700,000) additional whole shares (the "Option Shares," and together with the Initial Shares, the "Shares") of the Ordinary Common Stock for a purchase price of $16.00 per share or $27,200,000 in the aggregate in the event that all of the Option Shares are so purchased (the "Option Payment"). The purchase and sale of any Option Shares shall take place at the offices of Milbank, Tweed, Hadley & McCloy LLP, 601 S. Figueroa Street, Los Angeles, CA 90017 at 10:00 a.m., on 3 or before March 31, 2010 (the "Option Closing Date," and together with the Initial Closing Date, the "Closing Date"), or at such other time and place as the Company and the Subscriber mutually agree upon orally or in writing (the "Option Closing," and together with the Initial Closing, the "Closing"). (b) In order to exercise its right to purchase any of the Option Shares, the Subscriber shall provide written notice to the Company, not less than five business days prior to the Option Closing Date, specifying the number of Option Shares the Subscriber elects to purchase and the Subscriber's proposed Option Closing Date (which date shall not be later than March 31, 2010). The Subscriber's right to purchase, and the Company's obligation to sell and issue, any Option Shares shall expire and terminate immediately after the earlier to occur of the Option Closing Date and March 31, 2010. (c) Notwithstanding the foregoing, the right of the Subscriber to purchase, and the obligation of the Company to sell and issue, some or all of the Option Shares may be subject to (i) the approval of the stockholders of the Company as required by Section 312.03(c) of the Listed Company Manual and the rules and regulations of the New York Stock Exchange on which the Ordinary Common Stock trades, (ii) the filing with the SEC and distribution of an information statement relating to such stockholder approval, in accordance with Regulation 14C under the Exchange Act, and the passage of not less than 20 calendar days following such distribution, (iii) filings in accordance the HSR Act, and the termination or expiration of the applicable waiting period imposed under the HSR Act, and (iv) compliance with the Company's Insider Trading Policy applicable to all members of the board of directors of the Company to the extent the Subscriber then has a designee or Affiliate as a member thereof (the requirements specified in clauses (i), (ii), (iii) and (iv) being referred to herein as the "Option Exercise Conditions"). If any of the Option Exercise Conditions is applicable to the purchase and sale of any of the Option Shares, then the right of the Subscriber to purchase, and the obligation of the Company to sell and issue, such Option Shares shall be conditioned on the prior satisfaction of such Option Exercise Condition(s). Section 2.03 Closing Deliverables. (a) At the Initial Closing: (i) the Company shall deliver to the Subscriber a certificate or certificates representing the Initial Shares that the Subscriber is purchasing; and (ii) the Subscriber shall make the Initial Payment by cashier's check or by wire transfer of immediately available funds in United States dollars, to an account designated at least two business days prior to the Initial Closing in writing by the Company. (b) At the Option Closing: (i) the Company shall deliver to the Subscriber a certificate or certificates representing the Option Shares that the Subscriber is purchasing; and (ii) the Subscriber shall make the Option Payment by cashier's check or by wire transfer of immediately available funds in United States dollars, to an account designated at least two business days prior to the Option Closing in writing by the Company. 4 ARTICLE III. REPRESENTATIONS AND WARRANTIES ------------------------------ Section 3.01 Representations and Warranties of the Company. The Company represents and warrants to the Subscriber that the following statements are true as of the date hereof and will be true as of each Closing Date: (a) Organization and Status of the Company. The Company (a) is a corporation duly formed, validly existing and in good standing under the Laws of the State of Delaware, (b) is duly qualified to do business as a foreign corporation and is in good standing under the Laws of each jurisdiction in which either the ownership or use of the properties owned or used by it, or the nature of the activities conducted by it, requires such qualification, except where the failure to so qualify would not cause a Material Adverse Effect, (c) has the relevant corporate power and authority necessary to own or lease its properties and to carry on its businesses as currently conducted, and (d) is not in breach or violation of, or default under, any provision of its organizational documents. The Company has never approved or taken any action, nor is there any pending or (to the Company's knowledge) threatened action, suit, arbitration, mediation, investigation or similar proceeding (or basis therefor) (an "Action"), seeking or otherwise contemplating the dissolution, liquidation, insolvency, or rehabilitation of the Company. (b) Power and Authority; Enforceability. Subject to the satisfaction of the Option Exercise Conditions: (i) the Company has the corporate power and authority necessary to consummate the transactions contemplated by this Agreement and execute, deliver, and perform this Agreement; (ii) the Company has taken all actions necessary to authorize the execution and delivery of this Agreement; and (iii) this Agreement has been duly authorized, executed, delivered by, and is binding upon and enforceable against, the Company. (c) No Violations. Subject to the satisfaction of the Option Exercise Conditions, the consummation of the transactions contemplated by this Agreement and the execution, delivery, and performance of the this Agreement by the Company will not, subject to the accuracy of the representations and warranties of the Subscriber contained herein, (i) breach any Laws to which the Company is subject to or any provision of its organizational documents, (ii) breach any contract, agreement, arrangement, commitment, instrument, document or similar understanding (whether written or oral) ("Contract"), to which the Company is a party or by which the Company is bound or to which the Company's assets are subject, (iii) violate any order, ruling, decision, award, judgment, injunction or other similar determination or finding by, before or under the supervision of any Governmental Authority or arbitrator (an "Order") with jurisdiction over the Company, (iv) result in the imposition of Encumbrances upon any assets owned by the Company or the Shares, (v) require any consent under any Contract, Order or Laws, or, if such consent is required, the Company shall have obtained the same, or (vi) trigger any rights of first refusal, preferential purchase or similar rights with respect to any of the Shares, or if such rights are triggered, the Company shall have obtained the waiver of the same, except in the case of clauses (i) through (vi) where such breach, violation, result or other event would not cause a Material Adverse Effect. 5 (d) The Shares. The Shares have been duly authorized, and when issued at the Initial Closing and the Option Closing, the Initial Shares and the Option Shares, respectively, will be validly issued, fully paid and nonassessable shares of the Ordinary Common Stock. (e) SEC Filings. The Company's filings made with the SEC pursuant to the Exchange Act, including but not limited to filings on Forms 10-K, 10-Q and 8-K, as such filings have been updated, modified, amended or superseded by subsequent filings with the SEC, did not (as of the time of such filings, as so updated, modified, amended or superseded) contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading. Section 3.02 Representations and Warranties of the Subscriber. The Subscriber represents and warrants to the Company that the following statements are true as of the date hereof and will be true as of each Closing Date: (a) Status of Subscriber. The Subscriber is a corporation duly created, formed or organized, validly existing, and in good standing under the Laws of the jurisdiction of its creation, formation or organization. There is no pending or threatened Action (or basis therefor) for the dissolution, liquidation, insolvency, or rehabilitation of the Subscriber. (b) Power and Authority; Enforceability. Subject to the satisfaction of the Option Exercise Conditions: (i) the Subscriber has the corporate power and authority necessary to consummate the purchase of the Shares and execute, deliver, and perform this Agreement; (ii) the Subscriber has taken all actions necessary to authorize the execution and delivery of this Agreement; and (iii) this Agreement has been duly authorized, executed, delivered by, and is binding upon and enforceable against, the Subscriber. (c) No Violations. Subject to the satisfaction of the Option Exercise Conditions, the consummation of the transactions contemplated by this Agreement and the execution, delivery, and performance of this Agreement by the Subscriber will not (i) breach any Law to which the Subscriber is subject or any provision of its organizational documents, (ii) breach any Contract or violate any Order to which the Subscriber is a party or by which the Subscriber is bound or to which any of the Subscriber's assets are subject, or (iii) require any consent under any Contract, Order or Laws (including consent of the Bank of Korea), other than any consents that have been obtained prior to the date hereof, except in the case of clauses (i) through (iii) where such breach, violation or other event would not cause a material adverse effect on the business or assets of the Subscriber or the transactions contemplated by this Agreement. (d) Ownership. Prior to the Initial Closing, the Subscriber is the lawful owner, beneficially and of record (through an Affiliate of the Subscriber), of 244,700 shares of the Ordinary Common Stock, and no Affiliate of the Subscriber owns, beneficially or of record, any other shares of Ordinary Common Stock or other securities of the Company. 6 (e) Eligibility. (i) This Agreement is made with the Subscriber in reliance upon the Subscriber's representation to the Company, which by the Subscriber's execution of this Agreement, the Subscriber hereby confirms, that the Shares to be acquired by the Subscriber will be acquired for investment for the Subscriber's own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that the Subscriber has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, the Subscriber further represents that the Subscriber does not presently have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to any of the Shares. (ii) The Subscriber acknowledges that the offering and sale of the Shares have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), or any other state or foreign securities laws, and the offering and sale of the Shares is being made in reliance upon federal and state exemptions for transactions not involving a public offering. (iii) The Subscriber is an "accredited investor" within the meaning of Rule 501 under the Securities Act by virtue of paragraph (a)(3) thereof. (iv) The Subscriber will promptly furnish to the Company all information that the Company may hereafter reasonably require in order to determine whether or not the Subscriber is an "accredited investor." (v) The Subscriber (either alone or together with any advisors retained by the Subscriber in connection with evaluating the merits and risks of a prospective investment in the Shares) has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of acquiring the Shares, and is able to bear the economic risk of such investment, including the risk of a complete loss. The aggregate amount of the investments of the Subscriber in all investments that are illiquid is reasonable in relation to the Subscriber's net worth. (vi) The Subscriber acknowledges and agrees that any and all certificates representing any of the Shares shall contain a legend substantially to the following effect: "THE ORDINARY COMMON SHARES (THE "SHARES") IN STEINWAY MUSICAL INSTRUMENTS, INC. (THE "COMPANY") REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT 7 OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR NON-U.S. SECURITIES LAWS, AND AS SUCH ARE "RESTRICTED SECURITIES. THE SHARES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR PLEDGED, IN WHOLE OR IN PART, EXCEPT BOTH (A) AS PERMITTED UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE OR OTHER SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM, AND (B) IN ACCORDANCE WITH THE TERMS OF THE BYLAWS OF THE COMPANY." ARTICLE IV. CONDITIONS TO OBLIGATIONS OF THE PARTIES ---------------------------------------- Section 4.01 Conditions to Each Party's Obligations. The respective obligations of each Party to consummate the transactions contemplated by this Agreement are subject to the satisfaction at or prior to each Closing of the following conditions: (a) No statute, rule or regulation shall have been enacted, promulgated or enforced by any court or Governmental Authority following the date hereof which prohibits or restricts the consummation of the transactions contemplated by this Agreement; (b) There shall not be in effect any judgment, order, injunction or decree of any court of competent jurisdiction enjoining the consummation of the transactions contemplated by this Agreement; (c) All consents, authorizations, waivers and approvals of any Governmental Authority or other regulatory body as may be required to be obtained in connection with the performance of this Agreement, the failure to obtain which would prevent the consummation of the transactions contemplated by this Agreement; and (d) With respect to the Option Closing, if any Option Exercise Condition is applicable to the purchase and sale of any Option Shares that the Subscriber has elected to purchase, such Option Exercise Condition shall have been satisfied with respect to such Option Shares. Section 4.02 Conditions to Obligations of the Company. The obligations of the Company to consummate the transactions contemplated by this Agreement are further subject to the satisfaction (or waiver) at or prior to each Closing of the following conditions: (a) The representations and warranties of the Subscriber contained in Section 3.02 of this Agreement shall be true and correct in all material respects as of the date of this Agreement and as of such Closing as if made at and as of such time (provided that representations and warranties which are as of a specific date shall speak only as of such date); 8 (b) The Subscriber shall have performed in all material respects its obligations under this Agreement required to be performed by it at or prior to such Closing pursuant to the terms of this Agreement; and (c) The Company shall have received from the Subscriber an officers' certificate certifying that the conditions set forth in Sections 4.02(a) and (b) above have been satisfied. Section 4.03 Conditions to Obligations of the Subscriber. The obligations of the Subscriber to consummate the transactions contemplated by this Agreement are further subject to the satisfaction (or waiver by the Subscriber) at or prior to each Closing of the following conditions: (a) The representations and warranties of the Company in Section 3.01 of this Agreement shall be true and correct in all material respects as of the date of this Agreement and as of such Closing as if made at and as of such time (provided that representations and warranties which are as of a specific date shall speak only as of such date); (b) The Company shall have performed in all material respects its obligations under this Agreement required to be performed by it at or prior to such Closing pursuant to the terms of this Agreement; (c) The Subscriber shall have received from the Company an officers' certificate certifying that the conditions set forth in Sections 4.03(a) and (b) above have been satisfied; and (d) The Subscriber shall have received a side letter duly executed by Kyle Kirkland and Dana Messina, as the owners of all of the Class A Shares of the Company, substantially in the form of Exhibit A. ARTICLE V. COVENANTS OF THE PARTIES ------------------------ Section 5.01 Standstill. Except as provided under Article II of this Agreement, the Subscriber hereby agrees that neither it nor any of its Affiliates shall acquire beneficial or record ownership of any additional securities of the Company, including any additional shares of the Ordinary Common Stock of the Company, without the prior written approval of the Board of Directors of the Company; provided, however, that the Subscriber may, without such consent, acquire outstanding shares of the Ordinary Common Stock as long as the aggregate holdings of the Subscriber and its Affiliates, including the Shares, does not exceed 40% of the total number of outstanding shares of the Ordinary Common Stock, and provided that such acquisition is otherwise in compliance with all applicable Laws. The Subscriber further agrees that neither it nor any of its Affiliates, nor anyone acting on its or their behalf, shall: (a) except as expressly permitted by Article II or this Section 5.01, in any manner, acquire, agree to acquire or make any proposal to acquire, directly or indirectly, any assets or securities of the Company (or beneficial ownership thereof) or any rights or options to acquire any assets or securities of the 9 Company (or beneficial ownership thereof); (b) propose to enter into, directly or indirectly, any merger or business combination involving the Company or any of its subsidiaries or divisions; (c) otherwise act, alone or in concert with others, to seek to control or influence the management, board of directors, or policies of the Company, other than as or through a member of the board of directors; (d) disclose any intention, plan, or arrangement inconsistent with the foregoing; or (e) advise, assist, or encourage any other persons in connection with any of the foregoing. Section 5.02 Securities Law Compliance. (a) The Subscriber hereby agrees that it, its Affiliates, and any representative or nominee that it may have on the Board of Directors of the Company (collectively, the "Subscriber Parties"), shall comply with all applicable Laws with respect to the acquisition, disposition or ownership of the Shares and any other securities of the Company, including but not limited to making any and all required filings with the SEC. The Subscriber further agrees that it shall provide not less than five (5) days written notice to the Company prior to any Subscriber Party acquiring or disposing of any Shares or other securities of the Company, or making any filing with the SEC or issuing any press release or announcement relating to the Company or the Shares or other securities of the Company. (b) The Company hereby agrees that, to the extent necessary and appropriate to effectuate the transactions contemplated by this Agreement, it shall file with the SEC an Information Statement pursuant to Regulation 14C of the Exchange Act and distribute such Information Statement to the stockholders of the Company. Section 5.03 HSR Act. If and to the extent required in connection with the Subscriber's exercise of its right to acquire Option Shares pursuant to Section 2.02, each of the Parties will (a) take all actions necessary to make the filings required of such Party or its Affiliates under the HSR Act, (b) comply at the earliest practicable date with any request for additional information received by such Party or its Affiliates from the Federal Trade Commission or the Antitrust Division of the Department of Justice pursuant to the HSR Act and (c) cooperate with the other Party in connection with such other Party's filing under the HSR Act and in connection with resolving any investigation or other inquiry concerning the transactions contemplated by this Agreement commenced by either the Federal Trade Commission or the Antitrust Division of the Department of Justice or state attorneys general. Section 5.04 Right of First Refusal. If at any time while the Subscriber has continuously owned shares of the Ordinary Common Stock constituting in excess of 15% of all outstanding shares of Ordinary Common Stock, the Company proposes to issue shares of the Ordinary Common Stock, or proposes to sell shares of the Ordinary Common Stock held in treasury, in an Equity Financing Transaction, the Company shall provide notice to the Subscriber in advance of such proposed Equity Financing Transaction, which notice shall specify the number of such shares proposed to be issued or sold, the proposed price or range of prices per share, and such other terms and conditions thereof as the Company shall deem to be material. The Subscriber shall have the right, but not the obligation, to purchase a portion of such newly issued or treasury shares of the Ordinary Common Stock equal to (and not less than) the proportional number of shares held by the Subscriber at the time of its receipt 10 of such notice (rounded to the nearest whole share). If the Subscriber decides to exercise its right to so purchase a portion of such newly issued or treasury shares, the Subscriber must deliver to the Company, within seven (7) calendar days of receipt of the Company's notice, a notice indicating the number of shares it intends to so purchase, and irrevocably committing to purchase such shares on the terms and conditions of the Equity Financing Transaction. If the Company timely receives such notice from the Subscriber and proceeds to consummate the Equity Financing Transaction, the Company shall issue and/or sell to the Subscriber, and the Subscriber shall purchase from the Company, such proportionate number of shares of the Ordinary Common Stock on the terms and conditions of the Equity Financing Transaction. Notwithstanding the foregoing, the Subscriber's rights to purchase shares of the Ordinary Common Stock pursuant to this Section 5.03 shall terminate and be of no further force and effect if either (a) the Subscriber fails to continuously own shares of the Ordinary Common Stock constituting in excess of 15% of all outstanding shares of Ordinary Common Stock, or (b) the Subscriber declines to exercise its rights to purchase shares of the Ordinary Common Stock pursuant to this Section 5.03 on three (3) occasions. Section 5.05 Cooperation. The Company agrees to use commercially reasonable efforts to cooperate with the Subscriber in connection with the lawful sale or transfer of Shares by the Subscriber, including but not limited to the removal of the legend referred to in Section 3.02(e)(vi) on certificates representing such Shares when permitted under applicable Law. ARTICLE VI. MISCELLANEOUS ------------- Section 6.01 Entire Agreement. This Agreement, together with all schedules, exhibits, annexes or other attachments hereto, and the certificates, documents, instruments and writings that are delivered pursuant hereto or thereto, constitutes the entire agreement and understanding of the Parties in respect of the subject matter hereof and supersedes all prior understandings, agreements or representations by or among the Parties, written or oral, to the extent they relate in any way to the subject matter hereof. Section 6.02 No Third Party Beneficiary. Nothing in this Agreement is intended to confer any rights or remedies under or by reason of this Agreement on any person other than the Subscriber and the Company. Section 6.03 Assignment; Binding Effect. No Party may assign either this Agreement or any of its rights, interests or obligations hereunder without the prior written approval of the other Party, and any such assignment by a Party without prior written approval of the other Party will be deemed invalid and not binding on such other Party. All of the terms, agreements, covenants, representations, warranties and conditions of this Agreement are binding upon, inure to the benefit of and are enforceable by, the Parties and their respective successors and permitted assigns. Section 6.04 Notices. All notices, requests and other communications provided for or permitted to be given under this Agreement must be in writing and must be given by personal delivery, by certified or registered United States mail (postage prepaid, return receipt requested), by a nationally recognized 11 overnight delivery service for next day delivery, or by facsimile transmission, to the intended recipient at the address set forth for the recipient on the signature page (or to such other address as any Party may give in a notice given in accordance with the provisions hereof). All notices, requests or other communications will be effective and deemed given only as follows: (i) if given by personal delivery, upon such personal delivery, (ii) if sent by certified or registered mail, on the fifth business day after being deposited in the United States mail, (iii) if sent for next day delivery by overnight delivery service, on the date of delivery as confirmed by written confirmation of delivery, or (iv) if sent by facsimile, upon the transmitter's confirmation of receipt of such facsimile transmission, except that if such confirmation is received after 5:00 p.m. (in the recipient's time zone) on a business day, or is received on a day that is not a business day, then such notice, request or communication will not be deemed effective or given until the next succeeding business day. Notices, requests and other communications sent in any other manner, including by electronic mail, will not be effective. If to the Subscriber: Samick Musical Instruments Co, Ltd. Samick Plaza Building 58-3 Nonhyeon-Dong, Gangnam-Gu Seoul, Korea 135-010 Fax: 82-32-453-3169 Attention: Jong Sup Kim, Chairman with a copy to: Kim & Min, A Professional Law Corporation 3435 Wilshire Blvd., Suite 2600 Los Angeles, California 90010 Fax: (213) 382-3500 If to the Company: Steinway Musical Instruments, Inc. 800 South Street, Suite 305 Waltham, Massachusetts 02453-1439 Fax: (781) 894-9803 Attention: Dennis M. Hanson with a copy to: Milbank, Tweed, Hadley & McCloy LLP 601 S. Figueroa Street, 30th Floor Los Angeles, California 90017 Fax: (213) 892-4710 Attention: Neil J Wertlieb, Esq. 12 Section 6.05 Headings. The article and section headings contained in this Agreement are inserted for convenience only and will not affect in any way the meaning or interpretation of this Agreement. Section 6.06 Governing Law; Jurisdiction; Attorneys' Fees. Section 6.07 This Agreement will be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice of law principles. The parties submit to the exclusive jurisdiction and venue of the courts of the State of California for the resolution of all disputes relating to this Agreement and the transactions contemplated hereby. If any litigation or other enforcement proceeding is commenced in connection with this Agreement, then the prevailing party shall be entitled to receive payment of its reasonable attorneys' fees and expenses and court costs from the other party. Section 6.08 Amendment; Extensions; Waivers. No amendment, modification, waiver, replacement, termination or cancellation of any provision of this Agreement will be valid, unless the same is in writing and signed by all of the Parties. Each waiver of a right hereunder does not extend beyond the specific event or circumstance giving rise to the right. No waiver by any Party of any default, misrepresentation or breach of warranty or covenant hereunder, whether intentional or not, may be deemed to extend to any prior or subsequent default, misrepresentation or breach of warranty or covenant hereunder or affect in any way any rights arising because of any prior or subsequent such occurrence. Neither the failure nor any delay on the part of any Party to exercise any right or remedy under this Agreement will operate as a waiver thereof, nor does any single or partial exercise of any right or remedy preclude any other or further exercise of the same or of any other right or remedy. Section 6.09 Severability. The provisions of this Agreement will be deemed severable and the invalidity or unenforceability of any provision will not affect the validity or enforceability of the other provisions hereof; provided, however, that if any provision of this Agreement, as applied to any Party or to any circumstance, is judicially determined not to be enforceable in accordance with its terms, the Parties agree that the court judicially making such determination may modify the provision in a manner consistent with its objectives such that it is enforceable, and/or to delete specific words or phrases, and in its modified form, such provision will then be enforceable and will be enforced. Section 6.10 Counterparts; Effectiveness. This Agreement may be executed in one or more counterparts, each of which will be deemed an original but all of which together will constitute one and the same instrument. This Agreement will become effective when one or more counterparts have been signed by each Party and delivered to the other Parties. Section 6.11 Construction. This Agreement has been freely and fairly negotiated among the Parties. If an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the Parties and no presumption or burden of proof will arise favoring or disfavoring any Party because of the authorship of any provision of this Agreement. The words "include," "includes," and "including" will be deemed to be followed by "without limitation." The word "person" includes individuals, entities and Governmental Bodies. Pronouns in masculine, feminine and neuter genders will be construed to include any other gender, and words in the singular form will be construed to include the plural and vice versa, unless the context 13 otherwise requires. The words "this Agreement," "herein," "hereof," "hereby," "hereunder," and words of similar import refer to this Agreement as a whole and not to any particular subdivision unless expressly so limited. The Parties intend that each representation, warranty and covenant contained herein will have independent significance. If any Party has breached any representation, warranty or covenant contained herein in any respect, the fact that there exists another representation, warranty or covenant relating to the same subject matter (regardless of the relative levels of specificity) which the Party has not breached will not detract from or mitigate the fact that the Party is in breach of the first representation, warranty or covenant. [SIGNATURE PAGE TO FOLLOW] 14 IN WITNESS WHEREOF, the Company and the Subscriber have executed this Agreement as of the date first written above. COMPANY ------- STEINWAY MUSICAL INSTRUMENTS, INC. By: ___________________________ Name: _____________________ Title: ______________________ SUBSCRIBER ---------- SAMICK MUSICAL INSTRUMENTS CO, LTD. By: ___________________________ Name: _____________________ Title: ______________________ Signature Page EXHIBIT A Side Letter of Class A Holders ------------------------------ [insert date of Initial Closing] Samick Musical Instruments Co, Ltd. Samick Plaza Building 58-3 Nonhyeon-Dong, Gangnam-Gu Seoul, Korea 135-010 Attention: Jong Sup Kim, Chairman Re: Subscription Agreement ---------------------- Dear Chairman Kim: We, the undersigned, are delivering this letter to you in connection with the transactions contemplated by the Subscription Agreement (the "Subscription Agreement") dated November 5, 2009, between Samick Musical Instruments Co, Ltd. (the "Subscriber") and Steinway Musical Instruments, Inc. (the "Company"). We hereby represent that we are the sole and exclusive owners of all of the outstanding shares of Series A Common Stock, par value $0.001, of the Company (the "Series A Shares") and, as such, currently have the voting power to elect the members of the board of directors of the Company (the "Board"). We hereby agree that we shall vote our Series A Shares so as to elect Chairman Jong Sup Kim to the Board. The agreement evidenced by this letter shall terminate and be of no further force or effect if at any point in time (a) the Subscriber is in breach of the Subscription Agreement or (b) the Subscriber holds less than 15% of the outstanding shares of Ordinary Common Stock, par value $0.001, of the Company. Sincerely, - --------------------------- ------------------------- Kyle Kirkland Dana D. Messina EX-99.3 4 ex99_3.txt Exhibit 99.3 POWER OF ATTORNEY Know all by these presents, that the undersigned hereby constitutes and appoints each of Hansin Kim and Youngsoo Lee, each of Kim & Min, A Professional Law Corporation ("Kim & Min"), signing singly, the undersigned's true and lawful attorney-in-fact to: (1) execute for and on behalf of the undersigned Schedules 13D, Schedules 13G, a Form ID and Forms 3, 4 and 5, and any amendments thereto, and cause such form(s) to be filed with the United States Securities and Exchange Commission (the "SEC") pursuant to Section 16(a) with respect to Forms 3, 4 and 5 and Section 13(d) and Section 13(g) with respect to Schedules 13D and Schedules 13G, of the Securities Act of 1934 and the rules thereunder, relating to the undersigned's beneficial ownership of securities in Steinway Musical Instruments, Inc.; (2) do and perform any and all acts for and on behalf of the undersigned which may be necessary or desirable to complete and execute any such Schedule 13D, Schedule 13G, Form ID or Forms 3, 4 or 5, or other form or report, and timely file such form or report with the SEC and any stock exchange or similar authority; and (3) take any other action of any type whatsoever in connection with the foregoing which, in the opinion of such attorney-in-fact, may be of benefit to, in the best interest of, or legally required by, the undersigned, it being understood that the documents executed by such attorney-in-fact on behalf of the undersigned pursuant to this Power of Attorney shall be in such form and shall contain such terms and conditions as such attorney-in-fact may approve in such attorney-in-fact's discretion. The undersigned hereby grants to each such attorney-in-fact full power and authority to do and perform any and every act and thing whatsoever requisite, necessary, or proper to be done in the exercise of any of the rights and powers herein granted, as fully to all intents and purposes as the undersigned might or could do if personally present, with full power of substitution or revocation, hereby ratifying and confirming all that such attorney-in-fact, or such attorney-in-fact's substitute or substitutes, shall lawfully do or cause to be done by virtue of this power of attorney and the rights and powers herein granted. The undersigned acknowledges that the foregoing attorneys-in-fact, in serving in such capacity at the request of the undersigned, are not assuming, nor is Kim & Min assuming, any of the undersigned's responsibilities to comply with Section 16 and Section 13 of the Securities Exchange Act of 1934. This Power of Attorney shall remain in full force and effect until the undersigned is no longer required to file Schedules 13D, Schedules 13G, Forms 3, 4 and 5 with respect to the undersigned's holdings of, and transactions in, securities issued by Steinway Musical Instruments, Inc., unless earlier revoked by the undersigned in a signed writing delivered to the foregoing attorneys-in-fact. IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to be executed as of this 30th day of March, 2010. SAMICK MUSICAL INSTRUMENTS CO, LTD. By: /s/ Jong Sup Kim ------------------------- Name: Jong Sup Kim Title: Chairman EX-99.4 5 ex99_4.txt Exhibit 99.4 POWER OF ATTORNEY Know all by these presents, that the undersigned hereby constitutes and appoints each of Hansin Kim and Youngsoo Lee, each of Kim & Min, A Professional Law Corporation ("Kim & Min"), signing singly, the undersigned's true and lawful attorney-in-fact to: (1) execute for and on behalf of the undersigned Schedules 13D, Schedules 13G, a Form ID and Forms 3, 4 and 5, and any amendments thereto, and cause such form(s) to be filed with the United States Securities and Exchange Commission (the "SEC") pursuant to Section 16(a) with respect to Forms 3, 4 and 5 and Section 13(d) and Section 13(g) with respect to Schedules 13D and Schedules 13G, of the Securities Act of 1934 and the rules thereunder, relating to the undersigned's beneficial ownership of securities in Steinway Musical Instruments, Inc.; (2) do and perform any and all acts for and on behalf of the undersigned which may be necessary or desirable to complete and execute any such Schedule 13D, Schedule 13G, Form ID or Forms 3, 4 or 5, or other form or report, and timely file such form or report with the SEC and any stock exchange or similar authority; and (3) take any other action of any type whatsoever in connection with the foregoing which, in the opinion of such attorney-in-fact, may be of benefit to, in the best interest of, or legally required by, the undersigned, it being understood that the documents executed by such attorney-in-fact on behalf of the undersigned pursuant to this Power of Attorney shall be in such form and shall contain such terms and conditions as such attorney-in-fact may approve in such attorney-in-fact's discretion. The undersigned hereby grants to each such attorney-in-fact full power and authority to do and perform any and every act and thing whatsoever requisite, necessary, or proper to be done in the exercise of any of the rights and powers herein granted, as fully to all intents and purposes as the undersigned might or could do if personally present, with full power of substitution or revocation, hereby ratifying and confirming all that such attorney-in-fact, or such attorney-in-fact's substitute or substitutes, shall lawfully do or cause to be done by virtue of this power of attorney and the rights and powers herein granted. The undersigned acknowledges that the foregoing attorneys-in-fact, in serving in such capacity at the request of the undersigned, are not assuming, nor is Kim & Min assuming, any of the undersigned's responsibilities to comply with Section 16 and Section 13 of the Securities Exchange Act of 1934. This Power of Attorney shall remain in full force and effect until the undersigned is no longer required to file Schedules 13D, Schedules 13G, Forms 3, 4 and 5 with respect to the undersigned's holdings of, and transactions in, securities issued by Steinway Musical Instruments, Inc., unless earlier revoked by the undersigned in a signed writing delivered to the foregoing attorneys-in-fact. IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to be executed as of this 30th day of March, 2010. OPUS FIVE INVESTMENT 1, LP By: /s/ Kyung Min Park --------------------------- Name: Kyung Min Park Title: Sole Member of General Partner EX-99.5 6 ex99_5.txt Exhibit 99.5 POWER OF ATTORNEY Know all by these presents, that the undersigned hereby constitutes and appoints each of Hansin Kim and Youngsoo Lee, each of Kim & Min, A Professional Law Corporation ("Kim & Min"), signing singly, the undersigned's true and lawful attorney-in-fact to: (1) execute for and on behalf of the undersigned Schedules 13D, Schedules 13G, a Form ID and Forms 3, 4 and 5, and any amendments thereto, and cause such form(s) to be filed with the United States Securities and Exchange Commission (the "SEC") pursuant to Section 16(a) with respect to Forms 3, 4 and 5 and Section 13(d) and Section 13(g) with respect to Schedules 13D and Schedules 13G, of the Securities Act of 1934 and the rules thereunder, relating to the undersigned's beneficial ownership of securities in Steinway Musical Instruments, Inc.; (2) do and perform any and all acts for and on behalf of the undersigned which may be necessary or desirable to complete and execute any such Schedule 13D, Schedule 13G, Form ID or Forms 3, 4 or 5, or other form or report, and timely file such form or report with the SEC and any stock exchange or similar authority; and (3) take any other action of any type whatsoever in connection with the foregoing which, in the opinion of such attorney-in-fact, may be of benefit to, in the best interest of, or legally required by, the undersigned, it being understood that the documents executed by such attorney-in-fact on behalf of the undersigned pursuant to this Power of Attorney shall be in such form and shall contain such terms and conditions as such attorney-in-fact may approve in such attorney-in-fact's discretion. The undersigned hereby grants to each such attorney-in-fact full power and authority to do and perform any and every act and thing whatsoever requisite, necessary, or proper to be done in the exercise of any of the rights and powers herein granted, as fully to all intents and purposes as the undersigned might or could do if personally present, with full power of substitution or revocation, hereby ratifying and confirming all that such attorney-in-fact, or such attorney-in-fact's substitute or substitutes, shall lawfully do or cause to be done by virtue of this power of attorney and the rights and powers herein granted. The undersigned acknowledges that the foregoing attorneys-in-fact, in serving in such capacity at the request of the undersigned, are not assuming, nor is Kim & Min assuming, any of the undersigned's responsibilities to comply with Section 16 and Section 13 of the Securities Exchange Act of 1934. This Power of Attorney shall remain in full force and effect until the undersigned is no longer required to file Schedules 13D, Schedules 13G, Forms 3, 4 and 5 with respect to the undersigned's holdings of, and transactions in, securities issued by Steinway Musical Instruments, Inc., unless earlier revoked by the undersigned in a signed writing delivered to the foregoing attorneys-in-fact. IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to be executed as of this 30th day of March, 2010. OPUS FIVE INVESTMENT, LLC By: /s/ Kyung Min Park --------------------- Name: Kyung Min Park Title: Sole Member EX-99.6 7 ex99_6.txt Exhibit 99.6 POWER OF ATTORNEY Know all by these presents, that the undersigned hereby constitutes and appoints each of Hansin Kim and Youngsoo Lee, each of Kim & Min, A Professional Law Corporation ("Kim & Min"), signing singly, the undersigned's true and lawful attorney-in-fact to: (1) execute for and on behalf of the undersigned Schedules 13D, Schedules 13G, a Form ID and Forms 3, 4 and 5, and any amendments thereto, and cause such form(s) to be filed with the United States Securities and Exchange Commission (the "SEC") pursuant to Section 16(a) with respect to Forms 3, 4 and 5 and Section 13(d) and Section 13(g) with respect to Schedules 13D and Schedules 13G, of the Securities Act of 1934 and the rules thereunder, relating to the undersigned's beneficial ownership of securities in Steinway Musical Instruments, Inc.; (2) do and perform any and all acts for and on behalf of the undersigned which may be necessary or desirable to complete and execute any such Schedule 13D, Schedule 13G, Form ID or Forms 3, 4 or 5, or other form or report, and timely file such form or report with the SEC and any stock exchange or similar authority; and (3) take any other action of any type whatsoever in connection with the foregoing which, in the opinion of such attorney-in-fact, may be of benefit to, in the best interest of, or legally required by, the undersigned, it being understood that the documents executed by such attorney-in-fact on behalf of the undersigned pursuant to this Power of Attorney shall be in such form and shall contain such terms and conditions as such attorney-in-fact may approve in such attorney-in-fact's discretion. The undersigned hereby grants to each such attorney-in-fact full power and authority to do and perform any and every act and thing whatsoever requisite, necessary, or proper to be done in the exercise of any of the rights and powers herein granted, as fully to all intents and purposes as the undersigned might or could do if personally present, with full power of substitution or revocation, hereby ratifying and confirming all that such attorney-in-fact, or such attorney-in-fact's substitute or substitutes, shall lawfully do or cause to be done by virtue of this power of attorney and the rights and powers herein granted. The undersigned acknowledges that the foregoing attorneys-in-fact, in serving in such capacity at the request of the undersigned, are not assuming, nor is Kim & Min assuming, any of the undersigned's responsibilities to comply with Section 16 and Section 13 of the Securities Exchange Act of 1934. This Power of Attorney shall remain in full force and effect until the undersigned is no longer required to file Schedules 13D, Schedules 13G, Forms 3, 4 and 5 with respect to the undersigned's holdings of, and transactions in, securities issued by Steinway Musical Instruments, Inc., unless earlier revoked by the undersigned in a signed writing delivered to the foregoing attorneys-in-fact. IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to be executed as of this 30th day of March, 2010. SAM SONG CASTER CO., LTD. By: /s/ Kang Log Lee --------------------- Name: Kang Log Lee Title: Director EX-99.7 8 ex99_7.txt Exhibit 99.7 POWER OF ATTORNEY Know all by these presents, that the undersigned hereby constitutes and appoints each of Hansin Kim and Youngsoo Lee, each of Kim & Min, A Professional Law Corporation ("Kim & Min"), signing singly, the undersigned's true and lawful attorney-in-fact to: (1) execute for and on behalf of the undersigned Schedules 13D, Schedules 13G, a Form ID and Forms 3, 4 and 5, and any amendments thereto, and cause such form(s) to be filed with the United States Securities and Exchange Commission (the "SEC") pursuant to Section 16(a) with respect to Forms 3, 4 and 5 and Section 13(d) and Section 13(g) with respect to Schedules 13D and Schedules 13G, of the Securities Act of 1934 and the rules thereunder, relating to the undersigned's beneficial ownership of securities in Steinway Musical Instruments, Inc.; (2) do and perform any and all acts for and on behalf of the undersigned which may be necessary or desirable to complete and execute any such Schedule 13D, Schedule 13G, Form ID or Forms 3, 4 or 5, or other form or report, and timely file such form or report with the SEC and any stock exchange or similar authority; and (3) take any other action of any type whatsoever in connection with the foregoing which, in the opinion of such attorney-in-fact, may be of benefit to, in the best interest of, or legally required by, the undersigned, it being understood that the documents executed by such attorney-in-fact on behalf of the undersigned pursuant to this Power of Attorney shall be in such form and shall contain such terms and conditions as such attorney-in-fact may approve in such attorney-in-fact's discretion. The undersigned hereby grants to each such attorney-in-fact full power and authority to do and perform any and every act and thing whatsoever requisite, necessary, or proper to be done in the exercise of any of the rights and powers herein granted, as fully to all intents and purposes as the undersigned might or could do if personally present, with full power of substitution or revocation, hereby ratifying and confirming all that such attorney-in-fact, or such attorney-in-fact's substitute or substitutes, shall lawfully do or cause to be done by virtue of this power of attorney and the rights and powers herein granted. The undersigned acknowledges that the foregoing attorneys-in-fact, in serving in such capacity at the request of the undersigned, are not assuming, nor is Kim & Min assuming, any of the undersigned's responsibilities to comply with Section 16 and Section 13 of the Securities Exchange Act of 1934. This Power of Attorney shall remain in full force and effect until the undersigned is no longer required to file Schedules 13D, Schedules 13G, Forms 3, 4 and 5 with respect to the undersigned's holdings of, and transactions in, securities issued by Steinway Musical Instruments, Inc., unless earlier revoked by the undersigned in a signed writing delivered to the foregoing attorneys-in-fact. IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to be executed as of this 30th day of March, 2010. /s/ Jong Sup Kim ------------------------------- Jong Sup Kim EX-99.8 9 ex99_8.txt Exhibit 99.8 SECURITY AGREEMENT ------------------ THIS SECURITY AGREEMENT (the "Agreement") is made and entered into on this 6th day of October, 2010, by and between Samick Musical Instruments Co., Ltd., a Korean corporation (the "Borrower"), and Shinhan Capital Co., Ltd., a Korean corporation (the "Lender"). WITNESSETH: ----------- WHEREAS, the Borrower is the owner of the shares of the Ordinary Common Stock of Steinway Musical Instruments, Inc., a Delaware corporation ("Steinway"). WHEREAS, the Borrower and the Lender have entered into certain loan agreement (the "Loan Agreement")in March 2010; and WHEREAS, the Lender now desires to secure the repayment of the loan under the Loan Agreement, and the Borrower has agreed to grant right of pledge over 400,000 shares of Ordinary Common Stocks of Steinway ("the Pledged Shares") in accordance with the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the premises and the mutual promises and agreements herein contained, the Borrower and the Lender hereby agree as follows: 1. Pledge. As security for the due and punctual payment of all amounts due and payable pursuant to the Loan Agreement, the Borrower hereby pledges, hypothecates, assigns, transfers, sets over and grants to the Lender, its successors and assigns a security interest in and lien upon all of the Borrower's right, title and interest in and to the Pledged Shares. Concurrent to this Agreement, the Borrowers shall execute certain Pledged Collateral Account Control Agreement, the form of which is attached hereto as Exhibit A, and deposit the Pledged Shares in the Pledged Collateral Account at Merrill Lynch. The Pledged Shares shall not be physically conveyed or transferred to the Lender but remain in the custody of Merrill Lynch. 2. Events of Default. If the Borrower is default in the performance of any of the terms, agreements or covenants of this Agreement or the Loan Agreement, such occurrence shall constitute a default hereunder (each an "Event of Default"). 3. Dividends, Voting Rights and Disposition Rights. So long as no Event of Default shall have occurred and be continuing, the Borrower shall be entitled (a) to receive any and all cash dividends declared and paid in respect of the Pledged Shares (other than liquidating dividends); (b) to exercise any and all voting and other consensual rights in respect thereof and the Lender shall have no rights to receive any and all cash dividends or to exercise any and all voting and other consensual rights and (c) to dispose the Pledged Shares with the Lender's consent. 4. The Lender's Remedies Upon Default. If any Event of Default shall have occurred and be continuing 30 days after the giving of written notice thereof by the Lender to the Borrower the Lender may: (a) be entitled to receive any and all cash dividends declared and paid in respect of the Pledged Shares (other than liquidating dividends); (b) exercise any and all voting and other consensual rights in respect thereof and the Lender shall have no rights to receive any and all cash dividends or to exercise any and all voting and other consensual rights and (c) dispose the Pledged Shares with the Lender's consent. In such event the Lender shall provide ML with the specific instruction. 5. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and altogether but one instrument. 6. Entire Agreement. This Agreement supersedes any other agreements, contracts, or understanding between the parties with respect to the Pledged Shares and this Agreement constitutes the entire agreement between the two parties. This Agreement shall not be varied in its terms or conditions by any oral agreement or representation, or otherwise, than by an instrument in writing of even or subsequent date thereto, executed by both the Borrower and the Lender. 7. Governing Law. This Agreement shall be governed by and construed and interpreted in accordance with the laws of the Republic of Korea. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. By: _________________________________________ Name Jong Sup Kim Title: Chairman "Borrower" By: _________________________________________ Name: Joo-Yul Kim Title: General Manager "Lender" Exhibit A Pledged Collateral Account Control Agreement Merrill Lynch Wealth Management Bank of America Corporation [LOGO OMITTED] Pledged Collateral Account Control Agreement - -------------------------------------------------------------------------------- ================================================================================ PLEDGED COLLATERAL ACCOUNT CONTROL AGREEMENT Account Number (Internal Use Only) [_][_][_] - [_][_][_][_][_] ================================================================================ ================================================================================ PLEDGED COLLATERAL ACCOUNT CONTROL AGREEMENT ================================================================================ INSTRUCTIONS : Complete Boxes A, B, and C. 1. The Parties The Parties to this agreement ("Agreement") are the Client named below, the Creditor named below and Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"). 2. The Pledged Account Box A Client has granted Creditor a security interest in Merrill Lynch account __________________________ ("Account") pursuant to a separate Security Agreement between Client and Creditor. If the Account will be a new Merrill Lynch account, Client hereby instructs Merrill Lynch to transfer the assets listed in Exhibit A to the Account. The Account shall be maintained as a cash securities account, and will be titled "[Name of Client] Pledged Collateral Account for [Name of Creditor]" or a substantially similar title. The purpose of this Agreement is to perfect the Creditor's security interest in the Account by granting Creditor control over the Account; however, this Agreement does not create Creditor's security interest in the Account inasmuch as Client and Creditor have a separate Security Agreement for that purpose. Client has not granted a security interest in the Account to any party other than Creditor, except for Merrill Lynch's broker lien referenced in section 7 and any lien for service fees to an Investment Manager or Agent named in Box B in section 4. Merrill Lynch has not entered into a Control Agreement with respect to the Account with any other party and agrees that it will not do so while this Agreement is in effect. The manager signing this Agreement on behalf of Merrill Lynch hereby represents, to the best of his or her knowledge, that no person other than Client, Creditor, Merrill Lynch and any Investment Manager or Agent named in Box B in section 4 has any claim, lien or interest in the Account or the assets in the Account. All assets in the Account will be treated as financial assets under Article 8 of the New York Uniform Commercial Code. 3. Excluded Assets Client and Creditor acknowledge that the following assets (each an "Excluded Asset" and, collectively, "Excluded Assets") are not covered by this Agreement even if shown, for information purposes, on a periodic account statement for the Account, because Merrill Lynch is not the legal custodian of such assets: money market deposit account (MMDA) balances, shares of the Merrill Lynch Institutional Funds (unless such shares are held directly by Merrill Lynch), non-listed limited partnership interests, annuities and life insurance contracts, and precious metals. Merrill Lynch will not be responsible for assuring that any Excluded Assets are not acquired with assets from the Account. 4. Client's Authority over the Account Until Creditor delivers to Merrill Lynch a Notice of Exclusive Control pursuant to section 6, Client will have full authority to give instructions with respect to assets in the Account in regard to voting and other rights, but will not have the authority to give any entitlement orders with respect to, or terminate or withdraw assets from the Account, except as may be provided in Box C, without written consent by Creditor. Client's authority with respect to trading in the Account and receipt of income from the Account will be governed by the completion of boxes B and C, which authority Creditor may revoke at any time by written notice delivered to Merrill Lynch. Box B Is Client permitted to trade in the Account? [_] Yes [X] No If yes, except as otherwise provided in section 6, Merrill Lynch may comply with any trading instructions from Client or the Investment Manager or Agent named below without further consent by Creditor. - -------------------------------------------------------------------------------- Print name of Merrill Lynch advisory service, Investment Manager or Agent designated by separate power of attorney or equivalent document on file with Merrill Lynch Box C Is Client permitted to withdraw income? [X] Yes [_] No If yes, Client is authorized to receive all interest and regular cash dividends earned on assets in the Account monthly: [_] by check or [X] by transfer to account no. _______________________________ If an Investment Manager or Agent is named in Box B, Creditor agrees that the assets in the Account are subject to Client's agreement with such manager or agent and that periodic payment of normal advisory and service fees from assets in the Account pursuant to such an agreement is permitted without consent of Creditor. 5. Control by Creditor Merrill Lynch agrees to comply with any instructions it receives from Creditor at any time to transfer, sell, redeem, close open trades or otherwise liquidate any assets in the Account (including Investment products are provided by Merrill Lynch, Pierce, Fenner & Smith Incorporated and: - -------------------------------------------------------------------------------- Are Not FDIC Insured May Lose Value Are Not Bank Guaranteed - -------------------------------------------------------------------------------- Merrill Lynch, Pierce, Fenner & Smith Incorporated is a registered broker-dealer, member SIPC, and a wholly owned subsidiary of Bank of America Corporation. Merrill Lynch, Pierce, Fenner & Smith Incorporated is not a tax advisor. We suggest you consult your personal tax advisor before making tax-related investment decisions. Page 1 | Pledged Collateral Account Control Agreement Code 1226 - 1109 ================================================================================ PLEDGED COLLATERAL ACCOUNT CONTROL AGREEMENT Account Number (Internal Use Only) [_][_][_] - [_][_][_][_][_] ================================================================================ instructions to transfer assets directly to, or into an account in the name of, Creditor), without further consent by Client. All instructions to transfer assets from the Account must be in writing. If Creditor is an entity, Merrill Lynch is authorized to take instructions from any person Merrill Lynch reasonably believes represents Creditor. 6. Notice of Exclusive Control Creditor may at any time deliver to Merrill Lynch a "Notice of Exclusive Control" substantially in the form of Exhibit B. Upon receipt of such notice by the manager of the Merrill Lynch office servicing the Account, Merrill Lynch will cease complying with trading instructions from, or on behalf of, Client with respect to the Account, cease distributing to Client interest and regular cash dividends earned on assets in the Account, and refuse to accept any other instructions from Client intended to exercise any authority with respect to the Account except upon instruction of Creditor. 7. Priority of Creditor's Security Interest So long as this Agreement is in effect, Merrill Lynch subordinates in favor of Creditor any security interest, lien, or right of setoff it may have, now or in the future, against assets in the Account, except Merrill Lynch may retain a prior lien on assets in the Account to secure payment for assets purchased for the Account and to collect normal commissions and service fees. 8. Duplicate Statements and Confirmations Merrill Lynch will send Creditor duplicate copies of periodic account statements and trade confirmations, if any, contemporaneously with those sent to Client. 9. Responsibility and Protection of Merrill Lynch Except for permitting a transfer of assets from the Account in violation of section 4, Merrill Lynch will not be liable to Creditor for complying with instructions from Client that are received by Merrill Lynch before Merrill Lynch receives a Notice of Exclusive Control in accordance with section 6. Merrill Lynch will not be liable to Client for complying with a Notice of Exclusive Control or any instructions received from any person Merrill Lynch reasonably believes represents Creditor. Merrill Lynch has no duty to investigate whether Creditor is authorized under the Security Agreement to give such Notice of Exclusive Control or such instructions. Client hereby agrees to indemnify and hold harmless Merrill Lynch, its officers, directors, employees and agents, and any Investment Manager or Agent named in Box B in section 4, against claims, liabilities and expenses arising out of maintenance of the Account pursuant to this Agreement (including reasonable attorneys' fees), except if such claims, liabilities or expenses are caused solely by Merrill Lynch's or such manager's or agent's gross negligence or willful misconduct, respectively. Creditor hereby agrees to indemnify and hold harmless Merrill Lynch, its officers, directors, employees and agents, and any Investment Manager or Agent named in Box B in section 4, against claims, liabilities and expenses (including reasonable attorneys' fees) arising out of Merrill Lynch's compliance with any instructions from Creditor with respect to the Account except if such claims, liabilities or expenses are caused solely by Merrill Lynch's or such manager's or agent's gross negligence or willful misconduct, respectively. This Agreement does not create any obligations for Merrill Lynch except for those expressly set forth in this Agreement. 10. Termination; Survival Creditor may terminate this Agreement by written notice to Merrill Lynch. Upon notification by Creditor to Merrill Lynch that Creditor's security interest in the Account has terminated, this Agreement will automatically terminate. Merrill Lynch may terminate this Agreement on thirty (30) days written notice to Creditor and Client. In the event that Merrill Lynch voluntarily terminates this Agreement, Merrill Lynch shall transfer the assets in the Account as directed in writing by the Creditor. Section 9, "Responsibility and Protection of Merrill Lynch," will survive termination of this Agreement. 11. Effect of Agreement Client and Creditor agree that this Agreement supplements the applicable Merrill Lynch account agreement with respect to the Account, and any related agreement if the Account is a managed account under a Merrill Lynch advisory program with a manager named in Box B, and that it does not abridge any rights that Merrill Lynch might otherwise have, except as provided in section 7. If there is any inconsistency between this Agreement and such Merrill Lynch account agreements this Agreement will control. The Parties also acknowledge that there are no other understandings or agreements with Merrill Lynch concerning the Account except for this Agreement, the Merrill Lynch account agreements and any agreement with an Investment Manager or Agent named in Box B to which Merrill Lynch may be a party. 12. Governing Law This Agreement and the Account will be governed by the internal laws of the State of New York with respect to interpretation and enforcement. 13. Amendments No amendment of, or waiver of a right under, this Agreement will be binding unless it is in writing and signed by the party to be charged. 14. Severability To the extent a provision of this Agreement is unenforceable, this Agreement will be construed as if the unenforceable provision were omitted. 15. Successors and Assigns of Creditor A successor to or assignee of Creditor's rights and obligations under the Security Agreement between Creditor and Client will succeed to Creditor's rights and obligations under this Agreement. Page 2 | Pledged Collateral Account Control Agreement Code 1226 - 1109 ================================================================================ PLEDGED COLLATERAL ACCOUNT CONTROL AGREEMENT Account Number (Internal Use Only) [_][_][_] - [_][_][_][_][_] ================================================================================ ================================================================================ SIGNATURE PAGE ================================================================================ INSTRUCTIONS : Fill in names and addresses and sign. Use Exhibit A to list the assets to be transferred into the Merrill Lynch Pledged Collateral Account. PLEASE NOTE : This Agreement may be executed in counterparts, but the preparer should provide the completed original to Merrill Lynch with signed photocopy counterparts provided to Client and Creditor.
Client : Client's Name (Print)____________________________________________________________________________ Signature _____________________________________________________ Date____________________________ Name of Individual Signing (Print)_______________________________________________________________ Title____________________________________________________________________________________________ Client's Address: Street_________________________________________________________________________ City______________________________________________ State/Province________________________________ Postal Code (zip code)_________________________________ Country__________________________________ PLEASE NOTE : This is the name to whom periodic account statements and trade confirmations will be addressed unless another officer's name is provided to Merrill Lynch for this purpose. Creditor : Creditor's Name (Print)__________________________________________________________________________ Signature ______________________________________________________ Date____________________________ Name of Individual Signing (Print)_______________________________________________________________ Title (an authorized officer)____________________________________________________________________ Creditor's Address: Street ______________________________________________________________________ City______________________________________________ State/Province________________________________ Postal Code (zip code) ________________________________ Country__________________________________ Merrill Lynch , Pierce , Fenner, & Smith Incorporated : Managing Director/Director (or designee) Name (Print) ___________________________________________ Signature ______________________________________________________ Date____________________________
Page 3 | Pledged Collateral Account Control Agreement Code 1226 - 1109 ================================================================================ PLEDGED COLLATERAL ACCOUNT CONTROL AGREEMENT Account Number (Internal Use Only) [_][_][_] - [_][_][_][_][_] ================================================================================ ================================================================================ EXHIBIT A ================================================================================ INSTRUCTIONS : Use Exhibit A to list the Quantity Description assets to be transferred into the Merrill Lynch Pledged Collateral Account. PLEASE NOTE : If an existing managed account, such as a ML Consults(R)or other managed account, is being pledged, please attach a copy of the most recent monthly account statement and write "See attached statement". Quantity Description _____________ ______________________________________________________________ _____________ ______________________________________________________________ _____________ ______________________________________________________________ _____________ ______________________________________________________________ _____________ ______________________________________________________________ _____________ ______________________________________________________________ _____________ ______________________________________________________________ _____________ ______________________________________________________________ _____________ ______________________________________________________________ _____________ ______________________________________________________________ _____________ ______________________________________________________________ _____________ ______________________________________________________________ _____________ ______________________________________________________________ _____________ ______________________________________________________________ _____________ ______________________________________________________________ _____________ ______________________________________________________________ _____________ ______________________________________________________________ _____________ ______________________________________________________________ _____________ ______________________________________________________________ _____________ ______________________________________________________________ _____________ ______________________________________________________________ _____________ ______________________________________________________________ _____________ ______________________________________________________________ Page 4 | Pledged Collateral Account Control Agreement Code 1226 - 1109 ================================================================================ PLEDGED COLLATERAL ACCOUNT CONTROL AGREEMENT Account Number (Internal Use Only) [_][_][_] - [_][_][_][_][_] ================================================================================ ================================================================================ EXHIBIT B : SAMPLE NOTICE OF EXCLUSIVE CONTROL ================================================================================ NOT TO BE USED AT ACCOUNT OPENING - TO BE USED IN EVENT OF DEFAULT OR OTHER EVENT IN WHICH CREDITOR REQUIRES EXCLUSIVE CONTROL. PLEASE NOTE: If this notice is sent by fax, it must be addressed to Managing Director/Director with receipt confirmed by telephone, and the original mailed or delivered to the office servicing the Account as indicated on the account statement. [Letterhead of Creditor] Date: ________________ To: Managing Director /Director Merrill Lynch, Pierce, Fenner & Smith Inc. ___________________________________________ ___________________________________________ ___________________________________________ [Insert address of Merrill Lynch office servicing account as indicated on Account Statement] Pledged Collateral Account number __________________________________________ in the name of "_________________________________________ Name of Client Pledged Collateral Account for_____________________________________" Name of Creditor This is to notify Merrill Lynch that the above-referenced pledged collateral account ("Account") is now under the exclusive control of Creditor named above. Merrill Lynch is hereby instructed to cease complying with trading instructions given by or on behalf of Client (named above) relating to said Account, to cease distributing interest and regular cash dividends earned on property in the Account, and to refuse to accept any other instructions from Client intended to exercise any authority with respect to the Account unless instructed by the undersigned on behalf of Creditor. Creditor warrants to Merrill Lynch that this Notice of Exclusive Control is lawful and authorized by the Security Agreement between Client and Creditor. All future instructions on the Account shall be given solely by the undersigned on behalf of Creditor unless further evidence of authority is provided to Merrill Lynch. Name (Print)____________________________________________________________________ Signature____________________________________________________Date ______________ Title (an authorized officer) __________________________________________________ Page 5 | Pledged Collateral Account Control Agreement Code 1226 - 1109 Merrill Lynch Wealth Management Bank of America Corporation [LOGO OMITTED] Code 1226 -1109 EX-99.P 10 ex99_9.txt Exhibit 99.9 SECURITY AGREEMENT ------------------ THIS SECURITY AGREEMENT (the "Agreement") is made and entered into on this 6th day of October, 2010, by and between Samick Musical Instruments Co., Ltd., a Korean corporation (the "Borrower"), and KDB Capital Corporation, a Korean corporation (the "Lender"). WITNESSETH: ----------- WHEREAS, the Borrower is the owner of the shares of the Ordinary Common Stock of Steinway Musical Instruments, Inc., a Delaware corporation ("Steinway"). WHEREAS, the Borrower and the Lender have entered into certain loan agreement (the "Loan Agreement")in March 2010; and WHEREAS, the Lender now desires to secure the repayment of the loan under the Loan Agreement, and the Borrower has agreed to grant right of pledge over 800,000 shares of Ordinary Common Stocks of Steinway ("the Pledged Shares") in accordance with the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the premises and the mutual promises and agreements herein contained, the Borrower and the Lender hereby agree as follows: 1. Pledge. As security for the due and punctual payment of all amounts due and payable pursuant to the Loan Agreement, the Borrower hereby pledges, hypothecates, assigns, transfers, sets over and grants to the Lender, its successors and assigns a security interest in and lien upon all of the Borrower's right, title and interest in and to the Pledged Shares. Concurrent to this Agreement, the Borrowers shall execute certain Pledged Collateral Account Control Agreement, the form of which is attached hereto as Exhibit A, and deposit the Pledged Shares in the Pledged Collateral Account at Merrill Lynch. The Pledged Shares shall not be physically conveyed or transferred to the Lender but remain in the custody of Merrill Lynch. 2. Events of Default. If the Borrower is default in the performance of any of the terms, agreements or covenants of this Agreement or the Loan Agreement, such occurrence shall constitute a default hereunder (each an "Event of Default"). 3. Dividends, Voting Rights and Disposition Rights. So long as no Event of Default shall have occurred and be continuing, the Borrower shall be entitled (a) to receive any and all cash dividends declared and paid in respect of the Pledged Shares (other than liquidating dividends); (b) to exercise any and all voting and other consensual rights in respect thereof and the Lender shall have no rights to receive any and all cash dividends or to exercise any and all voting and other consensual rights and (c) to dispose the Pledged Shares with the Lender's consent. 4. The Lender's Remedies Upon Default. If any Event of Default shall have occurred and be continuing 30 days after the giving of written notice thereof by the Lender to the Borrower the Lender may: (a) be entitled to receive any and all cash dividends declared and paid in respect of the Pledged Shares (other than liquidating dividends); (b) exercise any and all voting and other consensual rights in respect thereof and the Lender shall have no rights to receive any and all cash dividends or to exercise any and all voting and other consensual rights and (c) dispose the Pledged Shares with the Lender's consent. In such event the Lender shall provide ML with the specific instruction. 5. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and altogether but one instrument. 6. Entire Agreement. This Agreement supersedes any other agreements, contracts, or understanding between the parties with respect to the Pledged Shares and this Agreement constitutes the entire agreement between the two parties. This Agreement shall not be varied in its terms or conditions by any oral agreement or representation, or otherwise, than by an instrument in writing of even or subsequent date thereto, executed by both the Borrower and the Lender. 7. Governing Law. This Agreement shall be governed by and construed and interpreted in accordance with the laws of the Republic of Korea. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. By: ___________________________________________ Name Jong Sup Kim Title: Chairman "Borrower" By: ___________________________________________ Name: Sung Min Choo Title: Investment Finance Division, Managing Director "Lender" Exhibit A Pledged Collateral Account Control Agreement Merrill Lynch Wealth Management Bank of America Corporation [LOGO OMITTED] Pledged Collateral Account Control Agreement - -------------------------------------------------------------------------------- ================================================================================ PLEDGED COLLATERAL ACCOUNT CONTROL AGREEMENT Account Number (Internal Use Only) [_][_][_] - [_][_][_][_][_] ================================================================================ ================================================================================ PLEDGED COLLATERAL ACCOUNT CONTROL AGREEMENT ================================================================================ INSTRUCTIONS : Complete Boxes A, B, and C. 1. The Parties The Parties to this agreement ("Agreement") are the Client named below, the Creditor named below and Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"). 2. The Pledged Account Box A Client has granted Creditor a security interest in Merrill Lynch account __________________________ ("Account") pursuant to a separate Security Agreement between Client and Creditor. If the Account will be a new Merrill Lynch account, Client hereby instructs Merrill Lynch to transfer the assets listed in Exhibit A to the Account. The Account shall be maintained as a cash securities account, and will be titled "[Name of Client] Pledged Collateral Account for [Name of Creditor]" or a substantially similar title. The purpose of this Agreement is to perfect the Creditor's security interest in the Account by granting Creditor control over the Account; however, this Agreement does not create Creditor's security interest in the Account inasmuch as Client and Creditor have a separate Security Agreement for that purpose. Client has not granted a security interest in the Account to any party other than Creditor, except for Merrill Lynch's broker lien referenced in section 7 and any lien for service fees to an Investment Manager or Agent named in Box B in section 4. Merrill Lynch has not entered into a Control Agreement with respect to the Account with any other party and agrees that it will not do so while this Agreement is in effect. The manager signing this Agreement on behalf of Merrill Lynch hereby represents, to the best of his or her knowledge, that no person other than Client, Creditor, Merrill Lynch and any Investment Manager or Agent named in Box B in section 4 has any claim, lien or interest in the Account or the assets in the Account. All assets in the Account will be treated as financial assets under Article 8 of the New York Uniform Commercial Code. 3. Excluded Assets Client and Creditor acknowledge that the following assets (each an "Excluded Asset" and, collectively, "Excluded Assets") are not covered by this Agreement even if shown, for information purposes, on a periodic account statement for the Account, because Merrill Lynch is not the legal custodian of such assets: money market deposit account (MMDA) balances, shares of the Merrill Lynch Institutional Funds (unless such shares are held directly by Merrill Lynch), non-listed limited partnership interests, annuities and life insurance contracts, and precious metals. Merrill Lynch will not be responsible for assuring that any Excluded Assets are not acquired with assets from the Account. 4. Client's Authority over the Account Until Creditor delivers to Merrill Lynch a Notice of Exclusive Control pursuant to section 6, Client will have full authority to give instructions with respect to assets in the Account in regard to voting and other rights, but will not have the authority to give any entitlement orders with respect to, or terminate or withdraw assets from the Account, except as may be provided in Box C, without written consent by Creditor. Client's authority with respect to trading in the Account and receipt of income from the Account will be governed by the completion of boxes B and C, which authority Creditor may revoke at any time by written notice delivered to Merrill Lynch. Box B Is Client permitted to trade in the Account? [_] Yes [X] No If yes, except as otherwise provided in section 6, Merrill Lynch may comply with any trading instructions from Client or the Investment Manager or Agent named below without further consent by Creditor. - -------------------------------------------------------------------------------- Print name of Merrill Lynch advisory service, Investment Manager or Agent designated by separate power of attorney or equivalent document on file with Merrill Lynch Box C Is Client permitted to withdraw income? [X] Yes [_] No If yes, Client is authorized to receive all interest and regular cash dividends earned on assets in the Account monthly: [_] by check or [X] by transfer to account no. _______________________________ If an Investment Manager or Agent is named in Box B, Creditor agrees that the assets in the Account are subject to Client's agreement with such manager or agent and that periodic payment of normal advisory and service fees from assets in the Account pursuant to such an agreement is permitted without consent of Creditor. 5. Control by Creditor Merrill Lynch agrees to comply with any instructions it receives from Creditor at any time to transfer, sell, redeem, close open trades or otherwise liquidate any assets in the Account (including Investment products are provided by Merrill Lynch, Pierce, Fenner & Smith Incorporated and: - -------------------------------------------------------------------------------- Are Not FDIC Insured May Lose Value Are Not Bank Guaranteed - -------------------------------------------------------------------------------- Merrill Lynch, Pierce, Fenner & Smith Incorporated is a registered broker-dealer, member SIPC, and a wholly owned subsidiary of Bank of America Corporation. Merrill Lynch, Pierce, Fenner & Smith Incorporated is not a tax advisor. We suggest you consult your personal tax advisor before making tax-related investment decisions. Page 1 | Pledged Collateral Account Control Agreement Code 1226 - 1109 ================================================================================ PLEDGED COLLATERAL ACCOUNT CONTROL AGREEMENT Account Number (Internal Use Only) [_][_][_] - [_][_][_][_][_] ================================================================================ instructions to transfer assets directly to, or into an account in the name of, Creditor), without further consent by Client. All instructions to transfer assets from the Account must be in writing. If Creditor is an entity, Merrill Lynch is authorized to take instructions from any person Merrill Lynch reasonably believes represents Creditor. 6. Notice of Exclusive Control Creditor may at any time deliver to Merrill Lynch a "Notice of Exclusive Control" substantially in the form of Exhibit B. Upon receipt of such notice by the manager of the Merrill Lynch office servicing the Account, Merrill Lynch will cease complying with trading instructions from, or on behalf of, Client with respect to the Account, cease distributing to Client interest and regular cash dividends earned on assets in the Account, and refuse to accept any other instructions from Client intended to exercise any authority with respect to the Account except upon instruction of Creditor. 7. Priority of Creditor's Security Interest So long as this Agreement is in effect, Merrill Lynch subordinates in favor of Creditor any security interest, lien, or right of setoff it may have, now or in the future, against assets in the Account, except Merrill Lynch may retain a prior lien on assets in the Account to secure payment for assets purchased for the Account and to collect normal commissions and service fees. 8. Duplicate Statements and Confirmations Merrill Lynch will send Creditor duplicate copies of periodic account statements and trade confirmations, if any, contemporaneously with those sent to Client. 9. Responsibility and Protection of Merrill Lynch Except for permitting a transfer of assets from the Account in violation of section 4, Merrill Lynch will not be liable to Creditor for complying with instructions from Client that are received by Merrill Lynch before Merrill Lynch receives a Notice of Exclusive Control in accordance with section 6. Merrill Lynch will not be liable to Client for complying with a Notice of Exclusive Control or any instructions received from any person Merrill Lynch reasonably believes represents Creditor. Merrill Lynch has no duty to investigate whether Creditor is authorized under the Security Agreement to give such Notice of Exclusive Control or such instructions. Client hereby agrees to indemnify and hold harmless Merrill Lynch, its officers, directors, employees and agents, and any Investment Manager or Agent named in Box B in section 4, against claims, liabilities and expenses arising out of maintenance of the Account pursuant to this Agreement (including reasonable attorneys' fees), except if such claims, liabilities or expenses are caused solely by Merrill Lynch's or such manager's or agent's gross negligence or willful misconduct, respectively. Creditor hereby agrees to indemnify and hold harmless Merrill Lynch, its officers, directors, employees and agents, and any Investment Manager or Agent named in Box B in section 4, against claims, liabilities and expenses (including reasonable attorneys' fees) arising out of Merrill Lynch's compliance with any instructions from Creditor with respect to the Account except if such claims, liabilities or expenses are caused solely by Merrill Lynch's or such manager's or agent's gross negligence or willful misconduct, respectively. This Agreement does not create any obligations for Merrill Lynch except for those expressly set forth in this Agreement. 10. Termination; Survival Creditor may terminate this Agreement by written notice to Merrill Lynch. Upon notification by Creditor to Merrill Lynch that Creditor's security interest in the Account has terminated, this Agreement will automatically terminate. Merrill Lynch may terminate this Agreement on thirty (30) days written notice to Creditor and Client. In the event that Merrill Lynch voluntarily terminates this Agreement, Merrill Lynch shall transfer the assets in the Account as directed in writing by the Creditor. Section 9, "Responsibility and Protection of Merrill Lynch," will survive termination of this Agreement. 11. Effect of Agreement Client and Creditor agree that this Agreement supplements the applicable Merrill Lynch account agreement with respect to the Account, and any related agreement if the Account is a managed account under a Merrill Lynch advisory program with a manager named in Box B, and that it does not abridge any rights that Merrill Lynch might otherwise have, except as provided in section 7. If there is any inconsistency between this Agreement and such Merrill Lynch account agreements this Agreement will control. The Parties also acknowledge that there are no other understandings or agreements with Merrill Lynch concerning the Account except for this Agreement, the Merrill Lynch account agreements and any agreement with an Investment Manager or Agent named in Box B to which Merrill Lynch may be a party. 12. Governing Law This Agreement and the Account will be governed by the internal laws of the State of New York with respect to interpretation and enforcement. 13. Amendments No amendment of, or waiver of a right under, this Agreement will be binding unless it is in writing and signed by the party to be charged. 14. Severability To the extent a provision of this Agreement is unenforceable, this Agreement will be construed as if the unenforceable provision were omitted. 15. Successors and Assigns of Creditor A successor to or assignee of Creditor's rights and obligations under the Security Agreement between Creditor and Client will succeed to Creditor's rights and obligations under this Agreement. Page 2 | Pledged Collateral Account Control Agreement Code 1226 - 1109 ================================================================================ PLEDGED COLLATERAL ACCOUNT CONTROL AGREEMENT Account Number (Internal Use Only) [_][_][_] - [_][_][_][_][_] ================================================================================ ================================================================================ SIGNATURE PAGE ================================================================================ INSTRUCTIONS : Fill in names and addresses and sign. Use Exhibit A to list the assets to be transferred into the Merrill Lynch Pledged Collateral Account. PLEASE NOTE : This Agreement may be executed in counterparts, but the preparer should provide the completed original to Merrill Lynch with signed photocopy counterparts provided to Client and Creditor.
Client : Client's Name (Print)____________________________________________________________________________ Signature _____________________________________________________ Date____________________________ Name of Individual Signing (Print)_______________________________________________________________ Title____________________________________________________________________________________________ Client's Address: Street_________________________________________________________________________ City______________________________________________ State/Province________________________________ Postal Code (zip code)_________________________________ Country__________________________________ PLEASE NOTE : This is the name to whom periodic account statements and trade confirmations will be addressed unless another officer's name is provided to Merrill Lynch for this purpose. Creditor : Creditor's Name (Print)__________________________________________________________________________ Signature ______________________________________________________ Date____________________________ Name of Individual Signing (Print)_______________________________________________________________ Title (an authorized officer)____________________________________________________________________ Creditor's Address: Street ______________________________________________________________________ City______________________________________________ State/Province________________________________ Postal Code (zip code) ________________________________ Country__________________________________ Merrill Lynch , Pierce , Fenner, & Smith Incorporated : Managing Director/Director (or designee) Name (Print) ___________________________________________ Signature ______________________________________________________ Date____________________________
Page 3 | Pledged Collateral Account Control Agreement Code 1226 - 1109 ================================================================================ PLEDGED COLLATERAL ACCOUNT CONTROL AGREEMENT Account Number (Internal Use Only) [_][_][_] - [_][_][_][_][_] ================================================================================ ================================================================================ EXHIBIT A ================================================================================ INSTRUCTIONS : Use Exhibit A to list the Quantity Description assets to be transferred into the Merrill Lynch Pledged Collateral Account. PLEASE NOTE : If an existing managed account, such as a ML Consults(R)or other managed account, is being pledged, please attach a copy of the most recent monthly account statement and write "See attached statement". Quantity Description _____________ ______________________________________________________________ _____________ ______________________________________________________________ _____________ ______________________________________________________________ _____________ ______________________________________________________________ _____________ ______________________________________________________________ _____________ ______________________________________________________________ _____________ ______________________________________________________________ _____________ ______________________________________________________________ _____________ ______________________________________________________________ _____________ ______________________________________________________________ _____________ ______________________________________________________________ _____________ ______________________________________________________________ _____________ ______________________________________________________________ _____________ ______________________________________________________________ _____________ ______________________________________________________________ _____________ ______________________________________________________________ _____________ ______________________________________________________________ _____________ ______________________________________________________________ _____________ ______________________________________________________________ _____________ ______________________________________________________________ _____________ ______________________________________________________________ _____________ ______________________________________________________________ _____________ ______________________________________________________________ Page 4 | Pledged Collateral Account Control Agreement Code 1226 - 1109 ================================================================================ PLEDGED COLLATERAL ACCOUNT CONTROL AGREEMENT Account Number (Internal Use Only) [_][_][_] - [_][_][_][_][_] ================================================================================ ================================================================================ EXHIBIT B : SAMPLE NOTICE OF EXCLUSIVE CONTROL ================================================================================ NOT TO BE USED AT ACCOUNT OPENING - TO BE USED IN EVENT OF DEFAULT OR OTHER EVENT IN WHICH CREDITOR REQUIRES EXCLUSIVE CONTROL. PLEASE NOTE: If this notice is sent by fax, it must be addressed to Managing Director/Director with receipt confirmed by telephone, and the original mailed or delivered to the office servicing the Account as indicated on the account statement. [Letterhead of Creditor] Date: ________________ To: Managing Director /Director Merrill Lynch, Pierce, Fenner & Smith Inc. ___________________________________________ ___________________________________________ ___________________________________________ [Insert address of Merrill Lynch office servicing account as indicated on Account Statement] Pledged Collateral Account number __________________________________________ in the name of "_________________________________________ Name of Client Pledged Collateral Account for_____________________________________" Name of Creditor This is to notify Merrill Lynch that the above-referenced pledged collateral account ("Account") is now under the exclusive control of Creditor named above. Merrill Lynch is hereby instructed to cease complying with trading instructions given by or on behalf of Client (named above) relating to said Account, to cease distributing interest and regular cash dividends earned on property in the Account, and to refuse to accept any other instructions from Client intended to exercise any authority with respect to the Account unless instructed by the undersigned on behalf of Creditor. Creditor warrants to Merrill Lynch that this Notice of Exclusive Control is lawful and authorized by the Security Agreement between Client and Creditor. All future instructions on the Account shall be given solely by the undersigned on behalf of Creditor unless further evidence of authority is provided to Merrill Lynch. Name (Print)____________________________________________________________________ Signature____________________________________________________Date ______________ Title (an authorized officer) __________________________________________________ Page 5 | Pledged Collateral Account Control Agreement Code 1226 - 1109 Merrill Lynch Wealth Management Bank of America Corporation [LOGO OMITTED] Code 1226 -1109 -----END PRIVACY-ENHANCED MESSAGE-----