EXHIBIT 99.(D)(3)
EMPLOYMENT AND NONCOMPETITION AGREEMENT
THIS AGREEMENT, dated as of September 4, 2001, between Enovation
Graphic Systems, Inc., a Delaware corporation having a place of business at 000
Xxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000, (the "Company"), and Xxxxx X. Xxxxxx, an
individual residing at 00 Xxxxx Xxxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxx Xxxxxx 00000
(the "Executive"). This Agreement is binding upon the parties hereto; provided,
however, that the employment relationship hereinafter established shall become
effective (the "Effective Date") only upon and contemporaneously with the
consummation of the purchase of and payment for Shares (as defined in the Merger
Agreement) by FPF Acquisition Corp. pursuant to the offer contemplated pursuant
to the Agreement and Plan of Merger dated the date hereof (the "Merger
Agreement") by and among Fuji Photo Film U.S.A., Inc., the Company, FPF
Acquisition Corp. and PrimeSource Corporation.
w i t n e s s e t h:
WHEREAS, the Company and its subsidiaries are in the photographic and
graphic arts businesses in the United States (the "Business"); and
WHEREAS, the Company wishes to employ the Executive and the Executive
wishes to be employed by the Company, subject to the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual benefits to be derived
from this Agreement, the Company and the Executive hereby agree as follows:
1. Terms of Employment; Office and Duties.
(a) During the Period of Employment (as hereinafter defined), the Company agrees
to employ the Executive as President with general responsibility for the
business, and the Executive shall perform such duties, services and
responsibilities and have the authority commensurate to such position as
determined from time to time by the Board of Directors. The Executive agrees to
serve in such capacity, commensurate with the Executive's experience, knowledge
and training, for the Company and for any subsidiary of the Company as shall be
designated by the Chief Executive Officer or Board of Directors of the Company,
all in accordance with the terms and conditions herein set forth. In performing
his duties hereunder, the Executive shall report directly to the Chief Executive
Officer or the delegate of the Board of Directors, and all functions of the
Company's business, except financial and legal affairs, shall report to the
Executive.
(b) During the Period of Employment, the Executive shall devote all of his
business time to the performance of his duties hereunder except for reasonable
time for vacation, illness or incapacity.
(c) During the Period of Employment, the Executive shall be entitled to take
four (4) weeks paid vacation during each twelve-month period worked.
(d) Until December 31, 2003, the location of the Executive's primary business
office will be within thirty (30) miles of Pennsauken, New Jersey.
2. Period of Employment. The period of employment hereunder shall
commence on the Effective Date and continue through March 31, 2004 (the "Period
of Employment").
3. Compensation.
(a) During the portion of the Period of Employment ending on March
31, 2002, the Company shall pay the Executive for all services rendered
hereunder by the Executive in any capacity a base salary at the rate of $275,000
per year. The Executive's salary shall be payable in accordance with the
Company's customary payroll practices, but in no event less frequently than
monthly. The base salary will be increased on April 1st of each year during the
Period of Employment as follows:
Year Amount
---- ------
April 1, 2002 $285,000
April 1, 2003 $295,000
(b) During the Period of Employment, commencing with the fiscal year
ending March 31, 2002, the Company shall provide the Executive the opportunity
to earn an annual incentive bonus (the "Bonus"). For the fiscal year ending
March 31, 2002, such Bonus shall be equal to the pro-rated portion of $175,000
from the Effective Date through March 31, 2002, which pro-rated amount is
guaranteed, and, thereafter, shall be variable based upon the attainment of
performance criteria described below, and shall be payable in an amount not to
exceed (i) $190,000 for the fiscal year ending March 31, 2003 and (ii) $205,000
for the fiscal year ending March 31, 2004; provided, however, that the Bonus
payable in respect of the fiscal year ending March 31, 2003 shall be not less
than $95,000, which is guaranteed. Each annual Bonus shall be payable promptly
following a determination by the Board of Directors (or a designated committee
thereof) that the applicable performance criteria have been satisfied, but in no
event later than thirty (30) days after the Company's receipt of the report
prepared by its regular independent certified public accountants with respect to
the Company's financial statements for such fiscal year. For each of the fiscal
years ending March 31, 2003 and March 31, 2004, appropriate performance criteria
for each fiscal year shall be developed jointly and in good faith by the
Executive and the Board (or a designated committee thereof) within the fourth
quarter of the preceding fiscal year in connection with the development and
approval of an annual strategic plan for the Company.
(c) After the expiration of the Period of Employment, the Company
shall provide the Executive the opportunity to earn a one-time special bonus
(the "Special Bonus") based upon the attainment of performance criteria for the
fiscal year ending March 31, 2004 to be developed jointly and in good faith by
the Executive and the Board (or a designated committee thereof) before the end
of the fiscal year ending March 31, 2002.
4. Expenses. The Company shall reimburse the Executive for reasonable
travel and other expenses incurred by the Executive in connection with the
performance of his duties under this Agreement in accordance with such
procedures as the Company may from time to time establish.
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5. Additional Benefits.
(a) During the Period of Employment, the Executive shall have the
option to (i) have full use and enjoyment of an automobile furnished by the
Company, at the Company's expense, and under the terms and conditions of the
standard auto allowance policy for executives of the Company's immediate parent,
Fuji Photo Film U.S.A., Inc. or (ii) receive a car allowance.
(b) During the Period of Employment, the Executive shall be entitled
to participate in employee benefit programs that the Company makes available to
its employees generally, which benefits will include a 401(k) Plan; provided,
however, that until such time as PrimeSource Corporation's employee benefit
programs are replaced by the Company's employee benefit programs, the Executive
shall continue to participate in PrimeSource Corporation's employee benefit
programs. The Executive, however, will not participate in the Fuji Photo Film
U.S.A., Inc. Long Term Incentive Program or SERP.
6. Termination of Employment.
(a) Notwithstanding any other provision of this Agreement, the
Period of Employment may be terminated by the Company in accordance with the
procedures specified in this Section 6(a), on account of any of the following
reasons, each of which shall constitute "Cause" for purposes of this Agreement:
(i) a material act of fraud or dishonesty on the part of the
Executive which reflects adversely on the Company or directly
affects the Company;
(ii) a material failure by the Executive to comply with material
applicable laws or regulations which reflect adversely on the
Company or directly affects the Company;
(iii) any violation of Section 9; or
(iv) the Board of Directors of the Company determines that the
Executive has materially failed to perform his duties
hereunder or has committed any other material breach of any of
the terms hereunder; provided, however, a failure to perform
his duties shall not include either merely performing
unsatisfactorily or actions taken in the Executive's
reasonable business judgment.
The Period of Employment shall terminate immediately upon the Company giving the
Executive written notice that the Period of Employment is being terminated for a
Cause specified in Sections 6(a)(i), (ii) or (iii). However, with respect to a
termination for a Cause specified in Section 6(a)(iv), the Company shall give
written notice to the Executive specifying the Cause relied upon for termination
and if the Executive does not cease and correct such conduct, event, act or
failure within thirty (30) days after the date of such notice, the Period of
Employment shall then be terminated.
(b) The Company may terminate the Period of Employment other than
for Cause at any time by written notice to the Executive. In the event the
Period of Employment is terminated by the Company without Cause, the Company
shall, as liquidated damages or severance pay, or both, pay to the Executive and
provide him an amount equal to the unearned remaining base salary provided in
Section 3(a), payable at the times therein specified during the remainder of the
Period of Employment, any guaranteed and earned bonus provided in Section 3(b)
and benefits provided in Section 5(b). The Executive shall have no further right
to receive any other compensation or benefits after such termination, except as
otherwise determined in accordance with the terms of any Executive benefit plan
in which Executive participates. The Executive is entitled to the payments
described in this Section 6(b) upon the termination of his employment and is
under no duty to mitigate any damages.
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(c) If, during the Period of Employment, the Executive shall become
incapable of fulfilling his obligations hereunder because of injury or physical
or mental illness, and such incapacity shall exist for a period of six (6)
consecutive months or such shorter periods aggregating more than six (6) months
during any period of twelve (12) consecutive months, the Company may, upon at
least fifteen (15) days' prior written notice to the Executive, terminate this
Agreement. The disability of the Executive shall be determined by an independent
physician acceptable to both the Company and the Executive or his
representative.
(d) If the Executive dies during the Period of Employment, this
Agreement shall terminate immediately.
(e) In the event that the Company terminates the Period of
Employment for Cause, the Executive resigns or the Period of Employment
terminates due to the disability or death of the Executive, then the Company's
obligations to make payments to, and provide benefits for, the Executive under
Sections 3, 4 and 5 shall immediately cease as of the date of such termination
or resignation; provided, however, in the case of termination for disability,
the Company shall continue providing the benefits set forth in Section 5(b)
hereof.
(f) The payments and benefits (if any) required to be provided to
the Executive under this Section 6 shall be in complete satisfaction of any
claims that the Executive may have as a result of termination of the Executive's
employment.
7. Arbitration. Subject to Section 10 hereof, any controversy or claim
arising out of or relating to this Agreement shall be settled by arbitration in
Philadelphia, Pennsylvania in accordance with the National Rules for the
Resolution of Employment Disputes set by the American Arbitration Association,
and judgment upon the award rendered may be entered in any court having
jurisdiction thereof; provided, however, that any such arbitration award shall
be limited to monetary damages and shall not include any order for specific
performance or other equitable relief.
8. Executive's Duty to Surrender Automobile and Materials. Upon the
termination of the Period of Employment for any reason, the Executive or his
estate shall surrender to the Company the automobile furnished under Section
5(a), all correspondence, letters, files, contracts, mailing lists, pricing
lists and information, customer lists, advertising materials, ledgers, supplies,
equipment, checks, and all other materials and records of any kind that are the
property of the Company or any of its subsidiaries and affiliates, that are in
the Executive's possession or under his control at such time, including all
copies of any of the foregoing.
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9. Other Duties of Executive During and After Period of Employment.
(a) Both during and after the Period of Employment, the Executive
shall, upon reasonable notice, furnish such information as may be in his
possession to, and cooperate with, the Company as may reasonably be requested by
the Company in connection with any litigation in which the Company or any of its
subsidiaries and affiliates is or may become a party.
(b) Both during and after the Period of Employment, the Executive
shall not, to the detriment of the Company or its subsidiaries and affiliates,
knowingly disclose or reveal to any unauthorized person any trade secret or
other confidential information relating to the Company, its subsidiaries and
affiliates, or any of the businesses operated by them, including, without
limitation, any customer lists, pricing information or sales and marketing data,
plans and programs, and the Executive confirms that such confidential
information constitutes the exclusive property of the Company or any of its
subsidiaries and affiliates. The Executive agrees that he will use such
confidential information solely for purposes of this Agreement and the
employment services to be provided hereunder.
(c) During the Period of Employment (which, for purposes of this
Section 9(c), shall include the period, if any, the Company is required to make
payments to the Executive under Section 6(b)) and for a period of two years
thereafter, the Executive shall not, directly or indirectly, with respect to the
Business:
(i) own 5% or more of the common equity or other ownership
interest in, manage, operate, join, control, render financial
or other assistance to or participate in or be connected, as
an officer, employee, partner, stockholder, consultant or
otherwise, with any individual, proprietor, partnership, firm,
corporation or other business enterprise that is or may be
competitive with the Company or any of its subsidiaries and
affiliates with respect to the Business; or
(ii) make any statement or perform any act intended to advance an
interest of any existing or prospective competitor of the
Company or any of its subsidiaries and affiliates or to injure
an interest of the Company, or any of its subsidiaries and
affiliates, in their relationship and dealings with existing
or potential customers or any enterprise, with which the
Company, or any of its subsidiaries and affiliates, had or has
a business relationship enabling the Company or any of its
subsidiaries and affiliates to sell graphic arts products or
services to customers, or solicit or encourage any employee of
the Company or any of its subsidiaries and affiliates to do
any act that, in the Company's reasonable judgment, is
disloyal to, or inconsistent with, the Company's or any of its
subsidiaries' and affiliates' interests.
10. Injunctive Relief. In addition to any other remedies, at law or
otherwise, that the Company may have against the Executive for a breach of this
Agreement, and notwithstanding Section 7 hereof, the Company is entitled to an
injunction to be issued by any court of competent jurisdiction, enjoining and
restraining the Executive from committing any breach of Sections 8 and 9 of this
Agreement.
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11. Tax Withholding. The Company may withhold from any compensation and
other benefits payable under this Agreement all federal, state, local or other
taxes as shall be required pursuant to any law or governmental regulation or
ruling.
12. Consolidation, Merger, or Sale of Assets. Nothing in this Agreement
shall preclude the Company from consolidating or merging into or with, or
transferring all or substantially all of its assets to, another corporation,
which assumes this Agreement and all obligations and undertakings of the Company
hereunder. Upon such consolidation, merger or transfer of assets and such
assumption, the term "Company" as used herein shall mean such other corporation
and this Agreement shall continue in full force and effect.
13. General Provisions.
(a) This Agreement shall be binding upon, and inure to the benefit
of, the Executive and the Company and their respective successors and permitted
assigns.
(b) This Agreement shall be governed by and construed under the
laws of the State of New York (without giving effect to its principles of
conflict of laws).
(c) The obligations of the Executive under Sections 7, 8 and 9
shall survive the termination for any reason of this Agreement (whether such
termination is by the Company, by the Executive, upon the expiration of the
Period of Employment or otherwise).
(d) In case any one or more of the provisions or any part of a
provision contained in this Agreement shall for any reason be held to be
invalid, illegal or unenforceable in any respect in any jurisdiction, such
invalidity, illegality or unenforceability shall be deemed not to affect any
other provision or part of a provision of this Agreement, but this Agreement
shall be reformed and construed in such jurisdiction as if such provision or
part of a provision held to be invalid, illegal or unenforceable had never been
contained herein and such provision or part be reformed so that it would be
valid, legal and enforceable in such jurisdiction to the maximum extent
possible.
(e) This Agreement contains the entire agreement between the
Company and the Executive with respect to the subject matter thereof. This
Agreement may not be amended, waived, changed, modified or discharged except by
an instrument in writing executed by or on behalf of the party against whom any
amendment, waiver, change, modification or discharge is sought.
(f) All notices, requests, demands and other communications
hereunder shall be in writing and shall be personally delivered or sent by
expedited overnight courier service as follows:
If to the Company:
Enovation Graphic Systems, Inc.
c/o Fuji Photo Film U.S.A., Inc.
000 Xxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attn: General Counsel
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If to the Executive:
Xxxxx X. Xxxxxx
00 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxx Xxxxxx 00000
and/or to such other persons and addresses as any party shall have specified in
writing to the other.
(g) Any waiver of any breach of any provision of this Agreement
shall not operate as a waiver of any other breach of such provision or any other
provision of this Agreement, nor shall any failure to enforce any provision
hereof operate as a waiver of such provision or of any other provision hereof.
Each of the parties hereto agrees to execute all such further instruments and
documents and to take all such further action as the other party may reasonably
request in order to effectuate the terms and purposes of this Agreement.
(h) The terms of this Agreement shall be treated by the parties as
confidential, except to the extent disclosure is required by law.
(i) The section headings contained in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
EXECUTIVE
/s/ Xxxxx X. Xxxxxx
------------------------------------------
Xxxxx X. Xxxxxx
ENOVATION GRAPHIC
SYSTEMS, INC.
By: /s/ Yasuo "Xxxxxx" Tanaka
-----------------------------------
Name: Yasuo "Xxxxxx" Tanaka
Title: President
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