EMPLOYMENT AGREEMENT
This Agreement is made as of February 6, 1997 by and between PAPER
WAREHOUSE, INC., a Minnesota corporation (the "Company"), and YALE X. XXXXXXXX
(the "Executive").
W I T N E S S E T H
WHEREAS, the Company desires to employ Executive in accordance with the
terms and conditions stated in this Agreement; and
WHEREAS, Executive desires to accept that employment pursuant to the terms
and conditions of this Agreement;
NOW, THEREFORE, in consideration of the covenants and agreements contained
herein, the parties hereto agree as follows:
I. EMPLOYMENT
1.1 EMPLOYMENT AS PRESIDENT AND CHIEF EXECUTIVE OFFICER. The Company
hereby employs Executive as President and Chief Executive Officer and Executive
accepts such employment pursuant to the terms of this Agreement. Executive
shall report to the Company's Board of Directors. The Executive will perform
those duties which are usual and customary for a president and chief executive
officer of a publicly-traded party goods retailer. Executive shall be employed
at the Company's corporate offices. He shall perform his duties in a manner
reasonably expected of a president and chief executive officer of a
publicly-traded party goods retailer.
1.2 TERM. Employment shall be for a term commencing the date hereof and
continuing until the earlier of (i) two years or (ii) the date Executive's
employment terminates pursuant to Article III hereof.
II. COMPENSATION, BENEFITS AND PERQUISITES
2.1 BASE SALARY. During the term and effectiveness of this Agreement, the
Company shall pay Executive an annualized base salary ("Base Salary") at the
annual rate of $285,000. The Base Salary shall be payable in equal installments
in the time and manner that other employees of the Company are compensated. The
Board of Directors of the Company will review the Base Salary at least annually,
and may, in its sole discretion increase it to reflect performance, appropriate
industry guideline data or other factors.
2.2 VACATIONS. Executive shall be entitled to four weeks paid vacation,
or such greater amount of time as determined by the Company's Board of
Directors.
2.3 EMPLOYEE BENEFITS. Executive shall be entitled to the benefits
which the Company provides to its other executives under its employee benefit
plans. Executive's participation in such benefit plans shall be on the same
basis as applies to other executives of the Company. Executive shall pay any
contributions which are generally required of executives to receive any such
benefits.
III. TERMINATION OF EXECUTIVE'S EMPLOYMENT
3.1 TERMINATION OF EMPLOYMENT. Executive's employment under this
Agreement may be terminated by the Company or Executive at any time for any
reason; provided, however, that if Executive's employment is terminated by the
Company during the term of this Agreement for a reason or disability other than
for cause as defined in Section 3.2 below, he shall continue to receive his Base
Salary under Section 2.1 for a period of twelve months from the date of
termination. Executive's employment under this Agreement may be terminated by
Executive at any time for any reason. The termination shall be effective as of
the date specified by the party initiating the termination in a written notice
delivered to the other party, which date shall not be earlier than the date such
notice is delivered to the other party. This Agreement shall terminate in its
entirety immediately upon the death of Executive. Except as expressly provided
to the contrary in this section or applicable law, Executive's rights to pay and
benefits shall cease on the date his employment under this Agreement terminates.
3.2 CAUSE. For purposes of this Article III, "cause" shall mean only
the following: (i) commission of a felony; (ii) theft or embezzlement of
Company property or commission of similar acts involving moral turpitude; or
(iii) the failure by Executive to substantially perform his material duties
under this Agreement (excluding nonperformance resulting from Executive's
disability) which willful failure is not cured within thirty (30) days after
written notice from the Board of Directors of the Company specifying the act of
willful nonperformance or within such longer period (but no longer than ninety
(90) days in any event) as is reasonably required to cure such willful
nonperformance. Notwithstanding the foregoing, Executive shall not be deemed to
have been terminated for "cause" unless and until there shall have been
delivered to Executive a copy of a resolution duly adopted by the affirmative
vote of the Board at a meeting of the Board called and held for this specific
purpose.
3.3 DISABILITY. If Executive has become disabled such that he cannot
perform the essential functions of his job with or without reasonable
accommodation, and the disability has continued for a period of more than ninety
(90) days, the Board of Directors of the Company may, in its discretion,
terminate his employment under this Agreement. Upon any such termination for
disability, Executive shall be entitled to such disability, medical, life
insurance, and other benefits as may be provided generally for disabled
employees of the Company during the period he remains disabled.
3.4 NOTICE. Executive must provide the Company with at least 30 days
written notice if Executive desires to terminate his employment under this
Agreement.
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IV. CONFIDENTIALITY
4.1 PROHIBITIONS AGAINST USE. Both parties to this Agreement
acknowledge and agree that during the term of this Agreement they may have
access to various trade secrets and confidential business information
("Confidential Information") of each other. Each party agrees that it shall use
such Confidential Information solely in connection with his obligations under
this Agreement and shall maintain in strictest confidence and shall not disclose
any such Confidential Information, directly or indirectly or use such
information in any other way during the term of this Agreement or for a period
of one (1) year after the termination of this Agreement. The parties further
agree to take all reasonable steps necessary to preserve and protect the
Confidential Information. The provisions of this Section shall be equally
applicable to each parties' officers, directors, agents or employees. The
provisions of this Section shall not apply to information which (i) was in
possession of a party prior to receipt from the other party, or (ii) is or
becomes generally available to the public other than as a result of a disclosure
by a party, its directors, officers, employees, agents or advisors, or (iii)
becomes available to a party from a third party having the right to make such
disclosure.
4.2 REMEDIES. Executive acknowledges that the Company's remedy at law
for any breach or threatened breach by Executive of Section 4.1 will be
inadequate. Therefore, the Company shall be entitled to injunctive and other
equitable relief restraining Executive from violating those requirements, in
addition to any other remedies that may be available to the Company under this
Agreement or applicable law.
V. NON-COMPETITION
5.1 AGREEMENT NOT TO COMPETE. Executive agrees that, on or before the
date which is two (2) years after the date Executive's employment under this
Agreement terminates, he will not, unless he receives the prior approval of the
Board of Directors of the Company, directly or indirectly engage in any of the
following actions:
(a) Own an interest in (except as provided below), manage,
operate, join, control, lend money or render financial or other
assistance to, or participate in or be connected with, as an officer,
employee, partner, stockholder, consultant or otherwise, any entity whose
products or services could be considered part of the party goods
industry. However, nothing in this subsection (a) shall preclude
Executive from holding less than one percent of the outstanding capital
stock of any corporation required to file periodic reports with the
Securities and Exchange Commission under Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, the securities of which are
listed on any securities exchange, quote on the National Association of
Securities Dealers Automated Quotation System or traded in the
over-the-counter market.
(b) Intentionally solicit, endeavor to entice away from the
Company, or otherwise interfere with the relationship of the Company, any
person who is employed by
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or otherwise engaged to perform services for the Company (including, but
not limited to, any independent sales representatives or organizations),
whether for Executive's own account or for the account of any other
individual, partnership, firm, corporation or other business
organization.
If the scope of the restrictions in this section are determined by a court of
competent jurisdiction to be too broad to permit enforcement of such
restrictions to their full extent, then such restrictions shall be construed or
rewritten (blue-lined) so as to be enforceable to the maximum extent permitted
by law, and Executive hereby consents, to the extent he may lawfully do so, to
the judicial modification of the scope of such restrictions in any proceeding
brought to enforce them.
VI. MISCELLANEOUS
6.1 AMENDMENT. This Agreement may be amended only in writing, signed by
both parties.
6.2 ENTIRE AGREEMENT. This Agreement contains the entire understanding
of the parties with regard to all matters contained herein. There are no other
agreements, conditions or representations, oral or written, expressed or
implied, with regard thereto. This Agreement supersedes all prior agreements
relating to the employment of Executive by the Company.
6.3 ASSIGNMENT. This Agreement shall be binding upon, and shall inure
to the benefit of parties and their respective successors, assigns, heirs and
personal representatives and any entity with which the Company may merge or
consolidate or to which the Company may sell substantially all of its assets.
6.4 NOTICES. Any notice required to be given under this Agreement shall
be in writing and shall be delivered either in person or by certified or
registered mail, return receipt requested. Any notice by mail shall be
addressed as follows:
If to the Company, to:
Paper Warehouse, Inc.
0000 Xxxxxxxxx Xxxxxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
If to Executive, to:
Yale X. Xxxxxxxx
0000 Xxxxxx Xxxxx Xxxx
Xxxxx, XX 00000
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or to such other addresses as either party may designate in writing to the other
party from time to time.
6.6 WAIVER OF BREACH. Any waiver by either party of compliance with any
provision of this Agreement by the other party shall not operate or be construed
as a waiver of any other provision of this Agreement, or of any subsequent
breach by such party of a provision of this Agreement.
6.7 SEVERABILITY. If any one or more of the provisions (or portions
thereof) of this Agreement shall for any reason be held by a final determination
of a court of competent jurisdiction to be invalid, illegal, or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provisions (or portions of the provisions) of this Agreement, and the
invalid, illegal or unenforceable provisions shall be deemed replaced by a
provision that is valid, legal and enforceable and that comes closest to
expressing the intention of the parties hereto.
6.8 GOVERNING LAW. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Minnesota, without giving effect to
conflict of law principles.
6.9 ARBITRATION. Any controversy or claim arising out of or relating to
this Agreement or the breach of this Agreement or the breach of any exhibits
attached to this Agreement shall be settled by arbitration in accordance with
the Commercial Arbitration Rules of the American Arbitration Association, and a
judgment upon the award rendered by the arbitrator(s) may be entered in any
court having jurisdiction. The arbitration award shall be subject to review
only in the manner provided in the Uniform Arbitration Act as adopted in Chapter
572, Minnesota Statutes, as the Act is amended at the time of submission of the
issue to arbitration. The arbitrator(s) shall have the authority to award the
prevailing party its costs and reasonable attorney's fees which shall be paid by
the non-prevailing party. In the event the parties hereto agree that it is
necessary to litigate any dispute hereunder in a court, the non-prevailing party
shall pay the prevailing party its costs and reasonable attorney's fees.
Notwithstanding anything in this Section 6.9 to the contrary, Executive shall be
entitled to seek specific performance of Executive's rights to be paid until the
date of termination during the pendency of any dispute or controversy arising
under or in connection with this Agreement or exhibits attached to this
Agreement. Further, the Company shall be entitled to seek an injunction or
restraining order in a court of competent jurisdiction to enforce the provision
of Article IV and Article V.
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IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the date set forth above.
PAPER WAREHOUSE, INC.
By s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
Chairman of Compensation Committee
s/ Yale X. Xxxxxxxx
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Yale X. Xxxxxxxx
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