EXHIBIT 10.5
EMPLOYMENT AGREEMENT
by and between
MICHAELS STORES INC.
and
____________________
THIS AGREEMENT is entered into effective as of the 6th day of April, 1989,
by and between MICHAELS STORES, INC., a Delaware corporation, (hereinafter
referred to as the "Company") and ______________________ (hereinafter referred
to as the "Executive").
WHEREAS, the Company wishes to attract and retain well-qualified executive
and key personnel and to assure both itself and Executive of continuity of
management in the event of any actual or threatened change of control of the
Company; and
WHEREAS, Executive has heretofore been employed by the Company and is
experienced in the business of the Company;
NOW, THEREFORE, it is hereby agreed by and between the parties as follows:
1. TERM OF AGREEMENT. This Agreement shall commence on the date hereof
and shall continue in effect through April 5, 1992; provided, however, that
commencing on April 6, 1990 and each April 6 thereafter, the term of this
Agreement shall automatically be extended for one additional year unless, not
later than the October 6 immediately preceding such April 6, the Company shall
have given notice that it does not wish
to extend this Agreement; provided, further, that notwithstanding any such
notice by the Company not to extend, if a Change in Control shall have
occurred during the original or extended term of this Agreement, this
Agreement shall continue in effect for a period of twelve (12) months beyond
the term in effect immediately before such Change in Control.
2. EMPLOYMENT. Unless sooner terminated pursuant to the provisions of
Section 8 of this Agreement, the Company hereby agrees to employ Executive, and
Executive hereby agrees to remain in the employ of the Company, for the period
commencing on the Change of Control Date and ending on the 65th birthday of
Executive (the "Employment Period"), to exercise such authority and perform such
executive duties as are commensurate with the authority being exercised and
duties being performed by Executive immediately prior to the Change of Control
Date, which services shall be performed at the location where Executive was
employed immediately prior to the Change of Control Date.
3. BASE COMPENSATION. The Company agrees to pay Executive during the
Employment Period a salary, payable in cash at intervals not less frequently
than twice monthly, which is not less than his annual salary immediately prior
to the
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Change of Control Date, with the opportunity for increases, from time to time
thereafter, which are in accordance with the Company's regular practices in
effect prior to the Change of Control Date.
4. DISCRETIONARY BONUSES. During the Employment Period, Executive shall
be entitled to participate in an equitable manner with all other key management
personnel of the Company in discretionary bonuses paid to the Company's key
management employees. No other compensation provided for in this Agreement
shall be deemed a substitute for Executive's right to participate in such
discretionary bonuses when and as declared by the Board of Directors or by any
committee thereof.
5. OTHER COMPENSATION.
(a) PARTICIPATION IN RETIREMENT AND MEDICAL PLANS. During the
Employment Period, Executive shall be entitled to receive employee benefits
under, and participate in, all employee benefit plans to which Executive was
entitled immediately prior to the Change of Control Date, including but not
limited to any applicable pension, retirement, deferred compensation, employee
stock ownership or Section 401(k) thrift and savings plans (collectively,
"Retirement Plans"), and any disability, life insurance or medical and dental
plans provided
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by the Company to executives with comparable duties; provided, however, that
this provision shall not be construed to require the Company to establish any
new plans.
(b) EXECUTIVE BENEFITS; EXPENSES. During the Employment Period,
Executive shall be entitled to receive any fringe benefits and perquisites which
may be or become applicable to the Company's executive employees, including but
not limited to participation in the Company's Key Employee Stock Compensation
Program, and any other stock option or incentive plans adopted by the Board of
Directors, a reasonable expense account, and any other benefits and perquisites
which are commensurate with the responsibilities and functions to be performed
by Executive under this Agreement. The Company shall reimburse Executive for
all out-of-pocket expenses which Executive shall incur in connection with his
services for the Company. During the Employment Period, Executive shall be
entitled to the use of a Company automobile in accordance with the Company's
practices in effect prior to the Change of Control Date for providing
automobiles to its executives. In addition, during the Employment Period,
Executive shall be entitled to legal and financial planning benefits consistent
with benefits made available by the Company to its executives prior to the
Change of Control Date.
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(c) PARTICIPATION IN OTHER AGREEMENTS. During the Employment Period,
Executive shall continue to be treated as an employee under the provisions of
all agreements and other documents relating to the Company's Key Employee Stock
Compensation Program or any deferred compensation arrangements.
6. VACATION, SICK LEAVE AND LEAVES OF ABSENCE. During the Employment
Period, Executive shall be entitled, without loss of pay, to absent himself
voluntarily from the performance of his employment under this Agreement for the
following purposes:
(a) Executive shall be entitled to an annual vacation in accordance
with the Company's practices in effect prior to the Change of Control Date for
its senior management officials.
(b) Upon Executive's request, the Board of Directors shall be
entitled to grant to Executive a leave or leaves of absence with or without pay
at such time or times and upon such terms and conditions as the Board of
Directors in its reasonable discretion may determine.
(c) In addition, Executive shall be entitled to an annual sick leave
in accordance with the Company's practices in effect prior to the Change of
Control Date for its senior management officials.
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7. CONTROL.
(a) CHANGE OF CONTROL. Except as provided in this Section 7(a), for
purposes of this Agreement, a Change of Control shall mean a change in control
of a nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act") (as such disclosure requirement may in the
future be otherwise identified), whether or not the Company is then subject to
such reporting requirement; provided that, without limitation, a Change of
Control shall be deemed to have occurred if (A) any "person" (as such term is
used in Sections 13(d) and 14(d) of the Exchange Act), other than Xx. Xxx Xxxx,
Xx. Xxxxxxx X. Xxxx, Xx., or any affiliate of either of them, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 20% or more of the
combined voting power of the Company's then outstanding securities; or (B)
during any period of three consecutive years (not including any period prior to
the execution of this Agreement), individuals who at the beginning of such
period constitute the Board of Directors, including for this purpose any new
director whose election by the Board, or nomination for election by the
Company's stockholders, was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were
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directors at the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to constitute a
majority thereof.
(b) CHANGE OF CONTROL DATE. For purposes of this Agreement, the term
Change of Control Date shall mean the date upon which a Change of Control as
defined in Section 7(a) hereof is deemed to have occurred.
8. TERMINATION OF THE EMPLOYMENT PERIOD.
The Employment Period shall terminate upon the occurrence of any of
the following events:
(a) any termination by the Company of the employment of Executive
with the Company for any reason other than death, physical or mental incapacity,
or
(b) the resignation of Executive upon the occurrence of any of the
following:
(i) a significant change in the nature or scope of Executive's
authorities or duties from those described in Section 2;
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(ii) a reduction in or delay in payment of total compensation
from that provided in Section 3, 4 and 5;
(iii) the material breach by the Company of any other provision
of this Agreement; or
(iv) a determination made by Executive, in his sole discretion,
that as a result of a Change in Control of the Company and a change in
circumstances thereafter affecting his position, he is unable to fully exercise
the authorities, powers, functions or duties attached to his or her position and
contemplated by Section 2 of this Agreement.
9. CALCULATION OF TERMINATION PAY. For purposes of this Agreement,
Termination Date shall mean the date upon which the Employment Period terminates
pursuant to Section 8 hereof. If the Employment Period is terminated pursuant to
Section 8 hereof after a Change of Control, but prior to the first anniversary
of the Change of Control Date, the Company shall pay to Executive as termination
pay the amounts determined as follows:
(a) an amount equivalent to one hundred percent (100%) of Executive's
aggregate monthly salary for the twelve (12) months immediately prior to the
Termination Date; and
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(b) an amount equivalent to one hundred percent (100%) of Executive's
aggregate bonuses for the twelve (12) months immediately prior to the
Termination Date; and
(c) an amount equivalent to one hundred percent (100%) of the
aggregate monthly equivalent cash values of those benefits which Executive shall
have received during the twelve (12) months immediately prior to the Termination
Date in the form of (i) a car allowance or company car, (ii) those contributions
by the Company on behalf of Executive pursuant to a Section 401(k) or other
tax-advantaged savings plan established or to be established by the Company, and
(iii) those legal and financial planning benefits made available by the Company
to Executive; and
(d) in addition to the benefits to which Executive is entitled under
any pension, deferred compensation or retirement benefit plan or plans
maintained by the Company, or any successor plan or plans thereto (hereinafter
referred to as the "Pension Plans"), a lump sum equal to the actuarial
equivalent of the excess of (x) the retirement pension (determined as a straight
life annuity commencing at age sixty-five (65)) which Executive would have
accrued under the terms of the Company's Pension Plans (without regard to any
amendment to such Pension
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Plans made subsequent to the Change in Control Date and on or prior to the
Termination Date, which amendment adversely affects in any manner the
computation of retirement benefits thereunder), determined as if Executive
were fully vested thereunder and had accumulated (after the Termination Date)
twelve (12) months of service credit thereunder at a level of one hundred
percent (100%) of Executive's average rate of compensation during the twelve
(12) months immediately prior to the Termination Date and (y) the retirement
pension (determined as a straight life annuity commencing at age sixty-five
(65)) which Executive had then accrued pursuant to the provisions of the
Pension Plans.
10. CONTINUATION OF MEDICAL AND HEALTH BENEFITS. For a period of twelve
(12) months following the Termination Date, the Company shall arrange to provide
Executive with life, medical, dental, health, accident and disability insurance
benefits substantially similar to those that Executive is receiving or is
entitled to receive immediately prior to the Termination Date, which benefits
shall in no event be less than those benefits in effect immediately prior to the
Change of Control Date.
11. PAYMENT OF LEGAL EXPENSES. The Company shall also pay Executive all
legal fees and expenses incurred by Executive as a result of any termination
pursuant to Section 8 hereof,
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including, but not limited to, all such fees and expenses, if any, incurred
in contesting or disputing any such termination or in seeking to obtain or
enforce any right or benefit provided by this Agreement.
12. DISBURSEMENT OF TERMINATION PAY. The aggregate amount of all
termination payments that are payable to Executive as provided in Section 9
hereof shall be determined in good faith by the Company within 15 days following
the Termination Date, and such termination payments shall be distributed by the
Company to Executive, at the election of Executive (which election shall be made
within thirty (30) days following the Termination Date), either (A) in one lump
sum within ninety (90) days following the Termination Date or (B) in twelve (12)
equal monthly installments beginning thirty (30) days following the Termination
Date and continuing every thirty (30) days thereafter.
13. NOTICES. Any notices, demands and other communications provided for
by this Agreement shall be sufficient if in writing and if sent by registered or
certified mail to Executive at the last address he has filed in writing with the
Company or, in the case of the Company, at its principal executive offices to
the attention of the President, with a copy to the attention of the General
Counsel.
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14. SUCCESSORS AND ASSIGNS.
(a) This Agreement shall inure to the benefit of and be binding upon
any corporate or other successor of the Company which shall acquire, directly or
indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the assets of the Company.
(b) This Agreement shall inure to the benefit of and be enforceable
by Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Executive should die
while he or she is entitled to receive any amounts payable pursuant to this
Agreement, all such amounts shall be paid in accordance with the terms of this
Agreement to Executive's devisee, legatee or other designee or, if there is no
such designee, to Executive's estate.
15. AMENDMENTS. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties.
16. APPLICABLE LAW. This Agreement shall be governed in all respects,
whether as to validity, construction, capacity, performance or otherwise, by the
laws of the State of Texas, except to the extent that federal law shall be
deemed to apply.
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17. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
18. ENTIRE AGREEMENT. This Agreement contains all the terms agreed upon
by the parties with respect to the subject matter hereof and supersedes all
prior agreements, arrangements and communications.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first hereinabove written.
EXECUTIVE:
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ATTEST: MICHAELS STORES, INC.
Xxxx X. Xxxxxx By: /s/ X. X. XXXXX
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X. X. Xxxxx, President
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