EXHIBIT 10.5
AGREEMENT
by and between
MICHAELS STORES, INC.
and
_____________________
THIS AGREEMENT is entered into effective as of the 22nd day of March,
1989, by and between MICHAELS STORES, INC., a Delaware corporation, (hereinafter
referred to as the "Company") and ________________________ (hereinafter referred
to as the "Consultant").
WHEREAS, the Company wishes to attract and retain certain key
consultants and advisors and to assure itself of continuity of strategy and
policy in the event of any actual or threatened change of control of the
Company; and
WHEREAS, Consultant has heretofore been retained 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 March 21, 1992; provided,
however, that commencing on March 22, 1990 and each March 22, thereafter, the
term of this Agreement shall automatically be extended for one additional year
unless, not later than the September 22 immediately preceding such March 22,
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 thirty-six (36) months beyond the term in effect immediately before such
Change in Control.
2. CONSULTING PERIOD. Unless sooner terminated pursuant to the
provisions of Section 6 of this Agreement, the Company hereby agrees to
retain Consultant, and Consultant hereby agrees to offer his services to the
Company, for the period commencing on the Change of Control Date and ending
on the 65th birthday of Consultant (the "Consulting Period"), to perform such
consulting services as are commensurate with the services being performed by
Consultant immediately prior to the Change of Control Date, which services
shall be performed at the location where Consultant was located immediately
prior to the Change of Control Date.
3. BASE COMPENSATION. The Company agrees to pay Consultant during the
Consulting Period, in cash at intervals not less frequently than once
monthly, consulting fees in an amount not less than Consultant's average
monthly consulting fees for the twelve (12) months immediately prior to the
Change of Control Date.
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4. OTHER COMPENSATION.
(a) PARTICIPATION IN RETIREMENT AND MEDICAL PLANS. During the
Consulting Period, Consultant shall be entitled to receive benefits under,
and participate in, all benefit plans to which Consultant was entitled
immediately prior to the Change of Control Date, including but not limited to
any applicable pension, retirement, deferred compensation, stock ownership or
Section 401(k) thrift and savings plans (collectively, "Retirement Plans"),
and any disability, life insurance or medical and dental plans provided by
the Company to key advisors with comparable duties; provided, however, that
this provision shall not be construed to require the Company to establish any
new plans.
(b) CONSULTANT BENEFITS; EXPENSES. During the Consulting Period,
Consultant shall be entitled to receive any fringe benefits and perquisites
which may be or become applicable to the Company's other key advisors,
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 Consultant under this
Agreement. The Company shall reimburse Consultant for all out-of-pocket
expenses which
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Consultant shall incur in connection with his services for the Company.
During the Consulting Period, Consultant 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 key advisors.
In addition, during the Consulting Period, Consultant shall be entitled to
legal and financial planning benefits consistent with benefits made available
by the Company to its key advisors prior to the Change of Control Date.
(c) PARTICIPATION IN OTHER AGREEMENTS. During the Consulting
Period, Consultant shall continue to be treated as a key advisor and
consultant under the provisions of all agreements and other documents
relating to the Company's Key Employee Stock Compensation Program or any
deferred compensation arrangements.
5. CONTROL.
(a) CHANGE OF CONTROL. Except as provided in this Section 5(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
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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 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 5(a) hereof is deemed to have occurred.
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6. TERMINATION OF THE CONSULTING PERIOD.
The Consulting Period shall terminate upon the occurrence of any of
the following events:
(a) any termination by the Company of the consulting agreements or
contracts between Consultant and the Company, including but not limited to
that certain Consultation Agreement dated January 1, 1986 (as amended June 1,
1986 and March 25, 1988) between the Company and Consultant for any reason
other than death, physical or mental incapacity, or
(b) the resignation of Consultant upon the occurrence of any of
the following:
(i) a significant change in the nature or scope of
Consultant's duties from those described in Section 2;
(ii) a reduction in or delay in payment of total compensation
from that provided in Section 3 and 4;
(iii) the material breach by the Company of any other provision
of this Agreement; or
(iv) a determination made by Consultant, in his sole
discretion, that as a result of a Change in Control of
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the Company and a change in circumstances thereafter affecting his position,
he is unable to fully exercise his duties as contemplated by Section 2 of
this Agreement.
7. CALCULATION OF TERMINATION PAY. For purposes of this Agreement,
Termination Date shall mean the date upon which the Consulting Period
terminates pursuant to Section 6 hereof. If the Consulting Period is
terminated pursuant to Section 6 hereof after a Change of Control, but prior
to the third anniversary of the Change of Control Date, the Company shall pay
to Consultant as termination pay the amounts determined as follows:
(a) an amount equivalent to three (3) times one hundred percent
(100%) of Consultant's aggregate consulting fees for the twelve (12) months
immediately prior to the Termination Date; and
(b) an amount equivalent to three (3) times one hundred percent
(100%) of the aggregate monthly equivalent cash values of those benefits
which Consultant 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
Consultant pursuant to a Section 401(k) or other tax-advantaged savings plan
established or to be established by the Company,
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and (iii) those legal and financial planning benefits made available by the
Company to Consultant; and
(c) in addition to the benefits to which Consultant 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
Consultant would have accrued under the terms of the Company's Pension Plans
(without regard to any amendment to such Pension 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 Consultant were fully vested
thereunder and had accumulated (after the Termination Date) thirty-six (36)
months of service credit thereunder at a level of one hundred percent (100%)
of Consultant'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 Consultant had then accrued pursuant to the provisions of the Pension
Plans.
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8. CONTINUATION OF MEDICAL AND HEALTH BENEFITS. For a period of
thirty-six (36) months following the Termination Date, the Company shall
arrange to provide Consultant with life, medical, dental, health, accident
and disability insurance benefits substantially similar to those that
Consultant 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.
9. PAYMENT OF LEGAL EXPENSES. The Company shall also pay Consultant
all legal fees and expenses incurred by Consultant as a result of any
termination pursuant to Section 6 hereof, 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.
10. DISBURSEMENT OF TERMINATION PAY. The aggregate amount of all
termination payments that are payable to Consultant as provided in Section 7
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 Consultant, at the election of Consultant
(which election shall be made within thirty (30) days following the
Termination Date), either (A) in one lump
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sum within ninety (90) days following the Termination Date or (B) in
thirty-six (36) equal monthly installments beginning thirty (30) days
following the Termination Date and continuing every thirty (30) days
thereafter.
11. 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 Consultant 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.
12. 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 Consultant's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Consultant should die while he or she is entitled to receive any amounts
payable
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pursuant to this Agreement, all such amounts shall be paid in accordance with
the terms of this Agreement to Consultant's devisee, legatee or other
designee or, if there is no such designee, to Consultant's estate.
13. AMENDMENTS. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties.
14. 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.
15. 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.
16. 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.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first hereinabove written.
CONSULTANT:
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ATTEST: MICHAELS STORES, INC.
------------------- By:
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X. X. Xxxxx, President
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