EXHIBIT 10.32
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made as of April 29, 1997
by and between Michaels Stores, Inc., a Delaware corporation (the "Company"),
and R. Xxxxxxx Xxxxxxx ("Executive").
The parties hereto agree as follows:
1. EMPLOYMENT. The Company agrees to employ Executive and Executive
accepts such employment for the period beginning as of the date hereof and
ending on April 30, 2003, subject to earlier termination pursuant to
Paragraph 1(d). After April 30, 2003, this Agreement will continue for
successive one-year terms unless the Company gives written notice to
Executive pursuant to Paragraph 4 of this Agreement at least 120 days prior
to the expiration of any term of this Agreement that the Agreement will not
be renewed. If a Change in Control of the Company (as hereinafter defined)
shall have occurred during any term of this Agreement, this Agreement shall
continue in effect until the term of the Agreement expires.
(a) SALARY, BONUS AND BENEFITS. During the term of this
Agreement, the Company will pay Executive a base salary ("Base Salary") of
$500,000 per annum, or such higher amount as the Company's Board of Directors
or an appropriate committee thereof shall determine in its sole discretion.
Base Salary will be paid in equal bi-weekly installments. On or about April
1 of each year during the term of this Agreement, Executive shall be eligible
to receive a bonus based on the Company's applicable bonus plan. If a Change
in Control of the Company shall have occurred during any term of this
Agreement, Executive shall be entitled to receive employee benefits under,
and participate in for the remaining term of the Agreement, all employee
benefit plans to which Executive was entitled immediately prior to the date
of the Change in Control, including but not limited to any applicable pension
plan, retirement plan, stock option plan, employee stock ownership, 401(k)
savings plan, disability insurance plan, life insurance plan, medical and
dental insurance plans.
(b) ADDITIONAL BENEFITS. In addition to the salary and any bonus
payable to Executive pursuant to Paragraph 1(a), Executive will be entitled
during the term of this Agreement to health insurance, life insurance,
disability insurance, four weeks of vacation annually, a Company-paid
automobile, and such other employment-related benefits that the Company
provides to its executive employees, as well as any perquisites the Board of
Directors or an appropriate committee thereof may establish. The Company
shall reimburse Executive, in accordance with its
standard expense reporting and reimbursement policies in effect from time to
time, for all out-of-pocket expenses which Executive shall incur in
connection with his services for the Company.
(c) SERVICES. During the term of this Agreement, Executive will
serve as President and Chief Executive Officer of the Company and will
perform such services of an executive and administrative nature for the
Company and its subsidiaries as the Company's Board of Directors and/or the
Company's Chairman of the Board of Directors may from time to time direct.
It is the intention of the parties that, subject to the directives of the
Company's Board of Directors and its Chairman, Executive's principal
responsibilities shall be to direct the day to day management of the Company.
Executive will devote all of his business time and attention (except for
vacation periods and reasonable periods of illness or other incapacity) to
the business of the Company and its subsidiaries.
(d) TERMINATION; SEVERANCE PAY. The term of this Agreement will
terminate upon the first to occur of (i) the expiration of the term of the
Agreement, (ii) Executive's death or permanent disability (as determined by
the Board of Directors in its good faith judgment) or (iii) the date on which
the Company's Board of Directors terminates Executive's employment for
"Cause." In the event that the Company shall terminate Executive's
employment prior to April 30, 2003 otherwise than pursuant to clause (ii) or
(iii) above, the Company shall pay severance pay to Executive by continuing
the Base Salary, as well as all additional benefits described in Paragraph
1(a) and in effect at the time of such termination, until April 30, 2003.
Such payments shall be made in bi-weekly installments. For purposes of this
Agreement, "Cause" shall mean by determination of the Company's Board of
Directors in its good faith judgment that Executive has: (1) knowingly
committed gross misconduct in the performance of his duties, (2) knowingly
committed gross negligence or gross nonfeasance in the performance of his
duties, (3) committed an act of financial dishonesty against the Company or
any of its subsidiaries, or (4) committed any felony involving moral
turpitude.
In the event this Agreement terminates because of the
expiration of the term of the Agreement or because of Executive's death or
disability, or in the event of the termination of Executive's employment by
the Company for any reason other than Cause, the Company will allow
Executive's spouse to continue to participate in Company's medical plan on
the same basis as such continued participation is provided to spouses of
other executive employees until her 65th birthday. If such continued
participation is not possible for any reason, the Company will purchase
health insurance coverage for Executive's spouse that provides, to the extent
practicable, reasonably
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comparable benefits until her 65th birthday. In no event will the Company be
obligated to provide any medical plan or other health insurance coverage if
Executive's spouse becomes eligible for medical benefits offered by another
employer. In addition, in the event this Agreement is terminated at any time
and for any reason (i) any unvested portion of Executive's 401(k) savings
plan interest will automatically accelerate and become immediately 100%
vested on the date of such termination or, if such accelerated vesting is not
permitted by any law, regulation or governmental ruling applicable to the
401(k) savings plan, the Company will pay to Executive the value of his
unvested interest in the 401(k) savings plan; (ii) any and all unvested stock
options to purchase common stock of the Company granted to Executive at any
time during his employment with Company will automatically accelerate and
become immediately 100% vested and exercisable on the date of said
termination; (iii) Executive will have the option to purchase the
Company-paid automobile in his possession at the depreciated book value of
said automobile; and (iv) Executive will automatically become the owner of
his Company-paid whole life insurance policy.
2. CONFIDENTIAL INFORMATION. Executive acknowledges that the trade
secrets and similar proprietary information obtained by him during the course
of his employment with the Company (including his employment prior to the
date of this Agreement), concerning the business or affairs of the Company
and its subsidiaries are the property of the Company. Therefore, Executive
agrees that, at no time during or after the term of this Agreement, will he
disclose to any unauthorized person or use for his own account any of such
information or data without the written consent of the Chairman of the Board
of Directors, unless and to the extent that the aforementioned matters become
generally known to and available for use by the public other than as a result
of Executive's acts or omissions to act. Executive agrees to deliver to the
Company at the termination of his employment, or at any other time the
Company may request, all memoranda, notes, plans, records, reports and other
documents (and copies thereof) relating to the business of the Company and
its subsidiaries which he may then possess or have under his control.
3. CHANGE IN CONTROL. For purposes of this Agreement, the term
"Change in Control" means the occurrence of any of the following events:
(a) the Company is merged, consolidated or reorganized into or with
another corporation or other legal person, and as a result of such merger,
consolidation or reorganization less than two-thirds of the combined voting
power of the then-outstanding securities entitled to vote generally in the
election of directors ("Voting Stock") of such
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corporation or person immediately after such transaction are held in the
aggregate by the holders of Voting Stock of the Company immediately prior
to such transaction;
(b) the Company sells or otherwise transfers all or substantially all
of its assets to another corporation or other legal person, and as a result
of such sale or transfer less than two-thirds of the combined voting power
of the then-outstanding Voting Stock of such corporation or person
immediately after such sale or transfer is held in the aggregate by the
holders of Voting Stock of the Company immediately prior to such sale or
transfer;
(c) there is a report filed on Schedule 13D or Schedule 14D-1 (or any
successor schedule, form or report), each as promulgated pursuant to the
Act, disclosing that any person (as the term "person" is used in Section
13(d)(3) or Section 14(d)(2) of the Act) has become the beneficial owner
(as the term "beneficial owner" is defined under Rule 13d-3 or any
successor rule or regulation promulgated under the Act) of securities
representing 20% or more of the combined voting power of the
then-outstanding Voting Stock of the Company;
(d) the Company files a report or proxy statement with the Securities
and Exchange Commission pursuant to the Act disclosing in response to Form
8-K or Schedule 14A (or any successor schedule, form or report or item
therein) that a change in control of the Company has occurred or will occur
in the future pursuant to any then-existing contract or transaction; or
(e) if, during any period of two consecutive years, individuals who
at the beginning of any such period constitute the directors of the Company
cease for any reason to constitute at least a majority thereof; provided,
however, that for purposes of this Paragraph 3(e) each director who is
first elected, or first nominated for election by the Company's
stockholders, by a vote of at least two-thirds of the directors of the
Company (or a committee thereof) then still in office who were directors of
the Company at the beginning of any such period will be deemed to have been
a director of the Company at the beginning of such period.
Notwithstanding the foregoing provisions of Paragraph 3(c) or (d) above,
unless otherwise determined in a specific case by majority vote of the Board,
a "Change in Control" will not be deemed to have occurred for purposes of
Paragraph 3(c) or (d) above solely because (A) the Company, (B) a Subsidiary
or (C) any Company-sponsored employee benefit plan of the Company or any
Subsidiary
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either files or becomes obligated to file a report or a proxy statement under
or in response to Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or
any successor schedule, form or report or item therein) under the Act
disclosing beneficial ownership by it of shares of Voting Stock of the
Company, whether in excess of 20% or otherwise, or because the Company
reports that a change in control of the Company has occurred or will occur in
the future by reason of such beneficial ownership or any decrease thereof.
4. NOTICES. Any notice provided for in this Agreement must be in
writing and must be either personally delivered, or mailed by first class
mail, to the recipient at the address below indicated:
To the Company:
Michaels Stores, Inc.
x/x Xxx Xxxx, Xxxxxxxx
000 Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
To Executive:
R. Xxxxxxx Xxxxxxx
0000 Xxxxxxxx Xx.
Xxxxxx, Xxxxx 00000
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered
or mailed.
5. SEVERABILITY. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in
any jurisdiction, such invalidity, illegality or unenforceability will not
affect any other provision or any other jurisdiction, but this Agreement will
be reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
6. COMPLETE AGREEMENT. This Agreement constitutes the complete
agreement and understanding between the parties hereto and supersedes and
preempts any prior understandings, agreements or representations by or
between the parties hereto, written or oral, which may have related to the
subject matter hereof in any way.
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7. COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which
taken together constitute one and the same agreement.
8. SUCCESSORS AND ASSIGNABILITY. This Agreement is intended to bind
and inure to the benefit of and be enforceable by Executive and his heirs,
executors or administrators, and to bind and inure to the benefit of and be
enforceable by the Company and its successors and assigns. This Agreement
shall not be assignable by Executive, except by will or pursuant to the laws
of descent and distribution.
9. CHOICE OF LAW. All questions concerning the construction,
validity, and interpretation of this Agreement will be governed by the
internal law, and not the law of conflicts, of the State of Texas, including
without limitation the Texas statute of limitations.
10. REMEDIES. Each of the parties to this Agreement will be entitled
to enforce its rights under this Agreement specifically, to recover damages
by reason of any breach of any provision of this Agreement and to exercise
all other rights existing in its favor. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach
of the provisions of this Agreement and that any party may in its sole
discretion apply to any court of law or equity of competent jurisdiction for
specific performance and/or injunctive relief in order to enforce or prevent
any violations of the provisions of this Agreement.
11. AMENDMENTS AND WAIVERS. Any provision of this Agreement may be
amended or waived only with the prior written consent of the Company and
Executive.
12. LEGAL FEES. In the event of any litigation between the parties
hereto relating to this Agreement, the prevailing party will be entitled to
recover from the losing party reimbursement for the prevailing party's
reasonable attorneys' fees and expenses.
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IN WITNESS HEREOF, the parties have executed this Agreement on the 29th
day of April, 1997.
MICHAELS STORES, INC.
By:
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Xxx Xxxx, Chairman of
the Board of Directors
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R. Xxxxxxx Xxxxxxx
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