EXHIBIT 10.6
EMPLOYMENT 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 "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 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. 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 third 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 three (3) times 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 three (3) times 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 three (3) times 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)
thirty-six (36) 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
thirty-six (36) 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 thirty-six (36) 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.
By:
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X. X. Xxxxx, President
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