Exhibit 10.4
MICHAELS STORES,
INC.
STOCK OPTION
AGREEMENT
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Optionee: John B.
Menzer
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No. of Shares:
2,500,000
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Date of Grant: June 2,
2009
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Expiration Date: June 1,
2017
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This Option and any securities
issued upon exercise of this Option are subject to restrictions on
voting and transfer and other provisions as set forth in the
Amended and Restated Stockholders Agreement among Michaels
Stores, Inc. and certain investors, originally dated as of
October 31, 2006, as amended and restated on February 16,
2007 and amended from time to time thereafter (the
“Stockholders Agreement”) and the terms of the
Registration Rights Agreement referred to therein (the
“Registration Rights Agreement”). This Option and
any securities issued upon exercise of this Option constitute an
Option and Shares, respectively, as defined in the Stockholders
Agreement.
This Stock Option Agreement (this
“Agreement”) is hereby entered into between Michaels
Stores, Inc., a Delaware corporation (the
“Company”), and the Optionee named above pursuant to
the Company’s 2006 Equity Incentive Plan, as amended from
time to time (the “Plan”). For the purpose of
this Agreement, the “Grant Date” shall mean the date
hereof, June 2, 2009.
1.
Grant of
Option. This
Agreement evidences the grant by the Company on the Grant Date to
the Optionee of an option (the “Option”) to purchase,
in whole or in part, on the terms provided herein and in the Plan,
a total of 2,500,000 shares of Common Stock of the Company, par
value $.10 per share (the “Shares”), at the following
prices per Share:
(a)
833,334 Shares at $7.50 per Share
(the “Tranche 0 Option”);
(b)
833,333 Shares at $15.00 per Share
(the “Tranche 1 Option”); and
(c)
833,333 Shares at $22.50 per Share
(the “Tranche 2 Option”);
The Option evidenced by this
Agreement is not intended to qualify as an incentive stock option
under Section 422 of the Internal Revenue Code (the
“Code”).
2.
Vesting.
During the Optionee’s
Employment, the Option will vest and become exercisable
(i) with respect to 20% of the Shares subject to each of the
Tranche 0 Option, Tranche 1 Option and Tranche 2 Option on each of
the first through fifth anniversaries of April 6, 2009 or
(ii) if earlier, with respect to any unvested portion of the
Option, upon a Change of Control (as defined in the Stockholders
Agreement).
3.
Exercise of
Option.
(a)
Details of Exercise
. Each election to exercise
this Option shall be subject to the terms and conditions of the
Plan and shall be in writing, signed by the Optionee or by his or
her executor or administrator or by the Person or Persons to whom
this Option is transferred by will or the
1
applicable laws of descent and
distribution (the “Legal Representative”), and made
pursuant to and in accordance with the terms and conditions set
forth in the Plan. The latest date on which this Option may
be exercised (the “Final Exercise Date”) is the date
which is the eight (8th) anniversary of the Grant Date, subject to
earlier termination in accordance with the terms and provisions of
the Plan and this Agreement.
(b)
Payment of Exercise
Price . The
following are permitted forms of payment for the exercise of this
Option and for the remittance of withholding taxes pursuant to
Section 8: (a) cash or check acceptable to the
Administrator, (b) actual or constructive transfer to the
Company of shares of Stock owned by the Optionee for at least six
months (or, with the consent of the Administrator, for less than
six months) having an aggregate Fair Market Value at the date of
exercise equal to the aggregate exercise price of the Award,
(c) authorization by the Optionee of the Company to withhold a
number of shares of Stock otherwise issuable to the Optionee under
this Option having an aggregate Fair Market Value on the date of
exercise equal to the aggregate exercise price of this Option and,
if applicable, the amount of any withholding tax, (d) at such
time, if any, as the Stock is publicly traded through a
broker-assisted “cashless” exercise program acceptable
to the Administrator, and (e) by a combination of such methods
of payment.
4.
Effect of Certain
Transactions.
In the event of a Change of Control (as defined in the Stockholders
Agreement), this Option will vest and become fully
exercisable.
5.
Representations and Warranties
of Optionee.
Optionee represents and warrants that:
(a)
Authorization
. Optionee has full legal
capacity, power, and authority to execute
