Exhibit 10.3


 


	
   

  	
   

  
	
   

  	
  John B. Menzer

  



 


MICHAELS STORES, INC.


2006 EQUITY INCENTIVE PLAN


 


Restricted Stock Award Agreement


 


Michaels
Stores, Inc.

8000 Bent Branch Drive

Irving, Texas 75063


 


Attn:      Michael
J. Veitenheimer


 


Ladies
and Gentlemen:


 


The
undersigned (i) acknowledges that he or she has received an award (the “Award”)
of restricted stock from Michaels Stores, Inc. (the “Company”) under the
Michaels Stores, Inc. 2006 Equity Incentive Plan (the “Plan”), subject to
the terms set forth below and in the Plan; (ii) further acknowledges
receipt of a copy of the Plan as in effect on the date hereof; and (iii) agrees
with the Company as follows:


 


1.              
Effective Date.  This
Agreement shall take effect as of June 2, 2009, which is the date of grant
of the Award.


 


2.              
Shares Subject to Award. 
The Award consists of 500,000 shares (the “Shares”) of common stock of the
Company (“Stock”).  The undersigned’s rights to the Shares are subject to
the restrictions described in this Agreement and the Plan (which is
incorporated herein by reference with the same effect as if set forth herein in
full) in addition to such other restrictions, if any, as may be imposed by law.


 


3.              
Meaning of Certain Terms. 
Except as otherwise expressly provided, all terms used herein shall have the
same meaning as in the Plan.  The term “vest” as used herein with respect
to any Share means the lapsing of the restrictions described herein with
respect to such Share.


 


4.              
Nontransferability of Shares. 
The Shares acquired by the undersigned pursuant to this Agreement shall not be
sold, transferred, pledged, assigned or otherwise encumbered or disposed of
except as provided below and in the Plan.


 


5.              
Vesting of Shares. 
The shares acquired hereunder shall vest in accordance with the provisions of
this Paragraph 5 and applicable provisions of the Plan, as follows: 125,000
Shares on each of the second through fifth anniversary of April 6,
2009.  Notwithstanding the foregoing, no shares shall vest on any vesting
date specified above unless the undersigned is then, and since the date of
grant has continuously been, employed by the Company or its
subsidiaries.   In the event that the undersigned’s employment is
terminated before April 6, 2011, due to his death, by the Company other
than for “Cause” or for Disability, or by the undersigned for “Good Reason”
(all terms as defined in the Agreement dated March 6, 2009, between the
undersigned and the Company, as amended), 133,333 then outstanding and unvested
Shares acquired by the undersigned hereunder shall automatically and
immediately vest.  Any remaining
outstanding and unvested Shares shall be forfeited in accordance with the
provisions of paragraph 6 below.


 

















 


6.              
Forfeiture Risk. 
Except as provided in Paragraph 5 above, if the undersigned ceases to be
employed by the Company and its subsidiaries for any reason, any then
outstanding and unvested Shares acquired by the undersigned hereunder shall be
automatically and immediately forfeited.  The undersigned hereby (i) appoints
the Company as the attorney-in-fact of the undersigned to take such actions as
may be necessary or appropriate to effectuate a transfer of the record
ownership of any such shares that are unvested and forfeited hereunder, (ii) agrees
to deliver to the Company, as a precondition to the issuance of any certificate
or certificates with respect to unvested Shares hereunder, one or more stock
powers, endorsed in blank, with respect to such Shares, and (iii) agrees
to sign such other powers and take such other actions as the Company may
reasonably request to accomplish the transfer or forfeiture of any unvested
Shares that are forfeited hereunder.


 


7.              
Retention of Certificates. 
Any certificates representing unvested Shares shall be held by the
Company.  If unvested Shares are held in book entry form, the undersigned
agrees that the Company may give stop transfer instructions to the depository
to ensure compliance with the provisions hereof.


 


8.             
Effect of Certain Transactions.  In the event of a
Change of Control (as defined in the Stockholders Agreement), all then
outstanding and unvested Shares acquired by the undersigned hereunder shall
automatically and immediately vest.


 


9.              
Joinder to Agreements. 
The undersigned acknowledges and agrees that the Shares acquired hereunder will
be subject to the Stockholders Agreement and to the Registration Rights
Agreement and the transfer and other restrictions, rights, and obligations set
forth in those agreements.  By executing this Agreement, the undersigned
hereby becomes a party to and bound by the Stockholders Agreement and the
Registration Rights Agreement as a Manager (as such term is defined in those
agreements), without any further action on the part of the undersigned, the
Company or any other Person.


 


10.         Legend.  Any certificates
representing unvested Shares shall be held by the Company, and any such
certificate shall contain a legend substantially in the following form:


 


THE
TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF STOCK REPRESENTED HEREBY
ARE SUBJECT TO THE TERMS AND CONDITIONS (INCLUDING FORFEITURE) OF THE MICHAELS
STORES, INC. 2006 EQUITY INCENTIVE PLAN AND A RESTRICTED STOCK AWARD AGREEMENT
ENTERED INTO BETWEEN THE REGISTERED OWNER AND MICHAELS STORES, INC. 
COPIES OF SUCH PLAN AND AGREEMENT ARE ON FILE IN THE OFFICES OF MICHAELS
STORES, INC.


 


As
soon as practicable following the vesting of any such Shares the Company shall
cause a certificate or certificates covering such Shares, without the aforesaid
legend, to be issued and delivered to the undersigned.  If any Shares are
held in book-entry form, the Company may take such steps as it deems necessary
or appropriate to record and manifest the restrictions applicable to such
Shares.


 


11.         Dividends, etc..  The undersigned
shall be entitled to (i) receive any and all dividends or other
distributions paid with respect to those Shares of which he is the record owner
on the record date for such dividend or other distribution, and (ii) vote
any Shares of which he is the record owner on the record date for such vote; provided, however, that any property
(other 


 

















 


than
cash) distributed with respect to a share of Stock (the “associated share”)
acquired hereunder, including without limitation a distribution of Stock by
reason of a stock dividend, stock split or otherwise, or a distribution of
other securities with respect to an associated share, shall be subject to the
restrictions of this Agreement in the same manner and for so long as the
associated share remains subject to such restrictions, and shall be promptly
forfeited if and when the associated share is so forfeited;  and further provided, that the
Administrator may require that any cash distribution with respect to the Shares
other than a normal cash dividend be placed in escrow or otherwise made subject
to such restrictions as the Administrator deems appropriate to carry out the
intent of the Plan.  References in this Agreement to the Shares
shall refer, mutatis mutandis,
to any such restricted amounts.


 


12.         Sale of Vested Shares.  The
undersigned understands that he will be free to sell any Share once it has
vested, subject to (i) satisfaction of any applicable tax withholding
requirements with respect to the vesting or transfer of such Share; (ii) the
completion of any administrative steps (for example, but without limitation,
the transfer of certificates) that the Company may reasonably impose; (iii) applicable
requirements of federal and state securities laws, (iv) the Stockholders
Agreement and (v) the Registration Rights Agreement.


 


13.         Certain Tax Matters.  The
undersigned expressly acknowledges the following:


 


a.    The undersigned has been
advised to confer promptly with a professional tax advisor to consider whether
the undersigned should make a so-called “83(b) election” with respect to
the Shares.  Any such election, to be effective, must be made in
accordance with applicable regulations and within thirty (30) days following
the date of this Award.  The Company has made no recommendation to the
undersigned with respect to the advisability of making such an election.


 


b.    The award or vesting of the
Shares acquired hereunder, and the payment of dividends with respect to such
Shares, may give rise to “wages” subject to withholding.  The undersigned
expressly acknowledges and agrees that his rights hereunder are subject to his
promptly paying to the Company in cash (or by such other means as may be
acceptable to the Company in its discretion, including, if the Administrator so
determines, by the delivery of previously acquired Stock or shares of Stock
acquired hereunder or by the withholding of amounts from any payment hereunder)
all taxes required to be withheld in connection with such award, vesting or
payment.


 


	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  John B. Menzer

  
	
   

  	
  John
  B. Menzer

  



 


Dated: 
June 2, 2009


 


The
foregoing Restricted Stock Award Agreement is hereby accepted:


 


MICHAELS STORES, INC.


 


	
  By:

  	
  /s/
  Michael J. Veitenheimer

  	
   

  
	
   

  	
  Michael
  J. Veitenheimer

  
	
   

  	
  Senior
  Vice President — General Counsel and Secretary