Exhibit 10.3

MICHAELS STORES, INC.
STOCK OPTION AGREEMENT

             
 
  Participant:        
 
     
 
   
 
  No. of Shares:        
 
     
 
   
 
  Option Price:        
 
     
 
   
 
  Date of Grant:        
 
     
 
   
 
  Expiration Date:        
 
     
 
   

     Under the terms and conditions of the 2005 Incentive Compensation Plan (the
“Plan”) of Michaels Stores, Inc., a Delaware corporation (the “Company”), a copy
of which is attached hereto and incorporated herein by reference, the Company
grants to the individual whose name is set forth above (the “Participant”) an
option (“Option”) to purchase the number of shares of the Company’s Common
Stock, par value $0.10 per share, set forth above at the price per share set
forth above (the “Option Price”). Terms not defined in this Agreement have the
meanings set forth in the Plan.

     The Option will be for a term commencing on the Date of Grant set forth
above and ending at 5:00 p.m. Dallas, Texas time on the Expiration Date set
forth above. During the term of the Option, the Option will become 100%
exercisable on and after the Date of Grant. In no event, however, will the
Participant be entitled to acquire a fraction of a share of Common Stock
pursuant to the Option.

     Notwithstanding the Expiration Date set forth above, in the event the
Participant’s service with the Company is terminated by retirement at or after
the age of 60, long-term disability (as determined by the Committee in good
faith) or death, the portion of the Option which is unexpired at the time of
such termination of service will expire at 5:00 p.m. Dallas, Texas time (i) one
day prior to the fifth anniversary of such retirement or long-term disability or
(ii) one day prior to the third anniversary of such death.

     In the event the Participant’s service with the Company is terminated for
any reason other than such retirement, long-term disability or death, the Option
will expire at 5:00 p.m. Dallas, Texas time on the 30th calendar day after such
termination.

     Payment of the Option Price of any shares purchased under the Option will
be made pursuant to any of the provisions of, and in accordance with, Paragraph
6(c) of the Plan (or any successor provision).

     The Option may not be sold, pledged, assigned or transferred in any manner
other than by will or the laws of descent and distribution, pursuant to a
qualified domestic relations order or, with the consent of the Committee, by
gifts to family members of the Participant, including to trusts in which family
members of the Participant own more than 50% of the beneficial interests, to
foundations in which family members of the Participant or the Participant
control the management of assets, to other entities in which more than 50% of
the voting interests are owned by family members of the Participant or the
Participant.

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     The Participant hereby accepts and agrees to be bound by all the terms and
conditions of the Plan and this Agreement. Any amendment to the Plan will be
deemed to be an amendment to this Agreement to the extent that the Plan
amendment is applicable hereto; provided, however, that no amendment will
adversely affect the rights of the Participant under this Agreement without the
Participant’s consent. This Agreement may be executed simultaneously in multiple
counterparts, each of which will be deemed an original, but all of which
together constitute one and the same instrument.

              ACCEPTED:       MICHAELS STORES, INC.
 
           
 
      By:    
 
Signature of Participant
 
 
Social Security #   Title:  
 
 
         
 

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