**Exhibit 10.2**
**DIRECTOR INDEMNIFICATION AGREEMENT**
     ThisDirector Indemnification Agreement, dated as of                        , 2003(this “***Agreement***”), is made by and between Michaels Stores, Inc., a Delawarecorporation (the “***Company***”), and                          (“***Indemnitee***”).
**RECITALS:**
     A. Section 141 of the Delaware General Corporation Law provides that thebusiness and affairs of a corporation shall be managed by or under thedirection of its board of directors.
     B. By virtue of the managerial prerogatives vested in the directors of aDelaware corporation, directors act as fiduciaries of the corporation and itsstockholders.
     C. Thus, it is critically important to the Company and its stockholdersthat the Company be able to attract and retain the most capable personsreasonably available to serve as directors of the Company.
     D. In recognition of the need for corporations to be able to inducecapable and responsible persons to accept positions in corporate management,Delaware law authorizes (and in some instances requires) corporations toindemnify their directors and officers, and further authorizes corporations topurchase and maintain insurance for the benefit of their directors andofficers.
     E. The Delaware courts have recognized that indemnification by acorporation serves the dual policies of (1) allowing corporate officials toresist unjustified lawsuits, secure in the knowledge that, if vindicated, thecorporation will bear the expense of litigation and (2) encouraging capablewomen and men to serve as corporate directors and officers, secure in theknowledge that the corporation will absorb the costs of defending their honestyand integrity.
     F. The number of lawsuits challenging the judgment and actions ofdirectors of Delaware corporations, the costs of defending those lawsuits, andthe threat to directors’ personal assets have all materially increased over thepast several years, chilling the willingness of capable women and men toundertake the responsibilities imposed on corporate directors.
     G. Recent federal legislation and rules adopted by the Securities andExchange Commission and the national securities exchanges have imposedadditional disclosure and corporate governance obligations on directors ofpublic companies and have exposed such directors to new and substantiallybroadened civil liabilities.
     H. These legislative and regulatory initiatives have also exposeddirectors of public companies to a significantly greater risk of criminalproceedings, with attendant defense costs and potential criminal fines andpenalties.
 

 

     I. Under Delaware law, a director’s right to be reimbursed for the costsof defense of criminal actions, whether such claims are asserted under state orfederal law, does not depend upon the merits of the claims asserted against thedirector and is separate and distinct from any right to indemnification thedirector may be able to establish, and indemnification of the director againstcriminal fines and penalties is permitted if the director satisfies theapplicable standard of conduct.
     J. Indemnitee is a director of the Company and his/her willingness toserve in such capacity is predicated, in substantial part, upon the Company’swillingness to indemnify him/her in accordance with the principles reflectedabove, to the fullest extent permitted by the laws of the state of Delaware,and upon the other undertakings set forth in this Agreement.
     K. Therefore, in recognition of the need to provide Indemnitee withsubstantial protection against personal liability, in order to procureIndemnitee’s continued service as a director of the Company and to enhanceIndemnitee’s ability to serve the Company in an effective manner, and in orderto provide such protection pursuant to express contract rights (intended to beenforceable irrespective of, among other things, any amendment to the Company’scertificate of incorporation or bylaws (collectively, the ***“ConstituentDocuments”***), any change in the composition of the Company’s Board of Directors(the ***“Board”***) or any change-in-control or business combination transactionrelating to the Company), the Company wishes to provide in this Agreement forthe indemnification of and the advancement of Expenses (as defined in Section1(c)) to Indemnitee as set forth in this Agreement and for the continuedcoverage of Indemnitee under the Company’s directors’ and officers’ liabilityinsurance policies.
     L. In light of the considerations referred to in the preceding recitals,it is the Company’s intention and desire that the provisions of this Agreementbe construed liberally, subject to their express terms, to maximize theprotections to be provided to Indemnitee hereunder.
**AGREEMENT:**
     NOW, THEREFORE, the parties hereby agree as follows:
     **1. Certain Definitions.**In addition to terms defined elsewhere herein,the following terms have the following meanings when used in this Agreementwith initial capital letters:
        (a)***“Claim”*** means (i) any threatened, asserted, pending or completedclaim, demand, action, suit or proceeding, whether civil, criminal,administrative, arbitrative, investigative or other, and whether made pursuantto federal, state or other law; and (ii) anyinquiry or investigation, whether made, instituted or conducted by theCompany or any other party, including without limitation any federal, state orother governmental entity, that Indemnitee determines might lead to theinstitution of any such claim, demand, action, suit or proceeding.
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        (b) ***“Controlled Affiliate”***means any corporation, limited liabilitycompany, partnership, joint venture, trust or other entity or enterprise,whether or not for profit, that is directly or indirectly controlled by theCompany. For purposes of this definition, “control” means the possession,directly or indirectly, of the power to direct or cause the direction of themanagement or policies of an entity or enterprise, whether through theownership of voting securities, through other voting rights, by contract orotherwise; *provided*that direct or indirect beneficial ownership of capitalstock or other interests in an entity or enterprise entitling the holder tocast 20% or more of the total number of votes generally entitled to be cast inthe election of directors (or persons performing comparable functions) of suchentity or enterprise shall be deemed to constitute control for purposes of thisdefinition.
        (c) ***“Disinterested Director”*** means a director of the Company who is notand was not a party to the Claim in respect of which indemnification is soughtby Indemnitee.
        (d)***“Expenses”*** means attorneys’ and experts’ fees and expenses and allother costs and expenses paid or payable in connection with investigating,defending, being a witness in or participating in (including on appeal), orpreparing to investigate, defend, be a witness in or participate in (includingon appeal), any Claim.
        (e) ***“Incumbent Directors”***means the individuals who, as of the datehereof, are Directors of the Company and any individual becoming a Directorsubsequent to the date hereof whose election, nomination for election by theCompany’s stockholders, or appointment, was approved by a vote of at leasttwo-thirds of the then Incumbent Directors (either by a specific vote or byapproval of the proxy statement of the Company in which such person is named asa nominee for director, without objection to such nomination); *provided*,*however*, that an individual shall not be an Incumbent Director if suchindividual’s election or appointment to the Board occurs as a result of anactual or threatened election contest (as described in Rule 14a-12(c) of theExchange Act) with respect to the election or removal of Directors or otheractual or threatened solicitation of proxies or consents by or on behalf of aPerson other than the Board.
        (f)***“Indemnifiable Claim”*** means any Claim based upon, arising out of orresulting from (i) any actual, alleged or suspected act or failure to act byIndemnitee in his or her capacity as a director, officer, employee or agent ofthe Company or as a director, officer, employee, member, manager, trustee oragent of any other corporation, limited liability company, partnership, jointventure, trust or other entity or enterprise, whether or not for profit, as towhich Indemnitee is or was serving at the request of the Company as a director,officer, employee, member, manager, trustee or agent, (ii) any actual, allegedor suspected act or failure to act by Indemnitee in respect of any business,transaction,communication, filing, disclosure or other activity of the Company or anyother entity or enterprise referred to in clause (i) of this sentence, or (iii)Indemnitee’s status as a current or former director, officer, employee or agentof the Company or as a current or former director, officer, employee, member,manager, trustee or agent of the Company or any other entity or enterprisereferred to in clause (i) of this sentence or any actual, alleged or suspectedact or failure to act by Indemnitee in connection with any obligation orrestriction
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imposed upon Indemnitee by reason of such status. In addition toany service at the actual request of the Company, for purposes of thisAgreement, Indemnitee shall be deemed to be serving or to have served at therequest of the Company as a director, officer, employee, member, manager,trustee or agent of another entity or enterprise if Indemnitee is or wasserving as a director, officer, employee, member, manager, trustee or agent ofsuch entity or enterprise and (i) such entity or enterprise is or at the timeof such service was a Controlled Affiliate, (ii) such entity or enterprise isor at the time of such service was an employee benefit plan (or related trust)sponsored or maintained by the Company or a Controlled Affiliate, or (iii) theCompany or a Controlled Affiliate directly or indirectly caused Indemnitee tobe nominated, elected, appointed, designated, employed, engaged or selected toserve in such capacity.
        (g)***“Indemnifiable Losses”***means any and all Losses relating to, arisingout of or resulting from any Indemnifiable Claim.
        (h) ***“Independent Counsel”*** means a law firm, or a member of a law firm,that is experienced in matters of corporation law and neither presently is, norin the past five years has been, retained to represent: (i) the Company orIndemnitee in any matter material to either such party (other than with respectto matters concerning the Indemnitee under this Agreement, or of otherindemnitees under similar indemnification agreements), or (ii) any other partyto the Indemnifiable Claim giving rise to a claim for indemnificationhereunder. Notwithstanding the foregoing, the term “Independent Counsel” shallnot include any person who, under the applicable standards of professionalconduct then prevailing, would have a conflict of interest in representingeither the Company or Indemnitee in an action to determine Indemnitee’s rightsunder this Agreement.
        (i)***“Losses”*** means any and all Expenses, damages, losses, liabilities,judgments, fines, penalties (whether civil, criminal or other) and amounts paidin settlement, including without limitation all interest, assessments and othercharges paid or payable in connection with or in respect of any of theforegoing.
     **2. Indemnification Obligation.**Subject to Section 7, the Company shallindemnify, defend and hold harmless Indemnitee, to the fullest extent permittedby the laws of the State of Delaware in effect on the date hereof or as suchlaws may from time to time hereafter be amended to increase the scope of suchpermitted indemnification, against any and all Indemnifiable Claims andIndemnifiable Losses; *provided*, *however*, that, except as provided in Sections 5and 20, Indemnitee shall not be entitled to indemnification pursuant to thisAgreement in connection with any Claim initiated by Indemnitee against theCompany or any director or officer of the Company unless the Company hasjoined in or consented to the initiation of such Claim.
     **3. Advancement of Expenses.**Indemnitee shall have the right toadvancement by the Company prior to the final disposition of any IndemnifiableClaim of any and all Expenses relating to, arising out of or resulting from anyIndemnifiable Claim paid or incurred by Indemnitee or which Indemniteedetermines are reasonably likely to be paid or incurred by Indemnitee.Indemnitee’s right to such advancement is not subject to the
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satisfaction ofany standard of conduct. Without limiting the generality or effect of theforegoing, within five business days after any request by Indemnitee, theCompany shall, in accordance with such request (but without duplication), (a)pay such Expenses on behalf of Indemnitee, (b) advance to Indemnitee funds inan amount sufficient to pay such Expenses, or (c) reimburse Indemnitee for suchExpenses; *provided*that Indemnitee shall repay, without interest any amountsactually advanced to Indemnitee that, at the final disposition of theIndemnifiable Claim to which the advance related, were in excess of amountspaid or payable by Indemnitee in respect of Expenses relating to, arising outof or resulting from such Indemnifiable Claim. In connection with any suchpayment, advancement or reimbursement, Indemnitee shall execute and deliver tothe Company an undertaking, which need not be secured and shall be acceptedwithout reference to Indemnitee’s ability to repay the Expenses, by or onbehalf of the Indemnitee, to repay any amounts paid, advanced or reimbursed bythe Company in respect of Expenses relating to, arising out of or resultingfrom any Indemnifiable Claim in respect of which it shall have been determined,following the final disposition of such Indemnifiable Claim and in accordancewith Section 7, that Indemnitee is not entitled to indemnification hereunder.
     **4. Indemnification for Additional Expenses.**Without limiting thegenerality or effect of the foregoing, the Company shall indemnify and holdharmless Indemnitee against and, if requested by Indemnitee, shall reimburseIndemnitee for, or advance to Indemnitee, within five business days of suchrequest, any and all Expenses paid or incurred by Indemnitee or whichIndemnitee determines are reasonably likely to be paid or incurred byIndemnitee in connection with any Claim made, instituted or conducted byIndemnitee for (a) indemnification or reimbursement or advance payment ofExpenses by the Company under any provision of this Agreement, or under anyother agreement or provision of the Constituent Documents now or hereafter ineffect relating to Indemnifiable Claims, and/or (b) recovery under anydirectors’ and officers’ liability insurance policies maintained by theCompany, regardless in each case of whether Indemnitee ultimately is determinedto be entitled to such indemnification, reimbursement, advance or insurancerecovery, as the case may be; *provided*, *however*, that Indemnitee shall return,without interest, any such advance of Expenses (or portion thereof) whichremains unspent at the final disposition of the Claim to which the advancerelated.
     **5. Partial Indemnity.**If Indemnitee is entitled under any provision ofthis Agreement to indemnification by the Company for some or a portion of anyIndemnifiable Loss but not for all of the total amount thereof, the Companyshall nevertheless indemnify Indemnitee for the portion thereof to whichIndemnitee is entitled.
     **6. Procedurefor Notification.** To obtain indemnification under thisAgreement in respect of an Indemnifiable Claim or Indemnifiable Loss,Indemnitee shall submit to the Company a written request therefor, including abrief description (based upon information then available to Indemnitee) of suchIndemnifiable Claim or Indemnifiable Loss. If, at the time of the receipt ofsuch request, the Company has directors’ and officers’ liability insurance ineffect under which coverage for such Indemnifiable Claim or Indemnifiable Lossis potentially available, the Company shall give prompt written notice of suchIndemnifiable Claim or Indemnifiable Loss to the applicable insurers inaccordance with the
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procedures set forth in the applicable policies. TheCompany shall provide to Indemnitee a copy of such notice delivered to theapplicable insurers, and copies of all subsequent correspondence between theCompany and such insurers regarding the Indemnifiable Claim or IndemnifiableLoss, in each case substantially concurrently with the delivery or receiptthereof by the Company. The failure by Indemnitee to timely notify the Companyof any Indemnifiable Claim or Indemnifiable Loss shall not relieve the Companyfrom any liability hereunder unless, and only to the extent that, the Companydid not otherwise learn of such Indemnifiable Claim or Indemnifiable Loss andsuch failure results in forfeiture by the Company of substantial defenses,rights or insurance coverage.
     **7. Determinationof Right to Indemnification.**
        (a) To the extent that Indemnitee shall have been successful on the meritsor otherwise in defense of any Indemnifiable Claim or any portion thereof or indefense of any issue or matter therein, including without limitation dismissalwithout prejudice, Indemnitee shall be indemnified against all IndemnifiableLosses relating to, arising out of or resulting from such Indemnifiable Claimin accordance with Section 2 and no Standard of Conduct Determination (asdefined in Section 7(b)) shall be required.
        (b) To the extent that the provisions of Section 7(a) are inapplicable toan Indemnifiable Claim that shall have been finally disposed of, anydetermination of whether Indemnitee has satisfied any applicable standard ofconduct under Delaware law that is a legally required condition precedent toindemnification of Indemnitee hereunder against Indemnifiable Losses relatingto, arising out of or resulting from such Indemnifiable Claim (a “***Standard ofConduct Determination***”) shall be made as follows: (i) by a majority vote ofthe Disinterested Directors, even if less than a quorum of the Board, (ii) ifsuch Disinterested Directors so direct, by a majority vote of a committee ofDisinterested Directors designated by a majority vote of all DisinterestedDirectors, or (iii) if there are no such Disinterested Directors or ifrequested by Indemnitee, by Independent Counsel in a written opinion addressedto the Board, a copy of which shall be delivered to Indemnitee. Indemniteewill cooperate with the person or persons making such Standard of ConductDetermination, including providing to such person or persons, upon reasonableadvance request, any documentation or information which is not privileged orotherwise protected from disclosure and which is reasonably available toIndemnitee and reasonably necessary to such determination. The Company shallindemnify and hold harmless Indemnitee against and, if requested by Indemnitee,shall reimburse Indemnitee for, or advance to Indemnitee, within five businessdays of such request, any and all costs and expenses (including attorneys’and experts’ fees and expenses) incurred by Indemnitee in so cooperatingwith the person or persons making such Standard of Conduct Determination.
        (c) The Company shall use its reasonable best efforts to cause anyStandard of Conduct Determination required under Section 7(b) to be made aspromptly as practicable. If (i) the person or persons empowered or selectedunder Section 7 to make the Standard of Conduct Determination shall not havemade a determination within 30 days after the later of (A) receipt by theCompany of written notice from Indemnitee advising the Company of the finaldisposition of the applicable Indemnifiable Claim (the date of such receiptbeing the
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***“Notification Date”***) and (B) the selection of an Independent Counsel,if such determination is to be made by Independent Counsel, that is permittedunder the provisions of Section 7(e) to make such determination and (ii)Indemnitee shall have fulfilled its obligations set forth in the secondsentence of Section 7(b), then Indemnitee shall be deemed to have satisfied theapplicable standard of conduct; *provided*that such 30-day period may beextended for a reasonable time, not to exceed an additional 30 days, if theperson or persons making such determination in good faith requires suchadditional time for the obtaining or evaluation or documentation and/orinformation relating thereto.
        (d) If (i) Indemnitee shall be entitled to indemnification hereunderagainst any Indemnifiable Losses pursuant to Section 7(a), (ii) nodetermination of whether Indemnitee has satisfied any applicable standard ofconduct under Delaware law is a legally required condition precedent toindemnification of Indemnitee hereunder against any Indemnifiable Losses, or(iii) Indemnitee has been determined or deemed pursuant to Section 7(b) or (c)to have satisfied any applicable standard of conduct under Delaware law whichis a legally required condition precedent to indemnification of Indemniteehereunder against any Indemnifiable Losses, then the Company shall pay toIndemnitee, within five business days after the later of (x) the NotificationDate in respect of the Indemnifiable Claim or portion thereof to which suchIndemnifiable Losses are related, out of which such Indemnifiable Losses aroseor from which such Indemnifiable Losses resulted and (y) the earliest date onwhich the applicable criterion specified in clause (i), (ii) or (iii) aboveshall have been satisfied, an amount equal to the amount of such IndemnifiableLosses.
        (e) If a Standard of Conduct Determination is to be made by IndependentCounsel pursuant to Section 7(b), the Independent Counsel shall be selected bythe Board of Directors, and the Company shall give written notice to Indemniteeadvising him or her of the identity of the Independent Counsel so selected.Indemnitee may, within five business days after receiving written notice ofselection from the Company, deliver to the Company a written objection to suchselection; *provided*, *however*, that such objection may be asserted only on theground that the Independent Counsel so selected does not satisfy the criteriaset forth in the definition of “Independent Counsel” in Section 1(h), and theobjection shall set forth with particularity the factual basis of suchassertion. Absent a proper and timely objection, the person or firm soselected shall act as Independent Counsel. If such written objection isproperly and timely made and substantiated, the Independent Counsel so selectedmay not serve as Independent Counsel unless and until such objection iswithdrawn or a court has determined that such objection is without merit. Ifno Independent Counsel that ispermitted under the foregoing provisions of this Section 7(e) to make theStandard of Conduct Determination shall have been selected within 30 days afterthe Company gives its initial notice pursuant to the first sentence of thisSection 7(e), either the Company or Indemnitee may petition the Court ofChancery of the State of Delaware for resolution of any objection which shallhave been made by Indemnitee to the Company’s selection of Independent Counseland/or for the appointment as Independent Counsel of a person selected by theCourt or by such other person as the Court shall designate, and the person orfirm with respect to whom all objections are so resolved or the person or firmso appointed will act as Independent Counsel. In all events, the Company shallpay all of the reasonable
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fees and expenses of the Independent Counsel incurredin connection with the Independent Counsel’s determination pursuant to Section7(b).
     **8. Presumption of Entitlement.**In making any Standard of ConductDetermination, the person or persons making such determination shall presumethat Indemnitee has satisfied the applicable standard of conduct, and theCompany may overcome such presumption only by its adducing clear and convincingevidence to the contrary. Any Standard of Conduct Determination that isadverse to Indemnitee may be challenged by the Indemnitee in the Court ofChancery of the State of Delaware. No determination by the Company (includingby its directors or any Independent Counsel) that Indemnitee has not satisfiedany applicable standard of conduct shall be a defense to any Claim byIndemnitee for indemnification or reimbursement or advance payment of Expensesby the Company hereunder or create a presumption that Indemnitee has not metany applicable standard of conduct.
     **9. No Other Presumption.**For purposes of this Agreement, the terminationof any Claim by judgment, order, settlement (whether with or without courtapproval) or conviction, or upon a plea of *nolo contendere*or its equivalent,will not create a presumption that Indemnitee did not meet any applicablestandard of conduct or that indemnification hereunder is otherwise notpermitted.
     **10. Non-Exclusivity.**The rights of Indemnitee hereunder will be inaddition to any other rights Indemnitee may have under the ConstituentDocuments, or the substantive laws of the Company’s jurisdiction ofincorporation, any other contract or otherwise (collectively, “***Other IndemnityProvisions***”); *provided*, *however*, that (a) to the extent that Indemniteeotherwise would have any greater right to indemnification under any OtherIndemnity Provision, Indemnitee will be deemed to have such greater righthereunder and (b) to the extent that any change is made to any Other IndemnityProvision which permits any greater right to indemnification than that providedunder this Agreement as of the date hereof, Indemnitee will be deemed to havesuch greater right hereunder. The Company will not adopt any amendment to anyof the Constituent Documents the effect of which would be to deny, diminish orencumber Indemnitee’s right to indemnification under this Agreement or anyOther Indemnity Provision.
     **11. Liability Insurance and Funding.**For the duration of Indemnitee’sservice as a director and/or officer of the Company, and thereafter for so longas Indemnitee shall besubject to any pending or possible Indemnifiable Claim, the Company shalluse commercially reasonable efforts (taking into account the scope and amountof coverage available relative to the cost thereof) to cause to be maintainedin effect policies of directors’ and officers’ liability insurance providingcoverage for directors and/or officers of the Company that is at leastsubstantially comparable in scope and amount to that provided by the Company’scurrent policies of directors’ and officers’ liability insurance. The Companyshall provide Indemnitee with a copy of all directors’ and officers’ liabilityinsurance applications, binders, policies, declarations, endorsements and otherrelated materials, and shall provide Indemnitee with a reasonable opportunityto review and comment on the same. Without limiting the generality or effectof the two immediately preceding sentences, the Company
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shall not discontinueor significantly reduce the scope or amount of coverage from one policy periodto the next (i) without the prior approval thereof by a majority vote of theIncumbent Directors, even if less than a quorum, or (ii) if at the time thatany such discontinuation or significant reduction in the scope or amount ofcoverage is proposed there are no Incumbent Directors, without the priorwritten consent of Indemnitee (which consent shall not be unreasonably withheldor delayed). In all policies of directors’ and officers’ liability insuranceobtained by the Company, Indemnitee shall be named as an insured in such amanner as to provide Indemnitee the same rights and benefits, subject to thesame limitations, as are accorded to the Company’s directors and officers mostfavorably insured by such policy. The Company may, but shall not be requiredto, create a trust fund, grant a security interest or use other means,including without limitation a letter of credit, to ensure the payment of suchamounts as may be necessary to satisfy its obligations to indemnify and advanceexpenses pursuant to this Agreement.
     **12. Subrogation.**In the event of payment under this Agreement, theCompany shall be subrogated to the extent of such payment to all of the relatedrights of recovery of Indemnitee against other persons or entities (other thanIndemnitee’s successors), including any entity or enterprise referred to inclause (i) of the definition of “Indemnifiable Claim” in Section 1(f).Indemnitee shall execute all papers reasonably required to evidence such rights(all of Indemnitee’s reasonable Expenses, including attorneys’ fees andcharges, related thereto to be reimbursed by or, at the option of Indemnitee,advanced by the Company).
     **13. No Duplication of Payments.**The Company shall not be liable underthis Agreement to make any payment to Indemnitee in respect of anyIndemnifiable Losses to the extent Indemnitee has otherwise actually receivedpayment (net of Expenses incurred in connection therewith) under any insurancepolicy, the Constituent Documents and Other Indemnity Provisions or otherwise(including from any entity or enterprise referred to in clause (i) of thedefinition of “Indemnifiable Claim” in Section 1(f)) in respect of suchIndemnifiable Losses otherwise indemnifiable hereunder.
     **14. Defense of Claims.**The Company shall be entitled to participate inthe defense of any Indemnifiable Claim or to assume the defense thereof, withcounsel reasonably satisfactory to the Indemnitee; *provided*that if Indemniteebelieves, after consultation with counsel selected by Indemnitee, that (a) theuse of counsel chosen by the Company to represent Indemnitee would present suchcounsel with an actual or potential conflict, (b) thenamed parties in any such Indemnifiable Claim (including any impleadedparties) include both the Company and Indemnitee and Indemnitee shall concludethat there may be one or more legal defenses available to him or her that aredifferent from or in addition to those available to the Company, or (c) anysuch representation by such counsel would be precluded under the applicablestandards of professional conduct then prevailing, then Indemnitee shall beentitled to retain separate counsel (but not more than one law firm plus, ifapplicable, local counsel in respect of any particular Indemnifiable Claim) atthe Company’s expense. The Company shall not be liable to Indemnitee underthis Agreement for any amounts paid in settlement of any threatened or
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pendingIndemnifiable Claim effected without the Company’s prior written consent. TheCompany shall not, without the prior written consent of the Indemnitee, effectany settlement of any threatened or pending Indemnifiable Claim which theIndemnitee is or could have been a party unless such settlement solely involvesthe payment of money and includes a complete and unconditional release of theIndemnitee from all liability on any claims that are the subject matter of suchIndemnifiable Claim. Neither the Company nor Indemnitee shall unreasonablywithhold its consent to any proposed settlement; *provided*that Indemnitee maywithhold consent to any settlement that does not provide a complete andunconditional release of Indemnitee.
     **15. Successors and Binding Agreement.**(a) The Company shall require anysuccessor (whether direct or indirect, by purchase, merger, consolidation,reorganization or otherwise) to all or substantially all of the business orassets of the Company, by agreement in form and substance satisfactory toIndemnitee and his or her counsel, expressly to assume and agree to performthis Agreement in the same manner and to the same extent the Company would berequired to perform if no such succession had taken place. This Agreementshall be binding upon and inure to the benefit of the Company and any successorto the Company, including without limitation any person acquiring directly orindirectly all or substantially all of the business or assets of the Companywhether by purchase, merger, consolidation, reorganization or otherwise (andsuch successor will thereafter be deemed the “***Company***” for purposes of thisAgreement), but shall not otherwise be assignable or delegatable by theCompany.
        (b) This Agreement shall inure to the benefit of and be enforceable by theIndemnitee’s personal or legal representatives, executors, administrators,heirs, distributees, legatees and other successors.
        (c) This Agreement is personal in nature and neither of the parties heretoshall, without the consent of the other, assign or delegate this Agreement orany rights or obligations hereunder except as expressly provided in Sections15(a) and 15(b). Without limiting the generality or effect of the foregoing,Indemnitee’s right to receive payments hereunder shall not be assignable,whether by pledge, creation of a security interest or otherwise, other than bya transfer by the Indemnitee’s will or by the laws of descent and distribution,and, in the event of any attempted assignment or transfer contrary to thisSection 15(c), the Company shall have no liability to pay any amount soattempted to be assigned or transferred.
     **16. Notices.**For all purposes of this Agreement, all communications,including without limitation notices, consents, requests or approvals, requiredor permitted to be given hereunder shall be in writing and shall be deemed tohave been duly given when hand delivered or dispatched by electronic facsimiletransmission (with receipt thereof orally confirmed), or five business daysafter having been mailed by United States registered or certified mail, returnreceipt requested, postage prepaid or one business day after having been sentfor next-day delivery by a nationally recognized overnight courier service,addressed to the Company (to the attention of the Secretary of the Company) andto Indemnitee at the addresses shown on the signature page hereto, or to suchother address as any party may have furnished to the other in writing and inaccordance herewith, except that notices of changes of address will beeffective only upon receipt.
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     **17. Governing Law.**The validity, interpretation, construction andperformance of this Agreement shall be governed by and construed in accordancewith the substantive laws of the State of Delaware, without giving effect tothe principles of conflict of laws of such State. The Company and Indemniteeeach hereby irrevocably consent to the jurisdiction of the Chancery Court ofthe State of Delaware for all purposes in connection with any action orproceeding which arises out of or relates to this Agreement and agree that anyaction instituted under this Agreement shall be brought only in the ChanceryCourt of the State of Delaware.
     **18. Validity.**If any provision of this Agreement or the application ofany provision hereof to any person or circumstance is held invalid,unenforceable or otherwise illegal, the remainder of this Agreement and theapplication of such provision to any other person or circumstance shall not beaffected, and the provision so held to be invalid, unenforceable or otherwiseillegal shall be reformed to the extent, and only to the extent, necessary tomake it enforceable, valid or legal. In the event that any court or otheradjudicative body shall decline to reform any provision of this Agreement heldto be invalid, unenforceable or otherwise illegal as contemplated by theimmediately preceding sentence, the parties thereto shall take all such actionas may be necessary or appropriate to replace the provision so held to beinvalid, unenforceable or otherwise illegal with one or more alternativeprovisions that effectuate the purpose and intent of the original provisions ofthis Agreement as fully as possible without being invalid, unenforceable orotherwise illegal.
     **19. Miscellaneous.**No provision of this Agreement may be waived, modifiedor discharged unless such waiver, modification or discharge is agreed to inwriting signed by Indemnitee and the Company. No waiver by either party heretoat any time of any breach by the other party hereto or compliance with anycondition or provision of this Agreement to be performed by such other partyshall be deemed a waiver of similar or dissimilar provisions or conditions atthe same or at any prior or subsequent time. No agreements or representations,oral or otherwise, expressed or implied with respect to the subject matterhereof have been made by either party that are not set forth expressly in thisAgreement. References to Sections are to references to Sections of thisAgreement.
     **20. Legal Fees and Expenses.**It is the intent of the Company thatIndemnitee not be required to incur legal fees and or other Expenses associatedwith the interpretation, enforcement or defense of Indemnitee’s rights underthis Agreement by litigation or otherwise because the cost and expense thereofwould substantially detract from the benefits intended to be extended toIndemnitee hereunder. Accordingly, without limiting the generality or effectof any other provision hereof, if it should appear to Indemnitee that theCompany has failed to comply with any of its obligations under this Agreementor in the event that the Company or any other person takes or threatens to takeany action to declare this Agreement void or unenforceable, or institutes anylitigation or other action or proceeding designed to deny, or to recover from,Indemnitee the benefits provided or intended to be provided to Indemniteehereunder, the Company irrevocably authorizes the Indemnitee from time to timeto retain counsel of Indemnitee’s choice, at the expense of the Company ashereafter provided, to advise and represent Indemnitee in connection with anysuch interpretation, enforcement or defense, including without limitation theinitiation or
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defense of any litigation or other legal action, whether by oragainst the Company or any director, officer, stockholder or other personaffiliated with the Company, in any jurisdiction. Notwithstanding any existingor prior attorney-client relationship between the Company and such counsel, theCompany irrevocably consents to Indemnitee’s entering into an attorney-clientrelationship with such counsel, and in that connection the Company andIndemnitee agree that a confidential relationship shall exist betweenIndemnitee and such counsel. Without respect to whether Indemnitee prevails,in whole or in part, in connection with any of the foregoing, the Company willpay and be solely financially responsible for any and all attorneys’ andrelated fees and expenses incurred by Indemnitee in connection with any of theforegoing.
     **21. Certain Interpretive Matters.**No provision of this Agreement shall beinterpreted in favor of, or against, either of the parties hereto by reason ofthe extent to which any such party or its counsel participated in the draftingthereof or by reason of the extent to which any such provision is inconsistentwith any prior draft hereof or thereof.
     **22. EntireAgreement.** This Agreement and the Constituent Documentsconstitute the entire agreement, and supersede all prior agreements andunderstandings, both written and oral, between the parties hereto with respectto the subject matter of this Agreement. Any prior agreements orunderstandings between the parties hereto with respect to indemnification arehereby terminated and of no further force or effect.
     **23. Counterparts.**This Agreement may be executed in one or morecounterparts, each of which will be deemed to be an original but all of whichtogether shall constitute one and the same agreement.
**[Signatures Appear On Following Page]**
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     IN WITNESS WHEREOF, Indemnitee has executed and the Company has caused itsduly authorized representative to execute this Agreement as of the date firstabove written.       MICHAELS STORES, INC.