**Exhibit10.4**
| ** ** | Brian C. Cornell |
|------------|------------------|
| ** ** | Name of Employee |

 

**MICHAELSSTORES, INC.**

**2006 EQUITY INCENTIVE PLAN**

Restricted Stock Award Agreement

MichaelsStores, Inc.8000 Bent Branch DriveIrving, Texas 75063

Attn:       Jeffrey N. Boyer

Ladiesand Gentlemen:

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

1.               *Effective Date*.  ThisAgreement shall take effect as of June 4, 2007, which is the date of grant ofthe Award.

2.               *Shares Subject to Award*.  TheAward consists of 133,333 shares (the “Shares”) of common stock of the Company(“Stock”).  The undersigned’s rights tothe Shares are subject to the restrictions described in this Agreement and thePlan (which is incorporated herein by reference with the same effect as if setforth herein in full) in addition to such other restrictions, if any, as may beimposed by law.

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

4.               *Nontransferability of Shares*.  TheShares acquired by the undersigned pursuant to this Agreement shall not besold, transferred, pledged, assigned or otherwise encumbered or disposed ofexcept as provided below and in the Plan.

5.               *Vesting of Shares*.  Theshares acquired hereunder shall vest in accordance with the provisions of thisParagraph 5 and applicable provisions of the Plan, as follows:  66,667 Shares on and after June 4, 2008, and66,666 on and after June 4, 2009. Notwithstanding the foregoing, no shares shall vest on any vesting datespecified above unless the undersigned is then, and since the date of grant hascontinuously been, employed by the Company or its subsidiaries.   In the event that the undersigned’semployment is terminated due to his death, by the Company other than for “Cause”or for Disability, or by the undersigned for “Good Reason” (all terms asdefined in the Employment Agreement dated June 4, 2007, between the undersignedand the Company), all then outstanding and unvested Shares acquired by theundersigned hereunder shall automatically and immediately vest.

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6.               *Forfeiture Risk*. Except as provided in Section 5 above, if the undersigned ceases to beemployed by the Company and its subsidiaries for any reason, any thenoutstanding and unvested Shares acquired by the undersigned hereunder shall beautomatically and immediately forfeited. The undersigned hereby (i) appoints the Company as the attorney-in-factof the undersigned to take such actions as may be necessary or appropriate toeffectuate a transfer of the record ownership of any such shares that areunvested and forfeited hereunder, (ii) agrees to deliver to the Company, as aprecondition to the issuance of any certificate or certificates with respect tounvested Shares hereunder, one or more stock powers, endorsed in blank, withrespect to such Shares, and (iii) agrees to sign such other powers and takesuch other actions as the Company may reasonably request to accomplish thetransfer or forfeiture of any unvested Shares that are forfeited hereunder.

7.               *Retention of Certificates*.  Anycertificates representing unvested Shares shall be held by the Company.  If unvested Shares are held in book entryform, the undersigned agrees that the Company may give stop transferinstructions to the depository to ensure compliance with the provisions hereof.

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

9.               *Joinder to Agreements*.  Theundersigned acknowledges and agrees that the Shares acquired hereunder will besubject to the Stockholders Agreement and to the Registration Rights Agreementand the transfer and other restrictions, rights, and obligations set forth inthose agreements.  By executing thisAgreement, the undersigned hereby becomes a party to and bound by theStockholders Agreement and the Registration Rights Agreement as a Manager (assuch term is defined in those agreements), without any further action on thepart of the undersigned, the Company or any other Person.

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

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

As soon as practicablefollowing the vesting of any such Shares the Company shall cause a certificateor certificates covering such Shares, without the aforesaid legend, to beissued and delivered to the undersigned. If any Shares are held in book-entry form, the Company may take suchsteps as it deems necessary or appropriate to record and manifest therestrictions 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 thoseShares of which he is the record owner on the record date for such dividend orother distribution, and (ii) vote any Shares of which he is the record owner onthe record date for such vote; *provided, however*,that any property (other than cash) distributed with respect to a share ofStock (the “associated share”) acquired hereunder, including without limitationa distribution of Stock by reason of a stock dividend, stock split

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or otherwise, or adistribution of other securities with respect to an associated share, shall besubject to the restrictions of this Agreement in the same manner and for solong as the associated share remains subject to such restrictions, and shall bepromptly forfeited if and when the associated share is so forfeited; * and further provided*,that the Administrator may require that any cash distribution with respect tothe Shares other than a normal cash dividend be placed in escrow or otherwisemade subject to such restrictions as the Administrator deems appropriate tocarry 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 onceit has vested, subject to (i) satisfaction of any applicable tax withholdingrequirements with respect to the vesting or transfer of such Share;(ii) the completion of any administrative steps (for example, but withoutlimitation, the transfer of certificates) that the Company may reasonablyimpose; (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 thefollowing:

a.               The undersigned has been advised to conferpromptly with a professional tax advisor to consider whether the undersigned shouldmake a so-called “83(b) election” with respect to the Shares.  Any such election, to be effective, must bemade in accordance with applicable regulations and within thirty (30) daysfollowing the date of this Award.  TheCompany has made no recommendation to the undersigned with respect to theadvisability of making such an election.

b.              The award or vesting of the Shares acquiredhereunder, and the payment of dividends with respect to such Shares, may giverise to “wages” subject to withholding. The undersigned expressly acknowledges and agrees that his rightshereunder are subject to his promptly paying to the Company in cash (or by suchother means as may be acceptable to the Company in its discretion, including,if the Administrator so determines, by the delivery of previously acquiredStock or shares of Stock acquired hereunder or by the withholding of amountsfrom any payment hereunder) all taxes required to be withheld in connectionwith such award, vesting or payment.
|   | Very truly yours,                |
|--------|----------------------------------|
|   |                             |
|   |                             |
|   |   /s/ Brian C. Cornell |
|   | Brian C. Cornell                 |

 

Dated:  June 4, 2007

Theforegoing Restricted StockAward Agreement is hereby accepted:

**MICHAELSSTORES, INC.**
| By:    | /s/ Jeffrey N.  Boyer                  |   |
|--------|----------------------------------------|--------|
|   | Jeffrey N. Boyer                       |
|   | President and  Chief Financial Officer |

 

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