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Exhibit 10.1 Form of Fiscal Year 2004 Bonus Plan for
President and Chief Executive Officer Purpose The Fiscal Year 2004 Bonus Plan has been developed to provide financial
incentives to those members of management that can make an important
contribution to Michaels success and to encourage those members to remain with
the Company. Eligibility  1.
    
    To be eligible for a bonus under the Fiscal Year 2004 Bonus Plan, an
associate must be in a bonus eligible position during Fiscal Year 2004.
The Fiscal Year begins on February 1, 2004, and concludes on January 29,
2005.2.
    
    An associate must be employed with the Company, in good standing (see
#8), and in a bonus eligible position at the time of bonus payout in order
to be eligible to receive a bonus. If an associate is not employed in a
bonus eligible position at the beginning of the fiscal year, but assumes a
bonus eligible position during the fiscal year, he/she will be eligible to
earn a prorated bonus based upon the number of full months that he/she was
in the bonus eligible position. Individuals who assume a bonus eligible
position on or before the 15th of the month will receive credit for that
entire month. Individuals who assume such a position after the 15th will
not receive credit for that month.3.
    
    Bonus payments will normally occur by April 15th, following the end of
the fiscal year. Associates must be employed at the time of bonus payout
in order to be eligible to receive a bonus.4.
    
    Anyone hired or placed in a bonus eligible position after November 15,
2004 will not be eligible to earn a bonus under the Fiscal Year 2004 Bonus
Plan.5.
    
    Any associate who is on leave of absence longer than 90 days in Fiscal
Year 2004 may be eligible to earn a prorated bonus for time worked during
the fiscal year, in accordance with the normal proration guidelines
outlined in this document.6.
    
    An associate must be in an active status for at least one month of Fiscal
Year 2004, as defined in this document, to be eligible for any bonus
consideration.7.
    
    If an associate is promoted or changes position during the fiscal year,
the associate may be eligible for bonus earnings calculated using the
number of full months (see #2) in each position, the respective base
salaries, and the applicable target bonus amount(s).8.
    
    An associate must be in good standing at the time of bonus payout to be
eligible for a Fiscal Year 2004 bonus. An associate does not meet this
requirement if: 1) he/she receives an overall performance rating of
Unacceptable for FY 2004; and/or 2) at the time of bonus payout (check
date), he/she is on a Performance Improvement Plan (PIP) that was
initiated during FY 2004. Associates who are on a Performance Improvement
Plan that is initiated in FY 2005 will be eligible for a bonus payment for
FY 2004.




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Exhibit 10.1   How a Bonus is Earned The following factors must be satisfied in order for an eligible associate to
earn a bonus under the Year 2004 Bonus Plan.  1.
    
    The associate must be eligible as set forth in the Eligibility section of
the Year 2004 Bonus Plan.2.
    
    In order to earn a bonus under the Year 2004 Bonus Plan, an associate
must be employed by the Company, in a bonus eligible position, at the time
bonuses are paid. If an associate is not employed by the Company in a
bonus eligible position at the time bonuses are paid, regardless of the
reason for termination of employment, the associate does not earn a bonus
under the Year 2004 Bonus Plan.3.
    
    An associate does not earn a bonus payment for FY 2004 if: 1) he/she
receives an overall performance rating of Unacceptable for FY 2004
and/or 2) at the time of bonus payout he/she is on a Performance
Improvement Plan (PIP) that was initiated during FY 2004. Associates
who are on a Performance Improvement Plan that was initiated in FY 2004
will be eligible for a bonus payment for FY 2004. The Company anticipates that this bonus plan will be part of an ongoing bonus
program, but the Company does not guarantee that the program will in fact
continue for future periods or that the terms of the program will not change. When bonuses are paid, the Company typically makes bonus payments in April of
the following fiscal year. Bonus Payout Formula Bonus payouts will be based upon your earned percentage multiplied by your base
salary as of the first day of the fiscal year (February 1, 2004). Your earned
percentage will be based upon actual performance as compared to Plan. 2004 Bonus Plan
President and Chief Executive Officer Corporate Profit Before Taxes% of Plan
    
    Bonus Payout % of Salary106%105%104%102%100%99%98%97%96%95%