**Exhibit10.2**

AGREEMENT

AGREEMENT made andentered into by and between Michaels Stores, Inc. (the “Company”) and BrianCornell (the “Executive”), effective as of the 4th day of June, 2007 (the “EffectiveDate”).

WHEREAS, theoperations of the Company and its Affiliates are a complex matter requiringdirection and leadership;

WHEREAS, theExecutive is possessed of certain experience and expertise that qualify him toprovide the direction and leadership required by the Company and itsAffiliates; and

WHEREAS, subjectto the terms and conditions hereinafter set forth, the Company therefore wishesto employ the Executive as its Chief Executive Officer and the Executive wishesto accept such employment;

NOW, THEREFORE, inconsideration of the foregoing premises and the mutual promises, terms,provisions and conditions set forth in this Agreement, the parties herebyagree:

1.                                       Employment.  Subject to the terms and conditions set forthin this Agreement, the Company hereby offers, and the Executive hereby accepts,employment.

2.                                       Term.                   Subject toearlier termination as hereinafter provided, the Executive’s employmenthereunder shall be for a term of five (5) years, commencing on the EffectiveDate, and shall renew automatically thereafter for successive terms of one yeareach. The term of this Agreement, as from time to time renewed, is hereafterreferred to as “the term of this Agreement” or “the term hereof.”

# 3.                                       Capacityand Performance.

## (a)                                  During the termhereof, the Executive shall serve the Company as its Chief Executive Officer (“CEO”).  In addition, and without furthercompensation, the Executive agrees to serve as a director of the Company and asa director and/or officer of one or more of the Company’s Immediate Affiliates(as defined in Section 13 hereof), in each case if so elected or appointed fromtime to time.

(b)                                 Duringthe term hereof, the Executive shall report to the Board of Directors of theCompany or its designees, currently Matthew Levin and Michael Chae.

## (c)                                  During the termhereof, the Executive shall be employed by the Company on a full-time basis andshall perform the duties and responsibilities of his position, including,without limitation, general oversight and direction of the operations of theCompany and such

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## other duties and responsibilities on behalf of the Company consistentwith the responsibilities of a Chief Executive Officer, as well as the dutiesand responsibilities reasonably related to other positions on behalf of theImmediate Affiliates, as may be designated from time to time by the Board or byits Chair or other designee.

## (d)                                 During the termhereof, the Executive shall devote substantially all of his business time andhis best efforts, business judgment, skill and knowledge exclusively to theadvancement of the business and interests of the Company and, if so elected orappointed, its Immediate Affiliates and to the discharge of his duties andresponsibilities hereunder.  The Companyhereby agrees that the Executive may continue to serve as a director of OfficeMax, Inc. andmay participate in appropriate trade associations.  In addition, he may engage in appropriatecivic, charitable, religious or personal activities that do not conflict orinterfere with the proper performance of his duties hereunder.  However, the Executive shall not engage inany other business activity or serve in any industry, professional,governmental or academic position during the term of this Agreement, except asmay be expressly approved in advance by the Board in writing.

## 4.                                       Compensationand Benefits.  As compensation forall services performed by the Executive under and during the term hereof andsubject to performance of the Executive’s duties and of the obligations of theExecutive to the Company and its Immediate Affiliates, pursuant to thisAgreement or otherwise:

## (a)                                  Base Salary.  During the term hereof, the Company shall paythe Executive a base salary at the rate of One Million Dollars ($1,000,000) perannum, payable in accordance with the payroll practices of the Company for itsexecutives and subject to increase from time to time by the Board, in its solediscretion.  Such base salary, as fromtime to time increased, is hereafter referred to as the “Base Salary”.

## (b)                                 Bonuses.  For each fiscal year completed during theterm hereof, the Executive shall be eligible to earn an annual bonus, subjectto the achievement of such performance targets as shall be determined in thediscretion of the Board.  The Executive’starget bonus shall be one hundred percent (100%) of Base Salary, with a maximumbonus potential of two hundred percent (200%) of Base Salary for performance inexcess of the performance targets and with the actual amount of bonus, if any,to be determined by the Board in its sole discretion.  Such bonus is hereafter referred to as the “AnnualBonus.”  For the year endingDecember 31, 2007, the Annual Bonus will be prorated to reflect the actualcommencement of the Executive’s employment.

### (c)                                  Vacations.  During the term hereof, the Executive shallbe entitled to earn vacation at the rate of five (5) weeks per year, to betaken at such times and intervals as shall be determined by the Executive,subject to the reasonable business needs of the Company and the approval of theperson to whom the Executive reports. Vacation shall otherwise be governed by the policies of the Company, asin effect from time to time.

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## (d)                                 Other Benefits.  During the term hereof, the Executive shallbe entitled to participate in any and all Employee Benefit Plans from time totime in effect for senior executives of the Company generally.  Such participation shall be subject to theterms of the applicable plan documents and generally applicable Companypolicies.  For purposes of thisAgreement, “Employee Benefit Plan” shall have the meaning ascribed tosuch term in Section 3(3) of ERISA, as amended from time to time.

## (e)                                  Business Expenses.  The Company shall pay or reimburse theExecutive for all reasonable, customary and necessary business expensesincurred or paid by the Executive in the performance of his duties and responsibilitieshereunder, subject to any maximum annual limit and other restrictions on suchexpenses set by the Board and to such reasonable substantiation anddocumentation as may be specified by the Company from time to time.  Such expenses shall include, withoutlimitation, the following:

(i)                                     reasonableexpenses associated with relocation of Executive, his family and householdgoods from California to Texas and with obtaining suitable housing in Texas,all in accordance with the Company’s current executive relocation plan.

(ii)                                  reasonablelegal fees incurred in connection with his negotiation with the Company of thisAgreement and the option and restricted stock award documents described in (f)and (g) below, and

(iii)                               reasonable travelexpenses, including business class airfare when available.

(f)                                    Sign-OnBenefits.  On the Effective Date, theCompany shall: (i)  pay to Executive abonus of $2,500,000, and (ii) provide Executive with a grant of 133,333 sharesof restricted stock pursuant to the form of Restricted Stock Award Agreementattached as Exhibit A.

(g)                                 OptionGrant.  On the Effective Date, theCompany will grant to Executive an option to purchase 2,270,966 shares ofcommon stock pursuant to the Stock Option Agreement attached as Exhibit B.

## 5.                                       Terminationof Employment and Severance Benefits. Notwithstanding the provisions of Section 2 hereof, the Executive’semployment hereunder shall terminate prior to the expiration of the term hereofunder the following circumstances:

## (a)                                  Death.  In the event of the Executive’s death priorto the expiration of the term hereof, the Executive’s employment hereundershall immediately and automatically terminate. In such event, the Company shall pay to the Executive’s designatedbeneficiary or, if no beneficiary has been designated by the Executive inwriting, to his estate, (i) any Base Salary earned but not paid during thefinal payroll period of the Executive’s employment through the date oftermination, (ii) pay for any vacation time earned but not used through thedate of

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## termination, (iii) a pro-rata bonus for the year in which terminationoccurs, based on the actual Annual Bonus that the Executive would have receivedfor such year had he remained employed by the Company for the full year anddetermined based on the Company’s actual results for such year (payablepromptly following the date such Annual Bonus is determined), (iv) any bonuscompensation awarded for the fiscal year preceding that in which terminationoccurs, but unpaid on the date of termination and (v) any business expensesincurred by the Executive but un-reimbursed on the date of termination,provided that such expenses and required substantiation and documentation aresubmitted within sixty (60) days of termination and that such expenses are reimbursableunder Company policy (all of the foregoing, “Final Compensation”).  The Company shall have no further obligationto the Executive hereunder.

## (b)                                 Disability.

### (i)                                     TheCompany may terminate the Executive’s employment hereunder, upon notice to theExecutive, in the event that the Executive becomes disabled during hisemployment hereunder through any illness, injury, accident or condition ofeither a physical or psychological nature and, as a result, is unable toperform substantially all of his duties and responsibilities hereunder,notwithstanding the provision of any reasonable accommodation, for one hundredand eighty (180) days during any period of three hundred and sixty-five (365)consecutive calendar days (“Disability”). In the event of such termination,the Company shall have no further obligation to the Executive, other than forpayment of Final Compensation.

### (ii)                                  TheBoard may designate another employee to act in the Executive’s place during anyperiod of the Executive’s disability. Notwithstanding any such designation, the Executive shall continue toreceive the Base Salary in accordance with Section 4(a) and benefits inaccordance with Section 4(e), to the extent permitted by the then-current termsof the applicable benefit plans, until the Executive becomes eligible fordisability income benefits under the Company’s disability income plan or untilthe termination of his employment, whichever shall first occur.

### (iii)                               Whilereceiving disability income payments under the Company’s disability incomeplan, the Executive shall not be entitled to receive any Base Salary underSection 4(a) hereof, but shall continue to participate in Company benefit plansin accordance with Section 4(e) and the terms of such plans, until thetermination of his employment.

### (iv)                              Ifany question shall arise as to whether during any period the Executive isdisabled through any illness, injury, accident or condition of either aphysical or psycholog­ical nature so as to be unable to perform substantiallyall of his duties and responsibilities hereunder, the Executive may, and at therequest of the Company shall, submit to a medical examination by a physicianselected by the Company to whom the Executive or his duly appointed guardian,if any, has no reasonable objection to determine whether the Executive is sodisabled and such determination shall for the purposes of this Agreement beconclusive of the issue.  If suchquestion shall arise

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### and theExecutive shall fail to submit to such medical examination, the Company’s determinationof the issue shall be binding on the Executive.

### (c)                                  By the Company forCause.  The Company may terminate theExecutive’s employment hereunder for Cause at any time upon notice to theExecutive setting forth in reasonable detail the nature of such Cause.  “Cause” shallmean the following events or conditions, as determined by the Board in itsreasonable judgment:  (i) the Executive’srefusal or failure to perform (other than by reason of disability), or materialnegligence in the performance of, his duties and responsibilities to theCompany or any of its Affiliates, or refusal or failure to follow or carry outany reasonable direction of the Board, and the continuance of such refusal,failure or negligence for a period of ten (10) days after notice to theExecutive; (ii) the material breach by the Executive of any provision of any materialagreement between the Executive and the Company or any of its Affiliates; (iii)fraud, embezzlement, theft or other dishonesty by the Executive with respect tothe Company or any of its Affiliates; (iv) the conviction of, or a plea of *nolo contendere* by, the Executive to anyfelony or any other crime involving dishonesty or moral turpitude; and (v) anyother conduct that involves a breach of fiduciary obligation on the part of theExecutive.  Upon the giving ofnotice of termination of the Executive’s employment hereunder for Cause, theCompany shall have no further obligation to the Executive, other than for FinalCompensation.

## (d)                                 By the CompanyOther than for Cause.  The Companymay terminate the Executive’s employment hereunder other than for Cause at anytime upon notice to the Executive.  Inthe event of such termination, in addition to Final Compensation, then for theperiod of two (2) years following the date of termin­ation, the Company shallprovide the Executive Severance Benefits as follows:  (i) the Company will pay the ExecutiveSeverance Pay equal to the sum of (A) the Base Salary at the annual rate ineffect on the date of termination and (B) the Executive’s target Annual Bonusdetermined in accordance with Section 4(b) hereof and (ii) subject to anyemployee contribution applicable to the Executive on the date of termination,the Company shall continue to contribute to the premium cost of the Executive’sparticipation in the Company’s group medical and dental plans, provided thatthe Executive is entitled to continue such participation under applicable lawand plan terms and pays the remainder of such premium cost, and any requiredadministrative fee, in a timely manner from month to month.  Anyobligation of the Company to the Executive hereunder is conditioned, however,on the Executive signing and returning to the Company a timely and effectiverelease of claims in the form provided by the Company (the “Release of Claims”).  The Release of Claims required forseparation benefits in accordance with Section 5(d) or Section 5(e) hereofcreates legally binding obligations on the part of the Executive and theCompany and its Affiliates therefore advise the Executive to seek the advice ofan attorney before signing the Release of Claims.  Severance Pay to which theExecutive is entitled hereunder shall be payable on a pro-rated basis at theCompany’s regular payroll periods and in accordance with its normal payrollpractices and will begin at the Company’s next regular payroll period which isat least five (5) business days following the later of the effective date ofthe Release of Claims or the date the Release of Claims, signed by theExecutive, is received by the Company, but the first payment shall beretroactive to next business day following the date of termination.  In the event that Executive is entitled toreceive benefits upon termination under any other agreement with, or plan orpolicy

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## of, the Company, he shall be entitled toreceive either the benefits under this Agreement or under such other agreement,but not both, on an individual benefit basis, as he selects (“No Duplication ofBenefits”).

## (e)                                  By the Executivefor Good Reason.  The Executive mayterminate his employment hereunder for Good Reason, upon notice to the Companysetting forth in reasonable detail the nature of such Good Reason.  The following shall constitute Good Reasonfor termination by the Executive:

### (i)                                     Removalof the Executive, without his consent, from the position of CEO of the Company(or a successor corporation);

### (ii)                                  Materialdiminution in the nature or scope of the Executive’s responsibilities, dutiesor authority which is not cured within ten (10) days following the Company’sreceipt of notice from the Executive setting forth in reasonable detail thenature of such diminution; provided, however, that the Company’s failure tocontinue the Executive’s appointment or election as a director or officer ofany of its Affiliates, a change in reporting relationships resulting from thedirect or indirect control of the Company (or a successor corporation) byanother corporation or other entity and any diminution of the business of theCompany or any of its Affiliates or anysale or transfer of equity,property or other assets of the Company or any of its Affiliates shall notconstitute “Good Reason”; or

### (iii)                               Materialfailure of the Company to provide the Executive the Base Salary and benefits inaccordance with the terms of Section 4 hereof, excluding an inadvertent failurewhich is cured within ten (10) days following the Company’s receipt of noticefrom the Executive specifying in reasonable detail the nature of such failure.

## In the event of termination in accordance with this Section 5(e), and,in accordance with the No Duplication of Benefits principle contained inSection 5(d), then the Executive will be entitled to the SeveranceBenefits he would have been entitled to receive had the Executive beenterminated by the Company other than for Cause in accordance with Section 5(d)above; provided that the Executive satisfies all conditions to suchentitlement, including without limitation the signing of a timely and effectiveRelease of Claims.

## (f)                                    By the ExecutiveOther than for Good Reason.  TheExecutive may terminate his employment hereunder at any time upon sixty (60)days’ notice to the Company. In the event of termination of the Executivepursuant to this Section 5(f), the Board may elect to waive the period ofnotice, or any portion thereof, and, if the Board so elects, the Company willpay the Executive his Base Salary for the initial sixty (60) days of the noticeperiod (or for any remaining portion of such period).  The Company shall have no further obligationto the Executive, other than for any Final Compensation due to him.

## (g)                                 Timing of Payments.  If,at the time of the Executive’s separation from service, the Executive is a “specifiedemployee,” as hereinafter defined, any and all amounts payable under thisSection 5 in connection with such separation from service that constitute

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## deferredcompensation subject to Section 409A of the Internal Revenue Code of 1986, asamended, (“Section 409A”), as determined by the Company in its sole discretion,and that would (but for this sentence) be payable within six months followingsuch separation from service, shall instead be paid on the date that followsthe date of such separation from service by six (6) months.  For purposes of the preceding sentence, “separationfrom service” shall be determined in a manner consistent with subsection(a)(2)(A)(i) of Section 409A and the term “specified employee” shall mean anindividual determined by the Company to be a specified employee as defined insubsection (a)(2)(B)(i) of Section 409A.

## 6.                                       Effect ofTermination.  The provisions of thisSection 6 shall apply to any termination, whetherdue to the expiration of the term hereof, pursuant to Section 5 or otherwise.

## (a)                                  In the event of thetermination of the Executive’s employment hereunder, payment by the Company ofany amounts due in accordance with the applicable termination provision ofSection 5 hereof shall constitute the entire obligation of the Company to theExecutive.  The Executive shall promptlygive the Company notice of all facts necessary for the Company to determine theamount and duration of its obligations in connection with any terminationpursuant to Section 5(d) or 5(e) hereof.

## (b)                                 Except for any rightof the Executive to continue medical and dental plan participation in accordancewith applicable law, benefits shall terminate pursuant to the terms of theapplicable benefit plans based on the date of termination of the Executive’semployment without regard to any continuation of Base Salary or other paymentto the Executive following such date of termination.

## (c)                                  Provisions of thisAgreement shall survive any termination or expiration of the term hereof, if soprovided in this Agreement or if necessary or desirable to accomplish thepurposes of other surviving provisions, including without limitation theobligations of the Executive under Sections 7, 8 and 9 hereof.  Any obligation of the Company otherwise tomake payments to or on behalf of the Executive under Section 5(d) or 5(e)hereof is expressly conditioned upon the Executive’s continued full performanceof obligations under Sections 7, 8 and 9 hereof.  The Executive recognizes that no compensationis earned after termination of his employment hereunder, except as otherwiseexpressly provided in accordance with Section 5(d), 5(e) or 5(f) (for anyportion of the notice period waived).

# 7.                                       ConfidentialInformation.

## (a)                                  The Executiveacknowledges that the Company and its Affiliates continually developConfidential Information; that the Executive may develop Confidential Informationfor the Company or its Affiliates; and that the Executive may learn ofConfidential Information during the course of employment.  The Executive will comply with the policiesand procedures of the Company and its Affiliates for protecting Confidential Informationand shall not disclose to any Person or use any Confidential Informationobtained by the Executive incident to his employment or other association withthe Company or any of its Affiliates, other than as required for the properperformance of the Executive’s duties and responsibilities to the

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## Company and its Affiliates or as required by applicable law or legalprocess after notice to the Company and a reasonable opportunity for it to seeprotection of such Confidential Information prior to disclosure.  The Executive understands that theserestrictions shall continue to apply after his employment terminates,regardless of the reason for such termination. The confidentiality obligation under this Section 7 shall not apply toinformation which is generally known or readily available to the public at thetime of disclosure or becomes generally known through no wrongful act on thepart of the Executive or any other Person having an obligation ofconfidentiality to the Company or any of its Affiliates.

## (b)                                 All documents,records, tapes and other media of every kind and description relating to thebusiness, present or otherwise, of the Company or its Affiliates and anycopies, in whole or in part, thereof (the “Documents”), whether or not preparedby the Executive, shall be the sole and exclusive property of the Company andits Affiliates.  The Executive shallsafeguard all Documents and shall surrender to the Company at the time hisemployment terminates, or at such earlier time or times as the Board or itsdesignee may specify, all Documents then in the Executive’s possession orcontrol.

## 8**.****                                      **Assignmentof Rights to Intellectual Property**. **The Executive shall promptly andfully disclose all Intellectual Property to the Company.  The Executive hereby assigns and agrees toassign to the Company (or as otherwise directed by the Company) the Executive’sfull right, title and interest in and to all Intellectual Property developed atany time during his employment with the Company, its Affiliates, successors orassigns.  The Executive agrees to executeany and all applications for domestic and foreign patents, copyrights or otherproprietary rights and to do such other acts (including without limitation theexecution and delivery of instruments of further assurance or confirmation)requested by the Company to assign the Intellectual Property to the Company andto permit the Company to enforce any patents, copyrights or other proprietaryrights to the Intellectual Property. The Executive will not charge the Companyfor time spent in complying with these obligations.  All copyrightable works that the Executivecreates shall be considered “work made for hire” and shall, upon creation, beowned exclusively by the Company.

## 9.                                       RestrictedActivities.  The Executive acknowledgesthe importance to the Company and its Affiliates of protecting their tradesecrets and other Confidential Information and their other legitimate businessinterests, including without limitation the valuable trade secrets, otherConfidential Information and goodwill that they have developed or acquired andwhich they shall continue to develop and acquire while the Executive’semployment continues.  The Companyagrees, in consideration of the Executive’s acceptance of the restrictions setforth below, to grant the Executive access to trade secrets and otherConfidential Information of the Company and its Immediate Affiliates and totheir valuable business relationships and their goodwill.  The Executive acknowledges and agrees thatthe restrictions on his activities during and after his employment set forthbelow are necessary to protect the goodwill, Confidential Information and otherlegitimate interests of the Company and its Affiliates:

(a)                                  TheExecutive agrees that, during the his employment with the Company and for theperiod of twenty-four (24) months immediately following the termination of his

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employment,regardless of the basis or timing of such termination, the Executive will not,directly or indirectly, alone or in association with others, anywhere in theTerritory, own, manage, operate, control or participate in the ownership,management, operation or control of, or be connected as an officer, employee,investor, principal, joint venturer, shareholder, partner, director,consultant, agent or otherwise with, or have any financial interest (throughstock or other equity ownership, investment of capital, the lending of money orotherwise) in, any business, venture or activity that directly or indirectlycompetes, or is in planning, or has undertaken any preparation, to compete,with the Business of the Company or any of its Immediate Affiliates (a “Competitor”),except that nothing contained in this Section 9(a) shall prevent the Executive’swholly passive ownership of two percent (2%) or less of the equity securitiesof any Competitor that is a publicly-traded company.  For the purposes of this Agreement, the “Businessof the Company and its Immediate Affiliates” or “Business” is that of arts andcrafts specialty retailer providing materials, ideas and education for creativeactivities and the “Territory” is those states within the United States andthose provinces of Canada in which the Company or any of its ImmediateAffiliates is doing or actively planning to do business at any time during theExecutive’s employment or, with respect to his obligations hereunder followingtermination of his employment with the Company, at any time during the six (6)months immediately preceding such termination.

## (b)                                 The Executive agreesthat, during his employment with the Company, he will comply with any and allcodes of ethics or business conduct of the Company applicable to his position,as in effect from time to time, and will not undertake any outside activity,whether or not competitive with the business of the Company or its Affiliates,that could reasonably give rise to a conflict of interest or otherwiseinterfere with his duties and obligations to the Company or any of itsAffiliates.

## (c)                                  The Executive agreesthat, during his employment and during the period  of twenty-four (24) months immediatelyfollowing termination of his employment, regardless of the basis or timing ofsuch termination, the Executive will not, and will not assist any other Personto, (a) hire or solicit for hire any employee of the Company or any of itsImmediate Affiliates or seek to persuade any employee of the Company or any ofits Immediate Affiliates to discontinue employment or (b) solicit or encourageany independent contractor providing services to the Company or any of its ImmediateAffiliates to terminate or diminish its relationship with them; provided,however, that, after termination of the Executive’s employment with theCompany, these restrictions shall apply only with respect to employees of, andindependent contractors providing services to, the Company or any of itsImmediate Affiliates on the date the Executive’s employment with the Companyterminates or at any time during the preceding twelve (12) months.

(d)                                 TheExecutive agrees that, during his employment and during the period  of twenty-four (24) months immediately following termination of hisemployment, regardless of the basis or timing of such termination, theExecutive will not directly or indirectly solicit or encourage any distributoror vendor to the Company or any of its Immediate Affiliates to terminate orbreach any agreement with the Company or any of its Immediate Affiliates or toterminate or diminish its relationship with the Company or any of its ImmediateAffiliates;

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provided, however, that,after termination of the Executive’s employment with the Company, theserestrictions shall apply only with respect to those distributors and vendorswho were doing business with the Company or any of its Affiliates on the datethe Executive’s employment terminates or at any time during the precedingtwelve (12) months.

10.                                 NotificationRequirement.  Until the conclusion oftwenty-four (24) months following termination of his employment with theCompany, the Executive shall give notice to the Company of each new businessactivity he plans to undertake, at least ten (10) business days prior tobeginning any such activity.  Such noticeshall state the name and address of the Person for whom such activity isundertaken and the nature of the Executive’s business relationship(s) andposition(s) with such Person.  TheExecutive shall provide the Company with such other pertinent informationconcerning such business activity as the Company may reasonably request inorder to determine the Executive’s continued compliance with his obligationsunder Sections 7, 8 and 9 hereof.

11.                                 Enforcementof Covenants.  The Executiveacknowledges that he has carefully read and considered all the terms andconditions of this Agreement, including the restraints imposed upon himpursuant to Sections 7, 8 and 9 hereof. The Executive agrees without reservation that each of the restraintscontained herein is necessary for the reasonable and proper protection of thegoodwill, Confidential Information and other legitimate interests of theCompany and its Affiliates; that each and every one of those restraints isreasonable in respect to subject matter, length of time and geographic area;and that these restraints, individually or in the aggregate, will not preventhim from obtaining other suitable employment during the period in which theExecutive is bound by these restraints. The Executive further agrees that he will never assert, or permit to beasserted on his behalf, in any forum, any position contrary to theforegoing.   The Executive further acknowledgesthat, were he to breach any of the covenants contained in Sections 7, 8 or 9hereof, the damage to the Company and its Affiliates would be irreparable.  The Executive therefore agrees that theCompany, in addition to any other remedies available to it, shall be entitledto preliminary and permanent injunctive relief against any breach or threatenedbreach by the Executive of any of said covenants, without having to postbond.  The parties further agree that, inthe event that any provision of Section 7, 8 or 9 hereof shall be determined byany court of competent jurisdiction to be unenforceable by reason of its beingextended over too great a time, too large a geographic area or too great arange of activities, such provision shall be deemed to be modified to permitits enforcement to the maximum extent permitted by law.

12.                                 ConflictingAgreements.  The Executive herebyrepresents and warrants that the execution of this Agreement and theperformance of his obligations hereunder will not breach or be in conflict withany other agreement to which the Executive is a party or is bound and that theExecutive is not now subject to any covenants against competition or similarcovenants or any court order or other legal obligation that would affect theperformance of his obligations hereunder. The Executive will not disclose to or use on behalf of the Company anyproprietary information of a third party without such party’s consent.

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13.                                 Definitions.  Words or phrases which are initiallycapitalized or are within quotation marks shall have the meanings provided inthis Section and as provided elsewhere herein. For purposes of this Agreement, the following definitions apply:

(a)                                  “Affiliates”means all persons and entities directly or indirectly controlling, controlledby or under common control with the Company, where control may be by eithermanagement authority, contract or equity interest.

(b)                                 “ConfidentialInformation” means any and all information of the Company and its Affiliatesthat is not generally known by those Persons with whom they compete or dobusiness, or with whom any of them plans to compete or do business and any andall information, publicly known in whole or in part or not, which, if disclosedby the Company or its Affiliates would assist in competition against them.Confidential Information includes without limitation such information relatingto (i) the development, research, testing, manufacturing, marketing andfinancial activities of the Company and its Affiliates, (ii) the products andservices of the Company and its Affiliates, (iii) the costs, sources of supply,financial performance and strategic plans of the Company and its Affiliates,(iv) the identity and special needs of the customers of the Company and itsAffiliates and (v) the people and organizations with whom the Company and itsAffiliates have business relationships and those relationships.  Confidential Information also includes anyinformation that the Company or any of its Affiliates have received, or mayreceive hereafter, belonging to customers or others with any understanding,express or implied, that the information would not be disclosed.

(c)                                  “ImmediateAffiliates” means those Affiliates which are one of the following: (i) a director direct subsidiary of the Company, (ii) a parent to the Company or (iii) adirect or indirect subsidiary of such a parent.

## (d)                                 “Intellectual Property”means inventions, discoveries, developments, methods, processes, compositions,works, concepts and ideas (whether or not patentable or copyrightable orconstituting trade secrets) conceived, made, created, developed or reduced topractice by the Executive (whether alone or with others, whether or not duringnormal business hours or on or off Company premises) during the Executive’semployment that relate to the Business of the Company or any of its ImmediateAffiliates or to any prospective activity of the Company or any of itsImmediate Affiliates or to any work performed by the Executive for the Companyor any of its Immediate Affiliates or that make use of  Confidential Information or any of theequipment or facilities or other resources of the Company or any of itsImmediate Affiliates.

## (e)                                  “Person” means anindividual, a corporation, a limited liability company, an association, apartnership, an estate, a trust and any other entity or organization, otherthan the Company or any of its Affiliates.

## 15.                                 Withholding.  All payments made by the Company under thisAgreement shall be reduced by any tax or other amounts required to be withheldby the Company under applicable law.

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## 16.                                 Assignment.  Neither the Company nor the Executive maymake any assignment of this Agreement or any interest herein, by operation oflaw or otherwise, without the prior written consent of the other; provided,however, that the Company may assign its rights and obligations under thisAgreement without the consent of the Executive in the event that the Executiveis transferred to a position with any of the Affiliates or in the event thatthe Company shall hereafter effect a reorganization, consolidate with, or mergeinto, any Person or transfer all or substantially all of its properties orassets to any Person.  This Agreementshall inure to the benefit of and be binding upon the Company and theExecutive, their respective successors, executors, administrators, heirs andpermitted assigns.

## 17.                                 Severability.  If any portion or provision of this Agreementshall to any extent be declared illegal or unenforceable by a court ofcompetent jurisdiction, then the remainder of this Agreement, or theapplication of such portion or provision in circumstances other than those asto which it is so declared illegal or unenforceable, shall not be affectedthereby, and each portion and provision of this Agreement shall be valid andenforceable to the fullest extent permitted by law.

## 18.                                 Waiver.  No waiver of any provision hereof shall beeffective unless made in writing and signed by the waiving party.  The failure of either party to require theperformance of any term or obligation of this Agreement, or the waiver byeither party of any breach of this Agreement, shall not prevent any subsequentenforcement of such term or obligation or be deemed a waiver of any subsequentbreach.

## 19.                                 Notices.  Any and all notices, requests, demands andother communications provided for by this Agreement shall be in writing andshall be effective when delivered in person, consigned to a reputable nationalcourier service or deposited in the United States mail, postage prepaid,registered or certified, and addressed to the Executive at his last knownaddress on the books of the Company or, in the case of the Company, at itsprincipal place of business, attention of the Chair of the Board, or to suchother address as either party may specify by notice to the other actuallyreceived.

## 20.                                 Entire Agreement.  This Agreement constitutes the entireagreement between the parties and supersedes all prior communications,agreements and understandings, written or oral, with respect to the terms andconditions of the Executive’s employment.

## 21.                                 Amendment.  This Agreement may be amended or modifiedonly by a written instrument signed by the Executive and by a expresslyauthorized representative of the Board.

## 22.                                 Headings.  The headings and captions in this Agreementare for convenience only and in no way define or describe the scope or contentof any provision of this Agreement.

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# 23.                                 Counterparts.  This Agreement may be executed in two or morecounterparts, each of which shall be an original and all of which togethershall constitute one and the same instrument.

24.                                 GoverningLaw.  This is a Texas contract andshall be construed and enforced under and be governed in all respects by thelaws of the State of Texas, without regard to the conflict of laws principlesthereof.

[Signature pagefollows immediately.]

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IN WITNESSWHEREOF, this Agreement has been executed as a sealed instrument by theCompany, by its duly authorized representative, and by the Executive, as of thedate first above written.
| THE EXECUTIVE:          | THE COMPANY:          |
|-------------------------|-----------------------|
|                    |                  |
|                    |                  |
| Brian Cornell           | MICHAELS STORES, INC. |
|                    |                  |
|                    |                  |
|  /s/ Brian Cornell |                  | By: | /s/ Jeffrey N. Boyer |
|                    |                  |   |
|                    | Title:                | President and Chief Financial Officer |
|                         |                       |  |  |  |

 

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