**Exhibit10.3**

 

Name of Employee

 

**MICHAELS STORES, INC.**

**2006 EQUITY INCENTIVE PLAN**

 

Restricted Stock Award Agreement

 

MichaelsStores, Inc.

8000Bent Branch Drive

Irving,Texas 75063

 

Attn:

 

Ladiesand Gentlemen:

 

Theundersigned (i) acknowledges that [he/she] 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 tothe terms set forth below and in the Plan; (ii) further acknowledges receiptof a copy of the Plan as in effect on the date hereof; and (iii) agreeswith the Company as follows:

 

1.               *EffectiveDate*.  ThisAgreement shall take effect as of             ,20    , which is the date of grant of the Award.

 

2.               *SharesSubject to Award*.  The Awardconsists of                   shares (the “Shares”) of common stock of the Company (“Stock”).  The undersigned’s rights to the Shares aresubject to the restrictions described in this Agreement and the Plan (which isincorporated herein by reference with the same effect as if set forth herein infull) in addition to such other restrictions, if any, as may be imposed by law.

 

3.               *Meaningof Certain Terms*.  Except asotherwise expressly provided, all terms used herein shall have the same meaningas in the Plan.  The term “vest” as usedherein with respect to any Share means the lapsing of the restrictionsdescribed herein with respect to such Share.

 

4.               *Nontransferabilityof Shares*.  The Sharesacquired by the undersigned pursuant to this Agreement shall not be sold,transferred, pledged, assigned or otherwise encumbered or disposed of except asprovided below and in the Plan.

 

5.               *Vestingof Shares*.  The sharesacquired hereunder shall vest in accordance with the provisions of thisParagraph 5 and applicable provisions of the Plan, as follows:                    Shares on         , 20    ,                  Shares on         , 20    ,                Shares on           , 20    ,                  Shares on           , 20    ,and                   on and after           , 20    .  Notwithstanding the foregoing, no sharesshall vest on any vesting date specified above unless the undersigned is then,and since the date of grant has continuously been, employed by the Company orits subsidiaries.   In the event that theundersigned’s employment is terminated due to her death, by the Company otherthan for “Cause” or for “Disability,” all then outstanding and unvested Sharesacquired by the undersigned hereunder shall automatically and immediately vest.  “Cause” shall mean the following events orconditions, as determined by the Board in its 

 

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reasonable judgment: (i) the undersigned’s refusal or failure toperform (other than by reason of disability), or material negligence in theperformance of, her duties and responsibilities to the Company or any of itsAffiliates, or refusal or failure to follow or carry out any reasonabledirection of the Board, and the continuance of such refusal, failure ornegligence for a period of ten (10) days after notice to the undersigned; (ii) thematerial breach by the undersigned of any provision of any material agreementbetween the undersigned and the Company or any of its Affiliates; (iii) fraud,embezzlement, theft or other dishonesty by the undersigned with respect to theCompany or any of its Affiliates; (iv) the conviction of, or a plea of *nolo contendere* by, the undersigned to any felony or anyother crime involving dishonesty or moral turpitude; and (v) any otherconduct that involves a breach of fiduciary obligation on the part of the undersigned.  “Disability” shall mean that the undersigned becomesdisabled during her employment hereunder through any illness, injury, accidentor condition of either a physical or psychological nature and, as a result, is unableto perform substantially all of her 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.

 

6.               *ForfeitureRisk*.  Except asprovided in Section 5 above, if the undersigned ceases to be employed bythe Company and its subsidiaries for any reason, any then outstanding andunvested Shares acquired by the undersigned hereunder shall be automaticallyand immediately forfeited.  Theundersigned hereby (i) appoints the Company as the attorney-in-fact of theundersigned 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 a precondition to the issuance of any certificate or certificates withrespect to unvested Shares hereunder, one or more stock powers, endorsed inblank, with respect to such Shares, and (iii) agrees to sign such otherpowers and take such other actions as the Company may reasonably request toaccomplish the transfer or forfeiture of any unvested Shares that are forfeitedhereunder.

 

7.               *Retentionof 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.**             **Effectof Certain Transactions*.  In the event of a Change of Control (asdefined in the Stockholders Agreement), all then outstanding and unvestedShares acquired by the undersigned hereunder shall automatically andimmediately vest.

 

9.               *Joinderto 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 the partof 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:

 

THETRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF STOCK REPRESENTED HEREBYARE SUBJECT TO THE TERMS AND CONDITIONS (INCLUDING FORFEITURE) OF THE MICHAELSSTORES, INC. 2006 EQUITY 

 

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INCENTIVEPLAN AND 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 practicable following the vesting of any such Shares theCompany shall cause a certificate or certificates covering such Shares, withoutthe aforesaid legend, to be issued and delivered to the undersigned.  If any Shares are held in book-entry form,the Company may take such steps as it deems necessary or appropriate to recordand manifest the restrictions applicable to such Shares.

 

11.         *Dividends, etc.*.  The undersigned shall be entitled to (i) receiveany and all dividends or other distributions paid with respect to those Sharesof which [he/she] is the record owner on the record date for such dividend orother distribution, and (ii) vote any Shares of which [he/she] is therecord owner on the record date for such vote; *provided,however*, that any property (other than cash) distributed withrespect to a share of Stock (the “associated share”) acquired hereunder,including without limitation a distribution of Stock by reason of a stockdividend, stock split or otherwise, or a distribution of other securities withrespect to an associated share, shall be subject to the restrictions of thisAgreement in the same manner and for so long as the associated share remainssubject to such restrictions, and shall be promptly forfeited if and when theassociated share is so forfeited; * and further provided*, that theAdministrator may require that any cash distribution with respect to the Sharesother than a normal cash dividend be placed in escrow or otherwise made subjectto such restrictions as the Administrator deems appropriate to carry out theintent of the Plan.  References in this Agreementto the Shares shall  refer, *mutatis mutandis*, to any such restricted amounts.

 

12.         *Sale of Vested Shares**. *The undersigned understandsthat [he/she] will be free to sell any Share once it has vested, subject to (i) satisfactionof any applicable tax withholding requirements with respect to the vesting ortransfer of such Share; (ii) the completion of any administrative steps(for example, but without limitation, the transfer of certificates) that theCompany may reasonably impose; (iii) applicable requirements of federaland state securities laws, (iv) the Stockholders Agreement; and (v) theRegistration Rights Agreement.

 

13.         *Certain Tax Matters*.  The undersigned expressly acknowledges thefollowing:

 

a.               The undersigned has beenadvised to confer promptly with a professional tax advisor to consider whetherthe undersigned should make a so-called “83(b) election” with respect tothe Shares.  Any such election, to beeffective, must be made in accordance with applicable regulations and withinthirty (30) days following the date of this Award.  The Company has made no recommendation to theundersigned with respect to the advisability of making such an election.

 

b.              The award or vesting of theShares acquired hereunder, and the payment of dividends with respect to suchShares, may give rise to “wages” subject to withholding.  The undersigned expressly acknowledges andagrees that her rights hereunder are subject to her promptly paying to theCompany in cash (or by such other means as may be acceptable to the Company inits discretion, including, if the Administrator so determines, by the deliveryof previously acquired Stock or shares of Stock acquired hereunder or by thewithholding of amounts from any payment hereunder) all taxes required to bewithheld in connection with such award, vesting or payment.

 

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|                                 | Very  truly yours, |
|--------------------------------------|--------------------|
|                                 |               |
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| Dated:                               |               |
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| The  foregoing Restricted Stock      |               |
| Award  Agreement is hereby accepted: |               |
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| **MICHAELS  STORES, INC.**           | ** **         |
| ** **                           | ** **         |
| ** **                           | ** **         | ** ** |
|                                      |                    |  |  |

 

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