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EXHIBIT
10.26




  FIRST AMENDMENT TO
 REVOLVING CREDIT AGREEMENT  


    This FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT dated as of October 20, 1999 (this "Amendment") by and among
(a) MICHAELS STORES, INC. (the "Borrower"), a Delaware corporation having its principal place of business at 8000 Bent Branch Drive, Irving,
Texas 75063, (b) BANKBOSTON, N.A., and the other lending institutions (the "Banks") listed on the signature page hereto and
(c) BANKBOSTON, N.A. as administrative agent (the "Agent") for itself and the Banks, amending certain provisions of the Revolving Credit
Agreement dated as of August 28, 1998 (as amended and in effect from time to time, the "Credit Agreement") by and among the Borrower, the Banks and the Agent. Terms not otherwise defined herein
which are defined herein which are defined in the Credit Agreement shall have the respective meanings herein assigned to such terms in the Credit Agreement.



    WHEREAS, the Borrower has requested that the Banks agree to amend certain provisions of the Credit Agreement; and


    WHEREAS, the Banks have agreed to modify certain provisions of the Credit Agreement as specifically set forth in this Amendment;


    NOW, THEREFORE, in consideration of the mutual agreements contained herein and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:



    §1.  Amendment to §10.4 of the Credit Agreement. Section
10.4 of the Credit Agreement is hereby amended in its entirety to read as follows:



    "10.4. Capital Expenditures. The Borrower will not make, or permit any Subsidiary of the Borrower to make, Capital Expenditures in any
fiscal year set forth in the table below that exceed, in the aggregate, the amount set forth opposite such fiscal year in such table:



	Fiscal Year

	 	Amount

	1999	 	$100,000,000
	2000	 	$110,000,000
	2001	 	$120,000,000




    provided, however, that, if during any fiscal year the amount of Capital Expenditures permitted for that fiscal year in the table above
is not so utilized, twenty five percent (25%) of such unutilized amount may be utilized in the next succeeding fiscal year but not in any subsequent fiscal year. Notwithstanding the foregoing, the
Borrower may make additional Capital Expenditures in connection with the replacement of the Lexington, Kentucky distribution center in an amount not to exceed $40,000,000."




    §2.  Conditions to Effectiveness. This Amendment shall not become effective until the Agent receives a
counterpart of this Amendment, executed by the each of the Borrower, the Agent and the Majority Banks.


    §3.  Representations and Warranties. The representations and warranties of the Borrower contained in the
Credit Agreement were true and correct when made and continue to be true and correct on and as of the date hereof as if made on the date hereof except to the extent of changes resulting from
transactions contemplated or permitted by the Credit Agreement and to the extent that such representations and warranties relate expressly to an earlier date. No Default or Event of Default has
occurred and is continuing.


    §4.  Ratification, Etc. Except as expressly amended hereby, the Credit Agreement and all documents,
instruments and agreements related thereto, including, but not limited to the Security Documents, are hereby ratified and confirmed in all respects and shall continue in full force and effect. The
Credit Agreement and this Amendment shall be read and construed as a single agreement. All references in the








Credit
Agreement or any related agreement or instrument to the Credit Agreement shall hereafter refer to the Credit Agreement as amended hereby.


    §5.  Counterparts. This Amendment may be executed in one or more counterparts, each of which shall be deemed
an original but which together shall constitute one and the same instrument.


    §6.  Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF
MASSACHUSETTS (WITHOUT REFERENCE TO CONFLICT OF LAWS).








    IN WITNESS WHEREOF, the undersigned have duly executed this First Amendment as a sealed instrument as of the
date first set forth above.



	 
	 	 
	 

	 	 	MICHAELS STORES, INC.
	 

 	 
 	 

By:	 

 
	 	 	 	

	 	 	 	Name:
	 	 	 	Title:
	 

 	 
 	 
 BANKBOSTON, N.A., individually and as Agent
	 

 	 
 	 

By:	 

 
	 	 	 	

	 	 	 	Name:
	 	 	 	Title:
	 

 	 
 	 
 CREDIT LYONNAIS NEW YORK BRANCH
	 

 	 
 	 

By:	 

 
	 	 	 	

	 	 	 	Name:
	 	 	 	Title:
	 

 	 
 	 
 GUARANTY FEDERAL BANK, F.S.B.
	 

 	 
 	 

By:	 

 
	 	 	 	

	 	 	 	Name:
	 	 	 	Title:
	 

 	 
 	 
 WELLS FARGO BANK (TEXAS), N.A.
	 

 	 
 	 

By:	 

 
	 	 	 	

	 	 	 	Name:
	 	 	 	Title:
	 

 	 
 	 
 THE BANK OF NEW YORK
	 

 	 
 	 

By:	 

 
	 	 	 	

	 	 	 	Name:
	 	 	 	Title:
	 

 	 
 	 
 FLEET NATIONAL BANK
	 

 	 
 	 

By:	 

 
	 	 	 	

	 	 	 	Name:
	 	 	 	Title:
	 

 	 
 	 
 UNION BANK OF CALIFORNIA, N.A.
	 

 	 
 	 

By:	 

 
	 	 	 	

	 	 	 	Name:
	 	 	 	Title:













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FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT