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                                                                    Exhibit 10.7


                                                                  August 1, 1996

Mr. Richard Tredinnick
2707 Valley Creek Trail
McKinney, Texas 75070

                              Employment Agreement

Dear Mr. Tredinnick:

     Old America Stores, Inc., a Delaware corporation (the "Company"), hereby
offers to employ you on the following terms and conditions:

1.   General.  Effective February 1, 1997, (the "Commencement Date"), the
     Company will continue to employ you as President and Chief Executive
     Officer of the Company and will cause its subsidiary, Old America Store,
     Inc., a Texas corporation, (such subsidiary collectively with the Company,
     the Companies"), to employ you as the President and Chief Executive Officer
     thereof.
 
2.   Term.  Your employment hereunder shall be for the period (the "Employment
     Period") beginning on the Commencement Date and ending on January 31, 1999
     (the "Scheduled Termination Date"), or such earlier date (the "Termination
     Date") upon which your employment hereunder may terminate in accordance
     with the provisions hereof.
 
3.   Duties.  During the Employment Period, you will perform well and faithfully
     such duties for, and render such services to, the Companies in the conduct
     of their businesses as are from time to time assigned to you by the
     respective Boards of Directors thereof and as are consistent with your
     position as the President and Chief Executive Officer thereof.
 
4.   Time to be Devoted to Employment.  During the Employment Period, you will
     devote substantially all of your working time, attention and energies to
     the business of the Companies (except for vacations pursuant to Section 6
     (c) and except for temporary absences due to illness or incapacity) and you
     will not engage in any activity which, in the reasonable judgment of the
     Board of Directors of the Company, conflicts with your duties hereunder,
     whether or not such activity,

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     private or political, is pursued for gain, profit or other pecuniary
     advantage.
 
5.   Compensation; Bonus.  (a)  The Company (or at the Company's option, any
     subsidiary or affiliate thereof having the financial ability to make such
     payments) will pay you an annual base salary (the "Base Salary") during the
     Employment Period at the rate of $225,000 per annum (the "Base Salary"),
     payable in such installments (but not less often than monthly) as is
     generally the policy of the Company with respect to its executive officers.
     Your base salary will be subject to review annually.

       (b)  During the Employment Period, the Company (or at the Company's
            option, any subsidiary or affiliate thereof having the financial
            ability to make such payments) will pay you a bonus (the
            "performance Bonus") based on a percentage of base salary, which
            shall be due and payable not later than April 15, of each fiscal
            year. The formula for determining the amount of the Performance
            Bonus for the fiscal year ending January 31, 1997, is outlined in
            Exhibit B to this agreement. The Board of Directors will establish a
            new Performance Bonus program each year.

6.   Business Expenses; Benefits. (a)  The Company (or, at the Company's option,
     any subsidiary or affiliate thereof) will, upon presentation of such
     appropriate documentation as may be required by the Company, reimburse you
     in accordance with the practice from time to time for officers of the
     Company for all reasonable and necessary expenses and other disbursements
     incurred by you for or on behalf of the Company in the performance of your
     duties hereunder.
 
       (b)  During each fiscal year of the Employment Period, you will be
            entitled to four weeks paid vacation (or a pro rata portion thereof)
            for each fiscal year (or portion thereof) worked beginning on the
            Commencement Date, calculated in accordance with the practice from
            time to time for officers of the Company; provided, however, that
            unused vacation in any fiscal year will be forfeited at the end of
            such fiscal year and will not be carried over into the next year.

 
       (c)  During the Employment Period, and effective on the Commencement
            Date, you will be entitled to all benefits as are made generally
            available from time to time to senior executives of the Company. In
            particular, the Company will (i) provide you with such life
            insurance, health insurance and disability insurance benefits as are
            provided to its senior executives in

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            general and (ii) provide you with coverage under the directors' and
            officers' liability insurance policies which the Company maintains
            for its directors and officers. In addition, during the Employment
            Period, you will be entitled to an automobile (fair market value not
            to exceed $30,000), including payment of all fuel, maintenance and
            insurance related to said vehicle, and a cellular telephone.

7.   Termination.  (a)  If you are incapacitated or disabled by accident,
     sickness or otherwise so as to render you mentally or physically incapable
     of performing your duties hereunder for a period of 120 consecutive days or
     longer, or for an aggregate of 180 days or more during any twelve-month
     period, the Company may, at any time thereafter, at its option, terminate
     your employment hereunder immediately upon giving written notice to that
     effect, unless, but only for as long as, a termination as a result of such
     incapacitation or disability is prohibited by applicable law (provided that
     nothing contained in this Section 7 (a) shall obligate the Company to
     continue your employment beyond the Scheduled Termination Date). Until your
     employment hereunder is terminated in accordance with the foregoing, you
     will be entitled to receive the Base Salary notwithstanding any such
     Disability. If you die during the Employment Period, your employment
     hereunder will thereupon automatically terminate. A termination pursuant to
     this Section 7(a) is called an "Involuntary Termination" in this letter.

       (b)  The Company may terminate your employment hereunder at any time
            for Cause (as hereinafter defined) (such a termination being
            referred to in this Agreement as a "Termination For Cause") by
            giving you written notice of such termination, such termination to
            take effect immediately upon the giving of such notice. As used in
            this Agreement, (i) "Cause" means (A) your material breach of your
            agreements herein or in any other written agreement between you and
            the Company or any of its affiliates, (B) your misconduct which may
            reasonably be anticipated to have a Material Adverse Effect (as
            hereinafter defined), (C) your disregard of lawful instructions of
            the Board of Directors of any of the Companies that are consistent
            with your position or duties hereunder, or your neglect of duties or
            failure to act, which, in either case, may reasonably be anticipated
            to have a Material Adverse Effect, other than by reason of
            Disability or death, (D) alcohol or drug abuse, or (E) the
            commission of a felony or an act which, in the good faith
            determination of the Board of Directors of the Company, constitutes
            fraud, theft or dishonesty; and (ii) "Material Adverse

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            Effect" means a material adverse effect on the business, operations,
            financial condition, results of operations, assets, liabilities or
            prospects of the Company or any of its subsidiaries or affiliates.
            Nothing contained in this Section 7 (b) shall constitute a waiver of
            any right you might have to judicially contest (but not to the prior
            restraint of) any Termination for Cause.
 
       (c)  The Company may terminate your employment hereunder without Cause
            (such a termination being referred to in this Agreement as a
            "Termination Without Cause") by giving written notice of such
            termination, such termination to take effect on the date specified
            in such notice, which date shall not be earlier than the date of
            such notice.
 
       (d)  Any termination of your employment hereunder subsequent to a
            change in control ("Termination Due To A Change In Control") would 
            be deemed a termination without cause and would be treated as
            outlined in section 8 below. A change in control is deemed to have
            occurred in the event of an acquisition, merger, or other
            transactions as a result of which, during any six month period, more
            than 60% of the Company's common stock (including voting, nonvoting,
            or other classes of such stock) is acquired by a single entity or by
            a group of entities acting together.

       (e)  Any termination of your employment hereunder other than as a
            result of an Involuntary Termination, a Termination For Cause,
            Termination Due To A Change In Control or a Termination Without
            Cause is called a "Voluntary Termination".

8.  Effect of Termination.  (a)  Upon the termination of your employment
    hereunder due to a Termination for Cause or a Voluntary Termination, neither
    you nor your beneficiary or estate will have any further rights or claims
    against the Company hereunder, except to receive (i) the unpaid portion, if
    any, of the Base Salary provided for in Section 5 (a), computed on a pro
    rata basis through the Termination Date (based on the actual number of days
    elapsed over a year of 365 or 366 days, as applicable), (ii) any unpaid
    accrued benefits pursuant to Section 6 (d) hereof, and (iii) reimbursement
    for any expenses for which you shall not have been reimbursed as provided in
    Section 6(a) or (b).

       (b)  Upon the termination of your employment hereunder due to an
            Involuntary Termination, a Termination Without Cause or a
            Termination due to a Change In Control, neither you nor your

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            beneficiary or estate will have any further rights or claims against
            the Company hereunder, except (i) to receive the Base Salary through
            the first anniversary of the Scheduled Termination Date, in each
            case payable in such installments as paid prior to such termination
            of employment and (ii) any other unpaid amounts due under 8(a).
 
       (c)  In the event the Company does not renew this contract prior to
            January 31, 1999, and you are subsequently involuntarily terminated,
            you are entitled to receive (i) the Base Salary as defined in 5(a)
            for a period of one year from the Termination Date, in each case
            payable in such installments as paid prior to such termination of
            employment and (ii) any other unpaid amounts due under 8(a).
 
       (d)  The Company may, at its sole option and expense, maintain life and
            disability insurance policies covering you in such amounts as the
            Company shall determine in order to, among other things, meet its
            payment obligations under this Section 8 in the event of your death
            or Disability (which policies may be in addition to any other life
            or other insurance policies maintained by the Company). You will
            cooperate with the Company and provide such information or other
            assistance as the Company may reasonably request in connection with
            the Company's obtaining and maintaining such insurance policies.
 
 9.  Disclosure of Information.  You will not, at any time during or after the
     Employment Period, disclose to any person, firm, corporation or other
     business entity, except as required by law, any non-public information
     concerning the business or affairs of the Company or any subsidiary or
     affiliate thereof for any reason or purpose whatsoever, nor will you make
     use of any of such non-public information for your own purpose or for the
     benefit of any person, firm, corporation or other business entity except
     the Company or any subsidiary or affiliate thereof.
 
10.  Restrictive Covenant.  (a)  You acknowledge and recognize that during the
     Employment Period you will be privy to trade secrets and confidential
     proprietary information critical to the business of the Companies and that
     the Companies would find it extremely difficult or impossible to replace
     you. Accordingly, in consideration of the agreements of the Company
     hereunder and the consideration to be received by you hereunder, you will
     not, from and after the date hereof through the Employment Period and until
     the first anniversary of the Scheduled Termination Date, (i) directly or
     indirectly engage in, represent in any way, or be connected with, any
     Competing Business (as defined below), whether such engagement shall be as
     an

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     officer, director, owner, employee, partner, affiliate or other
     participant in any Competing Business, (ii) assist others in engaging in
     any Competing Business in any manner described in the foregoing clause (i),
     (iii) induce the Company's suppliers or customers to change or alter in any
     manner their business dealings with the Company or (iv) induce other
     employees of the Company or any subsidiary thereof to terminate their
     employment with the Company or any subsidiary thereof, or engage in any
     Competing Business; provided, however, that nothing contained in this
     Agreement shall prohibit your ownership of not more than an aggregate of 2%
     of any class or series of securities registered under the Securities
     Exchange Act of 1934, as amended.

       (b)  As used herein, the term "Competing Business" means any business or
            activity conducted or engaged in by any of the persons and entities
            listed in Exhibit A, as supplemented from time to time pursuant to
            this Section 10(b). Exhibit A shall be supplemented from to time to
            reflect additional persons and entities agreed upon by the Company
            and you as conducting or being engaged in a business or activity
            that directly competes with the business conducted by any of the
            Companies within any jurisdiction in which such business is
            conducted by such Company (other than any such person or entity with
            respect to whom such competitive activity does not constitute a
            significant or material portion of the business or activities
            conducted by such person or entity). In the event you and the
            Company cannot agree that any such additional person or entity
            should be added to Exhibit A pursuant to the preceding sentence,
            such dispute shall be submitted for resolution in accordance with
            the Commercial Arbitration Rules (the "Rules") of the American
            Arbitration Association (the "Association") by an independent, third
            party arbitrator selected by the Company and you (or, in the event
            of a disagreement, selected from the panels of arbitrators of the
            Association in accordance with the Rules). Any such arbitration
            shall be held in Dallas, Texas, and the fees and expenses of the
            arbitrator and the Association that are required to be paid by the
            parties pursuant to such Rules shall be borne by the party against
            whom such dispute is resolved.
 
       (c)  You understand that the foregoing restrictions may limit your
            ability to earn a livelihood in a business similar to the business
            of the Companies, but you nevertheless believe that you will receive
            sufficient consideration and other benefits as an employee of the
            Company and as otherwise provided hereunder to clearly justify such
            restrictions which, in any event

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            (given your education, skills and ability), you do not believe would
            prevent you from otherwise earning a living.
 
11.   Enforcement; Severability; Etc.  The terms and provisions of Sections 9
      and 10 hereof are intended to be enforced to the fullest extent
      permissible under the laws and public policies applied in each
      jurisdiction in which enforcement is sought. Accordingly, if any
      particular provision of any of such Sections is adjudicated to be invalid
      or unenforceable, such provision will be deemed amended to delete
      therefrom the portion thus adjudicated to be invalid or unenforceable,
      such deletion to apply only with respect to the operation of such
      provision in the particular jurisdiction in which such adjudication is
      made.
 
12.   Remedies.  You acknowledge and understand that the provisions of this
      Agreement are of a special and unique nature, the loss of which cannot be
      adequately compensated for in damages by an action at law, and that your
      breach or threatened breach of the provisions of this Agreement would
      cause the Company irreparable harm. In the event of a breach or threatened
      breach by you of the provisions of any of your agreements herein, this
      letter, the Company shall be entitled to an injunction restraining him
      from such breach. Nothing contained in this Agreement shall be construed
      as prohibiting the Company from or limiting the Company in pursuing any
      other remedies available for any breach or threatened breach of this
      Agreement.
 
13.   Binding Effect; Assignment.  Upon your acceptance hereof by signing and
      returning a copy of this letter to the undersigned, the terms of this
      letter will be binding upon, and will inure to the benefit of, our and
      your respective heirs, legal representatives, successors and assigns,
      provided that you acknowledge that your agreements hereunder are personal
      in nature and that you may not assign or transfer or delegate any of your
      rights or obligations hereunder without the consent of the Company.
 
14.   Governing Law.  This letter will be governed by, and construed and
      enforced in accordance with, the laws of the State of Texas applicable to
      agreements made and to be performed wholly therein.
 
15.   Waiver of Breach.  Any waiver of a breach of any term or provision of this
      letter must be in writing and shall not operate or be construed as a
      waiver of any other or subsequent breach.
 
16.   Entire Agreement; Amendments.  This letter contains the entire agreement
      between us with respect to the subject matter hereof and supersedes all
      prior and contemporaneous agreements or understandings between us with
      respect thereto. The terms in this letter may be amended only by an
      agreement in writing signed by both of us.

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17.   Headings.  The section headings contained in this Agreement are for
      reference purposes only and shall not affect in any way the meaning or
      interpretation of this Agreement.



     If the foregoing terms are acceptable to you, please acknowledge your
agreement with and acceptance of employment by the Company on such terms by
signing a copy of this letter in the space provided below and returning or to
the undersigned.

                                            Very truly yours,

                                            OLD AMERICA STORES, INC.


 

                                            By: _____________________________
                                                Name:  Mr. Peter Gould
                                                Title: Chairman of the Board


ACCEPTED AND AGREED AS OF
THIS _____ DAY OF _______, 1996:


___________________________________
Richard Tredinnick
 

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                                                                       EXHIBIT A
Competing Businesses

1.   Michael's Stores, Inc.
2.   M.J. Designs, Inc.
3.   Waccamaw Pottery Company
4.   Amber's Stores, Inc.
5.   Hobby Lobby, Inc.
6.   Rag Shops, Inc.
7.   Zaks Stores, Inc.
8.   Ben Franklin Retail Stores, Inc.
9.   Crafts Plus +, Inc.
10.  Frank's Nursery & Crafts, Inc.
11.  Garden Ridge Corporation
12.  A. C. Moore
13.  Endeavor Retail
14.  Fabri-Center of America
15.  Silas Creek Retail, Inc.

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