Exhibit
10.4


	
   

  	
  Brian C. Cornell

  
	
   

  	
  Name of Employee

  



 


MICHAELS
STORES, INC.


2006 EQUITY INCENTIVE PLAN


Restricted Stock Award Agreement


Michaels
Stores, Inc.

8000 Bent Branch Drive

Irving, Texas 75063


Attn:       Jeffrey N. Boyer


Ladies
and Gentlemen:


The undersigned (i) acknowledges that he has received an award (the “Award”)
of restricted stock from Michaels Stores, Inc. (the “Company”) under the
Michaels Stores, Inc. 2006 Equity Incentive Plan (the “Plan”), subject to the
terms set forth below and in the Plan; (ii) further acknowledges receipt of a
copy of the Plan as in effect on the date hereof; and (iii) agrees with the
Company as follows:


1.               Effective Date.  This
Agreement shall take effect as of June 4, 2007, which is the date of grant of
the Award.


2.               Shares Subject to Award.  The
Award consists of 133,333 shares (the “Shares”) of common stock of the Company
(“Stock”).  The undersigned’s rights to
the Shares are subject to the restrictions described in this Agreement and the
Plan (which is incorporated herein by reference with the same effect as if set
forth herein in full) in addition to such other restrictions, if any, as may be
imposed by law.


3.               Meaning of Certain Terms. 
Except as otherwise expressly provided, all terms used herein shall have
the same meaning as in the Plan.  The
term “vest” as used herein with respect to any Share means the lapsing of the
restrictions described herein with respect to such Share.


4.               Nontransferability of Shares.  The
Shares acquired by the undersigned pursuant to this Agreement shall not be
sold, transferred, pledged, assigned or otherwise encumbered or disposed of
except as provided below and in the Plan.


5.               Vesting of Shares.  The
shares acquired hereunder shall vest in accordance with the provisions of this
Paragraph 5 and applicable provisions of the Plan, as follows:  66,667 Shares on and after June 4, 2008, and
66,666 on and after June 4, 2009. 
Notwithstanding the foregoing, no shares shall 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 or its subsidiaries.   In the event that the undersigned’s
employment is terminated due to his death, by the Company other than for “Cause”
or for Disability, or by the undersigned for “Good Reason” (all terms as
defined in the Employment Agreement dated June 4, 2007, between the undersigned
and the Company), all then outstanding and unvested Shares acquired by the
undersigned hereunder shall automatically and immediately vest.













6.               Forfeiture Risk. 
Except as provided in Section 5 above, if the undersigned ceases to be
employed by the Company and its subsidiaries for any reason, any then
outstanding and unvested Shares acquired by the undersigned hereunder shall be
automatically and immediately forfeited. 
The undersigned hereby (i) appoints the Company as the attorney-in-fact
of the undersigned to take such actions as may be necessary or appropriate to
effectuate a transfer of the record ownership of any such shares that are
unvested and forfeited hereunder, (ii) agrees to deliver to the Company, as a
precondition to the issuance of any certificate or certificates with respect to
unvested Shares hereunder, one or more stock powers, endorsed in blank, with
respect to such Shares, and (iii) agrees to sign such other powers and take
such other actions as the Company may reasonably request to accomplish the
transfer or forfeiture of any unvested Shares that are forfeited hereunder.


7.               Retention of Certificates.  Any
certificates representing unvested Shares shall be held by the Company.  If unvested Shares are held in book entry
form, the undersigned agrees that the Company may give stop transfer
instructions to the depository to ensure compliance with the provisions hereof.


8.              Effect of Certain Transactions.  In
the event of a Change of Control (as defined in the Stockholders Agreement),
all then outstanding and unvested Shares acquired by the undersigned hereunder
shall automatically and immediately 
vest.


9.               Joinder to Agreements.  The
undersigned acknowledges and agrees that the Shares acquired hereunder will be
subject to the Stockholders Agreement and to the Registration Rights Agreement
and the transfer and other restrictions, rights, and obligations set forth in
those agreements.  By executing this
Agreement, the undersigned hereby becomes a party to and bound by the
Stockholders Agreement and the Registration Rights Agreement as a Manager (as
such term is defined in those agreements), without any further action on the
part of the undersigned, the Company or any other Person.


10.         Legend.  Any certificates representing unvested Shares
shall be held by the Company, and any such certificate shall contain a legend
substantially in the following form:


THE TRANSFERABILITY OF THIS CERTIFICATE AND
THE SHARES OF STOCK REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS
(INCLUDING FORFEITURE) OF THE MICHAELS STORES, INC. 2006 EQUITY INCENTIVE PLAN
AND A RESTRICTED STOCK AWARD AGREEMENT ENTERED INTO BETWEEN THE REGISTERED
OWNER AND MICHAELS STORES, INC.  COPIES
OF 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 the Company shall cause a certificate
or certificates covering such Shares, without the 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 record and manifest the
restrictions applicable to such Shares.


11.         Dividends, etc..  The undersigned shall be entitled to (i)
receive any and all dividends or other distributions paid with respect to those
Shares of which he is the record owner on the record date for such dividend or
other distribution, and (ii) vote any Shares of which he is the record owner on
the record date for such vote; provided, however,
that any property (other than cash) distributed with respect to a share of
Stock (the “associated share”) acquired hereunder, including without limitation
a distribution of Stock by reason of a stock dividend, stock split



 2
 









or otherwise, or a
distribution of other securities with respect to an associated share, shall be
subject to the restrictions of this Agreement in the same manner and for so
long as the associated share remains subject to such restrictions, and shall be
promptly forfeited if and when the associated share is so forfeited;  and further provided,
that the Administrator may require that any cash distribution with respect to
the Shares other than a normal cash dividend be placed in escrow or otherwise
made subject to such restrictions as the Administrator deems appropriate to
carry out the intent of the Plan. 
References in this Agreement to the Shares shall  refer, mutatis mutandis,
to any such restricted amounts.


12.         Sale of Vested Shares.  The undersigned understands that he will be free to sell any Share once
it has vested, subject to (i) satisfaction of any applicable tax withholding
requirements with respect to the vesting or transfer of such Share;
(ii) the completion of any administrative steps (for example, but without
limitation, the transfer of certificates) that the Company may reasonably
impose; (iii) applicable requirements of federal and state securities laws,
(iv) the Stockholders Agreement and (v) the Registration Rights Agreement.


13.         Certain Tax Matters.  The undersigned expressly acknowledges the
following:


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


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


	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
    /s/ Brian C. Cornell

  
	
   

  	
  Brian C. Cornell

  



 


Dated:  June 4, 2007


The
foregoing Restricted Stock

Award Agreement is hereby accepted:


MICHAELS
STORES, INC.


	
  By:

  	
  /s/ Jeffrey N.
  Boyer

  	
   

  
	
   

  	
  Jeffrey N. Boyer

  
	
   

  	
  President and
  Chief Financial Officer

  



 



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