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Exhibit 10.1    
  

 
 

FIRST AMENDMENT
  TO
  MICHAELS STORES, INC.
  DEFERRED COMPENSATION PLAN
  (As Amended And Restated as of January 1, 2002)    
  

        The Michaels Stores, Inc. Deferred Compensation Plan Administrative Committee adopts the following amendments to the Michaels Stores, Inc Deferred
Compensation Plan (the "Plan"): 

        1.    Section 6.3
of the Plan is amended in its entirety to read as follows: 

        6.3  Unscheduled Distributions. Participants will be permitted to request to withdraw amounts from their Accounts at any time
("Early Distributions"), subject to the following restrictions: 

        (i)    The
election to take an Early Distribution will be made by filing a form provided by and filed with the Administrative Committee or a third-party administrator
designated by the Administrative Committee. 

        (ii)  The
maximum amount payable to a Participant in connection with an Early Distribution will in all cases equal 90% of the amount requested by the Participant (which
requested amount must be not less than $10,000 or the Participant's entire Distributable Amount if less than $10,000); provided, however, that the maximum amount payable to a Participant in connection
with an Early Distribution will be 90% of the Distributable Amount as of the end of the calendar month in which the Early Distribution request is received by the Administrative Committee or the
third-party administrator. 

        (iii)  The
amount described in paragraph (ii) above will be paid in a single lump sum by the end of the calendar month next following the calendar month in which the
Early Distribution request is received by the Administrative Committee or the third-party administrator. A distribution pursuant to this Section 6.3 of less than the Participant's entire
interest in the Plan will be made pro rata from his or her Investment Fund Subaccounts according to the balances in such Subaccounts. 

        (iv)  If
a Participant receives an Early Distribution, the remaining portion of the requested or approved amount, as applicable, in excess of the amount payable under
paragraph (ii) above (i.e., 10% of such amount), will be permanently forfeited and the Company will have no obligation to the Participant or his or her Beneficiary with respect to such
forfeited amount. Forfeiture of such amount will be made pro rata from the Participant's Investment Fund Subaccounts according to the balances in such Subaccounts. 

        (v)  If
a Participant receives an Early Distribution, the Participant will be ineligible to participate in the Plan for the balance of the Plan Year in which the Early
Distribution occurs and for the immediately following Plan Year. 

        (vi)  A
Participant will be limited to a maximum of two Early Distributions during all of his or her periods of Plan participation. 

        2.    Section 6.4
of the Plan ("Financial Hardship Withdrawals") is amended by the addition of the following sentence. 

Any
action permitted to be taken by the Administrative Committee pursuant to this Section 6.4 will be valid if taken by any member of the Administrative Committee acting alone; provided,
however, that a member of the Administrative Committee may not act with respect to a financial hardship withdrawal to be made from the member's own Account. 

        3.    The
first sentence of Section 7.2 of the Plan ("Committee Action") is amended in its entirety to read as follows: 

Except
as otherwise expressly provided in the Plan, the Administrative Committee will act at meetings by affirmative vote of a majority of the members of the Committee. 

        Executed
at Irving, Texas, this 30th day of April, 2002. 

	 	 	MICHAELS STORES, INC. DEFERRED COMPENSATION PLAN ADMINISTRATIVE COMMITTEE
	

 	
 	

By:	

/s/  SUE ELLIOTT      
 Sue Elliott
	

 	
 	

By:	

/s/  DAVID KEEPES      
 David Keepes

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Exhibit 10.1

FIRST AMENDMENT TO MICHAELS STORES, INC. DEFERRED COMPENSATION PLAN (As Amended And Restated as of January 1, 2002)QuickLinks
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Exhibit 10.2    
  

 
 

FIRST AMENDMENT
  TO THE
  MICHAELS STORES, INC.
  EMPLOYEES 401(k) PLAN    
    
    (As Amended and Restated Effective August 1, 1999)    
  

        Michaels Stores, Inc., a Delaware corporation, pursuant to authority of the Board of Directors, hereby adopts the following amendments to the Michaels
Stores, Inc. Employees 401(k) Plan (the "Plan"), effective as of January 1, 2002, except as otherwise indicated. 

	1.
	Section 1.12(a)
of the Plan ("Compensation") is amended effective as of January 1, 2001, by adding the following new sentence at the end thereof: 

Effective
for Plan Years beginning after December 31, 2000, "Compensation" shall include any elective amounts that are not includible in the gross income of the Employee by reason of Code
Section 132(f)(4). 

	2.
	The
first sentence of Section 1.12(b) of the Plan is amended in its entirety effective as of January 1, 2001, to read as follows: 

        For
purposes of determining the amount of Salary Reduction Contributions and Employer Matching Contributions, the term "Compensation" shall have the same meaning as in the preceding
subsection; provided that any amounts attributable to an election by an Eligible Employee to reduce such person's Compensation pursuant to the Plan or any other plan under Code Sections 125 or 401(k)
sponsored by an Employer and any amounts not includible in the gross income of the Employee by reason of Code Section 132(f)(4) shall be disregarded. 

	3.
	Section 1.12(d)
of the Plan is amended by adding a new first sentence to the first paragraph thereof, to read as follows: 

        The
annual Compensation taken into account under the Plan for any Plan Year beginning after December 31, 2001, shall not exceed $200,000, as adjusted for
cost-of-living increases in accordance with Code Section 401(a)(17). 

	4.
	The
second sentence of the first paragraph of Section 1.12(d) of the Plan is amended in its entirety to read as follows: 

The
annual Compensation taken into account under the Plan for any Plan Year shall not exceed $150,000 as adjusted by the Adjustment Factor for Plan Years beginning on or after February 1, 1994,
and ending before January 1, 2002. 

	5.
	Clause (ii)
of the first sentence of the penultimate paragraph of Section 1.15 of the Plan ("Special Provisions for Leased Employees") is amended in its entirety
effective as of January 1, 1997, to read as follows: 

        for
periods beginning on and after January 1, 1997, such services are performed under the primary direction or control of the Employers. 

	6.
	The
first sentence of Section 2.9 of the Plan ("Veterans' Reemployment Rights") is amended in its entirety effective as of December 12, 1994, to read as follows: 

        Notwithstanding
any provisions of the Plan to the contrary, contributions, benefits and service credit with respect to qualified military service will be provided in accordance with Code
Section 414(u), and Participant loan repayments will be suspended under the Plan as permitted under Code Section 414(u)(4) for Participants on a leave of absence for qualified military
service. 

 
	7.
	The
first sentence of Section 3.1(d) of the Plan ("Salary Reduction Contributions") is amended in its entirety to read as follows: 

        No
Eligible Employee shall be permitted to make Salary Reduction Contributions during any calendar year in excess of the dollar limitation contained in Code Section 402(g) in
effect for such year (as such amount is adjusted for cost-of-living increases in the manner described in Code Section 415(d)). 

	8.
	Section 3.4(a)
of the Plan ("Deferral Percentage Limitation") is amended in its entirety effective as of January 1, 2000, to read as follows: 

        the
Average Actual Deferral Percentage for Highly Compensated Employees for the Plan Year shall not exceed the Average Actual Deferral Percentage for Nonhighly Compensated Employees for
the preceding Plan Year (or, for Plan Years beginning before January 1, 1997, and for the Plan Year beginning January 1, 2000, the Average Actual Deferral Percentage for Nonhighly
Compensated Employees for the current Plan Year) multiplied by 1.25, or 

	9.
	The
first sentence of Section 3.4(b) of the Plan is amended in its entirety effective as of January 1, 2000, to read as follows: 

        the
Average Actual Deferral Percentage for Highly Compensated Employees for the Plan Year shall not exceed the Average Actual Deferral Percentage for Nonhighly Compensated Employees for
the preceding Plan Year (or, for Plan Years beginning before January 1, 1997, and for the Plan Year beginning January 1, 2000, the Average Actual Deferral Percentage for Nonhighly
Compensated Employees for the current Plan Year) multiplied by two, provided that the Average Actual Deferral Percentage for Highly Compensated Employees does not exceed the Average Actual Deferral
Percentage for Nonhighly Compensated Employees by more than two percentage points. 

	10.
	Section 3.7
of the Plan ("Aggregate Limit") is amended by adding a new first sentence thereto, to read as follows: 

        This
Section 3.7 shall apply only for Plan Years beginning before January 1, 2002. 

	11.
	The
second sentence of Section 3.7 of the Plan is amended in its entirety to read as follows: 

If
the Plan does not satisfy the tests in Sections 3.4(a) and 4.4(a), then the sum of the Average Actual Deferral Percentage for Highly Compensated Employees for the Plan Year plus the Average
Contribution Percentage for Highly Compensated Employees for the Plan Year shall be adjusted, if necessary, in accordance with Section 3.8 so that the Aggregate Limit is not exceeded. 

	12.
	The
penultimate paragraph of Section 3.7 of the Plan is amended in its entirety effective as of January 1, 2000, to read as follows: 

        For
Plan Years beginning before January 1, 1997, and for the Plan Year beginning January 1, 2000, the Aggregate Limit shall be determined as described above, but shall be
based on the Average Actual Deferral Percentage or the Average Contribution Percentage for Nonhighly Compensated Employees for the current Plan Year rather than for the preceding Plan Year. 

	13.
	Section 4.4(a)
of the Plan ("Percentage Limitation on Employer Matching Contributions and Employee Contributions") is amended in its entirety effective as of January 1,
2000, to read as follows: 

        the
Average Contribution Percentage for Highly Compensated Employees for the Plan Year shall not exceed the Average Contribution Percentage for Nonhighly Compensated Employees for the
preceding Plan Year (or, for Plan Years beginning before January 1, 1997, and for the Plan 

2

 

Year beginning January 1, 2000, the Average Contribution Percentage for Nonhighly Compensated Employees for the current Plan Year) multiplied by 1.25, or 

	14.
	The
first sentence of Section 4.4(b) of the Plan is amended in its entirety effective as of January 1, 2000, to read as follows: 

        the
Average Contribution Percentage for Highly Compensated Employees for the Plan Year shall not exceed the Average Contribution Percentage for Nonhighly Compensated Employees for the
preceding Plan Year (or, for Plan Years beginning before January 1, 1997, and for the Plan Year beginning January 1, 2000, the Average Contribution Percentage for Nonhighly Compensated
Employees for the current Plan Year) multiplied by two, provided that the Average Contribution Percentage for Highly Compensated Employees does not exceed the Average Contribution Percentage for
Nonhighly Compensated Employees by more than two percentage points. 

	15.
	Section 4.7(a)
of the Plan ("Overall Limitation on Annual Additions") is amended in its entirety to read as follows: 

        100%
of the Participant's Compensation for the Limitation Year, or 

	16.
	Section 4.7(b)
of the Plan is amended in its entirety to read as follows: 

        $40,000,
as adjusted for increases in the cost-of-living under Code Section 415(d). 

	17.
	Section 9.2
of the Plan ("Time of Distribution") is amended by the addition of a new subsection (d), to read as follows: 

For
purposes of this Section 9.2, the value of the Participant's vested Account Balance will be determined without regard to that portion that is attributable to his Rollover Contribution
Account. 

	18.
	Section 9.6(a)
of the Plan ("Direct Rollovers") is amended by the addition of the following sentences at the end thereof: 

Notwithstanding
the foregoing, a portion of a distribution will not fail to be an eligible rollover distribution merely because the portion consists of after-tax employee contributions
which are not includible in gross income. However, such portion may be transferred only to an individual retirement account or annuity described in Code Sections 408(a) or (b), or to a qualified
defined contribution plan described in Code Sections 401(a) or 403(a) that agrees to separately account for amounts so transferred, including separately accounting for the portion of such distribution
which is includible in gross income and the portion of such distribution which is not so includible. 

	19.
	Section 9.6(b)
of the Plan is amended by adding a new second sentence, to read as follows: 

Effective
for distributions made after December 31, 2001, an eligible retirement plan includes an annuity contract described in Code Section 403(b) and an eligible plan under Code
Section 457(b) which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state and which agrees to separately
account for amounts transferred into such plan from the Plan. 

	20.
	The
third sentence of Section 9.6(b) of the Plan is amended in its entirety to read as follows: 

The
definition of "eligible retirement plan" shall also apply in the case of a distribution to a surviving spouse, or to a spouse or former spouse who is the alternate payee under a qualified domestic
relations order, as defined in Code Section 414(p). 

3

 
	21.
	The
third sentence of Section 10.8(a) of the Plan ("Requirements") is amended in its entirety to read as follows: 

Following
receipt of the hardship withdrawal, the Participant shall cease all elective deferrals and/or voluntary contributions under the Plan, and any other plans maintained by the Employer or any
other controlled group member, for a period of six months. A Participant who receives a distribution of elective deferrals and/or voluntary contributions in calendar year 2001 on account of hardship
shall be prohibited from making elective deferrals and voluntary contributions under the Plan and all other plans maintained by the Employer or any other controlled group members for six months after
receipt of the hardship distribution or until January 1, 2002, if later. 

	22.
	The
second sentence of Section 12.2(c) of the Plan ("Investment Committee") is amended in its entirety to read as follows: 

The
Investment Committee shall have the authority to appoint and remove the Trustee and to issue directions to the Trustee to the extent provided in the Trust Agreement. 

	23.
	Section 12.3(c)
of the Plan ("Procedures for Delegation and Allocation of Responsibilities") is amended in its entirety to read as follows: 

The
Investment Committee may appoint an investment manager to manage the Plan's assets or a portion thereof. 

	24.
	Section 14.4(c)
of the Plan ("Power of Administration Committee") is amended in its entirety to read as follows: 

        to
determine all questions (including factual questions) with regard to rights of Employees, Participants and Beneficiaries including but not limited to rights of eligibility of an
Employee to participate in the Plan, the computation of the value of a Participant's Account Balance and the computation of the vesting of a Participant's Account Balance. 

	25.
	Section 14.4
of the Plan is further amended by inserting a new subsection (d), which will read as follows, and redesignating the remaining subsections accordingly: 

        to
decide disputes arising under the Plan and to make determinations and findings (including factual findings) with respect to the benefits payable thereunder and the persons entitled
thereto as may be required for purposes of the Plan. 

	26.
	Section 14.4(o)
of the Plan is amended in its entirety to read as follows: 

        to
interpret and construe the Plan including without limitation, by supplying omissions from, correcting deficiencies in, or resolving inconsistencies or ambiguities in the language of
the Plan. 

	27.
	Section 14.4
of the Plan is further amended by adding a new paragraph at the end thereof, to read as follows: 

        All
decisions of the Administration Committee as to the facts of any case and the application thereof to any case, as to the interpretation of any provision of the Plan or its
application to any case, and as to any other interpretative matter or other determination or question related to the Plan shall be final and binding on all parties affected thereby, subject to the
provisions of Section 16.4. 

	28.
	The
second sentence of Section 17.1(b) ("Right to Amend") is amended in its entirety to read as follows: 

Except
as permitted by law, no modification or amendment shall make it possible to deprive any Participant of a previously accrued benefit or optional form of benefit within the meaning of Code
Section 411(d)(6). 

4

 
	29.
	Article 17
of the Plan is amended by deleting Section 17.6 ("Distribution Upon Disposition of Assets or Subsidy").

	30.
	Section 19.1(b)
of the Plan ("Rollover From Other Plans") is amended in its entirety to read as follows: 

        was
a participant in another employer's qualified plan under Code Sections 401(a) or 403(a), annuity contract under Code Section 403(b), or eligible plan under Code
Section 457(b) which was maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state, 

	31.
	Section 19.2(b)
of the Plan ("Rollover From Conduit Individual Retirement Arrangement") is amended in its entirety to read as follows: 

        established
an individual retirement account or annuity described in Code Sections 408(a) or (b) (an "IRA") that is eligible to be rolled over, and 

	32.
	Section 19.2(c)
of the Plan is amended in its entirety to read as follows: 

        received
from such IRA a distribution that is eligible to be rolled over and would otherwise be includible in gross income, 

	33.
	Section 20.1
of the Plan ("Top-Heavy Plan Defined") is amended by the addition of a new paragraph at the end thereof, to read as follows: 

        For
purposes of determining whether the Plan is a Top-Heavy Plan for Plan Years beginning after December 31, 2001, the foregoing provisions shall be applied by
substituting "one year period" for "five year period," except with respect to a distribution made for a reason other than separation from service, death or disability, and shall also apply to
distributions under a terminated plan which, had it not been terminated, would have been aggregated under Code Section 416(g)(2)(A)(i). 

	34.
	Section 20.2(b)
of the Plan ("Other Definitions") is amended in its entirety to read as follows: 

        "Employee" shall mean a current Eligible Employee or a former Eligible Employee who performed services for any of the Employers during the
one-year period ending on the Determination Date. 

	35.
	Section 20.2
of the Plan is amended by inserting a new subsection (c), which will read as follows, and redesignating the remaining subsections accordingly: 

        "Employer" shall mean the Employers and other entities required to be aggregated with an Employer under Code Section 414(b), (c),
(m) or (o). 

	36.
	Section 20.2(d)
of the Plan is amended by the addition of the following paragraph at the end thereof: 

        For
determinations for Plan Years beginning after December 31, 2001, "Key Employee" shall mean an Eligible Employee or former Eligible Employee (including any deceased Employee)
who at any time during the Plan Year including the Determination Date was an officer of an Employer having Compensation greater than $130,000 (as adjusted under Code Section 416(i)(1) for Plan
Years beginning after December 31, 2002), a 5-percent owner of an Employer, or a 1-percent owner of an Employer having Compensation of more than $150,000. The
determination of who is a Key Employee will be made in accordance with Code Section 416(i)(1) and the applicable regulations and other guidance of general applicability issued thereunder. 

5

 
	37.
	Section 22.1
of the Plan ("Adoption by Employers") is amended in its entirety to read as follows: 

        Any
corporation or other trade or business, the employees of which together with employees of the Company are required by Code Section 414(b) or (c) to be treated as if
they were employed by a single employer, may with the consent and approval of the Board adopt the Plan and the Trust by formal resolution and decision of its own board of directors or
non-corporate counterpart for all or any classification of its employees and thereby from and after the specified effective date of the adoption become an Employer. Such adoption shall be
evidenced by a resolution of the Board authorizing, consenting to, containing or incorporating by reference such resolution or decision of the adopting employer. The adoption resolution or decision
shall become, as to such adopting employer and its employees, a part of the Plan as then or subsequently amended. The adopting employer shall not be required or permitted to sign or execute the Plan
document or any amendment thereto. The Plan's effective date for any such adopting employer shall be that stated in the resolution or decision of adoption of the adopting employer, and from and after
such effective date the adopting employer shall assume all the rights, obligations and liabilities of the Employer as to its employees. The administrative powers and control granted to the Company,
including the sole right of amendment of the Plan and Trust and of appointment and removal of the Administration Committee, the Investment Committee and their respective successors, shall not be
diminished by reason of the participation of any such adopting employer in the Plan. 

	38.
	Article 23
of the Plan is amended by the addition of a new Section 23.12, to read as follows: 

        Electronic Media.    Notwithstanding any provision of the Plan to the contrary, including any provision which requires the use
of a written instrument, to the extent permitted by applicable law, the Administration Committee may establish procedures for the use of electronic media in communications and transactions between the
Plan or the Administration Committee and Participants and Beneficiaries. Electronic media may include, but are not limited to, e-mail, the Internet, intranet systems and automated
telephonic response systems. 

Executed
as of the 5th day of December, 2001. 

	 	 	MICHAELS STORES, INC.
	

 	
 	

By	
 	

/s/ Sue Elliott

	 	 	 	 	Name:	 	Sue Elliott
	 	 	 	 	Title:	 	Senior Vice President—

Human Resources

6

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Exhibit 10.2

FIRST AMENDMENT TO THE MICHAELS STORES, INC. EMPLOYEES 401(k) PLAN (As Amended and Restated Effective August 1, 1999)

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