EMPLOYMENT AGREEMENT



     THIS AGREEMENT is signed September 6, 2006 to be effective as of September

13, 2006, or earlier after the signature date hereof as permitted by Executive's

current employer (the "Effective Date"), between A. C. Moore Arts & Crafts,

Inc., a Pennsylvania corporation (the "Company"), and Marc D. Katz

("Executive"). This Agreement replaces and supersedes any and all prior

discussions, offers, communications or agreements of any sort whatsoever,

existing between the Company and Executive, of whatsoever nature.



     NOW THEREFORE,



     In consideration of the mutual covenants contained herein and other good

and valuable consideration, the receipt and sufficiency of which are hereby

acknowledged, the parties hereto agree as follows:



     1.   Employment.



          (a) The Company shall employ Executive, and Executive hereby accepts

employment with the Company, upon the terms and conditions set forth in this

Agreement for the period beginning on the effective date and ending as provided

in paragraph 4 hereof (the "Employment Term").



          (b) The Board of Directors of the Company (the "Board") has determined

that it is in the best interests of the Company and its shareholders to assure

that the Company will have the continued dedication of the Executive,

notwithstanding the possibility, threat or occurrence of a Change of Control (as

defined in Appendix I to this Agreement) of the Company. The Board believes it

is imperative to diminish the inevitable distraction of the Executive by virtue

of the personal uncertainties and risks created by a pending or threatened

Change of Control and to encourage the Executive's full attention and dedication

to the Company currently and in the event of any threatened or pending Change of

Control, and to provide the Executive with compensation and benefits

arrangements upon a Change of Control which ensure that the compensation and

benefits expectations of the Executive will be satisfied and which are

competitive with those of other corporations. Therefore, in order to accomplish

these objectives if a Change of Control occurs, paragraphs 1 through 4 of this

Agreement (except paragraphs 3(b) through (h) which shall continue) shall be

superseded by Appendix I.



     2.   Position and Duties.



          (a) During the Employment Term, Executive shall serve as Chief

Financial Officer and Executive Vice President of the Company. Executive shall

report directly to the Chief Executive Officer of the Company and shall have

such duties and responsibilities as is customary for a Chief Financial Officer

for companies of like size and type and shall be responsible for the oversight

of all of the Company's information technology.



          (b) Executive shall devote Executive's best efforts and Executive's

full business time and attention (except for permitted vacation periods and

reasonable periods of



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illness or other incapacity) to the business and affairs of the Company and its

Subsidiaries (as defined below); provided that Executive shall, with the prior

written approval of the Board, be allowed to serve as (i) a director or officer

of any non-profit organization including trade, civic, educational or charitable

organizations, or (ii) a director of any corporation which is not competing with

the Company or any of its Subsidiaries so long as such duties do not materially

interfere with the performance of Executive's duties or responsibilities under

this Agreement. Executive shall perform Executive's duties and responsibilities

under this Agreement to the best of Executive's abilities in a diligent,

trustworthy, businesslike and efficient manner.



          (c) Executive shall be based at or in the vicinity of the Company's

headquarters in Berlin, New Jersey, but may be required to travel as necessary

to perform Executive's duties and responsibilities under this Agreement.



          (d) For purposes of this Agreement, "Subsidiaries" shall mean any

entity of which the securities having a majority of the voting power in electing

directors or managers are, at the time of determination, owned by the Company,

directly or through one or more Subsidiaries.



     3.   Base Salary, Bonus, Options, Equity Compensation and Benefits.



          Subject to the provisions of paragraph 4, which shall control,

Executive shall be entitled to the following compensation and benefits during

the Employment Term:



          (a) Initially, Executive's base salary shall be $275,000 per year (the

"Base Salary"), which salary shall be payable in regular monthly installments in

accordance with the Company's general payroll practices. Executive's Base Salary

shall be reviewed at least annually by the Compensation Committee of the Board

and shall be subject to increase, as it shall determine based on among other

things, market practice and performance.



          (b) (i) On Effective Date, Executive shall receive a cash sign-on lump

sum retention bonus of $90,000 (the "2006 Retention Bonus"). Each month (or any

portion of such month) that Executive remains employed by Company, Executive

will earn one-twenty fourth of the 2006 Retention Bonus. If Executive's

employment is terminated by the Company for Cause (as defined below) or by

Executive without Good Reason (as defined below), Executive shall repay the

unearned portion of the Retention Bonus to Company. In the event that

Executive's employment is terminated by the Company without Cause or by the

Executive with Good Reason, Executive shall be deemed to have earned One Hundred

Percent (100%) of the 2006 Retention Bonus as of the effective date of the

termination of his employment, and Executive shall not be required to repay any

portion of the 2006 Retention Bonus.



               (ii) In 2007 and no later than March 31, 2007, Executive shall

receive a guaranteed cash lump sum retention bonus of $30,000 (the "2007

Retention Bonus"). Each month (or any portion of such month) after receipt of

the 2007 Retention Bonus that Executive remains employed by Company, Executive

will earn one-eighteenth of the 2007 Retention Bonus. If Executive's employment

is terminated by the Company for Cause (as defined below) or by Executive

without Good Reason (as defined below), Executive shall repay the unearned

portion of the Retention Bonus to Company. In the event that Executive's

employment is





                                       2



{PAGE}



terminated by the Company without Cause or by the Executive with Good Reason

after the payment of the 2007 Retention Bonus, Executive shall be deemed to have

earned One Hundred Percent (100%) of the 2007 Retention Bonus as of the

effective date of the termination of his employment, and Executive shall not be

required to repay any portion of the 2007 Retention Bonus.



          (c) During each calendar year of the Company in which Executive

continues to be employed by the Company pursuant to this Agreement, Executive

shall be entitled to participate in the Company's annual bonus plan (the "Bonus

Plan") as administered and determined by the Compensation Committee of the Board

of Directors, which the Company expects will provide for the possibility of

Executive to earn a maximum of 100% of annual base salary in short and long-term

annual bonus upon the achievement of certain Company targets. If the Board or

the Compensation Committee modifies such Bonus Plan during the Employment Term

or any extension term, Executive shall continue to participate at a level no

lower than the highest level established for any executive vice president of the

Company.



          (d) Executive shall be entitled to paid vacation in accordance with

the Company's general payroll practices for officers of the Company.



          (e) The Company shall reimburse Executive for all reasonable expenses

incurred by Executive in the course of performing Executive's duties under this

Agreement which are consistent with the Company's policies in effect from time

to time with respect to travel, entertainment and other business expenses,

subject to the Company's requirements with respect to reporting and

documentation of such expenses.



          (f) Executive will be entitled to all benefits as are, from time to

time, maintained for officers of the Company, including without limitation:

medical and other insurance plans (collectively, "Insurance Benefits"), and

retirement benefits.



          (g) Pursuant and subject to the terms and conditions of the Company's

2002 Stock Option Plan or any successor plan:



               (1) On September 13, 2006, Executive shall be granted a

non-qualified option (the "Initial Option") to purchase 50,000 shares of common

stock of the Company (the "Shares"). One third of the Shares shall become

exercisable on each of the first, second and third anniversaries of the date of

grant.



               (2) For each calendar year that Executive continues to be

employed by Company, on the day of each such calendar year that the Board

otherwise grants options to management of the Company, Executive shall be

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