Exhibit 10.1

SECOND AMENDMENT TO CREDIT AGREEMENT

SECOND AMENDMENT TO CREDIT AGREEMENT (this “Second Amendment”), dated as of May
10, 2007, among MICHAELS STORES, INC., a Delaware corporation (the “Borrower”),
the Replacement Lenders (as defined below), and DEUTSCHE BANK AG NEW YORK
BRANCH, as Administrative Agent (in such capacity, the “Administrative Agent”). 
Unless otherwise defined herein, capitalized terms used herein and defined in
the Credit Agreement are used herein as therein defined.

W I T N E S S E T H :

WHEREAS, the Borrower, the Lenders, the Administrative Agent, the Syndication
Agent and the Co-Documentation Agents have entered into a Credit Agreement,
dated as of October 31, 2006 (as amended, supplemented and/or otherwise modified
to, but not including, the date hereof, the “Credit Agreement”); and

WHEREAS, pursuant to Section 10.01 of the Credit Agreement, the parties hereto
wish to amend certain provisions of the Credit Agreement as provided herein,
subject to the terms and conditions set forth below.

NOW, THEREFORE, it is agreed;

A.                                   AMENDMENTS TO THE CREDIT AGREEMENT

1.             SECTION 1.01 OF THE CREDIT AGREEMENT IS HEREBY AMENDED BY (I)
DELETING THE DEFINITIONS OF “APPLICABLE RATE”, “COMMITMENT”, “LOAN”, “NOTICE OF
INTENT TO CURE”, “PERMITTED CURE ISSUANCE”, “PRO RATA SHARE” AND “RELEVANT
REFERENCE PERIOD” APPEARING IN SAID SECTION IN THEIR ENTIRETY AND (II) INSERTING
IN APPROPRIATE ALPHABETICAL ORDER THE FOLLOWING NEW DEFINITIONS:

“Applicable Rate” means a percentage per annum equal to (i) in the case of
Eurocurrency Rate Loans, 2.25% and (ii) in the case of Base Rate Loans, 1.25%,
less, in each case, if (but only if) the Moody’s Applicable Corporate Rating
then most recently published is B1 or higher (with at least a stable outlook),
0.25%.  Any increase or decrease in the Applicable Rate resulting from a change
in Moody’s Applicable Corporate Rating shall become effective as of the first
Business Day immediately following the date the then most recent Moody’s
Applicable Corporate Rating is published; provided that at the option of the
Administrative Agent or the Required Lenders, no deduction shall apply (x) as of
the first Business Day after the date on which Moody’s ceases to maintain or
publish a Moody’s Applicable Corporate Rating (of any level), and shall continue
not to apply to and including the date on which a new Moody’s Applicable
Corporate Rating is so published (with any deduction as otherwise determined in
accordance with this definition to apply thereafter), and (y) as of the first
Business Day after an Event of Default under Section 8.01(a), (f) or (g) shall
have occurred

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and be continuing, and shall continue not to apply to but excluding the date on
which such Event of Default is cured or waived (with any deduction as otherwise
determined in accordance with this definition to apply thereafter). It is
understood and agreed that (x) the “Applicable Rate” (as defined herein
immediately prior to giving effect to the First Amendment Effective Date) shall
apply for all periods prior to the First Amendment Effective Date, (y) the
“Applicable Rate” (as defined herein immediately after giving effect to the
First Amendment Effective Date and prior to the Second Amendment Effective Date)
shall apply for all periods on and after the First Amendment Effective Date and
prior to the Second Amendment Effective Date and (z) the “Applicable Rate” (as
defined herein immediately after giving effect to the Second Amendment Effective
Date) shall apply for all periods on and after the Second Amendment Effective
Date.

“Applicable Consolidated Secured Debt Ratio” means, as at any date of
determination, the ratio of (a) the Consolidated Total Indebtedness of the
Borrower and its Restricted Subsidiaries that is secured by Liens as at the last
day of the Relevant Reference Period then last ended to (b) the Borrower’s
EBITDA for the Relevant Reference Period then last ended, in each case with such
pro forma adjustments to Consolidated Total Indebtedness and EBITDA as are
appropriate and consistent with the pro forma adjustment provisions set forth in
the definitions of “Consolidated Secured Debt Ratio” and “Pro Forma Compliance”:

Calendar Year
Ended

 

Relevant 
Reference Period 
Ended Closest to
January 31

 

Relevant 
Reference Period 
Ended Closest to
April 30

 

Relevant 
Reference Period 
Ended Closest to
July 31

 

Relevant 
Reference Period 
Ended Closest to
October 31

 

2008

 

5.95:1.00

 

5.95:1.00

 

5.95:1.00

 

5.95:1.00

 

2009

 

5.95:1.00

 

5.50:1.00

 

5.50:1.00

 

5.50:1.00

 

2010

 

5.50:1.00

 

5.00:1.00

 

5.00:1.00

 

5.00:1.00

 

2011

 

5.00:1.00

 

4.50:1.00

 

4.50:1.00

 

4.50:1.00

 

2012

 

4.50:1.00

 

4.00:1.00

 

4.00:1.00

 

4.00:1.00

 

2013

 

4.00:1.00

 

4.00:1.00

 

4.00:1.00

 

4.00:1.00

 

 

“Commitment” means, as to each Lender, its Original Commitment, its New
Commitment or its Replacement Commitment, as the context may require.

“Loan” means (a) the making of an Original Loan by a Lender to the Borrower
pursuant to Section 2.01(a), (b) the making of an Additional New Loan by a
Lender to the Borrower pursuant to Section 2.01(c), (c) the conversion of an
Original Loan to a Converted New Loan by a Lender pursuant to Section 2.01(b) or
(d) the making of a Replacement Loan by a Lender to the Borrower pursuant to
Section 2.01(d).

“PRO RATA SHARE” MEANS, WITH RESPECT TO EACH LENDER, (I) AT OR PRIOR TO THE
FUNDING ON THE CLOSING DATE, A FRACTION (EXPRESSED AS A PERCENTAGE, CARRIED OUT
TO THE NINTH DECIMAL PLACE), THE NUMERATOR OF WHICH IS THE

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AMOUNT OF THE COMMITMENT OF SUCH LENDER AT SUCH TIME AND THE DENOMINATOR OF
WHICH IS THE AMOUNT OF THE AGGREGATE COMMITMENTS OF ALL LENDERS AT SUCH TIME,
(II) FOR PURPOSES OF SECTION 2.02(B) ONLY, AT THE TIME OF THE FUNDING OF THE
ADDITIONAL NEW LOANS ON THE FIRST AMENDMENT EFFECTIVE DATE, A FRACTION
(EXPRESSED AS A PERCENTAGE, CARRIED OUT TO THE NINTH DECIMAL PLACE), THE
NUMERATOR OF WHICH IS THE AMOUNT OF THE NEW COMMITMENT OF SUCH LENDER AT SUCH
TIME AND THE DENOMINATOR OF WHICH IS THE SUM OF THE AGGREGATE NEW COMMITMENTS OF
ALL LENDERS AT SUCH TIME, (III) AT THE TIME OF THE FUNDING OF THE REPLACEMENT
LOANS ON THE SECOND AMENDMENT EFFECTIVE DATE, A FRACTION (EXPRESSED AS A
PERCENTAGE, CARRIED OUT TO THE NINTH DECIMAL PLACE), THE NUMERATOR OF WHICH IS
THE AMOUNT OF THE REPLACEMENT COMMITMENT OF SUCH LENDER AT SUCH TIME AND THE
DENOMINATOR OF WHICH IS THE SUM OF THE AGGREGATE REPLACEMENT COMMITMENTS OF ALL
LENDERS AT SUCH TIME AND (IV) AT ANY OTHER TIME, A FRACTION (EXPRESSED AS A
PERCENTAGE, CARRIED OUT TO THE NINTH DECIMAL PLACE), THE NUMERATOR OF WHICH IS
THE PRINCIPAL AMOUNT OF THE LOANS OF SUCH LENDER AT SUCH TIME AND THE
DENOMINATOR OF WHICH IS THE AGGREGATE PRINCIPAL AMOUNT OF THE LOANS OF ALL
LENDERS AT SUCH TIME.

“REFINANCED LOANS” MEANS ALL OUTSTANDING LOANS IMMEDIATELY PRIOR TO THE SECOND
AMENDMENT EFFECTIVE DATE.

“RELEVANT REFERENCE PERIOD” MEANS (I) IN THE CASE OF ANY DETERMINATION OF EBITDA
AND CONSOLIDATED TOTAL INDEBTEDNESS (AND ANY COMPONENT DEFINITIONS USED THEREIN)
FOR PURPOSES OF COMPUTING THE CONSOLIDATED TOTAL LEVERAGE RATIO AS USED IN THE
DEFINITION OF “REQUIRED PERCENTAGE”, THE EXCESS CASH FLOW PERIOD THEN MOST
RECENTLY ENDED, AND (II) IN THE CASE OF ANY DETERMINATION OF (1) THE FIXED
CHARGE COVERAGE RATIO, (2) THE FIXED CHARGE COVERAGE RATIO INCURRENCE TEST, (3)
THE CONSOLIDATED SECURED DEBT RATIO, (4) THE CONSOLIDATED TOTAL LEVERAGE RATIO
(OTHER THAN AS USED IN THE DEFINITION OF “REQUIRED PERCENTAGE”), OR (5) PRO
FORMA COMPLIANCE WITH THE APPLICABLE CONSOLIDATED SECURED DEBT RATIO FOR
PURPOSES OF SECTIONS 7.02(A)(II), 7.02(B)(VI), 7.02(B)(VII) AND 7.06(A)(IV) AND
THE DEFINITIONS OF “PERMITTED COLLATERAL LIENS”, “PERMITTED LIENS” AND
“UNRESTRICTED SUBSIDIARY” (AND THE COMPONENT DEFINITIONS USED IN ANY OF THE
FOREGOING), THE TEST PERIOD THEN MOST RECENTLY ENDED FOR WHICH INTERNAL
FINANCIAL STATEMENTS ARE AVAILABLE IMMEDIATELY PRECEDING THE DATE ON WHICH THE
SPECIFIED TRANSACTION FOR WHICH SUCH CALCULATION IS BEING MADE SHALL OCCUR.

“Replacement Commitment” means, as to each Lender, its obligation to make a
Replacement Loan to the Borrower pursuant to Section 2.01(d) in an aggregate
principal amount not to exceed the amount set forth opposite such Lender’s name
on Schedule 2.01 under the caption “Replacement Commitment”, as such amount may
be adjusted from time to time in accordance with this Agreement. The initial
aggregate amount of the Replacement Commitments is $2,338,250,000.

“Replacement Loan” has the meaning provided in Section 2.01(d).

“Repricing Transaction” means (1) the incurrence by the Borrower of any
Indebtedness (including, without limitation, any new or additional term loans
under this Agreement, whether incurred directly or by way of the conversion of

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Replacement Loans into a new tranche of replacement term loans under this
Agreement) that is broadly marketed or syndicated to banks and other
institutional investors in financings similar to the facilities provided for in
this Agreement (i) having an “effective” interest rate margin or weighted
average yield for the respective Type of such indebtedness that is less than the
applicable rate for or weighted average yield for Replacement Loans of the
respective Type (with the comparative determinations to be made in the
reasonable judgment of the Administrative Agent consistent with generally
accepted financial practices, after giving effect to, among other factors,
margin, upfront or similar fee or “original issue discount” shared with all
lenders or holders of such Indebtedness or Replacement Loans, as the case may
be, but excluding the effect of any arrangement, structuring, syndication or
other fees payable in connection therewith that are not shared with all lenders
or holders of such Indebtedness or Replacement Loans, as the case may be, and
without taking into account any fluctuations in the Eurocurrency Rate or
comparable LIBOR rate) but excluding Indebtedness incurred in connection with a
Change of Control, and (ii) the proceeds of which are used to prepay (or, in the
case of a conversion, deemed to prepay or replace), in whole or in part,
outstanding principal of Replacement Loans or (2) any effective reduction in the
Applicable Rate for Replacement Loans (e.g., by way of amendment, waiver or
otherwise).  Any such determination by the Administrative Agent as contemplated
by preceding clauses (1) and (2) shall be conclusive and binding on all Lenders
holding Replacement Loans.

“Second Amendment” means the Second Amendment to this Agreement, dated as of May
10, 2007.

“Second Amendment Effective Date” has the meaning provided in the Second
Amendment.

2.             THE DEFINITION OF “CONSOLIDATED TOTAL INDEBTEDNESS” APPEARING IN
SECTION 1.01 OF THE CREDIT AGREEMENT IS HEREBY AMENDED BY REPLACING THE TEXT
“DEFINITIONS OF APPLICABLE RATE AND” APPEARING IN SAID DEFINITION WITH THE TEXT
“DEFINITION OF”.

3.             THE DEFINITION OF “CONSOLIDATED TOTAL LEVERAGE RATIO” APPEARING
IN SECTION 1.01 OF THE CREDIT AGREEMENT IS HEREBY AMENDED BY REPLACING THE TEXT
“DEFINITIONS OF APPLICABLE RATE AND” APPEARING IN SAID DEFINITION WITH THE TEXT
“DEFINITION OF”.

4.             THE DEFINITION OF “EXCLUDED CONTRIBUTION” APPEARING IN SECTION
1.01 OF THE CREDIT AGREEMENT IS HEREBY AMENDED BY DELETING THE TEXT “PROVIDED
THAT THE TERM “EXCLUDED CONTRIBUTION” SHALL NOT INCLUDE THE NET CASH PROCEEDS
FROM ANY PERMITTED CURE ISSUANCE” APPEARING AT THE END OF SAID DEFINITION.

5.             THE DEFINITION OF “LENDER” APPEARING IN SECTION 1.01 OF THE
CREDIT AGREEMENT IS HEREBY AMENDED BY INSERTING THE TEXT “EACH REPLACEMENT
LENDER AND ITS” IMMEDIATELY AFTER THE TEXT “AND INCLUDES” APPEARING IN SAID
DEFINITION AND DELETING “THEIR” IN SAID DEFINITION.

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6.             THE DEFINITION OF “PERMITTED COLLATERAL LIENS” APPEARING IN
SECTION 1.01 OF THE CREDIT AGREEMENT IS HEREBY AMENDED BY REPLACING THE TEXT
“(OR, IF LESS, THE COVENANT LEVEL THEN REQUIRED TO BE MAINTAINED PURSUANT TO
SECTION 7.05)” APPEARING IN CLAUSE (A) OF SAID DEFINITION WITH THE TEXT “(AND,
IN ANY EVENT, THE BORROWER SHALL BE IN PRO FORMA COMPLIANCE WITH THE THEN
APPLICABLE CONSOLIDATED SECURED DEBT RATIO)”.

7.             THE DEFINITION OF “PERMITTED LIENS” APPEARING IN SECTION 1.01 OF
THE CREDIT AGREEMENT IS HEREBY AMENDED BY REPLACING THE TEXT “(OR, IF LESS, THE
COVENANT LEVEL THEN REQUIRED TO BE MAINTAINED PURSUANT TO SECTION 7.05” IN
CLAUSE (MM) OF SAID DEFINITION WITH THE TEXT “(AND, IN ANY EVENT, THE BORROWER
SHALL BE IN PRO FORMA COMPLIANCE WITH THE THEN APPLICABLE CONSOLIDATED SECURED
DEBT RATIO)”.

8.             THE DEFINITION OF “PRO FORMA COMPLIANCE” APPEARING IN SECTION
1.01 OF THE CREDIT AGREEMENT IS HEREBY AMENDED BY (I) REPLACING THE TEXT “THE
FINANCIAL PERFORMANCE COVENANT SET FORTH IN SECTION 7.05” AND THE FIRST
REFERENCE TO THE TEXT “SECTION 7.05” APPEARING IN SAID DEFINITION WITH THE TEXT
“THE APPLICABLE CONSOLIDATED SECURED DEBT RATIO”, (II) REPLACING THE TEXT “IN
THE TABLE IN SECTION 7.05” APPEARING IN SAID DEFINITION WITH THE TEXT “IN THE
TABLE SET FORTH IN THE DEFINITION OF APPLICABLE CONSOLIDATED SECURED DEBT RATIO”
AND (III) REPLACING EACH REFERENCE TO THE TEXT “TEST PERIOD” APPEARING IN SAID
DEFINITION WITH THE TEXT “RELEVANT REFERENCE PERIOD”.

9.             THE DEFINITION OF “UNRESTRICTED SUBSIDIARY” APPEARING IN SECTION
1.01 OF THE CREDIT AGREEMENT IS HEREBY AMENDED BY REPLACING EACH REFERENCE TO
THE TEXT “SECTION 7.05” APPEARING IN SAID DEFINITION WITH THE TEXT “THE THEN
APPLICABLE CONSOLIDATED SECURED DEBT RATIO”.

10.           SECTION 1.03 OF THE CREDIT AGREEMENT IS HEREBY AMENDED BY
REPLACING ALL INSTANCES OF THE TEXT “SECTION 7.05” IN CLAUSE (B) OF SAID SECTION
WITH THE TEXT “THE APPLICABLE CONSOLIDATED SECURED DEBT RATIO”.

11.           SECTION 1.08 OF THE CREDIT AGREEMENT IS HEREBY AMENDED BY
REPLACING THE TEXT “SECTION 7.05” IN THE SECOND SENTENCE OF SAID SECTION WITH
THE TEXT “THE APPLICABLE CONSOLIDATED SECURED DEBT RATIO”.

12.           SECTION 2.01 OF THE CREDIT AGREEMENT IS HEREBY AMENDED BY (I)
DELETING THE WORD “AND” IMMEDIATELY BEFORE THE TEXT “EACH LENDER WITH A NEW
COMMITMENT” APPEARING IN SAID SECTION AND INSERTING A COMMA IN LIEU THEREOF, AND
(II) INSERTING THE FOLLOWING TEXT IMMEDIATELY PRIOR TO THE PERIOD (“.”)
APPEARING AT THE END OF THE FIRST SENTENCE OF SAID SECTION:

“, AND (D) ON THE SECOND AMENDMENT EFFECTIVE DATE, EACH LENDER WITH A
REPLACEMENT COMMITMENT SEVERALLY AGREES TO MAKE TO THE BORROWER A SINGLE TERM
LOAN DENOMINATED IN DOLLARS (EACH, A “REPLACEMENT LOAN” AND, COLLECTIVELY, THE
“REPLACEMENT LOANS”) IN A PRINCIPAL AMOUNT EQUAL TO SUCH LENDER’S REPLACEMENT
COMMITMENT ON THE SECOND AMENDMENT EFFECTIVE DATE.”

13.           SECTION 2.05 OF THE CREDIT AGREEMENT IS HEREBY AMENDED BY (I)
DELETING THE WORD “AND” APPEARING BEFORE THE TEXT “(3) ANY” IN THE FIRST
SENTENCE OF CLAUSE (A)(I) OF SAID SECTION AND (II) INSERTING THE FOLLOWING NEW
TEXT IMMEDIATELY PRIOR TO THE PERIOD (“.”) AT THE END OF THE FIRST SENTENCE OF
SAID SECTION:

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“and (4) any prepayment of Replacement Loans made prior to the first anniversary
date of the Second Amendment Effective Date in connection with a Repricing
Transaction shall be accompanied by the payment of the fee described in Section
2.09(b).”

14.           SECTION 2.07 OF THE CREDIT AGREEMENT IS HEREBY AMENDED BY
INSERTING THE TEXT “, EXCEPT TO THE EXTENT SUCH PREPAYMENTS WERE MADE ON THE
SECOND AMENDMENT EFFECTIVE DATE WITH THE PROCEEDS OF REPLACEMENT LOANS” AFTER
THE TEXT “SET FORTH IN SECTION 2.05” APPEARING IN SAID SECTION.

15.           SECTION 2.09 OF THE CREDIT AGREEMENT IS HEREBY AMENDED BY (I)
INSERTING THE TEXT “(A)” IMMEDIATELY PRIOR TO THE TEXT “THE BORROWER” IN THE
FIRST SENTENCE OF SAID SECTION AND (II) INSERTING THE FOLLOWING NEW CLAUSE (B)
IMMEDIATELY FOLLOWING THE NEW CLAUSE (A) OF SAID SECTION:

“(b)         At the time of the effectiveness of any Repricing Transaction that
is consummated prior to the first anniversary of the Second Amendment Effective
Date, the Borrower agrees to pay to the Administrative Agent, for the ratable
account of each Lender with outstanding Replacement Loans (including each Lender
that withholds its consent to such Repricing Transaction and is replaced as a
Non-Consenting Lender under Section 3.07), a fee in an amount equal to 1.0% of
(x) in the case of a Repricing Transaction of the type described in clause (1)
of the definition thereof, the aggregate principal amount of all Replacement
Loans prepaid (or converted) in connection with such Repricing Transaction and
(y) in the case of a Repricing Transaction described in clause (2) of the
definition thereof, the aggregate principal amount of all Replacement Loans
outstanding on such date that are subject to an effective pricing reduction
pursuant to such Repricing Transaction.  Such fees shall be due and payable upon
the date of the effectiveness of such Repricing Transaction.”

16.           SECTION 6.02 OF THE CREDIT AGREEMENT IS HEREBY AMENDED BY DELETING
CLAUSES (A) AND (B) THEREOF IN THEIR ENTIRETY AND INSERTING THE FOLLOWING NEW
CLAUSES (A) AND (B) IN LIEU THEREOF:

“(A)         NO LATER THAN FIVE (5) DAYS AFTER THE DELIVERY OF THE FINANCIAL
STATEMENTS REFERRED TO IN SECTION 6.01(A), A CERTIFICATE OF ITS INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM CERTIFYING SUCH FINANCIAL STATEMENTS (WHICH
CERTIFICATE MAY BE LIMITED TO THE EXTENT REQUIRED BY ACCOUNTING RULES OR
GUIDELINES);

(B)           NO LATER THAN FIVE (5) DAYS AFTER THE DELIVERY OF THE FINANCIAL
STATEMENTS REFERRED TO IN SECTION 6.01(A) AND (B), A DULY COMPLETED COMPLIANCE
CERTIFICATE SIGNED BY A RESPONSIBLE OFFICER OF THE BORROWER;”.

17.           SECTION 7.02 OF THE CREDIT AGREEMENT IS HEREBY AMENDED BY (I)
REPLACING ALL INSTANCES OF THE TEXT “SECTION 7.05” IN SAID SECTION (INCLUDING IN
ALL CLAUSES AND SUB-CLAUSES OF SAID SECTION) WITH THE TEXT “THE THEN APPLICABLE
CONSOLIDATED SECURED DEBT RATIO”, (II) DELETING THE TEXT “(V) A PERMITTED CURE
ISSUANCE,” APPEARING IN THE PROVISO AT THE END OF SUB-CLAUSE (A)(III)(B) OF SAID
SECTION, AND (III) DELETING THE TEXT “(X) CASH CONTRIBUTED TO THE BORROWER
PURSUANT TO A PERMITTED CURE ISSUANCE,” APPEARING IN SUB-CLAUSE (A)(III)(C) OF
SAID SECTION.

18.           SECTION 7.05 OF THE CREDIT AGREEMENT IS HEREBY AMENDED BY DELETING
SAID SECTION IN ITS ENTIRETY AND INSERTING THE FOLLOWING NEW TEXT IN LIEU
THEREOF:

“SECTION 7.05  [RESERVED].”

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19.           SECTION 7.12 OF THE CREDIT AGREEMENT IS HEREBY AMENDED BY ADDING
THE FOLLOWING SENTENCE AT THE END OF SAID SECTION:

“NOTWITHSTANDING THE FOREGOING, PROCEEDS OF THE REPLACEMENT LOANS WILL NOT BE
USED FOR ANY PURPOSE OTHER THAN THE REPAYMENT OF PRINCIPAL OF THE OUTSTANDING
REFINANCED LOANS ON THE SECOND AMENDMENT EFFECTIVE DATE.”.

20.           SECTION 8.01 OF THE CREDIT AGREEMENT IS HEREBY AMENDED BY DELETING
THE TEXT “PROVIDED, THAT ANY EVENT OF DEFAULT UNDER SECTION 7.05 IS SUBJECT TO
CURE AS CONTEMPLATED BY SECTION 8.05” APPEARING IN CLAUSE (B) OF SAID SECTION.

21.           SECTION 8.05 OF THE CREDIT AGREEMENT IS HEREBY DELETED IN ITS
ENTIRETY AND REPLACED WITH THE FOLLOWING NEW TEXT:

“SECTION 8.05  [RESERVED].”

22.           SCHEDULE 2.01 TO THE CREDIT AGREEMENT IS HEREBY AMENDED BY ADDING
THERETO THE INFORMATION SET FORTH ON SCHEDULE 2.01 ATTACHED HERETO.

B.                                     MISCELLANEOUS PROVISIONS

1.             IN ORDER TO INDUCE THE LENDERS TO ENTER INTO THIS SECOND
AMENDMENT, THE BORROWER HEREBY REPRESENTS AND WARRANTS TO EACH OF THE LENDERS
THAT (I) ALL OF THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THE CREDIT
AGREEMENT AND IN THE OTHER LOAN DOCUMENTS ARE TRUE AND CORRECT IN ALL MATERIAL
RESPECTS ON AND AS OF THE SECOND AMENDMENT EFFECTIVE DATE (AS DEFINED BELOW),
BOTH IMMEDIATELY BEFORE AND AFTER GIVING EFFECT TO THIS SECOND AMENDMENT, UNLESS
SUCH REPRESENTATIONS AND WARRANTIES RELATE TO A SPECIFIC EARLIER DATE, IN WHICH
CASE SUCH REPRESENTATIONS AND WARRANTIES SHALL BE TRUE AND CORRECT IN ALL
MATERIAL RESPECTS AS OF SUCH EARLIER DATE, (II) THERE EXISTS NO DEFAULT OR EVENT
OF DEFAULT ON THE SECOND AMENDMENT EFFECTIVE DATE, BOTH IMMEDIATELY BEFORE AND
AFTER GIVING EFFECT TO THIS SECOND AMENDMENT AND (III) CONCURRENTLY WITH THIS
EFFECTIVENESS OF THE SECOND AMENDMENT, THE PROCEEDS OF ALL REPLACEMENT LOANS
SHALL BE IMMEDIATELY APPLIED BY THE BORROWER TO REPAY ALL OUTSTANDING REFINANCED
LOANS.

2.             THIS SECOND AMENDMENT IS LIMITED AS SPECIFIED AND SHALL NOT
CONSTITUTE A MODIFICATION, ACCEPTANCE OR WAIVER OF ANY OTHER PROVISION OF THE
CREDIT AGREEMENT OR ANY OTHER LOAN DOCUMENT.

3.             THIS SECOND AMENDMENT MAY BE EXECUTED IN ANY NUMBER OF
COUNTERPARTS AND BY THE DIFFERENT PARTIES HERETO ON SEPARATE COUNTERPARTS, EACH
OF WHICH COUNTERPARTS WHEN EXECUTED AND DELIVERED SHALL BE AN ORIGINAL, BUT ALL
OF WHICH SHALL TOGETHER CONSTITUTE ONE AND THE SAME INSTRU­MENT.  A COMPLETE SET
OF COUNTERPARTS EXECUTED BY ALL THE PARTIES HERETO SHALL BE LODGED WITH THE
BORROWER AND THE ADMINISTRATIVE AGENT.

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4.             THIS SECOND AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW
OF THE STATE OF NEW YORK.

5.             THIS SECOND AMENDMENT SHALL BECOME EFFECTIVE ON THE DATE (THE
“SECOND AMENDMENT EFFECTIVE DATE”) WHEN:

(I)            THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH REPLACEMENT
LENDER (AS DEFINED IN THE CREDIT AGREEMENT AS MODIFIED HEREBY) SHALL HAVE SIGNED
A COUNTERPART HEREOF (WHETHER THE SAME OR DIFFERENT COUNTERPARTS) AND SHALL HAVE
DELIVERED (INCLUDING BY WAY OF FACSIMILE TRANSMISSION) THE SAME TO THE
ADMINISTRATIVE AGENT;

(II)           THERE SHALL HAVE BEEN DELIVERED TO THE ADMINISTRATIVE AGENT FOR
THE ACCOUNT OF EACH OF THE REPLACEMENT LENDERS THAT HAVE REQUESTED SAME AN
APPROPRIATE NOTE EXECUTED BY THE BORROWER, IN EACH CASE IN THE AMOUNT, MATURITY
AND OTHERWISE AS PROVIDED IN THE CREDIT AGREEMENT (AS MODIFIED HEREBY);

(III)          (X) THE PRINCIPAL OF ALL OUTSTANDING REFINANCED LOANS SHALL HAVE
BEEN REPAID IN FULL AND (Y) ALL ACCRUED AND UNPAID INTEREST ON ALL REFINANCED
LOANS SHALL HAVE BEEN PAID IN FULL AND ALL COSTS OF THE TYPE DESCRIBED IN
SECTION 3.05 OF THE CREDIT AGREEMENT SHALL HAVE BEEN PAID IN FULL IN CONNECTION
WITH THE REPAYMENT OF THE REFINANCED LOANS;

(IV)          THERE SHALL HAVE BEEN DELIVERED TO ADMINISTRATIVE AGENT (A) COPIES
OF RESOLUTIONS OF THE BOARD OF DIRECTORS OF EACH LOAN PARTY APPROVING AND
AUTHORIZING THE EXECUTION, DELIVERY AND PERFORMANCE OF THIS SECOND AMENDMENT AND
THE LOAN DOCUMENTS AS AMENDED BY THIS SECOND AMENDMENT, CERTIFIED AS OF THE
SECOND AMENDMENT EFFECTIVE DATE BY A RESPONSIBLE OFFICER, SECRETARY OR ASSISTANT
SECRETARY OF SUCH LOAN PARTY AS BEING IN FULL FORCE AND EFFECT WITHOUT
MODIFICATION OR AMENDMENT AND (B) GOOD STANDING CERTIFICATES FOR EACH LOAN PARTY
FROM EACH JURISDICTION IN WHICH SUCH LOAN PARTY IS ORGANIZED;

(V)           THERE SHALL HAVE BEEN DELIVERED TO THE ADMINISTRATIVE AGENT A
CERTIFICATE ATTESTING TO THE SOLVENCY OF THE LOAN PARTIES (TAKEN AS A WHOLE)
AFTER GIVING EFFECT TO THIS SECOND AMENDMENT, FROM THE CHIEF FINANCIAL OFFICER
OF THE BORROWER; AND

(vi)          there shall have been delivered to the Administrative Agent an
opinion from Ropes & Gray LLP, counsel to the Loan Parties, in a form reasonably
acceptable to the Administrative Agent.

6.             BY EXECUTING AND DELIVERING A COPY HEREOF, EACH LOAN PARTY HEREBY
AGREES THAT ALL LOANS (INCLUDING, WITHOUT LIMITATION, THE REPLACEMENT LOANS)
SHALL BE FULLY GUARANTEED PURSUANT TO THE GUARANTY TO WHICH IT IS PARTY IN
ACCORDANCE WITH THE TERMS AND PROVISIONS THEREOF AND SHALL BE FULLY SECURED
PURSUANT TO THE APPLICABLE COLLATERAL DOCUMENTS.

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7.             THE BORROWER, THE ADMINISTRATIVE AGENT AND THE REPLACEMENT
LENDERS HEREBY ACKNOWLEDGE AND AGREE THAT THIS SECOND AMENDMENT AND THE
REPLACEMENT LOANS ARE PERMITTED BY THE APPLICABLE PROVISIONS OF SECTION 10.01 OF
THE CREDIT AGREEMENT AND THAT SUCH REPLACEMENT LOANS CONSTITUTE OBLIGATIONS.

8.             FROM AND AFTER THE SECOND AMENDMENT EFFECTIVE DATE, ALL
REFERENCES IN THE CREDIT AGREEMENT AND IN THE OTHER LOAN DOCUMENTS TO THE CREDIT
AGREEMENT SHALL BE DEEMED TO BE REFERENCES TO THE CREDIT AGREEMENT AS MODIFIED
HEREBY.

*              *              *

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IN WITNESS WHEREOF, the undersigned have caused this Second Amendment to be duly
executed and delivered as of the date first above written.

MICHAELS STORES, INC.

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

   /s/ Lisa K. Klinger

 

 

 

 

Name:  Lisa K. Klinger

 

 

 

 

Title:    Senior Vice President – Finance
and Treasurer

 

 

 

 

 

 

 

 

DEUTSCHE BANK AG NEW YORK

 

 

 

BRANCH, Individually and as Administrative
Agent

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

   /s/ Enrique Landaeta

 

 

 

 

Name:  Enrique Landaeta

 

 

 

 

Title:    Vice President

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

   /s/ Evelyn Thierry

 

 

 

 

Name:  Evelyn Thierry

 

 

 

 

Title:    Vice President

 

 

 

--------------------------------------------------------------------------------

 

Each of the undersigned Guarantors acknowledges and agrees to the terms of the
Second Amendment.

 

 

 

 

 

 

 

 

 

 

 

AARON BROTHERS, INC.

 

 

 

 

 

 

 

By:

    /s/ Lisa K. Klinger

 

 

 

 

Lisa K. Klinger

 

 

 

 

Senior Vice President – Finance and Treasurer

 

 

 

 

 

 

 

 

 

 

 

 

 

ARTISTREE, INC.

 

 

 

 

 

 

 

 

By:

    /s/ Lisa K. Klinger

 

 

 

 

Lisa K. Klinger

 

 

 

 

Senior Vice President – Finance and Treasurer

 

 

 

 

 

 

 

 

 

 

 

 

 

MICHAELS FINANCE COMPANY, INC.

 

 

 

 

 

 

 

 

By:

    /s/ Lisa K. Klinger

 

 

 

 

Lisa K. Klinger

 

 

 

 

Senior Vice President – Finance and Treasurer

 

 

 

 

 

 

 

 

 

 

 

 

 

MICHAELS OF CANADA, ULC

 

 

 

 

 

 

 

 

By:

    /s/ Lisa K. Klinger

 

 

 

 

Lisa K. Klinger

 

 

 

 

Senior Vice President – Finance and Treasurer

 

 

 

 

 

 

 

 

 

 

 

 

 

MICHAELS STORES CARD SERVICES, LLC

 

 

 

 

 

 

 

 

By:

    /s/ Lisa K. Klinger

 

 

 

 

Lisa K. Klinger

 

 

 

 

Senior Vice President – Finance and Treasurer

 

 

 

 

 

 

 

 

 

 

 

 

 

MICHAELS STORES PROCUREMENT
COMPANY, INC.

 

 

 

 

 

 

 

 

By:

    /s/ Lisa K. Klinger

 

 

 

 

Lisa K. Klinger

 

 

 

 

Senior Vice President – Finance and Treasurer

 

 

 

--------------------------------------------------------------------------------

 

SIGNATURE PAGE TO THE SECOND AMENDMENT, DATED AS OF MAY 10, 2007, TO THE CREDIT
AGREEMENT, DATED AS OF OCTOBER 31, 2006, AMONG MICHAELS STORES, INC., DEUTSCHE
BANK AG NEW YORK BRANCH, AS ADMINISTRATIVE AGENT, JPMORGAN CHASE BANK, N.A., AS
SYNDICATION AGENT, AND BANK OF AMERICA, N.A. AND CREDIT SUISSE, AS
CO-DOCUMENTATION AGENTS

 

 

 

 

 

 

NAME OF INSTITUTION:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

--------------------------------------------------------------------------------

SCHEDULE 2.01

To Credit Agreement

Schedule 2.01

Replacement Commitments

LENDER

 

REPLACEMENT COMMITMENT

 

 

 

 

 

DEUTSCHE BANK AG NEW YORK BRANCH

 

$

2,338,250,000

 

 

--------------------------------------------------------------------------------