Exhibit 4.1


 


SUPPLEMENTAL INDENTURE


 


This SUPPLEMENTAL INDENTURE, dated as of October 20,
2010 (the “Supplemental Indenture”), is
by and between Michaels Stores, Inc., a Delaware corporation (the “Company”), and Law Debenture Trust
Company of New York (as successor to Wells Fargo Bank, National Association),
as trustee under the Indenture referred to below (the “Trustee”).


 


RECITALS


 


WHEREAS, the Company and the Trustee have previously
become parties to an Indenture, dated as of October 31, 2006 (as amended,
supplemented or otherwise modified from time to time, the “Indenture”),
providing for the issuance of the Company’s 10% Senior Notes due 2014 (the “Notes”);


 


WHEREAS, the Company proposes to amend the Indenture
and the Notes as contemplated by this Supplemental Indenture (such amendments,
collectively, the “Amendments”);


 


WHEREAS, pursuant to Section 9.02 of the
Indenture, the Company and the Trustee may amend or supplement the Indenture
and the Notes as contemplated by this Supplemental Indenture with the consent
of the Holders of at least a majority in aggregate principal amount of the
outstanding Notes;


 


WHEREAS, the Company has obtained the consent of the
Holders of at least a majority in aggregate principal amount of the outstanding
Notes, pursuant to the Offer to Purchase and Consent Solicitation Statement,
dated October 6, 2010 (as amended, supplemented or otherwise modified from
time to time, the “Consent Solicitation
Statement”), to the Amendments upon the terms and subject to the
conditions set forth therein;


 


WHEREAS,
the Company has done all things necessary to make this Supplemental Indenture a
valid agreement of the Company in accordance with the terms of the Indenture
and has satisfied all other conditions required under Article 9 of the
Indenture; and


 


WHEREAS, pursuant to Section 9.06, the Trustee is
authorized to execute and deliver this Supplemental Indenture.


 


NOW, THEREFORE, in consideration of the foregoing and
for other good and valuable consideration, the receipt of which is hereby acknowledged,
in order to effect the Amendments, the Company agrees with the Trustee as
follows:


 


ARTICLE I


 


DEFINITIONS AND OTHER PROVISIONS OF GENERAL
APPLICATION


 


1.1  Definitions.  Except
as otherwise expressly provided herein or unless the context otherwise
requires, capitalized terms used but not defined in this Supplemental Indenture
shall have the meanings assigned to them in the Indenture.


 


1.2  Effect of Headings.  The Article and Section headings in
this Supplemental Indenture are for convenience only and shall not affect the
construction of the Indenture or this Supplemental Indenture.


 


1.3  Successors and Assigns. 
All covenants and agreements in this Supplemental Indenture by the
Company shall bind its successors and assigns, whether so expressed or not.


 


1.4.  Separability Clause. 
In case any provision in this Supplemental Indenture shall be held
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.


 


1.5  Trust Indenture Act Controls.  If any provision of this Supplemental
Indenture limits, qualifies or conflicts with another provision of this
Supplemental Indenture or the Indenture that is required to be included by the
Trust Indenture Act of 1939, as amended (the “Act”),
as in force at the date this Supplemental Indenture is executed, the provision
required by the Act shall control.


 


1.6  Benefits of Supplemental Indenture.  Nothing in this Supplemental Indenture,
express or implied, shall give to any person, other than the parties to this
Supplemental Indenture and their successors hereunder and the Holders of the
Notes, any benefit of any legal or equitable right, remedy or claim under this
Supplemental Indenture.


 

















 


1.7  Governing Law.  This
Supplemental Indenture shall be governed by, and construed in accordance with,
the laws of the State of New York.


 


1.8  Reference to and Effect on the Indenture.


 


(a)  On and after the Operative Date (as
defined in Section 2.1 below), each reference in the Indenture to “this
Indenture,” “hereunder,” “hereof,” or “herein” shall mean and be a reference to
the Indenture as supplemented by this Supplemental Indenture, unless the
context otherwise requires.


 


(b)  Except as specifically amended by
this Supplemental Indenture on the Operative Date, the Indenture and the Notes
are hereby ratified and confirmed and all of the terms, conditions and
provisions thereof shall remain in full force and effect.  This Supplemental Indenture shall form a part
of the Indenture for all purposes, and every Holder of the Notes heretofore and
hereafter authenticated and delivered under the Indenture shall be bound
hereby.


 


ARTICLE II


 


AMENDMENTS OF THE INDENTURE AND NOTES


 


2.1  Amendment to Indenture and Notes.  Following the execution and delivery by the
Company and the Trustee of this Supplemental Indenture, the terms hereof shall
become operative on the initial date (the “Operative Date”)
of acceptance for purchase by the Company of the Notes validly tendered in the
tender offer contemplated by the Consent Solicitation Statement.  Effective as of the Operative Date, the
Supplemental Indenture hereby amends the Indenture and Notes as provided for
herein.  If the Operative Date does not
occur on or prior to the Initial Payment Date (as defined in the Consent
Solicitation Statement), then the terms of this Supplemental Indenture shall be
null and void and the Indenture and Notes shall continue in full force and
effect without any modification or amendment hereby.


 


2.2  Deletion of Certain Provisions.


 


(a)  Amendments.


 


(i) As of the Operative Date, the
following sections of the Indenture are hereby deleted in their entirety and,
in the case of each such section, replaced with the phrase “[Intentionally
Omitted]”, and any and all references to such sections and any and all
obligations thereunder are hereby deleted throughout the Indenture, and such
sections and references shall be of no further force or effect.


 


	
   

  	
  ·

  	
  SECTION 4.02

  	
  Maintenance of Office or Agency

  
	
   

  	
  ·

  	
  SECTION 4.03

  	
  Reports and Other Information

  
	
   

  	
  ·

  	
  SECTION 4.04

  	
  Compliance Certificate

  
	
   

  	
  ·

  	
  SECTION 4.05

  	
  Taxes

  
	
   

  	
  ·

  	
  SECTION 4.06

  	
  Stay, Extension or Usury Laws

  
	
   

  	
  ·

  	
  SECTION 4.07

  	
  Limitation on Restricted Payments

  
	
   

  	
  ·

  	
  SECTION 4.08

  	
  Dividend and Other Payment Restrictions Affecting
  Restricted Subsidiaries

  
	
   

  	
  ·

  	
  SECTION 4.09

  	
  Limitation on Incurrence of Indebtedness and
  Issuance of Disqualified Stock and Preferred Stock

  
	
   

  	
  ·

  	
  SECTION 4.10

  	
  Asset Sales

  
	
   

  	
  ·

  	
  SECTION 4.11

  	
  Transactions with Affiliates

  
	
   

  	
  ·

  	
  SECTION 4.12

  	
  Liens

  
	
   

  	
  ·

  	
  SECTION 4.13

  	
  Corporate Existence

  
	
   

  	
  ·

  	
  SECTION 4.14

  	
  Offer to Repurchase Upon Change of Control

  
	
   

  	
  ·

  	
  SECTION 4.15

  	
  Limitation on Guarantees of Indebtedness by
  Restricted Subsidiaries

  
	
   

  	
  ·

  	
  SECTION 4.16

  	
  Discharge and Suspension of Covenants

  
	
   

  	
  ·

  	
  SECTION 5.01

  	
  Merger, Amalgamation, Consolidation, or Sale of
  Assets

  



 


(ii)  As of the Operative Date, each of
clauses (a)(3), (4), (5) and (8) and (b) of Section 6.01
and each of clauses (2), (3), (4), (5), (6) and (7) of Section 8.04
are hereby deleted in their entirety and, in the 


 

















 


case of each such section, replaced with the phrase “[Intentionally
Omitted]” and the Company shall be released from any and all of its obligations
thereunder.


 


2.3  Other Amendments to the Indenture. 
All definitions in the Indenture which are used exclusively
in the sections and clauses deleted pursuant to Section 2.2 of this
Supplemental Indenture or whose sole use or uses in the Indenture were
eliminated in the revisions set forth in Sections 2.2 of this Supplemental
Indenture are hereby deleted.  All
cross-references in the Indenture to sections and clauses deleted by Section 2.2
of this Supplemental Indenture shall also be deleted in their entirety.


 


ARTICLE III


 


AMENDMENT TO THE NOTES


 


The Notes include certain of the foregoing provisions
from the Indenture to be deleted or amended pursuant to Sections 2.2 and 2.3
hereof.  Upon the Operative Date, such
provisions from the Notes shall be deemed deleted or amended as applicable.


 


***


 


This Supplemental Indenture may be executed in several
counterparts, all of which together shall constitute one agreement binding on
all parties hereto, notwithstanding that all the parties have not signed the
same counterpart.


 

















 


SIGNATURES


 


IN WITNESS WHEREOF, the parties hereto have caused
this Supplemental Indenture to be duly executed all as of the date first
written above.


 


	
   

  	
  MICHAELS STORES, INC.,

  
	
   

  	
  as the Company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles M. Sonsteby

  
	
   

  	
  Name:

  	
  Charles M. Sonsteby

  
	
   

  	
  Title:

  	
  Chief Administrative Officer and Chief

  
	
   

  	
   

  	
  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  LAW DEBENTURE TRUST COMPANY OF NEW YORK,

  
	
   

  	
  as the Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  



 


Supplemental
Indenture (10% Senior Notes due 2014)