Document:

exhibit.htm

                                                                                                                         Exhibit 10.1

 

 

 

 

 

SECOND AMENDMENT TO

 

THIRD AMENDED AND RESTATED

 

CREDIT AGREEMENT

 

 

Dated as of September 28, 2012

 

among

 

NORTHERN OIL AND GAS, INC.,

 

as Borrower,

 

ROYAL BANK OF CANADA,

 

as Administrative Agent,

 

and

 

The Lenders Party Hereto

 

 

 

 

 

  

  

  

SECOND AMENDMENT TO

 

THIRD AMENDED AND RESTATED CREDIT AGREEMENT

 

THIS SECOND AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”), dated as of September 28, 2012, is by and among Northern Oil and Gas, Inc., a Minnesota corporation (the “Borrower”), Royal Bank of Canada (the “Administrative Agent”), and the Lenders party hereto.

 

Recitals

 

WHEREAS, the Borrower, the Administrative Agent and the other Lenders party thereto entered into that certain Third Amended and Restated Credit Agreement, dated as of February 28, 2012 (as previously amended by the First Amendment dated as of June 29, 2012 and as the same may be further amended, modified, supplemented or restated from time to time, the “Credit Agreement”);

 

WHEREAS, the Borrower has requested that the Administrative Agent and the Lenders amend the Credit Agreement as set forth below; and

 

WHEREAS, the Administrative Agent and the Lenders are willing to (i) amend the Credit Agreement, (ii) redetermine the Borrowing Base as provided herein, and (iii) take such other actions as provided herein.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and in the Credit Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

 

ARTICLE I

 

Definitions

 

Each capitalized term used in this Amendment and not defined herein shall have the meaning assigned to such term in the Credit Agreement.

 

ARTICLE II

 

Amendments to Credit Agreement

 

Section 2.01 Amendments to Section 1.02 of the Credit Agreement.

 

(a) The following definition is hereby added where alphabetically appropriate:

 

“Undisclosed Administration” means the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official by a supervisory authority or regulator with respect to a Lender under the Dutch Financial Supervision Act 2007 (as amended from time to time and including any successor legislation).

 

(b) The following definitions are hereby amended and restated in their entirety to read as follows:

 

“Adjusted LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/100 of 1%) equal to the LIBO Rate for such Interest Period multiplied by the Statutory Reserve Rate; provided that in no event shall the Adjusted LIBO Rate be less than zero percent per annum.

 

  

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“Defaulting Lender” means, at any time, a Lender as to which the Administrative Agent has notified the Borrower that such Lender, as reasonably determined by the Administrative Agent, has (a) failed to fund any portion of its Loans or participations in Letters of Credit within three Business Days of the date required to be funded by it hereunder (other than due to a failure of a condition precedent to be satisfied), (b) notified the Borrower, the Administrative Agent, the Issuing Bank or any Lender in writing that it does not intend to comply with its funding obligations under this Agreement or has made a public statement to the effect that it does not intend to comply with its funding obligations under this Agreement or under any other agreement in which it commits to extend credit (other than due to a failure of a condition precedent to be satisfied), (c) failed, within three Business Days after request by the Administrative Agent, to confirm that it will comply with the terms of this Agreement relating to its obligations to fund prospective Loans and participations in then outstanding Letters of Credit (but such Lender shall cease to be a Defaulting Lender upon providing this confirmation), (d) otherwise failed to pay over to the Administrative Agent, the Issuing Bank or any Lender any other amount required to be paid by it hereunder within three Business Days of the date when due, unless the subject of a good faith dispute, (e) become or is insolvent or has a parent company that has become or is insolvent, or (f) become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment or has a parent company that has become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment; provided that no Lender shall be deemed to be a Defaulting Lender solely by virtue of an Undisclosed Administration.

 

Section 2.02 Amendment to Section 2.07(d)(i) of the Credit Agreement.  Section 2.07(d)(i) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

(i)           in the case of a Scheduled Redetermination, (A) if the Administrative Agent shall have received the Engineering Reports required to be delivered by the Borrower pursuant to Section 8.12(a) and (c) in a timely and complete manner, then on the April 1st or October 1st, as applicable, following such notice, or (B) if the Administrative Agent shall not have received the Engineering Reports required to be delivered by the Borrower pursuant to Section 8.12(a) and (c) in a timely and complete manner, then on the Business Day next succeeding delivery of such notice; and

 

Section 2.03 Amendment to Section 5.01(a)(i) of the Credit Agreement.  Section 5.01(a)(i) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

(i)           impose, modify or deem applicable any reserve, liquidity, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate); or

 

Section 2.04 Amendment to Section 9.02(f) of the Credit Agreement.  Section 9.02(f) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

  

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(f)           Permitted Additional Debt incurred after the Effective Date, the principal amount of which does not exceed $500,000,000 at any time outstanding and any guarantees thereof; provided that (i) the Borrower shall have furnished to the Administrative Agent and the Lenders, not less than seven Business Days prior written notice of its intent to incur such Permitted Additional Debt, the amount thereof, and the anticipated closing date, together with copies of drafts of the material definitive documents therefor and, when completed, copies of the final versions of such material definitive documents, (ii) at the time of incurring such Permitted Additional Debt (A) no Default has occurred and is then continuing, (B) no Default would result from the incurrence of such Permitted Additional Debt after giving effect to the incurrence of such Permitted Additional Debt (and any concurrent repayment of Debt with the proceeds of such incurrence), and (C) after giving effect to the incurrence thereof, the Borrower is in pro forma compliance with the financial covenants contained in Section 9.01, (iii) the incurrence of such Permitted Additional Debt (and any concurrent repayment of Debt with the proceeds of such incurrence) would not result in the total Revolving Credit Exposure exceeding the Borrowing Base then in effect and (iv) concurrently with the incurrence of such Debt, the Borrowing Base is adjusted pursuant to Section 2.07(e)(iii).

 

Section 2.05 Amendment to Section 9.19 of the Credit Agreement.  Section 9.19 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

Section 9.19 Swap Agreements.  The Borrower shall neither assign, terminate, unwind nor sell any Swap Agreements listed on Schedule 7.20. The Borrower shall not enter into Swap Agreements in respect of commodities if the effect thereof would be to cause the notional volumes of all Swap Agreements and additional fixed price physical off take contracts, in the aggregate, to exceed (a) 75% of the reasonably anticipated projected production from the Borrower’s Proved Reserves for any month continuing through and including the date that is twenty-four (24) months following the effective date of each such Swap Agreement or (b) 50% of the reasonably anticipated projected production from the Borrower’s Proved Reserves for any month thereafter through and including the date that is forty-eight (48) months following the effective date of each such Swap Agreement (it being understood that any put contracts entered into for non-speculative purposes shall not count against the above limitations).  The Borrower shall not enter into Swap Agreements converting interest rates (i) from fixed to floating in excess of 75% of the then outstanding principal amount of debt for borrowed money which bears interest at a fixed rate or (ii) from floating to fixed in excess of 100% of the then outstanding principal amount of debt for borrowed money which bears interest at a floating rate. The Borrower shall not post any collateral to secure Swap Agreements with a non-Lender.

 

Section 2.06 Amendment to Annex I of the Credit Agreement.  Annex I of the Credit Agreement is hereby deleted in its entirety and replaced with Annex I hereto.

 

ARTICLE III

 

Redetermination of the Borrowing Base; Addition of New Lenders

 

Section 3.01 Redetermination of the Borrowing Base. Notwithstanding the requirements of Section 2.07 of the Credit Agreement, effective as of the Second Amendment Effective Date, the amount of the Borrowing Base shall be $350,000,000.00, subject to further adjustments from time to time pursuant to Section 2.07, Section 8.13(c) or Section 9.12(d) of the Credit Agreement. The redetermination of the Borrowing Base pursuant to this Section 3.01 of this Amendment shall constitute the Scheduled Redetermination for October 1, 2012.

 

  

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Section 3.02 Addition of New Lenders.

 

(a) On the Second Amendment Effective Date, (i) The Bank of Nova Scotia and ING Capital LLC, are each hereby added as a “Lender” for all purposes under the Credit Agreement (as amended by this Amendment) with a Maximum Credit Amount as specified in the attached Annex I and (ii) the Maximum Credit Amount of each Lender (including the new Lenders specified in the preceding clause (i)) shall, without any further action (including, without the execution of any joinder agreement or any Assignment and Assumption or the payment of any processing and recordation fee to the Administrative Agent), be the Maximum Credit Amount specified for such Lender on the attached Annex I.

 

(b) In connection therewith, to the extent that the Maximum Credit Amounts in effect immediately prior to the Second Amendment Effective Date are reallocated (the “Reallocation”), then, on the Second Amendment Effective Date, the Lenders shall purchase and assume (without recourse or warranty) from the Lenders (i) Loans, to the extent that there are any Loans then outstanding, and (ii) undivided participation interests in any outstanding LC Exposure, in each case, to the extent necessary to ensure that after giving effect to the Reallocation, each Lender has outstanding Loans and participation interests in outstanding LC Exposure equal to its Applicable Percentage of the Aggregate Maximum Credit Amounts.  Each Lender shall make any payment required to be made by it pursuant to the preceding sentence via wire transfer to the Administrative Agent on the Second Amendment Effective Date and the Administrative Agent shall remit the relevant amounts to those Lenders entitled to a portion of the amounts received by the Administrative Agent pursuant to this Section 3.02.  Each existing Lender shall be automatically deemed to have assigned any outstanding Loans and participation interests in outstanding LC Exposure on the Second Amendment Effective Date necessary to give effect to this paragraph (b) and the existing Lenders, each new Lender and the Borrower each agree to take any further steps reasonably requested by the Administrative Agent, in each case to the extent deemed necessary by the Administrative Agent to effectuate the provisions of the preceding sentences.  If, on the Second Amendment Effective Date, any Loans that are Eurodollar Loans have been funded, then the Borrower shall be obligated to pay any breakage fees or costs that are payable pursuant to Section 5.02 of the Credit Agreement, as amended by this Second Amendment, in connection with the reallocation of such outstanding Loans to effectuate the provisions of this paragraph.

 

ARTICLE IV

 

Conditions Precedent

 

This Amendment shall become effective as of the date first referenced above when and only when the following conditions are satisfied (the “Second Amendment Effective Date”):

 

(a) the Administrative Agent shall have received duly executed counterparts of this Amendment from the Borrower and each Lender, in such numbers as the Administrative Agent or its counsel may reasonably request; and

 

(b) the Administrative Agent and the Lenders shall have received such upfront fees as may be agreed to among the Borrower, the Administrative Agent and the Lenders with respect hereto and all other fees due and payable on or prior to the effectiveness hereof as provided in any Loan Document, including reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrower under the Credit Agreement (including, without limitation, the reasonable fees and expenses of counsel to the Administrative Agent).

 

  

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ARTICLE V

 

  

Representations and Warranties

 

The Borrower hereby represents and warrants to the Administrative Agent and each Lender that:

 

(a)           Each of the representations and warranties made by the Borrower under the Credit Agreement and each other Loan Document is true and correct on and as of the actual date of execution of this Amendment by the Borrower, as if made on and as of such date, except for any representations and warranties made as of a specified date, which are true and correct as of such specified date.

 

(b)           At the time of, and immediately after giving effect to, this Amendment, no Default has occurred and is continuing.

 

(c)           The execution, delivery and performance by the Borrower of this Amendment have been duly authorized by the Borrower.

 

(d)           This Amendment constitutes the legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

 

(e)           The execution, delivery and performance by the Borrower of this Amendment (i) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority or any other third Person (including the members or any class of directors of the Borrower or any other Person, whether interested or disinterested), nor is any such consent, approval, registration, filing or other action necessary for the validity or enforceability of any Loan Document or the consummation of the transactions contemplated thereby, except (a) such as have been obtained or made and are in full force and effect, and (b) the Borrower may need to file a current report on Form 8-K with the SEC disclosing this Amendment, (ii) will not violate any applicable law or regulation or the charter, by-laws or other organizational documents of the Borrower or any of its Subsidiaries or any order of any Governmental Authority, (iii) will not violate or result in a default under any indenture, agreement or other instrument binding upon the Borrower or any of its Subsidiaries or their Properties, or give rise to a right thereunder to require any payment to be made by the Borrower or such Subsidiary and (iv) will not result in the creation or imposition of any Lien on any Property of the Borrower or any of its Subsidiaries (other than the Liens created by the Loan Documents).

 

ARTICLE VI

 

Miscellaneous

 

Section 6.01 Credit Agreement in Full Force and Effect as Amended.  Except as specifically amended hereby, the Credit Agreement and other Loan Documents shall remain in full force and effect and are hereby ratified and confirmed as so amended.  Except as expressly set forth herein, this Amendment shall not be deemed to be a waiver, amendment or modification of any provisions of the Credit Agreement or any other Loan Document or any right, power or remedy of the Administrative Agent or the Lenders, or constitute a waiver of any provision of the Credit Agreement or any other Loan Document, or any other document, instrument and/or agreement executed or delivered in connection therewith or of any Default or Event of Default under any of the foregoing, in each case whether arising before or after the date hereof or as a result of performance hereunder or thereunder.  This Amendment also shall not preclude the future exercise of any right, remedy, power, or privilege available to the Administrative Agent and/or the Lenders whether under the Credit Agreement, the other Loan Documents, at law or otherwise.  All references to the Credit Agreement shall be deemed to mean the Credit Agreement as modified hereby.  The parties hereto agree to be bound by the terms and conditions

 

  

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of the Credit Agreement and Loan Documents as amended by this Amendment, as though such terms and conditions were set forth herein.  Each reference in the Credit Agreement to “this Agreement,” “hereunder,” “hereof,” “herein” or words of similar import shall mean and be a reference to the Credit Agreement as amended by this Amendment, and each reference herein or in any other Loan Documents to the “Credit Agreement” shall mean and be a reference to the Credit Agreement as amended and modified by this Amendment.

 

Section 6.02 GOVERNING LAW.  THIS AMENDMENT, AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER, SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

 

Section 6.03 Descriptive Headings, Etc.  The descriptive headings of the sections of this Amendment are inserted for convenience only and shall not be deemed to affect the meaning or construction of any of the provisions hereof.  The statements made and the terms defined in the recitals to this Amendment are hereby incorporated into this Amendment in their entirety.

 

Section 6.04 Entire Agreement.  This Amendment and the documents referred to herein represent the entire understanding of the parties hereto regarding the subject matter hereof and supersede all prior and contemporaneous oral and written agreements of the parties hereto with respect to the subject matter hereof.

 

Section 6.05 Loan Document.  This Amendment is a Loan Document executed under the Credit Agreement, and all provisions in the Credit Agreement pertaining to Loan Documents apply hereto.

 

Section 6.06 Counterparts.  This Amendment may be executed in any number of counterparts and by different parties on separate counterparts, each of which shall constitute an original but all of which when taken together shall constitute but one agreement.  Delivery of an executed counterpart of the signature page of this Amendment by facsimile or other electronic transmission shall be effective as delivery of a manually executed counterpart thereof.

 

Section 6.07 Successors.  The execution and delivery of this Amendment by any Lender shall be binding upon each of its successors and assigns.

 

 

[Remainder of page intentionally left blank.]

 

 

 

 

  

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized officers as of the date first written above.

 

NORTHERN OIL AND GAS, INC., as the Borrower

 

By:   /s/ Thomas W. Stoelk        

Name:             Thomas W. Stoelk

Title:                Chief Financial Officer

Signature Page

Second Amendment to Credit Agreement

  

  

  

ROYAL BANK OF CANADA, as Administrative Agent

By:           /s/ Ann Hurley                 

Name:    Ann Hurley

Title:      Manager, Agency

ROYAL BANK OF CANADA, as a Lender

By:          /s/ Don J. McKinnerney  

Name:   Don J. McKinnerney

Title:     Authorized Signatory

SUNTRUST BANK, as a Lender

By:           /s/ Yann Pirio                 

Name:    Yann Pirio

Title:      Director

BMO HARRIS FINANCING, INC., as a Lender

By:           /s/ James V. Ducote       

Name:   James V. Ducote

Title:     Director

KEYBANK NATIONAL ASSOCIATION, as a Lender

By:           /s/ Chulley Bogle             

Name:    Chulley Bogle

Title:      Vice President

U.S. BANK NATIONAL ASSOCIATION, as a Lender

By:           /s/ Justin M. Alexander    

Name:    Justin M. Alexander

Title:              Senior Vice President

Signature Page

Second Amendment to Credit Agreement

  

  

  

BANK OF SCOTLAND plc, as a Lender

By:           /s/ Stephen Giacolone               

Name:    Stephen Giacolone

Title:      Assistant Vice President

CAPITAL ONE, NATIONAL ASSOCIATION, as a Lender

By:           /s/ Matthew Molero               

Name:    Matthew Molero

Title:      Vice President

BOKF, NA dba BANK OF OKLAHOMA, as a Lender

By:           /s/ Guy C. Evangelista            

Name:    Guy C. Evangelista

Title:      Senior Vice President

BRANCH BANKING AND TRUST COMPANY, as a Lender

By:           /s/ Ryan K. Michael              

Name:    Ryan K. Michael

Title:      Senior Vice President

CADENCE BANK, N.A., as a Lender

By:           /s/ Steven Taylor       

Name:    Steven Taylor

Title:      Vice President

Signature Page

Second Amendment to Credit Agreement

  

  

  

MACQUARIE BANK LIMITED, as a Lender

By:           /s/ Christian (Ineligible)               

Name:    Christian (Ineligible)

Title:      Division Director

By:           /s/ Joel Outlaw          

Name:    Joel Outlaw

Title:      Associate Director, Legal Risk Management 

THE BANK OF NOVA SCOTIA, as a Lender

By:           /s/ Terry Donovan      

Name:    Terry Donovan

Title:      Managing Director

ING CAPITAL LLC, as a Lender

By:           /s/ Juli Bieser           

Name:    Juli Bieser

Title:      Director

Signature Page

Second Amendment to Credit Agreement

  

  

  

ANNEX I

	
Name of Lender

	 	
Applicable

Percentage

	 	 	
Maximum Credit Amount

	 	 	
Amount of Commitment on the Second Amendment Effective Date

	 
	
Royal Bank of Canada

	 	 	12.0	%	 	$	90,000,000.00	 	 	$	42,000,000.00	 
	
SunTrust Bank

	 	 	12.0	%	 	$	90,000,000.00	 	 	$	42,000,000.00	 
	
BMO Harris Financing, Inc.

	 	 	8.6	%	 	$	64,285,714.29	 	 	$	30,000,000.00	 
	
KeyBank, N.A.

	 	 	8.6	%	 	$	64,285,714.29	 	 	$	30,000,000.00	 
	
U.S. Bank National Association

	 	 	8.6	%	 	$	64,285,714.29	 	 	$	30,000,000.00	 
	
Capital One, National Association

	 	 	7.4	%	 	$	55,714,285.71	 	 	$	26,000,000.00	 
	
Bank of Scotland plc

	 	 	6.9	%	 	$	51,428,571.43	 	 	$	24,000,000.00	 
	
BOKF, NA dba Bank of Oklahoma

	 	 	6.9	%	 	$	51,428,571.43	 	 	$	24,000,000.00	 
	
BB&T Capital Markets

	 	 	6.9	%	 	$	51,428,571.43	 	 	$	24,000,000.00	 
	
Cadence Bank, N.A.

	 	 	6.9	%	 	$	51,428,571.43	 	 	$	24,000,000.00	 
	
ING Capital LLC

	 	 	6.9	%	 	$	51,428,571.43	 	 	$	24,000,000.00	 
	
The Bank of Nova Scotia

	 	 	6.9	%	 	$	51,428,571.43	 	 	$	24,000,000.00	 
	
Macquarie Bank Limited

	 	 	1.70	%	 	$	12,857,142.86	 	 	$	6,000,000.00	 
	  	 	 	 	 	 	 	 	 	 	 	 	 
	
TOTAL

	 	 	100.00	%	 	$	750,000,000.00	 	 	$	350,000,000.00	 

Second Amendment to Credit AgreementExhibit 4.1

 

 

 

MICHAELS STORES, INC.

 

as Issuer,

 

 

the GUARANTORS named herein,

 

as Guarantors,

 

 

and

 

 

LAW DEBENTURE TRUST COMPANY OF NEW YORK,
 as Trustee

 

 

 

 

SUPPLEMENTAL INDENTURE

 

 

 

Dated as of September 27, 2012

 

 

73⁄4% Senior Notes due 2018

 

 

 

 

This SUPPLEMENTAL INDENTURE, dated as of September 27, 2012 (the “Supplemental Indenture”),  is by and among Michaels Stores, Inc., a Delaware corporation (the “Issuer”), the Guarantors listed on the signature pages hereto (the “Guarantors” and, collectively with the Issuer, the “Michaels Parties”), and Law Debenture Trust Company of New York, as trustee (the “Trustee”) under the Indenture referred to below.

 

WHEREAS, each of the Michaels Parties and the Trustee has heretofore executed and delivered an indenture (the “Indenture”), dated as of October 21, 2010, providing for the issuance of an unlimited aggregate principal amount of 73⁄4% Senior Notes due 2018 (the “Notes”);

 

WHEREAS, on October 21, 2010, the Issuer issued $800,000,000 aggregate principal amount of Notes;

 

WHEREAS, the Michaels Parties desire to establish and provide for the issuance by the Issuer of an additional $200,000,000 aggregate principal amount of Notes (the “Additional Senior Notes”);

 

WHEREAS, Section 2.01 and Section 9.01 of the Indenture provide for the issuance of Additional Notes and the execution and delivery of this Supplemental Indenture to evidence the creation of the Additional Senior Notes without the consent of the Holders;

 

WHEREAS, the Additional Senior Notes shall constitute Additional Notes pursuant to 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 establish the terms of the Additional Senior Notes, the Michaels Parties and the Trustee mutually covenant and agree for the equal and ratable benefit of the holders of Additional Senior Notes as follows:

 

(1)           Capitalized Terms.  Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.

 

(2)           Reference to and Effect on Indenture.  Upon the date hereof, 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 requires otherwise.  This Supplemental Indenture shall form a part of the Indenture for all purposes.

 

(3)           Additional Senior Notes.  The Additional Senior Notes are hereby created under the Indenture and shall form a single class with the outstanding Notes under the Indenture.  The Additional Senior Notes shall constitute Additional Notes and be governed under the Indenture and executed and delivered in the manner contemplated therein, and each Guarantor shall Guarantee such Additional Senior Notes as set forth in Article 10 of the Indenture.

 

(4)           Form of Additional Senior Notes.  The Additional Senior Notes shall initially be evidenced by a Global Note (the “Global Note”), substantially in the form of Exhibit A hereto.

 

(5)           Amendment and Supplement.  This Supplemental Indenture or the Additional Senior Notes may be amended or supplemented as provided for in the Indenture.

 

1

 

(6)           Governing Law.  THIS SUPPLEMENTAL INDENTURE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

(7)           Counterparts.  The parties may sign any number of copies of this Supplemental Indenture.  Each signed copy shall be an original, but all of them together represent the same agreement.

 

(8)           Effect of Headings.  The Section headings herein are for convenience only and shall not affect the construction hereof.

 

(9)           The Trustee.  The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Michaels Parties.

 

[Signature pages follow.]

 

2

 

SIGNATURES

 

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

 

 

	
 
    	
ISSUER:
    
	
 
    	
 
    
	
 
    	
MICHAELS   STORES, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Charles M. Sonsteby
    
	
 
    	
Name:
    	
Charles   M. Sonsteby
    
	
 
    	
Title:
    	
Member   of the Interim Office of the Chief
    
	
 
    	
 
    	
Executive   Officer, Chief Administrative
    
	
 
    	
 
    	
Officer &   Chief Financial Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
GUARANTORS:
    
	
 
    	
 
    	
 
    
	
 
    	
AARON   BROTHERS, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Charles M. Sonsteby
    
	
 
    	
Name:
    	
Charles   M. Sonsteby
    
	
 
    	
Title:
    	
President   — CAO and CFO
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
MICHAELS   STORES PROCUREMENT COMPANY, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Charles M. Sonsteby
    
	
 
    	
Name:
    	
Charles   M. Sonsteby
    
	
 
    	
Title:
    	
Chief   Administrative Officer and Chief
    
	
 
    	
 
    	
Financial   Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
ARTISTREE, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Charles M. Sonsteby
    
	
 
    	
Name:
    	
Charles   M. Sonsteby
    
	
 
    	
Title:
    	
Chief   Administrative Officer and Chief
    
	
 
    	
 
    	
Financial   Officer
    

 

 

	
 
    	
MICHAELS   FINANCE COMPANY, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Charles M. Sonsteby
    
	
 
    	
Name:
    	
Charles   M. Sonsteby
    
	
 
    	
Title:
    	
President   — CAO and CFO
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
MICHAELS   STORES CARD SERVICES, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Charles M. Sonsteby
    
	
 
    	
Name:
    	
Charles   M. Sonsteby
    
	
 
    	
Title:
    	
President   — CAO and CFO
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
MICHAELS   OF CANADA, ULC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Charles M. Sonsteby
    
	
 
    	
Name:
    	
Charles   M. Sonsteby
    
	
 
    	
Title:
    	
Chief   Administrative Officer and Chief
    
	
 
    	
 
    	
Financial   Officer
    

 

 

	
 
    	
TRUSTEE:
    
	
 
    	
 
    
	
 
    	
LAW   DEBENTURE TRUST COMPANY OF NEW YORK
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

 

EXHIBIT A

 

[Face of Note]

 

[Insert the Global Note Legend, if applicable pursuant to the provisions of the Indenture]

 

[Insert the Private Placement Legend, if applicable pursuant to the provisions of the Indenture]

 

[Insert the Regulation S Temporary Global Note Legend, if applicable pursuant to the provisions of the Indenture]

 

A-1

 

CUSIP  [                    ]

ISIN  [                    ](1)

 

 

[[RULE 144A][REGULATION S] GLOBAL NOTE
 representing up to
 $                  ]

73⁄4% Senior Notes due 2018

 

	
No.
    	
[$                            ]
    

 

MICHAELS STORES, INC.

 

promises to pay to CEDE & CO. or registered assigns, the principal sum [set forth on the Schedule of Exchanges of Interests in the Global Note attached hereto] [of                                                  United States Dollars] on November 1, 2018.

 

Interest Payment Dates:  May 1 and November 1

 

Record Dates:  April 15 and October 15

 

(1)           Rule 144A Note CUSIP:  [          ]

Rule 144A Note ISIN:  [          ]

Regulation S Note CUSIP:  [          ]

Regulation S Note ISIN:  [          ]
 Exchange Note CUSIP:  [                          ]
 Exchange Note ISIN:  [                     ]

 

A-2

 

IN WITNESS HEREOF, the Issuer has caused this instrument to be duly executed. 

 

Dated:  September         , 2012

 

	
 
    	
MICHAELS   STORES, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

A-3

 

This is one of the Notes referred to in the within-mentioned Indenture:

 

	
Dated:
    	
 
    	
 
    

 

	
 
    	
LAW   DEBENTURE TRUST COMPANY OF NEW YORK,
    
	
 
    	
as   Trustee
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Authorized Signatory
    

 

A-4

 

[Back of Note]

 

73⁄4% Senior Notes due 2018

 

Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.

 

1.             INTEREST.  Michaels Stores, Inc., a Delaware corporation, promises to pay interest on the principal amount of this Note at 73⁄4% per annum from May 1, 2012 until maturity and shall pay the Additional Interest, if any, payable pursuant to the Registration Rights Agreement referred to below.  The Issuer will pay interest and Additional Interest, if any, semi-annually in arrears on May 1 and November 1 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each, an “Interest Payment Date”).  Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that the first Interest Payment Date on this Note shall be November 1, 2012.  The Issuer will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at the interest rate on the Notes; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Additional Interest, if any, (without regard to any applicable grace periods) from time to time on demand at the interest rate on the Notes.  Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.  In the event the Issuer is required to pay Additional Interest, the Issuer will provide an Officer’s Certificate to the Trustee no later than 15 days prior to the next Interest Payment Date, which shall set forth the amount of the Additional Interest to be paid by the Issuer and the rate per thousand.  The Trustee shall not at any time be under any duty or responsibility to any Holders to determine whether the Additional Interest is payable and the amount thereof.

 

2.             METHOD OF PAYMENT.  The Issuer will pay interest on the Notes and Additional Interest, if any, to the Persons who are registered Holders of Notes at the close of business on the April 15 or October 15 (whether or not a Business Day), as the case may be, next preceding the Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest.  Payment of interest and Additional Interest, if any, may be made by check mailed to the Holders at their addresses set forth in the register of Holders, provided that payment by wire transfer of immediately available funds will be required with respect to principal of and interest, premium and Additional Interest, if any, on, all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Issuer or the Paying Agent.  Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.

 

3.             PAYING AGENT AND REGISTRAR.  Initially, Law Debenture Trust Company of New York, the Trustee under the Indenture, will act as Paying Agent and Registrar.  The Issuer may change any Paying Agent or Registrar without notice to the Holders.  The Issuer or any of its Subsidiaries may act in any such capacity.

 

4.             INDENTURE.  The Issuer issued the Notes under an Indenture, dated as of October 21, 2010 (as the same may be further amended, supplemented or otherwise modified from time to time, the “Indenture”), among Michaels Stores, Inc., the Guarantors named therein and the Trustee.  This Note is one of a duly authorized issue of notes of the Issuer designated as its 73⁄4% Senior Notes due 2018.  The

 

A-5

 

Issuer shall be entitled to issue Additional Notes pursuant to Sections 2.01 and 4.09 of the Indenture.  The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”).  The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms.  To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling.

 

5.             OPTIONAL REDEMPTION.

 

(a)           Except as described below under clauses 5(b) and 5(c) hereof, the Notes will not be redeemable at the Issuer’s option before November 1, 2014.

 

(b)           At any time prior to November 1, 2014, the Issuer may redeem all or a part of the Notes, upon not less than 30 nor more than 60 days’ prior notice mailed by first-class mail to the registered address of each Holder of Notes or otherwise delivered in accordance with the procedures of DTC, at a redemption price equal to 100% of the principal amount of the Notes redeemed plus the Applicable Premium as of, and accrued and unpaid interest and Additional Interest, if any, to the date of redemption (the “Redemption Date”), subject to the rights of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date.

 

(c)           Until November 1, 2013, the Issuer may, at its option, on one or more occasions redeem up to 35% of the aggregate principal amount of Notes (including the aggregate principal amount of Notes issued after the Issue Date) at a redemption price equal to 107.750% of the aggregate principal amount thereof, plus accrued and unpaid interest thereon and Additional Interest, if any, to the applicable Redemption Date, subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date, with the net cash proceeds of one or more Equity Offerings; provided that at least 50% of the sum of the aggregate principal amount of Notes originally issued under the Indenture and any Additional Notes that are issued under the Indenture after the Issue Date, remains outstanding immediately after the occurrence of each such redemption; provided  further that each such redemption occurs within 90 days of the date of closing of each such Equity Offering.  Notice of any redemption upon any Equity Offering may be given prior to such redemption, and any such redemption or notice may, at the Issuer’s discretion, be subject to one or more conditions precedent, including, but not limited to, completion of the related Equity Offering.

 

(d)           On and after November 1, 2014, the Issuer may redeem the Notes, in whole or in part, at the redemption prices (expressed as percentages of principal amount of the Notes to be redeemed) set forth below, plus accrued and unpaid interest thereon and Additional Interest, if any, to the applicable Redemption Date, subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date, if redeemed during the twelve-month period beginning on November 1 of each of the years indicated below:

 

	
Year
    	
 
    	
Percentage
    	
 
    
	
2014 
    	
 
    	
103.875
    	
%
    
	
2015 
    	
 
    	
101.938
    	
%
    
	
2016 and thereafter 
    	
 
    	
100.000
    	
%
    

 

A-6

 

(e)           Any redemption pursuant to this paragraph 5 shall be made pursuant to the provisions of Sections 3.01 through 3.06 of the Indenture.

 

6.             MANDATORY REDEMPTION.  The Issuer shall not be required to make mandatory redemption or sinking fund payments with respect to the Notes.

 

7.             NOTICE OF REDEMPTION.  Subject to Section 3.03 of the Indenture, notice of redemption will be mailed by first-class mail at least 30 days but not more than 60 days before the redemption date (except that redemption notices may be mailed more than 60 days prior to a redemption date if the notice is issued in connection with Article 8 or Article 11 of the Indenture) to each Holder whose Notes are to be redeemed at its registered address or shall otherwise be delivered on such timeframe in accordance with the procedures of DTC.  Notes in denominations larger than $2,000 may be redeemed in part but only in integral multiples of $1,000 in excess of $2,000, unless all of the Notes held by a Holder are to be redeemed.  On and after the redemption date interest ceases to accrue on Notes or portions thereof called for redemption.

 

8.             OFFERS TO REPURCHASE.

 

(a)           Upon the occurrence of a Change of Control, the Issuer shall make an offer (a “Change of Control Offer”) to each Holder to repurchase all or any part (equal to $2,000 or an integral multiple of $1,000 in excess of $2,000) of each Holder’s Notes at a purchase price equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest and Additional Interest thereon, if any, to the date of purchase (the “Change of Control Payment”).  The Change of Control Offer shall be made in accordance with Section 4.14 of the Indenture.

 

(b)           If the Issuer or any of its Restricted Subsidiaries consummates an Asset Sale, within 10 Business Days of each date that Excess Proceeds exceed $50.0 million, the Issuer shall commence, an offer to all Holders of the Notes  and, if required by the terms of any Indebtedness that is pari passu with the Notes (“Pari Passu Indebtedness”), to the holders of such Pari Passu Indebtedness (an “Asset Sale Offer”), to purchase the maximum principal amount of Notes (including any Additional Notes) and such other Pari Passu Indebtedness that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest and Additional Interest thereon, if any, to the date fixed for the closing of such offer, in accordance with the procedures set forth in the Indenture.  To the extent that the aggregate amount of Notes (including any Additional Notes) and such Pari Passu Indebtedness tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Issuer may use any remaining Excess Proceeds for general corporate purposes, subject to other covenants contained in the Indenture.  If the aggregate principal amount of Notes and the Pari Passu Indebtedness surrendered by such holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and such Pari Passu Indebtedness to be purchased on a pro rata basis based on the accreted value or principal amount of the Notes or such Pari Passu Indebtedness tendered.  Upon completion of any such Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.  Holders of Notes that are the subject of an offer to purchase will receive an Asset Sale Offer from the Issuer prior to any related purchase date and may elect to have such Notes purchased by completing the form entitled “Option of Holder to Elect Purchase” attached to the Notes.

 

9.             DENOMINATIONS, TRANSFER, EXCHANGE.  The Notes are in registered form without coupons in denominations of $2,000 and integral multiples of $1,000 in excess of $2,000.  The

 

A-7

 

transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture.  The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Issuer may require a Holder to pay any taxes and fees required by law or permitted by the Indenture.  The Issuer need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part.  Also, the Issuer need not exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed.

 

10.           PERSONS DEEMED OWNERS.  The registered Holder of a Note may be treated as its owner for all purposes.

 

11.           AMENDMENT, SUPPLEMENT AND WAIVER.  The Indenture, the Guarantees or the Notes may be amended or supplemented as provided in the Indenture.

 

12.           DEFAULTS AND REMEDIES.  The Events of Default relating to the Notes are defined in Section 6.01 of the Indenture.  If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare the principal, premium, if any, interest and any other monetary obligations on all the then outstanding Notes to be due and payable immediately.  Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, all outstanding Notes will become due and payable immediately without further action or notice.  Holders may not enforce the Indenture, the Notes or the Guarantees except as provided in the Indenture.  Subject to certain limitations, Holders of a majority in aggregate principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power.  The Trustee may withhold from Holders of the Notes notice of any continuing Default (except a Default relating to the payment of principal, premium, if any, Additional Interest, if any, or interest) if it determines that withholding notice is in their interest.  The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or and its consequences under the Indenture except a continuing Default in payment of the principal of, premium, if any, Additional Interest, if any, or interest on, any of the Notes held by a non-consenting Holder.  The Issuer and each Guarantor (to the extent that such Guarantor is so required under the Trust Indenture Act) is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Issuer is required within five (5) Business Days after becoming aware of any Default, to deliver to the Trustee a statement specifying such Default and what action the Issuer proposes to take with respect thereto.

 

13.           AUTHENTICATION.  This Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose until authenticated by the manual signature of the Trustee.

 

14.           ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND RESTRICTED DEFINITIVE NOTES.  In addition to the rights provided to Holders of Notes under the Indenture, Holders of Restricted Global Notes and Restricted Definitive Notes, in each case to the extent issued on September 27, 2012, shall have all the rights set forth in the Registration Rights Agreement, dated as of September 27, 2012, among Michaels Stores, Inc., the Guarantors named therein and the other parties named on the signature pages thereof (the “Registration Rights Agreement”), including the right to receive Additional Interest (as defined in the Registration Rights Agreement).

 

A-8

 

15.           GOVERNING LAW.  THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THE INDENTURE, THE NOTES AND THE GUARANTEES.

 

16.           CUSIP NUMBERS.  Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Issuer has caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders.  No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.

 

The Issuer will furnish to any Holder upon written request and without charge a copy of the Indenture and/or the Registration Rights Agreement.  Requests may be made to the Issuer at the following address:

 

8000 Bent Branch Drive
 Irving, TX 75063
 Attention: General Counsel

 

A-9

 

ASSIGNMENT FORM

 

To assign this Note, fill in the form below:

 

	
(I) or (we) assign and transfer   this Note to:
    	
 
    
	
 
    	
(Insert   assignee’s legal name)
    
	
 
    
	
(Insert assignee’s soc. sec. or tax I.D.   no.)
    
	
 
    
	
 
    
	
 
    
	
 
    
	
(Print or type assignee’s name, address   and zip code)
    

 

and irrevocably appoint                                                                                                                                                                        to transfer this Note on the books of the  Issuer.  The agent may substitute another to act for him.

 

	
Date:
    	
 
    	
 
    

 

	
 
    	
Your Signature:
    	
 
    
	
 
    	
 
    	
(Sign   exactly as your name appears on the face of this Note)
    

 

	
Signature   Guarantee*:
    	
 
    	
 
    

 

* Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

 

A-10

 

OPTION OF HOLDER TO ELECT PURCHASE

 

If you want to elect to have this Note purchased by the Issuer pursuant to Section 4.10 or 4.14 of the Indenture, check the appropriate box below:

 

	
 
    	
o   Section 4.10
    	
o   Section 4.14
    

 

If you want to elect to have only part of this Note purchased by the Issuer pursuant to Section 4.10 or Section 4.14 of the Indenture, state the amount you elect to have purchased:

 

	
 
    	
$
    	
                            
    	
 
    

 

	
Date:
    	
 
    	
 
    

 

	
 
    	
Your Signature:
    	
 
    
	
 
    	
 
    	
(Sign   exactly as your name appears on the face of this Note)
    
	
 
    	
 
    
	
 
    	
Tax   Identification No.:
    	
                                                         
    
				

 

	
Signature   Guarantee*:
    	
 
    	
 
    

 

* Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

 

A-11

 

SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*

 

The initial outstanding principal amount of this Global Note is $                    .  The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global or Definitive Note for an interest in this Global Note, have been made:

 

	
Date of
   Exchange
    	
 
    	
Amount of
   decrease
   in Principal
   Amount
    	
 
    	
Amount of increase
   in Principal
   Amount of this
   Global Note
    	
 
    	
Principal Amount
   of
   this Global Note
   following such
   decrease or
   increase
    	
 
    	
Signature of
   authorized officer
   of Trustee or 
   Note Custodian
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

*This schedule should be included only if the Note is issued in global form.

 

A-12

 

EXHIBIT B

 

FORM OF CERTIFICATE OF TRANSFER

 

Michaels Stores, Inc. 
 8000 Bent Branch Drive
 Irving, TX 75063
 Attention: General Counsel

 

Law Debenture Trust Company of New York
 400 Madison Avenue, Suite 4D
 New York, New York 10017
 Fax No.:  (212) 750-1361
 Attention:  Corporate Trust Department

 

Re:  73⁄4% Senior Notes due 2018

 

Reference is hereby made to the Indenture, dated as of October 21, 2010 (as the same may be further amended, supplemented or otherwise modified from time to time, the “Indenture”), among Michaels Stores, Inc., the Guarantors named therein and the Trustee.  Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

 

                                 (the “Transferor”) owns and proposes to transfer the Note[s] or interest in such Note[s] specified in Annex A hereto, in the principal amount of $                       in such Note[s] or interests (the “Transfer”), to                                (the “Transferee”), as further specified in Annex A hereto.  In connection with the Transfer, the Transferor hereby certifies that:

 

[CHECK ALL THAT APPLY]

 

1.             o  CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE 144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A.  The Transfer is being effected pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the “Securities Act”), and, accordingly, the Transferor hereby further certifies that the beneficial interest or Definitive Note is being transferred to a Person that the Transferor reasonably believes is purchasing the beneficial interest or Definitive Note for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a “qualified institutional buyer” within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States.

 

2.             o  CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE REGULATION S GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO REGULATION S.  The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the 

 

B-1

 

United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) if the proposed transfer is being made prior to the expiration of the Restricted Period, the transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser).  Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on Transfer enumerated in the Indenture and the Securities Act.

 

3.             o  CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE DEFINITIVE NOTE PURSUANT TO ANY PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S.  The Transfer is being effected in compliance with the transfer restrictions applicable to beneficial interests in Restricted Global Notes and Restricted Definitive Notes and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any state of the United States, and accordingly the Transferor hereby further certifies that (check one):

 

(a)           o  such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act;

 

or

 

(b)           o  such Transfer is being effected to the Issuer or a subsidiary thereof;

 

or

 

(c)           o  such Transfer is being effected pursuant to an effective registration statement under the Securities Act and in compliance with the prospectus delivery requirements of the Securities Act.

 

4.             o  CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE.

 

(a)           o  CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act.  Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.

 

(b)           o  CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act.  Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated 

 

B-2

 

in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.

 

(c)           o  CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION.  (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act.  Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or Restricted Definitive Notes and in the Indenture.

 

B-3

 

This certificate and the statements contained herein are made for your benefit and the benefit of the Issuer.

 

	
 
    	
[Insert   Name of Transferor]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
Dated:
    	
 
    	
 
    
				

 

B-4

 

ANNEX A TO CERTIFICATE OF TRANSFER

 

1.             The Transferor owns and proposes to transfer the following:

 

[CHECK ONE OF (a) OR (b)]

 

(a)           o a beneficial interest in the:

 

(i)     o 144A Global Note (CUSIP 594087 AQ1, or

 

(ii)    o Regulation S Global Note (CUSIP U59329 AC3, or

 

(b)           o a Restricted Definitive Note.

 

2.             After the Transfer the Transferee will hold:

 

[CHECK ONE]

 

(a)           o a beneficial interest in the:

 

(i)     o 144A Global Note (CUSIP 594087 AQ1, or

 

(ii)    o Regulation S Global Note (CUSIP U59329 AC3, or

 

(iii)   o Unrestricted Global Note (CUSIP [                    ]; or

 

(b)           o a Restricted Definitive Note; or

 

(c)                                  o an Unrestricted Definitive Note, in accordance with the terms of the Indenture.

 

B-5

 

EXHIBIT C

 

FORM OF CERTIFICATE OF EXCHANGE

 

Michaels Stores, Inc. 
 8000 Bent Branch Drive
 Irving, TX 75063
 Attention: General Counsel

 

Law Debenture Trust Company of New York
 400 Madison Avenue, Suite 4D
 New York, New York 10017
 Fax No.:  (212) 750-1361
 Attention:  Corporate Trust Department

 

Re:  73⁄4% Senior Notes due 2018

 

Reference is hereby made to the Indenture, dated as of October 21, 2010 (as the same may be further amended, supplemented or otherwise modified from time to time, the “Indenture”), among Michaels Stores, Inc., the Guarantors named therein and the Trustee.  Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

 

(the “Owner”) owns and proposes to exchange the Note[s] or interest in such Note[s] specified herein, in the principal amount of $                     in such Note[s] or interests (the “Exchange”).  In connection with the Exchange, the Owner hereby certifies that:

 

1)             EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN AN UNRESTRICTED GLOBAL NOTE

 

a)             o  CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE.  In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a beneficial interest in an Unrestricted Global Note in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with the United States Securities Act of 1933, as amended (the “Securities Act”), (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest in an Unrestricted Global Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

 

b)            o  CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE.  In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the

 

C-1

 

Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

 

c)             o  CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE.  In connection with the Owner’s Exchange of a Restricted Definitive Note for a beneficial interest in an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

 

d)            o  CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO UNRESTRICTED DEFINITIVE NOTE.  In connection with the Owner’s Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

 

2)             EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES

 

a)             o  CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE.  In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a Restricted Definitive Note with an equal principal amount, the Owner hereby certifies that the Restricted Definitive Note is being acquired for the Owner’s own account without transfer.  Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Restricted Definitive Note issued will continue to be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Note and in the Indenture and the Securities Act.

 

b)            o  CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE.  In connection with the Exchange of the Owner’s Restricted Definitive Note for a beneficial interest in the [CHECK ONE]  o 144A Global Note  o Regulation S Global Note, with an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States.  Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial interest issued will be subject to the restrictions on transfer

 

C-2

 

enumerated in the Private Placement Legend printed on the relevant Restricted Global Note and in the Indenture and the Securities Act.

 

This certificate and the statements contained herein are made for your benefit and the benefit of the Issuer and are dated                                                    .

 

 

	
 
    	
[Insert   Name of Transferor]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

C-3

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