Item 1.01 Entry into a Material Definitive Agreement.

5.250% Senior Secured Notes due 2028

General

On the Closing Date, Merger Sub successfully completed the offering of $850.0 million aggregate principal amount of 5.250% Senior Secured Notes due 2028 (the "Secured Notes"). The Secured Notes were offered and sold to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), and to persons outside of the United States in compliance with Regulation S under the Securities Act. The Secured Notes have not been registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent an effective registration statement or an applicable exemption from registration requirements or a transaction not subject to the registration requirements of the Securities Act or any state securities laws. The Secured Notes were issued pursuant to an Indenture, dated as of the Closing Date, by and between Merger Sub and Wilmington Trust, National Association, as trustee (as supplemented, the "Secured Indenture").

On the Closing Date, upon the completion of the Merger, the Company and certain subsidiaries of the Company (the "Subsidiary Guarantors") entered into a supplemental indenture pursuant to which the Company assumed the obligations under the Secured Notes and the Secured Indenture, and the Subsidiary Guarantors guaranteed the Company's obligations under the Secured Notes and the Secured Indenture.

The Company's obligations under the Secured Notes and the Secured Indenture are fully and unconditionally guaranteed by each of the Company's direct or indirect wholly owned material domestic subsidiaries that guarantees the Company's Term Loan Facility (as defined below). The Secured Notes and the related guarantees are secured by first-priority security interests in the "Term/Notes Priority Collateral" (which consists of substantially all of the Company's and Subsidiary Guarantors' assets other than the ABL Priority Collateral) and by second-priority security interests in the "ABL Priority Collateral" (which consists of the Company's and Subsidiary Guarantors' inventory and accounts receivable and related assets), in each case subject to certain exceptions and permitted liens set forth in the Secured Indenture and the security documents. For more information regarding the collateral and arrangements with respect to the collateral, see "Term Loan Facility-Collateral and Guarantors" below. The Secured Notes are secured on a ratable basis with the Term Loan Facility with respect to the Term/Notes Priority Collateral (on a first-priority basis) and the ABL Priority Collateral (on a second-priority basis), in each case, on such assets owned by the Company and the Subsidiary Guarantors.

Maturity and Interest Payments

The Secured Notes will mature on May 1, 2028. Interest on the Secured Notes accrues at 5.250% per annum and will be paid semi-annually, in arrears, on May 1 and November 1 of each year, beginning November 1, 2021.

Redemption

On or after November 1, 2023, the Company may redeem the Secured Notes at its option, in whole at any time or in part from time to time, at the redemption prices set forth in the Secured Indenture. In addition, prior to November 1, 2023, the Company may redeem the Secured Notes at its option, in whole at any time or in part from

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time to time, at a redemption price equal to 100% of the principal amount of the Secured Notes redeemed, plus a "make-whole" premium and accrued and unpaid interest, if any. Notwithstanding the foregoing, at any time and from time to time prior to November 1, 2023, the Company may redeem in the aggregate up to 40% of the original aggregate principal amount of the Secured Notes (calculated after giving effect to any issuance of additional notes) in an aggregate amount not to exceed the amount of net cash proceeds of one or more equity offerings at a redemption price equal to 105.250%, plus accrued and unpaid interest, if any, so long as at least 50% of the original aggregate principal amount of the Secured Notes (calculated after giving effect to any issuance of additional notes) must remain outstanding after each such redemption. In addition, prior to November 1, 2023, the Company may redeem during each twelve-month period up to 10% of the original aggregate principal amount of the Secured Notes (calculated after giving effect to any issuance of additional notes) at a redemption price equal to 103%, plus accrued and unpaid interest, if any.

Certain Covenants

The Secured Indenture, among other things, limits the Company's ability and the ability of its restricted subsidiaries to, among other things: (i) incur or guarantee additional indebtedness; (ii) pay dividends or distributions on, or redeem or repurchase, capital stock and make other restricted payments; (iii) make investments; (iv) consummate certain asset sales; (v) engage in certain transactions with affiliates; (vi) grant or assume certain liens; and (vii) consolidate, merge or transfer all or substantially all of its assets.

These covenants are subject to a number of important qualifications and exceptions. Additionally, upon the occurrence of specified change of control events, the Company must offer to repurchase the Secured Notes at 101% of the principal amount, plus accrued and unpaid interest, if any, to, but excluding, the purchase date. The Secured Indenture also provides for customary events of default.



7.875% Senior Notes due 2029

General

On the Closing Date, Merger Sub successfully completed the offering of $1,300.0 million aggregate principal amount of 7.875% Senior Notes due 2029 (the "Unsecured Notes"). The Unsecured Notes were offered and sold to qualified institutional buyers pursuant to Rule 144A under the Securities Act and to persons outside of the United States in compliance with Regulation S under the Securities Act. The Unsecured Notes have not been registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent an effective registration statement or an applicable exemption from registration requirements or a transaction not subject to the registration requirements of the Securities Act or any state securities laws. The Unsecured Notes were issued pursuant to an Indenture, dated as of the Closing Date, by and between Merger Sub and Wilmington Trust, National Association, as trustee (as supplemented, the "Unsecured Indenture").

On the Closing Date, upon the completion of the Merger, the Company and the Subsidiary Guarantors entered into a supplemental indenture pursuant to which the Company assumed the obligations under the Unsecured Notes and the Unsecured Indenture and the Subsidiary Guarantors guaranteed the Company's obligations under the Unsecured Notes and the Unsecured Indenture.

The Company's obligations under the Unsecured Notes and the Unsecured Indenture are fully and unconditionally guaranteed by the Subsidiary Guarantors.

Maturity and Interest Payments

The Unsecured Notes will mature on May 1, 2029. Interest on the Unsecured Notes accrues at 7.875% per annum and will be paid semi-annually, in arrears, on May 1 and November 1 of each year, beginning November 1, 2021.

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Redemption

On or after May 1, 2024, the Company may redeem the Unsecured Notes at its option, in whole at any time or in part from time to time, at the redemption prices set forth in the Unsecured Indenture. In addition, prior to May 1, 2024, the Company may redeem the Unsecured Notes at its option, in whole at any time or in part from time to time, at a redemption price equal to 100% of the principal amount of the Unsecured Notes redeemed, plus a "make-whole" premium and accrued and unpaid interest, if any. Notwithstanding the foregoing, at any time and from time to time prior to May 1, 2024, the Company may redeem in the aggregate up to 40% of the original aggregate principal amount of the Unsecured Notes (calculated after giving effect to any issuance of additional notes) in an aggregate amount not to exceed the amount of net cash proceeds of one or more equity offerings at a redemption price equal to 107.875%, plus accrued and unpaid interest, if any, so long as at least 50% of the original aggregate principal amount of the Unsecured Notes (calculated after giving effect to any issuance of additional notes) must remain outstanding after each such redemption.

Certain Covenants

The Unsecured Indenture, among other things, limits the Company's ability and the ability of its restricted subsidiaries to, among other things: (i) incur or guarantee additional indebtedness; (ii) pay dividends or distributions on, or redeem or repurchase, capital stock and make other restricted payments; (iii) make investments; (iv) consummate certain asset sales; (v) engage in certain transactions with affiliates; (vi) grant or assume certain liens; and (vii) consolidate, merge or transfer all or substantially all of its assets.

These covenants are subject to a number of important qualifications and exceptions. Additionally, upon the occurrence of specified change of control events, the Company must offer to repurchase the Unsecured Notes at 101% of the principal amount, plus accrued and unpaid interest, if any, to, but excluding, the purchase date. The Unsecured Indenture also provides for customary events of default.



Term Loan Facility

General

On the Closing Date, upon the completion of the Merger, the Company assumed Merger Sub's obligations under a Term Loan Credit Agreement, dated as of the . . .

Item 1.02 Termination of a Material Definitive Agreement.

Termination of ABL Credit Agreement and Term Loan Credit Agreement

In connection with the consummation of the Merger, on the Closing Date, Michaels Stores, Inc. ("MSI"), an indirect, wholly-owned subsidiary of the Company, terminated (i) the Third Amended and Restated Credit Agreement, dated May 27, 2016 (as amended, supplemented or otherwise modified, including pursuant to the First Amendment to Third Amended and Restated Credit Agreement, dated August 30, 2019, the "Existing ABL Credit Agreement"; the asset-based loan facility provided pursuant to the ABL Credit Agreement, the "Existing ABL Credit Facility"), by and among MSI and certain subsidiaries of MSI, as borrowers, Michaels Funding, Inc., the direct parent company of MSI, and certain subsidiaries of MSI, as facility guarantors, the lenders from time to time party thereto and Wells Fargo Bank, National Association, as administrative agent and collateral agent; and (ii) the Amended and Restated Credit Agreement, dated January 28, 2013 (as amended, supplemented or otherwise modified, including pursuant to the First Amendment to Amended and Restated Credit Agreement, dated June 10, 2014, the Second Amendment to Amended and Restated Credit Agreement, dated September 28, 2016, the Third

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Amendment to Amended and Restated Credit Agreement and Omnibus Amendment to Loan Documents, dated May 23, 2018, and the Fourth Amendment to Amended and Restated Credit Agreement, dated October 1, 2020, the "Existing Term Loan Credit Agreement"; the term loan facility provided pursuant to the Term Loan Credit Agreement, the "Existing Term Loan Credit Facility"), by and among MSI, as borrower, the lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent.

In connection with the termination of the Existing ABL Credit Facility, MSI prepaid all of the outstanding obligations in respect of principal, interest and fees under the Existing ABL Credit Facility. No prepayment premium or early termination penalties were incurred by the Company or any of its subsidiaries in connection with the termination of the Existing ABL Credit Facility. The Existing ABL Credit Facility consisted of an aggregate principal amount of $850.0 million of revolver commitments. On April 15, 2021, the outstanding principal amount of loans pursuant to the Existing ABL Credit Facility was $0, and the aggregate amount of outstanding letters of credit issued pursuant to the Existing ABL Credit Facility was $87.4 million.

In connection with the termination of the Existing Term Loan Credit Facility, MSI prepaid all of the obligations in respect of principal, interest and fees under the Existing Term Loan Credit Facility. No prepayment premium or early termination penalties were incurred by the Company or any of its subsidiaries in connection with the termination of the Existing Term Loan Credit Facility. The outstanding principal amount of the Existing Term Loan Credit Facility as of April 15, 2021 was $1,661.7 million. In addition, in connection with the termination of the Existing Term Loan Credit Facility, MSI terminated the interest rate swaps and interest rate caps previously entered into to mitigate interest rate risk in connection with the Existing Term Loan Credit Facility.

Certain lenders or agents under the Existing ABL Credit Facility or Existing Term Loan Credit Facility (or their affiliates) have engaged in, or may in the future engage in, transactions with, and perform services for, the Company and its affiliates in the ordinary course of business or in connection with the transactions contemplated by the Merger Agreement.

Redemption of MSI's 8.000% Senior Notes due 2027 and 4.750% Senior Secured Notes due 2027

As previously disclosed, on April 1, 2021, MSI caused to be delivered to the holders of MSI's 8.000% Senior Notes due 2027 (the "Existing Senior Notes") and 4.750% Senior Secured Notes due 2027 (the "Existing Secured Notes") notices of conditional redemption (the "Notices of Redemption") relating to the redemption in full of the Existing Senior Notes and the Existing Secured Notes on April 15, 2021 (the "Redemption Date"), subject to the consummation of the Merger. Substantially concurrently with the closing of the Merger, on April 15, 2021, MSI irrevocably deposited with the respective trustees of the Existing Senior Notes and the Existing Secured Notes sufficient funds to fund the redemption of the Existing Senior Notes and the Existing Secured Notes, respectively. The Existing Senior Notes were redeemed at a redemption price of 113.191% of the principal amount thereof and the Existing Secured Notes were redeemed at a redemption price of 112.054% of the principal amount thereof, in each case, plus accrued and unpaid interest thereon to, but excluding, the Redemption Date, in accordance with the terms of (i) the Indenture, dated as of July 8, 2019, by and among MSI, the guarantors party thereto and U.S. Bank National Association, as trustee, relating to the Existing Senior Notes, and (ii) the Indenture, dated as of October 1, 2020, by and among MSI, the guarantors party thereto and U.S. Bank National Association, as trustee and collateral agent, relating to the Existing Secured Notes.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an

Off-Balance Sheet Arrangement of a Registrant.

The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03.

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