<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D/A
Under the Securities Exchange Act of 1934
(Amendment No. 23)*
Michaels Stores, Inc.
--------------------------------------------------------
(NAME OF ISSUER)
Common Stock, par value $0.10 per share
--------------------------------------------------------
(TITLE OF CLASS OF SECURITIES)
594087-10-8
--------------------------------------------------------
(CUSIP NUMBER)
Charles D. Maguire, Jr.
901 Main Street, Suite 6000
Dallas, Texas 75202
(214) 953-6000
--------------------------------------------------------
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS)
February 23, 1995
--------------------------------------------------------
(DATE OF EVENT WHICH REQUIRES FILING OF THIS STATEMENT)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box / /.
Check the following box if a fee is being paid with this statement / /. (A
fee is not required only if the reporting person: (1) has a previous statement
on file reporting beneficial ownership of more than five percent of the class
of securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
Page 1 of 10 Pages
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CUSIP No. 594087-10-8 13D Page 2 of 10 Pages
- -------------------------------------------------------------------------------
(1) Names of Reporting Person S.S. or I.R.S. Identification No. of Above
Person
Sam Wyly ###-##-####
- -------------------------------------------------------------------------------
(2) Check the Appropriate Box if a Member (a) /X/
of a Group* (b) / /
- -------------------------------------------------------------------------------
(3) SEC Use Only
- -------------------------------------------------------------------------------
(4) Source of Funds*
N/A
- -------------------------------------------------------------------------------
(5) Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(a) / /
/
- -------------------------------------------------------------------------------
(6) Citizenship or Place of Organization
United States
- -------------------------------------------------------------------------------
Number of Shares (7) Sole Voting
Beneficially Owned Power 1,434,905
by Each Reporting --------------------------------------------------
Person With (8) Shared Voting
Power 200,000
--------------------------------------------------
(9) Sole Dispositive
Power 1,884,905
--------------------------------------------------
(10) Shared Dispositive
Power 200,000
- -------------------------------------------------------------------------------
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
2,084,905
- -------------------------------------------------------------------------------
(12) Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares*
/ /
- -------------------------------------------------------------------------------
(13) Percent of Class Represented by Amount in Row (11)
9.7%
- -------------------------------------------------------------------------------
(14) Type of Reporting Person*
IN
- -------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
CUSIP No. 594087-10-8 13D Page 3 of 10 Pages
- -------------------------------------------------------------------------------
(1) Names of Reporting Person S.S. or I.R.S. Identification No. of Above
Person
Charles J. Wyly, Jr ###-##-####
- -------------------------------------------------------------------------------
(2) Check the Appropriate Box if a Member (a) /X/
of a Group* (b) / /
- -------------------------------------------------------------------------------
(3) SEC Use Only
- -------------------------------------------------------------------------------
(4) Source of Funds*
N/A
- -------------------------------------------------------------------------------
(5) Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(a) / /
- -------------------------------------------------------------------------------
(6) Citizenship or Place of Organization
United States
- -------------------------------------------------------------------------------
Number of Shares (7) Sole Voting
Beneficially Owned Power 1,497,607
by Each Reporting --------------------------------------------------
Person With (8) Shared Voting
Power 200,000
--------------------------------------------------
(9) Sole Dispositive
Power 1,722,607
--------------------------------------------------
(10) Shared Dispositive
Power 200,000
- -------------------------------------------------------------------------------
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
1,922,607
- -------------------------------------------------------------------------------
(12) Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares*
/ /
- -------------------------------------------------------------------------------
(13) Percent of Class Represented by Amount in Row (11)
9.0%
- -------------------------------------------------------------------------------
(14) Type of Reporting Person*
IN
- -------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
CUSIP No. 594087-10-8 13D Page 4 of 10 Pages
- -------------------------------------------------------------------------------
(1) Names of Reporting Person S.S. or I.R.S. Identification No. of Above
Person
Maverick Entrepreneurs Fund, Ltd. (f/k/a First Dallas Limited) 75-231-9145
- -------------------------------------------------------------------------------
(2) Check the Appropriate Box if a Member (a) /X/
of a Group* (b) / /
- -------------------------------------------------------------------------------
(3) SEC Use Only
- -------------------------------------------------------------------------------
(4) Source of Funds*
N/A
- -------------------------------------------------------------------------------
(5) Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(a) / /
- -------------------------------------------------------------------------------
(6) Citizenship or Place of Organization
Texas
- -------------------------------------------------------------------------------
Number of Shares (7) Sole Voting
Beneficially Owned Power 200,000
by Each Reporting --------------------------------------------------
Person With (8) Shared Voting
Power 0
--------------------------------------------------
(9) Sole Dispositive
Power 200,000
--------------------------------------------------
(10) Shared Dispositive
Power 0
- -------------------------------------------------------------------------------
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
200,000
- -------------------------------------------------------------------------------
(12) Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares*
/ /
- -------------------------------------------------------------------------------
(13) Percent of Class Represented by Amount in Row (11)
0.9%
- -------------------------------------------------------------------------------
(14) Type of Reporting Person*
PN
- -------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
CUSIP No. 594087-10-8 13D Page 5 of 10 Pages
- -------------------------------------------------------------------------------
(1) Names of Reporting Person S.S. or I.R.S. Identification No. of Above
Person
The Wyly Group
- -------------------------------------------------------------------------------
(2) Check the Appropriate Box if a Member (a) /X/
of a Group* (b) / /
- -------------------------------------------------------------------------------
(3) SEC Use Only
- -------------------------------------------------------------------------------
(4) Source of Funds*
N/A
- -------------------------------------------------------------------------------
(5) Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(a) / /
- -------------------------------------------------------------------------------
(6) Citizenship or Place of Organization
Texas
- -------------------------------------------------------------------------------
Number of Shares (7) Sole Voting
Beneficially Owned Power 3,132,512
by Each Reporting --------------------------------------------------
Person With (8) Shared Voting
Power 0
--------------------------------------------------
(9) Sole Dispositive
Power 3,807,512
--------------------------------------------------
(10) Shared Dispositive
Power 0
- -------------------------------------------------------------------------------
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
3,807,512
- -------------------------------------------------------------------------------
(12) Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares*
/ /
- -------------------------------------------------------------------------------
(13) Percent of Class Represented by Amount in Row (11)
17.8%
- -------------------------------------------------------------------------------
(14) Type of Reporting Person*
IN,PN
- -------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
CUSIP No. 594087-10-8 13D Page 6 of 10 Pages
ITEM 1. SECURITY AND ISSUER.
Not Amended.
ITEM 2. IDENTITY AND BACKGROUND.
Not Amended.
ITEM 3. SOURCE AND AMOUNT OF FUNDS.
Not Applicable.
ITEM 4. PURPOSE OF TRANSACTION.
Not Amended.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
Item 5 is hereby amended and restated in its entirety to read as follows:
On November 9, 1994, Mr. Sam Wyly resigned as Trustee of, and as a member
of the Investment Committee and the Management Committee for, the Michaels
Stores, Inc. Employees 401(k) Plan and Trust (the "Plan" and "Trust,"
respectively). Such resignation was accepted by Michaels Stores, Inc. on
November 9, 1994. At such time, the Trust held approximately 455,925 shares of
Common Stock.
Effective February 23, 1995, each of the Reporting Persons entered into an
arrangement with Lehman Brothers Finance, S.A. (the "Lender") in respect of, in
the aggregate, 1,771,163 shares of Common Stock; the details of such transaction
are more fully described in Item 6.
Mr. Sam Wyly beneficially owns 2,084,905 shares, or 9.7%, of the
outstanding Common Stock. Sam Wyly beneficially owns 150,000 of such shares by
virtue of his ownership of options; beneficially owns 1,174,536 of such shares
as general partner of Tallulah, Ltd., a Texas limited partnership for which Sam
Wyly is general partner ("Tallulah") (through direct ownership by Tallulah of
874,536 shares and beneficial ownership by Tallulah of an additional 300,000
shares as a result of Tallulah's ownership of options); beneficially owns
200,000 of such shares as general partner of Maverick Entrepreneurs Fund, Ltd.;
beneficially owns 7,918 of such shares as the guardian of a minor child;
beneficially owns 15,836 of such shares by virtue of his holding a power of
attorney to vote the shares of two adult children; and beneficially owns an
aggregate of 536,615 of such shares as trustee of the trusts listed below:
Shares
Beneficially
Name of Trust Owned
- -------------------------------------------- ----------------
1. The Christiana Parker Wyly Trust 82,393
2. The Andrew David Sparrow Wyly Trust 82,393
3. The Laurie L. Wyly Revocable Trust 123,943
4. The Lisa Wyly Revocable Trust 123,943
<PAGE>
CUSIP No. 594087-10-8 13D Page 7 of 10 Pages
5. The Kelly Wyly Elliot Trust 123,943
- ---------------------------------------- -----------------
- ---------------------------------------- -----------------
Sam Wyly possesses sole voting power with respect to 1,434,905 shares of
Common Stock, sole dispositive power with respect to 1,884,905 shares of Common
Stock and shared voting and dispositive power with respect to 200,000 shares
of Common Stock.
Charles J. Wyly, Jr. beneficially owns 1,922,607 shares, or 9.0%, of the
outstanding Common Stock. Charles J. Wyly, Jr. owns 225,000 of such shares by
virtue of his ownership of options; beneficially owns 755,000 of such shares as
general partner of Brush Creek; beneficially owns 374 of such shares by virtue
of his holding a power of attorney to vote the shares of four adult children;
beneficially owns 200,000 of such shares as general partner of Maverick
Entrepreneurs Fund, Ltd. and beneficially owns an aggregate of 742,233 of such
shares as trustee of the trusts listed below:
Number of
Shares
Beneficially
Name of Trust Owned
- ---------------------------------------- -----------------
1. The Charles Joseph Wyly III Trust 190,913
2. The Martha Caroline Wyly Trust 170,000
3. The Emily Ann Wyly Trust 190,813
4. The Jennifer Lynn Wyly Trust 190,507
- ---------------------------------------- -----------------
- ---------------------------------------- -----------------
Charles J. Wyly, Jr. possesses sole voting power with respect to 1,497,607
shares of Common Stock, sole dispositive power with respect to 1,722,607 shares
of Common Stock and shared voting and dispositive power with respect to 200,000
shares of Common Stock.
Maverick Entrepreneurs Fund, Ltd. beneficially owns 200,000 shares, or
0.9%, of the outstanding Common Stock. Maverick Entrepreneurs Fund, Ltd. owns
all of such shares directly.
The Reporting Persons as a group beneficially own 3,807,512 shares, or
17.8%, of the outstanding Common Stock. The Reporting Persons as a group possess
sole voting power with respect to 3,132,512 shares of Common Stock, sole
dispositive power with respect to 3,807,512 shares of Common Stock and shared
voting and dispositive power with respect to 0 shares of Common Stock.
<PAGE>
CUSIP No. 594087-10-8 13D Page 8 of 10 Pages
Except as set forth in this Item 5, no transactions in the Common Stock
were effected by the Reporting Persons during the past 60 days or since the most
recent filing on Schedule 13D, whichever is less.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER. Item 6 is hereby amended by adding the
following disclosure:
On February 23, 1995, the Reporting Persons each entered into a Loan
Agreement with the Lender providing for loans to the Reporting Persons from time
to time (the "Loan Agreements"). In connection with the Loan Agreements, the
Reporting Persons entered into various security documents provided for in the
Loan Agreements (the "Security Documents"). Included in the Security Documents
are documents that provide, in general, that: (i) with respect to an aggregate
of 1,771,163 shares of Common Stock (770,000 shares of which are beneficially
owned by Mr. Sam Wyly, 801,163 shares of which are beneficially owned by Mr.
Charles J. Wyly, Jr., and 200,000 shares of which are beneficially owned by each
of the Reporting Persons), if the market price of such shares on or before
February 23, 1998, is less than $28.5574, then the Lender, upon the request of
the Reporting Persons, will pay to the Reporting Persons the difference between
such market price and such specified amount at the time of such request, and if
the market price on February 23, 1998, is greater than $48.2302,
the Reporting Persons will, on that date, pay to the Lender the difference
between such market price and such specified amount; and (ii) the Reporting
Persons are required to pledge such rights and an aggregate of 1,771,163 shares
to secure their obligations under the Security Documents. Reference is made to
the complete terms of the Loan Agreements and Security Documents in the forms
attached hereto as exhibits.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1 - Agreement pursuant to Rule 13d-1(f)(1)(iii).
Exhibit 2.1 - Form of Loan Agreement, dated as of February 23, 1995,
between Lehman Brothers Finance, S.A., and Those Persons Specified in
Schedule A thereto.
Exhibit 2.2 - Form of Loan Agreement, dated as of February 23, 1995,
between Lehman Brothers Finance, S.A., and Those Persons Specified in
Schedule A thereto.
Exhibit 3.1 - Form of Option Transaction Confirmation, dated as of
February 23, 1995, by Lehman Brothers Finance, S.A. to the Counterparties set
forth on Exhibit A thereto.
Exhibit 3.2 - Form of Option Transaction Confirmation, dated as of
February 23, 1995, by Lehman Brothers Finance, S.A. to the Counterparties set
forth on Exhibit A thereto.
Exhibit 3.3 - Form of Option Transaction Confirmation, dated as of
February 23, 1995, by Lehman Brothers Finance, S.A. to the Counterparties set
forth on Exhibit A thereto.
Exhibit 3.4 - Form of Option Transaction Confirmation, dated as of
February 23, 1995, by Lehman Brothers Finance, S.A. to the Counterparties set
forth on Exhibit A thereto.
Exhibit 4.1 - Form of Pledge Agreement, dated as of
February 23, 1995, between Lehman Brothers Finance, S.A. and the
Counterparties set forth on Exhibit A thereto.
Exhibit 4.2 - Form of Pledge Agreement, dated as of
February 23, 1995, between Lehman Brothers Finance, S.A. and the
Counterparties set forth on Exhibit A thereto.
Exhibit 5.1 - Form of Guarantee Agreement.
<PAGE>
CUSIP No. 594087-10-8 13D Page 9 of 10 Pages
SIGNATURES
After reasonable inquiry and to the best of our knowledge and belief, we
certify that the information set forth in this statement is true, complete and
correct.
Date: February 27, 1995 /s/ Sam Wyly
-----------------------------------------
Sam Wyly
/s/ Charles J. Wyly, Jr.
-----------------------------------------
Charles J. Wyly, Jr.
MAVERICK ENTREPRENEURS FUND, LTD.
(formerly First Dallas Limited)
By: /s/ Sam Wyly
-----------------------------------------
Sam Wyly,
General Partner
By: /s/ Charles J. Wyly, Jr.
-----------------------------------------
Charles J. Wyly, Jr.,
General Partner
<PAGE>
CUSIP No. 594087-10-8 13D Page 10 of 10 Pages
EXHIBIT 1
Pursuant to Rule 13d-1(f)(1)(iii) of Regulation 13D-G of the General Rules
and Regulations of the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended, the undersigned agree that the statement to
which this Exhibit is attached is filed on behalf of each of them.
Date: February 27, 1995 /s/ Sam Wyly
-----------------------------------------
Sam Wyly
/s/ Charles J. Wyly, Jr.
-----------------------------------------
Charles J. Wyly, Jr.
MAVERICK ENTREPRENEURS FUND, LTD.
(formerly First Dallas Limited)
By: /s/ Sam Wyly
-----------------------------------------
Sam Wyly,
General Partner
By: /s/ Charles J. Wyly, Jr.
-----------------------------------------
Charles J. Wyly, Jr.,
General Partner
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
LOAN AGREEMENT
Dated as of February 23, 1995
Between
Those Persons Specified in Schedule A
as Borrowers
and
LEHMAN BROTHERS FINANCE, S.A.
as Lender
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Article Section Page
- ------- ------- ----
I. DEFINITIONS
1.01. Defined Terms . . . . . . . . . . . . . . . . .
1.02. Terms Generally . . . . . . . . . . . . . . . .
II. LOANS
2.01. Availability . . . . . . . . . . . . . . . . .
2.02. Drawdown . . . . . . . . . . . . . . . . . . .
2.03. Notes . . . . . . . . . . . . . . . . . . . . .
2.04. Interest . . . . . . . . . . . . . . . . . . .
2.05. Prepayment . . . . . . . . . . . . . . . . . .
2.06. Default Interest . . . . . . . . . . . . . . .
2.07. Alternate Rate of Interest . . . . . . . . . .
2.08. Prepayment of Loans . . . . . . . . . . . . . .
2.09. Reserve Requirements; Change in Circumstances .
2.10. Change in Legality . . . . . . . . . . . . . .
2.11. Indemnity . . . . . . . . . . . . . . . . . . .
2.12. Taxes . . . . . . . . . . . . . . . . . . . . .
2.13. Payments . . . . . . . . . . . . . . . . . . .
2.14. Obligations Several . . . . . . . . . . . . . .
III. REPRESENTATIONS AND WARRANTIES
3.01. Organization; Powers . . . . . . . . . . . . .
3.02. Authorization . . . . . . . . . . . . . . . . .
3.03. Governmental Approval . . . . . . . . . . . . .
3.04. Enforceability . . . . . . . . . . . . . . . .
3.05. Litigation; Compliance with Laws . . . . . . .
3.06. No Material Misstatements . . . . . . . . . . .
IV. CONDITIONS OF LENDING . . . . . . . . . . . . . . . . . . . .
V. AFFIRMATIVE COVENANTS
5.01. Legal Existence . . . . . . . . . . . . . . . .
5.02. Obligations and Taxes . . . . . . . . . . . . .
<PAGE>
Article Section Page
- ------- ------- ----
5.03. Litigation and Other Notices . . . . . . . . .
5.04. Further Assurance . . . . . . . . . . . . . . .
5.05. Use of Proceeds . . . . . . . . . . . . . . . .
5.06 Securities Laws . . . . . . . . . . . . . . . .
VI. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . .
VII. MISCELLANEOUS
7.01. Notices . . . . . . . . . . . . . . . . . . . .
7.02. Survival of Agreement . . . . . . . . . . . . .
7.03. Successors and Assigns . . . . . . . . . . . .
7.04. Expenses of the Lender; Indemnity . . . . . . .
7.05. Right of Setoff . . . . . . . . . . . . . . . .
7.06. Applicable Law . . . . . . . . . . . . . . . .
7.07. Payments on Business Days . . . . . . . . . . .
7.08. Waivers; Amendments . . . . . . . . . . . . . .
7.09. Consent to Jurisdiction . . . . . . . . . . . .
7.10. Waiver of Jury Trial . . . . . . . . . . . . .
7.11. Severability . . . . . . . . . . . . . . . . .
7.12. Counterparts . . . . . . . . . . . . . . . . .
7.13. Headings . . . . . . . . . . . . . . . . . . .
Schedule A The Borrowers
Exhibit A Form of Promissory Note
Exhibit B Form of Pledge Agreement
Exhibit C Form of Collar Documentation
<PAGE>
LOAN AGREEMENT dated as of February 23, 1995, between those
persons specified in Schedule A (each, a "Borrower" and together,
the "Borrowers") and LEHMAN BROTHERS FINANCE, S.A., a Swiss
corporation (the "Lender").
The Borrowers have applied to the Lender for loans in the aggregate
principal amount specified in Schedule A. The Lender is willing to make such
loans to the Borrowers, subject to the terms and conditions hereinafter set
forth.
Accordingly, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINED TERMS. As used in this Agreement, the
following terms shall have the meanings specified below:
"AFFILIATE" shall mean, with respect to any person, any person or
group of persons acting in concert in respect of the person in question that,
directly or indirectly, controls or is controlled by or is under common control
with such person.
"BUSINESS DAY" shall mean any day, other than a Saturday or Sunday, on
which (a) banks are open for (i) banking business in New York City and
(ii) dealings in dollar deposits in the London interbank market and (b) the
NASDAQ NMS is open for trading.
"COLLAR DOCUMENTATION" shall mean the ISDA master agreement, master
agreement schedule and confirmations to be entered into by the Lender and the
Borrower substantially in the form of Exhibit C.
"DEFAULT" shall mean any event, condition or circumstance which, with
the giving of notice or the passage of time or both, would become an Event of
Default.
"DEFAULT RATE" shall mean the relevant Interest Rate plus 5% per
annum.
<PAGE>
2
"DOLLARS" and the symbol "$" shall mean the lawful currency of the
United States.
"DRAWING DATE" shall mean February , 1995.
EVENT OF DEFAULT" shall have the meaning assigned to such term in
Article VI hereof.
"INTEREST PAYMENT DATE" shall mean the last day of each Interest
Period.
"INTEREST PERIOD" shall mean the period commencing on the Drawing Date
(or, in the case of subsequent Interest Periods, on the last day of the
preceding Interest Period) and ending on the numerically corresponding day (or
if there is no corresponding day, the last day) in the following calendar month;
PROVIDED, HOWEVER, that (y) if any Interest Period would end on a day that is
not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless such next succeeding Business Day would fall in
the next calendar month, in which case such Interest Period shall end on the
next preceding Business Day, and (z) no Interest Period shall extend beyond the
Maturity Date. Interest shall accrue from and including the first day of an
Interest Period to but excluding the last day of such Interest Period.
"INTEREST RATE" shall mean LIBOR plus the Margin.
"LBI" shall mean Lehman Brothers Inc.
"LIBOR" shall mean, with respect to any Interest Period (a) the rate
for deposits in dollars for a period comparable to the applicable Interest
Period which appears on the Telerate Page 3750 as of 11:00 a.m., London time,
two Business Days prior to the commencement of such Interest Period; (b) if such
rate does not appear on the Telerate page 3750, the arithmetic mean of the rates
for deposits in dollars for a period comparable to the applicable Interest
Period which appear on the Reuters Screen LIBO Page as of 11:00 a.m., London
time, two Business Days prior to the commencement of such Interest Period; and
(c) if only one or no such rate appears on the Reuters Screen LIBO Page, the
rate (rounded upwards, if necessary, to the next higher 1/16 of 1%) at which
dollar deposits approximately equal in principal amount to the Loans and with a
maturity comparable to the applicable Interest Period are offered to the Lender
in immediately available funds in the London interbank
<PAGE>
3
market at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.
"LOAN" shall mean, in relation to each Borrower, the principal amount
specified opposite its name in Schedule A, to be advanced by the Lender to such
Borrower hereunder or, as the context requires, the principal amount thereof
outstanding from time to time, and "LOANS" shall mean the aggregate of all such
principal amounts.
"MARGIN" shall mean 1.0% per annum.
"MATURITY DATE" shall mean the third anniversary of the Drawing Date,
or such later date as the Lender and Borrowers agree in writing.
"NOTE" shall mean, in relation to a Borrower, a promissory note of
such Borrower executed and delivered as provided in Section 2.03, substantially
in the form of Exhibit A.
"PERSON" shall mean any natural person, corporation, business trust,
association, company, joint venture, partnership or government or any agency or
political subdivision thereof.
"PLEDGE AGREEMENT" shall mean the Pledge Agreement, substantially in
the form of Exhibit B, between the Borrowers and the Lender.
"SECURITY DOCUMENTS" shall mean the Pledge Agreement and the Collar
Documentation.
"SHARES" shall mean, in relation to each Borrower, that number of
shares of common stock of Michaels Stores Inc. specified opposite its name in
Schedule A.
"TRANSACTION DOCUMENTS" shall mean, in relation to a Borrower, this
Agreement, the Note of such Borrower and the Security Documents.
"TRANSACTIONS" shall have the meaning assigned to such term in
Section 3.02.
SECTION 1.02. TERMS GENERALLY. The definitions in Section 1.01 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may
<PAGE>
4
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include", "includes" and "including" shall be deemed
to be followed by the phrase "without limitation". All references herein to
Articles, Sections, Exhibits and Schedules shall be deemed references to
Articles and Sections of, and Exhibits and Schedules to, this Agreement unless
the context shall otherwise require.
ARTICLE II
LOANS
SECTION 2.01. AVAILABILITY. Subject to the terms and conditions
herein set forth, the Lender agrees to make each Loan to the related Borrower,
and each Borrower agrees to drawdown its Loan, on the Drawing Date.
SECTION 2.02. DRAWDOWN. The Lender shall by 3:00 p.m., New York City
time, on the Drawing Date, credit the amount of each Loan, in immediately
available funds, to the account of the related Borrower specified in a notice
delivered to the Lender by such Borrower no later than two Business Days prior
to the Drawing Date.
SECTION 2.03. NOTES. Each Loan shall be evidenced by a Note duly
executed on behalf of the related Borrower, dated the Drawing Date, with the
blanks appropriately filled, payable to the order of the Lender in a principal
amount equal to the principal amount of the related Loan. Each Note shall bear
interest from the Drawing Date on the principal amount thereof as set forth in
Section 2.04.
SECTION 2.04. INTEREST. Subject to the provisions of Section 2.06,
each Loan shall bear interest (computed on the basis of the actual number of
days elapsed over a year of 360 days) from the Drawing Date to the Maturity Date
at a rate per annum equal to the Interest Rate. Interest on each Loan shall be
payable by the related Borrower on each applicable Interest Payment Date. LIBOR
shall be determined by the Lender, and such determination shall be conclusive
absent manifest error. The Lender shall promptly advise each Borrower of such
determination.
<PAGE> 5
SECTION 2.05. REPAYMENT. Each Borrower shall repay its Loan on the
Maturity Date.
SECTION 2.06. DEFAULT INTEREST. If a Borrower defaults in the
payment of the principal of or interest on its Loan or any other amount becoming
due hereunder, by acceleration or otherwise, such Borrower shall on demand from
time to time pay interest, to the extent permitted by law, on such defaulted
amount up to (but not including) the date of actual payment at the Default Rate.
SECTION 2.07. ALTERNATE RATE OF INTEREST. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for the Loans, the Lender shall have determined (i) that dollar
deposits in the amount of the Loans are not generally available in the London
interbank market or (ii) that the rate at which such dollar deposits are being
offered will not adequately and fairly reflect the cost to the Lender of making
or maintaining the Loans during such Interest Period, the Lender shall, as soon
as practicable thereafter, give written or telex notice of such determination to
each Borrower. In the event of any such determination, the Interest Rate
payable with respect to such Interest Period shall be the rate certified by the
Lender to be its cost of funding the Loans for such period, plus the Margin.
Each determination by the Lender hereunder shall be conclusive absent manifest
error.
SECTION 2.08. PREPAYMENT OF LOANS. Each Borrower may, on giving the
Lender no less than five Business Days' notice, prepay its Loan or any part
thereof in an amount of no less than $1,000,000 on an Interest Payment Date.
Such notice shall be irrevocable and shall require such Borrower to make such
prepayment on the date specified therein.
SECTION 2.09. RESERVE REQUIREMENTS; CHANGE IN CIRCUMSTANCES. (a)
Notwithstanding any other provision herein, if after the date of this Agreement
any change in applicable law or regulation or in the interpretation or
administration thereof by any governmental authority charged with the inter-
pretation or administration thereof (whether or not having the force of law)
shall change the basis of taxation of payments to the Lender or of the principal
of or interest on a Loan or any other fees or amounts payable hereunder (other
than taxes imposed on the overall net income of the Lender by the jurisdiction
in which the Lender has its principal office, or by any political subdivision or
<PAGE>
6
taxing authority therein), or shall impose, modify or deem applicable any
reserve, special deposit or similar requirement against assets of, deposits with
or for the account of, or credit extended by, the Lender or shall impose on the
Lender or the London interbank market any other condition affecting this
Agreement, and the result of any of the foregoing shall be to increase the cost
to the Lender of making or maintaining a Loan or to reduce the amount of any sum
received or receivable by the Lender hereunder (whether of principal, interest
or otherwise) in respect thereof by an amount deemed by the Lender to be
material, then the related Borrower will pay to the Lender upon demand such
additional amount or amounts as will compensate the Lender for such additional
costs incurred or reduction suffered.
(b) A certificate of the Lender setting forth such amount or amounts
as shall be necessary to compensate it as specified in paragraph (a) above shall
be delivered to the related Borrower and shall be conclusive absent manifest
error. Such Borrower shall pay the Lender the amount shown as due on any such
certificate within 5 days after its receipt of the same.
SECTION 2.10. CHANGE IN LEGALITY. Notwithstanding anything to the
contrary herein contained, if any change in any law or regulation or in
interpretation thereof by any governmental authority charged with the
administration or interpretation thereof shall make it unlawful for the Lender
to maintain a Loan or to give effect to its obligations as contemplated hereby,
then, by written notice to the related Borrower, the Lender may require that
such Loan be repaid immediately or on such later date as the Lender specifies.
SECTION 2.11. INDEMNITY. Each Borrower shall indemnify the Lender
against any loss or reasonable expense which the Lender may sustain or incur as
a consequence of (a) any failure by such Borrower to fulfill on the Drawing Date
the applicable conditions set forth in Article IV, (b) any failure by such
Borrower to drawdown hereunder on the Drawing Date, (c) any payment or
prepayment of its Loan required by any other provision of this Agreement or
otherwise made on a date other than the last day of an Interest Period, (d) any
default in the payment or prepayment of the principal amount of its Loan or any
part thereof or interest accrued thereon, as and when due and payable, or
(e) the occurrence of any Event of Default with
<PAGE>
7
respect to it, including any loss or reasonable expense sustained or incurred or
to be sustained or incurred in liquidating or employing deposits from third
parties acquired to effect or maintain its Loan or any part thereof. A
certificate of the Lender setting forth any amount or amounts which the Lender
is entitled to receive pursuant to this Section shall be delivered to such
Borrower and shall be conclusive absent manifest error. Such Borrower shall pay
the Lender the amount shown as due on any such statement within 5 days after
receipt of the same.
SECTION 2.12. TAXES. (a) Any and all payments by each Borrower
hereunder shall be made free and clear of and without deduction for any and all
present or future taxes, levies, imposts, deductions, charges or withholdings,
and all liabilities with respect thereto, EXCLUDING taxes imposed on the
Lender's income, and franchise taxes imposed on the Lender, by the jurisdiction
of its principal office or lending office or any political subdivision thereof,
and withholding taxes payable with respect to payments to the Lender at its
principal office or lending office under laws (including, without limitation,
any treaty, ruling, determination or regulation) in effect on the date hereof,
but not any increase in withholding tax resulting from any subsequent change in
such laws (all such nonexcluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as "Taxes"). If a
Borrower shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder to the Lender, (i) the sum payable shall be increased by
the amount necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section), the Lender
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) such Borrower shall make such deductions and
(iii) such Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law.
(b) In addition, each Borrower agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement (hereinafter referred to as "Other Taxes").
(c) Each Borrower will indemnify the Lender for the full amount of
Taxes or Other Taxes (including any Taxes
<PAGE>
8
or Other Taxes imposed by any jurisdiction (except as specified in clause (a))
on amounts payable under this Section with respect to such Borrower's Loan and
paid by the Lender and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted; PROVIDED, HOWEVER, that at
the request of a Borrower and solely at such Borrower's expense the Lender shall
use reasonable efforts to contest the payment of such Taxes or Other Taxes which
such Borrower and the Lender believe were not correctly or legally asserted.
This indemnification shall be made within 10 days from the date the Lender makes
written demand therefor. If the Lender receives a refund in respect of any
Taxes or Other Taxes for which it has received payment from such a Borrower
hereunder, it shall, within seven days of receipt, repay such refund to such
Borrower, provided that such Borrower, upon the request of the Lender, agrees to
return such refund (plus any penalties, interest or other charges) to the Lender
in the event the Lender is required to repay such refund.
(d) Each Borrower will, within 30 days after the date of any payment
of Taxes or Other Taxes withheld by it in respect of any payment to the Lender,
furnish to the Lender the original or a certified copy of a receipt evidencing
payment thereof.
(e) Without prejudice to the survival of any other agreement
hereunder, the agreements and obligations contained in this Section shall
survive the payment in full of principal and interest hereunder.
SECTION 2.13. PAYMENTS. Each Borrower shall make each payment to the
Lender hereunder not later than 12:00 noon, New York City time, on the day when
due in dollars in immediately available funds to the Lender's account at
Chemical Bank, New York; ABA Number 021000128; Favour: Lehman Brothers Finance
S.A.; Account Number 066-196566.
SECTION 2.14. OBLIGATIONS SEVERAL. Notwithstanding any other
provision of this Agreement, the obligations of the Borrowers hereunder shall be
several.
<PAGE>
9
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants to Lender that:
SECTION 3.01. ORGANIZATION; POWERS. It is duly established and
validly existing as an express trust or, as the case may be, as a limited
partnership under the laws of the jurisdiction of its establishment, has the
requisite power and authority to own or lease its property and assets and to
carry on its business as now conducted and is qualified to do business in every
jurisdiction where such qualification is required, except where the failure so
to qualify would not have a material adverse effect on the condition, financial
or otherwise, of such Borrower. Such Borrower has the power and authority to
execute, deliver and perform its obligations under the related Transaction
Documents.
SECTION 3.02. AUTHORIZATION. The execution, delivery and performance
by such Borrower of its obligations under the related Transaction Documents
(collectively, the "Transactions") (a) have been duly authorized by all
requisite action and (b) will not (i) violate (A) any provision of any law,
statute, rule or regulation or the constitutive documents of such Borrower,
(B) any order of any court, or any rule, regulation or order of any other agency
of government binding upon such Borrower or (C) any provisions of any indenture,
agreement or other instrument to which such Borrower is a party, or by which
such Borrower or any of its properties or assets are or may be bound, other than
any indentures, agreements and other instruments which, individually or in
aggregate, are not material to such Borrower, (ii) be in conflict with, result
in a breach of or constitute (alone or with notice or lapse of time or both) a
default under any indenture, agreement or other instrument referred to in
(b)(i)(C) above, other than indentures, agreements and other instruments which,
individually or in aggregate, are not material to such Borrower or to the
Transactions, or (iii) result in the creation or imposition of any lien upon any
property or assets of such Borrower, except pursuant to the Security Documents.
SECTION 3.03. GOVERNMENTAL APPROVAL. No registration with or
consent or approval of, or other action by, any Federal, state, foreign or other
governmental agency,
<PAGE>
10
authority or regulatory body is or will be required in connection with any of
the Transactions.
SECTION 3.04. ENFORCEABILITY. Each of the related Transaction
Documents constitutes the legal, valid and binding obligations of such Borrower,
enforceable in accordance with its terms (subject, as to the enforcement of
remedies, to applicable bankruptcy, reorganization, insolvency, moratorium and
similar laws affecting creditors' rights generally).
SECTION 3.05. LITIGATION; COMPLIANCE WITH LAWS, ETC. (a) There are
not any actions, suits or proceedings at law or in equity or by or before any
governmental instrumentality or other agency or regulatory authority now pending
or, to the knowledge of such Borrower, threatened against or affecting such
Borrower or the businesses, assets or rights of such Borrower (i) which involve
any of the related Transaction Documents or any of the Transactions or (ii)
which may reasonably be expected to, individually or in the aggregate,
materially impair the ability of such Borrower to conduct its businesses, or
materially and adversely affect the businesses, assets, properties, operations
or condition, financial or otherwise, or prospects of such Borrower, or impair
the validity or enforceability of or the ability of such Borrower to perform its
obligations under this Agreement or its Note or any other related Transaction
Document.
(b) Such Borrower is not in violation of any law, or in default with
respect to any judgment, writ, injunction, decree, rule or regulation of any
court or governmental agency or instrumentality, where such violation or default
would have a materially adverse effect on the businesses, assets, properties,
operations or condition, financial or otherwise, or prospects of such Borrower.
SECTION 3.06. NO MATERIAL MISSTATEMENTS. No information, report,
financial statement, exhibit or schedule prepared or furnished by or on behalf
of such Borrower to the Lender in connection with any of the related Transaction
Documents or included therein contained or contains any material misstatement of
fact or omitted or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
<PAGE>
11
Each representation and warranty contained in this Section 3 shall be
made by each Borrower on the Drawing Date and deemed to be repeated on each day
on which such Borrower makes a payment to the Lender hereunder.
ARTICLE IV
CONDITIONS OF LENDING
The obligations of the Lender to make the Loans hereunder are subject
to the satisfaction of the following conditions on the Drawing Date:
(a) The representations and warranties set forth in Article III shall
be true and correct in all material respects on and as of the Drawing Date,
except to the extent that such representations and warranties expressly
relate to an earlier date or a change therein permitted by this Agreement.
(b) Each Borrower shall be in compliance in all material respects
with all the terms and provisions contained in the Transaction Documents,
and immediately after the drawdown of the Loans no Event of Default or
Default shall have occurred and be continuing with respect to any Borrower.
(c) Each Borrower has executed and delivered to the Lender each of
the related Transaction Documents and each other document contemplated by
the related Transaction Documents (including the documents specified in
Section 3 of the Pledge Agreement) and each such document remains in full
force and effect.
ARTICLE V
AFFIRMATIVE COVENANTS
Each Borrower covenants and agrees with the Lender that it will:
SECTION 5.01. LEGAL EXISTENCE. Do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence.
<PAGE>
12
SECTION 5.02. OBLIGATIONS AND TAXES. Comply in all material respects
with all applicable laws, rules, regulations and orders, pay or cause to be paid
all of its indebtedness and other obligations promptly when due in accordance
with their terms, and pay and discharge promptly when due all taxes, assessments
and governmental charges or levies imposed upon it.
SECTION 5.03. LITIGATION AND OTHER NOTICES. Give the Lender prompt
written notice of the following:
(a) the issuance by any court or governmental agency or authority of
any injunction, order or other restraint prohibiting, or having the effect
of prohibiting, the performance of this Agreement, any other related
Transaction Document, the maintaining of its Loan or any other related
Transaction or the initiation of any litigation, or any claim or contro-
versy which might result in the initiation of any litigation, seeking any
such injunction, order or other restraint;
(b) the filing or commencement of any action, suit or proceeding,
whether at law or in equity or by or before any court or any Federal,
state, municipal or other governmental agency or authority, which may
reasonably be expected to materially impair the right or the ability of
such Borrower to perform its obligations under this Agreement or any other
related Transaction Document, or materially and adversely affect the
business, assets, properties, operations, prospects or condition, financial
or otherwise, of such Borrower;
(c) any Event of Default or Default, specifying the nature and extent
thereof and the action (if any) which is proposed to be taken with respect
thereto; and
(d) any development in the business or affairs of such Borrower which
has resulted in or which could, in the reasonable judgment of such
Borrower, result in a material adverse change in the business, assets,
properties, operations or condition, financial or otherwise, or prospects
of such Borrower.
SECTION 5.04. FURTHER ASSURANCE. Execute any and all further
documents, financing statements, agreements and instruments, and take all
further actions (including filing Uniform Commercial Code financing statements,
mortgages and
<PAGE>
13
other instruments), which may be required under applicable law, or which the
Lender may reasonably request, in order to effectuate the Transactions and in
order to grant, preserve, protect and perfect the validity and priority of the
security interests created by the Security Documents.
SECTION 5.05. USE OF PROCEEDS. Use the proceeds of its Loan solely
for the purpose of repayment of its indebtedness.
SECTION 5.06. SECURITIES LAWS. Make or cause to be made all filings
or reportings required by applicable Federal or state securities law in
connection with the Transactions as soon as possible (but in any event before
the expiration of the period, or no later than the date, prescribed by such
law).
ARTICLE VI
EVENTS OF DEFAULT
In case of the occurrence of any of the following events (herein
called Events of Default) with respect to a Borrower:
(a) default shall be made in the payment of any principal of or
interest on its Loan, when and as the same shall become due and payable,
whether at the due date thereof or at a date fixed for prepayment thereof
or by acceleration thereof or otherwise;
(b) any representation or warranty made or deemed made by it in or in
connection with any of the related Transaction Documents shall prove to
have been false or misleading in any material respect when made;
(c) default shall be made in the due observance or performance of any
other covenant, condition or agreement to be observed or performed on the
part of such Borrower pursuant to the terms of this Agreement, or any other
related Transaction Document, and such default shall continue for a period
of 10 days after written notice thereof from the Lender;
(d) such Borrower shall (i) voluntarily commence any proceeding or
file any petition seeking relief under any Federal, state or foreign bank-
ruptcy,
<PAGE>
14
insolvency, liquidation or similar law, (ii) consent to the institution of,
or fail to contravene in a timely and appropriate manner, any such pro-
ceeding or the filing of any such petition, (iii) apply for or consent to
the appointment of a receiver, trustee, custodian, sequestrator or similar
official for such Borrower or for a substantial part of its property or
assets, (iv) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (v) make a general
assignment for the benefit of creditors, (vi) become unable, admit in
writing its inability or fail generally to pay its debts as they become
due, or (vii) take action for the purpose of effecting any of the
foregoing;
(e) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking
(i) relief in respect of such Borrower or of a substantial part of the
property or assets of such Borrower under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law, (ii) the appointment
of a receiver, trustee, custodian, sequestrator or similar official for
such Borrower or for a substantial part of the property of such Borrower or
(iii) the liquidation of such Borrower; and such proceeding or petition
shall continue undismissed for 30 days or an order or decree approving or
ordering any of the foregoing shall continue unstayed and in effect for
30 days;
then, and in any such event, the Lender may declare the related Note due and
payable; whereupon the principal of such Note, together with accrued interest
thereon and any other fees and other liabilities of such Borrower accrued
hereunder, shall become forthwith due and payable both as to principal and
interest, without presentment, demand, protest or any other notice of any kind,
all of which are hereby expressly waived, anything contained herein or in such
Note or any other related Transaction Document to the contrary notwithstanding.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. NOTICES. Notices and other communications provided for
herein shall be in writing and
<PAGE>
15
shall be delivered or mailed (or in the case of telegraphic communication,
delivered by telex, graphic scanning or other telegraphic communications
equipment) addressed,
(a) if to a Borrower, at
8800 North Central Expressway
Suite 1300
Dallas, Texas 75206
Attention: Shari Robertson
Facsimile No.: 214-891-8311
Telephone No.: 214-891-8341; and
(b) if to the Lender, at
13 Route de Florissant
P.O. Box 280
1211 Geneva 12
Switzerland
Attention: Financial Controller
Telex No.: 428345; Answerback: LBF CH
Facsimile No.: 4122-789-1929
Telephone No.: 4122-789-0789.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if hand delivered or three days after being sent by registered
or certified mail, postage prepaid, return receipt requested, if by mail, or
upon confirmed receipt, if by any telegraphic or telex communications equipment,
in each case addressed to such party as provided in this Section or in
accordance with the latest unrevoked direction from such party.
SECTION 7.02. SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by each Borrower herein shall be considered
to have been relied upon by the Lender and shall survive the making by the
Lender of the related Loan and the execution and delivery to the Lender of the
related Note and shall continue in full force and effect as long as the
principal of or any accrued interest on the related Note is outstanding and
unpaid.
SECTION 7.03. SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon the Borrowers and the Lender and inure to the benefit of the
Borrowers, the Lender and LBI and their respective successors and assigns. No
<PAGE>
16
Borrower may assign or transfer any of its rights or obligations hereunder
without the written consent of the Lender. The Lender may assign to one or more
banks or other entities all or a portion of its interests, rights and
obligations under this Agreement, the Notes and the other Transaction Documents,
PROVIDED, in the case of an assignment to a person other than an Affiliate of
the Lender, it obtains the prior written consent of each related Borrower (not
to be unreasonably withheld).
SECTION 7.04. EXPENSES OF THE LENDER; INDEMNITY.
(a) Each Borrower agrees to indemnify the Lender, its directors,
officers, employees, agents and affiliates against, and to hold the Lender and
each such person harmless from, any and all losses, claims, damages, liabilities
and related expenses, including counsel fees and expenses, incurred by or
asserted against the Lender or any such persons arising out of, in any way in
connection with, or as a result of any of its related Transaction Documents;
PROVIDED, HOWEVER, any such indemnity shall not apply to any such losses,
claims, damages, liabilities or related expenses arising from the Lender's gross
negligence or wilful misconduct.
(b) The provisions of this Section shall remain operative and in full
force and effect regardless of the expiration of the term of this Agreement, any
of the other related Transaction Documents or the invalidity or unenforceability
of any term or provision of this Agreement or any related Transaction Document.
All amounts due under this Section shall be payable on written demand therefor.
SECTION 7.05. RIGHT OF SETOFF. Each of the Lender and LBI is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by it to or for the credit or the account of a Borrower against any
of and all the obligations of a such Borrower now or hereafter existing under
this Agreement and the other related Transaction Documents, irrespective of
whether or not the Lender shall have made any demand under this Agreement or
such other related Transaction Document. The Lender agrees promptly to notify
such Borrower after any such setoff and application made by it or LBI, but the
failure to give such notice shall not affect the validity of such setoff and
application. The
<PAGE>
17
rights of the Lender under this Section are in addition to other rights and
remedies (including, without limitation, other rights of setoff) which the
Lender may have.
SECTION 7.06. APPLICABLE LAW. This Agreement and the Notes shall be
construed in accordance with and governed by the laws of the State of New York.
SECTION 7.07. PAYMENTS ON BUSINESS DAYS. Should the principal of or
interest on a Note, or any other amount payable hereunder, become due and
payable on other than a Business Day, payment in respect thereof may be made on
the next succeeding Business Day, and such extension of time shall in such case
be included in computing interest, if any, in connection with such payment.
SECTION 7.08. WAIVERS; AMENDMENTS. No failure or delay of the Lender
in exercising any power or right hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Lender hereunder are cumulative
and not exclusive of any rights or remedies which it would otherwise have. No
waiver of any provision of this Agreement or the Notes or consent to any
departure by a Borrower therefrom shall in any event be effective unless the
same shall be in writing signed by the Lender, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice or demand on a Borrower in any case shall entitle such
Borrower to any other or further notice or demand in similar or other
circumstances. No amendment to this Agreement shall be effective unless it is
in writing signed by the Lender and each Borrower.
SECTION 7.09. CONSENT TO JURISDICTION. Each of the parties hereto
irrevocably submits to the jurisdiction of the United States District Court for
the Southern District of New York, any court in the State of New York located in
the City and County of New York, and any appellate court from any thereof, in
any action, suit or proceeding brought against it and related to or in
connection with this Agreement, the other Transaction Documents or the
Transactions or for recognition or enforcement of any judgment, and each of the
parties hereto irrevoacably and unconditionally agrees that all claims in
<PAGE>
18
respect of any such suit or action or proceeding may be heard or determined in
such New York State court or, to the extent permitted by applicable law, in such
federal court. Each of the parties hereto agrees that a final judgment in any
such action, suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
applicable law. To the extent permitted by applicable law, each of the parties
hereby waives and agrees not to assert by way of motion, as a defense or
otherwise in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of such courts, that the suit, action or
proceeding is brought in an inconvenient forum, that the venue of the suit,
action or proceeding is improper or that this Agreement or any of the other
Transaction Documents or the subject matter hereof or thereof may not be
litigated in or by such courts.
SECTION 7.10. WAIVER OF JURY TRIAL. Except as prohibited by law,
each party hereto hereby waives any right it may have to a trial by jury in
respect of any litigation directly or indirectly arising out of, under or in
connection with this Agreement, the other Transaction Documents or the
Transactions.
SECTION 7.11. SEVERABILITY. If any one or more of the provisions
contained in this Agreement or in the Notes should be held invalid, illegal or
unenforceable in any respect, no party hereto shall be required to comply with
such provision for so long as such provision is held to be invalid, illegal or
unenforceable and the validity, legality and enforceability of the remaining
provisions contained herein or therein shall not in any way be affected or
impaired thereby. The parties shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 7.12. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute but one contract.
SECTION 7.13. HEADINGS. Article and Section headings and the Table
of Contents used herein are for convenience of reference only and are not to
affect the
<PAGE>
19
construction of, or to be taken into consideration in interpreting, this
Agreement.
IN WITNESS WHEREOF, the Borrowers and the Lender have caused this
Agreement to be duly executed as of the day and year first above written.
LEHMAN BROTHERS FINANCE, S.A.,
by
_____________________________
Title:
BRUSH CREEK LTD.,
by
______________________________
Title:
CHARLES J. WYLY JR. as trustee
for Charles J. Wyly III
______________________________
CHARLES J. WYLY JR. as trustee
for Jennifer Lynn Wyly
______________________________
CHARLES J. WYLY JR. as trustee
for Emily Ann Wyly
______________________________
<PAGE>
20
CHARLES J. WYLY JR. as trustee
for Martha C. Wyly
______________________________
<PAGE>
SCHEDULE A
THE BORROWERS
<TABLE>
<CAPTION>
Principal Amount
Name and Address of Loan Number of Shares
---------------- ---------------- ----------------
<S> <C> <C>
Brush Creek Ltd. 420,000
Charles J. Wyly Jr. 95,031
as trustee for the
benefit of Charles J.
Wyly III
Charles J. Wyly Jr. 96,070
as trustee for the
benefit of Jennifer
Lynn Wyly
Charles J. Wyly Jr. 95,031
as trustee for the
benefit of Emily Ann
Wyly
Charles J. Wyly Jr. 95,030
as trustee for the
benefit of Martha C.
Wyly
</TABLE>
<PAGE>
EXHIBIT A
FORM OF PROMISSORY NOTE
Date: Principal Amount: [ ]
FOR VALUE RECEIVED, the undersigned, [ ], a [ ]
(the "Maker"), hereby promises to pay to the order of LEHMAN BROTHERS FINANCE,
S.A. (the "Holder"), at [office or bank of the relevant Borrower], on the Matu-
rity Date, the lesser of the principal amount hereof and the aggregate unpaid
principal amount of its Loan, in lawful money of the United States of America in
immediately available funds, and to pay interest from the date hereof on the
principal amount hereof from time to time outstanding, in like funds, at said
office, at a rate or rates per annum and payable on such dates as determined
pursuant to the terms of the Loan Agreement (as defined below).
This Note is the Note of the Maker referred to in the Loan Agreement
dated as of February 23, 1995 between the Maker, the Holder and the other
Borrowers specified therein, as the same may be amended or modified from time to
time (the "Loan Agreement"). The Loan Agreement contains additional rights of
the holder hereof. Capitalized terms used but not defined herein have the
meaning assigned thereto to the Loan Agreement.
This Note is subject to mandatory repayment, prior to the Maturity
Date, in whole or in part, as provided in the Loan Agreement. If an Event of
Default occurs with respect to the Maker and is continuing, the principal and
accrued interest hereon may be declared to be due and payable in the manner and
with the effect provided in the Loan Agreement.
If the Maker shall default in the payment of the principal of or
interest on its Loan or any other amount becoming due under the Loan Agreement,
by acceleration or otherwise, the Maker promises to pay interest on demand from
time to time, to the extent permitted by law, on such defaulted amount up to
(but not including) the date of actual payment.
The Maker hereby waives diligence, presentment, demand, protest and
notice of any kind whatsoever, other than as expressly required by the Loan
Agreement. The nonexercise by the Holder of any of its rights hereunder in
<PAGE>
2
any particular instance shall not constitute a waiver thereof in that or any
subsequent instance.
This Note shall be construed in accordance with and governed by the
laws of the State of New York and any applicable laws of the United States of
America. This Note is secured by and entitled to the benefits of the Security
Documents.
[ ],
by
-----------------------------
Title:
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
LOAN AGREEMENT
Dated as of February 23, 1995
Between
Those Persons Specified in Schedule A
as Borrowers
and
LEHMAN BROTHERS FINANCE, S.A.
as Lender
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Article Section Page
- ------- ------- ----
I. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . .
1.01. Defined Terms . . . . . . . . . . . . . . . . .
1.02. Terms Generally . . . . . . . . . . . . . . . .
II. LOANS
2.01. Availability . . . . . . . . . . . . . . . . .
2.02. Drawdown . . . . . . . . . . . . . . . . . . .
2.03. Notes . . . . . . . . . . . . . . . . . . . . .
2.04. Interest . . . . . . . . . . . . . . . . . . .
2.05. Prepayment . . . . . . . . . . . . . . . . . .
2.06. Default Interest . . . . . . . . . . . . . . .
2.07. Alternate Rate of Interest . . . . . . . . . .
2.08. Prepayment of Loans . . . . . . . . . . . . . .
2.09. Reserve Requirements; Change in Circumstances .
2.10. Change in Legality . . . . . . . . . . . . . .
2.11. Indemnity . . . . . . . . . . . . . . . . . . .
2.12. Taxes . . . . . . . . . . . . . . . . . . . . .
2.13. Payments . . . . . . . . . . . . . . . . . . .
2.14. Obligations Several . . . . . . . . . . . . . .
III. REPRESENTATIONS AND WARRANTIES
3.01. Organization; Powers . . . . . . . . . . . . .
3.02. Authorization . . . . . . . . . . . . . . . . .
3.03. Governmental Approval . . . . . . . . . . . . .
3.04. Enforceability . . . . . . . . . . . . . . . .
3.05. Litigation; Compliance with Laws . . . . . . .
3.06. No Material Misstatements . . . . . . . . . . .
IV. CONDITIONS OF LENDING . . . . . . . . . . . . . . . . . . . .
V. AFFIRMATIVE COVENANTS
5.01. Legal Existence . . . . . . . . . . . . . . . .
5.02. Obligations and Taxes . . . . . . . . . . . . .
<PAGE>
Article Section Page
- ------- ------- ----
5.03. Litigation and Other Notices . . . . . . . . .
5.04. Further Assurance . . . . . . . . . . . . . . .
5.05. Use of Proceeds . . . . . . . . . . . . . . . .
5.06 Securities Laws . . . . . . . . . . . . . . . .
VI. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . .
VII. MISCELLANEOUS
7.01. Notices . . . . . . . . . . . . . . . . . . . .
7.02. Survival of Agreement . . . . . . . . . . . . .
7.03. Successors and Assigns . . . . . . . . . . . .
7.04. Expenses of the Lender; Indemnity . . . . . . .
7.05. Right of Setoff . . . . . . . . . . . . . . . .
7.06. Applicable Law . . . . . . . . . . . . . . . .
7.07. Payments on Business Days . . . . . . . . . . .
7.08. Waivers; Amendments . . . . . . . . . . . . . .
7.09. Consent to Jurisdiction . . . . . . . . . . . .
7.10. Waiver of Jury Trial . . . . . . . . . . . . .
7.11. Severability . . . . . . . . . . . . . . . . .
7.12. Counterparts . . . . . . . . . . . . . . . . .
7.13. Headings . . . . . . . . . . . . . . . . . . .
Schedule A The Borrowers
Exhibit A Form of Promissory Note
Exhibit B Form of Pledge Agreement
Exhibit C Form of Collar Documentation
<PAGE>
LOAN AGREEMENT dated as of February 23, 1995, between those
persons specified in Schedule A (each, a "Borrower" and together,
the "Borrowers") and LEHMAN BROTHERS FINANCE, S.A., a Swiss
corporation (the "Lender").
The Borrowers have applied to the Lender for loans in the aggregate
principal amount specified in Schedule A. The Lender is willing to make such
loans to the Borrowers, subject to the terms and conditions hereinafter set
forth.
Accordingly, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINED TERMS. As used in this Agreement, the
following terms shall have the meanings specified below:
"AFFILIATE" shall mean, with respect to any person, any person or
group of persons acting in concert in respect of the person in question that,
directly or indirectly, controls or is controlled by or is under common control
with such person.
"BUSINESS DAY" shall mean any day, other than a Saturday or Sunday, on
which (a) banks are open for (i) banking business in New York City and
(ii) dealings in dollar deposits in the London interbank market and (b) the
NASDAQ NMS is open for trading.
"COLLAR DOCUMENTATION" shall mean the ISDA master agreement, master
agreement schedule and confirmations to be entered into by the Lender and the
Borrower substantially in the form of Exhibit C.
"DEFAULT" shall mean any event, condition or circumstance which, with
the giving of notice or the passage of time or both, would become an Event of
Default.
"DEFAULT RATE" shall mean the relevant Interest Rate plus 5% per
annum.
<PAGE>
2
"DOLLARS" and the symbol "$" shall mean the lawful currency of the
United States.
"DRAWING DATE" shall mean February , 1995.
"EVENT OF DEFAULT" shall have the meaning assigned to such term in
Article VI hereof.
"INTEREST PAYMENT DATE" shall mean the last day of each Interest
Period.
"INTEREST PERIOD" shall mean the period commencing on the Drawing Date
(or, in the case of subsequent Interest Periods, on the last day of the
preceding Interest Period) and ending on the numerically corresponding day (or
if there is no corresponding day, the last day) in the following calendar month;
PROVIDED, HOWEVER, that (y) if any Interest Period would end on a day that is
not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless such next succeeding Business Day would fall in
the next calendar month, in which case such Interest Period shall end on the
next preceding Business Day, and (z) no Interest Period shall extend beyond the
Maturity Date. Interest shall accrue from and including the first day of an
Interest Period to but excluding the last day of such Interest Period.
"INTEREST RATE" shall mean LIBOR plus the Margin.
"LBI" shall mean Lehman Brothers Inc.
"LIBOR" shall mean, with respect to any Interest Period (a) the rate
for deposits in dollars for a period comparable to the applicable Interest
Period which appears on the Telerate Page 3750 as of 11:00 a.m., London time,
two Business Days prior to the commencement of such Interest Period; (b) if such
rate does not appear on the Telerate page 3750, the arithmetic mean of the rates
for deposits in dollars for a period comparable to the applicable Interest
Period which appear on the Reuters Screen LIBO Page as of 11:00 a.m., London
time, two Business Days prior to the commencement of such Interest Period; and
(c) if only one or no such rate appears on the Reuters Screen LIBO Page, the
rate (rounded upwards, if necessary, to the next higher 1/16 of 1%) at which
dollar deposits approximately equal in principal amount to the Loans and with a
maturity comparable to the applicable Interest Period are offered to the Lender
in immediately available funds in the London interbank
<PAGE>
3
market at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.
"LOAN" shall mean, in relation to each Borrower, the principal amount
specified opposite its name in Schedule A, to be advanced by the Lender to such
Borrower hereunder or, as the context requires, the principal amount thereof
outstanding from time to time, and "LOANS" shall mean the aggregate of all such
principal amounts.
"MARGIN" shall mean 1.0% per annum.
"MATURITY DATE" shall mean the third anniversary of the Drawing Date,
or such later date as the Lender and Borrowers agree in writing.
"NOTE" shall mean, in relation to a Borrower, a promissory note of
such Borrower executed and delivered as provided in Section 2.03, substantially
in the form of Exhibit A.
"PERSON" shall mean any natural person, corporation, business trust,
association, company, joint venture, partnership or government or any agency or
political subdivision thereof.
"PLEDGE AGREEMENT" shall mean the Pledge Agreement, substantially in
the form of Exhibit B, between the Borrowers and the Lender.
"SECURITY DOCUMENTS" shall mean the Pledge Agreement and the Collar
Documentation.
"SHARES" shall mean, in relation to each Borrower, that number of
shares of common stock of Michaels Stores Inc. specified opposite its name in
Schedule A.
"TRANSACTION DOCUMENTS" shall mean, in relation to a Borrower, this
Agreement, the Note of such Borrower and the Security Documents.
"TRANSACTIONS" shall have the meaning assigned to such term in
Section 3.02.
SECTION 1.02. TERMS GENERALLY. The definitions in Section 1.01 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may
<PAGE>
4
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include", "includes" and "including" shall be deemed
to be followed by the phrase "without limitation". All references herein to
Articles, Sections, Exhibits and Schedules shall be deemed references to
Articles and Sections of, and Exhibits and Schedules to, this Agreement unless
the context shall otherwise require.
ARTICLE II
LOANS
SECTION 2.01. AVAILABILITY. Subject to the terms and conditions
herein set forth, the Lender agrees to make each Loan to the related Borrower,
and each Borrower agrees to drawdown its Loan, on the Drawing Date.
SECTION 2.02. DRAWDOWN. The Lender shall by 3:00 p.m., New York City
time, on the Drawing Date, credit the amount of each Loan, in immediately
available funds, to the account of the related Borrower specified in a notice
delivered to the Lender by such Borrower no later than two Business Days prior
to the Drawing Date.
SECTION 2.03. NOTES. Each Loan shall be evidenced by a Note duly
executed on behalf of the related Borrower, dated the Drawing Date, with the
blanks appropriately filled, payable to the order of the Lender in a principal
amount equal to the principal amount of the related Loan. Each Note shall bear
interest from the Drawing Date on the principal amount thereof as set forth in
Section 2.04.
SECTION 2.04. INTEREST. Subject to the provisions of Section 2.06,
each Loan shall bear interest (computed on the basis of the actual number of
days elapsed over a year of 360 days) from the Drawing Date to the Maturity Date
at a rate per annum equal to the Interest Rate. Interest on each Loan shall be
payable by the related Borrower on each applicable Interest Payment Date. LIBOR
shall be determined by the Lender, and such determination shall be conclusive
absent manifest error. The Lender shall promptly advise each Borrower of such
determination.
<PAGE>
5
SECTION 2.05. REPAYMENT. Each Borrower shall repay its Loan on the
Maturity Date.
SECTION 2.06. DEFAULT INTEREST. If a Borrower defaults in the
payment of the principal of or interest on its Loan or any other amount becoming
due hereunder, by acceleration or otherwise, such Borrower shall on demand from
time to time pay interest, to the extent permitted by law, on such defaulted
amount up to (but not including) the date of actual payment at the Default Rate.
SECTION 2.07. ALTERNATE RATE OF INTEREST. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for the Loans, the Lender shall have determined (i) that dollar
deposits in the amount of the Loans are not generally available in the London
interbank market or (ii) that the rate at which such dollar deposits are being
offered will not adequately and fairly reflect the cost to the Lender of making
or maintaining the Loans during such Interest Period, the Lender shall, as soon
as practicable thereafter, give written or telex notice of such determination to
each Borrower. In the event of any such determination, the Interest Rate
payable with respect to such Interest Period shall be the rate certified by the
Lender to be its cost of funding the Loans for such period, plus the Margin.
Each determination by the Lender hereunder shall be conclusive absent manifest
error.
SECTION 2.08. PREPAYMENT OF LOANS. Each Borrower may, on giving the
Lender no less than five Business Days' notice, prepay its Loan or any part
thereof in an amount of no less than $1,000,000 on an Interest Payment Date.
Such notice shall be irrevocable and shall require such Borrower to make such
prepayment on the date specified therein.
SECTION 2.09. RESERVE REQUIREMENTS; CHANGE IN CIRCUMSTANCES. (a)
Notwithstanding any other provision herein, if after the date of this Agreement
any change in applicable law or regulation or in the interpretation or
administration thereof by any governmental authority charged with the inter-
pretation or administration thereof (whether or not having the force of law)
shall change the basis of taxation of payments to the Lender or of the principal
of or interest on a Loan or any other fees or amounts payable hereunder (other
than taxes imposed on the overall net income of the Lender by the jurisdiction
in which the Lender has its principal office, or by any political subdivision or
<PAGE>
6
taxing authority therein), or shall impose, modify or deem applicable any
reserve, special deposit or similar requirement against assets of, deposits with
or for the account of, or credit extended by, the Lender or shall impose on the
Lender or the London interbank market any other condition affecting this
Agreement, and the result of any of the foregoing shall be to increase the cost
to the Lender of making or maintaining a Loan or to reduce the amount of any sum
received or receivable by the Lender hereunder (whether of principal, interest
or otherwise) in respect thereof by an amount deemed by the Lender to be
material, then the related Borrower will pay to the Lender upon demand such
additional amount or amounts as will compensate the Lender for such additional
costs incurred or reduction suffered.
(b) A certificate of the Lender setting forth such amount or amounts
as shall be necessary to compensate it as specified in paragraph (a) above shall
be delivered to the related Borrower and shall be conclusive absent manifest
error. Such Borrower shall pay the Lender the amount shown as due on any such
certificate within 5 days after its receipt of the same.
SECTION 2.10. CHANGE IN LEGALITY. Notwithstanding anything to the
contrary herein contained, if any change in any law or regulation or in
interpretation thereof by any governmental authority charged with the
administration or interpretation thereof shall make it unlawful for the Lender
to maintain a Loan or to give effect to its obligations as contemplated hereby,
then, by written notice to the related Borrower, the Lender may require that
such Loan be repaid immediately or on such later date as the Lender specifies.
SECTION 2.11. INDEMNITY. Each Borrower shall indemnify the Lender
against any loss or reasonable expense which the Lender may sustain or incur as
a consequence of (a) any failure by such Borrower to fulfill on the Drawing Date
the applicable conditions set forth in Article IV, (b) any failure by such
Borrower to drawdown hereunder on the Drawing Date, (c) any payment or
prepayment of its Loan required by any other provision of this Agreement or
otherwise made on a date other than the last day of an Interest Period, (d) any
default in the payment or prepayment of the principal amount of its Loan or any
part thereof or interest accrued thereon, as and when due and payable, or
(e) the occurrence of any Event of Default with
<PAGE>
7
respect to it, including any loss or reasonable expense sustained or incurred or
to be sustained or incurred in liquidating or employing deposits from third
parties acquired to effect or maintain its Loan or any part thereof. A
certificate of the Lender setting forth any amount or amounts which the Lender
is entitled to receive pursuant to this Section shall be delivered to such
Borrower and shall be conclusive absent manifest error. Such Borrower shall pay
the Lender the amount shown as due on any such statement within 5 days after
receipt of the same.
SECTION 2.12. TAXES. (a) Any and all payments by each Borrower
hereunder shall be made free and clear of and without deduction for any and all
present or future taxes, levies, imposts, deductions, charges or withholdings,
and all liabilities with respect thereto, EXCLUDING taxes imposed on the
Lender's income, and franchise taxes imposed on the Lender, by the jurisdiction
of its principal office or lending office or any political subdivision thereof,
and withholding taxes payable with respect to payments to the Lender at its
principal office or lending office under laws (including, without limitation,
any treaty, ruling, determination or regulation) in effect on the date hereof,
but not any increase in withholding tax resulting from any subsequent change in
such laws (all such nonexcluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as "Taxes"). If a
Borrower shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder to the Lender, (i) the sum payable shall be increased by
the amount necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section), the Lender
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) such Borrower shall make such deductions and
(iii) such Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law.
(b) In addition, each Borrower agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement (hereinafter referred to as "Other Taxes").
(c) Each Borrower will indemnify the Lender for the full amount of
Taxes or Other Taxes (including any Taxes
<PAGE>
8
or Other Taxes imposed by any jurisdiction (except as specified in clause (a))
on amounts payable under this Section with respect to such Borrower's Loan and
paid by the Lender and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted; PROVIDED, HOWEVER, that at
the request of a Borrower and solely at such Borrower's expense the Lender shall
use reasonable efforts to contest the payment of such Taxes or Other Taxes which
such Borrower and the Lender believe were not correctly or legally asserted.
This indemnification shall be made within 10 days from the date the Lender makes
written demand therefor. If the Lender receives a refund in respect of any
Taxes or Other Taxes for which it has received payment from such a Borrower
hereunder, it shall, within seven days of receipt, repay such refund to such
Borrower, provided that such Borrower, upon the request of the Lender, agrees to
return such refund (plus any penalties, interest or other charges) to the Lender
in the event the Lender is required to repay such refund.
(d) Each Borrower will, within 30 days after the date of any payment
of Taxes or Other Taxes withheld by it in respect of any payment to the Lender,
furnish to the Lender the original or a certified copy of a receipt evidencing
payment thereof.
(e) Without prejudice to the survival of any other agreement
hereunder, the agreements and obligations contained in this Section shall
survive the payment in full of principal and interest hereunder.
SECTION 2.13. PAYMENTS. Each Borrower shall make each payment to the
Lender hereunder not later than 12:00 noon, New York City time, on the day when
due in dollars in immediately available funds to the Lender's account at
Chemical Bank, New York; ABA Number 021000128; Favour: Lehman Brothers Finance
S.A.; Account Number 066-196566.
SECTION 2.14. OBLIGATIONS SEVERAL. Notwithstanding any other
provision of this Agreement, the obligations of the Borrowers hereunder shall be
several.
<PAGE>
9
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants to Lender that:
SECTION 3.01. ORGANIZATION; POWERS. It is duly established and
validly existing as an express trust or, as the case may be, as a limited
partnership under the laws of the jurisdiction of its establishment, has the
requisite power and authority to own or lease its property and assets and to
carry on its business as now conducted and is qualified to do business in every
jurisdiction where such qualification is required, except where the failure so
to qualify would not have a material adverse effect on the condition, financial
or otherwise, of such Borrower. Such Borrower has the power and authority to
execute, deliver and perform its obligations under the related Transaction
Documents.
SECTION 3.02. AUTHORIZATION. The execution, delivery and performance
by such Borrower of its obligations under the related Transaction Documents
(collectively, the "Transactions") (a) have been duly authorized by all
requisite action and (b) will not (i) violate (A) any provision of any law,
statute, rule or regulation or the constitutive documents of such Borrower,
(B) any order of any court, or any rule, regulation or order of any other agency
of government binding upon such Borrower or (C) any provisions of any indenture,
agreement or other instrument to which such Borrower is a party, or by which
such Borrower or any of its properties or assets are or may be bound, other than
any indentures, agreements and other instruments which, individually or in
aggregate, are not material to such Borrower, (ii) be in conflict with, result
in a breach of or constitute (alone or with notice or lapse of time or both) a
default under any indenture, agreement or other instrument referred to in
(b)(i)(C) above, other than indentures, agreements and other instruments which,
individually or in aggregate, are not material to such Borrower or to the
Transactions, or (iii) result in the creation or imposition of any lien upon any
property or assets of such Borrower, except pursuant to the Security Documents.
SECTION 3.03. GOVERNMENTAL APPROVAL. No registration with or
consent or approval of, or other action by, any Federal, state, foreign or other
governmental agency,
<PAGE>
10
authority or regulatory body is or will be required in connection with any of
the Transactions.
SECTION 3.04. ENFORCEABILITY. Each of the related Transaction
Documents constitutes the legal, valid and binding obligations of such Borrower,
enforceable in accordance with its terms (subject, as to the enforcement of
remedies, to applicable bankruptcy, reorganization, insolvency, moratorium and
similar laws affecting creditors' rights generally).
SECTION 3.05. LITIGATION; COMPLIANCE WITH LAWS, ETC. (a) There are
not any actions, suits or proceedings at law or in equity or by or before any
governmental instrumentality or other agency or regulatory authority now pending
or, to the knowledge of such Borrower, threatened against or affecting such
Borrower or the businesses, assets or rights of such Borrower (i) which involve
any of the related Transaction Documents or any of the Transactions or (ii)
which may reasonably be expected to, individually or in the aggregate,
materially impair the ability of such Borrower to conduct its businesses, or
materially and adversely affect the businesses, assets, properties, operations
or condition, financial or otherwise, or prospects of such Borrower, or impair
the validity or enforceability of or the ability of such Borrower to perform its
obligations under this Agreement or its Note or any other related Transaction
Document.
(b) Such Borrower is not in violation of any law, or in default with
respect to any judgment, writ, injunction, decree, rule or regulation of any
court or governmental agency or instrumentality, where such violation or default
would have a materially adverse effect on the businesses, assets, properties,
operations or condition, financial or otherwise, or prospects of such Borrower.
SECTION 3.06. NO MATERIAL MISSTATEMENTS. No information, report,
financial statement, exhibit or schedule prepared or furnished by or on behalf
of such Borrower to the Lender in connection with any of the related Transaction
Documents or included therein contained or contains any material misstatement of
fact or omitted or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
<PAGE>
11
Each representation and warranty contained in this Section 3 shall be
made by each Borrower on the Drawing Date and deemed to be repeated on each day
on which such Borrower makes a payment to the Lender hereunder.
ARTICLE IV
CONDITIONS OF LENDING
The obligations of the Lender to make the Loans hereunder are subject
to the satisfaction of the following conditions on the Drawing Date:
(a) The representations and warranties set forth in Article III shall
be true and correct in all material respects on and as of the Drawing Date,
except to the extent that such representations and warranties expressly
relate to an earlier date or a change therein permitted by this Agreement.
(b) Each Borrower shall be in compliance in all material respects
with all the terms and provisions contained in the Transaction Documents,
and immediately after the drawdown of the Loans no Event of Default or
Default shall have occurred and be continuing with respect to any Borrower.
(c) Each Borrower has executed and delivered to the Lender each of
the related Transaction Documents and each other document contemplated by
the related Transaction Documents (including the documents specified in
Section 3 of the Pledge Agreement) and each such document remains in full
force and effect.
ARTICLE V
AFFIRMATIVE COVENANTS
Each Borrower covenants and agrees with the Lender that it will:
SECTION 5.01. LEGAL EXISTENCE. Do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence.
<PAGE>
12
SECTION 5.02. OBLIGATIONS AND TAXES. Comply in all material respects
with all applicable laws, rules, regulations and orders, pay or cause to be paid
all of its indebtedness and other obligations promptly when due in accordance
with their terms, and pay and discharge promptly when due all taxes, assessments
and governmental charges or levies imposed upon it.
SECTION 5.03. LITIGATION AND OTHER NOTICES. Give the Lender prompt
written notice of the following:
(a) the issuance by any court or governmental agency or authority of
any injunction, order or other restraint prohibiting, or having the effect
of prohibiting, the performance of this Agreement, any other related
Transaction Document, the maintaining of its Loan or any other related
Transaction or the initiation of any litigation, or any claim or contro-
versy which might result in the initiation of any litigation, seeking any
such injunction, order or other restraint;
(b) the filing or commencement of any action, suit or proceeding,
whether at law or in equity or by or before any court or any Federal,
state, municipal or other governmental agency or authority, which may
reasonably be expected to materially impair the right or the ability of
such Borrower to perform its obligations under this Agreement or any other
related Transaction Document, or materially and adversely affect the
business, assets, properties, operations, prospects or condition, financial
or otherwise, of such Borrower;
(c) any Event of Default or Default, specifying the nature and extent
thereof and the action (if any) which is proposed to be taken with respect
thereto; and
(d) any development in the business or affairs of such Borrower which
has resulted in or which could, in the reasonable judgment of such
Borrower, result in a material adverse change in the business, assets,
properties, operations or condition, financial or otherwise, or prospects
of such Borrower.
SECTION 5.04. FURTHER ASSURANCE. Execute any and all further
documents, financing statements, agreements and instruments, and take all
further actions (including filing Uniform Commercial Code financing statements,
mortgages and
<PAGE>
13
other instruments), which may be required under applicable law, or which the
Lender may reasonably request, in order to effectuate the Transactions and in
order to grant, preserve, protect and perfect the validity and priority of the
security interests created by the Security Documents.
SECTION 5.05. USE OF PROCEEDS. Use the proceeds of its Loan solely
for the purpose of repayment of its indebtedness.
SECTION 5.06. SECURITIES LAWS. Make or cause to be made all filings
or reportings required by applicable Federal or state securities law in
connection with the Transactions as soon as possible (but in any event before
the expiration of the period, or no later than the date, prescribed by such
law).
ARTICLE VI
EVENTS OF DEFAULT
In case of the occurrence of any of the following events (herein
called Events of Default) with respect to a Borrower:
(a) default shall be made in the payment of any principal of or
interest on its Loan, when and as the same shall become due and payable,
whether at the due date thereof or at a date fixed for prepayment thereof
or by acceleration thereof or otherwise;
(b) any representation or warranty made or deemed made by it in or in
connection with any of the related Transaction Documents shall prove to
have been false or misleading in any material respect when made;
(c) default shall be made in the due observance or performance of any
other covenant, condition or agreement to be observed or performed on the
part of such Borrower pursuant to the terms of this Agreement, or any other
related Transaction Document, and such default shall continue for a period
of 10 days after written notice thereof from the Lender;
(d) such Borrower shall (i) voluntarily commence any proceeding or
file any petition seeking relief under any Federal, state or foreign bank-
ruptcy,
<PAGE>
14
insolvency, liquidation or similar law, (ii) consent to the institution of,
or fail to contravene in a timely and appropriate manner, any such pro-
ceeding or the filing of any such petition, (iii) apply for or consent to
the appointment of a receiver, trustee, custodian, sequestrator or similar
official for such Borrower or for a substantial part of its property or
assets, (iv) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (v) make a general
assignment for the benefit of creditors, (vi) become unable, admit in
writing its inability or fail generally to pay its debts as they become
due, or (vii) take action for the purpose of effecting any of the
foregoing;
(e) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking
(i) relief in respect of such Borrower or of a substantial part of the
property or assets of such Borrower under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law, (ii) the appointment
of a receiver, trustee, custodian, sequestrator or similar official for
such Borrower or for a substantial part of the property of such Borrower or
(iii) the liquidation of such Borrower; and such proceeding or petition
shall continue undismissed for 30 days or an order or decree approving or
ordering any of the foregoing shall continue unstayed and in effect for
30 days;
then, and in any such event, the Lender may declare the related Note due and
payable; whereupon the principal of such Note, together with accrued interest
thereon and any other fees and other liabilities of such Borrower accrued
hereunder, shall become forthwith due and payable both as to principal and
interest, without presentment, demand, protest or any other notice of any kind,
all of which are hereby expressly waived, anything contained herein or in such
Note or any other related Transaction Document to the contrary notwithstanding.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. NOTICES. Notices and other communications provided for
herein shall be in writing and
<PAGE>
15
shall be delivered or mailed (or in the case of telegraphic communication,
delivered by telex, graphic scanning or other telegraphic communications
equipment) addressed,
(a) if to a Borrower, at
8800 North Central Expressway
Suite 1300
Dallas, Texas 75206
Attention: Shari Robertson
Facsimile No.: 214-891-8311
Telephone No.: 214-891-8341; and
(b) if to the Lender, at
13 Route de Florissant
P.O. Box 280
1211 Geneva 12
Switzerland
Attention: Financial Controller
Telex No.: 428345; Answerback: LBF CH
Facsimile No.: 4122-789-1929
Telephone No.: 4122-789-0789.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if hand delivered or three days after being sent by registered
or certified mail, postage prepaid, return receipt requested, if by mail, or
upon confirmed receipt, if by any telegraphic or telex communications equipment,
in each case addressed to such party as provided in this Section or in
accordance with the latest unrevoked direction from such party.
SECTION 7.02. SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by each Borrower herein shall be considered
to have been relied upon by the Lender and shall survive the making by the
Lender of the related Loan and the execution and delivery to the Lender of the
related Note and shall continue in full force and effect as long as the
principal of or any accrued interest on the related Note is outstanding and
unpaid.
SECTION 7.03. SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon the Borrowers and the Lender and inure to the benefit of the
Borrowers, the Lender and LBI and their respective successors and assigns. No
<PAGE>
16
Borrower may assign or transfer any of its rights or obligations hereunder
without the written consent of the Lender. The Lender may assign to one or more
banks or other entities all or a portion of its interests, rights and
obligations under this Agreement, the Notes and the other Transaction Documents,
PROVIDED, in the case of an assignment to a person other than an Affiliate of
the Lender, it obtains the prior written consent of each related Borrower (not
to be unreasonably withheld).
SECTION 7.04. EXPENSES OF THE LENDER; INDEMNITY.
(a) Each Borrower agrees to indemnify the Lender, its directors,
officers, employees, agents and affiliates against, and to hold the Lender and
each such person harmless from, any and all losses, claims, damages, liabilities
and related expenses, including counsel fees and expenses, incurred by or
asserted against the Lender or any such persons arising out of, in any way in
connection with, or as a result of any of its related Transaction Documents;
PROVIDED, HOWEVER, any such indemnity shall not apply to any such losses,
claims, damages, liabilities or related expenses arising from the Lender's gross
negligence or wilful misconduct.
(b) The provisions of this Section shall remain operative and in full
force and effect regardless of the expiration of the term of this Agreement, any
of the other related Transaction Documents or the invalidity or unenforceability
of any term or provision of this Agreement or any related Transaction Document.
All amounts due under this Section shall be payable on written demand therefor.
SECTION 7.05. RIGHT OF SETOFF. Each of the Lender and LBI is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by it to or for the credit or the account of a Borrower against any
of and all the obligations of a such Borrower now or hereafter existing under
this Agreement and the other related Transaction Documents, irrespective of
whether or not the Lender shall have made any demand under this Agreement or
such other related Transaction Document. The Lender agrees promptly to notify
such Borrower after any such setoff and application made by it or LBI, but the
failure to give such notice shall not affect the validity of such setoff and
application. The
<PAGE>
17
rights of the Lender under this Section are in addition to other rights and
remedies (including, without limitation, other rights of setoff) which the
Lender may have.
SECTION 7.06. APPLICABLE LAW. This Agreement and the Notes shall be
construed in accordance with and governed by the laws of the State of New York.
SECTION 7.07. PAYMENTS ON BUSINESS DAYS. Should the principal of or
interest on a Note, or any other amount payable hereunder, become due and
payable on other than a Business Day, payment in respect thereof may be made on
the next succeeding Business Day, and such extension of time shall in such case
be included in computing interest, if any, in connection with such payment.
SECTION 7.08. WAIVERS; AMENDMENTS. No failure or delay of the Lender
in exercising any power or right hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Lender hereunder are cumulative
and not exclusive of any rights or remedies which it would otherwise have. No
waiver of any provision of this Agreement or the Notes or consent to any
departure by a Borrower therefrom shall in any event be effective unless the
same shall be in writing signed by the Lender, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice or demand on a Borrower in any case shall entitle such
Borrower to any other or further notice or demand in similar or other
circumstances. No amendment to this Agreement shall be effective unless it is
in writing signed by the Lender and each Borrower.
SECTION 7.09. CONSENT TO JURISDICTION. Each of the parties hereto
irrevocably submits to the jurisdiction of the United States District Court for
the Southern District of New York, any court in the State of New York located in
the City and County of New York, and any appellate court from any thereof, in
any action, suit or proceeding brought against it and related to or in
connection with this Agreement, the other Transaction Documents or the
Transactions or for recognition or enforcement of any judgment, and each of the
parties hereto irrevocably and unconditionally agrees that all claims in
<PAGE>
18
respect of any such suit or action or proceeding may be heard or determined in
such New York State court or, to the extent permitted by applicable law, in such
federal court. Each of the parties hereto agrees that a final judgment in any
such action, suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
applicable law. To the extent permitted by applicable law, each of the parties
hereby waives and agrees not to assert by way of motion, as a defense or
otherwise in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of such courts, that the suit, action or
proceeding is brought in an inconvenient forum, that the venue of the suit,
action or proceeding is improper or that this Agreement or any of the other
Transaction Documents or the subject matter hereof or thereof may not be
litigated in or by such courts.
SECTION 7.10. WAIVER OF JURY TRIAL. Except as prohibited by law,
each party hereto hereby waives any right it may have to a trial by jury in
respect of any litigation directly or indirectly arising out of, under or in
connection with this Agreement, the other Transaction Documents or the
Transactions.
SECTION 7.11. SEVERABILITY. If any one or more of the provisions
contained in this Agreement or in the Notes should be held invalid, illegal or
unenforceable in any respect, no party hereto shall be required to comply with
such provision for so long as such provision is held to be invalid, illegal or
unenforceable and the validity, legality and enforceability of the remaining
provisions contained herein or therein shall not in any way be affected or
impaired thereby. The parties shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 7.12. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute but one contract.
SECTION 7.13. HEADINGS. Article and Section headings and the Table
of Contents used herein are for convenience of reference only and are not to
affect the
<PAGE>
19
construction of, or to be taken into consideration in interpreting, this
Agreement.
IN WITNESS WHEREOF, the Borrowers and the Lender have caused this
Agreement to be duly executed as of the day and year first above written.
LEHMAN BROTHERS FINANCE, S.A.,
by
_____________________________
Title:
TALLULAH LTD.,
by
______________________________
Title:
SAM WYLY as trustee
for Andrew David Sparrow Wyly
______________________________
SAM WYLY as trustee
for Christiana Parker Wyly
______________________________
SAM WYLY as trustee
for Laurie L. Wyly
______________________________
<PAGE>
20
SAM WYLY as trustee
for Lisa Wyly
______________________________
SAM WYLY as trustee
for Kelly Wyly Elliott
______________________________
MAVERICK ENTERPRENEURS FUND, LTD.,
by
______________________________
Title:
<PAGE>
SCHEDULE A
THE BORROWERS
Principal Amount Number
Name of Loan of Shares
---- ---------------- ---------
Tallulah Ltd. 485,000
Sam Wyly as trustee 45,000
for the benefit of
Andrew David Sparrow
Wyly
Sam Wyly as trustee 45,000
for the benefit of
Christiana Parker
Wyly
Sam Wyly as trustee 65,000
for the benefit of
Laurie L. Wyly
Sam Wyly as trustee 65,000
for the benefit of
Lisa Wyly
Sam Wyly as trustee 65,000
for the benefit of
Kelly Wyly Elliott
Maverick 200,000
Entrepreneurs Fund,
Ltd.
<PAGE>
EXHIBIT A
FORM OF PROMISSORY NOTE
Date: Principal Amount: [ ]
FOR VALUE RECEIVED, the undersigned, [ ], a [ ]
(the "Maker"), hereby promises to pay to the order of LEHMAN BROTHERS FINANCE,
S.A. (the "Holder"), at [office or bank of the relevant Borrower], on the Matu-
rity Date, the lesser of the principal amount hereof and the aggregate unpaid
principal amount of its Loan, in lawful money of the United States of America in
immediately available funds, and to pay interest from the date hereof on the
principal amount hereof from time to time outstanding, in like funds, at said
office, at a rate or rates per annum and payable on such dates as determined
pursuant to the terms of the Loan Agreement (as defined below).
This Note is the Note of the Maker referred to in the Loan Agreement
dated as of February 23, 1995 between the Maker, the Holder and the other
Borrowers specified therein, as the same may be amended or modified from time to
time (the "Loan Agreement"). The Loan Agreement contains additional rights of
the holder hereof. Capitalized terms used but not defined herein have the
meaning assigned thereto to the Loan Agreement.
This Note is subject to mandatory repayment, prior to the Maturity
Date, in whole or in part, as provided in the Loan Agreement. If an Event of
Default occurs with respect to the Maker and is continuing, the principal and
accrued interest hereon may be declared to be due and payable in the manner and
with the effect provided in the Loan Agreement.
If the Maker shall default in the payment of the principal of or
interest on its Loan or any other amount becoming due under the Loan Agreement,
by acceleration or otherwise, the Maker promises to pay interest on demand from
time to time, to the extent permitted by law, on such defaulted amount up to
(but not including) the date of actual payment.
The Maker hereby waives diligence, presentment, demand, protest and
notice of any kind whatsoever, other than as expressly required by the Loan
Agreement. The nonexercise by the Holder of any of its rights hereunder in
<PAGE>
2
any particular instance shall not constitute a waiver thereof in that or any
subsequent instance.
This Note shall be construed in accordance with and governed by the
laws of the State of New York and any applicable laws of the United States of
America. This Note is secured by and entitled to the benefits of the Security
Documents.
[ ],
by
----------------------
Title:
<PAGE>
- -------------------------------------------------------------------------------
February 23, 1995
OPTION TRANSACTION
The Name of each counterparty (each, a
"Counterparty", and collectively, the "Counterparties")
hereto shall be as set forth in Exhibit A which is
incorporated herein by reference.
8800 North Central Expressway
Suite 1300
Dallas, Texas 75206
- -------------------------------------------------------------------------------
Master Number:
LBF Reference Number:
Gentlemen:
The purpose of this letter agreement (this "Confirmation") is to confirm
the terms and conditions of the Transaction entered into between us on the Trade
Date specified below (the "Option Transaction"). This letter agreement
constitutes a "Confirmation" as referred to in the ISDA Master Agreement
specified below.
The definitions and provisions contained in the 1991 ISDA Definitions (as
published by the International Swaps and Derivatives Association, Inc.
(formerly known as the International Swap Dealers Association, Inc. ("ISDA"))
are incorporated into this Confirmation. In the event of any inconsistency
between those definitions and provisions and this Confirmation, this
Confirmation will govern.
Exhibit A is incorporated herein by reference.
1. This Confirmation supplements, forms part of, and is subject to, the
ISDA Master Agreement, including the Pledge Agreement (the "Agreement"), to be
negotiated between Lehman Brothers Finance S.A. ("LBF") and the Counterparties.
All provisions contained in the Agreement govern this Confirmation except as
expressly modified below. In addition, this Confirmation shall itself evidence a
complete and binding agreement between you and us as to the terms and conditions
of the Option Transaction to which this Confirmation relates.
2. The terms of the Option Transaction to which this Confirmation relates
are as follows:
GENERAL TERMS:
Agent: Lehman Brothers Inc. is confirming
as agent for both Buyer and Seller
Trade Date: February 23, 1995
Option Style: American Option
Option Type: Put Option
Seller: LBF
Buyer: Counterparty
Underlying Shares: Common Shares of Michaels Stores Inc.
Underlying Currency: USD
Quotation Exchange: Nasdaq NMS
Number of Options: As set forth in Exhibit A which is
incorporated herein by reference.
Share Entitlement
per Option: 1 Underlying Share
<PAGE>
Strike Price: USD 28.5574
Premium: USD 0. Buyer and Seller agree that the
Premium for this Option Transaction has
been paid in full by virtue of Buyer's
and Seller's execution of the Related
Option Transaction.
Related Option Transaction: The European Call Option Transaction
entered into between Buyer and Seller on
the Trade Date (LBF Reference No.: )
Exchange Business Day: A day that is (or, but for the
occurrence of a Market Disruption Event,
would have been) a trading day on the
relevant Market Disruption Exchange(s)
other than a day on which trading on any
Market Disruption Exchange(s) is
scheduled to close prior to its regular
weekday closing time.
Calculation Agent: Lehman Brothers Inc., whose
determinations and calculations shall be
binding in the absence of manifest
error.
EXERCISE:
Exercise Period: Any Exchange Business Day from, and
including, the Trade Date to, and
including, the tenth Exchange Business
Day immediately prior to the Expiration
Date
Expiration Date: February 23, 1998
Exercise Date: The Exchange Business Day during the
Exercise Period on which that Option is
or is deemed to be exercised.
Notice of Exercise and
Written Confirmation: Applicable. If the notice of exercise is
delivered after 1:00 p.m. (local time in
New York) on an Exchange Business Day,
then that notice will be deemed
delivered on the next following Exchange
Business Day, if any, in the Exercise
Period.
Automatic Exercise: If, on the Expiration Date, the Option
is in-the-money, then the Option shall
be deemed automatically exercised unless
the Buyer notifies the Seller to the
contrary.
Multiple Exercise: Inapplicable
Seller's telephone or Vuk Bulajic
facsimile number and Tel #: 212-526-0905
contact details for Fax #: 212-528-7337
purposes of giving cc: Jim Staricco
notice: Tel #: 4122-789-0789
Fax #: 4122-789-1929
VALUATION:
Valuation Date: Each Exchange Business Day during the
Valuation Period on which a Market
Disruption Event has not occurred.
2
<PAGE>
Valuation Period: The Exchange Business Days from, and
including, the Exercise Date to, and
including the ninth Exchange Business Day
immediately following the Exercise Date;
provided, however, that if the Option
Transaction is exercised pursuant to the
Automatic Exercise provision set forth above,
then the Valuation Period will be the ten
(10) Exchange Business Days immediately prior
to, and including, the Expiration Date.
Final Price: The arithmetic average of the closing prices
of the Underlying Shares on each Valuation
Date. If a Market Disruption Event occurs on
one or more of the Exchange Business Days
during the Valuation Period, then the Final
Price will equal the average of the closing
prices of the Underlying Shares on the
Exchange Business Days during the Valuation
Period on which a Market Disruption Event has
not occurred or, if there is only one such
Exchange Business Day, the closing price of
the Underlying Shares on such day. If a
Market Disruption Event occurs on all
Exchange Business Days during the Valuation
Period, then the Calculation Agent will
determine the Final Price of the Underlying
Shares on the last Exchange Business Day of
the Valuation Period, regardless of whether a
Market Disruption Event has occurred on such
day.
Market Disruption Event: The occurrence or existence during the Market
Disruption Period that ends at the close of
the Market Disruption Exchange(s) on the
Valuation Date of any of the following
events, in the determination of the
Calculation Agent: The suspension of or
material limitation imposed on trading in (1)
the Underlying Shares or (2) any options
contracts on the Underlying Shares.
Market Disruption Period: One-half hour
Market Disruption
Exchange(s): The Quotation Exchange
SETTLEMENT:
Method of Settlement: Cash Settlement
Settlement Currency: The Underlying Currency
Cash Settlement Amount: An amount, as calculated by the Calculation
Agent, equal to the Number of Options
MULTIPLIED by the Strike Price Differential
MULTIPLIED by the Share Entitlement per
Option
Strike Price Differential: An amount equal to the greater of (i) the
excess of the Strike Price over the Final
Price, and (ii) zero.
Cash Settlement Payment
Date: Five (5) Exchange Business Days after the
final Valuation Date.
DIVIDENDS: If, at any time during the period from and
including the Trade Date to but excluding the
Cash Settlement Payment Date, an ex-dividend
occurs with respect to the Underlying Shares,
then the Strike Price shall be reduced by the
corresponding amount.
3
<PAGE>
OTHER PROVISIONS:
Counterparty
Representation: Counterparty represents that (i) it is not
entering into the Option Transaction on
behalf of or for the accounts of any other
person or entity, and will not transfer or
assign its obligations under the Option
Transaction or any portion of such
obligations to any other person or entity
except in compliance with applicable laws and
the terms of the Option Transaction; (ii) it
is authorized to enter into the Option
Transaction and such action does not violate
any laws of its jurisdiction of organization
or residence or the terms of any agreement to
which it is a party; and (iii) it has reached
its own conclusions about the Option
Transaction, and any legal, regulatory, tax,
accounting or economic consequences arising
from the Option Transaction, and has
concluded that the Option Transaction is
suitable in light of its own investment
objectives, financial capabilities and
expertise.
Counterparty represents that (i) it has held
the Underlying Shares since at least
February 1, 1992 (except for the 200,000
Underlying Shares pledged by Maverick
Entrepreneurs Fund, Ltd. that have been held
since at least May 30, 1994); (ii) it
acquired the Underlying Shares in private
transactions from Michaels Stores Inc.;
(except for the 200,000 Underlying Shares
pledged by Maverick Entrepreneurs Fund, Ltd.
that were acquired in open-market purchases);
(iii) the amount of Underlying Shares sold by
it and by all persons whose sales are
required to be taken into consideration
pursuant to paragraph (e) of Rule 144 under
the Securities Act of 1933 during the
preceding three months is zero; and (iv)
it, and any person whose sales are
required to be taken into consideration
pursuant to paragraph (e) of Rule 144 under
the Securities Act of 1933, will not sell
additional securities of the same class
through any other means during (a) the three
month period commencing on the Trade Date, or
(b) the three month period immediately prior
to the Expiration Date, in each case, without
the prior written consent of LBF.
Notwithstanding the above, Counterparty or
any person whose securities are required to
be taken into consideration by it pursuant to
paragraph (e) of Rule 144 under the
Securities Act of 1933 may, at any other time
during the term of this Option Transaction,
sell additional securities of the same class
upon providing LBF with written notice two
(2) Exchange Business Days immediately prior
to the date of such sale.
NEITHER LBF NOR ANY OF ITS AFFILIATES HAS
ADVISED COUNTERPARTY WITH RESPECT TO ANY
LEGAL, REGULATORY, TAX, ACCOUNTING OR
ECONOMIC CONSEQUENCES ARISING FROM THIS
OPTION TRANSACTION, AND NEITHER LBF NOR ANY
OF ITS AFFILIATES IS ACTING AS AGENT OR
ADVISOR FOR COUNTERPARTY IN CONNECTION WITH
THIS OPTION TRANSACTION.
4
<PAGE>
Settlement Provision: a) Seller's obligations to Buyer under this
Option Transaction, if any, shall not accrue
until Buyer's obligations under the Pledge
Agreement are fully satisfied.
b) All payments under this Option Transaction
will be made without any deduction or
withholding for or on account of any
withholding tax, stamp tax, or any other tax,
duties, fees or commissions required by any
applicable law.
c) Buyer shall have no right to unwind or
exercise this Option Transaction, in whole or
in part, prior to the repayment by Buyer of
all amounts due Seller under the Loan
Agreement between Buyer and Seller, dated the
date hereof.
Adjustments: The Calculation Agent will make adjustments
to this Option Transaction in case of the
occurrence of certain events as follows:
(i) If a stock dividend or other stock
distribution is declared with respect to the
Underlying Shares, then (a) the Number of
Options shall be increased by the same number
of shares issued MULTIPLIED by the Share
Entitlement per Option, and (b) the Strike
Price shall be proportionately reduced as
soon as such event becomes effective.
(ii) If a spin-off has occurred with respect
to the Underlying Shares, then (a) any
property distributed or apportioned with
respect to the Underlying Shares, to the
extent of such distribution or apportionment,
shall be included in any valuation of the
Underlying Shares, and (b) the Strike Price
shall not be adjusted.
Governing Law: New York
Transfer: Neither party may transfer any Option, in
whole or in part, without the prior written
consent of the non-transferring party, which
consent shall not be unreasonably withheld.
Notwithstanding the foregoing, LBF may assign
this Option Transaction to any affiliated
entity whose obligations in respect of such
assignment are guaranteed by the guarantor of
LBF's obligations; PROVIDED, HOWEVER, that
(i) the transferring party will notify the
other party of any such assignment and (ii)
such assignment shall not be permitted
hereunder if, as a result of the assignment,
a payment hereunder becomes subject to any
deduction or withholding for or on account of
any tax which would not have arisen had such
assignment not been effected.
Guarantee: Lehman Brothers Holdings Inc. shall
unconditionally guarantee to Counterparty the
due and punctual payment of all amounts
payable by LBF under this Option Transaction
as such payments become due and payable.
ACCOUNT DETAILS:
LBF's payment instructions: Chemical Bank, New York
ABA Number: 021000128
Favour: Lehman Brothers Finance S.A.
Account Number: 066-196566
5
<PAGE>
LBF's delivery instructions: Citibank, N.A.
New York, USA
Account Bear Stearns Securities Corporation
ABA Number 021000089
For the account of Lehman Brothers
Counterparty's payment
instructions: As set forth in Exhibit A which is
incorporated herein by reference.
6
<PAGE>
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us or by sending to us a letter substantially similar to
this letter, which letter sets forth the material terms of the Option
Transaction to which this Confirmation relates and indicates your agreement to
those terms.
Yours sincerely,
LEHMAN BROTHERS FINANCE S.A.
By:
----------------------
Name:
Title:
By:
----------------------
Name:
Title:
Confirmed as of the date
first above written:
TALLULAH, LTD.
By:
----------------------
Name:
Title:
Execution time will be furnished upon Counterparty's written request.
<PAGE>
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us or by sending to us a letter substantially similar to
this letter, which letter sets forth the material terms of the Option
Transaction to which this Confirmation relates and indicates your agreement to
those terms.
Yours sincerely,
LEHMAN BROTHERS FINANCE S.A.
By:
----------------------
Name:
Title:
By:
----------------------
Name:
Title:
Confirmed as of the date
first above written:
SAM WYLY TTEE FOR THE BENEFIT OF
ANDREW DAVID SPARROW WYLY TRUST
By:
----------------------
Name:
Title:
Execution time will be furnished upon Counterparty's written request.
<PAGE>
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us or by sending to us a letter substantially similar to
this letter, which letter sets forth the material terms of the Option
Transaction to which this Confirmation relates and indicates your agreement to
those terms.
Yours sincerely,
LEHMAN BROTHERS FINANCE S.A.
By:
----------------------
Name:
Title:
By:
----------------------
Name:
Title:
Confirmed as of the date
first above written:
SAM WYLY TTEE FOR THE BENEFIT OF
CHRISTIANA PARKER WYLY TRUST
By:
----------------------
Name:
Title:
Execution time will be furnished upon Counterparty's written request.
<PAGE>
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us or by sending to us a letter substantially similar to
this letter, which letter sets forth the material terms of the Option
Transaction to which this Confirmation relates and indicates your agreement to
those terms.
Yours sincerely,
LEHMAN BROTHERS FINANCE S.A.
By:
----------------------
Name:
Title:
By:
----------------------
Name:
Title:
Confirmed as of the date
first above written:
SAM WYLY TTEE FOR THE BENEFIT OF
LAURIE L. WYLY REVOCABLE TRUST
By:
----------------------
Name:
Title:
Execution time will be furnished upon Counterparty's written request.
<PAGE>
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us or by sending to us a letter substantially similar to
this letter, which letter sets forth the material terms of the Option
Transaction to which this Confirmation relates and indicates your agreement to
those terms.
Yours sincerely,
LEHMAN BROTHERS FINANCE S.A.
By:
----------------------
Name:
Title:
By:
----------------------
Name:
Title:
Confirmed as of the date
first above written:
SAM WYLY TTEE FOR THE BENEFIT OF
LISA WYLY REVOCABLE TRUST
By:
----------------------
Name:
Title:
Execution time will be furnished upon Counterparty's written request.
<PAGE>
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us or by sending to us a letter substantially similar to
this letter, which letter sets forth the material terms of the Option
Transaction to which this Confirmation relates and indicates your agreement to
those terms.
Yours sincerely,
LEHMAN BROTHERS FINANCE S.A.
By:
----------------------
Name:
Title:
By:
----------------------
Name:
Title:
Confirmed as of the date
first above written:
SAM WYLY TTEE FOR THE BENEFIT OF
KELLY WYLY ELLIOTT TRUST
By:
----------------------
Name:
Title:
Execution time will be furnished upon Counterparty's written request.
<PAGE>
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us or by sending to us a letter substantially similar to
this letter, which letter sets forth the material terms of the Option
Transaction to which this Confirmation relates and indicates your agreement to
those terms.
Yours sincerely,
LEHMAN BROTHERS FINANCE S.A.
By:
----------------------
Name:
Title:
By:
----------------------
Name:
Title:
Confirmed as of the date
first above written:
MAVERICK ENTREPRENEURS FUND, LTD.
By:
----------------------
Name:
Title:
Execution time will be furnished upon Counterparty's written request.
<PAGE>
EXHIBIT A
SAM WYLY GROUP
COLLAR TRANSACTION - MICHAELS STORES INC.
- -------------------------------------------------------------------------------
COUNTERPARTY NUMBER OF PAYMENT INSTRUCTIONS
SHARES/OPTIONS
- -------------------------------------------------------------------------------
TALLULAH, LTD. 485,000 Chemical Bank, NY
ABA #: 021000128
A/C: Lehman Brothers Inc.
A/C #: 140-094-221
Further Credit to: Tallulah, Ltd.
Further Credit #: 837- 20011
- -------------------------------------------------------------------------------
Sam Wyly, trustee
for the benefit of:
- -------------------------------------------------------------------------------
ANDREW DAVID
SPARROW WYLY TRUST 45,000 Chemical Bank, NY
ABA #: 021000128
A/C: Lehman Brothers Inc.
A/C #: 140-094-221
Further Credit to: Sam Wyly
TTEE FBO Andrew David Sparrow
Wyly Trust
Further Credit #: 837- 20000
- -------------------------------------------------------------------------------
CHRISTIANA PARKER 45,000 Chemical Bank, NY
WYLY TRUST ABA #: 021000128
A/C: Lehman Brothers Inc.
A/C #: 140-094-221
Further Credit to: Sam Wyly
TTEE FBO Christiana Parker
Wyly Trust
Further Credit #: 837- 20002
- -------------------------------------------------------------------------------
<PAGE>
EXHIBIT A (CONT'D)
SAM WYLY GROUP
COLLAR TRANSACTION - MICHAELS STORES INC.
- -------------------------------------------------------------------------------
COUNTERPARTY NUMBER OF PAYMENT INSTRUCTIONS
SHARES/OPTIONS
- -------------------------------------------------------------------------------
LAURIE L. WYLY 65,000 Chemical Bank, NY
REVOCABLE TRUST ABA #: 021000128
A/C: Lehman Brothers Inc.
A/C #: 140-094-221
Further Credit to: Sam Wyly
TTEE FBO Laurie L. Wyly
Revocable Trust
Further Credit #:
837- 20006
- -------------------------------------------------------------------------------
LISA WYLY 65,000 Chemical Bank, NY
REVOCABLE TRUST ABA #: 021000128
A/C: Lehman Brothers Inc.
A/C #: 140-094-221
Further Credit to: Sam Wyly
TTEE FBO Lisa Wyly Revocable
Trust
Further Credit #:
837- 20007
- -------------------------------------------------------------------------------
KELLY WYLY 65,000 Chemical Bank, NY
ELLIOTT TRUST ABA #: 021000128
A/C: Lehman Brothers Inc.
A/C #: 140-094-221
Further Credit to: Sam Wyly
TTEE FBO Kelly Wyly Elliott
Trust
Further Credit #: 837- 20009
- -------------------------------------------------------------------------------
<PAGE>
EXHIBIT A (CONT'D)
SAM WYLY GROUP
COLLAR TRANSACTION - MICHAELS STORES INC.
- -------------------------------------------------------------------------------
COUNTERPARTY NUMBER OF PAYMENT INSTRUCTIONS
SHARES/OPTIONS
- -------------------------------------------------------------------------------
MAVERICK 200,000 Chemical Bank, NY
ENTREPRENEURS ABA #: 021000128
FUND LTD. A/C: Lehman Brothers Inc.
A/C #: 140-094-221
Further Credit to: Maverick
Entrepreneurs Fund, Ltd.
Further Credit #: 837- 20012
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
February 23, 1995
OPTION TRANSACTION
The Name of each counterparty (each, a
"Counterparty", and collectively, the "Counterparties")
hereto shall be as set forth in Exhibit A which is
incorporated herein by reference.
8800 North Central Expressway
Suite 1300
Dallas, Texas 75206
- -------------------------------------------------------------------------------
Master Number:
LBF Reference Number:
Gentlemen:
The purpose of this letter agreement (this "Confirmation") is to confirm
the terms and conditions of the Transaction entered into between us on the Trade
Date specified below (the "Option Transaction"). This letter agreement
constitutes a "Confirmation" as referred to in the ISDA Master Agreement
specified below.
The definitions and provisions contained in the 1991 ISDA Definitions (as
published by the International Swaps and Derivatives Association, Inc. (formerly
known as the International Swap Dealers Association, Inc. ("ISDA")) are
incorporated into this Confirmation. In the event of any inconsistency between
those definitions and provisions and this Confirmation, this Confirmation will
govern.
Exhibit A is incorporated herein by reference.
1. This Confirmation supplements, forms part of, and is subject to, the
ISDA Master Agreement, including the Pledge Agreement (the "Agreement"), to be
negotiated between Lehman Brothers Finance S.A. ("LBF") and the Counterparties.
All provisions contained in the Agreement govern this Confirmation except as
expressly modified below. In addition, this Confirmation shall itself evidence
a complete and binding agreement between you and us as to the terms and
conditions of the Option Transaction to which this Confirmation relates.
2. The terms of the Option Transaction to which this Confirmation relates
are as follows:
GENERAL TERMS:
GENERAL TERMS:
Agent: Lehman Brothers Inc. is confirming
as agent for both Buyer and Seller
Trade Date: February 23, 1995
Option Style: European Option
Option Type: Call Option
Seller: Counterparty
Buyer: LBF
Underlying Shares: Common Shares of Michaels Stores Inc.
Underlying Currency: USD
Quotation Exchange: Nasdaq NMS
Number of Options: As set forth in Exhibit A which is
incorporated herein by reference.
Share Entitlement
per Option: 1 Underlying Share
<PAGE>
Strike Price: USD 48.2302
Premium: USD 0. Buyer and Seller agree that the
Premium for this Option Transaction has
been paid in full by virtue of Buyer's
and Seller's execution of the Related
Option Transaction.
Related Option Transaction: The American Put Option Transaction entered
into between Buyer and Seller on the Trade
Date (LBF Reference No.: )
Exchange Business Day: A day that is (or, but for the occurrence of
a Market Disruption Event, would have been) a
trading day on the relevant Market Disruption
Exchange(s) other than a day on which trading
on any Market Disruption Exchange(s) is
scheduled to close prior to its regular
weekday closing time.
Calculation Agent: Lehman Brothers Inc., whose determinations
and calculations shall be binding in the
absence of manifest error.
EXERCISE:
Exercise Period: The Expiration Date
Expiration Date: February 23, 1998
Exercise Date: The Exchange Business Day during the Exercise
Period on which that Option is or is deemed
to be exercised.
Automatic Exercise: If, on the Expiration Date, the Option is in-
the-money, then the Option shall be deemed
automatically exercised unless the Buyer
notifies the Seller to the contrary.
Multiple Exercise: Inapplicable
Seller's telephone or Shari Robertson
facsimile number and Tel #: 214-891-8341
contact details for Fax #: 214-891-8311
purposes of giving
notice:
VALUATION:
Valuation Date: Each Exchange Business Day during the
Valuation Period on which a Market Disruption
Event has not occurred.
Valuation Period: The ten (10) Exchange Business Days
immediately prior to, and including, the
Exercise Date.
Final Price: The arithmetic average of the closing prices
of the Underlying Shares on each Valuation
Date. If a Market Disruption Event occurs on
one or more of the Exchange Business Days
during the Valuation Period, then the Final
Price will equal the average of the closing
prices of the Underlying Shares on the
Exchange Business Days during the Valuation
Period on which a Market Disruption Event has
not occurred or, if there is only one such
Exchange Business Day, the closing price of
the Underlying Shares on such day. If a
Market Disruption Event occurs on all
Exchange Business Days during the Valuation
Period, then the Calculation Agent will
determine the Final Price of the Underlying
Shares on the last Exchange Business Day of
the Valuation Period, regardless of whether a
Market Disruption Event has occurred on such
day.
2
<PAGE>
Market Disruption Event: The occurrence or existence during the Market
Disruption Period that ends at the close of
the Market Disruption Exchange(s) on the
Valuation Date of any of the following
events, in the determination of the
Calculation Agent:
The suspension of or material limitation
imposed on trading in (1) the Underlying
Shares or (2) any options contracts on the
Underlying Shares.
Market Disruption Period: One-half hour
Market Disruption Exchange(s): The Quotation Exchange
SETTLEMENT:
Method of Settlement: Cash Settlement
Settlement Currency: The Underlying Currency
Cash Settlement Amount: An amount, as calculated by the Calculation
Agent, equal to the Number of Options
MULTIPLIED by the Strike Price Differential
MULTIPLIED by the Share Entitlement per
Option.
Strike Price Differential: An amount equal to the greater of (i) the
excess of the Final Price over the
Strike Price and (ii) zero.
Cash Settlement Payment Date: Five (5) Exchange Business Days after the
final Valuation Date.
Dividends: If, at any time during the period from and
including the Trade Date to but excluding the
Cash Settlement Payment Date, an ex-dividend
date occurs with respect to the Underlying
Shares, then the Strike Price shall be
reduced by the corresponding amount.
COLLATERAL: On the Trade Date, Counterparty shall pledge
to LBF the Underlying Shares as Collateral
for this Option Transaction (the "Upfront
Collateral"). Such Upfront Collateral shall
be pledged to LBF until the Cash Settlement
Payment Date and Counterparty's performance
of its obligations under this Option
Transaction shall be secured by the Upfront
Collateral.
3
<PAGE>
Other Provisions:
Counterparty Representation: Counterparty represents that (i) it is
not entering into the Option Transaction
on behalf of or for the accounts of any
other person or entity, and will not
transfer or assign its obligations under
the Option Transaction or any portion of
such obligations to any other person or
entity except in compliance with
applicable laws and the terms of the
Option Transaction; (ii) it is
authorized to enter into the Option
Transaction and such action does not
violate any laws of its jurisdiction of
organization or residence or the terms
of any agreement to which it is a party;
and (iii) it has reached its own
conclusions about the Option
Transaction, and any legal, regulatory,
tax, accounting or economic consequences
arising from the Option Transaction, and
has concluded that the Option
Transaction is suitable in light of its
own investment objectives, financial
capabilities and expertise.
Counterparty represents that (i) it has
held the Underlying Shares since at
least February 1, 1992 (except for the
200,000 Underlying Shares pledged by
Maverick Entrepreneurs Fund, Ltd. that
have been held since at least May 30,
1994); (ii) it acquired the Underlying
Shares in private transactions from
Michaels Stores Inc. (except for the
200,000 Underlying Shares pledged by
Maverick Entrepreneures Fund, Ltd.
that were acquired in open-market
purchases); (iii) the amount of
Underlying Shares sold by it and by
all persons whose sales are required
to be taken into consideration
pursuant to paragraph (e) of
Rule 144 under the Securities Act of
1933 during the preceding three months
is zero; and (iv) it, and any person
whose sales are required to be taken
into consideration pursuant to paragraph
(e) of Rule 144 under the Securities Act
of 1933, will not sell additional
securities of the same class through any
other means during (a) the three month
period commencing on the Trade Date, or
(b) the three month period immediately
prior to the Expiration Date, in each
case, without the prior written consent
of LBF. Notwithstanding the above,
Counterparty or any person whose
securities are required to be taken into
consideration by it pursuant to
paragraph (e) of Rule 144 under the
Securities Act of 1933 may, at any other
time during the term of this Option
Transaction, sell additional securities
of the same class upon providing LBF
with written notice two (2) Exchange
Business Days immediately prior to the
date of such sale.
NEITHER LBF NOR ANY OF ITS AFFILIATES
HAS ADVISED COUNTERPARTY WITH RESPECT TO
ANY LEGAL, REGULATORY, TAX, ACCOUNTING
OR ECONOMIC CONSEQUENCES ARISING FROM
THIS OPTION TRANSACTION, AND NEITHER LBF
NOR ANY OF ITS AFFILIATES IS ACTING AS
AGENT OR ADVISOR FOR COUNTERPARTY IN
CONNECTION WITH THIS OPTION TRANSACTION.
4
<PAGE>
Settlement Provision: a) All payments under this Option
Transaction will be made without any
deduction or withholding for or on
account of any withholding tax, stamp
tax, or any other tax, duties, fees or
commissions required by any applicable
law.
b) Seller's obligations to Buyer
hereunder are secured under the terms of
the Pledge Agreement.
Adjustments: The Calculation Agent will make
adjustments to this Option Transaction
in case of the occurrence of certain
events as follows:
(i) If a stock dividend or other stock
distribution is declared with respect to
the Underlying Shares, then (a) the
Number of Options shall be increased by
the same number of shares issued
MULTIPLIED by the Share Entitlement per
Option, and (b) the Strike Price shall
be proportionately reduced as soon as
such event becomes effective.
(ii) If a spin-off has occurred with
respect to the Underlying Shares, then
(a) any property distributed or
apportioned with respect to the
Underlying Shares, to the extent of such
distribution or apportionment, shall be
included in any valuation of the
Underlying Shares, and (b) the Strike
Price shall not be adjusted.
Governing Law: New York
Transfer: Neither party may transfer any Option,
in whole or in part, without the prior
written consent of the non-transferring
party, which consent shall not be
unreasonably withheld. Notwithstanding
the foregoing, LBF may assign this
Option Transaction to any affiliated
entity whose obligations in respect of
such assignment are guaranteed by the
guarantor of LBF's obligations;
PROVIDED, HOWEVER, that (i) the
transferring party will notify the other
party of any such assignment and (ii)
such assignment shall not be permitted
hereunder if, as a result of the
assignment, a payment hereunder becomes
subject to any deduction or withholding
for or on account of any tax which would
not have arisen had such assignment not
been effected.
Guarantee: Lehman Brothers Holdings Inc. shall
unconditionally guarantee to
Counterparty the due and punctual
payment of all amounts payable by LBF
under this Option Transaction as such
payments become due and payable.
ACCOUNT DETAILS:
LBF's payment instructions: Chemical Bank, New York
ABA Number: 021000128
Favour: Lehman Brothers Finance S.A.
Account Number: 066-196566
5
<PAGE>
LBF's delivery instructions: Citibank, N.A.
New York, USA
Account Bear Stearns Securities
Corporation
ABA Number 021000089
For the account of Lehman Brothers
Counterparty's payment
instructions: As set forth in Exhibit A which is
incorporated herein by reference.
6
<PAGE>
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us or by sending to us a letter substantially similar to
this letter, which letter sets forth the material terms of the Option
Transaction to which this Confirmation relates and indicates your agreement to
those terms.
Yours sincerely,
LEHMAN BROTHERS FINANCE S.A.
By:
----------------------
Name:
Title:
By:
----------------------
Name:
Title:
Confirmed as of the date
first above written:
TALLULAH, LTD.
By:
----------------------
Name:
Title:
Execution time will be furnished upon Counterparty's written request.
<PAGE>
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us or by sending to us a letter substantially similar to
this letter, which letter sets forth the material terms of the Option
Transaction to which this Confirmation relates and indicates your agreement to
those terms.
Yours sincerely,
LEHMAN BROTHERS FINANCE S.A.
By:
----------------------
Name:
Title:
By:
----------------------
Name:
Title:
Confirmed as of the date
first above written:
SAM WYLY TTEE for the benefit of
ANDREW DAVID SPARROW WYLY TRUST
By:
----------------------
Name:
Title:
Execution time will be furnished upon Counterparty's written request.
<PAGE>
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us or by sending to us a letter substantially similar to
this letter, which letter sets forth the material terms of the Option
Transaction to which this Confirmation relates and indicates your agreement to
those terms.
Yours sincerely,
LEHMAN BROTHERS FINANCE S.A.
By:
----------------------
Name:
Title:
By:
----------------------
Name:
Title:
Confirmed as of the date
first above written:
SAM WYLY TTEE for the benefit of
CHRISTIANA PARKER WYLY TRUST
By:
----------------------
Name:
Title:
Execution time will be furnished upon Counterparty's written request.
<PAGE>
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us or by sending to us a letter substantially similar to
this letter, which letter sets forth the material terms of the Option
Transaction to which this Confirmation relates and indicates your agreement to
those terms.
Yours sincerely,
LEHMAN BROTHERS FINANCE S.A.
By:
----------------------
Name:
Title:
By:
----------------------
Name:
Title:
Confirmed as of the date
first above written:
SAM WYLY TTEE for the benefit of
LAURIE L. WYLY REVOCABLE TRUST
By:
----------------------
Name:
Title:
Execution time will be furnished upon Counterparty's written request.
<PAGE>
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us or by sending to us a letter substantially similar to
this letter, which letter sets forth the material terms of the Option
Transaction to which this Confirmation relates and indicates your agreement to
those terms.
Yours sincerely,
LEHMAN BROTHERS FINANCE S.A.
By:
----------------------
Name:
Title:
By:
----------------------
Name:
Title:
Confirmed as of the date
first above written:
SAM WYLY TTEE for the benefit of
LISA WYLY REVOCABLE TRUST
By:
----------------------
Name:
Title:
Execution time will be furnished upon Counterparty's written request.
<PAGE>
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us or by sending to us a letter substantially similar to
this letter, which letter sets forth the material terms of the Option
Transaction to which this Confirmation relates and indicates your agreement to
those terms.
Yours sincerely,
LEHMAN BROTHERS FINANCE S.A.
By:
----------------------
Name:
Title:
By:
----------------------
Name:
Title:
Confirmed as of the date
first above written:
SAM WYLY TTEE for the benefit of
KELLY WYLY ELLIOTT TRUST
By:
----------------------
Name:
Title:
Execution time will be furnished upon Counterparty's written request.
<PAGE>
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us or by sending to us a letter substantially similar to
this letter, which letter sets forth the material terms of the Option
Transaction to which this Confirmation relates and indicates your agreement to
those terms.
Yours sincerely,
LEHMAN BROTHERS FINANCE S.A.
By:
----------------------
Name:
Title:
By:
----------------------
Name:
Title:
Confirmed as of the date
first above written:
MAVERICK ENTREPRENEURS FUND, LTD.
By:
----------------------
Name:
Title:
Execution time will be furnished upon Counterparty's written request.
<PAGE>
EXHIBIT A
SAM WYLY GROUP
COLLAR TRANSACTION - MICHAELS STORES INC.
- -------------------------------------------------------------------------------
COUNTERPARTY NUMBER OF PAYMENT INSTRUCTIONS
SHARES/OPTIONS
- -------------------------------------------------------------------------------
TALLULAH, LTD. 485,000 Chemical Bank, NY
ABA #: 021000128
A/C: Lehman Brothers Inc.
A/C #: 140-094-221
Further Credit to: Tallulah, Ltd.
Further Credit #: 837- 20011
- -------------------------------------------------------------------------------
Sam Wyly, Trustee
for the benefit of:
- -------------------------------------------------------------------------------
ANDREW DAVID
SPARROW WYLY TRUST 45,000 Chemical Bank, NY
ABA #: 021000128
A/C: Lehman Brothers Inc.
A/C #: 140-094-221
Further Credit to: Sam Wyly
TTEE FBO Andrew David Sparrow
Wyly Trust
Further Credit #: 837- 20000
- -------------------------------------------------------------------------------
CHRISTIANA PARKER 45,000 Chemical Bank, NY
WYLY TRUST ABA #: 021000128
A/C: Lehman Brothers Inc.
A/C #: 140-094-221
Further Credit to: Sam Wyly
TTEE FBO Christiana Parker
Wyly Trust
Further Credit #: 837- 20002
- -------------------------------------------------------------------------------
<PAGE>
EXHIBIT A (CONT'D)
SAM WYLY GROUP
COLLAR TRANSACTION - MICHAELS STORES INC.
- -------------------------------------------------------------------------------
COUNTERPARTY NUMBER OF PAYMENT INSTRUCTIONS
SHARES/OPTIONS
- -------------------------------------------------------------------------------
LAURIE L. WYLY 65,000 Chemical Bank, NY
REVOCABLE TRUST ABA #: 021000128
A/C: Lehman Brothers Inc.
A/C #: 140-094-221
Further Credit to: Sam Wyly
TTEE FBO Laurie L. Wyly
Revocable Trust
Further Credit #:
837- 20006
- -------------------------------------------------------------------------------
LISA WYLY 65,000 Chemical Bank, NY
REVOCABLE TRUST ABA #: 021000128
A/C: Lehman Brothers Inc.
A/C #: 140-094-221
Further Credit to: Sam Wyly
TTEE FBO Lisa Wyly Revocable
Trust
Further Credit #:
837- 20007
- -------------------------------------------------------------------------------
KELLY WYLY 65,000 Chemical Bank, NY
ELLIOTT TRUST ABA #: 021000128
A/C: Lehman Brothers Inc.
A/C #: 140-094-221
Further Credit to: Sam Wyly
TTEE FBO Kelly Wyly Elliott
Trust
Further Credit #: 837- 20009
- -------------------------------------------------------------------------------
<PAGE>
EXHIBIT A (CONT'D)
SAM WYLY GROUP
COLLAR TRANSACTION - MICHAELS STORES INC.
- -------------------------------------------------------------------------------
COUNTERPARTY NUMBER OF PAYMENT INSTRUCTIONS
SHARES/OPTIONS
- -------------------------------------------------------------------------------
MAVERICK
ENTREPRENEURS
FUND LTD. 200,000 Chemical Bank, NY
ABA #: 021000128
A/C: Lehman Brothers Inc.
A/C #: 140-094-221
Further Credit to: Maverick
Entrepreneurs Fund, Ltd.
Further Credit #: 837- 20012
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
February 23, 1995
OPTION TRANSACTION
The Name of each counterparty (each, a
"Counterparty", and collectively, the "Counterparties")
hereto shall be as set forth in Exhibit A which is
incorporated herein by reference.
8800 North Central Expressway
Suite 1300
Dallas, Texas 75206
- -------------------------------------------------------------------------------
Master Number:
LBF Reference Number:
Gentlemen:
The purpose of this letter agreement (this "Confirmation") is to confirm
the terms and conditions of the Transaction entered into between us on the Trade
Date specified below (the "Option Transaction"). This letter agreement
constitutes a "Confirmation" as referred to in the ISDA Master Agreement
specified below.
The definitions and provisions contained in the 1991 ISDA Definitions (as
published by the International Swaps and Derivatives Association, Inc.
(formerly known as the International Swap Dealers Association, Inc. ("ISDA"))
are incorporated into this Confirmation. In the event of any inconsistency
between those definitions and provisions and this Confirmation, this
Confirmation will govern.
Exhibit A is incorporated herein by reference.
1. This Confirmation supplements, forms part of, and is subject to, the
ISDA Master Agreement, including the Pledge Agreement (the "Agreement"), to be
negotiated between Lehman Brothers Finance S.A. ("LBF") and the Counterparties.
All provisions contained in the Agreement govern this Confirmation except as
expressly modified below. In addition, this Confirmation shall itself evidence a
complete and binding agreement between you and us as to the terms and conditions
of the Option Transaction to which this Confirmation relates.
2. The terms of the Option Transaction to which this Confirmation relates
are as follows:
GENERAL TERMS:
Agent: Lehman Brothers Inc. is confirming
as agent for both Buyer and Seller
Trade Date: February 23, 1995
Option Style: American Option
Option Type: Put Option
Seller: LBF
Buyer: Counterparty
Underlying Shares: Common Shares of Michaels Stores Inc.
Underlying Currency: USD
Quotation Exchange: Nasdaq NMS
Number of Options: As set forth in Exhibit A which is
incorporated herein by reference.
Share Entitlement
per Option: 1 Underlying Share
<PAGE>
Strike Price: USD 28.5574
Premium: USD 0. Buyer and Seller agree that the
Premium for this Option Transaction has
been paid in full by virtue of Buyer's
and Seller's execution of the Related
Option Transaction.
Related Option Transaction: The European Call Option Transaction
entered into between Buyer and Seller on
the Trade Date (LBF Reference No.: )
Exchange Business Day: A day that is (or, but for the
occurrence of a Market Disruption Event,
would have been) a trading day on the
relevant Market Disruption Exchange(s)
other than a day on which trading on any
Market Disruption Exchange(s) is
scheduled to close prior to its regular
weekday closing time.
Calculation Agent: Lehman Brothers Inc., whose
determinations and calculations shall be
binding in the absence of manifest
error.
EXERCISE:
Exercise Period: Any Exchange Business Day from, and
including, the Trade Date to, and
including, the tenth Exchange Business
Day immediately prior to the Expiration
Date
Expiration Date: February 23, 1998
Exercise Date: The Exchange Business Day during the
Exercise Period on which that Option is
or is deemed to be exercised.
Notice of Exercise and
Written Confirmation: Applicable. If the notice of exercise is
delivered after 1:00 p.m. (local time in
New York) on an Exchange Business Day,
then that notice will be deemed
delivered on the next following Exchange
Business Day, if any, in the Exercise
Period.
Automatic Exercise: If, on the Expiration Date, the Option
is in-the-money, then the Option shall
be deemed automatically exercised unless
the Buyer notifies the Seller to the
contrary.
Multiple Exercise: Inapplicable
Seller's telephone or Vuk Bulajic
facsimile number and Tel #: 212-526-0905
contact details for Fax #: 212-528-7337
purposes of giving cc: Jim Staricco
notice: Tel #: 4122-789-0789
Fax #: 4122-789-1929
VALUATION:
Valuation Date: Each Exchange Business Day during the
Valuation Period on which a Market
Disruption Event has not occurred.
2
<PAGE>
Valuation Period: The Exchange Business Days from, and
including, the Exercise Date to, and
including the ninth Exchange Business Day
immediately following the Exercise Date;
provided, however, that if the Option
Transaction is exercised pursuant to the
Automatic Exercise provision set forth above,
then the Valuation Period will be the ten
(10) Exchange Business Days immediately prior
to, and including, the Expiration Date.
Final Price: The arithmetic average of the closing prices
of the Underlying Shares on each Valuation
Date. If a Market Disruption Event occurs on
one or more of the Exchange Business Days
during the Valuation Period, then the Final
Price will equal the average of the closing
prices of the Underlying Shares on the
Exchange Business Days during the Valuation
Period on which a Market Disruption Event has
not occurred or, if there is only one such
Exchange Business Day, the closing price of
the Underlying Shares on such day. If a
Market Disruption Event occurs on all
Exchange Business Days during the Valuation
Period, then the Calculation Agent will
determine the Final Price of the Underlying
Shares on the last Exchange Business Day of
the Valuation Period, regardless of whether a
Market Disruption Event has occurred on such
day.
Market Disruption Event: The occurrence or existence during the Market
Disruption Period that ends at the close of
the Market Disruption Exchange(s) on the
Valuation Date of any of the following
events, in the determination of the
Calculation Agent:
The suspension of or material limitation
imposed on trading in (1) the Underlying
Shares or (2) any options contracts on the
Underlying Shares.
Market Disruption Period: One-half hour
Market Disruption
Exchange(s): The Quotation Exchange
SETTLEMENT:
Method of Settlement: Cash Settlement
Settlement Currency: The Underlying Currency
Cash Settlement Amount: An amount, as calculated by the Calculation
Agent, equal to the Number of Options
MULTIPLIED by the Strike Price Differential
MULTIPLIED by the Share Entitlement per
Option
Strike Price Differential: An amount equal to the greater of (i) the
excess of the Strike Price over the Final
Price, and (ii) zero.
Cash Settlement Payment
Date: Five (5) Exchange Business Days after the
final Valuation Date.
Dividends: If, at any time during the period from and
including the Trade Date to but excluding the
Cash Settlement Payment Date, an ex-dividend
occurs with respect to the Underlying Shares,
then the Strike Price shall be reduced by the
corresponding amount.
3
<PAGE>
OTHER PROVISIONS:
Counterparty
Representation: Counterparty represents that (i) it is not
entering into the Option Transaction on
behalf of or for the accounts of any other
person or entity, and will not transfer or
assign its obligations under the Option
Transaction or any portion of such
obligations to any other person or entity
except in compliance with applicable laws and
the terms of the Option Transaction; (ii) it
is authorized to enter into the Option
Transaction and such action does not violate
any laws of its jurisdiction of organization
or residence or the terms of any agreement to
which it is a party; and (iii) it has reached
its own conclusions about the Option
Transaction, and any legal, regulatory, tax,
accounting or economic consequences arising
from the Option Transaction, and has
concluded that the Option Transaction is
suitable in light of its own investment
objectives, financial capabilities and
expertise.
Counterparty represents that (i) it has held
the Underlying Shares since at least February
1, 1992; (ii) it acquired the Underlying
Shares in private transactions from Michaels
Stores Inc.; (iii) the amount of Underlying
Shares sold by it and by all persons whose
sales are required to be taken into
consideration pursuant to paragraph (e) of
Rule 144 under the Securities Act of 1933
during the preceding three months is zero;
and (iv) it, and any person whose sales are
required to be taken into consideration
pursuant to paragraph (e) of Rule 144 under
the Securities Act of 1933, will not sell
additional securities of the same class
through any other means during (a) the three
month period commencing on the Trade Date, or
(b) the three month period immediately prior
to the Expiration Date, in each case, without
the prior written consent of LBF.
Notwithstanding the above, Counterparty or
any person whose securities are required to
be taken into consideration by it pursuant to
paragraph (e) of Rule 144 under the
Securities Act of 1933 may, at any other time
during the term of this Option Transaction,
sell additional securities of the same class
upon providing LBF with written notice two
(2) Exchange Business Days immediately prior
to the date of such sale.
NEITHER LBF NOR ANY OF ITS AFFILIATES HAS
ADVISED COUNTERPARTY WITH RESPECT TO ANY
LEGAL, REGULATORY, TAX, ACCOUNTING OR
ECONOMIC CONSEQUENCES ARISING FROM THIS
OPTION TRANSACTION, AND NEITHER LBF NOR ANY
OF ITS AFFILIATES IS ACTING AS AGENT OR
ADVISOR FOR COUNTERPARTY IN CONNECTION WITH
THIS OPTION TRANSACTION.
4
<PAGE>
Settlement Provision: a) Seller's obligations to Buyer under this
Option Transaction, if any, shall not accrue
until Buyer's obligations under the Pledge
Agreement are fully satisfied.
b) All payments under this Option Transaction
will be made without any deduction or
withholding for or on account of any
withholding tax, stamp tax, or any other tax,
duties, fees or commissions required by any
applicable law.
c) Buyer shall have no right to unwind or
exercise this Option Transaction, in whole or
in part, prior to the repayment by Buyer of
all amounts due Seller under the Loan
Agreement between Buyer and Seller, dated the
date hereof.
Adjustments: The Calculation Agent will make adjustments
to this Option Transaction in case of the
occurrence of certain events as follows:
(i) If a stock dividend or other stock
distribution is declared with respect to the
Underlying Shares, then (a) the Number of
Options shall be increased by the same number
of shares issued MULTIPLIED by the Share
Entitlement per Option, and (b) the Strike
Price shall be proportionately reduced as
soon as such event becomes effective.
(ii) If a spin-off has occurred with respect
to the Underlying Shares, then (a) any
property distributed or apportioned with
respect to the Underlying Shares, to the
extent of such distribution or apportionment,
shall be included in any valuation of the
Underlying Shares, and (b) the Strike Price
shall not be adjusted.
Governing Law: New York
Transfer: Neither party may transfer any Option, in
whole or in part, without the prior written
consent of the non-transferring party, which
consent shall not be unreasonably withheld.
Notwithstanding the foregoing, LBF may assign
this Option Transaction to any affiliated
entity whose obligations in respect of such
assignment are guaranteed by the guarantor of
LBF's obligations; PROVIDED, HOWEVER, that
(i) the transferring party will notify the
other party of any such assignment and (ii)
such assignment shall not be permitted
hereunder if, as a result of the assignment,
a payment hereunder becomes subject to any
deduction or withholding for or on account of
any tax which would not have arisen had such
assignment not been effected.
Guarantee: Lehman Brothers Holdings Inc. shall
unconditionally guarantee to Counterparty the
due and punctual payment of all amounts
payable by LBF under this Option Transaction
as such payments become due and payable.
ACCOUNT DETAILS:
LBF's payment instructions: Chemical Bank, New York
ABA Number: 021000128
Favour: Lehman Brothers Finance S.A.
Account Number: 066-196566
5
<PAGE>
LBF's delivery instructions: Citibank, N.A.
New York, USA
Account Bear Stearns Securities Corporation
ABA Number 021000089
For the account of Lehman Brothers
Counterparty's payment
instructions: As set forth in Exhibit A which is
incorporated herein by reference.
6
<PAGE>
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us or by sending to us a letter substantially similar to
this letter, which letter sets forth the material terms of the Option
Transaction to which this Confirmation relates and indicates your agreement to
those terms.
Yours sincerely,
LEHMAN BROTHERS FINANCE S.A.
By:
----------------------
Name:
Title:
By:
----------------------
Name:
Title:
Confirmed as of the date
first above written:
BRUSH CREEK, LTD.
By:
----------------------
Name:
Title:
Execution time will be furnished upon Counterparty's written request.
<PAGE>
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us or by sending to us a letter substantially similar to
this letter, which letter sets forth the material terms of the Option
Transaction to which this Confirmation relates and indicates your agreement to
those terms.
Yours sincerely,
LEHMAN BROTHERS FINANCE S.A.
By:
----------------------
Name:
Title:
By:
----------------------
Name:
Title:
Confirmed as of the date
first above written:
CHARLES J. WYLY JR. TTEE FOR THE
BENEFIT OF CHARLES J. WYLY III TRUST
By:
----------------------
Name:
Title:
Execution time will be furnished upon Counterparty's written request.
<PAGE>
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us or by sending to us a letter substantially similar to
this letter, which letter sets forth the material terms of the Option
Transaction to which this Confirmation relates and indicates your agreement to
those terms.
Yours sincerely,
LEHMAN BROTHERS FINANCE S.A.
By:
----------------------
Name:
Title:
By:
----------------------
Name:
Title:
Confirmed as of the date
first above written:
CHARLES J. WYLY JR. TTEE FOR THE
BENEFIT OF JENNIFER LYNN WYLY TRUST
By:
----------------------
Name:
Title:
Execution time will be furnished upon Counterparty's written request.
<PAGE>
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us or by sending to us a letter substantially similar to
this letter, which letter sets forth the material terms of the Option
Transaction to which this Confirmation relates and indicates your agreement to
those terms.
Yours sincerely,
LEHMAN BROTHERS FINANCE S.A.
By:
----------------------
Name:
Title:
By:
----------------------
Name:
Title:
Confirmed as of the date
first above written:
CHARLES J. WYLY JR. TTEE FOR THE
BENEFIT OF EMILY ANN WYLY TRUST
By:
----------------------
Name:
Title:
Execution time will be furnished upon Counterparty's written request.
<PAGE>
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us or by sending to us a letter substantially similar to
this letter, which letter sets forth the material terms of the Option
Transaction to which this Confirmation relates and indicates your agreement to
those terms.
Yours sincerely,
LEHMAN BROTHERS FINANCE S.A.
By:
----------------------
Name:
Title:
By:
----------------------
Name:
Title:
Confirmed as of the date
first above written:
CHARLES J. WYLY JR. TTEE FOR THE
BENEFIT OF MARTHA CAROLINE WYLY TRUST
By:
----------------------
Name:
Title:
Execution time will be furnished upon Counterparty's written request.
<PAGE>
EXHIBIT A
CHARLES WYLY GROUP
COLLAR TRANSACTION - MICHAELS STORES INC.
<TABLE>
<CAPTION>
COUNTERPARTY NUMBER OF PAYMENT
- ------------ SHARES/OPTIONS INSTRUCTIONS
-------------- -------------
<S> <C> <C>
BRUSH CREEK, LTD. 420,000 Chemical Bank, NY
ABA #: 021000128
A/C: Lehman Brothers, Inc.
A/C #: 140-094-221
Further Credit to: Bush Creek, Ltd.
Further Credit #: 837-20010
Charles Wyly Jr. Trustee for the benefit of:
CHARLES J. WYLY III TRUST 95,031 Chemical Bank, NY
ABA #: 021000128
A/C: Lehman Brothers Inc.
A/C #: 140-094-221
Further Credit to: Charles J. Wyly Jr. TTEE
FBO Charles J. Wyly III
Further Credit #: 837-20001
JENNIFER LYNN WYLY TRUST 96,070 Chemical Bank, NY
ABA #: 021000128
A/C: Lehman Brothers Inc.
A/C #: 140-094-221
Further Credit to: Charles J. Wyly Jr. TTEE
FBO Jennifer Lynn Wyly
Further Credit #: 837-20005
<PAGE>
EXHIBIT A (Cont.)
EMILY ANN WYLY TRUST 95,031 Chemical Bank, NY
ABA #: 021000128
A/C: Lehman Brothers Inc.
A/C #: 140-094-221
Further Credit to Charles J. Wyly Jr. TTEE
FBO Emily Ann Wyly
Further Credit #: 837-20003
MARTHA CAROLINE WYLY TRUST 95,031 Chemical Bank, NY
ABA #: 021000128
A/C: Lehman Brothers, Inc.
A/C #: 140-094-221
Further Credit to Charles J. Wyly Jr. TTEE
FBO Martha C. Wyly Trust
Further Credit #: 837-20008
</TABLE>
<PAGE>
- -------------------------------------------------------------------------------
February 23, 1995
OPTION TRANSACTION
The Name of each counterparty (each, a
"Counterparty", and collectively, the "Counterparties")
hereto shall be as set forth in Exhibit A which is
incorporated herein by reference.
8800 North Central Expressway
Suite 1300
Dallas, Texas 75206
- -------------------------------------------------------------------------------
Master Number:
LBF Reference Number:
Gentlemen:
The purpose of this letter agreement (this "Confirmation") is to confirm
the terms and conditions of the Transaction entered into between us on the Trade
Date specified below (the "Option Transaction"). This letter agreement
constitutes a "Confirmation" as referred to in the ISDA Master Agreement
specified below.
The definitions and provisions contained in the 1991 ISDA Definitions (as
published by the International Swaps and Derivatives Association, Inc. (formerly
known as the International Swap Dealers Association, Inc. ("ISDA")) are
incorporated into this Confirmation. In the event of any inconsistency between
those definitions and provisions and this Confirmation, this Confirmation will
govern.
Exhibit A is incorporated herein by reference.
1. This Confirmation supplements, forms part of, and is subject to, the
ISDA Master Agreement, including the Pledge Agreement (the "Agreement"), to be
negotiated between Lehman Brothers Finance S.A. ("LBF") and the Counterparties.
All provisions contained in the Agreement govern this Confirmation except as
expressly modified below. In addition, this Confirmation shall itself evidence
a complete and binding agreement between you and us as to the terms and
conditions of the Option Transaction to which this Confirmation relates.
2. The terms of the Option Transaction to which this Confirmation relates
are as follows:
GENERAL TERMS:
GENERAL TERMS:
Agent: Lehman Brothers Inc. is confirming
as agent for both Buyer and Seller
Trade Date: February 23, 1995
Option Style: European Option
Option Type: Call Option
Seller: Counterparty
Buyer: LBF
Underlying Shares: Common Shares of Michaels Stores Inc.
Underlying Currency: USD
Quotation Exchange: Nasdaq NMS
Number of Options: As set forth in Exhibit A which is
incorporated herein by reference.
Share Entitlement
per Option: 1 Underlying Share
<PAGE>
Strike Price: USD 48.2302
Premium: USD 0. Buyer and Seller agree that the
Premium for this Option Transaction has
been paid in full by virtue of Buyer's
and Seller's execution of the Related
Option Transaction.
Related Option Transaction: The American Put Option Transaction entered
into between Buyer and Seller on the Trade
Date (LBF Reference No.: )
Exchange Business Day: A day that is (or, but for the occurrence of
a Market Disruption Event, would have been) a
trading day on the relevant Market Disruption
Exchange(s) other than a day on which trading
on any Market Disruption Exchange(s) is
scheduled to close prior to its regular
weekday closing time.
Calculation Agent: Lehman Brothers Inc., whose determinations
and calculations shall be binding in the
absence of manifest error.
EXERCISE:
Exercise Period: The Expiration Date
Expiration Date: February 23, 1998
Exercise Date: The Exchange Business Day during the Exercise
Period on which that Option is or is deemed
to be exercised.
Automatic Exercise: If, on the Expiration Date, the Option is in-
the-money, then the Option shall be deemed
automatically exercised unless the Buyer
notifies the Seller to the contrary.
Multiple Exercise: Inapplicable
Seller's telephone or Shari Robertson
facsimile number and Tel #: 214-891-8341
contact details for Fax #: 214-891-8311
purposes of giving
notice:
VALUATION:
Valuation Date: Each Exchange Business Day during the
Valuation Period on which a Market Disruption
Event has not occurred.
Valuation Period: The ten (10) Exchange Business Days
immediately prior to, and including, the
Exercise Date.
Final Price: The arithmetic average of the closing prices
of the Underlying Shares on each Valuation
Date. If a Market Disruption Event occurs on
one or more of the Exchange Business Days
during the Valuation Period, then the Final
Price will equal the average of the closing
prices of the Underlying Shares on the
Exchange Business Days during the Valuation
Period on which a Market Disruption Event has
not occurred or, if there is only one such
Exchange Business Day, the closing price of
the Underlying Shares on such day. If a
Market Disruption Event occurs on all
Exchange Business Days during the Valuation
Period, then the Calculation Agent will
determine the Final Price of the Underlying
Shares on the last Exchange Business Day of
the Valuation Period, regardless of whether a
Market Disruption Event has occurred on such
day.
2
<PAGE>
Market Disruption Event: The occurrence or existence during the Market
Disruption Period that ends at the close of
the Market Disruption Exchange(s) on the
Valuation Date of any of the following
events, in the determination of the
Calculation Agent:
The suspension of or material limitation
imposed on trading in (1) the Underlying
Shares or (2) any options contracts on the
Underlying Shares.
Market Disruption Period: One-half hour
Market Disruption Exchange(s): The Quotation Exchange
SETTLEMENT:
Method of Settlement: Cash Settlement
Settlement Currency: The Underlying Currency
Cash Settlement Amount: An amount, as calculated by the Calculation
Agent, equal to the Number of Options
MULTIPLIED by the Strike Price Differential
MULTIPLIED by the Share Entitlement per
Option.
Strike Price Differential: An amount equal to the greater of (i) the
excess of the Final Price over the Strike
Price and (ii) zero.
Cash Settlement Payment Date: Five (5) Exchange Business Days after the
final Valuation Date.
Dividends: If, at any time during the period from and
including the Trade Date to but excluding the
Cash Settlement Payment Date, an ex-dividend
date occurs with respect to the Underlying
Shares, then the Strike Price shall be
reduced by the corresponding amount.
COLLATERAL: On the Trade Date, Counterparty shall pledge
to LBF the Underlying Shares as Collateral
for this Option Transaction (the "Upfront
Collateral"). Such Upfront Collateral shall
be pledged to LBF until the Cash Settlement
Payment Date and Counterparty's performance
of its obligations under this Option
Transaction shall be secured by the Upfront
Collateral.
3
<PAGE>
OTHER PROVISIONS:
Counterparty Representation: Counterparty represents that (i) it is
not entering into the Option Transaction
on behalf of or for the accounts of any
other person or entity, and will not
transfer or assign its obligations under
the Option Transaction or any portion of
such obligations to any other person or
entity except in compliance with
applicable laws and the terms of the
Option Transaction; (ii) it is
authorized to enter into the Option
Transaction and such action does not
violate any laws of its jurisdiction of
organization or residence or the terms
of any agreement to which it is a party;
and (iii) it has reached its own
conclusions about the Option
Transaction, and any legal, regulatory,
tax, accounting or economic consequences
arising from the Option Transaction, and
has concluded that the Option
Transaction is suitable in light of its
own investment objectives, financial
capabilities and expertise.
Counterparty represents that (i) it has
held the Underlying Shares since at
least February 1, 1992; (ii) it acquired
the Underlying Shares in private
transactions from Michaels Stores Inc.;
(iii) the amount of Underlying Shares
sold by it and by all persons whose
sales are required to be taken into
consideration pursuant to paragraph (e)
of Rule 144 under the Securities Act of
1933 during the preceding three months
is zero; and (iv) it, and any person
whose sales are required to be taken
into consideration pursuant to paragraph
(e) of Rule 144 under the Securities Act
of 1933, will not sell additional
securities of the same class through any
other means during (a) the three month
period commencing on the Trade Date, or
(b) the three month period immediately
prior to the Expiration Date, in each
case, without the prior written consent
of LBF. Notwithstanding the above,
Counterparty or any person whose
securities are required to be taken into
consideration by it pursuant to
paragraph (e) of Rule 144 under the
Securities Act of 1933 may, at any other
time during the term of this Option
Transaction, sell additional securities
of the same class upon providing LBF
with written notice two (2) Exchange
Business Days immediately prior to the
date of such sale.
NEITHER LBF NOR ANY OF ITS AFFILIATES
HAS ADVISED COUNTERPARTY WITH RESPECT TO
ANY LEGAL, REGULATORY, TAX, ACCOUNTING
OR ECONOMIC CONSEQUENCES ARISING FROM
THIS OPTION TRANSACTION, AND NEITHER LBF
NOR ANY OF ITS AFFILIATES IS ACTING AS
AGENT OR ADVISOR FOR COUNTERPARTY IN
CONNECTION WITH THIS OPTION TRANSACTION.
Settlement Provision: a) All payments under this Option
Transaction will be made without any
deduction or withholding for or on
account of any withholding tax, stamp
tax, or any other tax, duties, fees or
commissions required by any applicable
law.
b) Seller's obligations to Buyer
hereunder are secured under the terms of
the Pledge Agreement.
4
<PAGE>
Adjustments: The Calculation Agent will make
adjustments to this Option Transaction
in case of the occurrence of certain
events as follows:
(i) If a stock dividend or other stock
distribution is declared with respect to
the Underlying Shares, then (a) the
Number of Options shall be increased by
the same number of shares issued
MULTIPLIED by the Share Entitlement per
Option, and (b) the Strike Price shall
be proportionately reduced as soon as
such event becomes effective.
(ii) If a spin-off has occurred with
respect to the Underlying Shares, then
(a) any property distributed or
apportioned with respect to the
Underlying Shares, to the extent of such
distribution or apportionment, shall be
included in any valuation of the
Underlying Shares, and (b) the Strike
Price shall not be adjusted.
Governing Law: New York
Transfer: Neither party may transfer any Option,
in whole or in part, without the prior
written consent of the non-transferring
party, which consent shall not be
unreasonably withheld. Notwithstanding
the foregoing, LBF may assign this
Option Transaction to any affiliated
entity whose obligations in respect of
such assignment are guaranteed by the
guarantor of LBF's obligations;
PROVIDED, HOWEVER, that (i) the
transferring party will notify the other
party of any such assignment and (ii)
such assignment shall not be permitted
hereunder if, as a result of the
assignment, a payment hereunder becomes
subject to any deduction or withholding
for or on account of any tax which would
not have arisen had such assignment not
been effected.
Guarantee: Lehman Brothers Holdings Inc. shall
unconditionally guarantee to
Counterparty the due and punctual
payment of all amounts payable by LBF
under this Option Transaction as such
payments become due and payable.
ACCOUNT DETAILS:
LBF's payment instructions: Chemical Bank, New York
ABA Number: 021000128
Favour: Lehman Brothers Finance S.A.
Account Number: 066-196566
5
<PAGE>
LBF's delivery instructions: Citibank, N.A.
New York, USA
Account Bear Stearns Securities
Corporation
ABA Number 021000089
For the account of Lehman Brothers
Counterparty's payment
instructions: As set forth in Exhibit A which is
incorporated herein by reference.
6
<PAGE>
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us or by sending to us a letter substantially similar to
this letter, which letter sets forth the material terms of the Option
Transaction to which this Confirmation relates and indicates your agreement to
those terms.
Yours sincerely,
LEHMAN BROTHERS FINANCE S.A.
By:
----------------------
Name:
Title:
By:
----------------------
Name:
Title:
Confirmed as of the date
first above written:
BRUSH CREEK, LTD.
By:
----------------------
Name:
Title:
Execution time will be furnished upon Counterparty's written request.
<PAGE>
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us or by sending to us a letter substantially similar to
this letter, which letter sets forth the material terms of the Option
Transaction to which this Confirmation relates and indicates your agreement to
those terms.
Yours sincerely,
LEHMAN BROTHERS FINANCE S.A.
By:
----------------------
Name:
Title:
By:
----------------------
Name:
Title:
Confirmed as of the date
first above written:
CHARLES J. WYLY JR. TTEE FOR THE
BENEFIT OF CHARLES J. WYLY III TRUST
By:
----------------------
Name:
Title:
Execution time will be furnished upon Counterparty's written request.
<PAGE>
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us or by sending to us a letter substantially similar to
this letter, which letter sets forth the material terms of the Option
Transaction to which this Confirmation relates and indicates your agreement to
those terms.
Yours sincerely,
LEHMAN BROTHERS FINANCE S.A.
By:
----------------------
Name:
Title:
By:
----------------------
Name:
Title:
Confirmed as of the date
first above written:
CHARLES J. WYLY JR. TTEE FOR THE
BENEFIT OF JENNIFER LYNN WYLY TRUST
By:
----------------------
Name:
Title:
Execution time will be furnished upon Counterparty's written request.
<PAGE>
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us or by sending to us a letter substantially similar to
this letter, which letter sets forth the material terms of the Option
Transaction to which this Confirmation relates and indicates your agreement to
those terms.
Yours sincerely,
LEHMAN BROTHERS FINANCE S.A.
By:
----------------------
Name:
Title:
By:
----------------------
Name:
Title:
Confirmed as of the date
first above written:
CHARLES J. WYLY JR. TTEE FOR THE
BENEFIT OF EMILY ANN WYLY TRUST
By:
----------------------
Name:
Title:
Execution time will be furnished upon Counterparty's written request.
<PAGE>
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us or by sending to us a letter substantially similar to
this letter, which letter sets forth the material terms of the Option
Transaction to which this Confirmation relates and indicates your agreement to
those terms.
Yours sincerely,
LEHMAN BROTHERS FINANCE S.A.
By:
----------------------
Name:
Title:
By:
----------------------
Name:
Title:
Confirmed as of the date
first above written:
CHARLES J. WYLY JR. TTEE FOR THE
BENEFIT OF MARTHA CAROLINE WYLY TRUST
By:
----------------------
Name:
Title:
Execution time will be furnished upon Counterparty's written request.
<PAGE>
EXHIBIT A
CHARLES WYLY GROUP
COLLAR TRANSACTION - MICHAELS STORES INC.
<TABLE>
<CAPTION>
COUNTERPARTY NUMBER OF PAYMENT
- ------------ SHARES/OPTIONS INSTRUCTIONS
-------------- -------------
<S> <C> <C>
BRUSH CREEK, LTD. 420,000 Chemical Bank, NY
ABA #: 021000128
A/C: Lehman Brothers, Inc.
A/C #: 140-094-221
Further Credit to: Bush Creek, Ltd.
Further Credit #: 837-20010
Charles Wyly Jr. Trustee for the benefit of:
CHARLES J. WYLY III TRUST 95,031 Chemical Bank, NY
ABA #: 021000128
A/C: Lehman Brothers Inc.
A/C #: 140-094-221
Further Credit to: Charles J. Wyly Jr. TTEE
FBO Charles J. Wyly III
Further Credit #: 837-20001
JENNIFER LYNN WYLY TRUST 96,070 Chemical Bank, NY
ABA #: 021000128
A/C: Lehman Brothers Inc.
A/C #: 140-094-221
Further Credit to: Charles J. Wyly Jr. TTEE
FBO Jennifer Lynn Wyly
Further Credit #: 837-20005
<PAGE>
EXHIBIT A (Cont.)
EMILY ANN WYLY TRUST 95,031 Chemical Bank, NY
ABA #: 021000128
A/C: Lehman Brothers Inc.
A/C #: 140-094-221
Further Credit to Charles J. Wyly Jr. TTEE
FBO Emily Ann Wyly
Further Credit #: 837-20003
MARTHA CAROLINE WYLY TRUST 95,031 Chemical Bank, NY
ABA #: 021000128
A/C: Lehman Brothers, Inc.
A/C #: 140-094-221
Further Credit to Charles J. Wyly Jr. TTEE
FBO Martha C. Wyly Trust
Further Credit #: 837-20008
</TABLE>
<PAGE>
PLEDGE AGREEMENT (this "Pledge Agreement"), dated as of February 23, 1995,
between each of the counterparties set forth in Exhibit A hereto (each, a
"Pledgor"), and LEHMAN BROTHERS FINANCE S.A. ("Pledgee").
Pledgor and Pledgee have entered into a Loan Agreement of even date herewith
(together with all Schedules, Exhibits and Annexes thereto, the "Loan
Agreement"), pursuant to which Pledgor has certain payment obligations to
Pledgee. Pledgor and Pledgee also have entered into a Transaction and an ISDA
Master Agreement of even date herewith (together with all Schedules, Exhibits
and Annexes thereto, the "Master Agreement"), pursuant to which Pledgor may have
certain payment obligations to Pledgee. Pledgor is required to deliver
collateral as security for its obligations under the Loan Agreement, the Master
Agreement (together, the "Agreement") and the Transaction in accordance with the
provisions of this Pledge Agreement. This Pledge Agreement supplements, forms
part of, and is subject to, the Agreement, is part of the Master Agreement
Schedule and is a "Credit Support Document" under the Master Agreement with
respect to Pledgor.
Accordingly, the parties agree as follows:
1. CERTAIN DEFINITIONS. Unless otherwise defined in this Pledge Agreement,
capitalized terms used herein shall have the meaning assigned to them in the
Agreement or the Confirmation. In addition, as used in this Pledge Agreement,
the following terms will have the following meanings:
"Collateral" means, with respect to each Pledgor, (i) that Number of
Shares/Options of Michaels Stores Inc. common stock (the "Underlying Shares")
as set forth in Exhibit A hereto, which is incorporated herein by reference,
and (ii) that certain Put Option Transaction entered into on February 23, 1995,
between Pledgor as Buyer and Pledgee as Seller with respect to the Underlying
Shares.
"New York Business Day" means a day on which commercial banks are open for
business (including dealings in foreign exchange and foreign currency deposits)
in New York City.
"Relevant System" means (i) The Depository Trust Company in New York, New
York, (ii) the Euroclear System, operated by Morgan Guaranty Trust Company, New
York, Brussels branch, (iii) CEDEL S.A., Luxembourg or (iv) such other clearing
organization or book-entry system as is specified in Schedule A to this Pledge
Agreement (which Schedule may be added to by Pledgee at any time without the
consent of Pledgor).
"Upfront Collateral" means the amount specified as such in the relevant
Confirmation.
2. PLEDGE. To margin, guarantee and secure all obligations due or that may
become due from Pledgor to Pledgee or its affiliates under the Agreement, the
Transaction or otherwise ("Obligations"), Pledgor hereby pledges, assigns,
transfers and grants to Pledgee a first lien on, and a security interest in, the
Collateral.
3. FORM OF COLLATERAL. (a) With respect to any of the Collateral
available in definitive, certificated form, Pledgor shall deliver (as instructed
by Pledgee) to Pledgee or to
<PAGE>
Lehman Brothers Inc. ("Lehman"), Lehman Government Securities Inc. or such other
entity as Pledgee shall designate, as agent for Pledgee, the certificates for
such Collateral in suitable form for transfer or accompanied by duly executed
instruments of transfer or appropriate undated powers of assignment thereof duly
executed in blank. All deliveries of certificated securities shall be made to
Pledgee at the Cage, One Battery Park Plaza, 2nd Floor, New York, New York 10004
USA or such other location as Pledgee shall designate.
(b) With respect to any Collateral consisting of securities or interests
in securities held in accounts in a Relevant System:
(i) Pledgor shall furnish to Pledgee a list of such Collateral by
title (or series), and, if relevant, quantity, unpaid principal amount and
maturity date and shall transfer or cause to be transferred such Collateral
from its (or its representative's) account at that Relevant System to an
account at that Relevant System of Lehman or such other entity as Pledgee
shall designate, acting as agent for the Pledgee, which account shall be
designated as "Lehman-Customer Collateral Account."
(ii) Pledgee shall cause such Collateral to be held in the "Lehman-
Customer Collateral Account" and shall cause Lehman or such other
designated person to clearly identify on its books and records the
securities or interests in securities pledged by Pledgor that are held in
such account.
(iii) In connection with any transfer of such Collateral pursuant
to this Pledge Agreement, (1) the party making (or whose agent is making)
the transfer shall cause the other party to receive, by facsimile
transmission, courier or certified mail, a copy of the debit statement
issued by that Relevant System relating to such transfer and (2) the party
receiving (or whose agent is receiving) the transfer shall cause the other
party to receive, by facsimile transmission, courier or certified mail, a
copy of the credit statement issued by that Relevant System relating to
such transfer.
(c) With respect to all types of Collateral, (i) Pledgor shall take all
actions necessary to create a first priority lien and perfected security
interest in such Collateral in favor of Pledgee and (ii) all actions required or
authorized to be taken by Pledgee under this Pledge Agreement may be taken by
any affiliate of Pledgee.
4. DISTRIBUTIONS, ETC.
(a) If, while this Pledge Agreement is in effect, Pledgor shall become
entitled to receive or shall receive:
(i) any principal payment in respect of the Collateral, or
(ii) any debenture, other debt instrument, stock certificate, option,
right, other security or other property including cash, as an addition to, in
substitution of, or in exchange for any of the Collateral, whether or not in
connection with any reclassification, recapitalization, increase or reduction of
capital, reorganization, merger, consolidation, liquidation or dissolution of
the issuer of the Collateral, Pledgor agrees to accept the same as Pledgee's
agent and to hold the same in trust on behalf of Pledgee and to deliver the same
forthwith to Pledgee in the exact
<PAGE>
form received and in compliance with the terms of Section 3, as additional
Collateral for the Obligations.
(b) Except as provided in subsection (d) below, Pledgor shall be entitled
to receive (and to the extent the same come into possession of Pledgee or its
agents, Pledgee shall promptly remit to the order of Pledgor) any dividends or
interest paid in cash in respect of the Collateral consisting of securities.
Pledgee shall have no duty, however, to collect such payments.
(c) If on any date on which such dividends or such interest would
otherwise be payable to Pledgor, any Event of Default or Potential Event of
Default exists under the Agreement in respect of Pledgor or any default by
Pledgor exists under this Pledge Agreement, such dividends or such interest
shall be delivered to the Pledgee (or, if in the possession of Pledgee, retained
by Pledgee) in compliance with the terms of Section 3 as additional Collateral.
5. RIGHTS OF PLEDGEE.
(a) Pledgee shall not be liable for failure to collect or realize upon the
Obligations or any Collateral, security or guarantee therefor, or any part
thereof, or for any delay in so doing, nor shall it be under any obligation to
take any action whatsoever with regard thereto. Any or all of the Collateral
held by Pledgee hereunder may, without notice, be registered in the name of
Pledgee or its nominee. Pledgee or its nominee may thereafter, without notice,
exercise any and all rights of conversion, exchange, subscription or any other
rights, privileges or options with respect to such Collateral as if it were the
absolute owner thereof, including, without limitation, the right to vote on any
bankruptcy plan of reorganization or debt restructuring, the right to exchange
at its discretion any and all of such Collateral upon the merger, consolidation,
reorganization, recapitalization or other readjustment of the issuer thereof or
upon the exercise by any such issuer or Pledgee of any right, privilege or
option pertaining to any of such Collateral, and in connection therewith to
deposit and deliver any and all of such Collateral with any committee,
depository, transfer agent, registrar or other designated agency upon such terms
and conditions as it may determine, all without liability except to account for
property actually received by it, but Pledgee shall have no duty to exercise any
of the aforesaid rights, privileges or options and shall not be responsible for
any failure to do so or delay in so doing.
(b) Pledgor hereby agrees and acknowledges that Pledgee shall have the
right, without obtaining further consent of Pledgor, to sell, repledge,
rehypothecate, reassign, as well as enter into repurchase transactions
(collectively, "Repurchase Transactions") with respect to any of the Collateral,
or direct Lehman, Lehman Government Securities, Inc. or such other entity as
Pledgee designates, as its agent, to enter into any such Repurchase Transactions
using the Collateral during any period in which this Pledge Agreement remains in
effect. Notwithstanding the foregoing, Pledgee's right to enter into Repurchase
Transactions with Collateral under this Section 5 shall in no way relieve
Pledgee of its obligation to redeliver such Collateral to Pledgor under the
terms and in the timely manner provided for in this Pledge Agreement.
<PAGE>
6. REMEDIES.
(a) In the event that (i) any portion of the Obligations has become due
and payable and has not been paid, (ii) an Event of Default has occurred under
the Agreement with respect to Pledgor or (iii) Pledgor has failed to perform an
obligation under the Pledge Agreement, then
(I) Pledgee may forthwith collect the Collateral, or any part
thereof, or may sell, assign, exercise, give options to purchase, contract
to sell or otherwise dispose of and deliver the Collateral, or any part
thereof, in one or more parcels at public or private sale or sales, at any
exchange, broker's board or at any of Pledgee's offices or elsewhere upon
such terms and conditions as it may deem advisable and at such prices as it
may deem best, for cash or on credit or for future delivery without
assumption of any credit risk, without advertisement or demand upon
Pledgor, both of which are hereby waived, except Pledgee shall provide
Pledgor with notice on the day of any such sale (which may be a telex,
telegram, telecopy or other similar facsimile transmission and each of
which Pledgor hereby agrees is reasonable notice within the meaning of
Section 9-504(3) of the Uniform Commercial Code as in effect in New York)
of Pledgee's intention to make any such sale, with the right to Pledgee
upon any such sale or sales, public or private, to purchase the whole or
any part of such Collateral so sold, free of any right or equity of
redemption in Pledgor, which right or equity is hereby expressly waived or
released; Pledgor recognizes that Pledgee may be unable to effect a public
sale of any or all the Collateral and may be compelled to resort to one or
more private sales thereof, and Pledgor acknowledges and agrees that any
such private sale may result in prices and other terms less favorable to
Pledgee than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have
been made in a commercially reasonable manner; and
(II) in the case of Collateral consisting of securities, Pledgor shall
irrevocably instruct, and hereby irrevocably instructs, Pledgee to transfer
such Collateral to Lehman Brothers Inc., and shall irrevocably instruct,
and hereby irrevocably instructs, Lehman Brothers Inc. to liquidate the
Collateral for the account of Pledgor in the manner set forth in Section
6(b)(I) above, and to pay to Pledgee the proceeds of such liquidation to be
applied in the manner set forth in Section 6(c) below, all in accordance
with the letter agreement the form of which is attached hereto as Exhibit
1.
(b) In the event that (i) any portion of the Obligations has become due
and payable and has not been paid, (ii) an Event of Default has occurred under
the Agreement with respect to Pledgor or (iii) Pledgor has failed to perform an
obligation under the Pledge Agreement, then Pledgee may apply the net proceeds
of any Collateral as follows:
(i) first, to pay all costs and expenses, (including attorney's fees
and expenses), incurred by or on behalf of Pledgee in or incidental to the
care or safekeeping of the Collateral or enforcement of its rights with
respect to the Collateral or in any way relating to the rights of Pledgee
under this Pledge Agreement;
(ii) second, to pay interest in respect of any of the Obligations;
<PAGE>
(iii) third, to pay the Obligations; and
(iv) fourth, only after the amounts required for (i), (ii) and (iii)
of this paragraph (b) shall have been fully paid and after the payment by
Pledgee of all other amounts required by any provision of law, to pay the
surplus, if any, to Pledgor.
In addition to the rights and remedies granted to it in this Pledge Agreement
and in any other instrument or agreement securing, evidencing or relating to any
of the Obligations, Pledgee shall have all rights and remedies of a secured
party under the Uniform Commercial Code of the State of New York and any other
applicable law. Pledgor shall be liable for the deficiency if the proceeds of
any sale or other disposition of the Collateral are insufficient to pay all
amounts to which Pledgee is entitled and the fees of any attorneys employed by
Pledgee to realize upon such Collateral and collect such deficiency.
7. REPRESENTATIONS AND WARRANTIES OF PLEDGOR. To induce Pledgee to enter into
the Loan Agreement with Pledgor, including this Pledge Agreement, Pledgor
represents to and agrees with Pledgee that:
(a) Pledgor has and will receive an economic benefit from the Transactions
the Obligations under which are secured by the pledge of Collateral hereunder,
in an amount at least equal to the amount secured by the Collateral;
(b) Pledgor is and will be the legal and beneficial owner of, and have
good and marketable title to, the Collateral;
(c) the Collateral (or any proceeds) is not and will not be subject to any
pledge, lien, mortgage, hypothecation, security interest, charge, option, or any
agreement purporting to grant such an encumbrance in the Collateral or property
or assets of Pledgor which would include any Collateral, or any other
encumbrance whatsoever (collectively, "Liens"), except the lien and security
interest in favor of Pledgee created by this Pledge Agreement; and
(d) the pledge, assignment and delivery of the Collateral pursuant to this
Pledge Agreement will create a valid first lien on and a perfected first
priority security interest in the Collateral as such Collateral is delivered to
Pledgee, and the proceeds thereof, free and clear of all Liens.
The representations made herein shall be made and deemed to be repeated at the
times at which the representations of Pledgor in Article III of the Loan
Agreement and Section 3 of the Master Agreement are made and deemed to be
repeated and at each time Collateral is required by this Pledge Agreement to be
delivered by Pledgor.
8. AGREEMENTS OF PLEDGOR. Pledgor covenants and agrees that:
(a) without the prior written consent of Pledgee, it will not sell,
assign, transfer, exchange, or otherwise dispose of or grant any option with
respect to, the Collateral, nor will it create, incur or permit to exist any
Lien on the Collateral or any interest therein, or any proceeds thereof, except
for the lien and security interest provided for by this Pledge Agreement; and
<PAGE>
(b) so long as any Collateral is pledged pursuant to this Pledge Agreement
it will defend Pledgee's right, title and security interest in and to the
Collateral and the proceeds thereof against the claims and demands of all
persons whomever.
9. SPECIFIC PERFORMANCE. If Pledgee shall determine to exercise its right to
sell any or all of the Collateral pursuant to Section 6, Pledgor agrees to do or
cause to be done all such acts and things as may be reasonably necessary to make
such sale or sales of any portion or all of the Collateral valid and binding and
in compliance with any and all courts, arbitrators or governmental
instrumentalities, domestic or foreign, having jurisdiction over any such sale
or sales, all at Pledgor's expense; provided, however, that Pledgor shall not be
required to take such actions as shall enable the Collateral to be registered
for trading on any exchange on which it is not then traded. Pledgor further
acknowledges and agrees that a failure to comply with its obligations under this
Section 9 will cause substantial damage to Pledgee.
10. FURTHER ASSURANCE. Pledgor agrees that at any time and from time to time
upon the written request of Pledgee, Pledgor will execute and deliver such
further documents (including without limitation Uniform Commercial Code
Financing Statements) and do such further acts and things as Pledgee may
reasonably request in order to effect the purposes of this Pledge Agreement.
11. SEVERABILITY. In case any one or more of the provisions contained in this
Pledge Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained in
this Pledge Agreement shall not as a result in any way be affected or impaired.
The parties shall endeavor in good faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid, legal and enforceable provisions
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
12. WAIVER; CUMULATIVE REMEDIES. A failure or delay in exercising any right,
power or privilege in respect of this Pledge Agreement will not be presumed to
operate as a waiver, and a single or partial exercise of any right, power or
privilege will not be presumed to preclude any subsequent or further exercise,
of that right, power or privilege or the exercise of any other right, power or
privilege. The rights and remedies provided in this Pledge Agreement are
cumulative and may be exercised singly or concurrently, and are not exclusive of
any rights or remedies provided by law.
13. TRANSFER. Neither this Pledge Agreement nor any interest or obligation in
or under this Pledge Agreement may be transferred by any party except in
conformity with the provisions of Section 7.03 of the Loan Agreement and Section
7 of the Master Agreement.
<PAGE>
14. SUCCESSORS; AMENDMENTS.
(a) This Pledge Agreement and all obligations of Pledgor hereunder shall
be binding upon the successors and assigns of Pledgor and shall, together with
the rights and remedies of Pledgee hereunder, inure to the benefit of Pledgee
and its respective successors and assigns.
(b) No amendment, modification or waiver in respect of this Pledge
Agreement will be effective unless in writing and executed by each of the
parties or confirmed by an exchange of telexes.
15. GOVERNING LAW; SUBMISSION TO JURISDICTION.
(a) This Pledge Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without reference to choice of law
doctrine.
(b) With respect to any suit, action or proceedings relating to this
Pledge Agreement ("Proceedings") each party irrevocably (i) submits for itself
and its property to the nonexclusive jurisdiction of the courts of the State of
New York and the United States District Court located in the Borough of
Manhattan in New York City and (ii) waives any objection which it may have at
any time to the laying of venue of any Proceedings brought in any such court,
waives any claim that any such Proceedings have been brought in an inconvenient
forum and further waives the right to object, with respect to such Proceedings,
that such court does not have jurisdiction over such party.
(c) Each of the parties irrevocably appoints the Process Agent (if any)
specified in the Agreement to receive for it and on its behalf, service of
process in any Proceedings. If for any reason any party's Process Agent is
unable to act as such, such party will promptly notify the other party and
within 30 days appoint a substitute process agent acceptable to the other party.
The parties irrevocably consent to service of process given in the manner
provided for notices in this Pledge Agreement. Nothing in this Pledge Agreement
will affect the right of either party to serve process in any other manner
permitted by law.
(d) Each party irrevocably waives, to the fullest extent permitted by
applicable law, with respect to itself and its revenues and assets (irrespective
of their use or intended use), all immunity on the grounds of sovereignty or
other similar grounds from (i) suit, (ii) jurisdiction of any court, (iii)
relief by way of injunction, order for specific performance or for recovery of
property, (iv) attachment of its assets (whether before or after judgment) and
(v) execution or enforcement of any judgment to which it or its revenues or
assets might otherwise be entitled in any Proceedings in the courts of any
jurisdiction and irrevocably agrees, to the extent permitted by applicable law,
that it will not claim any such immunity in any Proceedings.
16. NOTICES. Any notice hereunder will be sufficiently given if given in any
manner and to the address set forth below:
(a) if in writing and delivered in person or by courier, on the date it is
delivered;
(b) if sent by telex, on the date the recipient's answerback is received;
<PAGE>
(c) if sent by facsimile transmission, on the date that transmission is
received by a responsible employee of the recipient in legible form, which date
shall be presumed to be the date sent if sent on a Local Business Day or, if
not, the first Local Business Day following such transmission;
(d) if sent by certified or registered mail (airmail, if overseas) or the
equivalent (return receipt requested), on the date that mail is delivered or its
delivery is attempted; or
(e) if sent by electronic messaging system, on the date that electronic
message is received, which date shall be presumed to be the date sent if sent on
a Local Business Day or, if not, the first Local Business Day following such
transmission,
if to Pledgee, to
Lehman Brothers Finance S.A., Attention: Financial Controller, 13, Route
de Florissant, P.O. Box 280, 1211 Geneva 12, Switzerland (Telex No. 428345;
Answerback: SLBCH); Telephone: 4122-789-0789; Telefax: 4122-789-1929; and
if to Pledgor, to
[ ], Attention: Shari Robertson, 8800 North Central Expressway,
Suite 1300, Dallas, Texas 75206
Telephone: 214-891-8341, Telefax: 214-891-8311
or at such other address as any party may notify to the others in writing.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Pledge Agreement to be duly
executed and delivered on the day and year first above written.
LEHMAN BROTHERS FINANCE S.A. TALLULAH,LTD.
By: By:
------------------------- -------------------------
Title: Title:
---------------------- ----------------------
By:
-------------------------
Title:
----------------------
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Pledge Agreement to be duly
executed and delivered on the day and year first above written.
SAM WYLY TTEE FOR THE BENEFIT
OF ANDREW DAVID SPARROW
LEHMAN BROTHERS FINANCE S.A. WYLY TRUST
By: By:
------------------------- -------------------------
Title: Title:
---------------------- ----------------------
By:
-------------------------
Title:
----------------------
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Pledge Agreement to be duly
executed and delivered on the day and year first above written.
SAM WYLY TTEE FOR THE BENEFIT
OF CHRISTIANA PARKER
LEHMAN BROTHERS FINANCE S.A. WYLY TRUST
By: By:
------------------------- -------------------------
Title: Title:
---------------------- ----------------------
By:
-------------------------
Title:
----------------------
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Pledge Agreement to be duly
executed and delivered on the day and year first above written.
SAM WYLY TTEE FOR THE BENEFIT
OF LAURIE L. WYLY REVOCABLE
LEHMAN BROTHERS FINANCE S.A. TRUST
By: By:
------------------------- -------------------------
Title: Title:
---------------------- ----------------------
By:
-------------------------
Title:
----------------------
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Pledge Agreement to be duly
executed and delivered on the day and year first above written.
SAM WYLY TTEE FOR THE BENEFIT
OF LISA WYLY REVOCABLE
LEHMAN BROTHERS FINANCE S.A. TRUST
By: By:
------------------------- -------------------------
Title: Title:
---------------------- ----------------------
By:
-------------------------
Title:
----------------------
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Pledge Agreement to be duly
executed and delivered on the day and year first above written.
SAM WYLY TTEE FOR THE BENEFIT
OF KELLY WYLY ELLIOTT
LEHMAN BROTHERS FINANCE S.A. TRUST
By: By:
------------------------- -------------------------
Title: Title:
---------------------- ----------------------
By:
-------------------------
Title:
----------------------
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Pledge Agreement to be duly
executed and delivered on the day and year first above written.
LEHMAN BROTHERS FINANCE S.A. MAVERICK ENTREPRENEURS
FUND, LTD.
By: By:
------------------------- -------------------------
Title: Title:
---------------------- ----------------------
By:
-------------------------
Title:
----------------------
<PAGE>
SCHEDULE A
1. ADDITIONAL RELEVANT SYSTEMS
2. SOURCES FOR VALUING COLLATERAL IN THE FORM OF SECURITIES
<PAGE>
EXHIBIT 1
TALLULAH,LTD.
Lehman Brothers Inc.
3 World Financial Center
New York, New York 10285-1200
Lehman Brothers Finance S.A.
13, Route de Florissant
P.O. Box 280
1211 Geneva 12
Switzerland
Gentlemen:
Reference is made to that certain Loan Agreement and Master Agreement (together,
the "Agreement") between Lehman Brothers Finance S.A. ("LBF") and the
undersigned dated as of February , 1995, and to that certain Pledge Agreement
between LBF and the undersigned dated as of February , 1995. Capitalized
terms used in this letter agreement shall have the meanings assigned to them in
the Agreement or Pledge Agreement, as the case may be.
Pursuant to Section 6 of the Pledge Agreement, the undersigned hereby
irrevocably instructs, if there occurs any Event of Default or Potential Event
of Default under the Master Agreement with respect to Pledgor or any Credit
Support Provider or Specified Entity of Pledgor, LBF to transfer to Lehman
Brothers Inc. ("LBI") any Collateral not then held by LBI, and LBI to liquidate
all Collateral in the form of securities and to pay to LBF the proceeds of such
liquidation to be held or applied in accordance with the Pledge Agreement. By
causing its authorized signatories to sign in the space provided below, LBF
agrees to turn over the Collateral to LBI for the purpose of such liquidation
and to release its pledge of the Collateral transferred to LBI upon payment to
it by LBI of the liquidation proceeds of such Collateral.
The instructions herein shall be irrevocable so long as the Master Agreement is
in effect, or any Collateral is held to secure the undersigned's obligations to
LBF, or there are any Transactions outstanding between LBF and the undersigned.
The parties agree that this letter agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
Agreed to and accepted
Very truly yours, this ___ day of ___________, 1995
TALLULAH, LTD. LEHMAN BROTHERS FINANCE S.A.
By: By:
------------------------ ------------------------
Title: Title:
--------------------- ---------------------
Date: LEHMAN BROTHERS INC.
----------------------
By:
------------------------
Title:
---------------------
<PAGE>
EXHIBIT 1
ANDREW DAVID SPARROW WYLY TRUST
Lehman Brothers Inc.
3 World Financial Center
New York, New York 10285-1200
Lehman Brothers Finance S.A.
13, Route de Florissant
P.O. Box 280
1211 Geneva 12
Switzerland
Gentlemen:
Reference is made to that certain Loan Agreement and Master Agreement (together,
the "Agreement") between Lehman Brothers Finance S.A. ("LBF") and the
undersigned dated as of February , 1995, and to that certain Pledge Agreement
between LBF and the undersigned dated as of February , 1995. Capitalized
terms used in this letter agreement shall have the meanings assigned to them in
the Agreement or Pledge Agreement, as the case may be.
Pursuant to Section 6 of the Pledge Agreement, the undersigned hereby
irrevocably instructs, if there occurs any Event of Default or Potential Event
of Default under the Master Agreement with respect to Pledgor or any Credit
Support Provider or Specified Entity of Pledgor, LBF to transfer to Lehman
Brothers Inc. ("LBI") any Collateral not then held by LBI, and LBI to liquidate
all Collateral in the form of securities and to pay to LBF the proceeds of such
liquidation to be held or applied in accordance with the Pledge Agreement. By
causing its authorized signatories to sign in the space provided below, LBF
agrees to turn over the Collateral to LBI for the purpose of such liquidation
and to release its pledge of the Collateral transferred to LBI upon payment to
it by LBI of the liquidation proceeds of such Collateral.
The instructions herein shall be irrevocable so long as the Master Agreement is
in effect, or any Collateral is held to secure the undersigned's obligations to
LBF, or there are any Transactions outstanding between LBF and the undersigned.
The parties agree that this letter agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
Agreed to and accepted
Very truly yours, this ___ day of ___________, 1995
SAM WYLY TTEE FOR THE BENEFIT OF
ANDREW DAVID SPARROW WYLY TRUST LEHMAN BROTHERS FINANCE S.A.
By: By:
------------------------ ------------------------
Title: Title:
--------------------- ---------------------
Date: LEHMAN BROTHERS INC.
----------------------
By:
------------------------
Title:
---------------------
<PAGE>
EXHIBIT 1
CHRISTIANA PARKER WYLY TRUST
Lehman Brothers Inc.
3 World Financial Center
New York, New York 10285-1200
Lehman Brothers Finance S.A.
13, Route de Florissant
P.O. Box 280
1211 Geneva 12
Switzerland
Gentlemen:
Reference is made to that certain Loan Agreement and Master Agreement (together,
the "Agreement") between Lehman Brothers Finance S.A. ("LBF") and the
undersigned dated as of February , 1995, and to that certain Pledge Agreement
between LBF and the undersigned dated as of February , 1995. Capitalized
terms used in this letter agreement shall have the meanings assigned to them in
the Agreement or Pledge Agreement, as the case may be.
Pursuant to Section 6 of the Pledge Agreement, the undersigned hereby
irrevocably instructs, if there occurs any Event of Default or Potential Event
of Default under the Master Agreement with respect to Pledgor or any Credit
Support Provider or Specified Entity of Pledgor, LBF to transfer to Lehman
Brothers Inc. ("LBI") any Collateral not then held by LBI, and LBI to liquidate
all Collateral in the form of securities and to pay to LBF the proceeds of such
liquidation to be held or applied in accordance with the Pledge Agreement. By
causing its authorized signatories to sign in the space provided below, LBF
agrees to turn over the Collateral to LBI for the purpose of such liquidation
and to release its pledge of the Collateral transferred to LBI upon payment to
it by LBI of the liquidation proceeds of such Collateral.
The instructions herein shall be irrevocable so long as the Master Agreement is
in effect, or any Collateral is held to secure the undersigned's obligations to
LBF, or there are any Transactions outstanding between LBF and the undersigned.
The parties agree that this letter agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
Agreed to and accepted
Very truly yours, this ___ day of ___________, 1995
SAM WYLY TTEE FOR THE BENEFIT OF
CHRISTIANA PARKER WYLY TRUST LEHMAN BROTHERS FINANCE S.A.
By: By:
------------------------ ------------------------
Title: Title:
--------------------- ---------------------
Date: LEHMAN BROTHERS INC.
----------------------
By:
------------------------
Title:
---------------------
<PAGE>
EXHIBIT 1
LAURIE L. WYLY REVOCABLE TRUST
Lehman Brothers Inc.
3 World Financial Center
New York, New York 10285-1200
Lehman Brothers Finance S.A.
13, Route de Florissant
P.O. Box 280
1211 Geneva 12
Switzerland
Gentlemen:
Reference is made to that certain Loan Agreement and Master Agreement (together,
the "Agreement") between Lehman Brothers Finance S.A. ("LBF") and the
undersigned dated as of February , 1995, and to that certain Pledge Agreement
between LBF and the undersigned dated as of February , 1995. Capitalized
terms used in this letter agreement shall have the meanings assigned to them in
the Agreement or Pledge Agreement, as the case may be.
Pursuant to Section 6 of the Pledge Agreement, the undersigned hereby
irrevocably instructs, if there occurs any Event of Default or Potential Event
of Default under the Master Agreement with respect to Pledgor or any Credit
Support Provider or Specified Entity of Pledgor, LBF to transfer to Lehman
Brothers Inc. ("LBI") any Collateral not then held by LBI, and LBI to liquidate
all Collateral in the form of securities and to pay to LBF the proceeds of such
liquidation to be held or applied in accordance with the Pledge Agreement. By
causing its authorized signatories to sign in the space provided below, LBF
agrees to turn over the Collateral to LBI for the purpose of such liquidation
and to release its pledge of the Collateral transferred to LBI upon payment to
it by LBI of the liquidation proceeds of such Collateral.
The instructions herein shall be irrevocable so long as the Master Agreement is
in effect, or any Collateral is held to secure the undersigned's obligations to
LBF, or there are any Transactions outstanding between LBF and the undersigned.
The parties agree that this letter agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
Agreed to and accepted
Very truly yours, this ___ day of ___________, 1995
SAM WYLY TTEE FOR THE BENEFIT OF
LAURIE L. WYLY REVOCABLE TRUST LEHMAN BROTHERS FINANCE S.A.
By: By:
------------------------ ------------------------
Title: Title:
--------------------- ---------------------
Date: LEHMAN BROTHERS INC.
----------------------
By:
------------------------
Title:
---------------------
<PAGE>
EXHIBIT 1
LISA WYLY REVOCABLE TRUST
Lehman Brothers Inc.
3 World Financial Center
New York, New York 10285-1200
Lehman Brothers Finance S.A.
13, Route de Florissant
P.O. Box 280
1211 Geneva 12
Switzerland
Gentlemen:
Reference is made to that certain Loan Agreement and Master Agreement (together,
the "Agreement") between Lehman Brothers Finance S.A. ("LBF") and the
undersigned dated as of February , 1995, and to that certain Pledge Agreement
between LBF and the undersigned dated as of February , 1995. Capitalized
terms used in this letter agreement shall have the meanings assigned to them in
the Agreement or Pledge Agreement, as the case may be.
Pursuant to Section 6 of the Pledge Agreement, the undersigned hereby
irrevocably instructs, if there occurs any Event of Default or Potential Event
of Default under the Master Agreement with respect to Pledgor or any Credit
Support Provider or Specified Entity of Pledgor, LBF to transfer to Lehman
Brothers Inc. ("LBI") any Collateral not then held by LBI, and LBI to liquidate
all Collateral in the form of securities and to pay to LBF the proceeds of such
liquidation to be held or applied in accordance with the Pledge Agreement. By
causing its authorized signatories to sign in the space provided below, LBF
agrees to turn over the Collateral to LBI for the purpose of such liquidation
and to release its pledge of the Collateral transferred to LBI upon payment to
it by LBI of the liquidation proceeds of such Collateral.
The instructions herein shall be irrevocable so long as the Master Agreement is
in effect, or any Collateral is held to secure the undersigned's obligations to
LBF, or there are any Transactions outstanding between LBF and the undersigned.
The parties agree that this letter agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
Agreed to and accepted
Very truly yours, this ___ day of ___________, 1995
SAM WYLY TTEE FOR THE BENEFIT OF
LISA WYLY REVOCABLE TRUST LEHMAN BROTHERS FINANCE S.A.
By: By:
------------------------ ------------------------
Title: Title:
--------------------- ---------------------
Date: LEHMAN BROTHERS INC.
----------------------
By:
------------------------
Title:
---------------------
<PAGE>
EXHIBIT 1
KELLY WYLY ELLIOTT TRUST
Lehman Brothers Inc.
3 World Financial Center
New York, New York 10285-1200
Lehman Brothers Finance S.A.
13, Route de Florissant
P.O. Box 280
1211 Geneva 12
Switzerland
Gentlemen:
Reference is made to that certain Loan Agreement and Master Agreement (together,
the "Agreement") between Lehman Brothers Finance S.A. ("LBF") and the
undersigned dated as of February , 1995, and to that certain Pledge Agreement
between LBF and the undersigned dated as of February , 1995. Capitalized
terms used in this letter agreement shall have the meanings assigned to them in
the Agreement or Pledge Agreement, as the case may be.
Pursuant to Section 6 of the Pledge Agreement, the undersigned hereby
irrevocably instructs, if there occurs any Event of Default or Potential Event
of Default under the Master Agreement with respect to Pledgor or any Credit
Support Provider or Specified Entity of Pledgor, LBF to transfer to Lehman
Brothers Inc. ("LBI") any Collateral not then held by LBI, and LBI to liquidate
all Collateral in the form of securities and to pay to LBF the proceeds of such
liquidation to be held or applied in accordance with the Pledge Agreement. By
causing its authorized signatories to sign in the space provided below, LBF
agrees to turn over the Collateral to LBI for the purpose of such liquidation
and to release its pledge of the Collateral transferred to LBI upon payment to
it by LBI of the liquidation proceeds of such Collateral.
The instructions herein shall be irrevocable so long as the Master Agreement is
in effect, or any Collateral is held to secure the undersigned's obligations to
LBF, or there are any Transactions outstanding between LBF and the undersigned.
The parties agree that this letter agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
Agreed to and accepted
Very truly yours, this ___ day of ___________, 1995
SAM WYLY TTEE FOR THE BENEFIT OF
KELLY WYLY ELLIOTT TRUST LEHMAN BROTHERS FINANCE S.A.
By: By:
------------------------ ------------------------
Title: Title:
--------------------- ---------------------
Date: LEHMAN BROTHERS INC.
----------------------
By:
------------------------
Title:
---------------------
<PAGE>
EXHIBIT 1
MAVERICK ENTREPRENEURS FUND, LTD.
Lehman Brothers Inc.
3 World Financial Center
New York, New York 10285-1200
Lehman Brothers Finance S.A.
13, Route de Florissant
P.O. Box 280
1211 Geneva 12
Switzerland
Gentlemen:
Reference is made to that certain Loan Agreement and Master Agreement (together,
the "Agreement") between Lehman Brothers Finance S.A. ("LBF") and the
undersigned dated as of February , 1995, and to that certain Pledge Agreement
between LBF and the undersigned dated as of February , 1995. Capitalized
terms used in this letter agreement shall have the meanings assigned to them in
the Agreement or Pledge Agreement, as the case may be.
Pursuant to Section 6 of the Pledge Agreement, the undersigned hereby
irrevocably instructs, if there occurs any Event of Default or Potential Event
of Default under the Master Agreement with respect to Pledgor or any Credit
Support Provider or Specified Entity of Pledgor, LBF to transfer to Lehman
Brothers Inc. ("LBI") any Collateral not then held by LBI, and LBI to liquidate
all Collateral in the form of securities and to pay to LBF the proceeds of such
liquidation to be held or applied in accordance with the Pledge Agreement. By
causing its authorized signatories to sign in the space provided below, LBF
agrees to turn over the Collateral to LBI for the purpose of such liquidation
and to release its pledge of the Collateral transferred to LBI upon payment to
it by LBI of the liquidation proceeds of such Collateral.
The instructions herein shall be irrevocable so long as the Master Agreement is
in effect, or any Collateral is held to secure the undersigned's obligations to
LBF, or there are any Transactions outstanding between LBF and the undersigned.
The parties agree that this letter agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
Agreed to and accepted
Very truly yours, this ___ day of ___________, 1995
MAVERICK ENTREPRENEURS FUND, LTD. LEHMAN BROTHERS FINANCE S.A.
By: By:
------------------------ ------------------------
Title: Title:
--------------------- ---------------------
Date: LEHMAN BROTHERS INC.
----------------------
By:
------------------------
Title:
---------------------
<PAGE>
EXHIBIT A
SAM WYLY GROUP
COLLAR TRANSACTION - MICHAELS STORES INC.
- -------------------------------------------------------------------------------
COUNTERPARTY NUMBER OF PAYMENT INSTRUCTIONS
SHARES/OPTIONS
- -------------------------------------------------------------------------------
TALLULAH, LTD. 485,000 Chemical Bank, NY
ABA #: 021000128
A/C: Lehman Brothers Inc.
A/C #: 140-094-221
Further Credit to: Tallulah, Ltd.
Further Credit #: 837- 20011
- -------------------------------------------------------------------------------
Sam Wyly, trustee
for the benefit of:
- -------------------------------------------------------------------------------
ANDREW DAVID
SPARROW WYLY TRUST 45,000 Chemical Bank, NY
ABA #: 021000128
A/C: Lehman Brothers Inc.
A/C #: 140-094-221
Further Credit to: Sam Wyly
TTEE FBO Andrew David Sparrow
Wyly Trust
Further Credit #: 837- 20000
- -------------------------------------------------------------------------------
CHRISTIANA PARKER 45,000 Chemical Bank, NY
WYLY TRUST ABA #: 021000128
A/C: Lehman Brothers Inc.
A/C #: 140-094-221
Further Credit to: Sam Wyly
TTEE FBO Christiana Parker
Wyly Trust
Further Credit #: 837- 20002
- -------------------------------------------------------------------------------
<PAGE>
EXHIBIT A (CONT'D)
SAM WYLY GROUP
COLLAR TRANSACTION - MICHAELS STORES INC.
- -------------------------------------------------------------------------------
COUNTERPARTY NUMBER OF PAYMENT INSTRUCTIONS
SHARES/OPTIONS
- -------------------------------------------------------------------------------
LAURIE L. WYLY 65,000 Chemical Bank, NY
REVOCABLE TRUST ABA #: 021000128
A/C: Lehman Brothers Inc.
A/C #: 140-094-221
Further Credit to: Sam Wyly
TTEE FBO Laurie L. Wyly
Revocable Trust
Further Credit #:
837- 20006
- -------------------------------------------------------------------------------
LISA WYLY 65,000 Chemical Bank, NY
REVOCABLE TRUST ABA #: 021000128
A/C: Lehman Brothers Inc.
A/C #: 140-094-221
Further Credit to: Sam Wyly
TTEE FBO Lisa Wyly Revocable
Trust
Further Credit #:
837- 20007
- -------------------------------------------------------------------------------
KELLY WYLY 65,000 Chemical Bank, NY
ELLIOTT TRUST ABA #: 021000128
A/C: Lehman Brothers Inc.
A/C #: 140-094-221
Further Credit to: Sam Wyly
TTEE FBO Kelly Wyly Elliott
Trust
Further Credit #: 837- 20009
- -------------------------------------------------------------------------------
<PAGE>
EXHIBIT A (CONT'D)
SAM WYLY GROUP
COLLAR TRANSACTION - MICHAELS STORES INC.
- -------------------------------------------------------------------------------
COUNTERPARTY NUMBER OF PAYMENT INSTRUCTIONS
SHARES/OPTIONS
- -------------------------------------------------------------------------------
MAVERICK
ENTREPRENEURS
FUND LTD. 200,000 Chemical Bank, NY
ABA #: 021000128
A/C: Lehman Brothers Inc.
A/C #: 140-094-221
Further Credit to: Maverick
Entrepreneurs Fund, Ltd.
Further Credit #: 837- 20012
- -------------------------------------------------------------------------------
<PAGE>
PLEDGE AGREEMENT (this "Pledge Agreement"), dated as of February 23, 1995,
between each of the counterparties set forth in Exhibit A hereto (each, a
"Pledgor"), and LEHMAN BROTHERS FINANCE S.A. ("Pledgee").
Pledgor and Pledgee have entered into a Loan Agreement of even date herewith
(together with all Schedules, Exhibits and Annexes thereto, the "Loan
Agreement"), pursuant to which Pledgor has certain payment obligations to
Pledgee. Pledgor and Pledgee also have entered into a Transaction and an ISDA
Master Agreement of even date herewith (together with all Schedules, Exhibits
and Annexes thereto, the "Master Agreement"), pursuant to which Pledgor may have
certain payment obligations to Pledgee. Pledgor is required to deliver
collateral as security for its obligations under the Loan Agreement, the Master
Agreement (together, the "Agreement") and the Transaction in accordance with the
provisions of this Pledge Agreement. This Pledge Agreement supplements, forms
part of, and is subject to, the Agreement, is part of the Master Agreement
Schedule and is a "Credit Support Document" under the Master Agreement with
respect to Pledgor.
Accordingly, the parties agree as follows:
1. CERTAIN DEFINITIONS. Unless otherwise defined in this Pledge Agreement,
capitalized terms used herein shall have the meaning assigned to them in the
Agreement or the Confirmation. In addition, as used in this Pledge Agreement,
the following terms will have the following meanings:
"Collateral" means, with respect to each Pledgor, (i) that Number of
Shares/Options of Michaels Stores Inc. common stock (the "Underlying Shares")
as set forth in Exhibit A hereto, which is incorporated herein by reference,
and (ii) that certain Put Option Transaction entered into on February 23, 1995,
between Pledgor as Buyer and Pledgee as Seller with respect to the Underlying
Shares.
"New York Business Day" means a day on which commercial banks are open for
business (including dealings in foreign exchange and foreign currency deposits)
in New York City.
"Relevant System" means (i) The Depository Trust Company in New York, New
York, (ii) the Euroclear System, operated by Morgan Guaranty Trust Company, New
York, Brussels branch, (iii) CEDEL S.A., Luxembourg or (iv) such other clearing
organization or book-entry system as is specified in Schedule A to this Pledge
Agreement (which Schedule may be added to by Pledgee at any time without the
consent of Pledgor).
"Upfront Collateral" means the amount specified as such in the relevant
Confirmation.
2. PLEDGE. To margin, guarantee and secure all obligations due or that may
become due from Pledgor to Pledgee or its affiliates under the Agreement, the
Transaction or otherwise ("Obligations"), Pledgor hereby pledges, assigns,
transfers and grants to Pledgee a first lien on, and a security interest in, the
Collateral.
3. FORM OF COLLATERAL. (a) With respect to any of the Collateral
available in definitive, certificated form, Pledgor shall deliver (as instructed
by Pledgee) to Pledgee or to
<PAGE>
Lehman Brothers Inc. ("Lehman"), Lehman Government Securities Inc. or such other
entity as Pledgee shall designate, as agent for Pledgee, the certificates for
such Collateral in suitable form for transfer or accompanied by duly executed
instruments of transfer or appropriate undated powers of assignment thereof duly
executed in blank. All deliveries of certificated securities shall be made to
Pledgee at the Cage, One Battery Park Plaza, 2nd Floor, New York, New York 10004
USA or such other location as Pledgee shall designate.
(b) With respect to any Collateral consisting of securities or interests
in securities held in accounts in a Relevant System:
(i) Pledgor shall furnish to Pledgee a list of such Collateral by
title (or series), and, if relevant, quantity, unpaid principal amount and
maturity date and shall transfer or cause to be transferred such Collateral
from its (or its representative's) account at that Relevant System to an
account at that Relevant System of Lehman or such other entity as Pledgee
shall designate, acting as agent for the Pledgee, which account shall be
designated as "Lehman-Customer Collateral Account."
(ii) Pledgee shall cause such Collateral to be held in the "Lehman-
Customer Collateral Account" and shall cause Lehman or such other
designated person to clearly identify on its books and records the
securities or interests in securities pledged by Pledgor that are held in
such account.
(iii) In connection with any transfer of such Collateral pursuant
to this Pledge Agreement, (1) the party making (or whose agent is making)
the transfer shall cause the other party to receive, by facsimile
transmission, courier or certified mail, a copy of the debit statement
issued by that Relevant System relating to such transfer and (2) the party
receiving (or whose agent is receiving) the transfer shall cause the other
party to receive, by facsimile transmission, courier or certified mail, a
copy of the credit statement issued by that Relevant System relating to
such transfer.
(c) With respect to all types of Collateral, (i) Pledgor shall take all
actions necessary to create a first priority lien and perfected security
interest in such Collateral in favor of Pledgee and (ii) all actions required or
authorized to be taken by Pledgee under this Pledge Agreement may be taken by
any affiliate of Pledgee.
4. DISTRIBUTIONS, ETC.
(a) If, while this Pledge Agreement is in effect, Pledgor shall become
entitled to receive or shall receive:
(i) any principal payment in respect of the Collateral, or
(ii) any debenture, other debt instrument, stock certificate, option,
right, other security or other property including cash, as an addition to, in
substitution of, or in exchange for any of the Collateral, whether or not in
connection with any reclassification, recapitalization, increase or reduction of
capital, reorganization, merger, consolidation, liquidation or dissolution of
the issuer of the Collateral, Pledgor agrees to accept the same as Pledgee's
agent and to hold the same in trust on behalf of Pledgee and to deliver the same
forthwith to Pledgee in the exact
<PAGE>
form received and in compliance with the terms of Section 3, as additional
Collateral for the Obligations.
(b) Except as provided in subsection (d) below, Pledgor shall be entitled
to receive (and to the extent the same come into possession of Pledgee or its
agents, Pledgee shall promptly remit to the order of Pledgor) any dividends or
interest paid in cash in respect of the Collateral consisting of securities.
Pledgee shall have no duty, however, to collect such payments.
(c) If on any date on which such dividends or such interest would
otherwise be payable to Pledgor, any Event of Default or Potential Event of
Default exists under the Agreement in respect of Pledgor or any default by
Pledgor exists under this Pledge Agreement, such dividends or such interest
shall be delivered to the Pledgee (or, if in the possession of Pledgee, retained
by Pledgee) in compliance with the terms of Section 3 as additional Collateral.
5. RIGHTS OF PLEDGEE.
(a) Pledgee shall not be liable for failure to collect or realize upon the
Obligations or any Collateral, security or guarantee therefor, or any part
thereof, or for any delay in so doing, nor shall it be under any obligation to
take any action whatsoever with regard thereto. Any or all of the Collateral
held by Pledgee hereunder may, without notice, be registered in the name of
Pledgee or its nominee. Pledgee or its nominee may thereafter, without notice,
exercise any and all rights of conversion, exchange, subscription or any other
rights, privileges or options with respect to such Collateral as if it were the
absolute owner thereof, including, without limitation, the right to vote on any
bankruptcy plan of reorganization or debt restructuring, the right to exchange
at its discretion any and all of such Collateral upon the merger, consolidation,
reorganization, recapitalization or other readjustment of the issuer thereof or
upon the exercise by any such issuer or Pledgee of any right, privilege or
option pertaining to any of such Collateral, and in connection therewith to
deposit and deliver any and all of such Collateral with any committee,
depository, transfer agent, registrar or other designated agency upon such terms
and conditions as it may determine, all without liability except to account for
property actually received by it, but Pledgee shall have no duty to exercise any
of the aforesaid rights, privileges or options and shall not be responsible for
any failure to do so or delay in so doing.
(b) Pledgor hereby agrees and acknowledges that Pledgee shall have the
right, without obtaining further consent of Pledgor, to sell, repledge,
rehypothecate, reassign, as well as enter into repurchase transactions
(collectively, "Repurchase Transactions") with respect to any of the Collateral,
or direct Lehman, Lehman Government Securities, Inc. or such other entity as
Pledgee designates, as its agent, to enter into any such Repurchase Transactions
using the Collateral during any period in which this Pledge Agreement remains in
effect. Notwithstanding the foregoing, Pledgee's right to enter into Repurchase
Transactions with Collateral under this Section 5 shall in no way relieve
Pledgee of its obligation to redeliver such Collateral to Pledgor under the
terms and in the timely manner provided for in this Pledge Agreement.
<PAGE>
6. REMEDIES.
(a) In the event that (i) any portion of the Obligations has become due
and payable and has not been paid, (ii) an Event of Default has occurred under
the Agreement with respect to Pledgor or (iii) Pledgor has failed to perform an
obligation under the Pledge Agreement, then
(I) Pledgee may forthwith collect the Collateral, or any part
thereof, or may sell, assign, exercise, give options to purchase, contract
to sell or otherwise dispose of and deliver the Collateral, or any part
thereof, in one or more parcels at public or private sale or sales, at any
exchange, broker's board or at any of Pledgee's offices or elsewhere upon
such terms and conditions as it may deem advisable and at such prices as it
may deem best, for cash or on credit or for future delivery without
assumption of any credit risk, without advertisement or demand upon
Pledgor, both of which are hereby waived, except Pledgee shall provide
Pledgor with notice on the day of any such sale (which may be a telex,
telegram, telecopy or other similar facsimile transmission and each of
which Pledgor hereby agrees is reasonable notice within the meaning of
Section 9-504(3) of the Uniform Commercial Code as in effect in New York)
of Pledgee's intention to make any such sale, with the right to Pledgee
upon any such sale or sales, public or private, to purchase the whole or
any part of such Collateral so sold, free of any right or equity of
redemption in Pledgor, which right or equity is hereby expressly waived or
released; Pledgor recognizes that Pledgee may be unable to effect a public
sale of any or all the Collateral and may be compelled to resort to one or
more private sales thereof, and Pledgor acknowledges and agrees that any
such private sale may result in prices and other terms less favorable to
Pledgee than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have
been made in a commercially reasonable manner; and
(II) in the case of Collateral consisting of securities, Pledgor shall
irrevocably instruct, and hereby irrevocably instructs, Pledgee to transfer
such Collateral to Lehman Brothers Inc., and shall irrevocably instruct,
and hereby irrevocably instructs, Lehman Brothers Inc. to liquidate the
Collateral for the account of Pledgor in the manner set forth in Section
6(b)(I) above, and to pay to Pledgee the proceeds of such liquidation to be
applied in the manner set forth in Section 6(c) below, all in accordance
with the letter agreement the form of which is attached hereto as Exhibit
1.
(b) In the event that (i) any portion of the Obligations has become due
and payable and has not been paid, (ii) an Event of Default has occurred under
the Agreement with respect to Pledgor or (iii) Pledgor has failed to perform an
obligation under the Pledge Agreement, then Pledgee may apply the net proceeds
of any Collateral as follows:
(i) first, to pay all costs and expenses, (including attorney's fees
and expenses), incurred by or on behalf of Pledgee in or incidental to the
care or safekeeping of the Collateral or enforcement of its rights with
respect to the Collateral or in any way relating to the rights of Pledgee
under this Pledge Agreement;
(ii) second, to pay interest in respect of any of the Obligations;
<PAGE>
(iii) third, to pay the Obligations; and
(iv) fourth, only after the amounts required for (i), (ii) and (iii)
of this paragraph (b) shall have been fully paid and after the payment by
Pledgee of all other amounts required by any provision of law, to pay the
surplus, if any, to Pledgor.
In addition to the rights and remedies granted to it in this Pledge Agreement
and in any other instrument or agreement securing, evidencing or relating to any
of the Obligations, Pledgee shall have all rights and remedies of a secured
party under the Uniform Commercial Code of the State of New York and any other
applicable law. Pledgor shall be liable for the deficiency if the proceeds of
any sale or other disposition of the Collateral are insufficient to pay all
amounts to which Pledgee is entitled and the fees of any attorneys employed by
Pledgee to realize upon such Collateral and collect such deficiency.
7. REPRESENTATIONS AND WARRANTIES OF PLEDGOR. To induce Pledgee to enter into
the Loan Agreement with Pledgor, including this Pledge Agreement, Pledgor
represents to and agrees with Pledgee that:
(a) Pledgor has and will receive an economic benefit from the Transactions
the Obligations under which are secured by the pledge of Collateral hereunder,
in an amount at least equal to the amount secured by the Collateral;
(b) Pledgor is and will be the legal and beneficial owner of, and have
good and marketable title to, the Collateral;
(c) the Collateral (or any proceeds) is not and will not be subject to any
pledge, lien, mortgage, hypothecation, security interest, charge, option, or any
agreement purporting to grant such an encumbrance in the Collateral or property
or assets of Pledgor which would include any Collateral, or any other
encumbrance whatsoever (collectively, "Liens"), except the lien and security
interest in favor of Pledgee created by this Pledge Agreement; and
(d) the pledge, assignment and delivery of the Collateral pursuant to this
Pledge Agreement will create a valid first lien on and a perfected first
priority security interest in the Collateral as such Collateral is delivered to
Pledgee, and the proceeds thereof, free and clear of all Liens.
The representations made herein shall be made and deemed to be repeated at the
times at which the representations of Pledgor in Article III of the Loan
Agreement and Section 3 of the Master Agreement are made and deemed to be
repeated and at each time Collateral is required by this Pledge Agreement to be
delivered by Pledgor.
8. AGREEMENTS OF PLEDGOR. Pledgor covenants and agrees that:
(a) without the prior written consent of Pledgee, it will not sell,
assign, transfer, exchange, or otherwise dispose of or grant any option with
respect to, the Collateral, nor will it create, incur or permit to exist any
Lien on the Collateral or any interest therein, or any proceeds thereof, except
for the lien and security interest provided for by this Pledge Agreement; and
<PAGE>
(b) so long as any Collateral is pledged pursuant to this Pledge Agreement
it will defend Pledgee's right, title and security interest in and to the
Collateral and the proceeds thereof against the claims and demands of all
persons whomever.
9. SPECIFIC PERFORMANCE. If Pledgee shall determine to exercise its right to
sell any or all of the Collateral pursuant to Section 6, Pledgor agrees to do or
cause to be done all such acts and things as may be reasonably necessary to make
such sale or sales of any portion or all of the Collateral valid and binding and
in compliance with any and all courts, arbitrators or governmental
instrumentalities, domestic or foreign, having jurisdiction over any such sale
or sales, all at Pledgor's expense; provided, however, that Pledgor shall not be
required to take such actions as shall enable the Collateral to be registered
for trading on any exchange on which it is not then traded. Pledgor further
acknowledges and agrees that a failure to comply with its obligations under this
Section 9 will cause substantial damage to Pledgee.
10. FURTHER ASSURANCE. Pledgor agrees that at any time and from time to time
upon the written request of Pledgee, Pledgor will execute and deliver such
further documents (including without limitation Uniform Commercial Code
Financing Statements) and do such further acts and things as Pledgee may
reasonably request in order to effect the purposes of this Pledge Agreement.
11. SEVERABILITY. In case any one or more of the provisions contained in this
Pledge Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained in
this Pledge Agreement shall not as a result in any way be affected or impaired.
The parties shall endeavor in good faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid, legal and enforceable provisions
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
12. WAIVER; CUMULATIVE REMEDIES. A failure or delay in exercising any right,
power or privilege in respect of this Pledge Agreement will not be presumed to
operate as a waiver, and a single or partial exercise of any right, power or
privilege will not be presumed to preclude any subsequent or further exercise,
of that right, power or privilege or the exercise of any other right, power or
privilege. The rights and remedies provided in this Pledge Agreement are
cumulative and may be exercised singly or concurrently, and are not exclusive of
any rights or remedies provided by law.
13. TRANSFER. Neither this Pledge Agreement nor any interest or obligation in
or under this Pledge Agreement may be transferred by any party except in
conformity with the provisions of Section 7.03 of the Loan Agreement and Section
7 of the Master Agreement.
<PAGE>
14. SUCCESSORS; AMENDMENTS.
(a) This Pledge Agreement and all obligations of Pledgor hereunder shall
be binding upon the successors and assigns of Pledgor and shall, together with
the rights and remedies of Pledgee hereunder, inure to the benefit of Pledgee
and its respective successors and assigns.
(b) No amendment, modification or waiver in respect of this Pledge
Agreement will be effective unless in writing and executed by each of the
parties or confirmed by an exchange of telexes.
15. GOVERNING LAW; SUBMISSION TO JURISDICTION.
(a) This Pledge Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without reference to choice of law
doctrine.
(b) With respect to any suit, action or proceedings relating to this
Pledge Agreement ("Proceedings") each party irrevocably (i) submits for itself
and its property to the nonexclusive jurisdiction of the courts of the State of
New York and the United States District Court located in the Borough of
Manhattan in New York City and (ii) waives any objection which it may have at
any time to the laying of venue of any Proceedings brought in any such court,
waives any claim that any such Proceedings have been brought in an inconvenient
forum and further waives the right to object, with respect to such Proceedings,
that such court does not have jurisdiction over such party.
(c) Each of the parties irrevocably appoints the Process Agent (if any)
specified in the Agreement to receive for it and on its behalf, service of
process in any Proceedings. If for any reason any party's Process Agent is
unable to act as such, such party will promptly notify the other party and
within 30 days appoint a substitute process agent acceptable to the other party.
The parties irrevocably consent to service of process given in the manner
provided for notices in this Pledge Agreement. Nothing in this Pledge Agreement
will affect the right of either party to serve process in any other manner
permitted by law.
(d) Each party irrevocably waives, to the fullest extent permitted by
applicable law, with respect to itself and its revenues and assets (irrespective
of their use or intended use), all immunity on the grounds of sovereignty or
other similar grounds from (i) suit, (ii) jurisdiction of any court, (iii)
relief by way of injunction, order for specific performance or for recovery of
property, (iv) attachment of its assets (whether before or after judgment) and
(v) execution or enforcement of any judgment to which it or its revenues or
assets might otherwise be entitled in any Proceedings in the courts of any
jurisdiction and irrevocably agrees, to the extent permitted by applicable law,
that it will not claim any such immunity in any Proceedings.
16. NOTICES. Any notice hereunder will be sufficiently given if given in any
manner and to the address set forth below:
(a) if in writing and delivered in person or by courier, on the date it is
delivered;
(b) if sent by telex, on the date the recipient's answerback is received;
<PAGE>
(c) if sent by facsimile transmission, on the date that transmission is
received by a responsible employee of the recipient in legible form, which date
shall be presumed to be the date sent if sent on a Local Business Day or, if
not, the first Local Business Day following such transmission;
(d) if sent by certified or registered mail (airmail, if overseas) or the
equivalent (return receipt requested), on the date that mail is delivered or its
delivery is attempted; or
(e) if sent by electronic messaging system, on the date that electronic
message is received, which date shall be presumed to be the date sent if sent on
a Local Business Day or, if not, the first Local Business Day following such
transmission,
if to Pledgee, to
Lehman Brothers Finance S.A., Attention: Financial Controller, 13, Route
de Florissant, P.O. Box 280, 1211 Geneva 12, Switzerland (Telex No. 428345;
Answerback: SLBCH); Telephone: 4122-789-0789; Telefax: 4122-789-1929; and
if to Pledgor, to
[ ], Attention: Shari Robertson, 8800 North Central Expressway,
Suite 1300, Dallas, Texas 75206
Telephone: 214-891-8341, Telefax: 214-891-8311
or at such other address as any party may notify to the others in writing.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Pledge Agreement to be duly
executed and delivered on the day and year first above written.
LEHMAN BROTHERS FINANCE S.A. BRUSH CREEK, LTD.
By: By:
------------------------- -------------------------
Title: Title:
---------------------- ----------------------
By:
-------------------------
Title:
----------------------
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Pledge Agreement to be duly
executed and delivered on the day and year first above written.
CHARLES J. WYLY JR. TTEE FOR
THE BENEFIT OF CHARLES J. WYLY
LEHMAN BROTHERS FINANCE S.A. III TRUST
By: By:
------------------------- -------------------------
Title: Title:
---------------------- ----------------------
By:
-------------------------
Title:
----------------------
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Pledge Agreement to be duly
executed and delivered on the day and year first above written.
CHARLES J. WYLY JR. TTEE FOR
THE BENEFIT OF JENNIFER LYNN
LEHMAN BROTHERS FINANCE S.A. WYLY TRUST
By: By:
------------------------- -------------------------
Title: Title:
---------------------- ----------------------
By:
-------------------------
Title:
----------------------
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Pledge Agreement to be duly
executed and delivered on the day and year first above written.
CHARLES J. WYLY JR. TTEE FOR
THE BENEFIT OF EMILY ANN WYLY
LEHMAN BROTHERS FINANCE S.A. TRUST
By: By:
------------------------- -------------------------
Title: Title:
---------------------- ----------------------
By:
-------------------------
Title:
----------------------
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Pledge Agreement to be duly
executed and delivered on the day and year first above written.
CHARLES J. WYLY JR. TTEE FOR
THE BENEFIT OF MARTHA C. WYLY
LEHMAN BROTHERS FINANCE S.A. TRUST
By: By:
------------------------- -------------------------
Title: Title:
---------------------- ----------------------
By:
-------------------------
Title:
----------------------
<PAGE>
SCHEDULE A
1. ADDITIONAL RELEVANT SYSTEMS
2. SOURCES FOR VALUING COLLATERAL IN THE FORM OF SECURITIES
<PAGE>
EXHIBIT 1
BRUSH CREEK, LTD.
Lehman Brothers Inc.
3 World Financial Center
New York, New York 10285-1200
Lehman Brothers Finance S.A.
13, Route de Florissant
P.O. Box 280
1211 Geneva 12
Switzerland
Gentlemen:
Reference is made to that certain Loan Agreement and Master Agreement (together,
the "Agreement") between Lehman Brothers Finance S.A. ("LBF") and the
undersigned dated as of February , 1995, and to that certain Pledge Agreement
between LBF and the undersigned dated as of February , 1995. Capitalized
terms used in this letter agreement shall have the meanings assigned to them in
the Agreement or Pledge Agreement, as the case may be.
Pursuant to Section 6 of the Pledge Agreement, the undersigned hereby
irrevocably instructs, if there occurs any Event of Default or Potential Event
of Default under the Master Agreement with respect to Pledgor or any Credit
Support Provider or Specified Entity of Pledgor, LBF to transfer to Lehman
Brothers Inc. ("LBI") any Collateral not then held by LBI, and LBI to liquidate
all Collateral in the form of securities and to pay to LBF the proceeds of such
liquidation to be held or applied in accordance with the Pledge Agreement. By
causing its authorized signatories to sign in the space provided below, LBF
agrees to turn over the Collateral to LBI for the purpose of such liquidation
and to release its pledge of the Collateral transferred to LBI upon payment to
it by LBI of the liquidation proceeds of such Collateral.
The instructions herein shall be irrevocable so long as the Master Agreement is
in effect, or any Collateral is held to secure the undersigned's obligations to
LBF, or there are any Transactions outstanding between LBF and the undersigned.
The parties agree that this letter agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
Agreed to and accepted
Very truly yours, this ___ day of ___________, 1995
BRUSH CREEK, LTD. LEHMAN BROTHERS FINANCE S.A.
By: By:
------------------------ ------------------------
Title: Title:
--------------------- ---------------------
Date: LEHMAN BROTHERS INC.
----------------------
By:
------------------------
Title:
---------------------
<PAGE>
EXHIBIT 1
CHARLES J. WYLY III TRUST
Lehman Brothers Inc.
3 World Financial Center
New York, New York 10285-1200
Lehman Brothers Finance S.A.
13, Route de Florissant
P.O. Box 280
1211 Geneva 12
Switzerland
Gentlemen:
Reference is made to that certain Loan Agreement and Master Agreement (together,
the "Agreement") between Lehman Brothers Finance S.A. ("LBF") and the
undersigned dated as of February , 1995, and to that certain Pledge Agreement
between LBF and the undersigned dated as of February , 1995. Capitalized
terms used in this letter agreement shall have the meanings assigned to them in
the Agreement or Pledge Agreement, as the case may be.
Pursuant to Section 6 of the Pledge Agreement, the undersigned hereby
irrevocably instructs, if there occurs any Event of Default or Potential Event
of Default under the Master Agreement with respect to Pledgor or any Credit
Support Provider or Specified Entity of Pledgor, LBF to transfer to Lehman
Brothers Inc. ("LBI") any Collateral not then held by LBI, and LBI to liquidate
all Collateral in the form of securities and to pay to LBF the proceeds of such
liquidation to be held or applied in accordance with the Pledge Agreement. By
causing its authorized signatories to sign in the space provided below, LBF
agrees to turn over the Collateral to LBI for the purpose of such liquidation
and to release its pledge of the Collateral transferred to LBI upon payment to
it by LBI of the liquidation proceeds of such Collateral.
The instructions herein shall be irrevocable so long as the Master Agreement is
in effect, or any Collateral is held to secure the undersigned's obligations to
LBF, or there are any Transactions outstanding between LBF and the undersigned.
The parties agree that this letter agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
Agreed to and accepted
Very truly yours, this ___ day of ___________, 1995
CHARLES J. WYLY JR. TTEE
FOR THE BENEFIT OF
CHARLES J. WYLY III TRUST LEHMAN BROTHERS FINANCE S.A.
By: By:
------------------------ ------------------------
Title: Title:
--------------------- ---------------------
Date: LEHMAN BROTHERS INC.
----------------------
By:
------------------------
Title:
---------------------
<PAGE>
EXHIBIT 1
JENNIFER LYNN WYLY TRUST
Lehman Brothers Inc.
3 World Financial Center
New York, New York 10285-1200
Lehman Brothers Finance S.A.
13, Route de Florissant
P.O. Box 280
1211 Geneva 12
Switzerland
Gentlemen:
Reference is made to that certain Loan Agreement and Master Agreement (together,
the "Agreement") between Lehman Brothers Finance S.A. ("LBF") and the
undersigned dated as of February , 1995, and to that certain Pledge Agreement
between LBF and the undersigned dated as of February , 1995. Capitalized
terms used in this letter agreement shall have the meanings assigned to them in
the Agreement or Pledge Agreement, as the case may be.
Pursuant to Section 6 of the Pledge Agreement, the undersigned hereby
irrevocably instructs, if there occurs any Event of Default or Potential Event
of Default under the Master Agreement with respect to Pledgor or any Credit
Support Provider or Specified Entity of Pledgor, LBF to transfer to Lehman
Brothers Inc. ("LBI") any Collateral not then held by LBI, and LBI to liquidate
all Collateral in the form of securities and to pay to LBF the proceeds of such
liquidation to be held or applied in accordance with the Pledge Agreement. By
causing its authorized signatories to sign in the space provided below, LBF
agrees to turn over the Collateral to LBI for the purpose of such liquidation
and to release its pledge of the Collateral transferred to LBI upon payment to
it by LBI of the liquidation proceeds of such Collateral.
The instructions herein shall be irrevocable so long as the Master Agreement is
in effect, or any Collateral is held to secure the undersigned's obligations to
LBF, or there are any Transactions outstanding between LBF and the undersigned.
The parties agree that this letter agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
Agreed to and accepted
Very truly yours, this ___ day of ___________, 1995
CHARLES J. WYLY JR. TTEE
FOR THE BENEFIT OF
JENNIFER LYNN WYLY TRUST LEHMAN BROTHERS FINANCE S.A.
By: By:
------------------------ ------------------------
Title: Title:
--------------------- ---------------------
Date: LEHMAN BROTHERS INC.
----------------------
By:
------------------------
Title:
---------------------
<PAGE>
EXHIBIT 1
EMILY ANN WYLY TRUST
Lehman Brothers Inc.
3 World Financial Center
New York, New York 10285-1200
Lehman Brothers Finance S.A.
13, Route de Florissant
P.O. Box 280
1211 Geneva 12
Switzerland
Gentlemen:
Reference is made to that certain Loan Agreement and Master Agreement (together,
the "Agreement") between Lehman Brothers Finance S.A. ("LBF") and the
undersigned dated as of February , 1995, and to that certain Pledge Agreement
between LBF and the undersigned dated as of February , 1995. Capitalized
terms used in this letter agreement shall have the meanings assigned to them in
the Agreement or Pledge Agreement, as the case may be.
Pursuant to Section 6 of the Pledge Agreement, the undersigned hereby
irrevocably instructs, if there occurs any Event of Default or Potential Event
of Default under the Master Agreement with respect to Pledgor or any Credit
Support Provider or Specified Entity of Pledgor, LBF to transfer to Lehman
Brothers Inc. ("LBI") any Collateral not then held by LBI, and LBI to liquidate
all Collateral in the form of securities and to pay to LBF the proceeds of such
liquidation to be held or applied in accordance with the Pledge Agreement. By
causing its authorized signatories to sign in the space provided below, LBF
agrees to turn over the Collateral to LBI for the purpose of such liquidation
and to release its pledge of the Collateral transferred to LBI upon payment to
it by LBI of the liquidation proceeds of such Collateral.
The instructions herein shall be irrevocable so long as the Master Agreement is
in effect, or any Collateral is held to secure the undersigned's obligations to
LBF, or there are any Transactions outstanding between LBF and the undersigned.
The parties agree that this letter agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
Agreed to and accepted
Very truly yours, this ___ day of ___________, 1995
CHARLES J. WYLY JR. TTEE
FOR THE BENEFIT OF
EMILY ANN WYLY TRUST LEHMAN BROTHERS FINANCE S.A.
By: By:
------------------------ ------------------------
Title: Title:
--------------------- ---------------------
Date: LEHMAN BROTHERS INC.
----------------------
By:
------------------------
Title:
---------------------
<PAGE>
EXHIBIT 1
MARTHA C. WYLY TRUST
Lehman Brothers Inc.
3 World Financial Center
New York, New York 10285-1200
Lehman Brothers Finance S.A.
13, Route de Florissant
P.O. Box 280
1211 Geneva 12
Switzerland
Gentlemen:
Reference is made to that certain Loan Agreement and Master Agreement (together,
the "Agreement") between Lehman Brothers Finance S.A. ("LBF") and the
undersigned dated as of February , 1995, and to that certain Pledge Agreement
between LBF and the undersigned dated as of February , 1995. Capitalized
terms used in this letter agreement shall have the meanings assigned to them in
the Agreement or Pledge Agreement, as the case may be.
Pursuant to Section 6 of the Pledge Agreement, the undersigned hereby
irrevocably instructs, if there occurs any Event of Default or Potential Event
of Default under the Master Agreement with respect to Pledgor or any Credit
Support Provider or Specified Entity of Pledgor, LBF to transfer to Lehman
Brothers Inc. ("LBI") any Collateral not then held by LBI, and LBI to liquidate
all Collateral in the form of securities and to pay to LBF the proceeds of such
liquidation to be held or applied in accordance with the Pledge Agreement. By
causing its authorized signatories to sign in the space provided below, LBF
agrees to turn over the Collateral to LBI for the purpose of such liquidation
and to release its pledge of the Collateral transferred to LBI upon payment to
it by LBI of the liquidation proceeds of such Collateral.
The instructions herein shall be irrevocable so long as the Master Agreement is
in effect, or any Collateral is held to secure the undersigned's obligations to
LBF, or there are any Transactions outstanding between LBF and the undersigned.
The parties agree that this letter agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
Agreed to and accepted
Very truly yours, this ___ day of ___________, 1995
CHARLES J. WYLY JR. TTEE
FOR THE BENEFIT OF
MARTHA C. WYLY TRUST LEHMAN BROTHERS FINANCE S.A.
By: By:
------------------------ ------------------------
Title: Title:
--------------------- ---------------------
Date: LEHMAN BROTHERS INC.
----------------------
By:
------------------------
Title:
---------------------
<PAGE>
EXHIBIT A
CHARLES WYLY GROUP
COLLAR TRANSACTION - MICHAELS STORES INC.
<TABLE>
<CAPTION>
COUNTERPARTY NUMBER OF PAYMENT
- ------------ SHARES/OPTIONS INSTRUCTIONS
-------------- -------------
<S> <C> <C>
BRUSH CREEK, LTD. 420,000 Chemical Bank, NY
ABA #: 021000128
A/C: Lehman Brothers, Inc.
A/C #: 140-094-221
Further Credit to: Bush Creek, Ltd.
Further Credit #: 837-20010
Charles Wyly Jr. Trustee for the benefit of:
CHARLES J. WYLY III TRUST 95,031 Chemical Bank, NY
ABA #: 021000128
A/C: Lehman Brothers Inc.
A/C #: 140-094-221
Further Credit to: Charles J. Wyly Jr. TTEE
FBO Charles J. Wyly III
Further Credit #: 837-20001
JENNIFER LYNN WYLY TRUST 96,070 Chemical Bank, NY
ABA #: 021000128
A/C: Lehman Brothers Inc.
A/C #: 140-094-221
Further Credit to: Charles J. Wyly Jr. TTEE
FBO Jennifer Lynn Wyly
Further Credit #: 837-20005
<PAGE>
EXHIBIT A (Cont.)
EMILY ANN WYLY TRUST 95,031 Chemical Bank, NY
ABA #: 021000128
A/C: Lehman Brothers Inc.
A/C #: 140-094-221
Further Credit to Charles J. Wyly Jr. TTEE
FBO Emily Ann Wyly
Further Credit #: 837-20003
MARTHA CAROLINE WYLY TRUST 95,031 Chemical Bank, NY
ABA #: 021000128
A/C: Lehman Brothers, Inc.
A/C #: 140-094-221
Further Credit to Charles J. Wyly Jr. TTEE
FBO Martha C. Wyly Trust
Further Credit #: 837-20008
</TABLE>
<PAGE>
GUARANTEE OF LEHMAN BROTHERS HOLDINGS INC.
------------------------------------------
LEHMAN BROTHERS FINANCE S.A. ("Party A") and _____ ("Party B") have entered
into a Master Agreement dated as of __________, 19__, pursuant to which Party A
and Party B have entered and/or anticipate entering into one or more
transactions (each a "Transaction"), the Confirmation of each of which
supplements, forms part of, and will be read and construed as one with, the
Master Agreement (collectively referred to as the "Agreement"). This Guarantee
is a Credit Support Document as contemplated in the Agreement. For value
received, and in consideration of the financial accommodation accorded to Party
A by Party B under the Agreement, LEHMAN BROTHERS HOLDINGS INC., a corporation
organized and existing under the laws of the State of Delaware ("Guarantor"),
hereby agrees to the following:
(a) Guarantor hereby unconditionally guarantees to Party B the due and
punctual payment of all amounts payable by Party A under each Transaction when
and as Party A's obligations thereunder shall become due and payable in
accordance with the terms of the Agreement. In case of the failure of Party A
to pay punctually any such amounts, Guarantor hereby agrees, upon written demand
by Party B, to pay or cause to be paid any such amounts punctually when and as
the same shall become due and payable.
(b) Guarantor hereby agrees that its obligations under the Guarantee
constitute a guarantee of payment when due and not of collection.
(c) Guarantor hereby agrees that its obligations under the Guarantee shall
be unconditional, irrespective of the validity, regularity or enforceability of
the Agreement against Party A (other than as a result of the unenforceability
thereof against Party B), the absence of any action to enforce Party A's
obligations under the Agreement, any waiver or consent by Party B with respect
to any provisions thereof, the entry by Party A and Party B into additional
Transactions under the Agreement or any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a guarantor; PROVIDED,
HOWEVER, that Guarantor shall be entitled to exercise any right that Party A
could have exercised under the Agreement to cure any default in respect of its
obligations under the Agreement or to setoff, counterclaim or withhold payment
in respect of any Event of Default or Potential Event of Default in respect of
Party B or any Affiliate, but only to the extent such right is provided to Party
A under the Agreement. The Guarantor acknowledges that Party A and Party B may
from time to time enter into one or more Transactions pursuant to the Agreement
and agrees that the obligations of the Guarantor under this Guarantee will upon
the execution of any such Transaction by Party A and Party B extend to all such
Transactions without the taking of further action by the Guarantor.
(d) Guarantor shall be subrogated to all rights of Party B against Party A
in respect of any amounts paid by Guarantor pursuant to the provisions of this
Guarantee; PROVIDED, HOWEVER, that Guarantor shall not be entitled to enforce or
to receive any payments arising out of, or based upon, such right of subrogation
until all amounts then due and payable by Party A under the Agreement, shall
have been paid in full.
(e) Guarantor further agrees that this Guarantee shall continue to be
effective or be reinstated, as the case may be, if at any time, payment, or any
part thereof, of any obligation or interest thereon is rescinded or must
otherwise be restored by Party B upon an Event of Default as set forth in
Section 5(a)(vii) of the Agreement affecting Party A or Guarantor.
(f) Guarantor hereby waives (i) promptness, diligence, presentment,
demand of payment, protest, order and, except as set forth in paragraph (a)
hereof, notice of any kind in connection with the Agreement and this Guarantee,
or (ii) any requirement that Party B exhaust any right to take any action
against Party A or any other person prior to or contemporaneously with
proceeding to exercise any right against Guarantor under this Guarantee.
<PAGE>
In the event that Guarantor is required by any applicable law, rule or
regulation to make any deduction or withholding for or on account of any Tax (as
defined in Section 14 of the Agreement, except that the reference therein to the
"Agreement" shall be deemed to mean the "Guarantee" for purposes of this
Guarantee) from any payment to be made under this Guarantee. Guarantor shall be
subject to the provisions of Section 2(d) of the Agreement to the same extent as
"X" (as defined therein); PROVIDED, HOWEVER, that Guarantor shall be required
to treat as an "Indemnifiable Tax" (as defined under Section 14 of the
Agreement, except that the reference therein to the "Agreement" shall be deemed
to mean the "Guarantee" for purposes of this Guarantee) for such purpose any Tax
that is not an "Indemnifiable Tax" if such Tax would have constituted an
"Indemnifiable Tax" had the payment in respect of which the Tax is imposed been
made by Party A rather than Guarantor.
Guarantor makes the same representations to and agreements with Party B as
those made by Party A pursuant to Sections 3 and 4 of the Agreement, at the
times set forth therein, except that references therein to "the party" will be
deemed to be references to "the Guarantor" and references therein to "the
Agreement" will be deemed to be references to "the Guarantee." This Guarantee
shall continue in force and effect to guarantee the obligations of Lehman
Brothers Capital GmbH ("Capital") or any other fully guaranteed subsidiary of
Guarantor in the event Party A assigns its rights under any Transaction to
Capital or such other fully guaranteed subsidiary.
This Guarantee shall be governed by and construed in accordance with the
laws of the State of New York, without reference to choice of law doctrine. All
capitalized terms not defined in this Guarantee are defined in the Agreement.
Any notice hereunder will be sufficiently given if given in accordance with
the provisions for notices under the Agreement and will be effective as set
forth therein. All notices hereunder shall be delivered to Lehman Brothers
Holdings Inc., Attention: Treasurer, at 200 Vesey Street, 28th Floor, New York,
New York 10285 (Telex No: 175636 Answerback: SLB) with a copy to Lehman Brothers
Finance S.A., Attention: Financial Controller at 13, Route de Florissant, P.O.
Box 280, 1211 Geneva 12, Switzerland (Telex No: 428345 Answerback: LBF CH).
IT WITNESS WHEREOF, Guarantor has caused this Guarantee to be executed in
its corporate name by its duly authorized officer as of the date of the
Agreement.
LEHMAN BROTHERS HOLDINGS INC.
By: ________________________
Name:
Title:
