-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NelfW9O+1vW9qTGm/Ko+BAsbRwreuyel8qtXSU2tq0RI9EYtCjZJpeVIRoHOSweR SoVh4yype3+lb0uBf+mNeQ== 0001047469-98-002793.txt : 19980202 0001047469-98-002793.hdr.sgml : 19980202 ACCESSION NUMBER: 0001047469-98-002793 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19980130 SROS: NYSE GROUP MEMBERS: CHARLES J. WYLY, JR. GROUP MEMBERS: MAVERICK ENTREPRENEURS FUND, LTD. GROUP MEMBERS: WYLY GROUP SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: MICHAELS STORES INC CENTRAL INDEX KEY: 0000740670 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-HOBBY, TOY & GAME SHOPS [5945] IRS NUMBER: 751943604 STATE OF INCORPORATION: DE FISCAL YEAR END: 0201 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-35305 FILM NUMBER: 98518681 BUSINESS ADDRESS: STREET 1: 8000 BENT BRANCH DR STREET 2: PO BOX 619566 CITY: IRVING STATE: TX ZIP: 75063 BUSINESS PHONE: 2147147000 MAIL ADDRESS: STREET 1: PO BOX 619566 CITY: DFW STATE: TX ZIP: 75261 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: WYLY GROUP CENTRAL INDEX KEY: 0000918613 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 8080 N CENTRAL EXPRESSWAY STREET 2: LB 31 CITY: DALLAS STATE: TX ZIP: 75206 SC 13D/A 1 FORM SC 13 D/A SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------ SCHEDULE 13D/A UNDER THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. 29) MICHAELS STORES, INC. (Name of Issuer) COMMON STOCK, PAR VALUE $0.10 PER SHARE (Title of Class of Securities) 594087-10-8 (CUSIP Number) ROBERT L. ESTEP JONES, DAY, REAVIS & POGUE 2300 TRAMMELL CROW CENTER 2001 ROSS AVENUE DALLAS, TEXAS 75201 (214) 220-3939 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) JANUARY 21, 1998 (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 / /. (Continued on following pages) (Page 1 of 38 Pages) CUSIP NO. 594087-10-8 13D/A Page 2 of 38 Pages - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Sam Wyly ###-##-#### - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)/X/ (b)/ / - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* BK, OO, WC - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) / / - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY 846,069 OWNED BY ---------------------------------------------------------------- EACH 8 SHARED VOTING POWER REPORTING PERSON WITH 15,836 ---------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER 2,046,069 ---------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 15,836 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,061,905 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.8% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN - -------------------------------------------------------------------------------- CUSIP NO. 594087-10-8 13D/A Page 3 of 38 Pages - -------------------------------------------------------------------------------- 1 NAME 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 OF A GROUP* (a)/X/ (b)/ / - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* BK, OO, WC - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) / / - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY 466,444 OWNED BY ---------------------------------------------------------------- EACH 8 SHARED VOTING POWER REPORTING 0 PERSON WITH ---------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER 1,066,444 ---------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,066,444 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 3.6% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN - -------------------------------------------------------------------------------- CUSIP NO. 594087-10-8 13D/A Page 4 of 38 Pages - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Maverick Entrepreneurs Fund, Ltd. 75-2319145 - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)/X/ (b)/ / - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* BK, OO, WC - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) / / - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Texas - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY 0 OWNED BY ---------------------------------------------------------------- EACH 8 SHARED VOTING POWER REPORTING PERSON WITH 0 ---------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER 0 ---------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 0 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN - -------------------------------------------------------------------------------- CUSIP NO. 594087-10-8 13D/A Page 5 of 38 Pages This Schedule 13D/A Amendment No. 29 hereby amends the Schedule 13D, filed jointly by Sam Wyly, Charles J. Wyly, Jr. and Maverick Entrepreneurs Fund, Ltd. ("Maverick Entrepreneurs" and collectively with Sam Wyly and Charles J. Wyly, Jr., the "Reporting Persons") with respect to the securities of Michaels Stores, Inc. (the "Company"). This statement terminates Maverick Entrepreneurs' membership in the Reporting Persons' group. See Item 5. Item 1. SECURITY AND ISSUER. This statement relates to the ownership of common stock, par value $.10 per share ("Common Stock"), of Michaels Stores, Inc., a Delaware corporation. The Company's principal executive offices are located at 8000 Bent Branch Drive, Irving, Texas 75063. Item 2. IDENTITY AND BACKGROUND. This Statement is being filed by Mr. Sam Wyly, Mr. Charles J. Wyly, Jr. and Maverick Entrepreneurs. Maverick Entrepreneurs is a Texas limited partnership of which Mr. Sam Wyly and Mr. Charles J. Wyly, Jr. are the sole general partners. The principal business and office address for each of the Reporting Persons is 300 Crescent Court, Suite 1000, Dallas, Texas 75201. Sam Wyly is principally employed as Chairman of the Board of Directors of each of Sterling Software, Inc. and the Company. Charles Wyly is principally employed as Vice Chairman of the Board of Directors of each of Sterling Software, Inc. and the Company. No Reporting Person has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or been a party to a civil proceeding of a judicial or administrative body resulting in subjection to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Sam Wyly and Charles J. Wyly, Jr. is each a citizen of the United States. Maverick Entrepreneurs is a Texas limited partnership. Item 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. The source of funds to hold a portion of the shares of Common Stock is borrowings under revolving lines of credit maintained with NationsBank of Texas, N.A. ("NationsBank") by each of (i) the trusts described in Item 5 for which Sam Wyly is trustee (the "Sam Wyly Trusts") and Tallulah, Ltd., (ii) the trusts described in Item 5 for which Charles J. Wyly, Jr. is trustee (the "Charles Wyly Trusts") and Brush Creek, Ltd., and (iii) Maverick Entrepreneurs. See Item 6 below. The options described in Item 5 as held by Sam Wyly and Charles J. Wyly, Jr. were granted under stock option plans of the Company. Item 4. PURPOSE OF TRANSACTION. The shares of Common Stock acquired by the Reporting Persons were acquired for investment. Depending upon market conditions and other factors that they deem material to an investment decision, any Reporting Person may purchase additional shares of Common Stock from time to time or may dispose of all or a portion of the shares of Common Stock they now beneficially own or may hereafter acquire. Except as set forth in this Item 4, none of the Reporting Persons has any present plans or proposals that relate to or would result in any of the actions specified in clauses (a) through (j) of Item 4 of Schedule 13D. CUSIP NO. 594087-10-8 13D/A Page 6 of 38 Pages Item 5. INTEREST IN SECURITIES OF THE ISSUER. (a)-(c) On January 21, 1998, Tallulah Ltd., a Texas limited partnership of which Sam Wyly is the sole general partner sold 485,000 shares of Common Stock on the open market at a price of $25.375 per share. On January 21, 1998, the Christiana Parker Wyly Trust and the Andrew David Sparrow Wyly Trust each sold 45,000 shares of Common Stock on the open market at a price of $25.375 per share and the Laurie L. Wyly Revocable Trust, the Lisa Wyly Revocable Trust and the Kelly Wyly Elliot Trust each sold 65,000 shares of Common Stock on the open market at a price of $25.375 per share. Sam Wyly is trustee of all five trusts. On January 21, 1998, Maverick Entrepreneurs, a Texas limited partnership, sold 200,000 shares of Common Stock on the open market at a price of $25.375 per share, which amount constituted all of the shares of Common Stock of the Company held by Maverick Entrepreneurs. Thus, Maverick Entrepreneurs will no longer be a reporting person pursuant to Rule 13d-1 of the Securities Exchange Act of 1934. Sam Wyly and Charles J. Wyly, Jr. are both General Partners of, and shared the beneficial ownership of the Common Stock that was held by, Maverick Entrepreneurs. As a result of the above sales, Sam Wyly currently beneficially owns 2,061,905 shares, or approximately 6.8%, of the Common Stock of the Company. Sam Wyly beneficially owns (i) 1,200,000 of such shares by virtue of his ownership of options to purchase Common Stock, (ii) 589,536 of such shares in his capacity as the sole general partner of Tallulah, Ltd., (iii) 15,836 of such shares by virtue of his holding a power of attorney to vote the shares of two adult children, and (iv) an aggregate of 256,533 of such shares in his capacity as the sole trustee of the Sam Wyly Trusts listed below: NUMBER OF SHARES NAME OF TRUST BENEFICIALLY OWNED ------------- ------------------ 1. The Christiana Parker Wyly Trust 37,393 2. The Andrew David Sparrow Wyly Trust 37,393 3. The Laurie L. Wyly Revocable Trust 58,943 4. The Lisa Wyly Revocable Trust 58,943 5. The Kelly Wyly Elliot Trust 63,861 Sam Wyly possesses sole voting power with respect to 846,069 shares of Common Stock, sole dispositive power with respect to 2,046,059 shares of Common Stock and shared voting and dispositive power with respect to 15,836 shares of Common Stock. On January 21, 1998, Brush Creek, Ltd., a Texas limited partnership, sold 420,000 shares of Common Stock on the open market at a price of $25.375 per share. Charles J. Wyly, Jr. is the sole general partner of such partnership. On January 21, 1998, the Martha Caroline Wyly Trust, the Charles J. Wyly III Trust and the Emily Ann Wyly Trust each sold 95,031 shares of Common Stock and the Jennifer Lynn Wyly Trust sold 96,070 shares of Common Stock on the open market at $25.375 per share. Charles J. Wyly, Jr. is trustee of all four trusts. As a result of the above, Charles J. Wyly, Jr. currently beneficially owns 1,066,444 shares, or approximately 3.6% of the outstanding Common Stock. Charles J. Wyly, Jr. beneficially owns (i) 600,000 of such shares by virtue of his ownership of options to purchase Common Stock, (ii) 80,000 of such shares as the sole general partner of Brush Creek, Ltd., and (iii) an aggregate of 386,444 of such shares as trustee of the Charles Wyly Trusts listed below: CUSIP NO. 594087-10-8 13D/A Page 7 of 38 Pages NUMBER OF SHARES NAME OF TRUST BENEFICIALLY OWNED ------------- ------------------ 1. The Martha Caroline Wyly Trust 74,969 2. The Charles J. Wyly, III Trust 104,403 3. The Emily Ann Wyly Trust 104,302 4. The Jennifer Lynn Wyly Trust 102,770 Charles J. Wyly, Jr. possesses sole voting power with respect to 466,444 shares of Common Stock, sole dispositive power with respect to 1,066,444 shares of Common Stock. The Reporting Persons as a group beneficially own an aggregate of 3,128,349 shares of Common Stock, or approximately 10.1% of the outstanding Common Stock. The Reporting Persons as a group have sole voting power with respect to 1,312,513 shares of Common Stock and sole dispositive power with respect to 3,112,513 shares of Common Stock. The Reporting Persons as a group have shared voting and dispositive power with respect to 15,836 shares of Common Stock. (d) No other person is known to have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the Common Stock deemed to be beneficially owned by the Reporting Persons. (e) Not applicable. Item 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. On February 23, 1995, each of (i) the Charles Wyly Trusts and Brush Creek, Ltd., and (ii) the Sam Wyly Trusts, Tallulah, Ltd. and Maverick Entrepreneurs (collectively, the "Borrowers") entered into a loan agreement with Lehman providing for loans to the Borrowers from time to time (the "Loan Agreements"). In connection with the Loan Agreements, the Borrowers 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 Lehman, upon the request of the Borrowers, will pay to the Borrowers the difference between the 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 Borrowers will, on that date, pay to Lehman the difference between such market price and such specified amount; and (ii) the Borrowers are required to pledge such rights and an aggregate of 1,771,163 shares to secure their obligations under the Security Documents. On January 20, 1998, each of the Borrowers entered into a letter agreement (a "Letter Agreement") with Lehman whereby each of the Borrowers agreed to sell a certain number of their shares of Common Stock of the Company. The Letter Agreement further provided for the application of the proceeds from the sale of the stock to pay all amounts due pursuant to the Lehman Agreement and the cash settlement amount provided for in the Security Documents and the termination of the Security Documents. Each of (i) the Sam Wyly Trusts and Tallulah, Ltd., (ii) the Charles Wyly Trusts and Brush Creek, Ltd., and (iii) Maverick Entrepreneurs maintains separate revolving lines of credit with NationsBank (collectively, the "NationsBank Credit Facilities"). The obligations of each borrower to repay advances made under its NationsBank Credit Facilities are several, full-recourse obligations that are secured by the Borrower's pledge of certain shares of Common Stock beneficially owned by the Reporting Persons as well as other securities. Each advance under a NationsBank Credit Facility bears interest at NationsBank's prime rate or at a floating rate, as elected by the borrower. Sam Wyly and Charles J. Wyly, Jr. have each guaranteed the obligations of Maverick Entrepreneurs under its NationsBank Credit Facility. The NationsBank Credit Facilities will mature on November 22, 1998. CUSIP NO. 594087-10-8 13D/A Page 8 of 38 Pages The foregoing descriptions of the agreements relating to the Loan Agreements, the Security Documents and the NationsBank Credit Facilities are qualified in their entirety by reference to such agreements, copies of which have been filed as exhibits to this Schedule 13D and are incorporated herein by reference. CUSIP NO. 594087-10-8 13D/A Page 9 of 38 Pages Item 7. MATERIAL TO BE FILED AS EXHIBITS. Exhibit 1.(*) Agreement pursuant to Rule 13d-1(f)(1)(iii) of the Securities Exchange Act of 1934. Exhibit 2.1 Form of Loan Agreement dated as of February 23, 1995 between Lehman Brothers Finance S.A., and the Charles Wyly Trusts and Brush Creek, Ltd. (Previously filed as Exhibit 2.1 to Amendment No. 23 to this Schedule 13D.) Exhibit 2.2 Form of Loan Agreement, dated as of February 23, 1995, between Lehman Brothers Finance S.A., and the Sam Wyly Trusts, Tallulah Ltd. and Maverick Entrepreneurs. (Previously filed as Exhibit 2.2 to Amendment No. 23 to this Schedule 13D.) 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. (Previously filed as Exhibit 3.1 to Amendment No. 23 to this Schedule 13D.) 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. (Previously filed as Exhibit 3.2 to Amendment No. 23 to this Schedule 13D.) 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. (Previously filed as Exhibit 3.3 to Amendment No. 23 to this Schedule 13D.) 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. (Previously filed as Exhibit 3.4 to Amendment No. 23 to this Schedule 13D.) 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. (Previously filed as Exhibit 4.1 to Amendment No. 23 to this Schedule 13D.) 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. (Previously filed as Exhibit 4.2 to Amendment No. 23 to this Schedule 13D.) Exhibit 5. Form of Guarantee Agreement. (Previously filed as Exhibit 5.1 to Amendment No. 23 to this Schedule 13D.) Exhibit 6. Form of Amended and Restated Loan Agreement, dated November 22, 1996, among NationsBank and each of (i) the Sam Wyly Trusts and Tallulah, Ltd.; (ii) the Charles Wyly Trusts and Brush Creek Limited; and (iii) Maverick Entrepreneurs Fund, Ltd. (Previously filed as Exhibit 6 to Amendment No. 27 to this Schedule 13D.) Exhibit 7. Form of Pledge Agreement, dated November 22, 1994, between NationsBank and each of (i) Tallulah, Ltd.; (ii) the Sam Wyly Trusts; (iii) Brush Creek, Ltd.; (iv) the Charles Wyly Trusts; and (v) Maverick Entrepreneurs Fund, Ltd. (Previously filed as Exhibit 3 to Amendment No. 26 to this Schedule 13D.) Exhibit 8. Form of Collateral Maintenance Agreement, dated November 22, 1994, between NationsBank and each of (i) Tallulah, Ltd.; (ii) the Sam Wyly Trusts; (iii) Brush Creek, Ltd.; (iv) the Charles Wyly Trusts; and (v) Maverick Entrepreneurs Fund, Ltd. (Previously filed as Exhibit 4 to Amendment No. 26 to this Schedule 13D.) Exhibit 9. Guaranty, executed as of November 22, 1994, by Tallulah, Ltd., the Sam Wyly Trusts, Brush Creek, Ltd., the Charles Wyly Trusts, and Even Wyly, in favor of NationsBank. (Previously filed as Exhibit 5 to Amendment No. 26 to this Schedule 13D.) - --------------- * Filed herewith CUSIP NO. 594087-10-8 13D/A Page 10 of 38 Pages Exhibit 10 * Form of Letter Agreement, dated January 20, 1998, between Lehman Brothers Finance S.A., and Tallulah Ltd., Sam Wyly, Trustee for the benefit of Andrew David Sparrow Wyly Trust, the Christiana Parker Wyly Trust, the Laurie L. Wyly Revocable Trust, the Lisa Wyly Revocable Trust and the Kelly Wyly Elliott Trust and Maverick Entrepreneurs. Exhibit 11* Form of Letter Agreement, dated January 20, 1998, between Lehman Brothers Finance S.A., and Brush Creek, Ltd., Charles Wyly, Jr., Trustee for the benefit of Charles J. Wyly III Trust, the Jennifer Lynn Wyly Trust, the Emily Ann Wyly Trust, and the Martha Caroline Wyly Trust. - --------------- * Filed herewith CUSIP NO. 594087-10-8 13D/A Page 11 of 38 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: January 30, 1998 /s/ Sam Wyly --------------------------------- Sam Wyly /s/ Charles J. Wyly, Jr. --------------------------------- Charles J. Wyly, Jr. MAVERICK ENTREPRENEURS FUND, LTD. By: /s/ Sam Wyly ------------------------------ Sam Wyly General Partner By: /s/ Charles J. Wyly, Jr. ------------------------------ Charles J. Wyly, Jr. General Partner CUSIP NO. 594087-10-8 13D/A Page 12 of 38 Pages EXHIBIT INDEX EXHIBIT NO. - ----------- 1. * Agreement pursuant to Rule 13d-1(f)(1)(iii) of the Securities Exchange Act of 1934. 2.1 Form of Loan Agreement dated as of February 23, 1995 between Lehman Brothers Finance S.A., and The Charles Wyly Trusts and Brush Creek, Ltd. (Previously filed as Exhibit 2.1 to Amendment No. 23 to this Schedule 13D.) 2.2 Form of Loan Agreement, dated as of February 23, 1995, between Lehman Brothers Finance S.A., and The Sam Wyly Trusts, Tallulah Ltd. and Maverick Entrepreneurs. (Previously filed as Exhibit 2.2 to Amendment No. 23 to this Schedule 13D.) 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. (Previously filed as Exhibit 3.1 to Amendment No. 23 to this Schedule 13D.) 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. (Previously filed as Exhibit 3.2 to Amendment No. 23 to this Schedule 13D.) 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. (Previously filed as Exhibit 3.3 to Amendment No. 23 to this Schedule 13D.) 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. (Previously filed as Exhibit 3.4 to Amendment No. 23 to this Schedule 13D.) 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. (Previously filed as Exhibit 4.1 to Amendment No. 23 to this Schedule 13D.) 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. (Previously filed as Exhibit 4.2 to Amendment No. 23 to this Schedule 13D.) 5. Form of Guarantee Agreement. (Previously filed as Exhibit 5.1 to Amendment No. 23 to this Schedule 13D.) 6. Form of Amended and Restated Loan Agreement, dated November 22, 1996, among NationsBank and each of (i) the Sam Wyly Trusts and Tallulah, Ltd.; (ii) the Charles Wyly Trusts and Brush Creek Limited; and (iii) Maverick Entrepreneurs Fund, Ltd. (Previously filed as Exhibit 6 to Amendment No. 27 to this Schedule 13D.) 7. Form of Pledge Agreement, dated November 22, 1994, between NationsBank and each of (i) Tallulah, Ltd.; (ii) the Sam Wyly Trusts; (iii) Brush Creek, Ltd.; (iv) the Charles Wyly Trusts; and (v) Maverick Entrepreneurs Fund, Ltd. (Previously filed as Exhibit 3 to Amendment No. 26 to this Schedule 13D.) __________________ * Filed herewith. CUSIP NO. 594087-10-8 13D/A Page 13 of 38 Pages 8. Form of Collateral Maintenance Agreement, dated November 22, 1994, between NationsBank and each of (i) Tallulah, Ltd.; (ii) the Sam Wyly Trusts; (iii) Brush Creek, Ltd.; (iv) the Charles Wyly Trusts; and (v) Maverick Entrepreneurs Fund, Ltd. (Previously filed as Exhibit 4 to Amendment No. 26 to this Schedule 13D.) 9. Guaranty, executed as of November 22, 1994, by Tallulah, Ltd., the Sam Wyly Trusts, Brush Creek, Ltd., the Charles Wyly Trusts, and Even Wyly, in favor of NationsBank. (Previously filed as Exhibit 5 to Amendment No. 26 to this Schedule 13D.) 10. * Form of Letter Agreement, dated January 20, 1998, between Lehman Brothers Finance S.A., and Tallulah Ltd., Sam Wyly, Trustee for the benefit of Andrew David Sparrow Wyly Trust, the Christiana Parker Wyly Trust, the Laurie L. Wyly Revocable Trust, the Lisa Wyly Revocable Trust and the Kelly Wyly Elliott Trust and Maverick Entrepreneurs. 11. * Form of Letter Agreement, dated January 20, 1998, between Lehman Brothers Finance S.A., and Brush Creek, Ltd., Charles Wyly, Jr., Trustee for the benefit of Charles J. Wyly III Trust, the Jennifer Lynn Wyly Trust, the Emily Ann Wyly Trust, and the Martha Caroline Wyly Trust. ______________________ * Filed herewith. EX-1 2 EXHIBIT 1 CUSIP NO. 594087-10-8 13D/A Page 14 of 38 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: January 30, 1998 /s/ Sam Wyly ----------------------------------------- Sam Wyly /s/ Charles J. Wyly, Jr. ----------------------------------------- Charles J. Wyly, Jr. MAVERICK ENTREPRENEURS FUND, LTD. By: /s/ Sam Wyly -------------------------------------- Sam Wyly General Partner By: /s/ Charles J. Wyly, Jr. -------------------------------------- Charles J. Wyly, Jr. General Partner EX-10 3 EXHIBIT 10 EXHIBIT 10 [LETTERHEAD] January 20, 1998 To each Counterparty (as defined below) 8080 North Central Expressway, Suite 1300 Dallas, Texas 75206 LBF Reference Numbers: N95020075A, N95020078A, N95020079A, N95020080A, N95020084A, N95020086A, N95020087A, N95020075B, N95020078B, N95020079B, N95020080B, N95020084B, N95020086B and N95020087B Dear Sir or Madam: Reference is made to that certain Amended European Call Option Transaction and that certain Amended American Put Option Transaction, each dated as of February 23, 1995, among Lehman Brothers Finance S.A. ("LBF"), Tallulah, Ltd., Sam Wyly, Trustee for the benefit of Andrew David Sparrow Wyly Trust, Sam Wyly, Trustee for the benefit of Christiana Parker Wyly Trust, Sam Wyly, Trustee for the benefit of Laurie L. Wyly Revocable Trust, Sam Wyly, Trustee for the benefit of Lisa Wyly Revocable Trust, Sam Wyly, Trustee for the benefit of Kelly Wyly Elliot Trust, and Maverick Entrepreneurs Fund, Ltd. (each, a "Counterparty" and collectively, the "Counterparties"), the Confirmations of which bear LBF Reference Numbers N95020075A, N95020078A, N95020079A, N95020080A, N95020084A, N95020086A, N95020087A, N95020075AB, N95020078B, N95020079B, N95020080B, N95020084B, N95020086B and N95020087B (collectively, the "Transactions"). Reference is also made to (a) that certain Loan Agreement dated as of February 23, 1995 (the "Loan Agreement"), between LBF, as lender, and the Counterparties, as borrowers, (b) that certain Promissory Note dated June 28, 1995, made by Tallulah, Ltd. to LBF in the principal amount of USD13,850,339, (c) that certain Promissory Note dated June 28, 1995, made by Sam Wyly as Trustee for the benefit of Andrew David Sparrow Wyly Trust to LBF in the principal amount of USD1,285,083, (d) that certain Promissory Note dated June 28, 1995, made by Sam Wyly as Trustee for the benefit of Christiana Parker Wyly Trust to LBF in the principal amount of USD1,285,083, (e) that certain Promissory Note dated June 28, 1995, made by Sam Wyly as Trustee for the benefit of Laurie L. Wyly Revocable Trust to LBF in the principal amount of USD1,856,231, (f) that certain Promissory Note dated June 28, 1995, made by Sam Wyly as Trustee for the benefit of Lisa Wyly Revocable Trust to LBF in the principal amount of USD1,856,231, (g) that certain Promissory Note dated June 28, 1995, made by Sam Wyly as Trustee for the benefit of Kelly Wyly Elliott Trust to LBF in the principal amount of USD1,856,231 and (h) that certain Promissory Note dated June 28, 1995, made by Maverick Entrepreneurs Fund, Ltd. to LBF in the principal amount of USD5,711,480. Items (b) through (h) shall hereinafter be referred to as the "Notes." Each Counterparty hereby acknowledges that, as of the date hereof, (i) the amount of USD set forth opposite such Counterparty's name on EXHIBIT A hereto is the aggregate amount outstanding, including the unpaid principal, interest thereon and all fees and charges, on such Counterparty's Note and under the Loan Agreement with respect to such Counterparty (such Counterparty's "Loan Obligations") and (ii) there are Calls/Puts on shares of the common stock of Michael Stores Inc. ("Common Stock") remaining under the Transactions with respect to such Counterparty in the amount set forth on EXHIBIT A. Each Counterparty further acknowledges that, as of the date hereof, the number of shares of Common Stock set forth on EXHIBIT A (the "Shares") have been delivered and pledged by such Counterparty to LBF as collateral under the Transactions for the Loan Obligations and the obligations of such Counterparty under the Transactions, all pursuant to and in accordance with the Pledge Agreement dated as of February 23, 1995 (the "Pledge Agreement"), entered into among LBF and the Counterparties in connection with that certain 1992 ISDA Master Agreement dated as of February 23, 1995 (the "Master Agreement"), among LBF and each Counterparty. Each Counterparty's execution and delivery of this letter agreement shall constitute an irrevocable order by such Counterparty for Lehman Brothers Inc., an affiliate of LBF ("LBI"), to sell (the "Sell Order") all of such Counterparty's Shares in "brokers transactions" as defined in Rule 144 promulgated under the Securities Act of 1933, as amended ("Rule 144"). The Sell Order shall last for up to 15 Exchange Business Days (as such term is defined under the Transactions) commencing on January 20, 1998 (the "Selling Period"). Each Counterparty acknowledges and understands that, pursuant to the Sell Order, LBI may sell any number of such Counterparty's Shares on any day during the Selling Period, with no restriction as to the minimum or maximum number of Shares sold on any such day. Each Counterparty shall pay to LBI, in consideration for the sale of such Counterparty's Shares, out of the proceeds of such sale, USD0.15 for each Share sold (the "Commission"). Each Counterparty acknowledges that LBI or its affiliates may purchase Shares from such Counterparty or otherwise during the Selling Period. Each Counterparty further acknowledges and agrees that the proceeds of the sale of such Counterparty's Shares, less the Commission (the "Net Sale Proceeds") which such Counterparty agrees shall be paid out of such proceeds, shall constitute, and shall be substituted for such Counterparty's Shares as, collateral posted and pledged by such Counterparty to LBF under the Transactions and the Pledge Agreement. Each Counterparty hereby reaffirms all agreements set forth in the Pledge Agreement with respect to the Sale Proceeds. Each Counterparty represents and warrants to LBF and to LBI, with respect to the Sell Order and the sale of the Shares, that the representations set forth in such Counterparty's 144 Letter (as hereinafter defined) are true, accurate and complete. Each Counterparty hereby reaffirms the representations and warranties made by such Counterparty to LBF in the Master Agreement, the Pledge Agreement, the Loan Agreement and the Transactions, including those representations made with respect to such Counterparty's authority to enter into such agreements and with respect to the enforceability of such agreements against such Counterparty, with full force and effect and as if such representations and warranties were made on the date hereof. This letter agreement shall confirm the agreement of each Counterparty and LBF fully to terminate the Transactions, effective as of the last day of the Selling Period, upon the following terms and conditions: 1. The representations and warranties set forth in the previous paragraph shall be true and accurate as of the date hereof. 2 2. Contemporaneously with the execution and delivery of this agreement by each Counterparty, such Counterparty shall have (a) transmitted three copies of a duly executed Notice of Proposed Sale of Securities Pursuant to Rule 144 on Securities and Exchange Commission ("SEC") Form 144 for filing with the SEC at its principal office in Washington, D.C. and (b) executed and delivered to LBI (to its satisfaction) a Seller's Representation Letter in the form attached hereto as EXHIBIT B (the "144 Letter"). Each Counterparty shall cooperate with LBI to ensure that sales of Shares pursuant to the Sell Order shall be in compliance with Rule 144. 3. LBF and each Counterparty agree that the "Final Price" (as such term is defined in the Transactions) with respect to each Transaction shall be equal to the average execution price for all Shares sold during the Selling Period pursuant to the Sell Order. 4. Each Counterparty agrees that (a) the "Cash Settlement Amount" (as such term is defined in the Transactions) of the Transactions, if any, payable by LBF to such Counterparty pursuant to the Transactions, together with (b) such Counterparty's Net Sale Proceeds, shall be applied to repay the Loan Obligations owing and payable by such Counterparty to LBF. If, after application of the foregoing amounts to the Loan Obligations, the Loan Obligations of such Counterparty shall not have been paid in full (the remaining unpaid amount, the "Balance"), then such Counterparty shall pay the Balance to LBF, in USD in immediately available funds, no later than the last day of the Selling Period, to LBF's account at Citibank, N.A., New York, SWIFT Code: CITIUS33, FED ABA Number: 021000089, Account Name: Lehman Brothers Holdings Inc., In Favor of: Lehman Brothers Finance S.A., Account Number: 40729568. 5. Each Counterparty agrees not to engage, and to cause its affiliates not to engage, in any sale of Common Stock during the period commencing on and including the date hereof and including the third Exchange Business Day after the last Exchange Business Day of the Selling Period. 6. Each Counterparty agrees, in connection herewith and in connection with the Sell Order and the sale of such Counterparty's Shares, to make such other filings, with the SEC and otherwise, and to take all further actions that may be necessary to comply with relevant federal and state securities laws and regulations. Upon the satisfaction or completion, as the case may be, of the foregoing terms and conditions, all rights and obligations of LBF and each Counterparty in respect of the Transactions shall terminate. This agreement itself shall be the binding agreement between LBF and each Counterparty relating to this termination. This agreement shall be governed by and construed under the laws of the State of New York, without regard for the principles of conflict of laws thereof. For purposes of convenience, this instrument has been executed and delivered simultaneously by each Counterparty. Nonetheless, it is intended and agreed that this instrument shall constitute a separate agreement between each Counterparty severally on the one hand, and LBF and LBI on the other hand, and shall not constitute an agreement between one Counterparty and any other Counterparty or an agreement among Counterparties. 3 Please evidence your agreement to the terms of this Termination Agreement by executing this letter and returning it to us at facsimile number 011-411-287-8825, Attention: Documentation. LEHMAN BROTHERS FINANCE S.A. LEHMAN BROTHERS INC. By: By: --------------------------- ----------------------- Name: Name: Title: By: --------------------------- Name: Title: Accepted and Agreed to: SAM WYLY, TRUSTEE FOR THE BENEFIT OF ANDREW DAVID SPARROW WYLY TRUST TALLULAH, LTD. By: By: ----------------- ----------------------- Name: Name: Title: Title: SAM WYLY, TRUSTEE FOR THE BENEFIT OF SAM WYLY, TRUSTEE FOR THE CHRISTIANA PARKER WYLY TRUST BENEFIT OF LAURIE L. WYLY REVOCABLE TRUST By: By: ----------------- ----------------------- Name: Name: Title: Title: SAM WYLY, TRUSTEE FOR THE SAM WYLY, TRUSTEE FOR THE BENEFIT LISA WYLY REVOCABLE TRUST BENEFIT OF KELLY WYLY ELLIOTT TRUST By: By: ----------------- ----------------------- Name: Name: Title: Title: 4 EXHIBIT A
- ---------------------------------------------------------------------------------------------------------- Counterparty Call/Put Options No. Shares Pledged Loan Obligations ------------- ----------------- ------------------ ---------------- - ---------------------------------------------------------------------------------------------------------- Tallulah, Ltd 485,000 485,000 $13,850,340 - ---------------------------------------------------------------------------------------------------------- Sam Wyly, Trustee for the benefit of Andrew 45,000 45,000 $1,285,083 David Sparrow Wyly Trust - ---------------------------------------------------------------------------------------------------------- Sam Wyly, Trustee for the benefit of 45,000 45,000 $1,285,083 Christiana Parker Wyly Trust - ---------------------------------------------------------------------------------------------------------- Sam Wyly, Trustee for the benefit of Laurie L. 65,000 65,000 $1,856,231 Wyly Revocable Trust - ---------------------------------------------------------------------------------------------------------- Sam Wyly, Trustee for the benefit of Lisa 65,000 65,000 $1,856,231 Wyly Revocable Trust - ---------------------------------------------------------------------------------------------------------- Sam Wyly, Trustee for the benefit of Kelly 65,000 65,000 $1,856,230 Wyly Elliott Trust - ---------------------------------------------------------------------------------------------------------- Maverick Entrepreneurs Fund, Ltd. 200,000 200,000 $5,711,480 - ----------------------------------------------------------------------------------------------------------
5 EXHIBIT B SELLER'S REPRESENTATION LETTER 6 LEHMAN BROTHERS Rule 144 Seller's Representation --------------------------------------------- Issuer's Name Michaels Stores, Inc. --------------------------------------------- To: Lehman Brothers Inc. Quantity to be Sold Class (e.g. common, Attention: Executive Financial preferred) Services Department 485,000 Shares Common --------------------------------------------- Utilizing Rule 144, I propose to sell through you as brokers or to you a market maker (as that term is defined in Section 3(a)(38) of the Securities Act of 1933) the securities described above. I have no present intention to sell additional securities of this Issuer through any other means. I have not made and do not propose to make any payment in connection with the execution of the transaction, except the usual customary broker commissions or dealer's charges to you; I have not solicited or arranged for the solicitation of orders to buy in anticipation of or in connection with the proposed sale; and (a) I am either an "affiliate of the Issuer" or (b) I am proposing to sell "restricted securities" to or through you (as those terms as defined in Paragraph (a) of Rule 144) which were acquired and fully paid for more than two years ago. I am not acting in concert with any other person in selling the stock and I have not so agreed to act. I am not engaged in a plan with anyone else to dispose of the securities. The shares which I propose to sell through you as broker or to you as market maker, together with all sales made by me and by any person whose sales must be aggregated with mine as provided in Paragraphs (a) and (e) of Rule 144 during the three months prior to the date of this sale, do not and will not exceed the greater of either 1% of the outstanding shares of the above Issuer, or the average weekly volume for the past four full calendar weeks prior to this date on my sale to or through you. (The applicable volume is that reported on all national securities exchanges and/or reported through the automated quotation system and/or reported through the consolidated transaction reporting system, whichever is applicable). With respect to the three months prior to the date of this sale, I, together with any person whose sales must be aggregated with mine: CHECK ONE: A. /X/ I have not sold any securities of the above Issuer. or B. / / I have sold (quantity) __________ shares of the (CLASS)___________ securities of the above Issuer. In addition, CHECK ONE: C. / / I have completed Form 144 and have given it to you for concurrent filing with the SEC, and primary Exchange, if required, or D. /X/ I have filed Form 144 with the SEC, and primary Exchange, if required, under Rule 144 and herewith attach a true copy of the form which I have filed. The undersigned does not know or have any reason to believe that the Issuer is not current in its reports to the SEC as required by Rule 144(c)(1)(i.e. that the Issuer has filed the reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 for a period of at least 90 days immediately preceding the date of the proposed sale of stock and, in addition, has filed the most recent annual report required to be filed thereunder.) I am not aware of any facts or circumstances indicating that I am or may be deemed an "underwriter" with respect to these securities or that the sale of these securities are or will be part of a "distribution" of securities of the Issuer as those terms are defined in the Securities Act of 1933. This is to further confirm to you that all of the information contained herein is true and correct. This is to further confirm to you that all of the information contained in this letter and in and in Form 144, if required, is true and correct. I also am to notify you promptly of any changes in the facts set forth in this letter. I hereby authorize you, if you deem it necessary, to contact my attorney (NAME AND TELEPHONE NUMBER) -------------------------------------------------------------, the Issuer, its transfer agent, and their agents and representatives concerning this transaction. I hereby permit you, the Issuer, the transfer agent and their agents and representatives to rely on this letter. Tallulah Ltd. Sam Wyly, Gen Ptr. - ---------------------------------------- Print Name of Seller Very truly yours, - ---------------------------------------- Date Date 1-14-98 /s/ Sam Wyly Gen Ptr. - ---------------------------------------- ---------------------------------- Signature of Seller ---------------------------------- LEHMAN BROTHERS Rule 144 Seller's Representation --------------------------------------------- Issuer's Name Michaels Stores, Inc. --------------------------------------------- To: Lehman Brothers Inc. Quantity to be Sold Class (e.g. common, Attention: Executive Financial preferred) Services Department 45,000 Shares Common --------------------------------------------- Utilizing Rule 144, I propose to sell through you as brokers or to you a market maker (as that term is defined in Section 3(a)(38) of the Securities Act of 1933) the securities described above. I have no present intention to sell additional securities of this Issuer through any other means. I have not made and do not propose to make any payment in connection with the execution of the transaction, except the usual customary broker commissions or dealer's charges to you; I have not solicited or arranged for the solicitation of orders to buy in anticipation of or in connection with the proposed sale; and (a) I am either an "affiliate of the Issuer" or (b) I am proposing to sell "restricted securities" to or through you (as those terms as defined in Paragraph (a) of Rule 144) which were acquired and fully paid for more than two years ago. I am not acting in concert with any other person in selling the stock and I have not so agreed to act. I am not engaged in a plan with anyone else to dispose of the securities. The shares which I propose to sell through you as broker or to you as market maker, together with all sales made by me and by any person whose sales must be aggregated with mine as provided in Paragraphs (a) and (e) of Rule 144 during the three months prior to the date of this sale, do not and will not exceed the greater of either 1% of the outstanding shares of the above Issuer, or the average weekly volume for the past four full calendar weeks prior to this date on my sale to or through you. (The applicable volume is that reported on all national securities exchanges and/or reported through the automated quotation system and/or reported through the consolidated transaction reporting system, whichever is applicable). With respect to the three months prior to the date of this sale, I, together with any person whose sales must be aggregated with mine: CHECK ONE: A. /X/ I have not sold any securities of the above Issuer. or B. / / I have sold (quantity) __________ shares of the (CLASS)___________ securities of the above Issuer. In addition, CHECK ONE: C. / / I have completed Form 144 and have given it to you for concurrent filing with the SEC, and primary Exchange, if required, or D. /X/ I have filed Form 144 with the SEC, and primary Exchange, if required, under Rule 144 and herewith attach a true copy of the form which I have filed. The undersigned does not know or have any reason to believe that the Issuer is not current in its reports to the SEC as required by Rule 144(c)(1)(i.e. that the Issuer has filed the reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 for a period of at least 90 days immediately preceding the date of the proposed sale of stock and, in addition, has filed the most recent annual report required to be filed thereunder.) I am not aware of any facts or circumstances indicating that I am or may be deemed an "underwriter" with respect to these securities or that the sale of these securities are or will be part of a "distribution" of securities of the Issuer as those terms are defined in the Securities Act of 1933. This is to further confirm to you that all of the information contained herein is true and correct. This is to further confirm to you that all of the information contained in this letter and in and in Form 144, if required, is true and correct. I also am to notify you promptly of any changes in the facts set forth in this letter. I hereby authorize you, if you deem it necessary, to contact my attorney (NAME AND TELEPHONE NUMBER) --------------------------------------------------------------, the Issuer, its transfer agent, and their agents and representatives concerning this transaction. I hereby permit you, the Issuer, the transfer agent and their agents and representatives to rely on this letter. Andrew David Sparrow Wyly Trust Sam Wyly, Trustee - ---------------------------------------- Print Name of Seller Very truly yours, - ---------------------------------------- Date Date 1-14-98 /s/ Sam Wyly Trustee - ---------------------------------------- ---------------------------------- Signature of Seller ---------------------------------- LEHMAN BROTHERS Rule 144 Seller's Representation --------------------------------------------- Issuer's Name Michaels Stores, Inc. --------------------------------------------- To: Lehman Brothers Inc. Quantity to be Sold Class (e.g. common, Attention: Executive Financial preferred) Services Department 45,000 Shares Common --------------------------------------------- Utilizing Rule 144, I propose to sell through you as brokers or to you a market maker (as that term is defined in Section 3(a)(38) of the Securities Act of 1933) the securities described above. I have no present intention to sell additional securities of this Issuer through any other means. I have not made and do not propose to make any payment in connection with the execution of the transaction, except the usual customary broker commissions or dealer's charges to you; I have not solicited or arranged for the solicitation of orders to buy in anticipation of or in connection with the proposed sale; and (a) I am either an "affiliate of the Issuer" or (b) I am proposing to sell "restricted securities" to or through you (as those terms as defined in Paragraph (a) of Rule 144) which were acquired and fully paid for more than two years ago. I am not acting in concert with any other person in selling the stock and I have not so agreed to act. I am not engaged in a plan with anyone else to dispose of the securities. The shares which I propose to sell through you as broker or to you as market maker, together with all sales made by me and by any person whose sales must be aggregated with mine as provided in Paragraphs (a) and (e) of Rule 144 during the three months prior to the date of this sale, do not and will not exceed the greater of either 1% of the outstanding shares of the above Issuer, or the average weekly volume for the past four full calendar weeks prior to this date on my sale to or through you. (The applicable volume is that reported on all national securities exchanges and/or reported through the automated quotation system and/or reported through the consolidated transaction reporting system, whichever is applicable). With respect to the three months prior to the date of this sale, I, together with any person whose sales must be aggregated with mine: CHECK ONE: A. /X/ I have not sold any securities of the above Issuer. or B. / / I have sold (quantity) __________ shares of the (CLASS)___________ securities of the above Issuer. In addition, CHECK ONE: C. / / I have completed Form 144 and have given it to you for concurrent filing with the SEC, and primary Exchange, if required, or D. /X/ I have filed Form 144 with the SEC, and primary Exchange, if required, under Rule 144 and herewith attach a true copy of the form which I have filed. The undersigned does not know or have any reason to believe that the Issuer is not current in its reports to the SEC as required by Rule 144(c)(1)(i.e. that the Issuer has filed the reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 for a period of at least 90 days immediately preceding the date of the proposed sale of stock and, in addition, has filed the most recent annual report required to be filed thereunder.) I am not aware of any facts or circumstances indicating that I am or may be deemed an "underwriter" with respect to these securities or that the sale of these securities are or will be part of a "distribution" of securities of the Issuer as those terms are defined in the Securities Act of 1933. This is to further confirm to you that all of the information contained herein is true and correct. This is to further confirm to you that all of the information contained in this letter and in and in Form 144, if required, is true and correct. I also am to notify you promptly of any changes in the facts set forth in this letter. I hereby authorize you, if you deem it necessary, to contact my attorney (NAME AND TELEPHONE NUMBER) --------------------------------------------------------------, the Issuer, its transfer agent, and their agents and representatives concerning this transaction. I hereby permit you, the Issuer, the transfer agent and their agents and representatives to rely on this letter. Christiana Parker Wyly Trust Sam Wyly, Trustee - ---------------------------------------- Print Name of Seller Very truly yours, - ---------------------------------------- Date Date 1-14-98 /s/ Sam Wyly Trustee - ---------------------------------------- ---------------------------------- Signature of Seller ---------------------------------- LEHMAN BROTHERS Rule 144 Seller's Representation --------------------------------------------- Issuer's Name Michaels Stores, Inc. --------------------------------------------- To: Lehman Brothers Inc. Quantity to be Sold Class (e.g. common, Attention: Executive Financial preferred) Services Department 65,000 Shares Common --------------------------------------------- Utilizing Rule 144, I propose to sell through you as brokers or to you a market maker (as that term is defined in Section 3(a)(38) of the Securities Act of 1933) the securities described above. I have no present intention to sell additional securities of this Issuer through any other means. I have not made and do not propose to make any payment in connection with the execution of the transaction, except the usual customary broker commissions or dealer's charges to you; I have not solicited or arranged for the solicitation of orders to buy in anticipation of or in connection with the proposed sale; and (a) I am either an "affiliate of the Issuer" or (b) I am proposing to sell "restricted securities" to or through you (as those terms as defined in Paragraph (a) of Rule 144) which were acquired and fully paid for more than two years ago. I am not acting in concert with any other person in selling the stock and I have not so agreed to act. I am not engaged in a plan with anyone else to dispose of the securities. The shares which I propose to sell through you as broker or to you as market maker, together with all sales made by me and by any person whose sales must be aggregated with mine as provided in Paragraphs (a) and (e) of Rule 144 during the three months prior to the date of this sale, do not and will not exceed the greater of either 1% of the outstanding shares of the above Issuer, or the average weekly volume for the past four full calendar weeks prior to this date on my sale to or through you. (The applicable volume is that reported on all national securities exchanges and/or reported through the automated quotation system and/or reported through the consolidated transaction reporting system, whichever is applicable). With respect to the three months prior to the date of this sale, I, together with any person whose sales must be aggregated with mine: CHECK ONE: A. /X/ I have not sold any securities of the above Issuer. or B. / / I have sold (quantity) __________ shares of the (CLASS)___________ securities of the above Issuer. In addition, CHECK ONE: C. / / I have completed Form 144 and have given it to you for concurrent filing with the SEC, and primary Exchange, if required, or D. /X/ I have filed Form 144 with the SEC, and primary Exchange, if required, under Rule 144 and herewith attach a true copy of the form which I have filed. The undersigned does not know or have any reason to believe that the Issuer is not current in its reports to the SEC as required by Rule 144(c)(1)(i.e. that the Issuer has filed the reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 for a period of at least 90 days immediately preceding the date of the proposed sale of stock and, in addition, has filed the most recent annual report required to be filed thereunder.) I am not aware of any facts or circumstances indicating that I am or may be deemed an "underwriter" with respect to these securities or that the sale of these securities are or will be part of a "distribution" of securities of the Issuer as those terms are defined in the Securities Act of 1933. This is to further confirm to you that all of the information contained herein is true and correct. This is to further confirm to you that all of the information contained in this letter and in and in Form 144, if required, is true and correct. I also am to notify you promptly of any changes in the facts set forth in this letter. I hereby authorize you, if you deem it necessary, to contact my attorney (NAME AND TELEPHONE NUMBER) --------------------------------------------------------------, the Issuer, its transfer agent, and their agents and representatives concerning this transaction. I hereby permit you, the Issuer, the transfer agent and their agents and representatives to rely on this letter. Laurie L. Wyly Revocable Trust Sam Wyly, Trustee - ---------------------------------------- Print Name of Seller Very truly yours, - ---------------------------------------- Date Date 1-14-98 /s/ Sam Wyly Trustee - ---------------------------------------- ---------------------------------- Signature of Seller ---------------------------------- LEHMAN BROTHERS Rule 144 Seller's Representation --------------------------------------------- Issuer's Name Michaels Stores, Inc. --------------------------------------------- To: Lehman Brothers Inc. Quantity to be Sold Class (e.g. common, Attention: Executive Financial preferred) Services Department 65,000 Shares Common --------------------------------------------- Utilizing Rule 144, I propose to sell through you as brokers or to you a market maker (as that term is defined in Section 3(a)(38) of the Securities Act of 1933) the securities described above. I have no present intention to sell additional securities of this Issuer through any other means. I have not made and do not propose to make any payment in connection with the execution of the transaction, except the usual customary broker commissions or dealer's charges to you; I have not solicited or arranged for the solicitation of orders to buy in anticipation of or in connection with the proposed sale; and (a) I am either an "affiliate of the Issuer" or (b) I am proposing to sell "restricted securities" to or through you (as those terms as defined in Paragraph (a) of Rule 144) which were acquired and fully paid for more than two years ago. I am not acting in concert with any other person in selling the stock and I have not so agreed to act. I am not engaged in a plan with anyone else to dispose of the securities. The shares which I propose to sell through you as broker or to you as market maker, together with all sales made by me and by any person whose sales must be aggregated with mine as provided in Paragraphs (a) and (e) of Rule 144 during the three months prior to the date of this sale, do not and will not exceed the greater of either 1% of the outstanding shares of the above Issuer, or the average weekly volume for the past four full calendar weeks prior to this date on my sale to or through you. (The applicable volume is that reported on all national securities exchanges and/or reported through the automated quotation system and/or reported through the consolidated transaction reporting system, whichever is applicable). With respect to the three months prior to the date of this sale, I, together with any person whose sales must be aggregated with mine: CHECK ONE: A. /X/ I have not sold any securities of the above Issuer. or B. / / I have sold (quantity) __________ shares of the (CLASS)___________ securities of the above Issuer. In addition, CHECK ONE: C. / / I have completed Form 144 and have given it to you for concurrent filing with the SEC, and primary Exchange, if required, or D. /X/ I have filed Form 144 with the SEC, and primary Exchange, if required, under Rule 144 and herewith attach a true copy of the form which I have filed. The undersigned does not know or have any reason to believe that the Issuer is not current in its reports to the SEC as required by Rule 144(c)(1)(i.e. that the Issuer has filed the reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 for a period of at least 90 days immediately preceding the date of the proposed sale of stock and, in addition, has filed the most recent annual report required to be filed thereunder.) I am not aware of any facts or circumstances indicating that I am or may be deemed an "underwriter" with respect to these securities or that the sale of these securities are or will be part of a "distribution" of securities of the Issuer as those terms are defined in the Securities Act of 1933. This is to further confirm to you that all of the information contained herein is true and correct. This is to further confirm to you that all of the information contained in this letter and in and in Form 144, if required, is true and correct. I also am to notify you promptly of any changes in the facts set forth in this letter. I hereby authorize you, if you deem it necessary, to contact my attorney (NAME AND TELEPHONE NUMBER) --------------------------------------------------------------, the Issuer, its transfer agent, and their agents and representatives concerning this transaction. I hereby permit you, the Issuer, the transfer agent and their agents and representatives to rely on this letter. Lisa Wyly, Revocable Trust Sam Wyly, Trustee - ---------------------------------------- Print Name of Seller Very truly yours, - ---------------------------------------- Date Date 1-14-98 /s/ Sam Wyly Trustee - ---------------------------------------- ---------------------------------- Signature of Seller ---------------------------------- LEHMAN BROTHERS Rule 144 Seller's Representation --------------------------------------------- Issuer's Name Michaels Stores, Inc. --------------------------------------------- To: Lehman Brothers Inc. Quantity to be Sold Class (e.g. common, Attention: Executive Financial preferred) Services Department 65,000 Shares Common --------------------------------------------- Utilizing Rule 144, I propose to sell through you as brokers or to you a market maker (as that term is defined in Section 3(a)(38) of the Securities Act of 1933) the securities described above. I have no present intention to sell additional securities of this Issuer through any other means. I have not made and do not propose to make any payment in connection with the execution of the transaction, except the usual customary broker commissions or dealer's charges to you; I have not solicited or arranged for the solicitation of orders to buy in anticipation of or in connection with the proposed sale; and (a) I am either an "affiliate of the Issuer" or (b) I am proposing to sell "restricted securities" to or through you (as those terms as defined in Paragraph (a) of Rule 144) which were acquired and fully paid for more than two years ago. I am not acting in concert with any other person in selling the stock and I have not so agreed to act. I am not engaged in a plan with anyone else to dispose of the securities. The shares which I propose to sell through you as broker or to you as market maker, together with all sales made by me and by any person whose sales must be aggregated with mine as provided in Paragraphs (a) and (e) of Rule 144 during the three months prior to the date of this sale, do not and will not exceed the greater of either 1% of the outstanding shares of the above Issuer, or the average weekly volume for the past four full calendar weeks prior to this date on my sale to or through you. (The applicable volume is that reported on all national securities exchanges and/or reported through the automated quotation system and/or reported through the consolidated transaction reporting system, whichever is applicable). With respect to the three months prior to the date of this sale, I, together with any person whose sales must be aggregated with mine: CHECK ONE: A. /X/ I have not sold any securities of the above Issuer. or B. / / I have sold (quantity) __________ shares of the (CLASS)___________ securities of the above Issuer. In addition, CHECK ONE: C. / / I have completed Form 144 and have given it to you for concurrent filing with the SEC, and primary Exchange, if required, or D. /X/ I have filed Form 144 with the SEC, and primary Exchange, if required, under Rule 144 and herewith attach a true copy of the form which I have filed. The undersigned does not know or have any reason to believe that the Issuer is not current in its reports to the SEC as required by Rule 144(c)(1)(i.e. that the Issuer has filed the reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 for a period of at least 90 days immediately preceding the date of the proposed sale of stock and, in addition, has filed the most recent annual report required to be filed thereunder.) I am not aware of any facts or circumstances indicating that I am or may be deemed an "underwriter" with respect to these securities or that the sale of these securities are or will be part of a "distribution" of securities of the Issuer as those terms are defined in the Securities Act of 1933. This is to further confirm to you that all of the information contained herein is true and correct. This is to further confirm to you that all of the information contained in this letter and in and in Form 144, if required, is true and correct. I also am to notify you promptly of any changes in the facts set forth in this letter. I hereby authorize you, if you deem it necessary, to contact my attorney (NAME AND TELEPHONE NUMBER) --------------------------------------------------------------, the Issuer, its transfer agent, and their agents and representatives concerning this transaction. I hereby permit you, the Issuer, the transfer agent and their agents and representatives to rely on this letter. Kelly Wyly Elliott Trust Sam Wyly, Trustee - ---------------------------------------- Print Name of Seller Very truly yours, - ---------------------------------------- Date Date 1-14-98 /s/ Sam Wyly Trustee - ---------------------------------------- ---------------------------------- Signature of Seller ---------------------------------- LEHMAN BROTHERS Rule 144 Seller's Representation --------------------------------------------- Issuer's Name Michaels Stores, Inc. --------------------------------------------- To: Lehman Brothers Inc. Quantity to be Sold Class (e.g. common, Attention: Executive Financial preferred) Services Department 200,000 Shares Common --------------------------------------------- Utilizing Rule 144, I propose to sell through you as brokers or to you a market maker (as that term is defined in Section 3(a)(38) of the Securities Act of 1933) the securities described above. I have no present intention to sell additional securities of this Issuer through any other means. I have not made and do not propose to make any payment in connection with the execution of the transaction, except the usual customary broker commissions or dealer's charges to you; I have not solicited or arranged for the solicitation of orders to buy in anticipation of or in connection with the proposed sale; and (a) I am either an "affiliate of the Issuer" or (b) I am proposing to sell "restricted securities" to or through you (as those terms as defined in Paragraph (a) of Rule 144) which were acquired and fully paid for more than two years ago. I am not acting in concert with any other person in selling the stock and I have not so agreed to act. I am not engaged in a plan with anyone else to dispose of the securities. The shares which I propose to sell through you as broker or to you as market maker, together with all sales made by me and by any person whose sales must be aggregated with mine as provided in Paragraphs (a) and (e) of Rule 144 during the three months prior to the date of this sale, do not and will not exceed the greater of either 1% of the outstanding shares of the above Issuer, or the average weekly volume for the past four full calendar weeks prior to this date on my sale to or through you. (The applicable volume is that reported on all national securities exchanges and/or reported through the automated quotation system and/or reported through the consolidated transaction reporting system, whichever is applicable). With respect to the three months prior to the date of this sale, I, together with any person whose sales must be aggregated with mine: CHECK ONE: A. /X/ I have not sold any securities of the above Issuer. or B. / / I have sold (quantity) __________ shares of the (CLASS)___________ securities of the above Issuer. In addition, CHECK ONE: C. / / I have completed Form 144 and have given it to you for concurrent filing with the SEC, and primary Exchange, if required, or D. /X/ I have filed Form 144 with the SEC, and primary Exchange, if required, under Rule 144 and herewith attach a true copy of the form which I have filed. The undersigned does not know or have any reason to believe that the Issuer is not current in its reports to the SEC as required by Rule 144(c)(1)(i.e. that the Issuer has filed the reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 for a period of at least 90 days immediately preceding the date of the proposed sale of stock and, in addition, has filed the most recent annual report required to be filed thereunder.) I am not aware of any facts or circumstances indicating that I am or may be deemed an "underwriter" with respect to these securities or that the sale of these securities are or will be part of a "distribution" of securities of the Issuer as those terms are defined in the Securities Act of 1933. This is to further confirm to you that all of the information contained herein is true and correct. This is to further confirm to you that all of the information contained in this letter and in and in Form 144, if required, is true and correct. I also am to notify you promptly of any changes in the facts set forth in this letter. I hereby authorize you, if you deem it necessary, to contact my attorney (NAME AND TELEPHONE NUMBER) --------------------------------------------------------------, the Issuer, its transfer agent, and their agents and representatives concerning this transaction. I hereby permit you, the Issuer, the transfer agent and their agents and representatives to rely on this letter. Maverick Entrepreneurs Fund, Ltd. Sam Wyly and Charles J. Wyly, Jr. - ---------------------------------------- Print Name of Seller Gen. Ptrs. Very truly yours, - ---------------------------------------- Date Date 1-14-98 /s/ Charles J. Wyly Gen. Ptr. - ---------------------------------------- ---------------------------------- Signature of Seller ---------------------------------- EX-11 4 EXHIBIT 11 EXHIBIT 11 [LETTERHEAD] January 20, 1998 To each Counterparty (as defined below) 8080 North Central Expressway, Suite 1300 Dallas, Texas 75206 LBF Reference Numbers: N95020077A, N95020081A, N950200083A, N95020082A, N95020076A, N95020077B, N95020081B, N950200083B, N95020082B, N95020076B Dear Sir or Madam: Reference is made to that certain Amended European Call Option Transaction and that certain Amended American Put Option Transaction, each dated as of February 23, 1995, among Lehman Brothers Finance S.A. ("LBF"), Brush Creek, Ltd., Charles Wyly Jr., Trustee for the benefit of Charles J. Wyly III, Charles Wyly Jr., Trustee for the benefit of Jennifer Lynn Wyly Trust, Charles Wyly Jr., Trustee for the benefit of Emily Ann Wyly Trust and Charles Wyly Jr., Trustee for the benefit of Martha Caroline Wyly Trust (each, a "Counterparty" and collectively, the "Counterparties"), the Confirmations of which bear LBF Reference Numbers N95020077A, N95020081A, N950200083A, N95020082A, N95020076A, N95020077B, N95020081B, N950200083B, N95020082B, N95020076B (collectively, the "Transactions"). Reference is also made to (a) that certain Loan Agreement dated as of February 23, 1995 (the "Loan Agreement"), between LBF, as lender, and the Counterparties, as borrowers, (b) that certain Promissory Note dated June 28, 1995, made by Brush Creek, Ltd. to LBF in the principal amount of USD11,994,108, (c) that certain Promissory Note dated June 28, 1995, made by Charles Wyly Jr., Trustee for the benefit of Charles J. Wyly III to LBF in the principal amount of USD2,713,838, (d) that certain Promissory Note dated June 28, 1995, made by Charles Wyly Jr., Trustee for the benefit of Jennifer Lynn Wyly Trust to LBF in the principal amount of USD2,743,509, (e) that certain Promissory Note dated June 28, 1995, made by Charles Wyly Jr., Trustee for the benefit of Emily Ann Wyly Trust to LBF in the principal amount of USD2,713,838 and (f) that certain Promissory Note dated June 28, 1995, made by Charles Wyly Jr., Trustee for the benefit of Martha Caroline Wyly Trust to LBF in the principal amount of USD2,713,838. Each of Item (b) through Item (f) shall hereinafter be referred to as the relevant Counterparty's "Note." Each Counterparty hereby acknowledges that, as of the date hereof, (i) the amount of USD set forth opposite such Counterparty's name on EXHIBIT A hereto is the aggregate amount outstanding, including the unpaid principal, interest thereon and all fees and charges, on such Counterparty's Note and under the Loan Agreement with respect to such Counterparty (such Counterparty's "Loan Obligations") and (ii) there are Calls/Puts on shares of the common stock of Michael Stores Inc. ("Common Stock") remaining under the Transactions with respect to such Counterparty in the amount set forth on EXHIBIT A. Each Counterparty further acknowledges that, as of the date hereof, the number of shares of Common Stock set forth on EXHIBIT A (the "Shares") have been delivered and pledged by such Counterparty to LBF as collateral under the Transactions of the Loan Obligations and the obligations of such Counterparty under the Transactions, all pursuant to and in accordance with the Pledge Agreement dated as of February 23, 1995 (the "Pledge Agreement"), entered into among LBF and the Counterparties in connection with that certain 1992 ISDA Master Agreement dated as of February 23, 1995 (the "Master Agreement"), among LBF and each Counterparty. Each Counterparty's execution and delivery of this letter agreement shall constitute an irrevocable order by such Counterparty for Lehman Brothers Inc., an affiliate of LBF ("LBI"), to sell (the "Sell Order") all of such Counterparty's Shares in "brokers transactions" as defined in Rule 144 promulgated under the Securities Act of 1933, as amended ("Rule 144"). The Sell Order shall last for up to 15 Exchange Business Days (as such term is defined under the Transactions) commencing on January 20, 1998 (the "Selling Period"). Each Counterparty acknowledges and understands that, pursuant to the Sell Order, LBI may sell any number of such Counterparty's Shares on any day during the Selling Period, with no restriction as to the minimum or maximum number of Shares sold on any such day. Each Counterparty shall pay to LBI, in consideration for the sale of such Counterparty's Shares, out of the proceeds of such sale, USD0.15 for each Share sold (the "Commission"). Each Counterparty acknowledges that LBI or its affiliates may purchase Shares from such Counterparty or otherwise during the Selling Period. Each Counterparty further acknowledges and agrees that the proceeds of the sale of such Counterparty's Shares, less the Commission (the "Net Sale Proceeds") which such Counterparty agrees shall be paid out of such proceeds, shall constitute, and shall be substituted for such Counterparty's Shares as, collateral posted and pledged by such Counterparty to LBF under the Transactions and the Pledge Agreement. Each Counterparty hereby reaffirms all agreements set forth in the Pledge Agreement with respect to the Sale Proceeds. Each Counterparty represents and warrants to LBF and to LBI, with respect to the Sell Order and the sale of the Shares, that the representations set forth in such Counterparty's 144 Letter (as hereinafter defined) are true, accurate and complete. Each Counterparty hereby reaffirms the representations and warranties made by such Counterparty to LBF in the Master Agreement, the Pledge Agreement, the Loan Agreement and the Transactions, including those representations made with respect to such Counterparty's authority to enter into such agreements and with respect to the enforceability of such agreements against such Counterparty, with full force and effect and as if such representations and warranties were made on the date hereof. This letter agreement shall confirm the agreement of each Counterparty and LBF fully to terminate the Transactions, effective as of the last day of the Selling Period, upon the following terms and conditions: 1. The representations and warranties set forth in the previous paragraph shall be true and accurate as of the date hereof. 2. Contemporaneously with the execution and delivery of this agreement by each Counterparty, such Counterparty shall have (a) transmitted three copies of a duly executed Notice of Proposed Sale of Securities Pursuant to Rule 144 on Securities and Exchange Commission ("SEC") Form 144 for filing with the SEC at its principal office 2 in Washington, D.C. and (b) executed and delivered to LBI (to its satisfaction) a Seller's Representation Letter in the form attached hereto as EXHIBIT B (the "144 Letter"). Each Counterparty shall cooperate with LBI to ensure that sales of Shares pursuant to the Sell Order shall be in compliance with Rule 144. 3. LBF and each Counterparty agree that the "Final Price" (as such term is defined in the Transactions) with respect to each Transaction shall be equal to the average execution price for all Shares sold during the Selling Period pursuant to the Sell Order. 4. Each Counterparty agrees that (a) the "Cash Settlement Amount" (as such term is defined in the Transactions) of the Transactions, if any, payable by LBF to such Counterparty pursuant to the Transactions, together with (b) such Counterparty's Net Sale Proceeds, shall be applied to repay the Loan Obligations owing and payable by such Counterparty to LBF. If, after application of the foregoing amounts to the Loan Obligations, the Loan Obligations of such Counterparty shall not have been paid in full (the remaining unpaid amount, the "Balance"), then such Counterparty shall pay the Balance to LBF, in USD in immediately available funds, no later than the last day of the Selling Period, to LBF's account at Citibank, N.A., New York, SWIFT Code: CITIUS33, FED ABA Number: 021000089, Account Name: Lehman Brothers Holdings Inc., In Favor of: Lehman Brothers Finance S.A., Account Number: 40729568. 5. Each Counterparty agrees not to engage, and to cause its affiliates not to engage, in any sale of Common Stock during the period commencing on and including the date hereof and including the third Exchange Business Day after the last Exchange Business Day of the Selling Period. 6. Each Counterparty agrees, in connection herewith and in connection with the Sell Order and the sale of such Counterparty's Shares, to make such other filings, with the SEC and otherwise, and to take all further actions that may be necessary to comply with relevant federal and state securities laws and regulations. Upon the satisfaction or completion, as the case may be, of the foregoing terms and conditions, all rights and obligations of LBF and each Counterparty in respect of the Transactions shall terminate. This agreement itself shall be the binding agreement between LBF and each Counterparty relating to this termination. This agreement shall be governed by and construed under the laws of the State of New York, without regard for the principles of conflict of laws thereof. For purposes of convenience, this instrument has been executed and delivered simultaneously by each Counterparty. Nonetheless, it is intended and agreed that this instrument shall constitute a separate agreement between each Counterparty severally on the one hand, and LBF and LBI on the other hand, and shall not constitute an agreement between one Counterparty and any other Counterparty or an agreement among Counterparties. [Intentionally left blank] 3 Please evidence your agreement to the terms of this Termination Agreement by executing this letter and returning it to us at facsimile number 011-411-287-8825, Attention: Documentation. LEHMAN BROTHERS FINANCE S.A. LEHMAN BROTHERS INC. By: By: ----------------------------- ----------------------------- Name: Name: Title: Title: By: ----------------------------- Name: Title: Accepted and Agreed to: CHARLES WYLY, TRUSTEE FOR THE BENEFIT OF CHARLES J. WYLY III TRUST BRUSH CREEK, LTD. By: By: ------------------ ------------------ Name: Name: Title: Title: CHARLES WYLY, TRUSTEE FOR THE CHARLES WYLY, TRUSTEE FOR THE BENEFIT OF EMILY ANN WYLY TRUST BENEFIT OF JENNIFER LYNN WYLY TRUST By: By: ------------------ ------------------ Name: Name: Title: Title: CHARLES WYLY, TRUSTEE FOR THE BENEFIT OF MARTHA CAROLINE WYLY TRUST By: ------------------ Name: Title: Execution time will be furnished upon a Counterparty's written request. 4 EXHIBIT A
- --------------------------------------------------------------------------------------------------------------------- Counterparty Call/Put Options No. Shares Pledged Loan Obligations ------------ ---------------- ------------------ --------------- - --------------------------------------------------------------------------------------------------------------------- Brush Creek, Ltd 420,000 420,000 $11,994,108 - --------------------------------------------------------------------------------------------------------------------- Charles Wyly, Trustee for the Benefit of 96,070 96,070 $ 2,743,509 Jennifer Lynn Wyly Trust - --------------------------------------------------------------------------------------------------------------------- Charles Wyly, Trustee for the benefit of 95,031 95,031 $ 2,713,838 Emily Ann Wyly Trust - --------------------------------------------------------------------------------------------------------------------- Charles Wyly, Trustee for the benefit of 95,031 95,031 $ 2,713,838 Charles J. Wyly III Trust - --------------------------------------------------------------------------------------------------------------------- Charles Wyly, Trustee for the benefit of 95,031 95,031 $ 2,713,840 Martha Caroline Wyly Trust - ---------------------------------------------------------------------------------------------------------------------
5 EXHIBIT B SELLER'S REPRESENTATION LETTER 6 LEHMAN BROTHERS Rule 144 Seller's Representation --------------------------------------------- Issuer's Name Michaels Stores, Inc. --------------------------------------------- To: Lehman Brothers Inc. Quantity to be Sold Class (e.g. common, Attention: Executive Financial preferred) Services Department 420,000 Shares Common --------------------------------------------- Utilizing Rule 144, I propose to sell through you as brokers or to you a market maker (as that term is defined in Section 3(a)(38) of the Securities Act of 1933) the securities described above. I have no present intention to sell additional securities of this Issuer through any other means. I have not made and do not propose to make any payment in connection with the execution of the transaction, except the usual customary broker commissions or dealer's charges to you; I have not solicited or arranged for the solicitation of orders to buy in anticipation of or in connection with the proposed sale; and (a) I am either an "affiliate of the Issuer" or (b) I am proposing to sell "restricted securities" to or through you (as those terms as defined in Paragraph (a) of Rule 144) which were acquired and fully paid for more than two years ago. I am not acting in concert with any other person in selling the stock and I have not so agreed to act. I am not engaged in a plan with anyone else to dispose of the securities. The shares which I propose to sell through you as broker or to you as market maker, together with all sales made by me and by any person whose sales must be aggregated with mine as provided in Paragraphs (a) and (e) of Rule 144 during the three months prior to the date of this sale, do not and will not exceed the greater of either 1% of the outstanding shares of the above Issuer, or the average weekly volume for the past four full calendar weeks prior to this date on my sale to or through you. (The applicable volume is that reported on all national securities exchanges and/or reported through the automated quotation system and/or reported through the consolidated transaction reporting system, whichever is applicable). With respect to the three months prior to the date of this sale, I, together with any person whose sales must be aggregated with mine: CHECK ONE: A. /X/ I have not sold any securities of the above Issuer. or B. / / I have sold (quantity) __________ shares of the (CLASS)___________ securities of the above Issuer. In addition, CHECK ONE: C. / / I have completed Form 144 and have given it to you for concurrent filing with the SEC, and primary Exchange, if required, or D. /X/ I have filed Form 144 with the SEC, and primary Exchange, if required, under Rule 144 and herewith attach a true copy of the form which I have filed. The undersigned does not know or have any reason to believe that the Issuer is not current in its reports to the SEC as required by Rule 144(c)(1)(i.e. that the Issuer has filed the reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 for a period of at least 90 days immediately preceding the date of the proposed sale of stock and, in addition, has filed the most recent annual report required to be filed thereunder.) I am not aware of any facts or circumstances indicating that I am or may be deemed an "underwriter" with respect to these securities or that the sale of these securities are or will be part of a "distribution" of securities of the Issuer as those terms are defined in the Securities Act of 1933. This is to further confirm to you that all of the information contained herein is true and correct. This is to further confirm to you that all of the information contained in this letter and in and in Form 144, if required, is true and correct. I also am to notify you promptly of any changes in the facts set forth in this letter. I hereby authorize you, if you deem it necessary, to contact my attorney (NAME AND TELEPHONE NUMBER) --------------------------------------------------------------, the Issuer, its transfer agent, and their agents and representatives concerning this transaction. I hereby permit you, the Issuer, the transfer agent and their agents and representatives to rely on this letter. Brush Creek Ltd. Charles J. Wyly, Jr. G.P. - ---------------------------------------- Print Name of Seller Very truly yours, - ---------------------------------------- Date Date 1-14-98 /s/ Charles J. Wyly, Jr. Gen. Ptr. - ---------------------------------------- ---------------------------------- Signature of Seller ---------------------------------- LEHMAN BROTHERS Rule 144 Seller's Representation --------------------------------------------- Issuer's Name Michaels Stores, Inc. --------------------------------------------- To: Lehman Brothers Inc. Quantity to be Sold Class (e.g. common, Attention: Executive Financial preferred) Services Department 95,031 Shares Common --------------------------------------------- Utilizing Rule 144, I propose to sell through you as brokers or to you a market maker (as that term is defined in Section 3(a)(38) of the Securities Act of 1933) the securities described above. I have no present intention to sell additional securities of this Issuer through any other means. I have not made and do not propose to make any payment in connection with the execution of the transaction, except the usual customary broker commissions or dealer's charges to you; I have not solicited or arranged for the solicitation of orders to buy in anticipation of or in connection with the proposed sale; and (a) I am either an "affiliate of the Issuer" or (b) I am proposing to sell "restricted securities" to or through you (as those terms as defined in Paragraph (a) of Rule 144) which were acquired and fully paid for more than two years ago. I am not acting in concert with any other person in selling the stock and I have not so agreed to act. I am not engaged in a plan with anyone else to dispose of the securities. The shares which I propose to sell through you as broker or to you as market maker, together with all sales made by me and by any person whose sales must be aggregated with mine as provided in Paragraphs (a) and (e) of Rule 144 during the three months prior to the date of this sale, do not and will not exceed the greater of either 1% of the outstanding shares of the above Issuer, or the average weekly volume for the past four full calendar weeks prior to this date on my sale to or through you. (The applicable volume is that reported on all national securities exchanges and/or reported through the automated quotation system and/or reported through the consolidated transaction reporting system, whichever is applicable). With respect to the three months prior to the date of this sale, I, together with any person whose sales must be aggregated with mine: CHECK ONE: A. /X/ I have not sold any securities of the above Issuer. or B. / / I have sold (quantity) __________ shares of the (CLASS)___________ securities of the above Issuer. In addition, CHECK ONE: C. / / I have completed Form 144 and have given it to you for concurrent filing with the SEC, and primary Exchange, if required, or D. /X/ I have filed Form 144 with the SEC, and primary Exchange, if required, under Rule 144 and herewith attach a true copy of the form which I have filed. The undersigned does not know or have any reason to believe that the Issuer is not current in its reports to the SEC as required by Rule 144(c)(1)(i.e. that the Issuer has filed the reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 for a period of at least 90 days immediately preceding the date of the proposed sale of stock and, in addition, has filed the most recent annual report required to be filed thereunder.) I am not aware of any facts or circumstances indicating that I am or may be deemed an "underwriter" with respect to these securities or that the sale of these securities are or will be part of a "distribution" of securities of the Issuer as those terms are defined in the Securities Act of 1933. This is to further confirm to you that all of the information contained herein is true and correct. This is to further confirm to you that all of the information contained in this letter and in and in Form 144, if required, is true and correct. I also am to notify you promptly of any changes in the facts set forth in this letter. I hereby authorize you, if you deem it necessary, to contact my attorney (NAME AND TELEPHONE NUMBER) --------------------------------------------------------------, the Issuer, its transfer agent, and their agents and representatives concerning this transaction. I hereby permit you, the Issuer, the transfer agent and their agents and representatives to rely on this letter. Emily Ann Wyly Trust Charles J. Wyly Jr. Trustee - ---------------------------------------- Print Name of Seller Very truly yours, - ---------------------------------------- Date Date 1-14-98 /s/ Charles J. Wyly Jr. Trustee - ---------------------------------------- ---------------------------------- Signature of Seller ---------------------------------- LEHMAN BROTHERS Rule 144 Seller's Representation --------------------------------------------- Issuer's Name Michaels Stores, Inc. --------------------------------------------- To: Lehman Brothers Inc. Quantity to be Sold Class (e.g. common, Attention: Executive Financial preferred) Services Department 96,070 Shares Common --------------------------------------------- Utilizing Rule 144, I propose to sell through you as brokers or to you a market maker (as that term is defined in Section 3(a)(38) of the Securities Act of 1933) the securities described above. I have no present intention to sell additional securities of this Issuer through any other means. I have not made and do not propose to make any payment in connection with the execution of the transaction, except the usual customary broker commissions or dealer's charges to you; I have not solicited or arranged for the solicitation of orders to buy in anticipation of or in connection with the proposed sale; and (a) I am either an "affiliate of the Issuer" or (b) I am proposing to sell "restricted securities" to or through you (as those terms as defined in Paragraph (a) of Rule 144) which were acquired and fully paid for more than two years ago. I am not acting in concert with any other person in selling the stock and I have not so agreed to act. I am not engaged in a plan with anyone else to dispose of the securities. The shares which I propose to sell through you as broker or to you as market maker, together with all sales made by me and by any person whose sales must be aggregated with mine as provided in Paragraphs (a) and (e) of Rule 144 during the three months prior to the date of this sale, do not and will not exceed the greater of either 1% of the outstanding shares of the above Issuer, or the average weekly volume for the past four full calendar weeks prior to this date on my sale to or through you. (The applicable volume is that reported on all national securities exchanges and/or reported through the automated quotation system and/or reported through the consolidated transaction reporting system, whichever is applicable). With respect to the three months prior to the date of this sale, I, together with any person whose sales must be aggregated with mine: CHECK ONE: A. /X/ I have not sold any securities of the above Issuer. or B. / / I have sold (quantity) __________ shares of the (CLASS)___________ securities of the above Issuer. In addition, CHECK ONE: C. / / I have completed Form 144 and have given it to you for concurrent filing with the SEC, and primary Exchange, if required, or D. /X/ I have filed Form 144 with the SEC, and primary Exchange, if required, under Rule 144 and herewith attach a true copy of the form which I have filed. The undersigned does not know or have any reason to believe that the Issuer is not current in its reports to the SEC as required by Rule 144(c)(1)(i.e. that the Issuer has filed the reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 for a period of at least 90 days immediately preceding the date of the proposed sale of stock and, in addition, has filed the most recent annual report required to be filed thereunder.) I am not aware of any facts or circumstances indicating that I am or may be deemed an "underwriter" with respect to these securities or that the sale of these securities are or will be part of a "distribution" of securities of the Issuer as those terms are defined in the Securities Act of 1933. This is to further confirm to you that all of the information contained herein is true and correct. This is to further confirm to you that all of the information contained in this letter and in and in Form 144, if required, is true and correct. I also am to notify you promptly of any changes in the facts set forth in this letter. I hereby authorize you, if you deem it necessary, to contact my attorney (NAME AND TELEPHONE NUMBER) --------------------------------------------------------------, the Issuer, its transfer agent, and their agents and representatives concerning this transaction. I hereby permit you, the Issuer, the transfer agent and their agents and representatives to rely on this letter. Jennifer Lynn Wyly Trust Charles J. Wyly Jr. Trustee - ---------------------------------------- Print Name of Seller Very truly yours, - ---------------------------------------- Date Date 1-14-98 /s/ Charles J. Wyly Jr. Trustee - ---------------------------------------- ---------------------------------- Signature of Seller ---------------------------------- LEHMAN BROTHERS Rule 144 Seller's Representation --------------------------------------------- Issuer's Name Michaels Stores, Inc. --------------------------------------------- To: Lehman Brothers Inc. Quantity to be Sold Class (e.g. common, Attention: Executive Financial preferred) Services Department 95,031 Shares Common --------------------------------------------- Utilizing Rule 144, I propose to sell through you as brokers or to you a market maker (as that term is defined in Section 3(a)(38) of the Securities Act of 1933) the securities described above. I have no present intention to sell additional securities of this Issuer through any other means. I have not made and do not propose to make any payment in connection with the execution of the transaction, except the usual customary broker commissions or dealer's charges to you; I have not solicited or arranged for the solicitation of orders to buy in anticipation of or in connection with the proposed sale; and (a) I am either an "affiliate of the Issuer" or (b) I am proposing to sell "restricted securities" to or through you (as those terms as defined in Paragraph (a) of Rule 144) which were acquired and fully paid for more than two years ago. I am not acting in concert with any other person in selling the stock and I have not so agreed to act. I am not engaged in a plan with anyone else to dispose of the securities. The shares which I propose to sell through you as broker or to you as market maker, together with all sales made by me and by any person whose sales must be aggregated with mine as provided in Paragraphs (a) and (e) of Rule 144 during the three months prior to the date of this sale, do not and will not exceed the greater of either 1% of the outstanding shares of the above Issuer, or the average weekly volume for the past four full calendar weeks prior to this date on my sale to or through you. (The applicable volume is that reported on all national securities exchanges and/or reported through the automated quotation system and/or reported through the consolidated transaction reporting system, whichever is applicable). With respect to the three months prior to the date of this sale, I, together with any person whose sales must be aggregated with mine: CHECK ONE: A. /X/ I have not sold any securities of the above Issuer. or B. / / I have sold (quantity) __________ shares of the (CLASS)___________ securities of the above Issuer. In addition, CHECK ONE: C. / / I have completed Form 144 and have given it to you for concurrent filing with the SEC, and primary Exchange, if required, or D. /X/ I have filed Form 144 with the SEC, and primary Exchange, if required, under Rule 144 and herewith attach a true copy of the form which I have filed. The undersigned does not know or have any reason to believe that the Issuer is not current in its reports to the SEC as required by Rule 144(c)(1)(i.e. that the Issuer has filed the reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 for a period of at least 90 days immediately preceding the date of the proposed sale of stock and, in addition, has filed the most recent annual report required to be filed thereunder.) I am not aware of any facts or circumstances indicating that I am or may be deemed an "underwriter" with respect to these securities or that the sale of these securities are or will be part of a "distribution" of securities of the Issuer as those terms are defined in the Securities Act of 1933. This is to further confirm to you that all of the information contained herein is true and correct. This is to further confirm to you that all of the information contained in this letter and in and in Form 144, if required, is true and correct. I also am to notify you promptly of any changes in the facts set forth in this letter. I hereby authorize you, if you deem it necessary, to contact my attorney (NAME AND TELEPHONE NUMBER) --------------------------------------------------------------, the Issuer, its transfer agent, and their agents and representatives concerning this transaction. I hereby permit you, the Issuer, the transfer agent and their agents and representatives to rely on this letter. Charles J. Wyly III Trust Charles J. Wyly Jr. Trustee - ---------------------------------------- Print Name of Seller Very truly yours, - ---------------------------------------- Date Date 1-14-98 /s/ Charles J. Wyly Jr. Trustee - ---------------------------------------- ---------------------------------- Signature of Seller ---------------------------------- LEHMAN BROTHERS Rule 144 Seller's Representation --------------------------------------------- Issuer's Name Michaels Stores, Inc. --------------------------------------------- To: Lehman Brothers Inc. Quantity to be Sold Class (e.g. common, Attention: Executive Financial preferred) Services Department 95,031 Shares Common --------------------------------------------- Utilizing Rule 144, I propose to sell through you as brokers or to you a market maker (as that term is defined in Section 3(a)(38) of the Securities Act of 1933) the securities described above. I have no present intention to sell additional securities of this Issuer through any other means. I have not made and do not propose to make any payment in connection with the execution of the transaction, except the usual customary broker commissions or dealer's charges to you; I have not solicited or arranged for the solicitation of orders to buy in anticipation of or in connection with the proposed sale; and (a) I am either an "affiliate of the Issuer" or (b) I am proposing to sell "restricted securities" to or through you (as those terms as defined in Paragraph (a) of Rule 144) which were acquired and fully paid for more than two years ago. I am not acting in concert with any other person in selling the stock and I have not so agreed to act. I am not engaged in a plan with anyone else to dispose of the securities. The shares which I propose to sell through you as broker or to you as market maker, together with all sales made by me and by any person whose sales must be aggregated with mine as provided in Paragraphs (a) and (e) of Rule 144 during the three months prior to the date of this sale, do not and will not exceed the greater of either 1% of the outstanding shares of the above Issuer, or the average weekly volume for the past four full calendar weeks prior to this date on my sale to or through you. (The applicable volume is that reported on all national securities exchanges and/or reported through the automated quotation system and/or reported through the consolidated transaction reporting system, whichever is applicable). With respect to the three months prior to the date of this sale, I, together with any person whose sales must be aggregated with mine: CHECK ONE: A. /X/ I have not sold any securities of the above Issuer. or B. / / I have sold (quantity) __________ shares of the (CLASS)___________ securities of the above Issuer. In addition, CHECK ONE: C. / / I have completed Form 144 and have given it to you for concurrent filing with the SEC, and primary Exchange, if required, or D. /X/ I have filed Form 144 with the SEC, and primary Exchange, if required, under Rule 144 and herewith attach a true copy of the form which I have filed. The undersigned does not know or have any reason to believe that the Issuer is not current in its reports to the SEC as required by Rule 144(c)(1)(i.e. that the Issuer has filed the reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 for a period of at least 90 days immediately preceding the date of the proposed sale of stock and, in addition, has filed the most recent annual report required to be filed thereunder.) I am not aware of any facts or circumstances indicating that I am or may be deemed an "underwriter" with respect to these securities or that the sale of these securities are or will be part of a "distribution" of securities of the Issuer as those terms are defined in the Securities Act of 1933. This is to further confirm to you that all of the information contained herein is true and correct. This is to further confirm to you that all of the information contained in this letter and in and in Form 144, if required, is true and correct. I also am to notify you promptly of any changes in the facts set forth in this letter. I hereby authorize you, if you deem it necessary, to contact my attorney (NAME AND TELEPHONE NUMBER) --------------------------------------------------------------, the Issuer, its transfer agent, and their agents and representatives concerning this transaction. I hereby permit you, the Issuer, the transfer agent and their agents and representatives to rely on this letter. Martha Caroline Wyly Trust Charles J. Wyly Jr. Trustee - ---------------------------------------- Print Name of Seller Very truly yours, - ---------------------------------------- Date Date 1-14-98 /s/ Charles J. Wyly Jr. Trustee - ---------------------------------------- ---------------------------------- Signature of Seller ---------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----