EXHIBIT 2.2
FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER
THIS FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER (this "First
Amendment") is made as of this 2nd day of June, 1994 among Leewards Creative
Crafts, Inc., a Delaware corporation ("Leewards"), Michaels Stores, Inc., a
Delaware corporation ("Michaels"), and LWA Acquisition Corporation, a Delaware
corporation and a wholly owned subsidiary of Michaels ("Newco").
Leewards, Michaels and Newco are parties to that certain Agreement and Plan
of Merger dated as of May 10, 1994 (the "Merger Agreement"). Except as
otherwise defined or modified herein, all capitalized terms used in this First
Amendment shall have the meaning set forth in the Merger Agreement.
In consideration of the mutual agreements contained in the Merger Agreement
and in this First Amendment and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
A. AMENDMENTS TO SECTION 1.01 OF THE MERGER AGREEMENT. Paragraphs (aj),
(ak), (ao) and (ap) of Section 1.01 are hereby deleted in their entirety, and
the remaining paragraphs of Section 1.01 and all cross-references thereto shall
be deemed to be renumbered accordingly. The following paragraphs of Section
1.01 are hereby amended to read in their entirety as follows (after taking into
account the renumbering of paragraphs effected pursuant to the preceding
sentence):
"(aj) "Class D Preferred Redemption Value" means the product obtained
by multiplying (i) the Class D Preferred Redemption Value Per Share by (ii)
the number of shares of Class D Preferred Stock which are outstanding
immediately prior to the Closing.
(bl) "Eligible Common Equivalents" means the (i) the outstanding
shares of Leewards Common Stock or Class C Common Stock immediately prior
to the Closing, (ii) the shares of Leewards Common Stock into which the
outstanding number of shares of Class B Common Stock immediately prior to
the Closing are convertible, (iii) the shares of Leewards Common Stock into
which the shares of Class C Preferred Stock with respect to which a Class C
Conversion Election has been made are convertible, (iv) the shares of
Leewards Common Stock into which the shares of Class E Preferred Stock with
respect to which a Class E Conversion Election has been made are
convertible and (v) with respect to Management Options not exercised prior
to the Closing, the shares of Leewards Common Stock issuable upon exercise
of such Management Options as of the Closing.
(ci) "Fully Diluted Number of Shares" means the sum of (i) the number
of outstanding shares of Leewards Common Stock immediately prior to the
Closing plus (ii) the number of shares of Leewards Common Stock into which
the outstanding number of shares of Class B Common Stock immediately prior
to the Closing are convertible plus (iii) the number of shares of Leewards
Common Stock into which the outstanding number of shares of Class C
Preferred Stock with respect to which a Class C Conversion Election has
been made are convertible plus (iv) the number of shares of Leewards Common
Stock into which the shares of Class E Preferred Stock with respect to
which a Class E Conversion Election has been made are convertible plus (v)
with respect to Options not exercised prior to the Closing, the number of
shares of Leewards Common Stock issuable upon exercise of the Management
Options and the Non-Management Options in full, whether or not exercisable
at or prior to the Closing plus (vi) if the Warrant Put Option is not
exercised prior to the Closing, the number of shares of Leewards Common
Stock issuable upon conversion of the shares of Class B Common Stock into
which the Warrant is exercisable. The Fully Diluted Number of Shares shall
not include (i) any number of shares of Leewards Common Stock issuable upon
conversion of shares of Class C Preferred Stock with respect to which a
Class C Redemption Election has been made, shares of Class D Preferred
Stock, or shares of Class E Preferred Stock with respect to which a Class E
Redemption Election has been made, (ii) any number of shares of Leewards
Common Stock issuable upon exercise of Options which are not Management
Options or Non-Management Options as of the Closing and (iii) any number of
shares of Leewards Common Stock issuable upon exercise of the Warrant if
the Warrant Put Option is exercised.
(dk) "Pro Rata Cash Allocation" means, if the Cash Offering occurs,
the ratio obtained by dividing (i) the Cash Proceeds by (ii) the Adjusted
Value to Common Equivalents plus the Class A Preferred Redemption Value,
plus the Class B Preferred Redemption Value, plus the Exchangeable
Preferred Redemption Value, plus the Class C Preferred Redemption Value,
plus the Class E Preferred Redemption Value, minus the Aggregate Option and
Warrant Value, minus the amounts payable with respect to the Non-Management
Options, the Management Options and the Warrant pursuant to Section
2.09(a)."
B. AMENDMENT TO SECTION 2.02 OF THE MERGER AGREEMENT. Section 2.02 of
the Merger Agreement is hereby amended to read in its entirety as follows:
"SECTION 2.02. THE CLOSING. The Closing shall take place (a) on the
earlier of (i) July 31, 1994, or (ii) ten days (or the next succeeding
business day if such tenth day is not a business day) after the closing of
the underwritten offering of Michaels Common Stock contemplated in Section
2.08(b); provided, in each case that the conditions set forth in
Articles VII and VIII hereof shall be fulfilled or waived in accordance
with this Agreement; provided, further, that if
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the conditions set forth in Sections 7.06 and 8.06 have not been fulfilled
on or before the date otherwise determined pursuant to this clause (a), the
Closing shall take place two business days after such conditions are
fulfilled or (iii) three business days following delivery by Michaels to
Leewards of its election to proceed to the Closing; provided that all of
the conditions set forth in Articles VII and VIII hereof shall be fulfilled
or waived in accordance with this Agreement or (b) at such other time
and/or on such other date as Leewards and Michaels may agree in writing,
subject, in all cases, to Article XII. The date on which the Closing
occurs is hereinafter referred to as the "Closing Date.""
C. AMENDMENTS TO SECTION 2.08 OF THE MERGER AGREEMENT. Paragraph (a) of
Section 2.08 is hereby amended to read in its entirety as follows:
"(a) The total number of shares of Michaels Common Stock to be issued
in connection with the Merger as set forth in Section 2.09 below (including
the shares to be deposited in escrow pursuant to Section 2.14) shall not
exceed 1,550,000 shares of Michaels Common Stock. The total number of
shares of Michaels Common Stock to be issued shall equal 1,550,000 shares
less a number of shares of Michaels Common Stock equal to (x) the sum of
(i) the Montgomery Fee plus (ii) the Citicorp Repurchase Price (if the
Warrant Put Option is exercised) plus (iii) one-half of the MONY Prepayment
Fee plus (iv) all cash paid to holders of the Options or the Warrant (if
the Warrant Put Option is not exercised) pursuant to Section 2.09(a) plus
(v) the Transaction Expenses plus (vi) the Class D Preferred Redemption
Value, such sum divided by (y) the Five Day Average."
D. AMENDMENT TO SECTION 2.09 OF THE MERGER AGREEMENT. Paragraphs
(a)(i)(B), (a)(ii)(B), (a)(iii)(H) and (a)(iv)(H) of Section 2.09 are hereby
deleted in their entirety and the remaining paragraphs and subparagraphs of
Section 2.09 and all cross-references thereto shall be deemed to be renumbered
accordingly.
(I) Former Section 2.09(a)(i)(C) (now renumbered Section 2.09(a)(i)(B)) is
hereby amended to read in its entirety as follows:
"(B) The holders of shares of Class E Preferred Stock
shall have the right to elect to receive for such shares of
Class E Preferred Stock either (x) the number of shares of
Michaels Common Stock determined pursuant to Section
2.09(a)(iii)(J) (the election pursuant to this clause (x) is
referred to herein as the "Class E Redemption Election") or
(y) the number of shares of Michaels Common Stock determined
pursuant to Section 2.09(a)(iii)(I) hereof (the election
referred to in this clause (y) is referred to herein as the
"Class E Conversion Election"). Each holder of shares of
Class E Preferred Stock shall elect the Class E
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Redemption Election or the Class E Conversion Election by
written notice delivered to Leewards on or before the
Closing."
(II) Former Section 2.09(a)(ii)(C) (now renumbered Section 2.09(a)(ii)(B))
is hereby amended to read in its entirety as follows:
"(B) The holders of shares of Class E Preferred Stock
shall have the right to elect to receive for such shares of
Class E Preferred Stock either (x) the consideration
determined pursuant to Section 2.09(a)(iv)(J) (the election
pursuant to this clause (x) is referred to herein as the
"Class E Redemption Election") or (y) the consideration
determined pursuant to Section 2.09(a)(iv)(I) hereof (the
election pursuant to this clause (y) is referred to herein
as the "Class E Conversion Election"). Each holder of
shares of Class E Preferred Stock shall elect the Class E
Redemption Election or the Class E Conversion Election by
written notice delivered to Leewards on or before the
Closing."
(III) Former Section 2.09(a)(iii)(I) (now renumbered Section
2.09(a)(iii)(H)) is hereby amended to read in its entirety as follows:
"(H) Each share of Class D Preferred Stock shall be
converted into the right to receive cash in an amount equal
to the Class D Preferred Redemption Value Per Share."
(IV) Former Section 2.09(a)(iv)(I) (now renumbered Section 2.09(a)(iv)(H))
is hereby amended to read in its entirety as follows:
"(H) Each share of Class D Preferred Stock shall be
converted into the right to receive cash in an amount equal
to the Class D Preferred Redemption Value Per Share."
E. AMENDMENTS TO SECTION 2.10 OF THE MERGER AGREEMENT.
(I) Paragraph (a) of Section 2.10 is amended to read as follows:
"(a) As of the Effective Time, Michaels shall deposit, or shall cause
to be deposited, at the expense of Michaels and with an exchange agent
selected by Michaels, which shall be the transfer agent for Michaels Common
Stock (the "Exchange Agent"), for the benefit of the holders of Leewards
Shares and for exchange in accordance with this Article II, certificates
representing the aggregate number of shares of Michaels Common Stock
computed in accordance with Section 2.08(a) and cash in order to permit the
Exchange Agent to make deliveries pursuant to Section 2.09 hereof (such
certificates for shares of Michaels
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Common Stock, together with the amount of any dividends or distributions
with respect thereto, and cash being hereinafter referred to as the
"Exchange Fund") in exchange for outstanding Leewards Shares."
(II) There is hereby added to Section 2.10 the following:
"(i) Notwithstanding any other provision of this Section 2.10, if at
or prior to the Closing any holder of Class D Preferred Stock delivers
to Michaels (i) a Certificate or Certificates representing shares of
Class D Preferred Stock, (ii) wire transfer instructions, (iii) a
representation of such holder that it has full power and authority to
surrender such Certificate or Certificates, free and clear of any
liens, claims, charges or encumbrances and (iv) a duly completed and
executed Form W-9 (or appropriate Substitute Form W-9), Michaels shall
pay to such holder, by wire transfer (as soon as reasonably possible
after the Effective Time) to the account designated in such wire
transfer instructions, the amount of cash that such holder is entitled
to receive with respect to such shares of Class D Preferred Stock
pursuant to Section 2.09(a)(iii)(H) or Section 2.09(a)(iv)(H), as
applicable, of this Agreement."
F. AMENDMENTS TO SECTION 9.01 OF THE MERGER AGREEMENT. Paragraphs (i)
and (j) of Section 9.01 are hereby amended to read in their entirety as follows:
"(i) executed Investment Representation Letters in the form attached
as EXHIBIT 9.01(i) from each of the Stockholders that is receiving Michaels
Common Stock pursuant to this Agreement;
(j) executed Escrow Agreement in the form attached as EXHIBIT 2.14
from each holder of Management Options and each Stockholder that holds
Leewards Common Stock, Class B Common Stock, Class C Common Stock, Class C
Preferred Stock with respect to which a Class C Conversion Election has
been made or Class E Preferred Stock with respect to which a Class E
Conversion Election has been made; and"
G. AMENDMENT TO SECTION 13.12 OF THE MERGER AGREEMENT. Section 13.12 of
the Merger Agreement is hereby amended to read in its entirety as follows:
"SECTION 13.12 SERVICE OF PROCESS. Service of any and all process
that may be served on any party hereto in any suit, action or proceeding
arising out of this Agreement may be made in the manner and to the address
set forth in Section 13.10 and service thus made shall be taken and held to
be valid personal service upon such party by any party hereto on whose
behalf such service is made."
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H. AMENDMENT TO SECTION 10.03 OF THE MERGER AGREEMENT. There is hereby
added the following paragraph (d) to Section 10.03:
"(d) INDEMNIFICATION. The rights and obligations of the persons
identified in paragraphs (c) and (d) of Section 10.01 with respect to
indemnification shall also apply with respect to any registration statement
filed pursuant to Section 10.03(a), or any prospectus forming a part
thereof, or any amendment or supplement thereto."
I. AMENDMENT TO EXHIBIT 2.14 OF THE MERGER AGREEMENT. Chase Manhattan
Investment Holdings, Inc. is hereby deleted as a signatory to the Escrow
Agreement attached as Exhibit 2.14 and there is hereby added to Section 12 of
Exhibit 2.14 the following:
"(c) Notwithstanding anything in this Agreement to the contrary,
in no event shall the Representative be entitled to be indemnified in
an amount, in the aggregate, in excess of $3,500,000 plus reasonable
attorneys' fees."
J. MISCELLANEOUS. Except as herein expressly modified, the terms and
provisions of the Merger Agreement shall remain as originally executed.
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IN WITNESS WHEREOF, the parties have executed this First Amendment and
caused the same to be duly delivered on their behalf on the day and year first
hereinabove written.
MICHAELS:
MICHAELS STORES, INC.
By: /s/ Kristin L. Magnuson
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Kristin L. Magnuson, Vice President
NEWCO:
LWA ACQUISITION CORPORATION
By: /s/ Kristin L. Magnuson
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Kristin L. Magnuson, Vice President
LEEWARDS:
LEEWARDS CREATIVE CRAFTS, INC.
By: /s/ Jon H. Browne
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Jon H. Browne, Senior Vice President