AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF MERGER
Exhibit 2.1
AMENDMENT NO. 1 TO
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER
This Amendment No. 1 to Agreement and Plan of Merger (the “Amendment”) is
made and entered into as of March 1, 2008 by and among Rock-Tenn Company, a Georgia corporation
(“Buyer”), Carrier Merger Sub, Inc., a Delaware corporation and direct wholly-owned
Subsidiary of Buyer (“Merger Sub”), Southern Container Corp., a Delaware corporation (the
“Company”), the Stockholders holding all of the issued and outstanding Company Common Stock
and listed on Schedule A to the Original Merger Agreement (as defined below) (together the
“Stockholders”), Xxxxxx Xxxx, a resident of the State of New York (“Hill”), and the
Stockholders’ Representative (as defined in the Original Merger Agreement (as defined below)).
RECITALS
WHEREAS, the parties hereto previously entered into that certain Agreement and Plan of Merger,
dated as of January 10, 2008 (the “Original Merger Agreement”); and
WHEREAS, the parties to the Original Merger Agreement deem it advisable and to be in their
respective best interests to amend the Original Merger Agreement in the manner contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing premises and for other good and valuable
consideration, receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Capitalized terms used but not defined in this Amendment shall have the meanings given to them
in the Original Merger Agreement. The following definitions shall be inserted as defined terms in
alphabetical order in the “Definitions” section of the Original Merger Agreement and shall
supersede definitions of the same terms in the Original Merger Agreement:
“Agreement” means this Agreement and Plan of Merger dated as of January 10,
2008, as amended by that certain Amendment No. 1 to Agreement and Plan of Merger dated as
of March 1, 2008.
“ESU Escrow Agreement” means an “Escrow Agreement” as defined in any Earnings
Share Units Agreement or any other escrow agreement to be entered into pursuant to an
Earnings Share Units Agreement in connection with the transactions contemplated hereby,
including, without limitation, the Xxxxxx Escrow Agreement.
“Xxxxxx Escrow Agreement” means an escrow or irrevocable trust agreement to be
entered into between Xxxxx X. Xxxxxx III, the Company and the
Xxxxxx Escrow Agent, which shall provide that the Xxxxxx Escrow Agent shall pay the
Xxxxxx Executive Share (as increased by earnings thereon and decreased by losses thereon)
to Xxxxx X. Xxxxxx III on the first anniversary of the Closing Date (or, if earlier, within
thirty (30) days following Xxxxx X. Xxxxxx III’s (a) death, (b) permanent disability, or
(c) termination of employment by the Company or its affiliates for any reason other than
“Gross Cause” as defined in the Xxxxxx Employment Agreement); provided,
however, that the Xxxxxx Executive Share shall not be paid to Xxxxx X. Xxxxxx III
if, prior to the first anniversary of the Closing Date, Xxxxx X. Xxxxxx III’s employment is
terminated by the Company for Gross Cause or due to his voluntary resignation. The Xxxxxx
Make-Whole Payment and a portion of the ESU Account of Xxxxx X. Xxxxxx III (such portion to
be designated by Xxxxx X. Xxxxxx III) shall also be held by the Xxxxxx Escrow Agent, and
such amounts shall be increased by earnings and decreased by losses in accordance with the
terms of the Xxxxxx Escrow Agreement.
“Proportionate Interest” means each CSE Holder’s proportionate interest in, or
liability for, an applicable amount expressed as a percentage as set forth next to such CSE
Holder’s name on Schedule D hereto.
“Sinking Fund Cash” means (i) the amount of Cash and Cash Equivalents held in
the Bond Fund maintained by the Trustee pursuant to the Indenture of Trust governing the
1998 Series of the SPLLC Notes and in the Revenue Fund, the Interest Fund and the Bond
Sinking Fund maintained by the Trustee pursuant to the Indenture and Supplemental
Indentures governing the 2000A, 2001 and 2002 Series of the SPLLC Notes and (ii) 50% of the
amount of Cash and Cash Equivalents held in the Sinking Fund Account as defined in and
established pursuant to the Amended and Restated Reimbursement Loan and Security Agreement,
dated as of March 25, 2005, by and between Greenpine Road LLC and Wachovia Bank, National
Association (the “Greenpine Loan”), which Cash and Cash Equivalents described in
clauses (i) and (ii) shall be retained in such accounts as of the Measurement Time and the
Closing Date.
2. Schedule D attached hereto is hereby added as a new Schedule D to the Agreement.
Schedule E attached hereto is the Supplement to the Company Disclosure Schedules delivered
to date by the Company to the Buyer as contemplated by Section 5.20 of the Agreement.
3. The following clause (f) shall be added to Section 1.7 of the Original Merger Agreement:
(f) The Company will hold the Transaction Advance paid by Buyer in Cash and Cash
Equivalents in the Company’s operating bank accounts on the Measurement Date and until the
Closing Date (the “Transaction Advance Cash”). On the Closing Date, the Company
will pay to the CSE Holders their Proportionate Interest in the Transaction Advance
pursuant to wire instructions provided by the Stockholders’ Representative.
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4. The following shall be added as the last sentence of clause (c) of Section 1.18 of the Original
Merger Agreement:
To the extent that the amount of Restricted Cash held by SPLLC in its operating bank
account(s) as of the Measurement Time is less than $33.6 million, the Target Working
Capital shall be increased by the amount of such shortfall (i.e., the difference between
$33.6 million and the amount of Restricted Cash actually held by SPLLC in its operating
bank account(s) as of the Measurement Time). To the extent that any amounts are due and
payable by the Company or the CSE Holders to the other pursuant to Section 1.10 following
the Closing, the Parties agree that such payments may be made together with (and if
applicable, netted against) any payments made pursuant to this Section 1.18 (including, in
the case of an amount due the Company by the CSE Holders, by funding such amount out of
available funds in the Working Capital Escrow Account).
5. Section 5.7(b) of the Original Merger Agreement is hereby amended by deleting the references to
“$78,942,000” and “$315,768” set forth therein and replacing them with “$79,342,000” and
“$317,368”, respectively.
6. Clause (i) of Section 5.16(a) of the Original Merger Agreement is hereby deleted and replaced
with the following:
(i) Prior to or after the Closing, with respect to the New Jersey Property,
the Company or the CSE Holders shall, at the sole cost and expense of the Company,
if prior to the Measurement Time, or at the sole cost and expense of the CSE
Holders, if after the Measurement Time, achieve Compliance with ISRA consistent
with the terms of this Agreement, including giving the appropriate notice of this
transaction as and when required to NJDEP, paying applicable fees and oversight
costs to NJDEP, and, if required by NJDEP, posting of financial assurance or a
remediation funding source. If the Company deposits funds into a remediation
funding source prior to the Measurement Time or accrues a current liability as of
the Measurement Time with respect to a deposit to be made into a remediation
funding source prior to or after the Closing (in either case, provided that such
deposit is not reflected as a current asset in the calculation of Net Working
Capital) or the CSE Holders (prior to or after the Measurement Time) deposit funds
into a remediation funding source, any such funds not used for remediation and
available for distribution from the remediation fund shall be distributed when and
as available (x) to the CSE Holders in accordance with their respective
Proportionate Interests if the deposit into the remediation fund is made by the
Company (prior to the Measurement Time) or by the CSE Holders (prior to or after
the Measurement Time) in accordance with their respective Proportionate Interests
and (y) to those CSE Holders contributing funds for deposit into the remediation
fund in proportion to the amounts contributed by the them if such deposit is made
by the CSE
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Holders other than in accordance with their respective Proportionate
Interests.
7. With respect to Schedule 1.18 to the Original Merger Agreement and the calculation of Net
Working Capital, the Parties agree as follows:
| a. | The amount of the Transaction Advance will be excluded from Cash and Cash Equivalents for purposes of calculating Net Working Capital and, as a result, the calculation of the Actual Net Working Capital pursuant to Section 1.18 shall not include the $10,000,000 of Cash and Cash Equivalents constituting the Transaction Advance that is to be held by the Company at the Measurement Time and the Closing Date pursuant to Section 1.7(f). | ||
| b. | SCC will accrue an accrued expense as a current liability, as of the Measurement Date, of $254,687, representing the cost of the premium for the 5-year environmental insurance policy including a 3% charge for terrorism coverage. | ||
| c. | The proceeds received by the Company pursuant to the sale of the Xxxxxx Loan Agreement, as contemplated by Item 7 of Schedule 4.1(a), will be held by the Company in Cash or Cash Equivalents through the Measurement Time, but shall be excluded from the current assets for purposes of calculating Net Working Capital. | ||
| d. | The Parties acknowledge and agree that, in calculating the Actual Working Capital, the measurement time or “cut-off” time with respect to conducting the Inventory of SPLLC and determining and valuing the current assets and current liabilities of SPLLC shall be as of 6:00 a.m. Eastern Time on the Monday immediately following the Measurement Time (and not as of the Measurement Time). | ||
| e. | The Parties agree that the reimbursement of the CSE Holders by the Buyer as contemplated by the last sentence of Section 5.8(a) shall be effected as a part of the working capital adjustment pursuant to Section 1.18. Specifically, in calculating the Actual Net Working Capital: (i) the CSE Holders shall be entitled to a credit for any amount to be reimbursed pursuant to the last sentence of Section 5.8(a) if such out-of-pocket cost was incurred and paid by the Company prior to the Measurement Time and (ii) the current liabilities of the Company included in the calculation of Actual Net Working Capital shall exclude any current liability that is incurred but not paid by the Company as of the Measurement Time if such current liability is an out-of-pocket |
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| cost for which the CSE Holders are entitled to be reimbursed pursuant to the last sentence of Section 5.8(a). |
8. The following shall be added as a new Items 7 and 8 to Schedule 4.1(a) to the Original Merger
Agreement:
7. Prior to the Closing Date, the Company shall sell to Xxxxxx Xxxxxxxx, Xxxxxx
Xxxxxxxx and Xxxxxx Xxxx, and Xxxxxx Xxxxxxxx, Xxxxxx Xxxxxxxx and Xxxxxx Xxxx shall
purchase, the notes issued to the Company under that certain Amended and Restated Loan
Agreement dated as of December 16, 2002 between Southern Container Corp. and Xxxxx X.
Xxxxxx III and Xxxxxx X. Xxxxxx (the “Xxxxxx Loan Agreement”), and the Company
shall assign to Xxxxxx Xxxxxxxx, Xxxxxx Xxxxxxxx and Xxxxxx Xxxx all of the Company’s
rights under the Xxxxxx Loan Agreement, in exchange for a cash payment on the date of such
sale and assignment by Xxxxxx Xxxxxxxx, Xxxxxx Xxxxxxxx and Xxxxxx Xxxx to the Company
equal to the outstanding principal amounts of such notes, together with accrued and unpaid
interest thereon.
8. The Company shall be entitled to award additional bonuses to its employees and
directors in the aggregate amount of up to $700,000 provided that (i) such bonuses are
awarded prior to the Measurement Time and the Company provides a list of such bonus awards
to the Buyer at or prior to the Closing; (ii) the Company shall accrue a current liability
as of the Measurement Time for all amounts due and payable with respect to such bonuses and
any other cost payable in connection therewith (the “Bonus Accrual Amount”),
including the employer portion of any payroll taxes related thereto, and such current
liability shall be taken into effect in calculating the Actual Net Working Capital pursuant
to Section 1.18 of the Agreement; and (iii) the Company shall hold the Bonus Accrual Amount
in Cash and Cash Equivalents in the Company’s operating bank accounts on the Measurement
Time and until the Closing Date (which shall be in addition to the Transaction Advance
Cash). The Company shall pay such bonuses at such time as the Stockholders’ Representative
shall designate, but in any event within 75 days following the Closing Date.
9. Schedule 2.5B to the Original Merger Agreement is hereby amended to reflect that the
Equipment Loan Payable by Preflex LLC to People’s Capital and Leasing Corp. will be repaid in full
by the Company at or prior to Closing, and if repaid at Closing, all amounts due and payable to the
lender to effect the payoff of the loan and the release of the applicable collateral (including all
prepayment penalties and fees) will be included in the Company Net Debt.
10. Clause (a) of Section 1.10 of the Original Merger Agreement is hereby deleted and replaced with
the following:
(a) The Company shall or shall cause the applicable ESU Escrow Agent to pay all
amounts that shall become due and payable under those certain
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Earnings Share Units Agreements set forth on Schedule 1.10 (such agreements, as
amended and modified through the date of this Agreement, the “Earnings Share Units
Agreements”) at such times and pursuant to such terms as set forth therein. On the Closing
Date or as soon as reasonably practicable thereafter (but in any event on or prior to the
thirtieth (30th) day following the Closing Date), the Company shall deposit with the
applicable ESU Escrow Agents any and all amounts required pursuant to the Earnings Share
Units Agreements and the ESU Escrow Agreements. For the avoidance of doubt, the parties
acknowledge and agree that on the Closing Date, or as soon as reasonably practicable
thereafter (but in any event on or prior to the thirtieth (30th) day following the Closing
Date), in addition to any other amounts required to be deposited with the applicable ESU
Escrow Agents pursuant to this Section 1.10(a), the Company shall deposit with the
applicable ESU Escrow Agents (without duplication for any amounts deposited with respect to
an individual pursuant to the first sentence of this Section 1.10(a)) all payments due
pursuant to the Earnings Share Units Agreements with respect to the Company’s 2007 fiscal
year and the Management 2008 ESU Amounts. To the extent that such amounts paid pursuant to
this Section 1.10(a) are required to be repaid or reimbursed to the Surviving Corporation
following the Effective Time pursuant to any Earnings Share Units Agreement (or ESU Escrow
Agreement or any other agreement or arrangement described therein), Buyer shall cause the
Surviving Corporation to promptly pay the applicable Proportionate Interest of such
refunded or reimbursed amounts to each CSE Holder entitled to receive the Merger
Consideration hereunder (unless such amounts were not reflected as a reduction in the
determination of the Merger Consideration pursuant to Section 1.7(a) hereof). Following
the Closing, the Surviving Corporation shall pay all payments, as they become due and
earned, with respect to the Management Retention Bonus Amounts. To the extent that any
Management Retention Bonus Amounts are not required to be paid by the Company following the
Effective Time pursuant to the terms of the governing letter agreements, Buyer shall cause
the Surviving Corporation to promptly pay the applicable Proportionate Interest of such
unearned and unpaid Management Retention Bonus Amounts to each CSE Holder entitled to
receive the Merger Consideration hereunder. In the event that any additional amounts are
required to be paid by the Company pursuant to any Earnings Share Units Agreement (or the
ESU Escrow Agreement or any other agreement or arrangement described therein) or the
Management Retention Bonus Amounts payable by the Company exceed the amount reflected as a
reduction in determining the Merger Consideration pursuant to Section 1.7(a) hereof, the
CSE Holders shall be obligated to promptly upon demand reimburse the Company their
Proportionate Interest of such additional amounts (including any payroll or employment
Taxes required to be paid in connection therewith). For the avoidance of doubt, the
parties acknowledge and agree that any amount payable to Xxxx XxXxxxxx pursuant to that
certain letter agreement by and between Xxxx XxXxxxxx and Buyer dated December 12, 2007 in
lieu of any of any credit with respect to the Company’s 2008 fiscal year (the “XxXxxxxx
Amount”) shall not be deposited with
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any ESU Escrow Agent pursuant to this Section 1.10(a) and Buyer shall have the sole
obligation to pay such amount.
11. Clause (a) of Section 6.2 of the Original Merger Agreement is hereby amended to delete the
phrase “with the same force and effect as if made as of the Closing” in each of the two instances
in which that phrase is used in Section 6.2(a).
12. Clause (a) of Section 6.3 of the Original Merger Agreement is hereby amended to delete the
phrase “with the same force and effect as if made as of the Closing” in each of the two instances
in which that phrase is used in Section 6.3(a).
13. Schedule C to the Agreement is hereby amended to include a Management Retention Bonus Amount
for Xxx Tolland in the amount of $50,000.
14. With respect to the Buyer’s obligation to reimburse the CSE Holders pursuant to the last
sentence of Section 5.8(a) and the out-of-pocket cost incurred by the Company and the Company
Subsidiaries related to the preparation of the Company’s audited financial statements for the
fiscal year ended December 29, 2007, the Parties acknowledge that the amount to be reimbursed to
the CSE Holders with respect to the fees and expenses of the Company’s independent public
accounting firm with respect thereto (which will be reimbursed in the manner described in Section
7(e) of this Amendment) will be the amount by which the out-of-pocket costs associated therewith
exceed the estimate for such 2007 audit originally provided to the Company by its independent
public accounting firm.
15. The second sentence of Section 1.10(b) of the Original Merger Agreement is hereby deleted and
replaced with the following:
On the Closing Date or as soon as reasonably practicable thereafter (but in any event on or
prior to the thirtieth (30th) day following the Closing Date), the Company shall
deposit with the Xxxxxx Escrow Agent the Xxxxxx Make-Whole Payment.
16. The first sentence of Section 1.18(a) of the Original Merger Agreement is hereby deleted and
replaced with the following:
The Company will deliver to Buyer on the last Business Day prior to the anticipated
Measurement Time a statement (the “Preliminary Statement”) setting forth the
Company’s good faith estimate of the Company Net Debt as of the close of business on the
Sunday last preceding the anticipated Closing Date (“Estimated Company Net Debt”).
17. Clause (iii) of Section 4.1(e) of the Original Merger Agreement is hereby amended by the
addition of the phrase “or the terms of the Greenpine Loan, as applicable” at the end of such
clause.
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18. Except as modified hereby, all of the terms and conditions of the Original Merger Agreement
remain in full force and effect and are hereby reaffirmed, ratified and approved. This Amendment,
together with the Original Merger Agreement, embodies the entire agreement and understanding
between the parties hereto with respect to the subject matter hereof. No statement,
representation, warranty, covenant or agreement of any kind not expressly set forth in this
Amendment shall affect, or be used to interpret, change or restrict, the express terms and
conditions of this Amendment. Hereafter references to the Merger Agreement in any document or
other agreement shall be deemed to constitute references to the Original Merger Agreement as
amended by this Amendment. This Amendment may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute one and the same
instrument. Execution and delivery of this Amendment may be made and evidenced by facsimile
transmission.
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IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first above
written.
| Buyer: | ||||||
| ROCK-TENN COMPANY | ||||||
| By: | /s/ Xxxxxx X. Xxxxxxxx | |||||
| Name: | Xxxxxx X. Xxxxxxxx | |||||
| Title: | Executive Vice President and Chief | |||||
| Financial Officer | ||||||
| Merger Sub: | ||||||
| CARRIER MERGER SUB, INC. | ||||||
| By: | /s/ Xxxxxx X. Xxxxxxxx | |||||
| Name: | Xxxxxx X. Xxxxxxxx | |||||
| Title: | ||||||
| Company: | ||||||
| SOUTHERN CONTAINER CORP. | ||||||
| By: | /s/ Xxxxxx Xxxxxxxx | |||||
| Name: | Xxxxxx Xxxxxxxx | |||||
| Title: | ||||||
| Stockholders: | ||||||
| /s/ Xxxxxx Xxxxxxxx | ||||||
| Xxxxxx Xxxxxxxx | ||||||
| /s/ Xxxxxx Xxxxxxxx | ||||||
| Xxxxxx Xxxxxxxx | ||||||
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| XXXXXX XXXXXXXX 2007 GRAT | ||||||
| By: | /s/ Xxxxxx Xxxxxxxx
|
|||||
| By: | U.S. Trust Company of Delaware, Trustee |
|||||
| By: | /s/ Xxxxxxxx X. Xxxxx | |||||
| Name: | Xxxxxxxx X. Xxxxx | |||||
| Title: | Vice President | |||||
| XXXXXX XXXXXXXX GRAT I | ||||||
| By: | /s/ Xxxxxx Xxxxxxxx | |||||
| XXXXXX XXXXXXXX 1998 GRAT | ||||||
| By: | /s/ Xxxxxx Xxxxxxxx | |||||
| XXXXXX XXXXXXXX 2002 GRAT | ||||||
| By: | /s/ Xxxxxx Xxxxxxxx | |||||
| By: | /s/ Xxxxx Xxxxxxxx | |||||
| By: | /s/ Xxxxxxx Xxxxxxxxxxx | |||||
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| XXXXX XXXXXXXX FAMILY 2007 GST |
||||||
| By: | /s/ Xxxxxx Xxxxxx
|
|||||
| By: | U.S. Trust Company of Delaware, Trustee |
|||||
| By: | /s/ Xxxxxxxx X. Xxxxx | |||||
| Name: | Xxxxxxxx X. Xxxxx | |||||
| Title: | Vice President | |||||
| XXXXXX XXXX IRREVOCABLE GRAT | ||||||
| By: | /s/ Xxxxx Xxxx | |||||
| XXXXXX XXXXXXXX XXXX XX | ||||||
| By: | /s/ Xxxxxx Xxxxxxxx | |||||
| Hill: | ||||||
| /s/ Xxxxxx Xxxx | ||||||
| Xxxxxx Xxxx | ||||||
| Stockholders’ Representative: | ||||||
| /s/ Xxxxxx Xxxxxxxx | ||||||
| Xxxxxx Xxxxxxxx | ||||||
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Schedule D
Proportionate Interest
| CSE Holder | Proportionate Interest | |||
Xxxxxx Xxxxxxxx |
62.74 | % | ||
Xxxxxx Xxxxxxxx GRAT I |
6.64 | % | ||
Xxxxxx Xxxxxxxx XXXX XX |
0.63 | % | ||
Xxxxxx Xxxx |
4.00 | % | ||
Xxxxxx Xxxx Irrevocable GRAT |
1.00 | % | ||
Xxxxxx Xxxxxxxx |
12.50 | % | ||
Xxxxxx Xxxxxxxx 2007 GRAT |
6.78 | % | ||
Xxxxxx Xxxxxxxx 2002 GRAT |
2.00 | % | ||
Xxxxxx Xxxxxxxx 1998 GRAT |
2.00 | % | ||
Xxxxx Xxxxxxxx Family 2007 GST |
1.72 | % | ||
| 100.00 | % | |||
Schedule E
Supplement to Company Disclosure Schedule
Pursuant to Section 5.20
Pursuant to Section 5.20
