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EXHIBIT 2.2
AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF MERGER
This AMENDMENT NO. 1, dated February 27, 2004 (this "Amendment No. 1"),
to the Agreement and Plan of Merger, dated as of December 22, 2003 (the
"Agreement"), by and among Solo Cup Company, an Illinois corporation ("Parent"),
Solo Acquisition Corp., a Delaware corporation ("Merger Sub"), and SF Holdings
Group, Inc., a Delaware corporation (the "Company").
WHEREAS, the parties hereto desire to amend and supplement certain
provisions of the Agreement; and
WHEREAS, Section 11.2 of the Agreement provides in relevant part that
the Agreement may be amended, modified and supplemented by the parties thereto
by an instrument in writing signed on behalf of each of the parties thereto.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein, the
parties hereto, intending to be legally bound, agree as follows:
1. Unless the context otherwise requires, references in the Agreement to
"this Agreement" shall be deemed to be references to the Agreement as
amended and supplemented by this Amendment No. 1.
2. The Agreement shall be amended and supplemented by the addition of the
following sentence after the first sentence in Section 1.4 of the
Agreement:
At Parent's election, the Merger may alternatively be structured
so that at the Effective Time, Merger Sub is a wholly-owned
Subsidiary of an affiliate of Parent.
3. Section 3.8(a) of the Agreement shall be amended and restated in its
entirety as follows:
(a) The Company will cause to be delivered to Parent, two
business days prior to Closing, (i) an estimated statement of the
consolidated Working Capital of the Company (calculated in a
manner consistent with Exhibit 3.8(c)(i)) as of 11:59 p.m. on
February 22, 2004 (the "ESTIMATED WORKING CAPITAL STATEMENT") to
be prepared in good faith in conformity with United States
generally accepted accounting principles ("GAAP") applied on a
basis consistent with the Target Working Capital and (ii) a
certificate as to the preparation of the Estimated Working
Capital Statement executed by the chief financial officer and
chief executive officer of the Company. Parent and its
representatives shall have full access to all relevant books and
records and employees of the Company in connection with the
Company's preparation of the Estimated Working Capital Statement.
On
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February 21, 2004 and February 22, 2004 (the "INVENTORY DATE"),
the Company, Parent and/or their respective representatives will
complete a physical inventory, observed by the Stockholders'
Representative. The value so attributed to inventory shall be
final, binding and conclusive for purposes of Section 3.8(c), 3.9
and Section 3.11. For purposes of this Section 3.8(a) and
Sections 3.8(c), 3.9 and 3.11, any interest on Indebtedness
deducted in the calculation of the Aggregate Merger Consideration
pursuant to Section 3.8(b) shall not be accrued as a current
liability, or deducted, in the determination of the Working
Capital of the Company as of 11:59 p.m. on February 22, 2004,
notwithstanding that accrued interest was included in the
calculation set forth on Exhibit 3.8(c)(i).
4. For purposes of the calculation of the Aggregate Merger Consideration
pursuant to Section 3.8(b) of the Agreement, (i) all items set forth on
Exhibit A attached hereto shall be deemed to be "Indebtedness," (ii) the
aggregate amount of Indebtedness (including accrued interest through the
Effective Time) outstanding under the Third Amended and Restated Loan
and Security Agreement, dated as of March 22, 2002, as amended, among
Sweetheart Cup Company, as Borrower, the financial institutions named
therein as the Lenders, and Bank of America, N.A., as Agent (the "CREDIT
AGREEMENT"), shall be deemed to be US$ 159,215,615.43, and (iii) the
aggregate amount of Indebtedness (including accrued interest through the
Effective Time) outstanding under the Credit Agreement, dated as of June
15, 1998, as amended, between Lilly Cup, as Borrower, and General
Electric Capital Canada Inc., as Lender (the "CANADIAN CREDIT
AGREEMENT"), shall be deemed to be US$ 12,796,503.58.
5. Section 3.8(b)(iv)(C) of the Agreement shall be amended and restated in
its entirety as follows:
(C) all amounts paid or payable to acquire Cupcorp, Inc. pursuant
to the Cupcorp Option Agreement,
6. The first sentence of Section 3.9(a) of the Agreement shall be amended
and restated in its entirety as follows:
As soon as practicable, but in no event later than 60 days
following the Effective Time, Parent shall prepare and deliver to
the Stockholders' Representative a statement of the consolidated
Working Capital of the Company (calculated in the manner
consistent with Exhibit 3.8(c)(i)) as of 11:59 p.m. on February
22, 2004 (the "CLOSING WORKING CAPITAL STATEMENT").
7. The Agreement shall be amended and supplemented by the addition of the
following at the end of Section 3.10(b) of the Agreement.
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; PROVIDED, FURTHER, HOWEVER, that to the extent set forth in the
Retention Escrow Agreement, the Deferred Payment Retention shall
be reduced by an amount equal to the portion of such earnings
distributed to Parent in connection with Parent's tax obligations
with respect to such earnings. The Company and the Stockholders'
Representative will jointly prepare and deliver to the Paying
Agent all necessary calculations to permit the Paying Agent to
make payments with respect to the Deferred Payment Rights.
8. The Agreement shall be amended and supplemented by the addition of the
following sentence at the end of Section 4.9(b) of the Agreement:
Cupcorp. Inc. has no liabilities or obligations of any kind
whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise.
9. Section 7.10(b) of the Agreement shall be amended and restated in its
entirety as follows:
(b) the Company to consummate the purchase of Cupcorp, Inc.
pursuant to that certain letter agreement between the Company and
TCW Shared Opportunity Fund II, L.P., dated December 19, 2003
(the "CUPCORP OPTION AGREEMENT"), immediately prior to the
Effective Time such that as of the Effective Time, Cupcorp, Inc.
and its wholly-owned subsidiary Newcup LLC shall be direct or
indirect wholly-owned subsidiaries of the Company.
10. Section 8.3(f) of the Agreement shall be amended and restated in its
entirety as follows:
All the Newcup Notes shall have been repurchased or redeemed by
Newcup with funds provided to the Company by Parent, Newcup shall
not own any 2008 Notes, Cupcorp, Inc. Newcup and Sweetheart
Holdings, Inc. shall each be wholly-owned Subsidiaries of the
Company, and the Company and each Company Subsidiary shall have
been released from their obligations under the Newcup
Arrangements as provided in Section 7.10.
11. The Company represents, warrants, covenants and agrees that
(a) Item 1 on Exhibit A attached hereto sets forth a true and correct
list of all fees, costs and expenses incurred, or to be incurred,
by the Company in connection with the Agreement and the
transactions contemplated thereby that have not been either (i)
paid in full by the Company prior to February 22, 2004 or (ii)
fully accrued on the Estimated Working Capital Statement;
(b) (i) the aggregate total amount payable with respect to the letter
agreements described in Section 7.13(a) of the Company Disclosure
Schedule is US
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$9,339,500, (ii) such amount has been fully accrued on the
Estimated Working Capital Statement, (iii) neither the Company
nor any Company Subsidiary has any liabilities with respect to
such letter agreements in excess of the amounts so accrued and
(iv) all amounts payable with respect to such letter agreements
will be paid by the Company prior to the Effective Time;
(c) (i) the aggregate total amount payable pursuant to Section
7.13(c) of the Agreement with respect to charitable pledges made
by or on behalf of the Company is US $1.8 million, (ii) such
amount has been paid prior to February 22, 2004 or fully accrued
on the Estimated Working Capital Statement, (iii) neither the
Company nor any Company Subsidiary has any liabilities with
respect to such pledges in excess of the amounts so accrued and
(iv) all amounts payable with respect to such pledges will be
paid by the Company prior to the Effective Time;
(d) Item 2 on Exhibit A attached hereto sets forth the total amount
payable by the Company in connection with the redemption by the
Company of the Class C Common Stock held by American
International Life Assurance Company of New York;
(e) US $ 158,662,357.79 represents the aggregate amount of
Indebtedness (including accrued interest) outstanding under the
Credit Agreement as of February 22, 2004;
(f) US$ 12,737,332.86 represents the aggregate amount of Indebtedness
(including accrued interest) outstanding under the Canadian
Credit Agreement as of February 22, 2004;
(g) Since February 22, 2004, the Company
(i) has not incurred, and from and after the date hereof
until the Effective Time will not incur, any liabilities
or obligations of any kind that would be required to be
reflected on a statement of the consolidated Working
Capital of the Company as of the Effective Time
(calculated in a manner consistent with Exhibit 3.8(c)(i)
to the Agreement) prepared in accordance with GAAP
applied on a basis consistent with the Target Working
Capital, except for liabilities or obligations incurred
with respect to (A) trade payables for the purchase of
goods and services arising in the ordinary course of
business consistent with past practice, (B) salary and
welfare benefits for employees of the Company and the
Company Subsidiaries in the ordinary course of business
consistent with past practice (which for the avoidance of
doubt shall not include any bonus or other compensation
payable in connection with, or otherwise related to, the
transactions contemplated by the Agreement or payments of
any kind to affiliates or associates of
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the Company or any of its affiliates) and (C) the fees,
costs and expenses incurred by the Company in connection
with the Agreement listed on Item 1 of Exhibit A attached
hereto; and
(ii) has not sold, transferred or otherwise disposed of, and
from and after the date hereof until the Effective Time
will not sell, transfer or dispose of, any (A) current
asset (including ant payment of cash whether provided
from operations, borrowings under the Credit Facility or
otherwise) reflected in the Estimated Working Capital
Statement or (B) other current asset (including ant
payment of cash whether provided from operations,
borrowings under the Credit Facility or otherwise),
except for (1) sales of inventory in the ordinary course
of business consistent with past practice and (2) cash
payments with respect to trade payables for the purchase
of goods and services that arose in the ordinary course
of business consistent with past practice, the express
terms of which required payment prior to the Effective
Time; and
(h) As of the Effective Time, the aggregate amount of Indebtedness
(including accrued interest) outstanding under the Credit
Agreement shall not exceed US $151,697,235.38.
(i) As of the Effective Time, the aggregate amount of Indebtedness
(including accrued interest) outstanding under the Canadian
Credit Agreement shall not exceed CA$ 17,633,743.72.
The representations, warranties, covenants and agreements set forth in
this Item 11 of this Amendment No. 1 shall (i) not be subject to the
limitation on indemnification set forth in Section 10.1(b) of the
Agreement and (ii) for purposes of the condition set forth in Section
8.3(a) of the Agreement must be true and correct in all respects as of
the Effective Time.
12. For purposes of Section 6.1 of the Agreement, Parent hereby consents to
the Company entering into the agreements set forth on Exhibit B attached
hereto.
13. For purposes of Sections 7.10(c) and 8.3(f) of the Agreement, the
Company shall be deemed to have satisfied its obligations relating to
the release of the Company and each Company Subsidiary from any and all
obligations with respect to the Newcup Arrangements when (i) the
documents included in Exhibit C attached hereto have been duly and
validly executed by the signatories thereto, (ii) such documents have
been delivered to Parent and (iii) all conditions to the effectiveness
of such documents have been satisfied.
14. Except as specifically set forth in this Amendment No. 1, the Agreement
shall remain in full force and effect.
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15. This Amendment No. 1 shall be governed by and construed in accordance
with the laws of the State of Delaware without giving effect to the
principles of conflicts of law thereof.
16. This Amendment No. 1 may be executed manually or by facsimile by the
parties hereto, in any number of counterparts, each of which shall be
considered one and the same agreement and shall become effective when a
counterpart hereof shall have been signed by each of the parties and
delivered to the other parties.
[Signature page follows.]
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IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Amendment No. 1 to be signed by their respective officers thereunto duly
authorized as of the date first written above.
SOLO CUP COMPANY
By /s/ Ronald L. Whaley
---------------------------------
Name:
Title:
SOLO ACQUISITION CORP.
By /s/ Ronald L. Whaley
---------------------------------
Name:
Title:
SF HOLDINGS GROUP, INC.
By /s/ Hans H. Heinsen
---------------------------------
Name: Hans H. Heinsen
Title: Sr. Vice President and CFO
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EXHIBIT A
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1. a) Jefferies & Company, Inc. $ 7,273,636.22
b) Harris Williams 500,000.00
c) Kramer Levin 574,617.27
d) TCW 65,924.13
e) Audax 10, 845.60
f) Bank of New York 10,000.00
2) $ 2,536,435.00
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EXHIBIT B
1) Warrant Agreement, dated as of January 22, 2004, entered into by and
between Newcup, LLC and Sweetheart Cup Company Inc.
2) Letter of Intent, dated February 19, 2004, between Earth Shell O.M., LLC
and Sweetheart Holdings Inc.
3) Amendment to the letter agreement, dated September 22, 2003, between SF
Holdings Group, Inc. ("SF") and Harvey L. Friedman.
4) Amendment to the letter agreement, dated September 22, 2003, between SF and
Thomas Uleau.
5) Amendment to the letter agreement, dated September 22, 2003, between SF and
Ingrid Santiago.
6) Amendment to the letter agreement, dated September 22, 2003, between SF and
Hans H. Heinsen.
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EXHIBIT C
1) Option Exercise and Agreement of Transfer, dated as of February 27, 2004, by
and among SF Holdings Group, Inc., NewCup, LLC, Audax Mezzanine Fund, L.P.,
Audax Co-Invest, L.P., Audax Trust Co-Invest, L.P. and AFF Co-Invest, L.P.
2) Release Instruction Letter, dated February 27, 2004, addressed to
TCW/Crescent Mezzanine, L.L.C.
3) Release in favor NewCup, LLC, dated February 27, 2004 from TCW/Crescent
Mezzanine, L.L.C., as collateral agent
4) Release in favor SF Holdings Group, Inc., dated February 27, 2004 from
TCW/Crescent Mezzanine, L.L.C., as collateral agent