Exhibit 10.2
FIRST AMENDMENT TO THE ACQUISITION
AGREEMENT
This First Amendment (“First
Amendment”), dated as of December 30, 2005, is by and
among SGS International, Inc., a corporation organized under
the laws of Delaware (“ SGS International ”),
Project Dove Holdco, Inc., a Delaware corporation (“
Canadian Holdco ”), Southern Graphics
Systems-Canada, Co./Systemes Graphiques Southern-Canada, Co.,
an unlimited liability company organized under the laws of Nova
Scotia, Canada (the “ Canadian Purchaser ”),
SGS-UK Holdings Limited, a company incorporated under the
laws of England and Wales (“ UK Purchaser ”)
(SGS International, Canadian Holdco, the Canadian Purchaser and the
UK Purchaser, collectively, “ Purchaser ”),
RMC Delaware, Inc., a corporation organized under the laws
of Delaware, U.S.A. (“ RMC ”), Southern
Graphic Systems-Canada, Ltd./Systemes Graphiques Southern-Canada,
Ltee., a Quebec corporation (“ SGS Canada
”), and Alcoa UK Holdings Limited, a company
incorporated under the laws of England and Wales (“ Alcoa
UK ”) (collectively, RMC, SGS Canada and Alcoa UK are
referred to as the “ Sellers ” and individually
as a “ Seller ”).
WHEREAS, SGS International and
Sellers have entered into that Acquisition Agreement, dated
November 11, 2005 (the “ Agreement ”),
under which Sellers have agreed to sell and transfer, and SGS
International has agreed to purchase and assume, the Purchased
Business and the Assumed Liabilities;
WHEREAS, SGS International has
formed a new, wholly-owned subsidiary, Canadian Holdco, and SGS
International has assigned its rights and delegated its obligations
in part under the Agreement to Canadian Holdco with respect to the
right to purchase the .06% interest in Southern Graphic Systems
Mexico, S. De R.L. De C.V. (“SGS Mexico”) held by RMC,
and
WHEREAS, Canadian Holdco has formed
a new, wholly-owned subsidiary, the Canadian Purchaser, and SGS
International has assigned its rights and delegated its obligations
in part under the Agreement to the Canadian Purchaser with respect
to the assets and liabilities of SGS Canada included in the
Purchased Business and the Assumed Liabilities; and
WHEREAS, SGS International has
formed a new, wholly-owned subsidiary, the UK Purchaser, and has
assigned its rights and delegated its obligations in part under the
Agreement to the UK Purchaser with respect to the purchase of the
shares of SGS-UK Limited (“SGS UK”) held by Alcoa UK;
and
WHEREAS, Purchaser and Sellers
desire to amend the Agreement in accordance with Section 14.07
of the Agreement and consistent with the terms of this First
Amendment to address the assignment to the Canadian Purchaser,
Canadian Holdco, the UK Purchaser and other matters.
NOW, THEREFORE, in consideration of
the mutual agreements herein contained and intending to be legally
bound hereby, the parties agree as follows:
1. Definitions . Capitalized
terms used herein and not otherwise defined herein shall have the
meaning provided therefor in the Agreement.
2. Agreement Amendments . The
Agreement is hereby amended as follows:
(a) The third “WHEREAS”
clause in the preamble is hereby deleted in its entirety and the
following is inserted in lieu thereof:
“ WHEREAS, SGS directly owns 99.94% of Southern
Graphic Systems Mexico, S. De R.L. De C.V., a Mexican company
(“ SGS Mexico ”), and RMC directly owns 0.06% of
SGS Mexico;”
(b) The sixth “WHEREAS”
clause in the preamble is hereby deleted in its entirety and the
following is inserted in lieu thereof:
“ WHEREAS , the
Purchaser desires to acquire (i) from SGS the 99.94% ownership
interest in SGS Mexico, (ii) from RMC the .06% ownership
interest in SGS Mexico and the ownership interests of SGS,
(iii) from Alcoa UK the ownership interests of SGS UK, and
(iv) from SGS Canada certain assets of SGS Canada used by or
relating to the Purchased Business, in each case upon the terms and
conditions set forth below.”
(c) Section 2.02 is hereby
amended to delete the first sentence thereof in its entirety and
insert the following sentence in lieu thereof:
“As consideration for the sale
of the Purchased Business to Purchaser (a) Purchaser will pay
to SGS and RMC US$2,200,000 for 100% of the ownership interest in
SGS Mexico, (b) Purchaser will pay to Sellers US$407,200,000
less the Indebtedness of the Purchased Business as of the Closing
Date for the remainder of the Purchased Business, and
(c) Purchaser will pay to Sellers the Eastgate Purchase
Price.”
(d) Section 2.04 is hereby
amended to rename such section as Section 2.04(a) and delete
the first two sentences of such section in their entirety and
insert the following sentences in lieu thereof:
“(a) Purchaser and Sellers
agree that the Purchase Price shall be allocated among the assets
comprising the Purchased Business in the United States, Canada, the
United Kingdom and Mexico as set forth on Schedule 2.04 .
Purchaser and Sellers will agree to a reasonable readjustment of
the allocation of the Purchase Price that has been subject to an
adjustment pursuant to Section 3.04(b) within 30 days
following the determination of any increase or decrease in the
Purchase Price pursuant to Section 3.03(a), provided that such
adjustment shall not affect the Purchase Price allocated to the
assets comprising the Purchased Business in the United
Kingdom.”
(e) Section 2.04 is hereby
amended to add the following Section 2.04(b) immediately
following Section 2.04(a) as follows:
“(b) Within 60 days after the
Closing Date, Purchaser shall deliver to Sellers a proposed
allocation of (i) the purchase price for the Purchased
Business located in the United States (as determined in accordance
with Schedule 2.04 ) among the assets that comprise such
business, and (ii) the purchase price for the Purchased
Business located in Canada (as determined in accordance with
Schedule 2.04 ) among the assets that comprise such
business. Such allocation shall be made in accordance with the
procedures set forth in Section 8.06(h)(ii). Unless Sellers
notify Purchaser of any objections to such proposed allocation
within the twenty (20) day period following receipt of such
proposed allocation, such allocation shall become final. If Sellers
object to such proposed allocation, the Purchaser and Sellers shall
use their good faith efforts to resolve the matter within the sixty
(60) day period following receipt by the Purchaser of
Sellers’ objection. If the Purchaser and Sellers are unable
to resolve the matter within such period, then the Purchaser and
Sellers shall retain the CPA Firm (as defined in Section 3.03)
to review the proposed allocation and to determine the appropriate
allocation in accordance with the terms and conditions of this
Section within a further period of thirty (30) days. Such
determination shall be final and binding on the Purchaser and
Sellers. The fees and expenses of the CPA Firm will be paid
one-half by Purchaser and one-half by Sellers.”
(f) A new Section 2.05 shall be
added immediately following Section 2.04 and shall read as
follows:
“ Section 2.05. Purchase
of SGS Mexico . At
the Closing, the sale of the 100% ownership interest in SGS Mexico
to Purchaser as set forth in Section 2.02(a) above (the
“Mexican Sale”) shall be deemed to occur immediately
prior to the sale of the remainder of the Purchased Business as set
forth in 2.02(b) above. The proceeds of such shall be allocated
between SGS and RMC in accordance with their respective ownership
interests in SGS Mexico. Purchaser agrees that SGS may distribute
the proceeds from the Mexican Sale to RMC. Purchaser shall fully
cooperate with Sellers in causing SGS to take all necessary and
reasonable actions requested by Sellers (at Seller’s expense)
to minimize Mexican taxes attributable to the Mexican Sale. Sellers
shall pay to SGS the amount of Taxes attributable to the Mexican
Sale, an estimated calculation of which is set forth on Schedule
2.05 , when such taxes become due and payable. In the event
that SGS fails to timely and accurately complete all obligations
set forth on Schedule 2.05 and as a direct result an
additional Mexican Tax is incurred by SGS, Sellers will only be
responsible for one-half of such additional Mexican Tax that may
directly result from any such failure, and SGS will be responsible
for the other one-half of such additional Mexican Tax. The
additional Tax that may result from any such failure to timely and
accurately file is estimated to be US$142,188.”
(g) Section 4.03(a) is hereby
amended to delete the second and third sentences and insert the
following sentences in lieu thereof:
“The capital stock of SGS
Mexico consists solely of three social parts, two of which
represent the fixed capital stock and one represents the variable
capital stock, where one fixed capital Participation Certificate
held by RMC has a par value of $2,970.00 Pesos Mexican Currency or
its multiple, and one fixed capital Participation Certificate held
by SGS has a par value of $30.00 Pesos Mexican Currency or its
multiple, and one variable capital Participation Certificate held
by SGS has a par value of $4,906,257.00 Pesos Mexican Currency or
its multiple, all of which have voting rights and are issued and
outstanding (the “ SGS Mexico Social Parts ”),
with SGS holding 99.94% of the SGS Mexico Social Parts and RMC
holding 0.06% of the SGS Mexico Social Parts. The issued share
capital of SGS UK is comprised of 60,000 ordinary shares of £1
each, all of which are issued and outstanding (the “ SGS
UK Shares ”).”
(h) Section 8.03 is hereby
amended to add the following Section 8.03(c) immediately
following Section 8.03(b):
“(c) Notwithstanding the last
sentence of Section 8.03(b), Sellers will reimburse Purchaser
for any additional rental or any new or additional security deposit
to be paid by Purchaser, the Companies or the Subsidiaries to the
landlord under any of the four lease agreements set forth in
Schedule 8.03 (“Material Leases”), which
additional rental or new or additional security deposit is directly
attributable and necessary to obtain the landlord’s consent
to assign any of the Material Leases with respect to the current
term of the Material Leases only and not with respect to any
renewal term, up to $250,000. Sellers will have no obligation under
this Section 8.03(b) to reimburse Purchaser for any additional
rental or new or additional security deposit to be paid by
Purchaser due to any significant adjustments to the lease (such as
a material reduction or increase in leased space, an extension of
or reduction to the lease term, a material change to the proposed
use of the premises or sublet of any or all of the premises). Under
no circumstances will Sellers’ responsibility under this
Section 8.03(c) exceed $250,000. Purchaser will notify Sellers
in writing within 60 days of the Closing Date of any and all such
additional rentals or new or additional security deposits for which
Purchaser seeks reimbursement from Sellers pursuant to this
Section 8.03(c). Purchase
