EXHIBIT 2.2
AMENDMENT NO. 3 TO THE ASSET PURCHASE AGREEMENT
AMENDMENT NO. 3, dated May 2, 2002 (this "Amendment") to the ASSET
PURCHASE AGREEMENT (the "Original Agreement"), dated as of January 23, 2002, as
amended, by and among THE XXXX GROUP INC., a Louisiana corporation (together
with its Designee(s), if any, "Buyer"), and THE IT GROUP, INC., a Delaware
corporation ("ITG") and the Subsidiaries (as defined in the Agreement) of ITG
which are or become signatories to the Agreement (together with ITG, "Sellers").
RECITALS
WHEREAS, capitalized terms used but not otherwise defined herein shall
have the meanings ascribed to such terms in the Agreement;
WHEREAS, the Parties previously amended the Original Agreement on
January 24, 2002, pursuant to Amendment No. 1 to the Asset Purchase Agreement
(the "First Amendment");
WHEREAS, the Parties further amended the Original Agreement on January
29, 2002, pursuant to Amendment No. 2 to the Asset Purchase Agreement (the
"Second Amendment");
WHEREAS, the Parties further amended the Original Agreement pursuant to
a letter agreement dated April 30, 2002 (the Original Agreement, as amended by
the First Amendment, the Second Amendment and the letter agreement, the
"Agreement");
WHEREAS, the Parties have determined that it is advisable to further
amend the Agreement to document various understandings, agreements and
Court-ordered modifications to the Agreement; and
WHEREAS, Section 9.12 of the Agreement provides that the Agreement may
be amended by execution of a written instrument executed by the Parties thereto.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises, and the
agreements, covenants, representations and warranties contained in the Agreement
and herein, and other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged and accepted, the Parties, intending to be
legally bound, hereby agree as follows:
1. The definition of "Beneco" set forth in Section 1.01 of the
Agreement is hereby amended and restated in its entirety to read as follows:
Beneco: Beneco Enterprises, Inc., a Utah corporation and
Subsidiary of ITG, but not a Seller hereunder.
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2. The definition of "Break-Up Fee and Expense Reimbursement" set forth
in Section 1.01 of the Agreement is hereby amended and restated in its entirety
to read as follows:
Break-Up Fee and Expense Reimbursement: an amount equal to
Four Million Eight Hundred Thousand Dollars ($4,800,000);
3. Section 1.01 of the Agreement is amended to add thereto the
following defined terms:
Accrued Expense Budget: as defined in Section 5.26.
Accrued Expenses: as defined in Section 5.26;
Basket: as defined in Section 2.06(c);
Budgets: the budgets approved by Lender under the terms of the
Credit Agreement;
Fringe Benefits: benefits for employees of ITG and its
Subsidiaries that are incurred or accrued and unpaid as of the Closing
Date, including without limitation travel expenses and other employee
expense reimbursements and amounts payable under or in respect of the
continuing benefit plans referred to in Section I.A. of Schedule
5.15(b);
Fringe Benefits Amount: as defined in Section 2.05(c);
Professional Fees Cap: as defined in Section 5.26(b)(iv);
Retention Amount: as defined in Section 5.26(b)(iv);
Termination Fee: an amount equal to the sum of (i) the
reasonable fees and expenses incurred by Buyer in connection with the
Transaction plus (ii) One Million Dollars ($1,000,000);
4. The following is added to the end of Section 2.02:
Notwithstanding the foregoing, Buyer shall not designate the Share
Consideration, the Cash Consideration, the Employee Payments or any
other cash paid to Sellers by Buyer pursuant to the provisions of this
Agreement as Assets. In addition, to the extent claims or causes of
action of Sellers against Sellers' pre-petition secured lenders are not
avoidance actions referred to in Section 2.02(d), Buyer and Sellers
agree that such claims or causes of action shall constitute Excluded
Assets.
5. Section 2.05(c) of the Agreement is amended and restated in its
entirety and shall read as follows:
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(c) an amount of cash (the "Employee Payments") equal to the
sum of (i) the Payroll Payments, (ii) the Retention Plan Payments,
(iii) an amount equal to one (1) week's vacation pay for all of
Sellers' employees as of the Closing Date and (iv) Seven Million
Dollars ($7,000,000) to be used first for Fringe Benefits and, once the
Fringe Benefits are paid, for the Sellers' estates (the "Fringe Benefit
Amount"); provided, however, that (A) in no event shall the total
amount of the Employee Payments exceed Twenty-Nine Million Five Hundred
Thousand Dollars ($29,500,000), and (B) in the event an employee of any
Seller leaves voluntarily prior to the Closing Date, Buyer shall
nevertheless pay to ITG fifty percent (50%) of the sum of (x) the
amount such employee would have received under the Retention Plan plus
(y) one (1) week's vacation pay for such employee.
6. Section 2.06(c) of the Agreement is amended and restated in its
entirety and shall read as follows:
(c) The Cash Consideration shall be further reduced, on a
dollar-for-dollar basis, to the extent that any use of cash by any
Seller not in accordance with the Budgets exceeds $500,000 in the
aggregate (the "Basket"), and in such event such reduction shall be
equal to the amount by which such cash used not in accordance with the
Budgets exceeds the Basket. The reduction in Cash Consideration
described in this Section 2.06(c) is separate from, and in addition to,
any other remedy which may be available to Lender under the terms of
the Credit Agreement.
7. Section 2.08(a) of the Agreement is amended and restated in its
entirety and shall read as follows:
(a) ITG agrees that, prior to the Closing Date, it will cause
this Agreement to be amended to add as Sellers hereunder any of its
Subsidiaries that have any right, title or interest in or to any of the
Assets. ITG and Buyer agree that any references herein to Sellers shall
mean and include ITG and all such Subsidiaries, and the representations
and warranties of ITG in this Agreement shall be made with respect to
all Sellers as if all Sellers had been Parties to this Agreement on the
date hereof.
8. Section 2.08(b) of the Agreement is amended and restated in its
entirety and shall read as follows:
(b) Sellers shall deliver the Seller Schedules to Buyer no
later than March 11, 2002.
9. Section 2.08(c) of the Agreement is amended and restated in its
entirety and shall read as follows:
(c) Buyer shall deliver the Buyer Schedules other than
Schedules 2.02(d), 5.04 and 5.15(b) to ITG no later than March 11,
2002, and shall deliver Schedules 2.02(d), 5.04 and 5.15(b) to ITG no
later than seven (7) days prior to the
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Bid Deadline; provided, however, that Buyer shall use commercially
reasonable efforts to keep ITG informed, on a rolling basis, of any
Contract which Buyer designates as an Excluded Contract or of any of
Sellers' employees who will not be offered employment by Buyer.
10. Section 2.10 is added to the Agreement and shall read as follows:
Section 2.10. Proceeds from Limited Liability Company
Membership Interests. For the avoidance of doubt, if and to the extent
that the Bankruptcy Court rules that the Sellers may not assign or
transfer to Buyer or its Designees any membership interests in limited
liability companies that Buyer has otherwise designated as Assets or
Assumed Contracts, and such interests are subject to a right of a third
party to buy such interests, Buyer shall be entitled to any proceeds
from the buy-out or other payment in respect of any such membership
interests, whenever received.
11. Section 5.03(a) of the Agreement is amended and restated in its
entirety and shall read as follows:
(a) (i) amend or terminate any Assumed Contract, or (ii) other
than in accordance with the Budget, enter into any new Contract or
other agreement, purchase order or arrangement, involving a commitment
on the part of any Seller in excess of Two Hundred Fifty Thousand
Dollars ($250,000);
12. Section 5.04 of the Agreement is amended to add thereto the
following Section 5.04(c):
(c) At Closing Buyer and the Sellers shall enter into an
agreement for the leasing of employees of Sellers to Buyer that will
encompass the terms set forth in Section I.A. of Schedule 5.15(b) to
the Agreement, and shall otherwise contain terms and conditions
reasonably acceptable to Buyer and Sellers.
13. Section 5.25 of the Agreement is hereby added to the Agreement and
shall read as follows:
5.25 Benefit of Insurance Policies. If after the Closing, any
Seller or any of its Affiliates receives cash proceeds from an insurer
that are attributable to any insurance policies listing any Seller or
any of its Affiliates as an insured or additional named insured with
respect to any insured occurrences on or prior to the Closing Date,
then such cash proceeds shall be paid to Buyer (net of any deductible,
co-payment, retro fees, self-insured retentions, or other charges paid
or payable to the insurance carrier or other third parties, or
obligations to reimburse the insurance carrier for which any Seller or
any of its Affiliates is liable and which relate to the insured
occurrences) but only to the extent that Buyer or any of its Designees
or any of their Affiliates are liable therefor, or have assumed or paid
the loss or liability attributed to such occurrences. Sellers shall
assign to Buyer all right, title and benefit in and to all policies of
environmental insurance, including without limitation, all Real Estate
Pollution Liability, Full Occurrence Commercial General
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Liability and Remediation Stop Loss policies relating to (i) all Real
Property being transferred to Buyer, or Buyer's Designee, pursuant to
this Agreement and (ii) Sellers' membership interest in and to
Northeast Plaza Venture I, LLC. Buyer shall take all action necessary
to have the applicable Sellers named as additional insureds under such
policies.
14. Section 5.26 of the Agreement is hereby added to the Agreement and
shall read as follows:
5.26 Expense Reimbursements.
(a) Based on the estimates set forth in the budget attached
hereto as Exhibit E (the "Accrued Expense Budget"), Buyer shall
reimburse ITG for post-Petition Date expenses which are incurred or
accrued but unpaid as of the Closing Date and which are subsequently
paid by ITG or its Subsidiaries as follows (collectively the "Accrued
Expenses"):
(i) Buyer shall reimburse Sellers for amounts
actually paid by Sellers after the Closing Date in respect of
expenses listed under the portion of the Accrued Expense
Budget entitled "SG&A" as follows:
(A) Buyer shall reimburse Sellers for
amounts actually paid by Sellers after the Closing
Date for incurred or accrued payroll and employee
payroll taxes as of the Closing Date; provided,
however, that Buyer shall not have such reimbursement
obligation to the extent that Buyer has already paid
such amounts as Employee Payments;
(B) Buyer shall reimburse Sellers for
amounts actually paid by Sellers after the Closing
Date in respect of the line item on the Accrued
Expense Budget entitled "Loan forgiveness tax
exposure;" provided, however, that Buyer's
reimbursement obligation under this Section
5.26(a)(i)(B) shall not exceed Two Million Four
Hundred Thousand Dollars ($2,400,000);
(C) Buyer shall reimburse Sellers for
amounts actually paid by Sellers after the Closing
Date in respect of the line item on the Accrued
Expense Budget entitled "Equipment Lease Payments";
provided, however, that Buyer's reimbursement
obligation under this Section 5.26(a)(i)(C) shall not
exceed Five Million Five Hundred Thousand Dollars
($5,500,000); and
(D) Buyer shall reimburse Sellers for
amounts actually paid by Sellers after the Closing
Date in respect of the line items on the Accrued
Expense Budget entitled "Utilities," "Other Taxes
(Non Payroll)," "Office Expense," "Incremental Field
Expenses & Xxxxx Cash", "Postage," "Fixed Maintenance
Costs," "Miscellaneous Fixed Disbursements," and
"Other"; provided, however, that Buyer's
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reimbursement obligation under this Section
5.26(a)(i)(D) shall not exceed Four Million Twenty
Thousand Dollars ($4,020,000); and
(ii) Buyer shall reimburse Sellers for amounts
actually paid by Sellers after the Closing Date in respect of
the line item on the Accrued Expense Budget entitled "Variable
Disbursements".
(iii) Buyer shall reimburse Sellers for amounts
actually paid by Sellers after the Closing Date in respect of
the line item on the Accrued Expense Budget entitled "First
Day Order Payments;" provided, that Buyer's reimbursement
obligation under this Section 5.26(a)(iii) shall not exceed
One Million One Hundred Ninety Four Thousand Dollars
($1,194,000); and
(iv) Buyer shall reimburse Sellers for amounts
actually paid by Sellers after the Closing Date in respect of
the line item on the Accrued Expense Budget entitled
"Professional Fees;" provided, that Buyer's reimbursement
obligation under this Section 5.26(a)(iv) shall not exceed Ten
Million Six Hundred Thousand Dollars ($10,600,000).
(b) The provisions of Section 5.26(a) shall be subject to the
following terms and conditions:
(i) Payment of Accrued Expenses by Sellers pursuant
to Section 5.26(a)(i), (ii) or (iii) shall be subject to the
reasonable prior approval of Buyer. Buyer and Sellers shall
agree upon a procedure for prior approval and payment of
Accrued Expenses. To facilitate the payment of these Accrued
Expenses, Sellers shall establish a segregated interest
bearing account which Sellers shall use to make such payments.
Such account shall not be deemed property of the Sellers'
estate, and no liens, claims or encumbrances of any party,
whether pre-petition or post-petition, shall attach to such
segregated account. Buyer shall fund the segregated account
with Five Million Dollars ($5,000,000) that Sellers may use to
pay the Accrued Expenses as provided herein. Buyer agrees to
replenish the segregated account from time to time upon
Sellers' request as necessary to pay the Accrued Expenses,
subject to the applicable caps on Buyer's reimbursement
obligations hereunder. Sellers shall provide Buyer with an
accounting of the funds deposited in the segregated account,
and any unused portion of the segregated account, together
with any interest earned thereon, shall be promptly returned
to Buyer upon payment of the Accrued Expenses.
(ii) The Parties acknowledge that the line item in
the Accrued Expense Budget entitled "Loan forgiveness tax
exposure" relates only to claims for payment of taxes arising
as a result of the Closing for Sellers' executive employees
who executed promissory notes in favor of ITG under Sellers'
1988 Executive Stock Ownership Program, which claims, if
asserted by the applicable taxing authorities, would be
entitled to priority under
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Section 507(a)(8) of the Bankruptcy Code or entitled to
treatment as an administrative claim under Section 503(b) of
the Bankruptcy Code.
(iii) To the extent that any of the Accrued Expenses
referred to in Section 5.26(a)(i)(B) or (C) are paid, settled
or resolved by Sellers or Buyer for an amount less than the
amount that was accrued for such expense on the Accrued
Expense Budget, the caps on Buyer's reimbursement obligations
set forth in such sections shall be reduced dollar-for-dollar
by an amount equal to the difference between the amount
accrued for such Accrued Expense and the amount actually paid.
Sellers and Buyer will cooperate in good faith with each other
to effectuate any such settlements or resolutions that Buyer
or Sellers may negotiate.
(iv) To the extent that the Accrued Expenses referred
to in Section 5.26(a)(iv) are less than Ten Million Six
Hundred Thousand Dollars ($10,600,000) (the "Professional Fees
Cap"), Sellers shall be entitled to retain from the segregated
account referred to in Section 5.26(b)(i) the amount by which
such expenses are less than the Professional Fees Cap (the
"Retention Amount"), and such Retention Amount shall be
distributed to Sellers and become property of Sellers'
estates; provided, however, that the Retention Amount shall
not exceed Six Hundred Thousand Dollars ($600,000), and any
additional amount by which such expenses are less than such
cap shall be promptly returned to Buyer upon payment of such
fees.
(v) Accrued Expenses shall not include any expenses,
fee or other amounts that constitute Fringe Benefits.
15. Section 5.27 of the Agreement is hereby added to the Agreement and
shall read as follows:
5.27 Cooperation With Respect to Accrued Expenses. To the
extent Buyer desires to contest or otherwise reduce the expenses
referred to in Section 5.26(a)(i), (ii) or (iii), Sellers shall, upon
Buyer's request, take such actions as Buyer may reasonably request to
contest or otherwise reduce such expenses. To the extent Buyer requests
such cooperation from Sellers, Buyer shall indemnify and hold Sellers
harmless for any costs, fees and expenses incurred by Sellers in
connection with such actions taken at Buyer's request.
16. Section 5.28 of the Agreement is hereby added to the Agreement and
shall read as follows:
5.28 Foreign Entity Matters
Notwithstanding any other provision of the Agreement to the
contrary, Buyer shall have up to thirty (30) days after the Closing to
determine whether it desires to purchase any of the entities which
conduct ITG's operations in Xxxxxx, Xxxxx, Xxxxxxx, Xxxx Xxxx, Xxxxx or
any of the Contracts and other assets associated with such operations.
Sellers shall, and shall cause their Subsidiaries to,
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maintain their operations in Russia, Italy, Germany, Korea and Hong
Kong until the earlier of (i) the expiration of such thirty (30) day
period, or (ii) the receipt of notice from Buyer indicating whether
Buyer desires to purchase such entities or Contracts and other assets.
In the event Buyer designates the stock or other equity interest of any
such entities or Contracts and other assets as Assets, the Subsidiaries
associated with such operations shall become Sellers, if necessary, and
Sellers shall transfer such Assets to Buyer for no additional
consideration. If Buyer decides not to designate any of such entities
or Contracts and other assets as Assets, such entities and Contracts
and other assets shall be deemed to be Excluded Assets. Buyer shall
reimburse Sellers for all reasonable expenses associated with such
foreign operations, including any expenses relating to employees of
such operations, (i) for the period prior to the earlier of ITG's
receipt of Buyer's notice or expiration of such thirty (30) day notice,
and (ii) if Buyer determines not to purchase any of such entities or
Contracts and other assets, for an additional fourteen (14) days after
ITG's receipt of such notice, with respect to such operations that are
not purchased.
17. Section 5.29 of the Agreement is hereby added to the Agreement and
shall read as follows:
5.29 Post-Closing Professional Fees. To the extent Buyer
requests Sellers to assist in responding to and otherwise dealing with
objections filed in the Bankruptcy Court with respect to Assets that
were not transferred to Buyer at Closing pursuant to the Sale Order
pending resolution of such objections, Buyer shall reimburse Sellers
for professional fees incurred by Sellers in connection with such
assistance, up to a limit of $500,000. Reimbursement by Buyer of such
professional fees shall be subject to approval of such fees by the
Bankruptcy Court.
18. Sections 8.04(c), (d), (e) and (f) of the Agreement shall be
deleted in their entirety and replaced with the following Sections 8.04(c), (d)
and (e):
(c) After the Buyer Protection and Bidding Procedures Order
has been entered, and provided that Buyer is not in material default
under this Agreement, ITG shall pay Buyer or Buyer's Designee, as the
case may be, the Break-Up Fee and Expense Reimbursement by wire
transfer of immediately available funds to an account designated by
Buyer or Buyer's Designee, within one (1) business day after the
following conditions have been satisfied:
(i) the Bankruptcy Court enters a sale order
approving a Qualified Bid by a Qualified Bidder other than
Buyer;
(ii) the occurrence of the closing date of the
transaction involving such Qualified Bid by a Qualified Bidder
other than Buyer; and
(iii) Buyer terminates this Agreement on or after the
closing date described in subsection (ii) above.
(d) Upon the occurrence of any of the following events, and
provided that Buyer is not then in material default under the terms of
this Agreement, ITG
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shall, no later than May 31, 2002 if termination occurs prior to such
date, pay Buyer or Buyer's Designee, as the case may be, the
Termination Fee by wire transfer of immediately available funds to an
account designated by Buyer or Buyer's Designee:
(i) if any Seller materially breaches this Agreement
and, as a result thereof, Buyer terminates this Agreement;
(ii) if any or all of the Sellers elect not to pursue
the Transaction or elect to pursue a Stand-Alone Plan and, as
a result thereof, Buyer terminates this Agreement;
(iii) if Buyer terminates this Agreement on or after
May 1, 2002 and, notwithstanding the lack of another Qualified
Bid and despite Sellers' compliance with the terms of this
Agreement (including their obligation to pursue approval of
this Agreement in good faith), the Sale Order and the
Executory Contract Assumption and Assignment Order have not
been entered on or prior to April 30, 2002; or
(iv) if (a) the Bankruptcy Court enters a sale order
approving a Qualified Bid by a Qualified Bidder other than
Buyer, (b) Buyer has not terminated this Agreement prior to
the entry of such sale order, and (c) Buyer, after the entry
of such sale order but prior to the date of the closing of the
transaction involving such other Qualified Bidder, terminates
this Agreement.
(e) The Break-Up Fee and Expense Reimbursement and the
Termination Fee shall have superpriority administrative claim status in
the Bankruptcy Cases pursuant to section 507(b) of the Bankruptcy Code,
junior to the administrative expense claim of the Lender and, except in
the circumstance where the Sale Order approves Buyer as the winning
bidder, shall be in lieu of any other claim by Buyer against any debtor
in the Bankruptcy Cases in connection with the Transaction.
19. Notwithstanding any other provision of the Original Agreement, as
amended, the Parties hereto acknowledge that Buyer has agreed to purchase
substantially all of the assets of Beneco pursuant to a separate Asset Purchase
Agreement. The Assets sold pursuant to this Agreement shall not include the
assets of Beneco. Sellers agree to support the sale of the assets of Beneco to
Buyer in Beneco's bankruptcy case.
20. Schedules 1.01, 2.02(b), 2.02(d), 2.02(i), 3.12(b), 4.08, 5.04, and
5.15(b) to the Agreement are hereby amended and restated in their entirety as
set forth on Exhibit A hereto.
21. With respect to any cause or causes of action against any current
or former officer or director of any Seller who becomes a Hired Employee, which
were to be purchased by Buyer pursuant to Section 2.01(k)(iii) of the Original
Agreement, Buyer and Sellers agree as follows:
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(a) Buyer shall not acquire such cause or causes of action, and such
cause or causes of action shall constitute Excluded Assets;
(b) Each Seller hereby irrevocably covenants not to xxx, and waives any
recovery against, any current or former officer or director that
becomes a Hired Employee, except and only to the extent such claim can
be and is satisfied from Sellers' insurance policies;
(c) Sellers agree to use commercially reasonable effort to minimize
disruptions to Buyer's business as a result of prosecuting such causes
of action; and
(d) All such current or former officers and directors that become Hired
Employees shall be express third party beneficiaries of this Section
21.
22. Notwithstanding any other provision of the Original Agreement,
pursuant to the Sale Order, the parties hereto acknowledge that certain Assets
designated by the Bankruptcy Court shall not be transferred to Buyer or its
Designee at Closing. The Parties hereto further acknowledge that upon the order
of the Bankruptcy Court and in accordance with the terms of such order, such
Assets shall be transferred to Buyer or its Designee after the Closing for no
additional consideration.
23. The Parties acknowledge that the acquisition by Beneco Inc., a
Louisiana corporation and Designee of Buyer, of the assets of OHM Corporation
(together with Buyer or its Designee's acquisition of the assets of Beneco in a
separate bankruptcy case), is intended to be treated as a reorganization under
section 368(a)(1)(G) of the Internal Revenue Code. In connection therewith,
Sellers consent to Buyer's allocation of the Purchase Price with respect to OHM
Corporation, OHM, Remediation Services Corporation, Northeast Plaza Ventures I,
LLC and the Real Property being transferred to Buyer.
24. Except as specifically amended hereby, the terms and provisions of
the Agreement shall continue and remain in full force and effect and shall
constitute the valid and binding obligation of the Parties hereto in accordance
with its terms. All references in the Agreement (and in any other agreements,
documents and instruments entered into in connection therewith) to the
"Agreement" shall be deemed for all purposes to refer to the Agreement, as
heretofore amended and as amended hereby.
25. This Amendment may be executed in one or more counterparts, each of
which shall be an original, with the same effect as of the signatures hereto and
thereto were upon the same instrument.
26. This Amendment shall be governed by and construed in accordance
with the laws of the State of Delaware without regard to the conflicts of law
rules of such state.
[SIGNATURE ON NEXT PAGE]
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IN WITNESS WHEREOF, the Parties have executed this Amendment and caused the same
to be duly delivered on their behalf on the day and year first written above.
THE IT GROUP, INC. THE XXXX GROUP INC.
By: /s/ XXXXX X. XXXXX By: /s/ XXXX X. XXXXXXX
-------------------------------- --------------------------------------------
Name: Xxxxx X. Xxxxx Name: Xxxx X. Xxxxxxx
Title: Chief Financial Officer Title: Corporate Secretary and General Counsel
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