EXHIBIT 2.2
December 1, 1998
Stephen S. Gray, Trustee
c/o The Recovery Group
270 Congress Street
Boston, MA 02210
Dear Mr. Gray:
Reference is made to an offer dated November 13, 1998, as amended and filed
with the United States Bankruptcy Court for the District of Massachusetts
(Eastern District) (the "Court") on November 24, 1998 (as amended, the "Bid") in
jointly administered Case Nos. 97-21385CJK through 97-21389CJK (the "Chapter 11
Case") and to an Order of Sale entered by the Court on November 25, 1998 (the
"Sale Order") approving the sale on the terms and conditions set forth in the
Bid. Capitalized terms used in this letter agreement shall have the same
meanings herein as in the Bid.
Pursuant to the Bid and the Order, the parties have agreed that:
Purchase by ATG Nuclear. ATG Nuclear Services L.L.C. ("ATG Nuclear") will
purchase the Wet Waste Assets from the Trustee (including the assets and real
estate located in South Carolina) at 12:01 a.m. on December 1, 1998 (the "First
Closing") under a Bill of Sale and related closing documents in form and scope
satisfactory to the parties executed and delivered by the Trustee.
Notwithstanding the foregoing, the accounts receivable generated from the Wet
Waste Business outstanding as of the date hereof (the "Wet Waste Receivables")
shall be held back from the Wet Waste Assets until the earlier to occur of: (i)
the posting of the letter of credit as provided for in Section 4(c) hereof or
(ii) the amount deposited in the Collateral Account (as defined below) equaling
or exceeding $1,800,000.
Purchase by ATG Catalytics. ATG Catalytics L.L.C. ("ATG Catalytics") will
purchase the CEP Assets (other than certain intellectual property belonging to
QC and the Fall River assets, which are referred to herein as the "QC Assets")
as of December 1, 1998 from the Trustee which shall be conveyed and delivered
immediately upon the earlier of (i) December 4, 1998 or (ii) the issuance of an
operating license by the State of Tennessee pursuant to which ATG Catalytics is
empowered to operate the CEP Assets (the "Second Closing") under a Bill of Sale
and related closing documents in form and scope satisfactory to the parties
executed and delivered by the Trustee. Notwithstanding the foregoing, the
accounts receivable generated from the CEP Business outstanding as of the date
hereof or arising on or after the date hereof through the Second Closing (the
"CEP Accounts Receivable" and, together with the Wet Waste Receivables, the
"Receivables") shall be held back from the CEP Assets until the earlier to occur
of: (i) the posting of the letter of credit as provided for in Section 4(c)
hereof or (ii) the amount deposited in the Collateral Account equaling or
exceeding $1,800,000.
Purchase by Quantum Catalytic. Quantum Catalytic LLC ("QC") will purchase the
QC Assets from the Trustee at the First Closing under a Bill of Sale and related
closing documents in form and scope satisfactory to the parties executed and
delivered by the Trustee.
Consideration. The consideration paid to the Trustee will be as follows:
For the Wet Waste Assets, $10,500,000 paid in cash by ATG Nuclear at the First
Closing ($1,050,000 of which was released at the First Closing from an escrow of
previously deposited funds) together with its Promissory Note in the principal
amount of $1,000,000, payable in full on the first anniversary of the closing
(the "Promissory Note").
For the CEP Assets, ATG Catalytics will make a payment of five percent (5%) of
annual EBITDA arising from the ongoing operations of and/or generation of
revenues from the CEP Business and/or the CEP Assets and QC will make a payment
of five percent (5%) of annual EBITDA arising from the ongoing operations of
and/or generation of revenues from the QC Business and/or the QC Assets, each
such payment payable each calendar year commencing January 1, 1999 for a period
of five years from the Closing (together the "EBITDA Payments"). The EBITDA
Payments will be in the minimum amount of $800,000 per year for each year of the
five-year period, and will be due 90 days following the end of each calendar
year during such five-year period. In the event of a sale of all or
substantially all of the CEP Business (other than the QC Assets) at any time
during such five-year period, ATG Catalytics shall make the payments required by
Part II, Section 2(d) of the Bid.
The Promissory Note and the EBITDA Payments will be guaranteed by ATG Inc.
("ATG"), the parent of ATG Nuclear and ATG Catalytics, pursuant to the terms of
a Guaranty executed simultaneously herewith. ATG's guaranty of payment of the
Promissory Note and the first of the EBITDA Payments (in the amount of $800,000)
(the "Guaranteed Payments") will be secured by a letter of credit in form, scope
and substance satisfactory to the Trustee, with such letter of credit to be in
place within thirty (30) days of the date hereof; provided, however, that until
the letter of credit is issued, any proceeds collected from the Receivables
shall be deposited in a segregated, interest-bearing account (the "Collateral
Account") (subject to the provisions of Section 6(b) hereof). The principal
balance of the Collateral Account shall not exceed $1,800,000, exclusive of
accrued interest. In the event that the principal balance in the Collateral
Account equals or exceeds $1,800,000, any additional proceeds collected from the
Receivables shall be turned over to ATG. The Collateral Account shall secure
the Guaranteed Payments. In the event that the letter of credit is not issued
and to the extent there is a default under the Guaranty with respect to the
Guaranteed Payments, the Trustee shall apply the funds in the Collateral Account
to satisfy the Guaranteed Payments. In the event that the Guaranteed Payments
are paid in full, (i) if the letter of credit has been issued, it shall be
terminated or (ii) if the letter of credit has not been issued, the funds in the
Collateral Account shall be returned to ATG. The Trustee shall be entitled to
withdraw up to $225,000 from the Collateral Account to pay Estate expenses
incurred prior to the date hereof; provided, that the Trustee shall deposit in
the Collateral Account an amount equal to the amounts so withdrawn (together
with interest thereon at the rate of interest earned on the cash collateral
referred to below) upon receipt of the proceeds of the cash collateral
supporting the South Carolina letter of credit.
For the QC Assets, QC will pay (i) $100,000 in cash at the First Closing and
(ii) its portion of the EBITDA Payments as set forth in Section 4(b) hereof. In
the event of a sale of all or substantially all of the QC Assets at any time
during the five-year period commencing on the Closing, QC shall make the
payments required by Part II, Section 2(d) of the Bid.
Attached as Exhibit A hereto is a schedule setting forth the prepayments made to
vendors prior to the First Closing for services to be rendered after the First
Closing, which amount ATG has paid to the Trustee. In the event that the
contracts set forth on Exhibit A hereto that are marked with an asterisk are
terminated after the Second Closing and to the extent there exists any balance
outstanding with respect to the amounts prepaid under such contracts, the
Trustee shall reimburse to ATG, or its nominee, such balance. Any other
adjustments to the purchase price shall be made in accordance with Part I,
Section 24 or Part II, Section 24 of the Bid, as the case may be.
For the purposes contained herein as well as for purposes of the Bid, "EBITDA"
shall be defined as earnings before interest, taxes, depreciation and
amortization, as determined in accordance with generally accepted accounting
principles. In addition to the foregoing, for purposes of calculating the
EBITDA payment, any bonuses and other extraordinary compensation payable to
officers, directors or shareholders shall not be included in such calculation.
Trustee's Title to Bear Creek Facility. For the period from the First Closing
to the Second Closing (the "Interim Period") the portion of the Wet Waste Assets
and CEP Assets constituting the Bear Creek Facility and all operations thereof
shall continue under the exclusive jurisdiction and control of the Trustee and
there shall be no transfer of ownership or title with respect to such assets
(including without limitation all such assets comprising real property) to any
third party by the Trustee until the Second Closing.
Operation of Bear Creek Facility During Interim Period.
a) ATG Catalytics agrees that, during the Interim Period, ATG Catalytics shall
bear the costs of the operations of the Bear Creek Facility, which the
Trustee shall endeavor to operate in accordance with the budget attached to
this letter agreement as Exhibit B (the "Budget"). The parties agree
further that all accounts receivable generated or collected during the
Interim Period in respect of the Bear Creek Facility shall be for the
benefit of ATG Catalytics, except as provided in Section 4(c) hereof, it
being the intention of the parties that ATG Catalytics shall bear the
costs, and benefit from the revenues, of the Bear Creek Facility during the
Interim Period as though it had been transferred from the Trustee to ATG
Catalytics at the First Closing. The parties covenant and agree that solely
with respect to the Bear Creek Facility the Trustee shall continue to
operate such facility in the same manner and method as previously operated
by the Trustee, including, without limitation, the continued employment of
all employees associated with such facility to the extent not employed by
ATG Nuclear or QC.
b) During the Interim Period, the Trustee with the consent of its post-
petition lender shall utilize the cash collateral of the post-petition lender to
pay the operating costs of the Bear Creek Facility during the Interim Period
(the "Operating Costs"). The Operating Costs shall be reimbursed by ATG on a
daily basis. To the extent that the Operating Costs are not reimbursed on or
before the expiration of five days after the Interim Period, the Trustee, upon
prior telephonic notice or telefax notice to ATG's counsel, may withdraw funds
held in the Collateral Account for reimbursement to the Estate, and such
withdrawal shall not effect the requirements of Section 4(c) hereof.
Notwithstanding the foregoing, in the event that the post-petition lender does
not consent to the use of its cash collateral to pay the Operating Costs, ATG
agrees to establish an account for the benefit of the Trustee in an amount equal
to the costs expected to be incurred for the operation of the Bear Creek
Facility in accordance with the Budget (the "Operating Cost Account"). Such
funds may be withdrawn by the Trustee to pay any and all operating costs of the
Bear Creek Facility incurred during the Interim Period. To the extent that the
actual costs of operation of the Bear Creek Facility during the Interim Period
are less than the amount deposited in the Operating Cost Account, such excess
funds shall be transferred to the Collateral Account, subject to the limitation
provided in Section 4(c) above.
Attached hereto as Exhibit C is a schedule setting forth the Good Current
Assets. Pursuant to such schedule, the parties acknowledge and agree that there
is no adjustment to the purchase price pursuant to Part I, Section 2(e) of the
Bid.
The parties hereby agree to cooperate with each other with respect to the
transfer of utility accounts. To the extent there exists any deposits paid by
the Bankruptcy Estates, such deposits shall be returned to the Trustee.
Post-Closing Issues
a) The parties agree to cooperate in undertaking the appropriate measures
to have the letters of credit referenced in the Bid terminated, cancelled and
returned. Upon the termination of such letters of credit and the receipt by the
Trustee of the cash collateral securing such letters of credit, the Trustee
shall remit to QC the sum of $91,000, and to ATG, or its nominee, the sum of
$1,600,000, together with all interest thereon. Any additional funds associated
with such letters of credit shall be retained by the Trustee.
b) The cash in the approximate amount of $140,000 to secure the
performance of the Kepco contract (Contract No. KH972NN800) shall be returned to
the Trustee upon the performance of the obligations under such contract to the
extent that such funds would be and are returned in accordance with the terms of
such contract.
c) ATG has determined that the fair market value of the assets to be
purchased pursuant to the Bid does not exceed the "size of the transaction" test
under the HSRA.
d) ATG Nuclear or QC, as the case may be, shall pay the salaries of the
Selected Employees accrued from and after the First Closing.
e) ATG Nuclear shall reimburse the Trustee for all expenses of the
Trustee associated with licenses, insurance, regulatory filings and permits that
are necessary or appropriate for ATG Nuclear's operation of the South Carolina
Facility pursuant to Part I, Section 8 of the Bid and incurred after the First
Closing.
f) The Trustee shall pay the outstanding real estate taxes associated
with the South Carolina property which accrued prior to the First Closing, which
amount is approximately $6,200. With respect to the Bear Creek Facility, the
Trustee shall pay the outstanding real estate taxes associated with such
facility which accrued prior to the First Closing, unless the Trustee reasonably
believes that the payment of such taxes would require a court order, in which
case the Trustee shall use his best efforts to obtain such court order.
g) The parties agree to coordinate their efforts and cooperate with each
other regarding the termination of Wet Waste Employees and CEP Employees by the
Trustee.
h) The parties agree that the Exclusion Notice Date with respect to
executory contracts referenced in Part II, Section 5 shall be extended to the
date of the Second Closing.
Miscellaneous Provisions
a) To the extent not explicitly modified by this letter agreement, the
Bid shall remain in full force and effect.
b) This letter agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts without application of its
principles of conflict of laws.
b) This letter agreement may be executed in counterparts and shall constitute
a single document.
Further Assurances. The parties each agree to execute all such documents and
take all such actions after the date hereof as any other party shall reasonably
request in connection with carrying out and effectuating the intent and purpose
hereof and all transactions and things contemplated by this letter agreement,
including, without limitation, the execution and delivery of any and all
confirmatory and other documents in addition to those to be delivered
simultaneously with the execution hereof and all actions which may reasonably be
necessary or desirable to complete the transactions contemplated hereby.
Without limiting the foregoing, the parties expressly agree and acknowledge that
ATG Nuclear, ATG Catalytics and/or QC (collectively, the "Buyers") shall make
available at the reasonable request of the Trustee, within five (5) days written
notice, any and all books and records requested by the Trustee, in his sole and
complete discretion, including, but not limited to, any and all original
documents. The Buyers further agree to use their best efforts to preserve the
books and records until the closing of the respective Bankruptcy Estates.
[Remainder of Page Intentionally Left Blank]
Sincerely,
ATG INC.
By:__________________________________________
ATG NUCLEAR SERVICES L.L.C.
By:__________________________________________
ATG CATALYTICS L.L.C.
By:__________________________________________
QUANTUM CATALYTIC LLC
By:__________________________________________
Accepted and agreed:
___________________________________
Stephen S. Gray, as Trustee
and not individually