Exhibit 2.2
AMENDMENT NUMBER 1 TO AGREEMENT AND PLAN OF REORGANIZATION
This Amendment Number 1 (the "Amendment") to the Agreement and Plan of
Reorganization (the "Agreement") dated April 27, 1997 by and among The Failure
Group, Inc., a Delaware corporation ("Parent"), The Failure Group Washington,
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Inc., a Washington corporation and a wholly-owned subsidiary of Parent ("Sub"),
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Performance Technologies, Incorporated d.b.a. PTI Environmental Services, a
Washington corporation (the "Company"), and each of Xxxxxx X. Xxxxxxx, Xxxx X.
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Xxxxxx, Xxxxxx X. Xxxx, Xxxx X. Xxxxxxxx, and Xxxxx X. Xxxx, individuals and
certain of the principal shareholders of the Company (such individuals being
hereinafter referred to as the "Principal Shareholders" and individually as a
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"Principal Shareholder") and Chase Trust Company of California (the "Escrow
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Agent") (as to the provisions of Article VII of the Agreement) is being executed
as of May 7, 1997. Capitalized terms that are not otherwise defined in this
Amendment have the same meaning given to them in the Agreement.
RECITAL
A. The parties to the Agreement deem it advisable to amend the
Agreement to provide that all of the 480,000 shares of Common Stock of Parent to
be issued pursuant to the Agreement will be placed into the Escrow Fund in order
to provide for an additional means for satisfaction of any claims by Parent for
Losses during the term of the Escrow Fund without resort to personal legal
action against the Company's shareholders during such term.
B. In addition the parties to the Agreement deem it advisable to
amend the Agreement to correct representation 3.3(a) of the Agreement by adding
the reference to the non-statutory options granted to the certain directors of
Parent.
The parties intending to be legally bound, agree as follows:
AGREEMENT
1. Recital C of the Agreement is hereby amended in its entirety
to read as follows:
"C. All of the stock otherwise payable by Parent in
connection with the Merger shall be placed in escrow by Parent
for the purposes of satisfying damages, losses, expenses and
other similar charges which result from breaches of
representations, warranties or covenants, all as set forth in
Article VII hereof."
2. Section 1.7(b) of the Agreement is hereby amended in its
entirety to read as follows:
"(b) Parent to Provide Cash and Deposit Stock. At
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Closing, Parent shall make available to the Exchange Agent
for exchange in accordance with this Article I, the
cash deliverable pursuant to Section 1.6(a) in exchange for
outstanding shares of Company Capital Stock; and, on behalf of
the holders of Company Capital Stock, Parent shall deposit
into the Escrow Fund (as defined below in Section 7.2(a)) an
aggregate of 480,000 shares of Parent Common Stock (the
"Escrow Amount") out of the Merger Consideration otherwise
payable pursuant to Section 1.6(a). The portion of the Escrow
Amount deposited into escrow on behalf of each holder of
Company Capital Stock shall be deemed issued and outstanding
Parent Common Stock in the name of such holder and shall be in
proportion to the aggregate number of shares of Parent Common
Stock which such holder would otherwise be entitled to receive
under Section 1.6(a) by virtue of such holder's ownership of
outstanding shares of Company Capital Stock. The Surviving
Corporation will pay the Option Purchase Amount for payment
pursuant to Section 1.6(e) as soon as practical after the
Closing."
3. Section 1.7(c) of the Agreement is hereby amended in its
entirety to read as follows:
"(c) Exchange Procedures. On the Closing Date, (i) each holder
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of record of a certificate or certificates (collectively, the
"Company Stock Certificates") that immediately prior to the
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Effective Time represented outstanding shares of Company
Capital Stock whose shares were converted into the right to
receive shares of Parent Common Stock and cash pursuant to
Section 1.6(a), will deliver to the Exchange Agent the Company
Stock Certificate(s) for cancellation, together with a letter
of transmittal and an executed stock power in blank, and (ii)
the Exchange Agent will deliver to each such holder of record
of the Company Stock Certificate(s) the cash portion of the
Merger Consideration Per Share in accordance with Section
1.6(a)(ii), and the Company Stock Certificates so surrendered
shall forthwith be canceled. Until so surrendered, each
outstanding Company Stock Certificate that, prior to the
Effective Time, represented shares of Company Capital Stock
will be deemed from and after the Effective Time, for all
corporate purposes, to evidence the ownership of the number of
full shares of Parent Common Stock (rounded to the nearest
whole share) into which such shares of Company Capital Stock
shall have been so converted (which shares of Parent Common
will be deposited by the Exchange Agent into the Escrow Fund)
and the right to receive an amount in cash as provided in
Section 1.6(a)(ii) hereof. As soon as practicable after the
Effective Time, and subject to and in accordance with the
provisions of Article VII hereof, Parent shall cause to be
deposited with the Escrow Agent (as defined in Article VII)
the sum of the Escrow Amount, which amount shall be available
to compensate Parent as provided in Article VII."
4. Section 3.3(a) of the Agreement is hereby amended in its
entirety to read as follows:
"(a) The authorized stock of Parent consists of 20,000,000
shares of Common Stock, $.001 par value, of which 6,805,837
shares were issued and outstanding as of
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December 31, 1996, and 2,000,000 shares of undesignated
Preferred Stock, $.001 par value. No shares of Preferred Stock
are issued or outstanding. All such shares have been duly
authorized, and all such issued and outstanding shares have
been validly issued, are fully paid and nonassessable and are
free of any liens or encumbrances other than any liens or
encumbrances created by or imposed upon the holders thereof.
Parent has also reserved (i) 1,550,000 shares of Common Stock
for issuance to employees and consultants pursuant to the
Parent's 1990 Stock Options and Rights Plan, (ii) 119,000
shares of Common Stock for issuance under the 1989 Stock
Option Plan for Xxxxxxxx X. Xxxxxxx, (iii) 200,000 shares of
Common Stock for issuance to directors under its 1991
Directors Restricted Stock Plan, (iv) 400,000 shares of Common
Stock for issuance under the Parent's 1992 Employee Stock
Purchase Plan, and (v) 84,000 shares of Common Stock reserved
for issuance pursuant to individual non-statutory options
issued to certain directors of Parent. There are no other
options, warrants, calls, rights, commitments or agreements of
any character to which Parent is a party or by which it is
bound obligating Parent to issue, deliver, sell, repurchase or
redeem, or cause to be issued, delivered, sold, repurchased or
redeemed, any shares of the capital stock of Parent or
obligating Parent to grant, extend or enter into any such
option, warrant, call, right, commitment or agreement."
5. Except as expressly provided herein, the Agreement shall
remain in full force and effect in accordance with its terms, and all the
provisions of the Agreement (and all schedules and exhibits thereto) are hereby
incorporated by reference as though fully set forth herein.
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IN WITNESS WHEREOF, Parent, Sub, the Company, the Principal
Shareholders and the Shareholder Representative and the Escrow Agent (as to the
provisions of Article VII only) have caused this Amendment to be signed by their
duly authorized respective officers (or in the case of the Principal
Shareholders, personally signed), all as of the date first written above.
PERFORMANCE TECHNOLOGIES
INCORPORATED,
D.B.A. PTI ENVIRONMENTAL SERVICES THE FAILURE GROUP, INC.
By: /s/ Xxxx Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxxx
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Title: President Title: President and C.E.O
ESCROW AGENT THE FAILURE GROUP
CHASE TRUST COMPANY OF WASHINGTON INC.
CALIFORNIA (AS TO THE PROVISIONS OF
ARTICLE VII ONLY)
By: /s/ Chii Xxxx Xxx By: /s/ Xxxxxxx X. Xxxxxx
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Name: Chii Xxxx Xxx
Title: President and C.E.O
Title: Trust Officer
SHAREHOLDER REPRESENTATIVE PRINCIPAL SHAREHOLDERS
By: /s/ Xxxx Xxxxxxxx /s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
Name: Xxxx Xxxxxxxx
/s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx
/s/ Xxxx X. Xxxxxxxx
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Xxxx X. Xxxxxxxx
/s/ Xxxxx X. Xxxx
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Xxxxx X. Xxxx
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