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AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF MERGER
This Amendment No. 1 to Agreement and Plan of Merger (this "Amendment") is
entered into as of November 20, 2000, by and among POWERBRIEF, INC., a Delaware
corporation (the "Company"), and INTEGRATED ORTHOPAEDICS, INC., a Texas
corporation ("IOI").
WHEREAS, the Company and IOI have entered into that certain Agreement and
Plan of Merger, dated as of September 15, 2000 (the "Merger Agreement");
WHEREAS, the parties hereto desire to amend the Merger Agreement as
hereinafter set forth;
WHEREAS, the Company desires to consent to the amendment of the employment
agreements with Xxxxxxx X. Baderscher, Xxxxx Xxxxxxx and Xxxxxx Xxxx Xxxxxxxxx
on October 24, 2000 (the "Employment Agreement Amendments");
WHEREAS, IOI desires to consent to the grant of certain stock options by
the Company that would otherwise be prohibited by Section 5.1(b) of the Merger
Agreement; and
WHEREAS, the boards of directors of the Company and IOI have approved this
Amendment;
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Definitions. The capitalized terms used, but not defined, in this
Amendment are defined in the Merger Agreement.
2. Amendments to Section 2.1 -- Conversion of Shares.
(a) The reference to ".0454" contained in Section 2.1(a)(i) of the Merger
Agreement, relating to the number of shares of IOI Common Stock purchasable with
Series A Warrants to be received in exchange for shares of Company Common Stock
by virtue of the Merger, is hereby amended to read "0.1370."
(b) Clause (iii) of Section 2.1(a)(i), which says "(iii) a Series B warrant
to purchase .0850 shares of IOI Common Stock (the "SERIES B WARRANTS"and
together with the Series A Warrants, the "WARRANTS")," shall be amended and
restated to read "(iii) a Series B warrant to purchase a number shares of IOI
Common Stock equal to the quotient of (x) the Maximum Series B Warrants Amount,
divided by (y) the sum of (I) the number of share of Company Common Stock
outstanding, (II) the number of shares of Series A Preferred Stock outstanding
multiplied bythree (3), and (III) the number of shares of Company Common Stock
purchasable under the Company Warrants, each as the Effective Time (the "SERIES
B WARRANTS"and together with the Series A Warrants, the "WARRANTS")."
(c) The reference to "9.054" contained in Section 2.1(a)(ii) of the Merger
Agreement, relating to the number of shares of IOI Common Stock to be received
in exchange for each share of the Company's Series A Preferred Stock by virtue
of the Merger, is hereby amended to read "9.053."
(d) The reference to ".1363" contained in Section 2.1(a)(ii) of the Merger
Agreement, relating to the number of shares of IOI Common Stock purchasable with
Series A Warrants to be received in exchange for shares of the Company's Series
A Preferred Stock by virtue of the Merger, is hereby amended to read "0.4111."
(e) Clause (iii) of Section 2.1(a)(ii), which says "(iii) a Series B
warrant to purchase .2549 shares of IOI Common Stock," shall be amended and
restated to read "(iii) a Series B warrant to purchase a number shares of IOI
Common Stock equal to the product of (x) the number of shares purchasable with a
Series B Warrant given in exchange for a share of Company Common Stock pursuant
to Section 2.1(a)(i) above, multiplied by (y) three (3)."
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(f) The first sentence of Section 2.1(d) of the Merger Agreement is hereby
deleted in its entirety and replaced with the following two sentences:
"(d) Upon the Effective Time, the Surviving Corporation will effect a five
to one reverse stock split of IOI Common Stock. The shares of IOI Common
Stock, Series A Warrants and Series B Warrants issuable pursuant to this
Article II shall be subject to and effected by such reverse stock split."
(g) The last paragraph of Section 2.1(a)(ii) of the Merger Agreement is
hereby amended and restated in its entirety to read as follows:
"Notwithstanding anything to the contrary herein, the maximum number of (A)
shares of IOI Common Stock issuable pursuant to Sections 2.1(a)(i) and
2.1(a)(ii) and Section 2.2 shall be 69,073,062 shares, (B) Series A
Warrants issuable pursuant to Section 2.1(a)(i) and 2.1(a)(ii) and 2.1(b)
shall entitle the holders thereof to purchase an aggregate of 2,673,332
shares of IOI Common Stock and (C) Series B Warrants issuable pursuant to
Section 2.1(a)(i) and 2.1(a)(ii) and Section 2.2(b) shall entitle the
holders thereof to purchase an aggregate number of shares of IOI Common
Stock equal to the aggregate number of shares of IOI Common Stock that may
be purchased under the warrants of IOI issued and outstanding as of
September 15, 2000 (the "EXISTING IOI WARRANTS"), as adjusted pursuant to
the anti-dilution provisions of the Existing IOI Warrants as a result of
the issuance of the IOI Warrants as permitted and contemplated by Section
6.16 (the "MAXIMUM SERIES B WARRANTS AMOUNT"). For clarification, neither
the IOI Warrants nor the Series A Warrants will receive any anti-dilution
adjustment for issuance of the Series A Warrants, the Series B Warrants or
any IOI Common Stock in the Merger. In the event that prior to the Closing
any of the options described in Section 2.2(a) are exercised, the maximum
number of Series A Warrants and the Series B Warrants will be reallocated,
on a pro-rata basis, among all of the holders of outstanding Company Common
Stock, Series A Preferred Stock and warrants. The foregoing amounts do not
limit the number of shares of IOI Common Stock issuable pursuant to Section
2.1(a)(iii) below."
3. Amendment to Section 3.2 -- Capitalization of the Company. Section 3.2
of the Merger Agreement is hereby amended by deleting the reference to the
amount of "551,025," which describes the number of Common Shares reserved for
issuance and issuable upon or otherwise deliverable in connection with the
exercise of the Company's outstanding warrants, and replacing such amount with
"560,116."
4. Amendment to Section 7.3(h) -- Conditions to Obligations of the
Company. Section 7.3(h) of the Merger Agreement is hereby amended and restated
in its entirety to read as follows:
"(h) The Series B Warrants outstanding as of the date hereof will be
amended to conform in all material respects with the form of Series B
Warrant attached hereto as Exhibit H and to waive the applicability of any
anti-dilution protection resulting from the transactions contemplated by
this Agreement; provided that such amendment shall not waive the
applicability of the any anti-dilution protection with regard to the
issuance of the IOI Warrants as permitted and contemplated by Section
6.16."
5. Amendment to Exhibit H -- Warrant Agreement for Series B
Warrants. Exhibit H to the Merger Agreement is hereby deleted in its entirety
and replaced with a new Exhibit H attached to this Amendment as Annex I, which
(a) changes the expiration date of the Series B Warrants from a date that is
four years from the date that the Series B Warrants first became exercisable to
June 30, 2005, (b) changes the exercise price of the Series B Warrants to that
of the Existing IOI Warrants, as adjusted pursuant to their anti-dilution
provisions for the issuance of the IOI Warrants as permitted and contemplated in
Section 6.16 of the Merger Agreement, and (c) includes other amendments to the
Series B Warrants that have been mutually agreed to by the parties.
6. Amendment to Exhibit I -- Warrant Agreement for Series A
Warrants. Exhibit I to the Merger Agreement is hereby deleted in its entirety
and replaced with a new Exhibit I attached to this Amendment as Annex II, which
(a) changes the expiration date of the Series A Warrants from a date that is
four years from the date that the Series A Warrants first became exercisable to
a date that is five years from
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the Closing Date, and (b) includes other amendments to the Series B Warrants
that have been mutually agreed to by the parties.
7. Consent to Employment Agreement Amendments. The Company hereby consents
to the Employment Agreement Amendments, copies of which are attached as Annex
III, and the actions taken by IOI in connection therewith. Furthermore, the
Company hereby waives IOI's compliance with the Merger Agreement, including,
without limitation, compliance with Section 5.2(f), solely with respect to the
entering into, and performance of, the Employment Agreement Amendments by IOI.
The foregoing consent and waiver applies only to the Employment Agreement
Amendments and the actions taken by IOI in connection therewith, and nothing
contained in this paragraph shall be a waiver of any other present or future
compliance with the Merger Agreement
8. Consent to Grant of Certain Stock Options. IOI hereby consents to the
grant of options exercisable for 98,350 shares of Company Common Stock under the
Company's 2000 Equity Incentive Plan and the actions taken by the Company in
connection therewith. Furthermore, IOI hereby waives the Company's compliance
with the Merger Agreement, including, without limitation, compliance with
Section 5.1(b), solely with respect to the grant of stock options contemplated
by this Section 8. The foregoing consent and waiver applies only to the grant of
stock options authorized by this Section 8 and the actions taken by the Company
in connection therewith, and nothing contained in this paragraph shall be a
waiver of any other present or future compliance with the Merger Agreement
9. Merger Agreement in Effect. Except as herein amended, the Merger
Agreement shall remain valid and subsisting in accordance with its terms. In the
event of any conflict or inconsistency between this Amendment and the Merger
Agreement, the provisions of this Amendment shall govern and control.
10. Governing Laws. This Amendment shall be governed by and construed in
accordance with the Laws of the State of Texas, without giving effect to the
choice of Law principals thereof.
11. Description Headings. The description headings herein are for
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Amendment.
12. Severability. The provisions of this Amendment shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provision of this Amendment, or the application thereof to any person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Amendment and the application of such
provision to other persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed on its behalf as of the day and year first above written.
POWERBRIEF, INC.:
By: /s/ XXXXXX X. XXXX
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Name: Xxxxxx X. Xxxx
Title: Chief Executive Officer
INTEGRATED ORTHOPAEDICS, INC.:
By: /s/ XXXXX X. XXXXXXX
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Name: Xxxxx X. Xxxxxxx
Title: Director
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