EXHIBIT 2.1
ARRANGEMENT AGREEMENT MADE AMONG PRAXIS PHARMACEUTICALS INC.
AND PATCH ENERGY INC. DATED AS OF OCTOBER 20, 2003
ARRANGEMENT AGREEMENT
made among
PRAXIS PHARMACEUTICALS INC.
and
PATCH ENERGY INC.
Dated as of October 20, 2003
TABLE OF CONTENTS
Page
ARTICLE 1 INTERPRETATION.......................................................1
Definitions................................................................1
Currency...................................................................4
Interpretation.............................................................4
Governing Law and Attornment...............................................5
Schedules..................................................................5
ARTICLE 2 PURPOSE AND COVENANTS................................................5
Purpose....................................................................5
Effective Date.............................................................5
Covenants of Patch.........................................................5
Covenants of Praxis........................................................6
Mutual Covenants Concerning Business and Financial Matters.................6
Mutual Covenants Not to Solicit a Competing Transaction....................7
Negotiations with Other Parties to Cease...................................7
Notification of Competing Proposal.........................................7
Delivery of Material Non-Public Information................................8
Notice of Superior Proposal................................................8
Negotiation of an Amendment to this Agreement..............................8
ARTICLE 3 REPRESENTATIONS AND WARRANTIES.......................................9
Representations and Warranties of the Parties..............................9
ARTICLE 4 CONDITIONS PRECEDENT................................................10
Mutual Conditions Precedent...............................................10
Conditions to Obligations Patch...........................................11
Conditions to Obligations of Praxis.......................................12
Notice of Failure to Comply With Conditions...............................12
Merger of Conditions......................................................13
ARTICLE 5 TERMINATION AND WAIVER..............................................13
Termination...............................................................13
Waiver....................................................................13
Effect of Termination.....................................................13
ARTICLE 6 IMPLEMENTATION OF TRANSACTION.......................................14
Interim Order.............................................................14
Filing of Final Order.....................................................14
Arrangement and Closing...................................................14
ARTICLE 7 GENERAL.............................................................14
Notice....................................................................14
Amendment.................................................................15
Amendment Resulting from Final Order......................................15
Binding Effect............................................................16
Prohibition Against Assignment............................................16
Equitable Remedies........................................................16
Disclosure................................................................16
Entire Agreement..........................................................16
Time of Essence...........................................................16
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Counterpart Executions and Facsimile Transmissions........................16
Expenses..................................................................16
Notification of Certain Matters...........................................16
Investigation.............................................................17
SCHEDULE A - PLAN OF ARRANGEMENT
ARRANGEMENT AGREEMENT
THIS ARRANGEMENT AGREEMENT is made as of the 20th day of October, 2003
AMONG:
PRAXIS PHARMACEUTICALS INC., a company incorporated under
the laws of the State of Utah
("Praxis")
AND:
PATCH ENERGY INC., a company continued by amalgamation under
the laws of Canada
("Patch")
WHEREAS:
(A) Praxis and Patch wish to combine their respective businesses;
(B) The Parties wish to accomplish the business combination by having
the holders of common shares of Patch exchange them for common shares of Praxis
pursuant to an Arrangement; and
(C) The Parties have entered into this Agreement to provide for the
matters referred to in the foregoing recitals and for other matters relating to
the combination of their businesses.
NOW THEREFORE THIS AGREEMENT WITNESSES THAT, in consideration of the respective
covenants and agreements hereinafter contained and other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged),
the parties hereto agree as follows:
ARTICLE 1
INTERPRETATION
DEFINITIONS
1.1 In this Agreement and in the recitals and Schedules hereto, unless
there is something in the context or subject matter inconsistent therewith, the
following words and phrases will have the meanings hereinafter set out:
ADVERSE MATERIAL CHANGE means, in respect of any Party, any change,
effect, event, occurrence or state of facts that is or would reasonably
be expected to be, Material and adverse to the business, operations,
capital, assets, liabilities or financial condition of such Party;
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APPLICABLE LAW means any applicable domestic or foreign law, including
any statute, subordinate legislation or treaty and any applicable
guideline, directive, rule, standard, requirement, policy, order,
judgment, injunction, award or decree of a Governmental Authority
having the force of law;
APPLICABLE SECURITIES LAW means applicable Canadian Securities Laws,
U.S. Securities Laws and the by-laws, rules and published policies of
the Stock Exchanges;
ARRANGEMENT means the arrangement under ss.192 of the CBCA on the terms
set forth in the Plan of Arrangement which is attached hereto as
Schedule A;
ARTICLES OF ARRANGEMENT means the articles of arrangement of Patch
relating to the Arrangement;
BUSINESS DAY means a day which is not a Saturday, Sunday or a civic or
statutory holiday, in the place where an action is to be taken;
CANADIAN SECURITIES LAWS means the Securities Act (British Columbia)
and the equivalent legislation in the other Provinces and in the
Territories of Canada, as amended from time to time, the rules,
regulations and forms made or promulgated under any of such statutes,
and the published policies, bulletins and notices of the regulatory
authorities administering such statutes;
CBCA means the Canada Business Corporations Act, as now enacted, as
amended, and the regulations thereto;
CERTIFICATE OF ARRANGEMENT means the certificate issued by the Director
under the CBCA giving effect to the Arrangement;
COMPETING TRANSACTION means a bona fide offer or proposal, other than
as contemplated by this Agreement
(a) for a merger, amalgamation, reorganization, arrangement or
other business combination involving a Party,
(b) to acquire, in any manner whether from treasury or otherwise
and either directly or indirectly, any shares or convertible
securities which exceed, or upon conversion will exceed, 20% of the
outstanding voting shares of the Party,
(c) to acquire, in any manner and either directly or indirectly,
assets which exceed in the aggregate 20% of the consolidated
assets of a Party, or
(d) for the adoption of a plan of liquidation or dissolution of,
affecting or involving a Party;
COURT means the Supreme Court of British Columbia;
DISSENTER means a person who has exercised a Dissent Right;
DISSENT RIGHT means the right to dissent to the Arrangement described
in Article 5 of the Plan of Arrangement;
EFFECTIVE DATE means the date shown on the Certificate of Arrangement;
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EFFECTIVE TIME means 5:00 p.m. (Vancouver time) on the Effective Date;
ENCUMBRANCE means a mortgage, charge, pledge, lien, hypothec, security
interest, adverse claim and rights of third parties to acquire or
restrict the use of property;
FINAL ORDER means the final order of the Court approving the
Arrangement;
FINANCIAL STATEMENTS of a Party means its audited comparative financial
statements and the notes thereto for the Party's most recently
completed fiscal year, together with the auditor's report thereon and
its published unaudited interim financial statements for the quarters
ended prior to the Effective Date;
GOVERNMENTAL AUTHORITY means any domestic or foreign legislative,
executive, judicial or administrative body or person having or
purporting to have jurisdiction in the relevant circumstances;
INFORMATION CIRCULAR means the management information circular to be
sent by Patch to Patch Shareholders in connection with the Meeting;
INTERIM ORDER means the interim order of the Court providing for, among
other things, the calling of the Meeting;
MATERIAL means, when used in respect to the affairs of a Party, an
event, occurrence or fact concerning the business, operations, capital,
assets, liabilities or financial condition of the Party, on a
consolidated basis, that would reasonably be expected to influence a
reasonable investor in whether or not to invest in the securities of
the Party;
MATERIAL FACT has the meaning attributed to such phrase in the
Securities Act (British Columbia);
MEETING means an extraordinary general meeting of Patch Shareholders to
be held pursuant to the Interim Order as soon as possible after the
date of execution hereof, called for the purpose of considering the
Arrangement, including any adjournment or adjournments thereof;
PARTY means a party to this Agreement;
PATCH SHAREHOLDER means the holders from time to time of Patch Shares;
PATCH SHARES means the common shares without par value in the capital
of Patch;
PLAN OF ARRANGEMENT means the plan of arrangement attached as Schedule
A to this Agreement, as amended from time to time;
PRAXIS SHARES means the common shares without par value in the capital
of Praxis;
REGULATORY APPROVAL means any approval, consent, waiver, permit, order
or exemption from any Governmental Authority that is required or
advisable to be obtained in order to permit the Arrangement to be
effected;
REPRESENTATIVES of a Party means collectively, the directors, officers,
employees, consultants, advisors and agents of the Party;
SEC means the United States Securities and Exchange Commission;
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SHARE COMMITMENT means an obligation of a Party to issue treasury
shares;
SUPERIOR PROPOSAL means a proposal for a Competing Transaction that is
delivered to a Party in writing, which the Board of Directors of the
Party determines will, in its good faith reasonable judgment, after
consultation with its financial advisors, if consummated in accordance
with its terms, be more favourable from a financial point of view to
the shareholders of the Party than the Arrangement and will be able to
be completed in a commercially reasonable length of time;
U.S. EXCHANGE ACT means the United States Securities Exchange Act of
1934, as amended;
U.S. SECURITIES ACT means the United States Securities Act of 1933, as
amended;
U.S. SECURITIES LAWS means the applicable blue sky or securities
legislation in the United States or any state or territory of the
United States or the District of Columbia, together with the U.S.
Exchange Act and the U.S. Securities Act and the rules and regulations
of the SEC thereunder;
and words and phrases used herein that are defined in the CBCA will have the
same meaning herein as in the CBCA unless the context otherwise requires.
CURRENCY
1.2 All sums of money which are referred to in this Agreement and the
Arrangement are expressed in lawful money of Canada unless otherwise stated.
INTERPRETATION
1.3 In this Agreement, unless otherwise expressly stated or the context
otherwise requires:
(a) the division of this Agreement and the Plan of Arrangement into
Articles and Sections and the further division thereof and the
insertion of headings and a table of contents are for convenience of
reference only and will not affect the construction or interpretation
of this Agreement or the Arrangement. Unless otherwise indicated, any
reference in this Agreement and the Plan of Arrangement to an Article,
Section or the symbol ss., or Schedule refers to the specified Article
or Section of or Schedule to this Agreement;
(b) the terms "Arrangement Agreement", "this Agreement", "hereof",
"herein", "hereunder" and similar expressions refer to this Agreement
and not to any particular section or other portion hereof and include
any agreement or instrument supplementary or ancillary hereto and,
unless otherwise indicated, a reference herein to a section is to the
appropriate section of this Agreement;
(c) words importing the singular number only will include the plural
and vice versa, words importing the use of any gender will include all
genders and words importing persons will include firms and corporations
and vice versa;
(d) if any date on which any action is required to be taken hereunder
by any of the parties is not a Business Day, such action will be
required to be taken on the next succeeding day which is a Business
Day;
(e) the word "including" means "including, without limiting the
generality of the foregoing";
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(f) a reference to a statute is to that statute as now enacted or
as the statute may from time to time be amended, re-enacted or replaced
and includes any regulation, rule or policy made thereunder; and
(g) a reference to the knowledge of a Party means to the best of
the knowledge of any of the officers of such Party after due enquiry.
GOVERNING LAW AND ATTORNMENT
1.4 This Agreement will be governed by and construed in accordance with the
laws of the Province of British Columbia and the Parties attorn to the non-
exclusive jurisdiction of the Courts of the Province of British Columbia.
SCHEDULES
The following schedule is hereby incorporated in and forms part of this
Agreement:
Schedule A - Plan of Arrangement.
ARTICLE 2
PURPOSE AND COVENANTS
PURPOSE
2.1 The parties hereto have entered into this Agreement for the purpose of
effecting the Arrangement on the Effective Date.
EFFECTIVE DATE
2.2 The Arrangement will become effective on the Effective Date and the
steps to be carried out pursuant to the Arrangement will become effective on the
Effective Date in the order set out in the Plan of Arrangement.
COVENANTS OF PATCH
2.3 As soon as reasonably practicable, Patch shall apply to the Court
pursuant to section 192 of the CBCA for an order approving the Arrangement and
in connection with such application, Patch will:
(a) file, proceed with and diligently prosecute an application for
the Interim Order, providing for, among other things, the calling and
holding of the Meeting for the purpose of considering and, if deemed
advisable, approving the Arrangement; and
(b) subject to obtaining the approvals as contemplated in the Interim
Order and as may be directed by the Court in the Interim Order, take
all steps necessary or desirable to submit the Arrangement to the Court
and apply for the Final Order;
and subject to the fulfilment or waiver of the conditions set forth in Article
4, Patch will deliver and file with the Registrar the Final Order, the Articles
of Arrangement and such other documents as may be required to give effect to the
Arrangement as soon as reasonably practicable.
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COVENANTS OF PRAXIS
2.4 Praxis covenants and agrees with Patch that on or prior to the
Effective Date, it will conditionally allot and reserve for issuance a
sufficient number of Praxis Shares to meet the obligations of Praxis under the
Arrangement;
MUTUAL COVENANTS CONCERNING BUSINESS AND FINANCIAL MATTERS
2.5 Each of the Parties covenants and agrees that, prior to the Effective
Date, unless the other Party consents in writing, which consent will not be
unreasonably withheld, or as otherwise expressly contemplated or permitted by
this Agreement, it will:
(a) carry on its business in the usual and normal course consistent
with past practice and will not enter into any Material transaction,
commitment or expenditure;
(b) not issue or agree to issue any shares or other securities,
whether by option or otherwise, without the prior written consent of
the other Party, save and except pursuant to the exercise of stock
options, warrants or conversion or exchange rights attaching to
securities which are currently outstanding or under existing share
issuance or grant plans;
(c) permit the other Party's Representatives, at all reasonable
times, access to the properties owned or controlled by the Party and to
the books, records, reports, data and all other information relevant to
the business, operations, capital, assets, liabilities and financial
condition of the Party;
(d) support the Arrangement and act expeditiously and in good faith,
(i) in finalizing material for applications to the Court for
the Interim Order and Final Order in a form satisfactory to the
Parties, which applications will request that the Court approve
the Arrangement on the basis that it is fair and reasonable to
the security holders of Patch and will state that, if the
Arrangement is approved, the Praxis Shares to be issued pursuant
to the Arrangement will not require registration under the U.S.
Securities Act by virtue of Section 3(a)(10) thereof and the
Final Order,
(ii) in finalizing the Information Circular in form
satisfactory to the Parties,
(iii) in convening the Meeting,
(iv) in soliciting shareholder approval for the Arrangement;
(v) in seeking applicable regulatory approvals for the
Arrangement, and
(vi) in completing the Arrangement;
(e) subject to ss.2.9, not disclose, in connection with any Competing
Transaction, any confidential information or provide any access to the
Party's properties, books, records or data;
(f) not enter into or change the terms of any employment,
management, consulting or severance agreement or other similar
arrangement with any of its directors, officers, employees or any other
person or pay any compensation to any such director, officer, employee
or other person other than as explicitly provided in any such agreement
or hereunder;
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(g) not amend or propose to amend its articles, by-laws or
authorized capital or the terms of any agreement which is Material to
it;
(h) use its reasonable commercial efforts to preserve intact its
business organization and goodwill, to keep available the services of
its officers and employees as a group and to maintain satisfactory
relationships with suppliers, distributors, customers and others having
business relationships with it;
(i) not take any action, which would render or which reasonably
may be expected to render, any representation or warranty made by it in
this Agreement untrue at any time prior to the Effective Date; and
(j) promptly notify the other Party orally and in writing of any
Adverse Material Change or any change which could reasonably be
expected to become an Adverse Material Change in its business,
operations, capital, assets, liabilities or financial condition and of
any Material governmental or third party complaints, investigations or
hearings (or communications indicating that such may be contemplated);
provided, however, that ss.(d) and ss.(e) above will not apply where a Competing
Transaction is made to a Party in writing, which the Board of Directors of the
Party determines is a Superior Proposal.
MUTUAL COVENANTS NOT TO SOLICIT A COMPETING TRANSACTION
2.6 No Party will, directly or indirectly, through any Representative or
otherwise, solicitor, initiate, facilitate or knowingly encourage the initiation
of a proposal for a Competing Transaction, provided however, that nothing
contained in this section or the other provisions of this Agreement will prevent
the Board of Directors of any Party which receives an unsolicited bona fide
proposal for a Competing Transaction in respect of that Party or its
shareholders or one or more of its Material Subsidiaries, from considering,
negotiating, approving or recommending to its shareholders the Competing
Transaction if:
(a) the Board of Directors of the Party receives an opinion of
counsel, that is reflected in the minutes of such Board of Directors,
that it is required to consider the proposal in order to discharge
properly its fiduciary duties, and
(b) the Board of Directors of the Party determines that the
Competing Transaction is a Superior Proposal.
NEGOTIATIONS WITH OTHER PARTIES TO CEASE
2.7 Each Party will immediately cease and cause to be terminated any existing
discussions or negotiations with any other party with respect to any potential
Competing Transaction, provided, however, that any third party affected will not
be released from any confidentiality agreement which such third party is bound
by or be released from any standstill agreement or provision to which such third
party is a party unless concurrently therewith such third party proposes a
Competing Transaction which is determined to be a Superior Proposal.
NOTIFICATION OF COMPETING PROPOSAL
2.8 Each Party will promptly notify the other Party orally and in writing of
any proposed Competing Transaction of which a director or officer of the Party
hereafter becomes aware, or any
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amendment to the foregoing, or any request for non-public information relating
to a Party in connection with a Competing Transaction or for access to the
properties, books or records of such Party by any Person that informs such Party
that it is considering making a proposal for a Competing Transaction. Such
written notice will include a copy of any such proposal for a Competing
Transaction and all amendments thereto.
DELIVERY OF MATERIAL NON-PUBLIC INFORMATION
2.9 If a Party receives a request for material non-public information from a
person who makes a bona fide proposal for a Competing Transaction and the Board
of Directors of such Party determines that such proposal would be a Superior
Proposal assuming the satisfactory outcome of due diligence, the Board of
Directors of such Party may, subject to the execution by such person of a
confidentiality agreement containing standstill provisions substantially the
same as those contained in the Confidentiality Agreement and the delivery of a
copy of such Confidentiality Agreement to the other Party, provide such person
with access to information.
NOTICE OF SUPERIOR PROPOSAL
2.10 A Party will not accept, approve, recommend or enter into any
agreement, arrangement or understanding to implement a Superior Proposal
without:
(a) complying fully with the provisions ofss.2.8;
(b) providing to the other Party written notice that the Board of
Directors of such Party has determined that it has received and is
prepared to accept, approve, recommend or enter into an agreement,
arrangement or understanding to implement a Superior Proposal and a
copy of any proposal or agreement in respect of the Superior Proposal
executed by the person making the Superior Proposal, in each case as
soon as possible but in any event not less than five Business Days
prior to a date established by the Board of Directors for acceptance,
approval or recommendation of the Superior Proposal; and
(c) allowing the other Party to propose, during such five Business
Day period, an amendment to this Agreement to provide for consideration
and other terms that make the Arrangement at least equivalent from a
financial point of view to the Superior Proposal such that it will no
longer be a Superior Proposal.
NEGOTIATION OF AN AMENDMENT TO THIS AGREEMENT
2.11 If a Party proposes an amendment pursuant to ss.2.10(c), the other Party
will negotiate in good faith to reach agreement on an amendment to this
Agreement and if such an amendment is concluded, the Superior Proposal will no
longer be a Superior Proposal and the Party involved in it will not implement
the Competing Transaction and may not terminate this Agreement as provided in
ss.5.1(d). If the Parties do not reach agreement on an amendment to this
Agreement such that the Superior Proposal remains a Superior Proposal, the Party
involved in it may terminate this Agreement in accordance with ss.5.1(d) and
thereafter may enter into an agreement to implement or recommend to its
shareholders, the Superior Proposal.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES
REPRESENTATIONS AND WARRANTIES OF THE PARTIES
3.1 Each of the Parties represents and warrants to the other that:
(a) it is a corporation duly incorporated or continued and validly
existing under the laws of its jurisdiction of incorporation or
continuation and has all necessary corporate power and capacity and
qualifications to own or lease its property and assets and to conduct
its business as now conducted by it and each of them is duly qualified
to carry on business, and is in good standing, in each jurisdiction in
which the character of its properties, owned or leased, or the nature
of its activities makes such qualification necessary;
(b) it hold all permits, licences and approvals required for the
operation of its business as is now being and has previously been
conducted, and its business is not being and has not been conducted in
violation of any law, ordinance, regulation, decree, order, permit or
license, except for violations which, individually and in the
aggregate, would not constitute an Adverse Material Change on a
consolidated basis;
(c) its issued shares are validly issued and are outstanding as
fully paid and non-assessable shares;
(d) the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
approved by its Board of Directors and this Agreement has been duly
executed and delivered by it and constitutes a valid and binding
obligation of it enforceable against it in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, fraudulent transfer,
moratorium and other laws relating to or affecting creditors' rights
generally and to general principles of equity;
(e) the execution of this Agreement and the performance of the
terms hereof will not result in any breach of, be in conflict with,
constitute a default under (whether after notice or lapse of time or
both) or result in the acceleration of indebtedness pursuant to, any
contract, lease, agreement, instrument or other commitment, written or
oral, to which the Party is a party or by which it is bound or any
judgment, decree, order, statute, rule, licence or regulation
applicable to it;
(f) other than previously disclosed to the other Party in writing,
there are no agreements Material to the conduct of its business and no
approval or consent of any person is required in order that such
Material agreements continue in full force and effect following
consummation of the transactions contemplated hereby;
(g) the Party's Financial Statements and the notes thereto
present, or will present, fairly in all Material respects the
consolidated financial condition of the Party and the results of
operations for the respective periods indicated in such statement and
have been or will be prepared in accordance with U.S. generally
accepted accounting principles applied on a consistent basis, except as
otherwise stated in the notes to such statements and the Party has no,
or will not have any liabilities (whether accrued, absolute, contingent
or otherwise) of a nature required to be set out in such statements and
the notes thereto in accordance with U.S. generally accepted accounting
principles, other than as set out in the Party's Financial Statements
and the notes thereto;
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(h) since the end of the Party's most recently completed fiscal
year, except as disclosed in writing to the other Party:
(i) the Party has conducted its business only in the usual,
ordinary and regular course, consistent with past practice;
and
(ii) no event has occurred that has caused and the Party has
not incurred any liability or obligation which is reasonably
likely to cause, an Adverse Material Change in respect of the
Party;
(i) no person is entitled to any broker's or finder's fee or other
fee, commission or compensation payable by the Party in connection with
the transactions contemplated by this Agreement, except for fees
payable to the Party's professional, financial and technical advisors,
filing and other fees to regulatory authorities and other miscellaneous
fees and expenses;
(j) the Party does not have any policies in force applicable to
any employees, that contain the requirement to make lump-sum cash
payments or pay other consideration upon the occurrence of a change of
control of the Party or upon the termination of the employment,
contract or arrangement other than disclosed to the other Party in
writing;
(k) the Party has no outstanding agreements or obligations in
respect of the repurchase, redemption, exchange or conversion of any of
its outstanding shares and there are no pre-emptive rights or voting,
shareholders or other similar agreements pertaining to the Party's
shares;
(l) the information that will be contained in the Information
Circular pertaining to the Party and its business, operations, capital,
assets, liabilities and financial condition will not contain an untrue
statement of a Material Fact relating to the Party or the Arrangement
and will not omit to state any Material Fact relating to the Party or
the Arrangement required to be stated therein or which is necessary in
order to make the statements made therein relating to the Party or the
Arrangement not misleading in light of the circumstances under which
they were made; and
(m) save and except as described in the Party's Financial
Statements or as previously disclosed to the other party in writing,
the Party is unaware of any judicial or administrative actions, suits,
proceedings or investigations pending or threatened against the Party
or any of the Party's Material Subsidiaries, which might result in an
Adverse Material Change in the business, operations, capital, assets,
liabilities or financial condition of the Party or any of the Party's
Material Subsidiaries and is unaware of any basis that exists for any
such action, suit, proceeding or investigation.
ARTICLE 4
CONDITIONS PRECEDENT
MUTUAL CONDITIONS PRECEDENT
4.1 The respective obligations of the Parties to complete the transactions
contemplated hereby will be subject to the satisfaction, on or before the
Effective Date, of each of the following conditions:
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(a) the Interim Order will have been granted in form and substance
satisfactory to the Parties, acting reasonably, and will not have been
set aside or modified in a manner unacceptable to the Parties, acting
reasonably;
(b) the Arrangement, with or without amendment, and the
transactions contemplated thereby will have been approved by resolution
of the Patch Shareholders at the Meeting in accordance with the
provisions of the CBCA, the Articles of Patch, the Interim Order and
any applicable regulatory requirements;
(c) the Final Order will have been granted by the Court, which
order will find that, before approving the Arrangement, the terms and
conditions of the exchanges pursuant to the Arrangement are fair to the
shareholders of Patch and will be in form and substance satisfactory to
the Parties acting reasonably and having regard to this Agreement and
will not have been modified or set aside in a manner that is
unacceptable to the Parties, acting reasonably;
(d) the Final Order together with the Articles of Arrangement will
have been accepted by the Director for filing;
(e) there will not be in force any order or decree of a court of
competent jurisdiction or of any Governmental Authority restraining,
interfering with or enjoining the consummation of the transactions
contemplated by this Agreement including, without limitation, the
Arrangement;
(f) this Agreement will not have been terminated pursuant to
Article 5;
(g) the issuance of the Praxis Shares to the holders of the Patch
Shares, pursuant to the terms and conditions of this Agreement and the
Plan of Arrangement will be exempt from the registration requirements
under the U.S. Securities Act pursuant to Section 3(a)(10) of such Act;
(h) all other Regulatory Approvals in connection with or required
to permit the completion of the Arrangement will have been obtained or
received on terms which are satisfactory to the Parties acting
reasonably;
(i) rights of dissent in relation to the Arrangement will not have
been exercised by the holders of more than 10% of the issued and
outstanding Patch Shares.
The foregoing conditions are for the mutual benefit of each of the Parties and
may be waived, in whole or in part, by any Party at any time, provided that no
Party may waive any mutual condition on behalf of any other Party.
CONDITIONS TO OBLIGATIONS PATCH
4.2 The obligation of Patch to complete the transactions contemplated hereby
is subject to the satisfaction, on or before the Effective Date, of each of the
following conditions, which conditions are for the sole benefit of Patch and may
be waived by it in whole or in part by notice in writing to Praxis without
prejudice to the rights of Patch to rely on any of the other condition:
(a) Patch, acting reasonably, will be satisfied that no Adverse
Material Change has occurred in the business, operations, capital,
assets, liabilities or financial condition of Praxis from the end of
Praxis' most recently completed fiscal year to the Effective Date;
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(b) except as affected by transactions contemplated by this
Agreement, the representations and warranties of Praxis contained in
ss.3.1 will be true and correct in all material respects on the
Effective Date with the same effect as though such representations and
warranties had been made at and as of such time;
(c) Patch or the shareholders of Patch will not have received a
Competing Transaction which the Board of Directors of Patch has
determined to be a Superior Proposal;
(d) each of the covenants, acts and undertakings of Praxis to be
performed pursuant to the terms of this Agreement on or before the
Effective Date will have been performed in all material respects by
Praxis;
(e) no third party act, action, suit or proceeding will have been
taken which would prohibit Patch from completing the Arrangement; and
(f) Patch will have received all such other documents and
certificates as may reasonably be required by Patch in connection with
completion of the Arrangement.
CONDITIONS TO OBLIGATIONS OF PRAXIS
4.3 The obligation of Praxis to complete the transactions contemplated
hereby is subject to the satisfaction of each of the following conditions on or
before the Effective Date, which conditions are for the sole benefit of Praxis
and may be waived by it in whole or in part by notice in writing to Patch
without prejudice to the rights of Praxis to rely on any other or others of such
conditions:
(a) Praxis, acting reasonably, will be satisfied that no Adverse
Material Change has occurred in the business, operations, capital,
assets, liabilities or financial condition of Patch from the end of
Patch's most recently completed fiscal year to the Effective Date;
(b) except as affected by transactions contemplated by this
Agreement, the representations and warranties of Patch contained in
ss.3.1 will be true and correct in all material respects on the
Effective Date with the same effect as though such representations and
warranties had been made at and as of such time;
(c) each of the covenants, acts and undertakings of Patch to be
performed pursuant to the terms of this Agreement on or before the
Effective Date will have been duly performed in all material respects;
(d) no third party act, action, suit or proceeding will have been
taken which would prohibit Praxis from completing the Arrangement;
(e) Praxis will have received all such other documents and
certificates as may reasonably be required by Praxis in connection with
completion of the Arrangement.
NOTICE OF FAILURE TO COMPLY WITH CONDITIONS
4.4 Each Party will give prompt notice to the other Party of the occurrence,
or failure to occur, at any time from the date hereof until the Effective Date,
of any event or state of facts that would likely:
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(a) cause any of the representations or warranties of such Party
contained herein to be untrue or inaccurate in any Material respect as
of the date hereof or at the Effective Date; or
(b) result in the failure of such Party to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied
by it under this Agreement prior to the Effective Date.
MERGER OF CONDITIONS
4.5 A condition set out in Article 4 will be conclusively deemed to have been
satisfied, waived or released upon the filing of the Articles of Arrangement as
contemplated by this Agreement.
ARTICLE 5
TERMINATION AND WAIVER
Termination
5.1 This Agreement may be terminated at any time prior to the Effective
Date:
(a) by mutual, written consent of Praxis and Patch;
(b) by either Praxis or Patch if the Effective Date of the
Arrangement has not occurred by December 31, 2003 (providing that the
terminating Party is not then in material breach of any representation,
warranty, covenant or agreement contained in this Agreement);
(c) by either Praxis or Patch (providing that the terminating
Party is not then in material breach of any representation, warranty,
covenant or agreement contained in this Agreement) if there has been a
Material breach of any representation, warranty, covenant or agreement
contained in this Agreement on the part of the other Party, and such
breach has not been cured or best efforts are not being employed to
cure such breach within ten days after notice thereof is given to the
Party committing such breach; or
(d) by a Party in the event of the acceptance, approval or
recommendation by its Board of Directors of a Superior Proposal.
WAIVER
5.2 At any time prior to the Effective Date, a Party hereto may:
(a) extend the time for the performance of any of the obligations
or other acts of the other Party hereto; or
(b) waive compliance with any of the agreements of the other Party
or with any conditions to its own obligations, in each case only to the
extent such obligations, agreements and conditions are intended for its
benefit.
EFFECT OF TERMINATION
5.3 If this Agreement is terminated as provided in ss.5.1, this Agreement will
become void and there will be no liability or further obligation on the part of
any Party hereto or any of their respective Representatives, except for
liability arising from a willful breach of this Agreement or common law fraud.
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ARTICLE 6
IMPLEMENTATION OF TRANSACTION
INTERIM ORDER
6.1 The notice of motion for the application for the Interim Order will
request that the Interim Order provide:
(a) for the class or classes of persons to whom notice is to be
provided in respect of the Arrangement and that the only class of
persons to which notice is to be provided in respect of the Meeting is
the Patch Shareholders;
(b) that the requisite shareholders' approval for the Arrangement
will be two-thirds of the votes cast on the Arrangement by holders of
Patch Shares in person or by proxy at the Meeting;
(c) that, in all other respects, the terms, restrictions and
conditions of the articles of Patch, including the quorum requirements,
will apply in respect of the Meeting; and
(d) for the grant of Dissent Rights.
FILING OF FINAL ORDER
6.2 As soon as possible after receipt of the Final Order, a certified copy of
the Final Order and Articles of Arrangement will be sent to the Director
pursuant to section 283(1) of the CBCA with the request that a Certificate of
Arrangement be endorsed on the Articles of Arrangement.
ARRANGEMENT AND CLOSING
6.3 Patch will promptly advise Praxis as to the date on which a Certificate of
Arrangement has been issued by the Director on receipt of such advise Praxis
shall take all such steps so as to cause the Praxis Shares to be issued, be
released and the parties will exchange such other documents as may be necessary
or desirable in connection with the completion of the transactions contemplated
by this Agreement and the Arrangement, including without limitation, the
delivery of required legal opinions.
ARTICLE 7
GENERAL
NOTICE
7.1 Any notice, direction or other instrument required or permitted to be
given hereunder:
(a) will be in writing and may be given by delivering the same or
sending the same by facsimile transmission addressed as follows:
To Praxis:
o
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To Patch:
o
Telecopier: o
Attention: o;
(b) will, whether delivered or transmitted by facsimile transmission,
be deemed to have been given at the time and on the date on which it
was delivered to or received in the office of the addressee, as the
case may be, if delivered or transmitted prior to 5:00 p.m. (Vancouver
time) on a Business Day or at 9:00 a.m. (Vancouver time) on the
subsequent Business Day if delivered or transmitted subsequent to such
time;
(c) will be given at such other address for service as may be given
by a Party from time to time by notice to the other Party hereto in
accordance with the foregoing;
(d) will be signed by one or more duly authorized officers of the
Party delivering it; and
(e) will be deemed to constitute the representation and warranty of
the Party who has given it to the other Party that such Party is
authorized to give such notice, direction or other instrument at such
time under this Agreement (unless the receiving Party has actual
knowledge to the contrary) and the receiving Party will not be required
to make any inquiry to confirm such authority.
AMENDMENT
7.2 This Agreement may, at any time, and from time to time before and after the
holding of the Meeting but not later than the Effective Date, be amended by
written agreement of Praxis and Patch (or, in the case of a waiver, by written
instrument of the Party giving the waiver) without, subject to Applicable Laws,
further notice to or authorization on the part of Patch Shareholders or the
Court. Without limiting the generality of the foregoing, any such amendment may:
(a) change the time for performance of any of the obligations or acts
of the parties hereto;
(b) waive any inaccuracies or modify any representation contained
herein or in any documents to be delivered pursuant hereto; and
(c) waive compliance with or modify any of the covenants or
conditions herein contained or waive or modify performance of any of the
obligations of the parties hereto;
provided that, notwithstanding the foregoing, the terms of the Arrangement and
this Agreement will not be amended in a manner prejudicial to Patch Shareholders
without the approval of such shareholders given in the same manner as required
for the approval of the Arrangement or as may be ordered by the Court.
AMENDMENT RESULTING FROM FINAL ORDER
7.3 This Agreement and the Arrangement may be amended in accordance with the
Final Order by written agreement of Praxis and Patch, provided that if the terms
of the Final Order require any such amendment, the obligations of the parties
hereto under ss.2.3, ss.2.4, ss.2.5, and ss.7.2 will remain unaffected.
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BINDING EFFECT
7.4 This Agreement will be binding upon and enure to the benefit of the
parties hereto and their respective successors.
PROHIBITION AGAINST ASSIGNMENT
7.5 No Party may assign its rights or obligations under this Agreement.
EQUITABLE REMEDIES
7.6 All covenants herein as to the enforceability of any covenant, agreement or
document will be qualified as to applicable bankruptcy and other laws affecting
the enforcement of creditors' rights generally and to the effect that specific
performance, being an equitable remedy, may not be ordered by a court in any
particular circumstances.
DISCLOSURE
7.7 Except as required by Applicable Laws, neither Praxis nor Patch will make
any public announcement or statement with respect to the Arrangement or this
Agreement without the approval of the other Party. Moreover, in any event, each
Party agrees to give prior notice to the other Party of any public announcement
relating to the Arrangement or its affairs and agrees to consult with the other
Party prior to issuing any such public announcement.
ENTIRE AGREEMENT
7.8 This Agreement and the Schedules hereto constitutes the whole of the
agreement between the parties hereto with respect to the transactions and
matters herein contemplated and supersedes all prior agreements, whether written
or oral, in connection herewith.
TIME OF ESSENCE
7.9 Time will be of the essence of this Agreement.
COUNTERPART EXECUTIONS AND FACSIMILE TRANSMISSIONS
7.10 This Agreement may be executed in counterparts, each of which when
delivered (whether in originally executed form or by facsimile transmission)
will be deemed to be an original and all of which together will constitute one
and the same document.
EXPENSES
7.11 Each Party will be responsible for its own expenses relating to the
Arrangement including, without limitation, regulatory fees and fees of
professional advisors, including legal counsel and auditors.
NOTIFICATION OF CERTAIN MATTERS
7.12 Each Party will give prompt notice to the other of:
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(a) the occurrence or failure to occur of any event, which
occurrence or failure would cause or may cause any representation or
warranty on its Party contained in this Agreement to be untrue or
incorrect in any respect at any time from the date of this Agreement to
the Effective Date; and
(b) any failure of such Party, or any officer, director, employee
or agent thereof, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder.
INVESTIGATION
7.13 Any investigation by a Party and its Representatives will not mitigate,
diminish or effect the representations and warranties of the other Party
contained in this Agreement or any document or certificate given pursuant
thereto.
IN WITNESS WHEREOF this Agreement has been signed, sealed and delivered by the
parties hereto as of the date first above written.
PRAXIS PHARMACEUTICALS INC.
Per:
---------------------------------------
Authorized Signatory
PATCH ENERGY INC.
Per:
----------------------------------------
Authorized Signatory
SCHEDULE A
PLAN OF ARRANGEMENT
IN THE MATTER OF AN ARRANGEMENT among Patch ( "Patch") and the holders from time
to time of the issued and outstanding common shares without par value in the
capital of the company pursuant to section 192 of the Canada Business
Corporations Act.
ARTICLE 1
INTERPRETATION
1.1 In this Plan of Arrangement, unless the context otherwise requires, the
following words and phrases will have the meanings hereinafter set out:
ARRANGEMENT AGREEMENT means the agreement made as of October 20, 2003
among Praxis and Patch entered into for the purpose of effecting this
Arrangement;
ARRANGEMENT means the arrangement under the provisions ofss.192 of the
CBCA as described herein;
BUSINESS DAY means a day which is not a Saturday, Sunday or a civic or
statutory holiday, in the place where an action is to be taken;
CBCA means the Business Corporations Act (Ontario), as now enacted, as
amended, and the regulations thereto;
COURT means the Supreme Court of British Columbia;
DIRECTOR means the Director appointed underss.260 of the CBCA;
DISSENT RIGHT means the right of dissent and appraisal provided for in
Article 5 hereto;
DISSENTER means an Patch Shareholder who has exercised a Dissent Right
and who is ultimately entitled to be paid the fair value of the Patch
Shares held by such Patch Shareholder;
EFFECTIVE DATE means the date shown on the Certificate of Arrangement;
EFFECTIVE TIME means 5:00 p.m. (Vancouver time) on the Effective Date;
FINAL ORDER means the final order of the Court approving the
Arrangement;
INTERIM ORDER means the interim order of the Court providing for, among
other things, the calling of the Meeting;
MEETING means an extraordinary general meeting of Patch Shareholders to
be held pursuant to the Interim Order as soon as possible after the
date of execution hereof, called for the purpose of considering the
Arrangement, including any adjournment or adjournments thereof;
PATCH means Patch Energy Inc.;
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PATCH SHAREHOLDERS means the holders from time to time of Patch Shares;
PATCH SHARES means the common shares without par value in the capital
of Patch;
PLAN OF ARRANGEMENT means this plan of arrangement as amended or
supplemented from time to time;
PRAXIS means Praxis Pharmaceuticals Xxx.Xxx.;
PRAXIS SHARES means the common shares without par value in the capital
of Praxis;
ARTICLE 2
ARRANGEMENT AGREEMENT
2.1 This Arrangement is made pursuant to and subject to the provisions of
the Arrangement Agreement.
ARTICLE 3
ARRANGEMENT
3.1 At the Effective Time, subject to the provisions of Article 5 hereof, the
following will occur and will be deemed to occur in the following order without
any further act or formality:
(a) each issued Patch Share (other than those held by a Dissenter)
will be and be deemed to be exchanged for one Praxis Share,
(b) the names of the Patch Shareholders, other than Dissenters, will
be removed from the registers of holders of Patch Shares;
(c) Praxis will become the holder of all Patch Shares and the share
register of Patch will be revised accordingly; and
(d) the exchanges and cancellations provided for in this ss.3.1 will
be deemed to occur at the Effective Time on the Effective Date,
notwithstanding that certain of the procedures related thereto will not
be completed until after the Effective Date.
3.2 Notwithstanding that the transactions or events set out in ss.3.1 may
occur or be deemed to occur in the order therein set out without any further act
or formality, each of Patch and Praxis agree to make, do and execute or cause
and procure to be made, done and executed all such further acts, deeds,
agreements, transfers, assurances, instruments or documents as may be required
by it in order to further document or evidence any of the transactions or events
set out in ss.3.1 including, without limitation, any resolution of directors
authorizing the issue, transfer or purchase for cancellation of shares, any
share transfer powers evidencing the transfer of shares, any receipt therefor
and any necessary additions to or deletions from share registers.
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ARTICLE 4
CERTIFICATES
4.1 After the Effective date, certificates formerly representing Patch Shares
which are held by a Patch Shareholder will represent only the right to receive
certificates representing Praxis Shares in accordance with the terms of the
Arrangement and this Plan of Arrangement.
4.2 No dividends or other distributions declared or made after the Effective
Date with respect to the Praxis Shares with a record date after the Effective
Date will be payable or paid to the holder of any unsurrendered certificate or
certificates which, immediately prior to the Effective Date, represented
outstanding Patch Shares.
4.3 As soon as reasonably practicable after the Effective Date, Praxis will
forward to each Patch Shareholder, at the address of such Patch Shareholder as
it appears on the appropriate register for such securities, or certificates
representing the Praxis Shares allotted and issued to such holder pursuant to
the Arrangement.
ARTICLE 5
RIGHTS OF DISSENT AND APPRAISAL
5.1 Registered holders of Patch Shares may exercise rights of dissent in
connection with the Plan of Arrangement (the "Dissent Right") in the manner set
forth in section 190 of the CBCA (as modified by the Interim Order, the Final
Order and this ss.5.1) as if this section (as so modified) was applicable to
such registered holders. Dissenting shareholders who:
(a) are ultimately entitled to be paid fair value for their
dissenting shares will be deemed to have transferred their dissenting
shares to Patch for cancellation immediately before the Effective Time
of the Arrangement on the Effective Date; or
(b) for any reason are ultimately not entitled to be paid fair value
for their dissenting shares, will be deemed to have participated in the
Arrangement on the same basis as an Patch Shareholder who is not a
Dissenter and will receive Praxis Shares on the same basis as every
other Patch Shareholder;
but in no case will Patch be required to recognize such persons as holding Patch
Shares on or after the Effective Date.
ARTICLE 6
EFFECT OF THE ARRANGEMENT
6.1 As at and from the Effective Time:
(c) Patch will be a wholly-owned Subsidiary of Praxis;
(d) Patch will continue to hold all of its assets;
(e) the rights of creditors against the property and interests of
Patch will be unimpaired by the Arrangement;
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(f) Patch Shareholders, other than Dissenters, will hold Praxis
Shares in replacement for their Patch Shares, as provided by the Plan
of Arrangement;
ARTICLE 7
AMENDMENTS
7.1 Praxis and Patch reserve the right to amend, modify and/or supplement this
Plan of Arrangement from time to time at any time prior to the Effective Date,
provided that any such amendment, modification or supplement must be contained
in a written document that is filed with the Court and, if made following the
Meeting, approved by the Court and, if required by the Court, communicated to
Patch Shareholders.
7.2 Save and except as may be otherwise provided in the Interim Order, any
amendment, modification or supplement to this Plan of Arrangement may be
proposed by Praxis and Patch at any time prior to the Meeting with or without
any other prior notice or communication, and if so proposed and accepted by
Patch Shareholders voting at the Meeting, will become part of the Plan of
Arrangement for all purposes.
7.3 Any amendment, modification or supplement to this Plan of Arrangement which
is approved by the Court following the Meeting, will only be effective if
consented to by Praxis and Patch and, if required by the Court, consented to by
Patch Shareholders. 7.4 Any amendment, modification or supplement to this Plan
of Arrangement may be made by the Parties without approval of the Patch
Shareholders provided that it concerns a matter which, in the reasonable opinion
of the Parties, is of an administrative or ministerial nature required to better
give effect to the implementation of this Plan of Arrangement and is not
materially adverse to the financial or economic interests of any of the Patch
Shareholders.
ARTICLE 8
TERMINATION
8.1 This Plan of Arrangement will automatically terminate and be of no further
force and effect upon the termination of the Arrangement Agreement in accordance
with its terms.
