EXHIBIT 10.1
SHARE EXCHANGE AGREEMENT AMONG THE SHAREHOLDERS OF
1289307 ALBERTA LTD., PATCH ENERGY INC., PATCH INTERNATIONAL INC.,
AND 1289307 ALBERTA LTD. DATED JANUARY 16, 2007
SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT is made as of the 16th day of January, 2007.
AMONG:
EACH OF THOSE PERSONS holding shares of the Company, as listed
in Schedule "B" hereto
(each a "VENDOR" and collectively, the "VENDORS")
- and -
PATCH ENERGY INC., a company incorporated pursuant to the
federal laws of Canada with its principal office at ▇▇▇, ▇▇▇
- ▇▇▇ ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
("EXCHANGECO")
- and -
PATCH INTERNATIONAL INC., a corporation incorporated under the
laws of the State of Nevada, having its principal office at
▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
("PATCH")
- and -
1289307 ALBERTA LTD., a corporation incorporated pursuant to
the laws of the Province of Alberta, Canada with its principal
office at ▇▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
(the "COMPANY")
WHEREAS the Vendors are the registered holders and beneficial owners of an
aggregate of 500,000 common shares in the capital of the Company as set out in
Schedule "B" hereto (the "PURCHASED SHARES");
WHEREAS Exchangeco is a wholly-owned subsidiary of Patch;
AND WHEREAS the Vendors have agreed to sell and Exchangeco has agreed to
purchase all of the Purchased Shares on the terms and conditions set out in this
Agreement;
NOW THEREFOREE THIS AGREEMENT WITNESSES THAT, in consideration of the premises,
covenants, terms, conditions representations and warranties hereinafter set
forth, the Parties agree each with the other as follows:
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ARTICLE 1
PURCHASE AND SALE OF SHARES
1.1 Purchase and Sale. Subject to the conditions and upon the terms
hereinafter set forth, Exchangeco agrees to purchase and the Vendors
agree to sell to Exchangeco all of their right, title and interest in
and to the Purchased Shares.
1.2 Purchase Price. The purchase price for the Purchased Shares shall
consist of an aggregate of 500,000 Exchangeable Shares to be issued to
the Vendors as set out in Schedule "B" hereto. At Closing, Exchangeco
will deliver to the Vendors certificates representing the Exchangeable
Shares, all such Exchangeable Shares to be issued as fully paid and
non-assessable, and registered in the names of the Vendors and in the
denominations set forth in Schedule "B" hereto. At the Closing, Patch
will issue the Patch Preferred Share to the Trustee in accordance with
the terms of the Exchange and Voting Trust Agreement. The Vendors and
Exchangeco agree that the voting rights and exchange rights arising or
granted under or pursuant to any of such agreements in favour of a
Vendor have a nominal value of $1.00.
1.3 Support Agreement and Exchange and Voting Trust Agreement. On or before
Closing Patch, Exchangeco and the Trustee shall enter into the Support
Agreement in the form attached hereto as Schedule "B" and the Exchange
and Voting Trust Agreement, in the form attached hereto as Schedule
"G". Such Support Agreement and Exchange and Voting Trust Agreement are
incorporated herein by reference thereto and the Vendors, jointly and
severally, shall each have all rights and remedies of enforcement of
the Support Agreement and the Exchange and Voting Trust Agreement as
contemplated in each such agreement. The Vendors and Exchangeco agree
that the voting rights and exchange rights arising or granted under or
pursuant to any of such agreements in favour of a Vendor have a nominal
value of $1.00.
1.4 Accounting Consequences. It is intended by the parties hereto that the
purchase and sale of the Purchased Shares under this Agreement shall
qualify for accounting treatment as a recapitalization under U.S. GAAP.
1.5 Tax Treatment.
(a) It is intended that the transactions contemplated in this
Agreement shall generally constitute (i) a taxable exchange
for United States federal income tax purposes (not qualifying
under Sections 368 or 351 of the United States Internal
Revenue Code of 1986, as amended) to persons who are otherwise
subject to taxation in the United States on the sale or
exchange of Purchased Shares, and (ii) a tax deferred
reorganization for Canadian federal income tax purposes for
the Vendors. At the option of each Vendor, Exchangeco
covenants and agrees to elect, jointly with each such Vendor
if applicable (referred to in this section as an "ELECTING
VENDOR"), in accordance with the provisions of subsection
85(1) of the Tax Act (and the corresponding provisions of any
applicable provincial tax legislation) in the prescribed form
and within the prescribed time for the purposes of the Tax
Act, and shall therein agree to elect in respect of the
Purchased Shares of the Electing Vendor such amount as the
Electing Vendor's proceeds of disposition thereof as the
Electing Vendor may determine, subject to the provisions of
subsection 85(1) of the Tax Act (and the corresponding
provisions of any applicable provincial tax legislation). Each
of the Electing Vendors and Exchangeco agree to execute all
such documents and forms to make the election contemplated in
this section.
(b) Each Vendor, with their professional advisors, have made a
bona fide determination that the Purchased Shares are
"QUALIFIED SMALL BUSINESS CORPORATION SHARES" as defined in
subsection 110.6(1) of the Tax Act as of the date hereof.
Based on such determination, it
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is the desire and intention of each of the Vendors and
Exchangeco that the "agreed amount" for the transfer of their
respective Purchased Shares (the "VENDOR'S SHARES") be the
lesser of the fair market value of the Vendor's Shares and the
aggregate of the Vendor's adjusted cost base thereof plus an
amount equal to the Vendor's unused capital gain deduction as
provided in subsection 110.6(2.1) of the Tax Act. However, it
is agreed between each of the Vendors and Exchangeco that
should any competent taxing authority at any time issue or
propose to issue any assessment or assessments that would
impose any liability for tax (other than the alternative
minimum tax provided for in section 127.5 of the Tax Act) on
the basis that a Vendor's Shares are not "qualified small
business corporation shares", or that the capital gain of a
Vendor resulting from the within transaction is not otherwise
eligible for the exemption pursuant to subsection 110.6(2.1)
of the Tax Act (or the corresponding provision of any
applicable provincial tax legislation) and if all appeals
requested by a Vendor have been exhausted, then for the
purposes of subsection FT(1) of the Tax Act, the "agreed
amount" shall be adjusted nunc pro tunc pursuant to the
provisions of this paragraph to be such amount as will
eliminate such liability for tax (except for the alternative
minimum tax as provided for section 127.5 of the Tax Act) and
the Vendors and Exchangeco shall do all things necessary to
reflect such change, including filing amended elections,
provided that such adjustment shall not result in any
additional Exchangeable Shares being issued to the Vendors.
Any interest and or penalty imposed shall, as between the
Vendors and Exchangeco be for the account of the Vendors and
not Exchangeco.
1.6 Securities Law Exemptions and Resale Restrictions. The sale of the
Purchased Shares and the issuance of the Exchangeable Shares to the
Vendors shall be made in reliance on an exemption from the registration
and prospectus filing requirements contained in section 2.16 of
National Instrument 45-106 Prospectus and Registration Exemptions ("NI
45-106"). The issuance or transfer of the Patch Shares to the Vendors
on the exchange of their Exchangeable Shares shall be made in reliance
on section 2.16 of NI 45-106 and the exemption from the registration
requirement of U.S. Securities Law contained in Regulation S
promulgated under the U.S. Securities Act of 1933, as amended. The
Vendors hereby acknowledge that as a result:
(a) any Exchangeable Shares that they receive pursuant to this
Agreement will be subject to resale restrictions in accordance
with applicable Canadian Securities Law and U.S. Securities
Law and that as a result the certificates representing such
Exchangeable Shares will be affixed with the following legends
describing such restrictions:
(i) the certificates representing such Exchangeable
Shares or Patch Shares will be affixed with the
following legend describing such restrictions:
THE SECURITY OR SECURITIES EVIDENCED HEREBY HAVE NOT
BEEN REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR
SOLD TO ANY PERSON EXCEPT AS SET FORTH IN THE
FOLLOWING SENTENCE. THE HOLDER HEREOF AGREES THAT:
(1) IT WILL NOT RESELL OR OTHERWISE TRANSFER THE
SHARES EVIDENCED HEREBY EXCEPT (A) IN AN OFFSHORE
TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF
REGULATION S OR (B) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE) OR ANOTHER THEN
AVAILABLE EXEMPTION UNDER THE SECURITIES ACT AND
STATE SECURITIES LAWS OR, (C) IN A TRANSACTION THAT
DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES
ACT OR ANY APPLICABLE
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STATE LAWS, OR (D) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE
AT THE TIME OF SUCH TRANSFER); (2) PRIOR TO ANY SUCH
TRANSFER, IT WILL FURNISH TO THE COMPANY OR ITS
AGENTS SUCH CERTIFICATIONS, LEGAL OPINIONS, OR OTHER
INFORMATION AS THE COMPANY OR SUCH AGENTS MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS
BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OR STATE
SECURITIES LAWS; AND (3) IT WILL DELIVER TO EACH
PERSON TO WHOM THE COMMON STOCK EVIDENCED HEREBY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND.
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE
HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY
BEFORE THE DATE THAT IS 4 MONTHS AND A DAY AFTER THE
LATER OF (i) [INSERT THE DISTRIBUTION DATE], AND (ii)
THE DATE THE ISSUER BECAME A REPORTING ISSUER IN ANY
PROVINCE OR TERRITORY.
and
(ii) the certificates representing the Exchangeable Shares
will be affixed with a legend describing such
restrictions, including, without limitation, the
following:
"THE SERIES A PREFERRED SHARES REPRESENTED HEREBY ARE
SUBJECT TO THE RIGHTS, PRIVILEGES, TERMS, CONDITIONS
AND RESTRICTIONS AS SET FORTH IN THE SHARE EXCHANGE
AGREEMENT, THE SUPPORT AGREEMENT AND THE EXCHANGE AND
VOTING TRUST AGREEMENT, RESPECTIVELY, COPIES OF EACH
OF WHICH ARE ON FILE AT THE REGISTERED OFFICE OF THE
COMPANY.
PURSUANT TO THE EXCHANGE AND VOTING TRUST AGREEMENT,
THE HOLDER OF THIS SECURITY IS ENTITLED TO INSTRUCT
THE TRUSTEE UNDER THE EXCHANGE AND VOTING TRUST
AGREEMENT AS TO THE EXERCISE OF THE VOTING RIGHTS
ATTACHED TO A NUMBER OF PATCH SHARES EQUAL TO THE
NUMBER OF SHARES REPRESENTED BY THIS CERTIFICATE WITH
RESPECT TO EACH MEETING OF THE SHAREHOLDERS OF PATCH
AND EACH CONSENT SOUGHT TO BE OBTAINED FROM THE
SHAREHOLDERS OF PATCH, OR TO ATTEND SUCH MEETING OF
THE SHAREHOLDERS OF PATCH AND TO EXERCISE PERSONALLY
SUCH VOTING RIGHTS. THE HOLDER OF SHARES REPRESENTED
BY THIS CERTIFICATE SHOULD REFER TO THE EXCHANGE AND
VOTING TRUST AGREEMENT FOR A DESCRIPTION OF SUCH
VOTING RIGHTS AND THE MANNER IN WHICH THEY MAY BE
EXERCISED."
(b) the resale exemptions provided under Canadian Securities Law
and U.S. Securities Law may not be generally available because
of the conditions and limitations of such exemptions, and that
Exchangeco and Patch are under no obligation to take any
action
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other than the actions specified in section 1.8 of this
Agreement and commercially reasonable actions to make any of
said exemptions available to the Vendors; and
(c) only Patch can register the Patch Shares or file a prospectus
or registration statement to qualify the Patch Shares for
immediate resale and Patch has made representations to the
Vendors that it will do so only in accordance with section 1.8
of this Agreement.
1.7 Securities Law Compliance. The Vendors hereby agree that they shall not
sell, transfer or otherwise deal with the Exchangeable Shares or the
Patch Shares without obtaining a favourable opinion of counsel or such
other evidence as may be required by Exchangeco or Patch, that the
proposed dealing will not be in violation of U.S. Securities Law.
1.8 Prospectus Filing. No later than 90 days after the Closing, Patch shall
use its commercially reasonable efforts to file with, and obtain
receipts from, the Alberta Securities Commission for a non-offering
preliminary prospectus and (final) prospectus for the purpose of having
Patch deemed to be a reporting issuer under the securities laws of the
province of Alberta and permitting the Vendors to rely upon the
prospectus exemption set out in sections 2.6 and 2.7 or section 2.8 of
National Instrument 45-102 Resale of Securities for the first trade by
the Vendors in the Patch Shares to be issued or transferred to the
Vendors upon exchange of the Exchangeable Shares.
1.9 Registration Statement Filing. No later than 30 days after, receipt by
Patch of (i) the Company's audited financial statements for the fiscal
period year ended December 31, 2006. Patch shall use its commercially
reasonable efforts to prepare and file a registration statement with
the SEC to register under the US Securities Act the issuance of the
Patch Shares on the exchange of the Exchangeable Shares and shall use
its commercially reasonable efforts to cause such registration to
become effective as soon as possible.
ARTICLE 2
CLOSING MATTERS
2.1 Date, Time and Place of Closing. The Closing shall take place at the
Closing Time on the Closing Date at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇
Gervais LLP, located at ▇▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ or such place as the Parties may agree on.
2.2 Mutual Conditions of Closing. The Parties shall be obliged to complete
the purchase and sale of the Purchased Shares only if each of the
conditions precedent set out in Part 1 of Schedule "C" hereto have been
satisfied in full at or before the Closing Time. Each of such
conditions precedent is for the benefit of each of the Parties, and the
Parties may by mutual consent waive any of them in whole or in part in
writing.
2.3 Conditions for Patch's and Exchangeco's Benefit. Patch and Exchangeco
shall not be obliged to complete the purchase of the Purchased Shares
or the issuance of the Patch Preferred Shares and Exchangeable Shares
unless each of the conditions set out in Part 2 of Schedule "C" shall
have been satisfied on or before the Closing Date. Each of such
conditions precedent is for the exclusive benefit of Patch and
Exchangeco and they may waive any of such conditions in whole or in
part in writing.
2.4 Conditions for the Vendors' Benefit. The Vendors shall not be obliged
to complete the sale of the Purchased Shares unless each of the
conditions set out in Part 3 of Schedule "C" shall have been satisfied
on or before the Closing Date. Each of such conditions precedent is for
the exclusive benefit of the Vendors and the Vendors may waive any of
them in whole or in part in writing.
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2.5 Failure to Satisfy Condition. If any condition set forth in Schedule
"C" is not satisfied at the Closing Time, or if it becomes apparent
that any such condition cannot be satisfied at the Closing Time, any
Party entitled to the benefit of such condition (the "FIRST PARTY") may
terminate this Agreement by notice in writing to the other Parties and
in such event:
(a) unless the other Parties can show that the condition or
conditions which have not been satisfied and for which the
First Party has terminated this Agreement are reasonably
capable of being performed or caused to be performed by the
First Party or have not been satisfied by reason of a default
by the First Party hereunder, the First Party shall be
released from all obligations hereunder; and
(b) unless the First Party can show that the condition or
conditions which have not been satisfied and for which the
First Party has terminated this Agreement are reasonably
capable of being performed or caused to be performed by the
other Party or have not been satisfied by reason of a default
by the other Party hereunder, then the other Party shall also
be released from all obligations hereunder.
2.6 Deliveries on Closing. On the Closing Date:
(a) Exchangeco will deliver to or to the direction of the Vendors
certificates representing the Exchangeable Shares and Patch
Preferred Share in accordance with Section 1.2 above;
(b) the Vendors will deliver to or to the direction of Exchangeco
certificates representing their Purchased Shares duly signed
off for transfer, together with all other documentation
required to transfer title to their Purchased Shares to or to
the direction of Exchangeco, provided that if there are no
certificates representing the Purchased Shares, the Vendors
shall each deliver to Exchangeco, or as directed by
Exchangeco, an executed stock power of attorney or other
document evidencing the transfer of the Purchased Shares from
the Vendors to or to the direction of Exchangeco; and
(c) Patch, Exchangeco and the Trustee shall execute and deliver
the Support Agreement; and Patch, Exchangeco, the Vendors and
the Trustee shall execute and deliver the Exchange and Voting
Trust Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Vendors. The Vendors hereby
jointly and severally represent and warrant to Exchangeco and Patch as
set out in Part 1 of Schedule "D", provided that each Vendor shall be
deemed to have severally made those representations set forth in
paragraphs (a) to (i) of Schedule "D" (collectively, the "INDIVIDUAL
REPRESENTATIONS"), and acknowledge that Exchangeco and Patch are
relying on these representations and warranties in entering into this
Agreement and performing their obligations under the same.
3.2 Representations and Warranties of Patch. Patch represents and warrants
to the Vendors as set out in Part 2 of Schedule "D" and acknowledges
that the Vendors are relying on these representations and warranties in
entering into this Agreement and performing their obligations under the
same.
3.3 Representations and Warranties of Exchangeco. Exchangeco represents and
warrants to the Vendors as set out in Part 3 of Schedule "D" and
acknowledges that the Vendors are relying on these representations and
warranties in entering into this Agreement and performing their
obligations under the same.
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3.4 Representations and Warranties of the Company given by the Company. The
Company hereby represents and warrants to Exchangeco and Patch as set
out in Part 4 of Schedule "D" and acknowledges that Exchangeco and
Patch are relying on these representations and warranties in their
entirety in entering into this Agreement and performing their
obligations under same.
3.5 Survival of Representations and Warranties. All representations and
warranties contained in this Agreement shall survive the Closing for a
period of one year from the Closing Date, after which time, if no claim
shall have been made against a Party with respect to any incorrectness
in or breach of any representation or warranty, that Party shall have
no further liability under this Agreement with respect to that
representation or warranty.
3.6 Certificates and Instruments Included. All statements contained in any
certificate or any instrument delivered by or on behalf of a Party
pursuant to or in connection with the transactions contemplated by this
Agreement shall be deemed to be made by such Party under this
Agreement.
ARTICLE 4
INDEMNIFICATION
4.1 Mutual Indemnification for Breaches of Covenant or Warranty. Subject to
the limitation period set out in section 3.5, above, each of Patch and
Exchangeco hereby covenant and agree with the Vendors and the Vendors
and the Company hereby jointly and severally covenant and agree with
Patch and Exchangeco, provided that with respect to Individual
Representations, the Vendors severally covenant and agree with Patch
and Exchangeco (the parties covenanting and agreeing to indemnify
another party under this Article 4 are hereinafter individually
referred to as "INDEMNIFYING PARTY" and the parties that are being
indemnified by another Party under this Article 4 are hereinafter
individually referred to as the "INDEMNIFIED PARTY") to indemnify and
save harmless the Indemnified Party, effective as and from the Closing
Time, from and against any Claims which maybe made or brought against
the Indemnified Party and/or which it may suffer or incur as a result
of, or arising out of any non-fulfillment of any covenant, obligation
or agreement on the part of the Indemnifying Party under this Agreement
or any incorrectness in or breach of any representation or warranty of
the Indemnifying Party contained in this Agreement.
ARTICLE 5
INTERIM OPERATIONS
5.1 Company Carrying on Business to Closing
(a) Up to the Closing Time, the Vendors shall cause the Company
to (1) carry on its business in the normal and ordinary
course; (2) preserve the ongoing goodwill of the Company; and
(3) ensure that key employees, if any, and key independent
contractors continue their association with the Company and
undertake to notify Patch of any event or occurrence during
such period which might reasonably be considered to have a
materially adverse effect on the assets or the business of the
Company.
(b) Unless otherwise contemplated herein or approved by Patch in
writing, during the period from the date hereof until the
earlier of the Closing Date or termination of this Agreement,
the Company shall not:
(i) except in the ordinary course of business, sell,
transfer or dispose of or create any mortgage,
pledge, waiver or other encumbrance or a security
interest on or in respect of the whole or any part of
its assets;
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(ii) enter into any transaction or material contract not
in the normal and ordinary course of business;
(iii) borrow money or incur any indebtedness for money
borrowed except as disclosed to and agreed by Patch,
acting reasonably;
(iv) make loans, advances or other payments, excluding
routine reimbursements to employees of the Company
for expenses incurred in the ordinary course and such
amounts as contemplated in this Agreement;
(v) make any capital expenditures except as disclosed to
and agreed to by Patch, acting reasonably;
(vi) issue, sell or agree to issue or sell any shares,
rights, options, warrants or other securities of the
Company other than as consented to in writing by
Patch;
(vii) declare any dividends or distribution;
(viii) purchase, cancel, retire, redeem or otherwise acquire
any of the Company's outstanding securities, rights,
options, warrants or other securities other than as
contemplated herein;
(ix) change, amend or modify the charter documents or
by-laws of the Company, other than as disclosed to
and approved by Patch;
(x) merge or amalgamate with or agree to merge or
amalgamate with, or purchase substantially all of the
assets of, or otherwise acquire any business; or sell
or lease or agree to sell or lease, any material
properties or assets or approve or undertake any
other material transaction or furnish or cause to be
furnished any information concerning the business,
properties or assets of any Persons (other than to
Patch) which is interested in any such transactions;
or
(xi) except as required by law, not to initiate, propose,
assist or participate in any activities in opposition
to or in competition with this Agreement, and without
limiting the generality of the foregoing, to
undertake any transaction or negotiate any
transaction which would be or potentially could be in
conflict with this Agreement and not to take actions
of any kind which may reduce the likelihood of
success of the completion of this Agreement.
5.2 Patch Carrying on Business to Closing
(a) Up to the Closing Time, Patch shall (1) carry on its business
in the normal and ordinary course; (2) preserve the ongoing
goodwill of Patch; and undertake to notify the Vendors of any
event or occurrence during such period which might reasonably
be considered to have a materially adverse effect on the
assets or the business of Patch.
(b) Unless otherwise contemplated herein or approved by the
Vendors in writing, during the period from the date hereof
until the earlier of the Closing Date or termination of this
Agreement, Patch shall not:
(i) sell, transfer or dispose of or create any mortgage,
pledge, waiver or other encumbrance or a security
interest on or in respect of the whole or any part of
the assets of Patch;
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(ii) enter into any transaction or material contract not
in the normal and ordinary course of business;
(iii) borrow money or incur any indebtedness for money
borrowed except as disclosed to and agreed by the
Vendors, acting reasonably;
(iv) make loans, advances or other payments, excluding
routine reimbursements to employees of Patch or
expenses incurred in the ordinary course and such
amounts as contemplated in this Agreement;
(v) make any capital expenditures except as disclosed to
and agreed to by the Vendor's, acting reasonably;
(vi) issue, sell or agree to issue or sell any shares,
rights, options, warrants or other securities of
Patch, other as approved by the Company;
(vii) declare any dividends or distribution;
(viii) purchase, cancel, retire, redeem or otherwise acquire
any of Patch's outstanding securities, rights,
options, warrants or other securities other than as
contemplated herein;
(ix) change, amend or modify the charter documents or
by-laws of Patch other than as approved by the
Company;
(x) merge or amalgamate with or agree to merge or
amalgamate with, or purchase substantially all of the
assets of, or otherwise acquire any business; or sell
or lease or agree to sell or lease, any material
properties or assets or approve or undertake any
other material transaction or furnish or cause to be
furnished any information concerning the business,
properties or assets of any Persons (other than to
the Vendors) which is interested in any such
transactions; or
(xi) except as required by law, not to initiate, propose,
assist or participate in any activities in opposition
to or in competition with this Agreement, and without
limiting the generality of the foregoing, to
undertake any transaction or negotiate any
transaction which would be or potentially could be in
conflict with the completion of this Agreement and
not to take actions of any kind which may reduce the
likelihood of success of the completion of this
Agreement.
ARTICLE 6
INTERPRETATION AND GENERAL
6.1 DEFINITIONS. Where used in this Agreement and the recitals and any
schedules hereto, each of the following words will have the meanings
ascribed to them in Schedule "A" hereto.
6.2 INTERPRETATION. In this Agreement, except as otherwise expressly
provided:
(a) all references in this Agreement to a designated "PARAGRAPH"
or other subdivision or to a Schedule is to the designated
paragraph or other subdivision of, or Schedule, to this
Agreement;
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(b) the words "HEREIN", "HEREOF" and "HEREUNDER" and other words
of similar import refer to this Agreement as a whole and not
to any particular paragraph or other subdivision or Schedule;
(c) the headings are for convenience only and do not form a part
of this Agreement and are not intended to interpret, define,
or limit the scope, extent or intent of this Agreement or any
provision hereof;
(d) the singular of any term includes the plural, and vice versa,
the use of any term is equally applicable to any gender and,
where applicable, a body corporate, the word "OR" is not
exclusive and the word "INCLUDING" is not limited (whether or
not non-limited language, such as "WITHOUT LIMITATION" or "BUT
NOT LIMITED" or words of similar import, are used with
reference thereto);
(e) any accounting term not otherwise defined has the meanings
assigned to it in accordance with generally accepted
accounting principles applicable to the United States of
America or Canada depending on whether it relates to a person
whose financial statements are prepared in accordance with
generally accepted accounting principles in the United States
of America or Canada, respectively;
(f) any reference to a statute includes and is a reference to that
statute and to the regulations made pursuant thereto, with all
amendments made thereto and in force from time to time, and to
any statute or regulations that may be passed which has the
effect of supplementing or superseding that statute or
regulations; and
(g) any other term defined within the text of this Agreement has
the meaning so ascribed.
6.3 SCHEDULES. The following are the Schedules to this Agreement and are
incorporated herein and form part of this Agreement:
SCHEDULE DESCRIPTION
-------------- ---------------------------------------------
A Definitions
B Shareholdings
C Conditions of Closing
D Representations, Warranties and Covenants
E Support Agreement
F intentionally blank
G Exchange and Voting Trust Agreement
H Material Contracts
6.4 ENTIRE AGREEMENT. This Agreement, together with the Schedules and other
documents to be delivered pursuant to this Agreement, constitutes the
entire agreement between the Parties pertaining to the matters
contemplated herein and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written,
and there are no warranties, representations and other agreements
between the Parties in connection with the subject matter hereof except
as specifically set forth in this Agreement or any other agreement or
document to be delivered pursuant to this Agreement.
6.5 NOTICES. All notices, requests, demands and other communications
hereunder must be made in writing and will be deemed to have been duly
given if delivered personally or by courier to the addressee at the
address appearing on the first page hereof or to such other address as
may be given in writing by the Party. Any notice given by personal
delivery shall be deemed to be
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received on the date of delivery. Any notice sent by courier shall be
deemed to be received on the next Business Day following the deposit of
the communication with the courier service.
6.6 TIME OF ESSENCE. Time shall be of the essence in all respects of this
Agreement.
6.7 FURTHER ASSURANCES. The Parties shall with reasonable diligence do all
things and provide all reasonable assurances as may be required to
complete the transactions contemplated by this Agreement, and each
Party shall provide such further documents or instruments required by
any other Party as may be reasonably necessary or desirable to give
effect to this Agreement and carry out its provisions.
6.8 TRANSACTION EXPENSES. Each Party to this Agreement will bear all costs
and expenses incurred by it in negotiating this Agreement and in
closing and carrying out the transactions contemplated by this
Agreement. All costs and expenses related to satisfying any condition
or fulfilling any covenant contained in this Agreement will be borne by
the party whose responsibility it is to satisfy the condition or fulfil
the covenant in question.
6.9 AMENDMENT. No supplement, modification, waiver or termination of this
Agreement shall be binding unless executed in writing by both Parties.
6.10 WAIVER. No waiver of any of the provisions of this Agreement shall
constitute a waiver of any other provision (whether or not similar) nor
shall such waiver constitute a continuing waiver unless otherwise
expressly provided.
6.11 ASSIGNMENT. This Agreement and the rights or obligations hereunder or
thereunder may not be assigned by either Party without the prior
written consent of the other Parties.
6.12 ENUREMENT. This Agreement shall be binding on and enure to the benefit
of both Parties and their respective successors and permitted assigns.
In addition all obligations of the Parties under this Agreement shall
also be binding upon any and all directors, officers, employees,
consultants, advisors and agents of each Party as well as all parent
corporations, subsidiaries, related and affiliated companies thereof.
6.13 GOVERNING LAW. This Agreement shall be governed by and interpreted in
accordance with the laws of the Province of Alberta without giving
effect to provisions of conflicts of law thereto. Each Party
irrevocably submits to the non-exclusive jurisdiction of the courts of
the Province of Alberta with respect to any matter arising hereunder or
related hereto.
6.14 SEVERABILITY. If any provision of this Agreement is determined to be
prohibited, void or unenforceable in whole or in part, such void or
unenforceable provision shall not affect or impair the validity of any
other provision of this Agreement and shall be severable from this
Agreement. Any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any
other jurisdiction.
6.15 INDEPENDENT LEGAL ADVICE. Each of the Vendors acknowledges that he or
she has been advised to seek independent legal counsel in respect of
this Agreement and the other agreements and documents referred to
herein and the matters contemplated herein. To the extent that any
Vendor declines to receive independent legal counsel in respect of this
Agreement, such Vendor hereby waives the right, should a dispute later
develop, to rely on its lack of independent legal counsel to avoid its
obligations, to seek indulgences from the other Parties hereto, or to
otherwise attack, in whole or in part, the integrity of this Agreement
and the documents related thereto.
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6.16 COUNTERPARTS. This Agreement may be executed by the Parties in one or
more counterparts by original or by facsimile, each of which when so
executed and delivered shall be an original and such counterparts shall
together constitute one and the same instrument.
6.17 POWER OF ATTORNEY. Each of the Vendors does hereby constitutes and
appoints the Representative, its attorney and attorney-in-fact for it
and in its name, place and stead, to do and perform any and every act,
and exercise any and every power pursuant to the specific provisions
set forth in the following paragraphs, that he might do or exercise,
and that he shall deem proper or advisable with respect to all matters
as hereinafter set forth.
The Representative is hereby specifically authorized and empowered to
do and perform any or all of the following acts or things from time to
time, namely:
(a) to act on behalf of and in place and stead of the undersigned
with respect to any and all matters relating to the sale of
the Purchased Shares of the Vendors pursuant to the terms and
conditions of the Agreement;
(b) without limiting the generality of the foregoing, to make all
decisions and execute, endorse, swear to, acknowledge,
deliver, file or record, any or all contracts, instruments,
agreements, statutory transfers, stock transfers, receipts,
assignments, certificates and other indicia of title to the
Purchased Shares and the Exchangeable Shares including but not
limited to the Exchange and Voting Trust Agreement and the
Agreement on behalf of each Vendor in such form as is or may
be required in order to carry out the purpose of evidencing
and affecting the foregoing;
(c) all documents required to be executed and delivered by the
Representative on behalf of each Vendor shall constitute
legal, valid and binding obligations of the undersigned,
enforceable in accordance with their respective terms;
(d) each Vendor hereby ratifies and confirms any and all actions
and decisions implemented or carried out by the Representative
pursuant to or caused to be done by virtue of this power of
attorney; and
(e) this authorization shall extend and include any and all
documents, instruments, certificates and other writings as may
in the opinion of the Representative be required or are
necessary in connection with the Transaction;
but the foregoing grant of authority shall not include the authority to
transfer the interest of the Vendors in the Exchangeable Shares or to
execute any proxy on behalf of the Vendors or to vote in respect of
Exchangeable Shares held by the Vendors.
The grant of authority contained in this power of attorney is coupled
with an interest, is irrevocable and will survive the death,
disability, legal incapacity, mental infirmity or incompetence or
bankruptcy of any of the Vendors or the transfer or assignment by any
of the Vendors of all or part of its interest in the Purchased Shares
and binds the heirs, executors, administrators and other legal
representatives and successors and assigns of each of the Vendors, and
may be exercised by the Representative on behalf of the Vendors in
executing any instrument or document by listing all the Vendors thereon
and executing such instrument or document with a single signature as
attorney and agent for all of them. The Vendors agree to be bound by
any representations and actions made or taken by the Representative
pursuant to this power of attorney permitted by the Agreement and
hereby waives any and all defences which may be available to contest,
negate or disaffirm any such action of the Representative taken in good
faith under this power of attorney. The Vendors declare that this power
of attorney shall survive and
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may be exercised during any legal incapacity, mental infirmity,
incompetence or bankruptcy on the Vendor's part. This power of attorney
shall continue until January 31, 2007, and shall terminate thereafter.
IN WITNESS WHEREOF the parties have duly executed this Agreement on the day and
year first above written.
PATCH INTERNATIONAL INC.
per: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
PATCH ENERGY INC.
per: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
1289307 ALBERTA LTD.
per: /s/ ▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇ ▇▇▇▇▇▇▇, President
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Witness ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇ ▇▇▇▇▇▇▇
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Witness ▇▇▇ ▇▇▇▇▇▇▇