EXHIBIT 10.2
EXCHANGE
AND VOTING TRUST AGREEMENT AMONG PATCH INTERNATIONAL INC.,
PATCH ENERGY INC., 1286664 ALBERTA LTD., AND THE SHAREHOLDERS
OF
1289307 ALBERTA LTD. DATED JANUARY 16, 2007
<PAGE>
EXCHANGE AND VOTING TRUST AGREEMENT
THIS EXCHANGE
AND VOTING TRUST
AGREEMENT made as of the 16th day of
January,
2007.
AMONG:
PATCH INTERNATIONAL INC. a corporation subsisting under the
laws of the State of Nevada; having its principal office at
300, 441 - 5th Avenue SW, Calgary, Alberta T2P 2V1
("PATCH");
AND:
PATCH ENERGY INC., a
corporation
incorporated
under the
federal laws of Canada; with its principal office at 300,
441 - 5th Avenue SW, Calgary, Alberta T2P 2V1
("EXCHANGECO");
AND:
1286664 ALBERTA LTD., a corporation incorporated pursuant
to the laws of the
Province of
Alberta, Canada with its
principal office at 22 Barclay Walk S.W., Calgary, Alberta
T2P 4V9,
the "TRUSTEE");
AND:
EACH OF THOSE PERSONS holding shares of the Exchangeco, as
listed in Appendix A hereto;
(individually a
"SHAREHOLDER"
and collectively the
"SHAREHOLDERS");
WHEREAS the Exchangeco is a wholly-owned subsidiary of Patch;
WHEREAS pursuant to a share exchange agreement dated as of January
16, 2007 (the
"PURCHASE AGREEMENT")
by and among Patch,
Exchangeco,
the Shareholders and
1289307 Alberta Ltd. (the "COMPANY"), Exchangeco agreed to acquire all of the
issued and outstanding
common shares of the
Company from the
Shareholders in
consideration of:
Exchangeco
issuing to the
Shareholders
a total of 500,000
Exchangeable Shares (as herein defined);
AND WHEREAS in accordance with the Purchase Agreement, this
Agreement stipulates
the means by which: (i) the Shareholders have voting rights in Patch;
(ii) the
Trustee holds the Patch Preferred Share; and (iii) the Shareholders exercise
their rights of conversion of the Exchangeable Shares;
NOW THEREFORE in
consideration
of the respective covenants and agreements
provided in this
Agreement and for other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged),
the parties agree
as
follows:
<PAGE>
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1
DEFINITIONS
In this Agreement, the following terms shall have the following
meanings:
"AFFILIATE" of any person means any other person directly or
indirectly
controlled by,
or under common control of, that person. For the
purposes of this
definition, "CONTROL"
(including,
with correlative
meanings, the terms
"CONTROLLED BY" and "UNDER COMMON CONTROL OF"), as
applied to any person, means the possession by another person,
directly
or indirectly,
of the power to direct
or cause the direction
of the
management and policies of that first mentioned person, whether
through
the ownership of voting securities, by contract or otherwise,
provided
that for the purpose
of this Agreement,
a Shareholder shall not be
deemed to be an Affiliate of Patch solely as a result of the
ownership
of Exchangeable Shares by such Shareholder, the rights of Shareholders
under the Exchangeable Share Provisions, the Support Agreement and the
Purchase Agreement,
and the Shareholder being a beneficiary of the
rights granted to the Trustee under this Agreement.
"AUTOMATIC EXCHANGE
RIGHTS" means the benefit of the
obligation
of
Patch to effect the automatic exchange of Exchangeable Shares for
Patch
Shares pursuant to section 4.11 hereof.
"BOARD OF DIRECTORS" means the Board of Directors of
Exchangeco.
"BUSINESS DAY" means a day other than a Saturday, Sunday or a day when
banks are not open for business in Calgary, Alberta.
"CURRENT MARKET PRICE"
shall have the meaning
attributed to such term
in the Exchangeable Share Provisions.
"EXCHANGEABLE SHARES"
means the Series A Preferred shares in the
capital of Exchangeco, including the Exchangeable Shares issuable
under
the Purchase Agreement.
"EXCHANGEABLE
SHARE
PROVISIONS"
means the rights, privileges,
restrictions and
conditions
attached to the Exchangeable Shares,
substantially in the
form set out in Schedule "A" to the Support
Agreement.
"INSOLVENCY
EVENT" means
the institution by Exchangeco of any
proceeding
to be adjudicated
bankrupt or insolvent
or to be dissolved
or wound up,
or the consent of Exchangeco to the institution of
bankruptcy,
insolvency,
dissolution or winding up proceedings against
it, or the filing of a petition, answer or consent seeking
dissolution
or winding up under
any bankruptcy,
insolvency
or analogous laws,
including without limitation the Companies Creditors' Arrangement Act
(Canada) and the
Bankruptcy
and Insolvency Act (Canada), and the
failure by Exchangeco
to contest in good faith any such
proceedings
commenced in respect of Exchangeco within fifteen (15) days of
becoming
aware thereof,
or the consent by
Exchangeco to the filing of any such
petition or to
the appointment of a receiver, or the making by
Exchangeco of a general assignment for the benefit of creditors, or
the
admission in writing by Exchangeco of its inability to pay its debts
generally as they
become due, or Exchangeco not being permitted,
pursuant to solvency
requirements
of applicable law, to redeem any
Retracted Shares
pursuant to section 6.6 of the Exchangeable Share
Provisions.
"INSOLVENCY EXCHANGE RIGHT" has the meaning ascribed thereto in
section
4.1.
"LIQUIDATION CALL
RIGHT" has the meaning ascribed thereto in the
Exchangeable Share Provisions.
<PAGE>
"LIQUIDATION EVENT"
has the meaning ascribed thereto in section
4.11(a).
"LIQUIDATION EVENT
EFFECTIVE DATE" has the meaning ascribed thereto in
section 4.11(c).
"LIST" has the meaning ascribed thereto in section 3.8.
"OFFICER'S CERTIFICATE" means, with respect to Patch or Exchangeco,
as
the case may be, a certificate signed by any one of the Chairman of
the
Board, the
Chief Executive Officer, the President or the Chief
Financial Officer of Patch or Exchangeco, as the case may be.
"PATCH SHARES" means the shares of common stock of Patch,
par value of
U.S.$0.00001, having voting rights of one vote per share, and any
other
securities into which such shares may be changed.
"PATCH CONSENT" has the meaning ascribed thereto in section 3.2.
"PATCH
MEETING" has the meaning ascribed in section 3.2. "PATCH SUCCESSOR"
has
the meaning ascribed thereto in section 11.1(a).
"PATCH PREFERRED
SHARE" means the Class B preferred
voting share of
Patch, par value of
U.S.$0.01,
having voting rights
of 500,000 votes
per share, and any
other securities
into which such shares may be
changed.
"PATCH PREFERRED
SHARE PROVISIONS" means the rights, privileges,
restrictions and
conditions
attached to the Patch
Preferred Share,
substantially in the
form set out in Schedule "B" to the Support
Agreement.
"PURCHASE AGREEMENT"
means the Purchase Agreement between Patch,
Exchangeco, the Company and the Shareholders named therein, dated
as of
the same date hereof.
"PERSON" shall
have the meaning attributed to such term in the
Exchangeable Share Provisions.
"REDEMPTION CALL
RIGHT" has the meaning ascribed thereto in the
Exchangeable Share Provisions.
"RETRACTED SHARES" has the meaning ascribed thereto in section
4.6.
"RETRACTION CALL
RIGHT" has the meaning ascribed thereto in the
Exchangeable Share Provisions.
"SHAREHOLDERS" means
the registered holders from time to time of
Exchangeable Shares, other than Patch and its Affiliates,
as listed in
Appendix A hereto.
"SHAREHOLDER VOTES" has the meaning ascribed thereto in section
3.2.
"SUPPORT AGREEMENT" means that certain Support Agreement made as of
the
same date hereof between Exchangeco, Patch and the Trustee.
"TRUST" means the trust created by this Agreement.
"TRUST ESTATE" means the Trust Shares, the Insolvency Exchange Right,
the Automatic Exchange Rights and any other securities,
money or other
property which may be held by the Trustee from time to time
pursuant to
this Agreement.
"TRUST SHARES" has the meaning ascribed thereto in section 2.2.
<PAGE>
"TRUSTEE" means 1286664 ALBERTA LTD., and subject to the
provisions of
Article 10, includes any successor Trustee.
"VOTING RIGHTS" has the meaning ascribed thereto in section
3.1.
1.2
INTERPRETATION NOT AFFECTED BY HEADINGS, ETC.
The division of this Agreement into articles, sections and paragraphs and
the
insertion of headings are for convenience of reference only and
shall not affect
the construction or interpretation of this Agreement.
1.3 NUMBER,
GENDER, ETC.
Words importing
the singular number only shall include the plural and vice
versa. Words importing the use of any gender shall include all
genders.
1.4 DATE FOR
ANY ACTION
If any date on which any action is required to be taken under this
Agreement is
not a Business
Day, such action shall be required to be taken on the next
succeeding Business Day.
ARTICLE 2
TRUST SHARES
2.1
ESTABLISHMENT OF TRUST
The purpose of this
Agreement is to create the Trust for the benefit of the
Shareholders, as
herein provided.
The Trustee
will hold the Patch
Preferred
Share issued
pursuant to the requirements of the Purchase Agreement,
Exchangeable Share
Provisions
and Support
Agreement to enable
the Trustee to
exercise the Voting
Rights and will hold the Insolvency Exchange Right and
Automatic Exchange Rights to enable the Trustee to exercise such
rights, in each
case as Trustee
for and on
behalf of the
Shareholders
as provided in this
Agreement.
2.2 ISSUE AND
OWNERSHIP OF PATCH SHARES
Upon execution
of this Agreement, Patch shall issue to and deposit
with the
Trustee the Patch Preferred Share, such shares to be hereafter held
of record by
the Trustee as Trustee for and on behalf of, and for the use and
benefit of, the
Shareholders and in accordance with the provisions of this
Agreement. The
Patch
Preferred Share so
issued and deposited
by Patch with the Trustee pursuant to
this section 2.2 shall
hereafter be referred
to as the "TRUST
SHARES". Patch
hereby acknowledges receipt from the Trustee as Trustee for and on
behalf of the
Shareholders of good and valuable consideration (and the adequacy thereof) for
the issuance of the Trust Shares by Patch to the Trustee. During
the term of the
Trust and subject to the terms and conditions of this Agreement, the Trustee
shall possess and be
vested with full legal
ownership of the Trust Shares and,
subject to the terms hereof, shall be entitled to exercise all of
the rights and
powers of an owner with respect to the Trust Shares, provided that the Trustee
shall:
(a) hold the
Trust Shares and the
legal title thereto as
Trustee
solely for
the use and benefit of the Shareholders in
accordance with the provisions of this Agreement; and
(b) except as
specifically
authorized by this Agreement, have no
power or authority to sell, transfer, vote or otherwise deal
in or with
the Trust Shares and
the Trust Shares shall not be
used or disposed of by the Trustee for any purpose other than
the purposes for which this Trust is created pursuant to this
Agreement.
<PAGE>
ARTICLE 3
VOTING
3.1 VOTING
RIGHTS
The Trustee, as the
holder of record of Trust Shares, shall be entitled to all
of the voting
rights, including the right to vote in person or by
proxy the
Trust Shares on any matters, questions, proposals or propositions whatsoever
that may properly come before the stockholders of Patch at a Patch
Meeting or in
connection with a
Patch Consent
(in each case as
hereinafter
defined) (the
"VOTING RIGHTS"). The
Voting Rights shall be and remain vested in and exercised
by the Trustee. Subject to section 7.14:
(a) the
Trustee shall exercise the Voting Rights only on the basis
of instructions
received pursuant to this Article 3 from
Shareholders entitled to instruct the Trustee as to the voting
thereof at the time at
which the Patch
Meeting is held or
a
Patch Consent is sought; and
(b) to
the extent that no instructions are received from a
Shareholder with
respect to the Voting
Rights to which
such
Shareholder is
entitled, the Trustee shall not exercise or
permit the exercise of such Voting Rights.
3.2 NUMBER OF
VOTES
With respect to all meetings of stockholders of Patch at which
holders of shares
of Patch are
entitled to vote (a "PATCH MEETING") and with respect to all
written consents sought by Patch from its stockholders including the holders of
shares of Trust Shares (a "PATCH CONSENT"), each Shareholder shall be
entitled
to instruct the Trustee to cast and exercise one of the votes
comprised in the
Voting Rights for each Exchangeable Share owned of record by such
Shareholder on
the record date established by Patch or by applicable law for such
Patch Meeting
or Patch Consent,
as the case may be
(the "SHAREHOLDER
VOTES") in respect
of
each matter,
question, proposal or proposition to be voted on at such Patch
Meeting or to be consented to in connection with such Patch
Consent.
3.3 LEGENDED
SHARES CERTIFICATES
Exchangeco will cause each certificate representing Exchangeable Shares to bear
an appropriate legend
notifying the Shareholders of their right to instruct the
Trustee with
respect to the
exercise of the Voting Rights in respect of the
Exchangeable Shares of the Shareholders.
3.4
SAFEKEEPING OF CERTIFICATES
The certificate(s)
representing the Trust
Shares shall at all times be held in
safe keeping by the Trustee or its agent.
3.5 MAILINGS
TO SHAREHOLDERS OF EXCHANGEABLE SHARES
With respect to each Patch Meeting and Patch Consent, Patch will mail or cause
to be mailed (or otherwise communicate in the same manner as Patch
utilizes in
communications to holders of Patch Shares) to each of the
Shareholders named
in
the List (as defined below) on the same day as the initial mailing
or notice (or
other communication)
with respect thereto is commenced by Patch to its
stockholders: (a) a
copy of such notice, together with any proxy or information
statement and related materials to be provided to stockholders of
Patch;
(a) a
statement that such
Shareholder is entitled to instruct the
Trustee as to the
exercise of the Shareholder Votes with
respect to such Patch
Meeting or Patch
Consent, as the
case
<PAGE>
may be, or pursuant
to section 3.9, to attend such Patch
Meeting and to
exercise personally the Shareholder Votes
thereat as the proxy of the Trustee;
(b) a
statement as to the manner in which such instructions may be
given to the Trustee,
including an express
indication
that
instructions may be given to the Trustee to give:
(i) a
proxy to such Shareholder or his designee to exercise
personally the Shareholder Votes; or
(ii) a proxy to
a designated agent or
other
representative
of the management of Patch to exercise such Shareholder
Votes;
(c) a
statement that if no such instructions are received from the
Shareholder, the
Shareholder Votes to
which such Shareholder
is entitled will not be exercised;
(d) a form of
direction whereby the
Shareholder may so direct and
instruct the Trustee as contemplated herein; and;
(e) a
statement of: (i) the time and date by which such
instructions must be
received by the Trustee in order to be
binding upon it, which
in the case of a Patch
Meeting shall
not be earlier
than the close of business on the second
Business Day prior to
such meeting;
and (ii) the method
for
revoking or amending such instructions.
For the purpose of
determining
Shareholder
Votes to which a
Shareholder
is
entitled in
respect of any Patch Meeting or Patch Consent, the number of
Exchangeable Shares
owned of record by the
Shareholder shall be
determined at
the close of business on the record date established by Patch or by applicable
law for purposes
of determining stockholders entitled to vote at such Patch
Meeting or to give written consent in connection with such Patch
Consent.
3.6 COPIES OF
STOCKHOLDER INFORMATION
Patch will deliver to the Shareholders copies of all proxy
materials
(including
notices of Patch Meetings), information statements,
reports (including
without
limitation all
interim and annual financial statements) and other written
communications that
are to be distributed from time to time to holders of Patch
Shares.
3.7 OTHER
MATERIALS
Immediately after
receipt by Patch or any stockholder of Patch of any
material
sent or given
generally to the
holders of Patch Shares by or on behalf of a
third party,
including without limitation dissident proxy and information
circulars (and related
information and
material) and tender and exchange offer
circulars (and
related information and material), Patch shall use its best
efforts to obtain and
deliver copies
thereof to each
Shareholder
as soon as
possible thereafter.
3.8 LIST OF
PERSONS ENTITLED TO VOTE
Exchangeco shall (a) prior to each annual, general and special Patch Meeting
or
the seeking of any Patch Consent and (b) forthwith upon each
request made at any
time by the Trustee or Patch in writing, prepare or cause to be prepared a
list
(a "LIST")
of the names and addresses of the Shareholders arranged in
alphabetical order and showing the number of Exchangeable
Shares held of
record
by each such
Shareholder, in each
case at the close of
business on the date
specified by the
Trustee or Patch in such request or, in the case of a List
prepared in connection with a Patch Meeting or a Patch Consent,
at the close of
business on the record date established by Patch or pursuant to applicable
law
for determining the holders of Patch Shares entitled to receive
notice of and/or
to vote at such Patch Meeting or to give consent in connection with such Patch
Consent. Each such
List shall be
delivered to the
Trustee or Patch
<PAGE>
promptly after receipt by Exchangeco of such request or the record
date for such
meeting or
seeking of
consent, as the case may be, and in any event within
sufficient time as to
enable Patch to perform its obligations under this
Agreement. Patch
agrees to give
Exchangeco written
notice (with a copy to the
Trustee) of the
calling of any Patch Meeting or the seeking of any Patch
Consent, together with
the record dates
therefore,
sufficiently prior to
the
date of the calling of such meeting or seeking of such
consent so as to
enable
Exchangeco to perform its obligations under this section 3.8.
3.9
ENTITLEMENT TO DIRECT VOTES
Any Shareholder named in a List prepared in connection with any
Patch Meeting or
Patch Consent
will be entitled (a) to instruct the Trustee in the manner
described in section 3.5 with respect to the exercise of the
Shareholder
Votes
to which such
Shareholder
is entitled or (b) to attend such meeting and
personally exercise thereat, as the proxy of the Trustee,
the Shareholder
Votes
to which such Shareholder is entitled.
3.10
VOTING BY TRUSTEE, AND ATTENDANCE OF TRUSTEE REPRESENTATIVE AT
MEETING
(a) In
connection with each
Patch Meeting and Patch Consent, the
Trustee shall
exercise, either in person or by proxy, in
accordance with the
instructions received
from a Shareholder
pursuant to section
3.5, the Shareholder Votes as to which
such Shareholder is entitled to direct the vote (or any lesser
number thereof
as may be set forth in the instructions);
provided, however, that such written instructions are received
by the Trustee from the Shareholder prior to the time and date
fixed by the Trustee for receipt of such instructions in the
notice given by Patch to the Shareholder pursuant to section
3.5.
(b) The
Trustee shall cause a representative who is empowered by
it to sign and deliver, on behalf of the Trustee, proxies for
Voting Rights to attend each Patch Meeting, Upon submission by
a Shareholder (or its designee) of identification satisfactory
to the Trustee's
representative,
and at the Shareholder's
request, such
representative
shall sign and deliver
to such
Shareholder (or its
designee) a proxy to exercise personally
the Shareholder
Votes
as to which such Shareholder is
otherwise entitled
hereunder to direct the vote, if such
Shareholder either (i)
has not previously
given the Trustee
instructions pursuant
to section 3.5 in respect of such
meeting or
(ii) submits to such representative written
revocation of any such previous instructions. At such meeting,
the Shareholder
exercising such Shareholder Votes shall have
the same rights as the
Trustee to speak at the meeting in
favour of any matter,
question, proposal or
proposition, to
vote by way of ballot at the meeting in respect of any matter,
question, proposal or proposition, and to vote at such meeting
by way of a show of hands in respect of any matter, question
or proposition.
3.11
DISTRIBUTION OF WRITTEN MATERIALS
Any written materials to be distributed by Patch to the
Shareholders pursuant to
this Agreement shall be delivered or sent by mail (or otherwise
communicated in
the same manner as Patch utilizes in communications to holders of Patch
Shares)
to each Shareholder
at its address as shown on the books of Exchangeco.
Exchangeco shall provide or cause to be provided to Patch for this
purpose, on a
timely basis
and without charge or other expense a current List of the
Shareholders.
3.12
TERMINATION OF VOTING RIGHTS
All of the rights
of a Shareholder with respect to the Shareholder Votes
exercisable in respect of each Exchangeable Share held by such
Shareholder shall
be deemed to be
surrendered by the
Shareholder to Patch
and such
Shareholder
Votes and the Voting Rights represented thereby shall cease
immediately
<PAGE>
upon the delivery by such holder to the Trustee of the certificates
representing
such Exchangeable
Shares in connection
with the exercise by the Shareholder of
the Insolvency
Exchange Right or the
occurrence of the
automatic exchange
of
Exchangeable Shares
for Patch Shares,
as specified in Article 4 (unless and
until, in either case,
the Trustee shall not have transferred and delivered to
the Shareholder
the requisite Patch Shares required to be transferred and
delivered by the
Trustee to the Shareholder), or upon the retraction or
redemption of Exchangeable Shares pursuant to Article 6 or 7 of the
Exchangeable
Share Provisions, or upon the effective date of the liquidation,
dissolution or
winding-up of
Exchangeco
pursuant to Article 5 of the Exchangeable Share
Provisions, or upon
the purchase of Exchangeable Shares from the holder thereof
by Patch pursuant to
the exercise by Patch of the Retraction Call Right, the
Redemption Call Right or the Liquidation Call Right.
ARTICLE 4
EXCHANGE RIGHT AND AUTOMATIC EXCHANGE
4.1 GRANT AND
OWNERSHIP OF THE EXCHANGE RIGHTS
Patch hereby grants to
the Trustee as Trustee for and on behalf of, and for the
use and benefit
of, the Shareholders the right (the "INSOLVENCY EXCHANGE
RIGHT"), upon the
occurrence and during the continuance of an Insolvency Event,
to require Patch to purchase from each or any Shareholder all or
any part of the
Exchangeable Shares
held by the Shareholder and the Automatic Exchange Rights
all in accordance with the provisions of this Agreement. Patch hereby
acknowledges receipt
from the Trustee, as Trustee for and on behalf of the
Shareholders, of good
and valuable consideration (and the adequacy thereof) for
the grant of the Insolvency Exchange Right, and the Automatic
Exchange Rights,
by Patch to the
Trustee. During the
term of the Trust and subject to the terms
and conditions of this
Agreement, the Trustee
shall possess and be vested with
full legal ownership of the Insolvency Exchange Right and the
Automatic Exchange
Rights and shall be
entitled to exercise all of the rights and powers of
an
owner with respect to the Insolvency Exchange Right and the Automatic
Exchange
Rights, provided that the Trustee shall:
(a) hold the
Insolvency Exchange
Right and the Automatic Exchange
Rights and the legal title thereto as Trustee solely for the
use and
benefit of the
Shareholders in
accordance
with the
provisions of this Agreement; and
(b) except as
specifically
authorized by this Agreement, have no
power or authority to
exercise or otherwise
deal in or with
the Insolvency
Exchange Right or the Automatic Exchange
Rights, and the Trustee shall not exercise any such rights for
any purpose
other than the
purposes for which the Trust is
created pursuant to
this Agreement,
and shall not assign
or
transfer such rights except to a successor Trustee hereunder.
The Insolvency
Exchange Right and the
Automatic Exchange
Rights shall be
and
remain vested in and
exercisable by the
Trustee. Subject to
section 7.14, the
Trustee shall
exercise the Insolvency Exchange Right only on the basis of
instructions received
pursuant to this Article 4 from Shareholders entitled to
instruct the
Trustee as to the exercise thereof. To the extent that no
instructions are
received from a
Shareholder
with respect to the
Insolvency
Exchange Right,
the Trustee
shall not exercise or permit the exercise of
the
Insolvency Exchange Right.
4.2 LEGENDED
SHARE CERTIFICATES
Exchangeco will cause each certificate representing Exchangeable Shares to bear
an appropriate legend notifying the Shareholders of:
(a) their
right to instruct the Trustee with respect to the
exercise of the
Insolvency Exchange
Right in respect of
the
Exchangeable Shares held by a Shareholder; and
<PAGE>
(b) the
Automatic Exchange Rights.
4.3 PURCHASE
PRICE
The purchase price payable by Patch for each Exchangeable
Share to be
purchased
by Patch under the Insolvency Exchange Right shall be an amount
per share equal
to: (i) the Current Market Price of a Patch Share on the last
Business Day prior
to the day of closing of the purchase and sale of such Exchangeable
Share under
the Insolvency
Exchange Right plus; (ii) an additional amount equivalent to
the
full amount of all dividends declared and unpaid on each such
Exchangeable Share
and all dividends
declared on Patch Shares which have not been declared on such
Exchangeable Shares in
accordance
with Article 3 of the Exchangeable Share
Provisions (provided
that if the record
date for any such
declared and unpaid
dividends occurs on or
after the day of closing of such purchase and sale the
purchase price shall
not include such
additional
amount equivalent to such
declared and
unpaid dividends). In connection with each exercise of the
Insolvency Exchange Right, Patch will provide to the Trustee, as
Trustee for and
on behalf of the
Shareholders,
an Officer's Certificate setting forth the
calculation of the
purchase price for
each Exchangeable
Share. The purchase
price for each such
Exchangeable Share so
purchased may be
satisfied by Patch
issuing and
delivering
to the Trustee for delivery by the Trustee to the
Shareholders, one
Patch Share and a
cheque for the
balance, if any, of the
purchase price without interest.
4.4 EXERCISE
INSTRUCTIONS
Subject to the terms and conditions set forth herein, a Shareholder shall be
entitled, upon the occurrence and during the continuance of an
Insolvency Event,
to instruct the Trustee to exercise the Insolvency Exchange Right with respect
to all or any part of the Exchangeable Shares registered in the name of such
Shareholder on the books of Exchangeco. To cause the exercise of the
Insolvency
Exchange Right by the Trustee, the Shareholder shall deliver to
the Trustee, in
person or by certified or registered mail the certificates representing the
Exchangeable Shares
which such Shareholder
desires Patch to purchase, duly
endorsed in blank for
transfer, and
accompanied
by such other
documents and
instruments as may be required to effect a transfer of Exchangeable
Shares under
the laws applicable to Exchangeco and the articles and by-laws of
Exchangeco and
such additional
documents and instruments as the Trustee may reasonably require
together with: (a) a duly completed form of notice of exercise of
the Insolvency
Exchange Right,
contained on the reverse of or attached to the Exchangeable
Share certificates,
stating: (i) that the Shareholder
thereby instructs the
Trustee to exercise
the Insolvency
Exchange Right so as to require
Patch to
purchase from the
Shareholder
the number of Exchangeable Shares specified
therein; (ii)
that such Shareholder has good title to and owns all such
Exchangeable Shares to
be acquired by Patch free and clear of all liens, claims
and encumbrances;
(iii) the name in which the certificates representing Patch
Shares to be issued in connection with the exercise of the
Insolvency
Exchange
Right are to be issued; and (iv) the names and addresses
of the persons to whom
such new certificates should be delivered, and (b) payment (or evidence
satisfactory to the
Trustee, Exchangeco
and Patch of payment) of the taxes (if
any) payable as contemplated by section 4.7 of this Agreement. If
only a part of
the Exchangeable Shares represented by any certificate or
certificates delivered
to the Trustee are to be purchased by Patch under the Insolvency
Exchange Right,
a new certificate for the balance of such Exchangeable Shares shall
be issued to
the Shareholder at the expense of Exchangeco.
4.5 DELIVERY
OF PATCH SHARES; EFFECT OF EXERCISE
Promptly, and
as soon as reasonably practicable after receipt of the
certificates
representing the Exchangeable Shares which the Shareholder
desires
Patch to purchase
under the Insolvency Exchange Right, together with such
documents and
instruments of
transfer and a duly
completed form of
notice of
exercise of the Insolvency Exchange Right (and payment of
taxes as contemplated
by section 4.7 of this Agreement, if any, or evidence thereof), duly endorsed
for transfer to Patch,
Trustee shall notify Patch and Exchangeco of its receipt
of the same, which notice to Patch and Exchangeco shall constitute exercise of
the Insolvency
Exchange Right by the Trustee on behalf of the holder of
such
Exchangeable Shares, and Patch shall immediately thereafter upon
receipt of such
notice deliver or cause to be delivered to the
<PAGE>
Shareholder of such
Exchangeable
Shares (or to such other persons, if any,
properly designated by such Shareholder), certificates representing the number
of Patch Shares
deliverable in
connection with the
exercise of the Insolvency
Exchange Right, which
shares shall be, or shall have been, duly issued as fully
paid and non-assessable and shall be free and clear of any lien, claim or
encumbrance, and
cheques for the balance, if any, of the total purchase price
therefor. Patch
shall, immediately upon receipt of such certificates
representing the
Exchangeable
Shares
from the Shareholder, deliver the
certificates to
the registered office of Exchangeco for cancellation.
Immediately upon the
giving of notice by the Trustee to Patch and Exchangeco of
the exercise of the Insolvency Exchange Right, as provided in
this section 4.5,
the closing
of the transaction of purchase and sale contemplated by the
Insolvency Exchange
Right shall be deemed to have occurred, and the holder of
such Exchangeable Shares shall be deemed to have transferred to
Patch its right,
title and interest in and to such Exchangeable Shares and the related
interest
in the Trust Estate and shall cease to be a holder of such
Exchangeable
Shares
and shall not be
entitled to exercise
any of the rights of a
Shareholder
in
respect thereof,
other than the right
to receive the purchase price therefore,
unless the requisite
number of Patch
Shares (together with a cheque for the
balance, if any,
of the total
purchase price therefore) is not issued and
delivered by
Patch to the Trustee and delivered by the Trustee to such
Shareholder (or to
such other persons,
if any, properly designated by such
Shareholder), within
five (5) Business
Days of the date of
the giving of such
notice by the Trustee,
in which case the rights of the Shareholder shall remain
unaffected until such
Patch Shares are so issued and delivered by Patch, as the
case may be, and any such cheque is so delivered and honoured.
Concurrently with
such Shareholder
ceasing to be a Shareholder of Exchangeable Shares, the
Shareholder shall be
considered and deemed for all purposes to be the holder of
Patch Shares delivered to it pursuant to the Insolvency Exchange
Right.
4.6 EXERCISE
OF INSOLVENCY EXCHANGE RIGHT SUBSEQUENT TO RETRACTION
In the event that a
Shareholder has
exercised its right under Article 6 of the
Exchangeable Share
Provisions to require Exchangeco to redeem any or all of the
Exchangeable Shares
held by the
Shareholder (the
"RETRACTED
Shares") and is
notified by
Exchangeco
pursuant to section 6.6 of the Exchangeable Share
Provisions that
Exchangeco
will not be permitted as a result of solvency
requirements of applicable law to redeem all such Retracted Shares,
and provided
that Patch shall not have exercised the Retraction Call Right with respect to
the Retracted Shares
and that the
Shareholder has not
revoked the
retraction
request delivered by
the Shareholder to
Exchangeco pursuant to
section 6.1 of
the Exchangeable Share
Provisions, the
retraction request
will constitute and
will be deemed
to constitute notice from the Shareholder to the Trustee
instructing the
Trustee to exercise the Insolvency Exchange Right with respect
to those Retracted
Shares which
Exchangeco
i
