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EXCHANGE AND VOTING TRUST AGREEMENT
THIS EXCHANGE AND VOTING TRUST AGREEMENT made as of the 15
th day of December, 2006.
AMONG:
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PATCH INTERNATIONAL INC. a corporation subsisting under the laws
of the State of Nevada; having its principal office at 1220,
666 Burrard Street, Vancouver, British Columbia, Canada
V6C 2X8,
(" Patch ");
AND:
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PATCH ENERGY INC. , a corporation incorporated under the
federal laws of Canada; with its principal office at 1220,
666 Burrard Street, Vancouver, British Columbia, Canada
V6C 2X8,
(" Exchangeco ");
AND:
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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:
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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 December 15, 2006 (the " Purchase Agreement ") by and
among Patch, Exchangeco, the Shareholders and Damascus Energy Inc.
(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 9,426,489 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:
Article 1
DEFINITIONS AND INTERPRETATION
In this Agreement, the following terms shall have the following
meanings:
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" 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.
" 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 A preferred
voting share of Patch, par value of U.S.$0.01, having voting rights
of 9,426,489 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.
" 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.
Words importing the singular number only shall include the
plural and vice versa. Words importing the use of any gender shall
include all genders.
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
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.
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:
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(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.
Article 3
VOTING
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:
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(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.
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.
The certificate(s) representing the Trust Shares shall at all
times be held in safe keeping by the Trustee or its agent.
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;
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(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 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:
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(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.
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.
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.
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 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
therefor, 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.
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.
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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.
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 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
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:
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(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.
Exchangeco will cause each certificate representing Exchangeable
Shares to bear an appropriate legend notifying the Shareholders
of:
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(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
(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.
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.
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 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 therefor, unless the requisite number of Patch
Shares (together with a cheque for the balance, if any, of the
total purchase price therefor) 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.
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 is unable to redeem. In any such event, Exchangeco
hereby agrees with the Trustee and in favour of the Shareholder
promptly to forward or cause to be forwarded to the Trustee all
relevant materials delivered by the Shareholder to Exchangeco
(including without limitation a copy of the retraction request
delivered pursuant to section 6.1 of the
Exchangeable Share Provisions) in connection with such proposed
redemption of the Retracted Shares and the Trustee will thereupon
exercise the Insolvency Exchange Right with respect to the
Retracted Shares that Exchangeco is not permitted to redeem and
will require Patch to purchase such shares in accordance with the
provisions of this Article 4.
Upon any sale of Exchangeable Sha
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