Document:

STEM
HOLDINGS, INC.

2016
EMPLOYEE, DIRECTOR AND CONSULTANT STOCK PLAN

 

1.
DEFINITIONS.

 

Unless
otherwise specified or unless the context otherwise requires, the following terms, as used in this Stem Holdings, Inc. 2016 Employee,
Director and Consultant Stock Plan, have the following meanings:

 

	(a)	“Administrator”
    means the Board, unless it has delegated power to act on its behalf to the Committee, in which case the Administrator
    means the Committee. 
	 	 
	(b)	“Affiliate”
    means a corporation or other entity controlled by the Company and designated by the Administrator as such. 
	 	 
	(c)	“Award”
    means a Stock Appreciation Right, Stock Option or Stock Award. 
	 	 
	(d)	“Board”
    means the Board of Directors of the Company. 
	 	 
	(e)	“Cause”
    shall include (and is not limited to) dishonesty with respect to the Company or any Affiliate, substantial malfeasance
    or non-feasance of duty, unauthorized disclosure of confidential information, breach by the Participant of any provision of
    any employment, consulting, advisory, nondisclosure, non-competition or similar agreement between the Participant and the
    Company or any Affiliate, and conduct substantially prejudicial to the business of the Company or any Affiliate. The determination
    of Cause shall be made by the Administrator in its sole discretion. Cause is not limited to events which have occurred prior
    to a Participant’s termination of employment or services, nor is it necessary that the Administrator’s finding
    of Cause occur prior to the termination of employment or services. If the Administrator determines, subsequent to a Participant’s
    termination of employment or services but prior to the vesting of a Stock Option, Stock Appreciation Right or Stock Award
    or exercise of a Stock Option or Stock Appreciation Right, that either prior or subsequent to the Participant’s termination
    of employment or services the Participant engaged in conduct which would constitute Cause, then the unvested Stock Option,
    Stock Appreciation Right or Stock Award, as applicable, is immediately cancelled and any vested Stock Options or Stock Appreciation
    Rights cease to be exercisable. Notwithstanding the foregoing, if the Participant and the Company or an Affiliate have entered
    into an employment or services agreement which defines the term “Cause” (or a similar term) which is in effect
    at the time of termination, such definition shall govern for purposes of determining whether such Participant has been terminated
    for Cause for purposes of this Plan. 
	 	 
	(f)	“Code”
    means the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto. 
	 	 
	(g)	“Commission”
    means the Securities and Exchange Commission or any successor agency. 
	 	 
	(h)	“Committee”
    means a committee of Directors appointed by the Board to administer this Plan. With respect to Stock Options granted at
    the time the Company is publicly held, if any, insofar as the Committee is responsible for granting Stock Options to Participants
    hereunder, it shall consist solely of two or more directors, each of whom is a “Non-Employee Director” within
    the meaning of Rule 16b-3 and each of whom is also an “outside director” under Section 162(m) of the Code. 
	 	 
	(i)	“Company”
    means Stem Holdings, Inc., a Nevada corporation. 
	 	 
	(j)	“Director”
    means a member of the Company’s Board of Directors. 
	 	 
	(k)	“Disability”
    or “Disabled” means mental or physical illness that entitles the Participant to receive benefits under
    the long-term disability plan of the Company or an Affiliate, or if the Participant is not covered by such a plan or the Participant
    is not an employee of the Company or an Affiliate, a medically determinable physical or mental impairment which can be expected
    to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve months,
    and which renders the Participant unable to engage in any substantial gainful activity; provided, however, that a Disability
    shall not qualify under this Plan if it is the result of (i) a willfully self-inflicted injury or willfully self-induced sickness;
    or (ii) an injury or disease contracted, suffered or incurred while participating in a criminal offense.

 

    	 

    

    

 

	 	Notwithstanding
    the foregoing, if the Participant and the Company or an Affiliate have entered into an employment or services agreement which
    defines the term “Disability” (or a similar term), such definition shall govern for purposes of determining whether
    such Participant suffers a Disability for purposes of this Plan. The Administrator shall make the determination both of whether
    Disability has occurred and the date of its occurrence (unless a procedure for such determination is set forth in another
    agreement between the Company and such Participant, in which case such procedure shall be used for such determination). If
    requested, the Participant shall be examined by a physician selected or approved by the Administrator, the cost of which examination
    shall be paid for by the Company. The determination of Disability for purposes of this Plan shall not be construed to be an
    admission of disability for any other purpose. 
	 	 
	(l)	“Effective
    Time” means the date of adoption of the Plan by the Company’s Board. 
	 	 
	(m)	“Eligible
    Individual” means any officer, employee or director of the Company or an Affiliate, or any consultant or advisor
    providing services to the Company or an Affiliate. 
	 	 
	(n)	“Exchange
    Act” means the Securities Exchange Act of 1934, as amended from time to time, and any successor thereto. 
	 	 
	(o)	“Fair
    Market Value” means, as of any given date, the fair market value of the Stock as determined by the Administrator
    or under procedures established by the Administrator and in accordance with Section 409A of the Code. 
	 	 
	(p)	“Family
    Member” means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling,
    niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of a Participant
    (including adoptive relationships); any person sharing the Participant’s household (other than a tenant or employee);
    any trust in which the Participant and any of these persons have substantially all of the beneficial interest; any foundation
    in which the Participant and any of these persons control the management of the assets; any corporation, partnership, limited
    liability company or other entity in which the Participant and any of these other persons are the direct and beneficial owners
    of substantially all of the equity interests (provided the Participant and these other persons agree in writing to remain
    the direct and beneficial owners of all such equity interests); and any personal representative of the Participant upon the
    Participant’s death for purposes of administration of the Participant’s estate or upon the Participant’s
    incompetency for purposes of the protection and management of the assets of the Participant. 
	 	 
	(q)	“Incentive
    Stock Option” means any Stock Option intended to be and designated as an “incentive stock option” within
    the meaning of Section 422 of the Code. 
	 	 
	(r)	“Non-Employee
    Director” means a Director who is not an officer or employee of the Company or any Affiliate. 
	 	 
	(s)	“Non-Qualified
    Stock Option” means any Stock Option that is not an Incentive Stock Option. 
	 	 
	(t)	“Optionee”
    means a person who holds a Stock Option. 
	 	 
	(u)	“Participant”
    means a person granted an Award. 
	 	 
	(v)	“Plan”
    means this Stem Holdings, Inc. 2016 Employee, Director and Consultant Stock Plan. 
	 	 
	(w)	“Representative”
    means (i) the person or entity acting as the executor or administrator of a Participant’s estate pursuant to the
    last will and testament of a Participant or pursuant to the laws of the jurisdiction in which the Participant had his or her
    primary residence at the date of the Participant’s death; (ii) the person or entity acting as the guardian or temporary
    guardian of a Participant; (iii) the person or entity which is the beneficiary of the Participant upon or following the Participant’s
    death; or (iv) any person to whom a Stock Option has been transferred with the permission of the Administrator or by operation
    of law; provided that only one of the foregoing shall be the Representative at any point in time as determined under applicable
    law and recognized by the Administrator. 
	 	 
	(x)	“Stock”
    means shares of the Company’s common stock. 

 

    	 		 

    	 		 

    

 

	(y)	“Stock
    Appreciation Right” means a right granted under Section 6. 
	 	 
	(z)	“Stock
    Award” means an Award, other than a Stock Option or Stock Appreciation Right, made in Stock or denominated in shares
    of Stock. A Stock Award may be settled in Stock or cash, as determined in the discretion of the Administrator. 
	 	 
	(aa)	“Stock
    Option” means an option granted under Section 5. 
	 	 
	(bb)	“Subsidiary”
    means any company during any period in which it is a “subsidiary corporation” (as such term is defined in
    Section 424(f) of the Code) with respect to the Company. 
	 	 
	(cc)	“Ten
    Percent Holder” means an individual who owns, or is deemed to own, stock possessing more than 10% of the total combined
    voting power of all classes of Stock of the Company or of any parent or subsidiary corporation of the Company determined pursuant
    to the rules applicable to Section 422(b)(6) of the Code. 

 

2.
ESTABLISHMENT AND PURPOSE.

 

The
Plan is established by the Company to attract and retain persons eligible to participate in the Plan, motivate Participants to
achieve long-term Company goals, and further align Participants’ interests with those of the Company’s other stockholders.
The Plan is adopted as of the Effective Time, subject to approval by the Company’s stockholders within 12 months before
or after such adoption date. Unless the Plan is discontinued earlier by the Board as provided herein, no Award shall be granted
hereunder on or after the date 10 years after the effective date.

 

3.
ADMINISTRATION; ELIGIBILITY.

 

The
Plan shall be administered by the Administrator; provided, however, that, if at any time no Committee shall be in office, the
Plan shall be administered by the Board. The Plan may be administered by different Committees with respect to different groups
of Eligible Individuals.

 

The
Administrator shall have plenary authority to grant Awards pursuant to the terms of the Plan to Eligible Individuals; provided,
however, that each Eligible Individual must be an officer, employee, director or consultant of the Company or of an Affiliate
at the time the Award is granted. Notwithstanding the foregoing, the Administrator may authorize the grant of an Award to a person
not then an officer, employee, director or consultant of the Company or of an Affiliate; provided, however, that the actual grant
of such Award shall be conditioned upon such person becoming an Eligible Individual at or prior to the time the Award is granted.
Participation shall be limited to such persons as are selected by the Administrator. The granting of any Award to any individual
shall neither entitle that individual to, nor disqualify such individual from, participation in any other Awards.

 

Awards
may be granted as alternatives to, in exchange or substitution for, or replacement of, awards outstanding under the Plan or any
other plan or arrangement of the Company or an Affiliate (including a plan or arrangement of a business or entity, all or a portion
of which is acquired by the Company or an Affiliate). The provisions of Awards need not be the same with respect to each Participant.

 

Among
other things, the Administrator shall have the authority, subject to the terms of the Plan:

 

	(a)	to
    select the Eligible Individuals to whom Awards may from time to time be granted; 
	 	 
	(b)	to
    determine whether and to what extent Stock Options, Stock Appreciation Rights, Stock Awards or any combination thereof are
    to be granted hereunder; 
	 	 
	(c)	to
    determine the number of shares of Stock to be covered by each Award granted hereunder; 
	 	 
	(d)	to
    approve forms of agreement for use under the Plan; 
	 	 
	(e)	to
    determine the terms and conditions, not inconsistent with the terms of this Plan, of any Award granted hereunder (including,
    but not limited to, the option price, any vesting restriction or limitation, any vesting acceleration or forfeiture waiver
    and any right of repurchase, right of first refusal or other transfer restriction regarding any Award and the shares of Stock
    relating thereto, based on such factors or criteria as the Administrator shall determine); 

 

    	 

    

    

 

	(f)	subject
    to Section 8(a), to modify, amend or adjust the terms and conditions of any Award, at any time or from time to time, including,
    but not limited to, with respect to (i) performance goals and targets applicable to performance-based Awards pursuant to the
    terms of the Plan and (ii) extension of the post-termination exercisability period of Stock Options; 
	 	 
	(g)	to
    determine to what extent and under what circumstances Stock and other amounts payable with respect to an Award shall be deferred;
    
	 	 
	(h)	to
    adopt any sub-plans applicable to residents of any specified jurisdiction as it deems necessary or appropriate in order to
    comply with or take advantage of any tax laws applicable to the Company or to Participants or to otherwise facilitate the
    administration of the Plan, which sub-plans may include additional restrictions or conditions applicable to Stock Options
    or Shares acquired upon the exercise of Stock Options; 
	 	 
	(i)	to
    determine the Fair Market Value; and 
	 	 
	(j)	to
    determine the type and amount of consideration to be received by the Company for any Stock Award issued under Section 7. 

 

The
Administrator shall have the authority to adopt, alter and repeal such administrative rules, guidelines and practices governing
the Plan as it shall, from time to time, deem advisable, to interpret the terms and provisions of the Plan and any Award issued
under the Plan (and any agreement relating thereto) and to otherwise supervise the administration of the Plan.

 

Except
to the extent prohibited by applicable law, the Administrator may allocate all or any portion of its responsibilities and powers
to any one or more of its members and may delegate all or any portion of its responsibilities and powers to any other person or
persons selected by it. Any such allocation or delegation may be revoked by the Administrator at any time. The Administrator may
authorize any one or more of their members or any officer of the Company to execute and deliver documents on behalf of the Administrator.

 

Any
determination made by the Administrator or pursuant to delegated authority pursuant to the provisions of the Plan with respect
to any Award shall be made in the sole discretion of the Administrator or such delegate at the time of the grant of the Award
or, unless in contravention of any express term of the Plan, at any time thereafter. All decisions made by the Administrator or
any appropriately delegated officer pursuant to the provisions of the Plan shall be final and binding on all persons, including
the Company and Participants, unless otherwise determined by the Board if the Administrator is the Committee.

 

No
member of the Administrator, and no officer of the Company, shall be liable for any action taken or omitted to be taken by such
individual or by any other member of the Administrator or officer of the Company in connection with the performance of duties
under this Plan, except for such individual’s own willful misconduct or as expressly provided by law.

 

4.
STOCK SUBJECT TO PLAN.

 

Subject
to adjustment as provided in this Section 4, the aggregate number of shares of Stock which may be delivered under the Plan shall
not exceed a number equal to 15% of the total number of shares of Stock outstanding immediately following the Effective Time,
assuming for this purpose the conversion into Stock of all outstanding securities that are convertible by their terms (directly
or indirectly) into Stock; provided, however, that, as of January 1 of each calendar year, commencing with the year 2017,
the maximum number of shares of Stock which may be delivered under the Plan shall automatically increase by a number sufficient
to cause the number of shares of Stock covered by the Plan to equal 15% of the total number of shares of Stock then outstanding,
assuming for this purpose the conversion into Stock of all outstanding securities that are convertible by their terms (directly
or indirectly) into Stock.

 

To
the extent any shares of Stock covered by an Award are not delivered to a Participant or beneficiary thereof because the Award
expires, is forfeited, canceled or otherwise terminated, or the shares of Stock are not delivered because the Award is settled
in cash or used to satisfy the applicable tax withholding obligation, such shares shall not be deemed to have been delivered for
purposes of determining the maximum number of shares of Stock available for delivery under the Plan.

 

    	 

    

    

 

In
the event of any Company stock dividend, stock split, combination or exchange of shares, recapitalization or other change in the
capital structure of the Company, corporate separation or division of the Company (including, but not limited to, a split-up,
spin-off, split-off or distribution to Company stockholders other than a normal cash dividend), sale by the Company of all or
a substantial portion of its assets (measured on either a stand-alone or consolidated basis), reorganization, rights offering,
partial or complete liquidation, or any other corporate transaction, Company share offering or other event involving the Company
and having an effect similar to any of the foregoing, the Administrator may make such substitution or adjustments in the (A) number
and kind of shares that may be delivered under the Plan, (B) additional maximums imposed in the immediately preceding paragraph,
(C) number and kind of shares subject to outstanding Awards, (D) exercise price of outstanding Stock Options and Stock Appreciation
Rights and (E) other characteristics or terms of the Awards as it may determine appropriate in its sole discretion to equitably
reflect such corporate transaction, share offering or other event; provided, however, that the number of shares subject to any
Award shall always be a whole number.

 

5.
STOCK OPTIONS.

 

Stock
Options may be granted alone or in addition to other Awards granted under the Plan and may be of two types: Incentive Stock Options
and Non-Qualified Stock Options. Any Stock Option granted under the Plan shall be in such form as the Administrator may from time
to time approve.

 

The
Administrator shall have the authority to grant any Participant Incentive Stock Options, Non-Qualified Stock Options or both types
of Stock Options (in each case with or without Stock Appreciation Rights). Incentive Stock Options may be granted only to employees
of the Company and its Subsidiaries. To the extent that any Stock Option is not designated as an Incentive Stock Option or, even
if so designated, does not qualify as an Incentive Stock Option, it shall constitute a Non-Qualified Stock Option. Incentive Stock
Options may be granted only within 10 years from the date the Plan is adopted, or the date the Plan is approved by the Company’s
stockholders, whichever is earlier.

 

Stock
Options shall be evidenced by option agreements, each in a form approved by the Administrator. An option agreement shall indicate
on its face whether it is intended to be an agreement for an Incentive Stock Option or a Non-Qualified Stock Option. The grant
of a Stock Option shall occur as of the date the Administrator determines.

 

Anything
in the Plan to the contrary notwithstanding, no term of the Plan relating to Incentive Stock Options shall be interpreted, amended
or altered, nor shall any discretion or authority granted under the Plan be exercised, so as to disqualify the Plan under Section
422 of the Code or, without the consent of the Optionee affected, to disqualify any Incentive Stock Option under Section 422 of
the Code.

 

Stock
Options granted under this Section 5 shall be subject to the following terms and conditions and shall contain such additional
terms and conditions as the Administrator shall deem desirable.

 

	(a)	Exercise
    Price. The exercise price per share of Stock purchasable under a Stock Option shall be determined by the Administrator;
    provided, however, that the exercise price per share shall be not less than the Fair Market Value per share on the date the
    Stock Option is granted, or if the Stock Option is intended to qualify as an Incentive Stock Option and is granted to an individual
    who is a Ten Percent Holder, not less than 110% of such Fair Market Value per share. 
	 	 
	(b)	Shares.
    Each option agreement shall state the number of shares to which it pertains. 
	 	 
	(c)	Option
    Term. The term of each Stock Option shall be fixed by the Administrator, but no Incentive Stock Option shall be exercisable
    more than 10 years (or five years in the case of an individual who is a Ten Percent Holder) after the date the Incentive Stock
    Option is granted. 
	 	 
	(d)	Exercisability.
    Except as otherwise provided herein, Stock Options shall be exercisable at such time or times, and subject to such terms and
    conditions, as shall be determined by the Administrator. If the Administrator provides that any Stock Option is exercisable
    only in installments, the Administrator may at any time waive such installment exercise provisions, in whole or in part, based
    on such factors as the Administrator may determine. In addition, the Administrator may at any time, in whole or in part, accelerate
    the exercisability of any Stock Option, provided that the Administrator shall not accelerate the exercise date of any
    installment of any Incentive Stock Option (and not previously converted into a Non-Qualified Stock Option pursuant to Section
    9(g)) if such acceleration would violate the annual exercisability limitation contained in Section 422(d) of the Code, as
    described in subsection (f) below. 

 

    	 

    

    

 

	(e)	Method
    of Exercise. Subject to the provisions of this Section 4, Stock Options may be exercised, in whole or in part, at any
    time during the option term by giving written notice of exercise to the Company or its designee specifying the number of shares
    of Stock subject to the Stock Option to be purchased and by complying with any other condition(s) set forth in the option
    agreement. 

 

Unless
the Company shall designate the Stock Option to be eligible for “cashless exercise” (to the extent permitted by applicable
law) and shall designate the terms and procedures for such “cashless exercise”, the option price of any Stock Option
shall be paid in full in cash (by certified or bank check or such other instrument as the Company may accept) or, unless otherwise
provided in the applicable option agreement, by one or more of the following: (i) in the form of unrestricted Stock already owned
by the Optionee (or, in the case of the exercise of a Non-Qualified Stock Option, Restricted Stock subject to a Stock Award hereunder)
held for at least 6 months based in any such instance on the Fair Market Value of the Stock on the date the Stock Option is exercised;
(ii) by certifying ownership of shares of Stock owned by the Optionee to the satisfaction of the Administrator for later delivery
to the Company as specified by the Company; (iii) unless otherwise prohibited by law for either the Company or the Optionee, by
irrevocably authorizing a third party to sell shares of Stock (or a sufficient portion of the shares) acquired upon exercise of
the Stock Option and remit to the Company a sufficient portion of the sale proceeds to pay the entire exercise price and any tax
withholding resulting from such exercise; or (iv) by any combination of cash and/or any one or more of the methods specified in
clauses (i), (ii) and (iii). Notwithstanding the foregoing, the Administrator shall accept only such payment on exercise of an
Incentive Stock Option as is permitted by Section 422 of the Code, and a form of payment shall not be permitted to the extent
it would cause the Company to recognize a compensation expense (or additional compensation expense) with respect to the Stock
Option for financial reporting purposes.

 

If
payment of the option exercise price of a Non-Qualified Stock Option is made in whole or in part in the form of Restricted Stock,
the number of shares of Stock to be received upon such exercise equal to the number of shares of Restricted Stock used for payment
of the option exercise price shall be subject to the same forfeiture restrictions to which such Restricted Stock was subject,
unless otherwise determined by the Administrator.

 

No
shares of Stock shall be issued upon exercise of a Stock Option until full payment therefor has been made. Upon exercise of a
Stock Option (or a portion thereof), the Company shall have a reasonable time to issue the Stock for which the Stock Option has
been exercised, and the Optionee shall not be treated as a stockholder for any purposes whatsoever prior to such issuance. No
adjustment shall be made for cash dividends or other rights for which the record date is prior to the date such Stock is recorded
as issued and transferred in the Company’s official stockholder records, except as otherwise provided herein or in the applicable
option agreement.

 

	(f)	Limitation
    on Yearly Exercise for Incentive Stock Options. The option agreements shall restrict the amount of Incentive Stock Options
    which may become exercisable in any calendar year (under this or any other Incentive Stock Option plan of the Company or an
    Affiliate) so that the aggregate Fair Market Value (determined at the time each Incentive Stock Option is granted) of the
    Stock with respect to which Incentive Stock Options are exercisable for the first time by the Optionee in any calendar year
    does not exceed $100,000. 
	 	 
	(g)	Transferability
    of Stock Options. Except as otherwise provided in the applicable option agreement, a Non-Qualified Stock Option (i) shall
    be transferable by the Optionee to a Family Member of the Optionee, provided that (A) any such transfer shall be by gift with
    no consideration and (B) no subsequent transfer of such Stock Option shall be permitted other than by will or the laws of
    descent and distribution, and (ii) shall not otherwise be transferable except by will or the laws of descent and distribution.
    An Incentive Stock Option shall not be transferable except by will or the laws of descent and distribution. A Stock Option
    shall be exercisable, during the Optionee’s lifetime, only by the Optionee or by the guardian or legal representative
    of the Optionee, it being understood that the terms “holder” and “Optionee” include the guardian and
    legal representative of the Optionee named in the applicable option agreement and any person to whom the Stock Option is transferred
    (X) pursuant to the first sentence of this Section 4(e) or pursuant to the applicable option agreement or (Y) by will or the
    laws of descent and distribution. Notwithstanding the foregoing, references herein to the termination of an Optionee’s
    employment or provision of services shall mean the termination of employment or provision of services of the person to whom
    the Stock Option was originally granted. 

 

    	 

    

    

 

	(h)	Termination
    by Death. Unless otherwise provided in the applicable option agreement, if an Optionee’s employment or provision
    of services terminates by reason of death, any Stock Option held by such Optionee may thereafter be exercised by the Participant’s
    Representative (i) to the extent that the Stock Option has become exercisable but has not been exercised on the date of death
    and (ii) in the event rights to exercise the Stock Option accrue periodically, to the extent of a pro-rata portion through
    the date of death of any additional vesting rights that would have accrued on the next vesting date had the Participant not
    died. The proration shall be based upon the number of days accrued in the current vesting period prior to the Participant’s
    date of death. If the Participant’s Representative wishes to exercise the Stock Option, the Representative must take
    all necessary steps to exercise the Option within one year after the date of death of such Participant, notwithstanding that
    the Participant might have been able to exercise the Option as to some or all of the shares on a later date if the Participant
    had not died and had continued to be an officer, employee, director or consultant or, if earlier, within the originally prescribed
    term of the Stock Option. In the event of termination of employment or provision of services due to death, if an Incentive
    Stock Option is exercised after the expiration of the exercise periods that apply for purposes of Section 422 of the Code,
    such Stock Option will thereafter be treated as a Non-Qualified Stock Option. 
	 	 
	 (i)	Termination
    by Reason of Disability. Unless otherwise provided in the applicable option agreement, if an Optionee’s employment
    or provision of services terminates by reason of Disability, any Stock Option held by such Optionee may thereafter be exercised
    by the Optionee (i) to the extent that the Stock Option has become exercisable but has not been exercised on the date of Disability;
    and (ii) in the event rights to exercise the Stock Option accrue periodically, to the extent of a pro rata portion through
    the date of Disability of any additional vesting rights that would have accrued on the next vesting date had the Participant
    not become Disabled. The proration shall be based upon the number of days accrued in the current vesting period prior to the
    date of Disability. A Disabled Participant may exercise such rights only within the period ending one year after the date
    of the Participant’s termination of employment, directorship or consultancy, as the case may be, notwithstanding that
    the Participant might have been able to exercise the Option as to some or all of the shares on a later date if the Participant
    has not become Disabled and had continued to be an officer, employee, director or consultant or, if earlier, within the originally
    prescribed term of the Stock Option. In the event of termination of employment or provision of services by reason of Disability,
    if an Incentive Stock Option is exercised after the expiration of the exercise periods that apply for purposes of Section
    422 of the Code, such Stock Option will thereafter be treated as a Non-Qualified Stock Option. 
	 	 
	(j)	Termination
    for Cause. Unless otherwise provided in the applicable option agreement, if an Optionee’s employment or services
    terminate for Cause, all outstanding and unexercised Stock Options as of the time the Optionee is notified that such Optionee’s
    employment or services are terminated for Cause will immediately be cancelled. 
	 	 
	(k)	Other
    Termination. Unless otherwise provided in the applicable option agreement, if an Optionee’s employment or provision
    of services terminates for any reason other than death, Disability or Cause, the Optionee may exercise any Stock Option granted
    to the Optionee to the extent that the Stock Option is exercisable on the date of such termination for up to three months
    following such termination, but only within such term as the Administrator has designated in the Optionee’s option agreement.
    The provisions of this Section 5(k), and not the provisions of Sections 5(h) and 5(i), shall apply to an Optionee who subsequently
    becomes Disabled or dies after the termination of employment or service; provided, however, that in the case of an Optionee’s
    Disability or death within three months after the termination of service, the Optionee or the Optionee’s survivors may
    exercise the Stock Option within one year after the date of the Optionee’s termination of service, but in no event after
    the date of expiration of the term of the Stock Option. Notwithstanding anything in this Section 5(k) to the contrary, if
    subsequent to an Optionee’s termination of employment or services, but prior to the exercise of a Stock Option, the
    Administrator determines that, either prior to or subsequent to the Optionee’s termination of employment or services,
    the Optionee engaged in conduct that would constitute Cause, then such Optionee shall cease to have any right to exercise
    such Stock Option. An Optionee who is absent from work with the Company or an Affiliate because of temporary disability (any
    disability other than a permanent and total Disability), or who is on leave of absence for any purpose, shall not, during
    the period of any such absence, be deemed, by virtue of such absence alone, to have terminated such Optionee’s service
    with the Company or with an Affiliate, except as the Administrator may otherwise expressly provide. Except as required by
    law or as set forth in the Optionee’s option agreement, Stock Options granted under the Plan shall not be affected by
    any change of an Optionee’s status within or among the Company and any Affiliates, so long as the Optionee continues
    to be an officer, employee, director or consultant of the Company or any Affiliate. In the event of termination of services
    for any reason other than death, Disability or Cause, if an Incentive Stock Option is exercised after the expiration of the
    exercise periods that apply for purposes of Section 422 of the Code, such Stock Option will thereafter be treated as a Non-Qualified
    Stock Option. 

 

    	 

    

    

 

6.
STOCK APPRECIATION RIGHTS.

 

Stock
Appreciation Rights may be granted either on a stand-alone basis or in conjunction with all or part of any Stock Option granted
under the Plan. In the case of a Non-Qualified Stock Option, such rights may be granted either at or after the time of grant of
such Stock Option. In the case of an Incentive Stock Option, such rights may be granted only at the time of grant of such Stock
Option. A Stock Appreciation Right shall terminate and no longer be exercisable as determined by the Administrator, or, if granted
in conjunction with all or part of any Stock Option, upon the termination or exercise of the related Stock Option.

 

A
Stock Appreciation Right may be exercised by a Participant as determined by the Administrator in accordance with this Section
6, and, if granted in conjunction with all or part of any Stock Option, by surrendering the applicable portion of the related
Stock Option in accordance with procedures established by the Administrator. Upon such exercise and surrender, the Participant
shall be entitled to receive an amount determined in the manner prescribed in this Section 6. Stock Options which have been so
surrendered, if any, shall no longer be exercisable to the extent the related Stock Appreciation Rights have been exercised.

 

Stock
Appreciation Rights shall be subject to such terms and conditions as shall be determined by the Administrator, including the following:

 

	(a)	Stock
    Appreciation Rights granted on a stand-alone basis shall be exercisable only at such time or times and to such extent as determined
    by the Administrator. Stock Appreciation Rights granted in conjunction with all or part of any Stock Option shall be exercisable
    only at the time or times and to the extent that the Stock Options to which they relate are exercisable in accordance with
    the provisions of Section 5 and this Section 6. 
	 	 
	(b)	Upon
    the exercise of a Stock Appreciation Right, a Participant shall be entitled to receive an amount in cash, shares of Stock
    or both, which in the aggregate are equal in value to the excess of the Fair Market Value of one share of Stock over (i) such
    Fair Market Value per share of Stock as shall be determined by the Administrator at the time of grant (if the Stock Appreciation
    Right is granted on a stand-alone basis), or (ii) the exercise price per share specified in the related Stock Option (if the
    Stock Appreciation Right is granted in conjunction with all or part of any Stock Option), multiplied by the number of shares
    in respect of which the Stock Appreciation Right shall have been exercised, with the Administrator having the right to determine
    the form of payment. 
	 	 
	(c)	A
    Stock Appreciation Right shall be transferable only to, and shall be exercisable only by, such persons permitted in accordance
    with Section 5(g). 

 

7.
STOCK AWARDS OTHER THAN OPTIONS.

 

Stock
Awards may be directly issued under the Plan (without any intervening options), subject to such terms, conditions, performance
requirements, restrictions, forfeiture provisions, contingencies and limitations as the Administrator shall determine. Stock Awards
may be issued which are fully and immediately vested upon issuance or which vest in one or more installments over the Participant’s
period of employment or other service to the Company or upon the attainment of specified performance objectives, or the Company
may issue Stock Awards which entitle the Participant to receive a specified number of vested shares of Stock or cash, as determined
by the Administrator, upon the attainment of one or more performance goals or service requirements established by the Administrator.

 

    	 

    

    

 

The
principal terms of each Stock Award shall be set forth in a stock grant agreement, which shall be in a form approved by the Administrator
and shall contain the terms and conditions which the Administrator determines to be appropriate and in the best interests of the
Company, including the number of shares to which the Stock Award relates.

 

Shares
representing a Stock Award shall be evidenced in such manner as the Administrator may deem appropriate, including book-entry registration
or issuance of one or more certificates (which may bear appropriate legends referring to the terms, conditions and restrictions
applicable to such Award). The Administrator may require that any such certificates be held in custody by the Company until any
restrictions thereon shall have lapsed and that the Participant deliver a stock power, endorsed in blank, relating to the Stock
covered by such Award.

 

A
Stock Award may be issued in exchange for any consideration which the Administrator may deem appropriate in each individual instance,
including, without limitation:

 

	(a)	cash
    or cash equivalents; 
	 	 
	(b)	past
    services rendered to the Company or any Affiliate; or 
	 	 
	(c)	future
    services to be rendered to the Company or any Affiliate (provided that, in such case, the par value of the Stock subject to
    such Stock Award shall be paid in cash or cash equivalents, unless the Administrator provides otherwise). 

 

A
Stock Award that is subject to restrictions on transfer and/or forfeiture provisions may be referred to as an award of “Restricted
Stock” or “Restricted Stock Units.”

 

8.
CHANGE IN CONTROL PROVISIONS.

 

	(a)	Impact
    of Event. Notwithstanding any other provision of the Plan to the contrary, in the event of a Change in Control: 

 

	 	(i)	Any
    Stock Options and Stock Appreciation Rights outstanding as of the date such Change in Control is determined to have occurred
    and not then exercisable and vested shall become fully exercisable and vested to the full extent of the original grant; 
	 	 	 
	 	(ii)	The restrictions applicable to any outstanding
    Stock Award shall lapse, and the Stock relating to such Award shall become free of all restrictions and become fully vested
    and transferable to the full extent of the original grant; 
	 	 	 
	 	(iii)	All outstanding repurchase rights of the Company
    with respect to any outstanding Awards shall terminate; and 
	 	 	 
	 	(iv)	Outstanding Awards shall be subject to any agreement
    of merger or reorganization that effects such Change in Control, which agreement shall provide for: 

 

	 	(A)	The continuation of the outstanding Awards by
    the Company, if the Company is a surviving corporation, 
	 	 	 
	 	(B)	The assumption of the outstanding awards by
    the surviving corporation or its parent or subsidiary; 
	 	 	 
	 	(C)	The substitution by the surviving corporation
    or its parent or subsidiary of equivalent awards for the outstanding Awards; or 

 

    	 

    

    

 

	 	(D)	Settlement of each share of Stock subject to
    an outstanding Award for the Change in Control Price (less, to the extent applicable, the per share exercise price). 
	 	 	 
	 	(v)	In the absence of any agreement of merger or
    reorganization effecting such Change in Control, each share of Stock subject to an outstanding Award shall be settled for
    the Change in Control Price (less, to the extent applicable, the per share exercise price), or, if the per share exercise
    price equals or exceeds the Change in Control Price, the outstanding Award shall terminate and be canceled. 

 

	 (b)	Definition of Change in Control. For
    purposes of the Plan, a “Change in Control” shall mean the happening of any of the following events: 

 

	 	(i)	An acquisition by any individual, entity or
    group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership
    (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of either (1) the then outstanding shares
    of common stock of the Company (the “Outstanding Company Common Stock”) or (2) the combined voting power of the
    then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding
    Company Voting Securities”); excluding, however, the following: (1) any acquisition directly from the Company, other
    than an acquisition by virtue of the exercise of a conversion privilege unless the security being so converted was itself
    acquired directly from the Company, (2) any acquisition by the Company; (3) any acquisition by any employee benefit plan (or
    related trust) sponsored or maintained by the Company or any corporation controlled by the Company; or (4) any acquisition
    by any Person pursuant to a transaction which complies with clauses (1), (2) and (3) of subsection (iii) of this Section 8(b);
    or 
	 	 	 
	 	(ii)	Within any period of 24 consecutive months,
    a change in the composition of the Board such that the individuals who, immediately prior to such period, constituted the
    Board (such Board shall be hereinafter referred to as the “Incumbent Board”) cease for any reason to constitute
    at least a majority of the Board; provided, however, for purposes of this Section 8(b), that any individual who becomes a
    member of the Board during such period, whose election, or nomination for election by the Company’s stockholders, was
    approved by a vote of at least a majority of those individuals who are members of the Board and who were also members of the
    Incumbent Board (or deemed to be such pursuant to this proviso) shall be considered as though such individual were a member
    of the Incumbent Board; but, provided further, that any such individual whose initial assumption of office occurs as a result
    of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under
    the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than
    the Board shall not be so considered as a member of the Incumbent Board; or 
	 	 	 
	 	(iii)	The consummation by the Company of a reorganization,
    merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (“Corporate
    Transaction”); excluding, however, such a Corporate Transaction pursuant to which (1) all or substantially all of the
    individuals and entities who are the beneficial owners, respectively, of the outstanding Company Common Stock and Outstanding
    Company Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more
    than 50% of, respectively, the outstanding shares of common stock, and the combined voting power of the then outstanding voting
    securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from
    such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company
    or all or substantially all of the Company’s assets, either directly or through one or more subsidiaries) in substantially
    the same proportions as their ownership, immediately prior to such Corporate Transaction, of the outstanding Company Common
    Stock and Outstanding Company Voting Securities, as the case may be, (2) no Person (other than the Company; any employee benefit
    plan (or related trust) sponsored or maintained by the Company, by any corporation controlled by the Company, or by such corporation
    resulting from such Corporate Transaction) will beneficially own, directly or indirectly, more than 50% of, respectively,
    the outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting
    power of the outstanding voting securities of such corporation entitled to vote generally in the election of directors, except
    to the extent that such ownership existed with respect to the Company prior to the Corporate Transaction, and (3) individuals
    who were members of the Board immediately prior to the approval by the stockholders of the Corporation of such Corporate Transaction
    will constitute at least a majority of the members of the board of directors of the corporation resulting from such Corporate
    Transaction; or 

 

    	 

    

    

 

	 	(iv)	The approval by the stockholders of the Company
    of a complete liquidation or dissolution of the Company, other than to a corporation pursuant to a transaction which would
    comply with clauses (1), (2) and (3) of subsection (iii) of this Section 8(b), assuming for this purpose that such transaction
    were a Corporate Transaction. 

 

	(c)	Change in Control Price. For purposes
    of the Plan, “Change in Control Price” means the higher of (i) the highest reported sales price, regular way,
    of a share of Stock in any transaction reported on any securities exchange or listing service on which such shares are listed
    during the 60-day period prior to and including the date of a Change in Control, or if the Stock is not publicly quoted, the
    Fair Market Value determined by the Administrator and (ii) if the Change in Control is the result of a tender or exchange
    offer or a Corporate Transaction, the highest price per share of Stock paid in such tender or exchange offer or Corporate
    Transaction. To the extent that the consideration paid in any such transaction described above consists all or in part of
    securities or other non-cash consideration, the value of such securities or other non-cash consideration shall be determined
    in the sole discretion of the Board. 

 

9.
MISCELLANEOUS.

 

	(a)	Amendment. The Board may amend or alter
    the Plan or any Award, but no amendment or alteration shall be made which would adversely affect the rights of a Participant
    under an Award theretofore granted without the Participant’s consent, except such an amendment (i) made to avoid an
    expense charge to the Company or an Affiliate, or (ii) made to permit the Company or an Affiliate to claim a deduction under,
    or otherwise comply with, the Code (including, but not limited to, Section 409A of the Code). No such amendment shall be made
    without the approval of the Company’s stockholders to the extent such approval is required by law, agreement or the
    rules of any stock exchange or market on which the Stock is listed. 

 

The
Administrator may amend the terms of any Stock Option or other Award theretofore granted, prospectively or retroactively, but
no such amendment shall adversely affect the rights of the holder thereof without the holder’s consent.

 

Notwithstanding
anything in the Plan to the contrary, neither the Board nor a Committee may (i) amend a Stock Option to reduce its option price,
(ii) cancel a stock option and re-grant a Stock Option with a lower option price that the option price of the cancelled Stock
option or (iii) take any other action (whether in the form of an amendment, cancellation or replacement grant) that has the effect
of repricing a Stock Option.

 

	(b)	Termination of the Plan. The Plan will
    terminate on the date which is 10 years from the earlier of the date of its adoption by the Board and the date of its approval
    by the stockholders. The Plan may be terminated at an earlier date by vote of the stockholders or the Board; provided, however,
    that any such earlier termination shall not affect any option agreements, Stock Appreciation Right agreements or Stock Award
    agreements executed prior to the effective date of such termination. 
	 	 
	(c)	Unfunded Status of Plan. It is intended
    that this Plan be an “unfunded” plan for incentive and deferred compensation. The Administrator may authorize
    the creation of trusts or other arrangements to meet the obligations created under this Plan to deliver Common Stock or make
    payments, provided that, unless the Administrator otherwise determines, the existence of such trusts or other arrangements
    is consistent with the “unfunded” status of this Plan. 
	 	 
	(d)	Rights as a Shareholder: No Participant
    to whom an Award has been granted shall have rights as a shareholder with respect to any shares covered by such Award, except
    after due exercise of the Stock Option or Stock Appreciation Right or vesting of the Stock Award and tender of the full purchase
    price, if any, for the shares being purchased pursuant to such exercise or award and registration of the shares in the Company’s
    share register in the name of the Participant. 
	 	 
	(e)	Issuance of Securities: Except as expressly
    provided herein, no issuance by the Company of shares of Stock of any class, or securities convertible into shares of stock
    of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares
    subject to Awards. Except as expressly provided herein, no adjustments shall be made for dividends paid in cash or in property
    (including without limitation, securities) of the Company prior to any issuance of shares pursuant to an Award.

 

    	 

    

    

 

	(f)	Fractional Shares: No fractional shares
    shall be issued under the Plan and the Company shall pay cash in lieu of fractional shares equal to the Fair Market Value
    of such fractional shares. 
	 	 
	(g)	Conversion of Incentive Stock Options into
    Non-Qualified Stock Options; Termination of Incentive Stock Options: The Administrator, at the written request of any
    Participant, may in its discretion take such actions as may be necessary to convert such Participant’s Incentive Stock
    Options (or any portions thereof) that have not been exercised on the date of conversion into Non-Qualified Stock Options
    at any time prior to the expiration of such Incentive Stock Options, regardless of whether the Participant is an employee
    of the Company or a Subsidiary at the time of such conversion. At the time of such conversion, the Administrator (with the
    consent of the Participant) may impose such conditions on the exercise of the resulting Non-Qualified Stock Options as the
    Administrator, in its discretion may determine, provided that such conditions shall not be inconsistent with this Plan. Nothing
    in the Plan shall be deemed to give any Participant the right to have such Participant’s Incentive Stock Options converted
    into Non-Qualified Stock Options, and no such conversion shall occur until and unless the Administrator takes appropriate
    action. The Administrator, with the consent of the Participant, may also terminate any portion of any Incentive Stock Option
    that has not been exercised at the time of such conversion. 
	 	 
	(h)	Notice to Company of Disqualifying Disposition:
    Each employee who receives an Incentive Stock Option must agree to notify the Company in writing immediately after the
    employee makes a “Disqualifying Disposition” of any shares acquired pursuant to the exercise of an Incentive Stock
    Option. A “Disqualifying Disposition” is defined in Section 424(c) of the Code and includes any disposition (including
    any sale or gift) of such shares before the later of (i) two years after the date the employee was granted the Incentive Stock
    Option, or (ii) one year after the date the employee acquired shares by exercising the Incentive Stock Option, except as otherwise
    provided in Section 424(c) of the Code. If the employee has died before such stock is sold, these holding period requirements
    do not apply and no Disqualifying Disposition can occur thereafter. 

 

	(i)	General Provisions. 

 

	 	(i)	The Administrator may require each person purchasing
    or receiving shares pursuant to an Award to represent to and agree with the Company in writing that such person is acquiring
    the shares without a view to the distribution thereof. The certificates for such shares may include any legend which the Administrator
    deems appropriate to reflect any restrictions on transfer. 

 

All
certificates for shares of Stock or other securities delivered under the Plan shall be subject to such stock transfer orders and
other restrictions as the Administrator may deem advisable under the rules, regulations and other requirements of the Commission,
any stock exchange or market on which the Stock is then listed and any applicable Federal or state securities law, and the Administrator
may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.

 

	 	(ii)	Nothing contained in the Plan shall prevent
    the Company or any Affiliate from adopting other or additional compensation arrangements for its employees. 
	 	 	 
	 	(iii)	The adoption of the Plan shall not confer upon
    any employee, director consultant or advisor any right to continued employment, directorship or service, nor shall it interfere
    in any way with the right of the Company or any Affiliate to terminate the employment or service of any employee, consultant
    or advisor at any time. 
	 	 	 
	 	(iv)	No later than the date as of which an amount
    first becomes includible in the gross income of the Participant for Federal income tax purposes with respect to any Award
    under the Plan, the Participant shall pay to the Company, or make arrangements satisfactory to the Company regarding the payment
    of, any Federal, state, local or foreign taxes of any kind required by law to be withheld with respect to such amount. Unless
    otherwise determined by the Administrator, withholding obligations may be settled with Stock, including Stock that is part
    of the Award that gives rise to the withholding requirement. The obligations of the Company under the Plan shall be conditional
    on such payment or arrangements, and the Company, its Subsidiaries and its Affiliates shall, to the extent permitted by law,
    have the right to deduct any such taxes from any payment otherwise due to the Participant. The Administrator may establish
    such procedures as it deems appropriate for the settlement of withholding obligations with Stock.

 

    	 

    

    

 

	 	(v)	The Administrator shall establish such procedures
    as it deems appropriate for a Participant to designate a beneficiary to whom any amounts payable in the event of the Participant’s
    death are to be paid. 
	 	 	 
	 	(vi)	Any amounts owed to the Company or an Affiliate
    by the Participant of whatever nature may be offset by the Company from the value of any shares of Common Stock, cash or other
    thing of value under this Plan or an agreement to be transferred to the Participant, and no shares of Common Stock, cash or
    other thing of value under this Plan or an agreement shall be transferred unless and until all disputes between the Company
    and the Participant have been fully and finally resolved and the Participant has waived all claims to such against the Company
    or an Affiliate. 
	 	 	 
	 	(vii)	The grant of an Award shall in no way affect
    the right of the Company to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge,
    consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets. 
	 	 	 
	 	(viii)	If any payment or right accruing to a Participant
    under this Plan (without the application of this Section (9)(c)(viii)), either alone or together with other payments or rights
    accruing to the Participant from the Company or an Affiliate (“Total Payments”) would constitute a “parachute
    payment” (as defined in Section 280G of the Code and regulations thereunder), such payment or right shall be reduced
    to the largest amount or greatest right that will result in no portion of the amount payable or right accruing under this
    Plan being subject to an excise tax under Section 4999 of the Code or being disallowed as a deduction under Section 280G of
    the Code; provided, however, that the foregoing shall not apply to the extent provided otherwise in an Award or in the event
    the Participant is party to an agreement with the Company or an Affiliate that explicitly provides for an alternate treatment
    of payments or rights that would constitute “parachute payments.” The determination of whether any reduction in
    the rights or payments under this Plan is to apply shall be made by the Administrator in good faith after consultation with
    the Participant, and such determination shall be conclusive and binding on the Participant. The Participant shall cooperate
    in good faith with the Administrator in making such determination and providing the necessary information for this purpose.
    The foregoing provisions of this Section 9(c)(viii) shall apply with respect to any person only if, after reduction for any
    applicable Federal excise tax imposed by Section 4999 of the Code and Federal income tax imposed by the Code, the Total Payments
    accruing to such person would be less than the amount of the Total Payments as reduced, if applicable, under the foregoing
    provisions of this Plan and after reduction for only Federal income taxes.
	 	 	 
	 	(ix)	To the extent that the Administrator determines
    that the restrictions imposed by the Plan preclude the achievement of the material purposes of the Awards in jurisdictions
    outside the United States, the Administrator in its discretion may modify those restrictions as it determines to be necessary
    or appropriate to conform to applicable requirements or practices of jurisdictions outside of the United States. 
	 	 	 
	 	(x)	The headings contained in this Plan are for
    reference purposes only and shall not affect the meaning or interpretation of this Plan. 
	 	 	 
	 	(xi)	If any provision of this Plan shall for any
    reason be held to be invalid or unenforceable, such invalidity or unenforceability shall not effect any other provision hereby,
    and this Plan shall be construed as if such invalid or unenforceable provision were omitted. 
	 	 	 
	 	(xii)	This Plan shall inure to the benefit of and
    be binding upon each successor and assign of the Company. All obligations imposed upon a Participant, and all rights granted
    to the Company hereunder, shall be binding upon the Participant’s heirs, legal representatives and successors 

 

    	 

    

    

 

	 	(xiii)	This Plan and each agreement granting an Award
    constitute the entire agreement with respect to the subject matter hereof and thereof, provided that in the event of any inconsistency
    between this Plan and such agreement, the terms and conditions of the Plan shall control 
	 	 	 
	 	(xiv)	In the event there is an effective registration
    statement under the Securities Act pursuant to which shares of Stock shall be offered for sale in an underwritten offering,
    a Participant shall not, during the period requested by the underwriters managing the registered public offering, effect any
    public sale or distribution of shares of Stock received, directly or indirectly, as an Award or pursuant to the exercise or
    settlement of an Award. 
	 	 	 
	 	(xv)	None of the Company, an Affiliate or the Administrator
    shall have any duty or obligation to disclose affirmatively to a record or beneficial holder of Stock or an Award, and such
    holder shall have no right to be advised of, any material information regarding the Company or any Affiliate at any time prior
    to, upon or in connection with receipt or the exercise of an Award or the Company’s purchase of Stock or an Award from
    such holder in accordance with the terms hereof. 
	 	 	 
	 	(xvi)	This Plan, and all Awards, agreements and actions
    hereunder, shall be governed by, and construed in accordance with, the laws of the state of Nevada (other than its law respecting
    choice of law). 

 

	(j)	Compliance
        with Section 409A of the Code. The Plan is intended to comply with Section 409A of the Code, and official guidance
        issued thereunder, to the extent applicable. Notwithstanding any provision of the Plan to the contrary, the Plan shall
        be interpreted, operated, and administered consistently with this intent.

         

        Adopted
        by the Board of Directors and Shareholders as of July 27, 2016Stem
holdings, INC.

 

AND

 

patch
international inc.

 

 

 

ARRANGEMENT
AGREEMENT

 

 

 

November
11, 2016

 

    	 		 

    	 	- 2 -	 

    

 

TABLE
OF CONTENTS

 

	Article
    1 INTERPRETATION	4
	 	 
	1.1	Definitions	4
	1.2	Interpretation
    Not Affected by Headings, etc.	16
	1.3	Number,
    etc.	16
	1.4	Capitalized
    Terms	16
	1.5	Date
    for Any Action	16
	1.6	Entire
    Agreement	16
	1.7	Currency	16
	1.8	Certain
    Phrases and References, etc.	16
	1.9	Accounting
    Matters	16
	1.10	Disclosure
    in Writing	17
	1.11	References
    to Legislation	17
	1.12	Enforceability	17
	1.13	Knowledge	17
	1.14	Interpretation
    Not Affected by Party Drafting	17
	1.15	Schedules	17
	 	 	 
	Article
    2 THE ARRANGEMENT AND MEETING	18
	 	 
	2.1	Plan
    of Arrangement	18
	2.2	Interim
    Order, Final Order, etc.	18
	2.3	Patch
    Meeting and Circular	19
	2.4	Court
    Proceedings	22
	2.5	Patch
    Board Recommendation	22
	2.6	Regulatory
    Matters	22
	2.7	Treatment
    of Patch Exchangeable Shares, the Patch Class “A” Preferred Share and the Patch Class “B” Preferred
    Share	23
	2.8	Officers
    and Employees	23
	2.9	Public
    Communications	23
	2.10	Indemnities
    and Directors’ and Officers’ Insurance	23
	2.11	Tax
    Withholdings	24
	2.12	Articles
    of Arrangement	24
	2.13	Closing	24
	2.14	Effective
    Date	24
	2.15	U.S.
    Securities Laws	25
	2.16	List
    of Securityholders	25
	2.17	Patch
    Energy Disposition	25
	2.18	Patch
    Note	25

 

    	 		 

    	 	- 3 -	 

    

 

	Article
    3 COVENANTS	26
	 	 
	3.1	Covenants
    of the Purchaser	26
	3.2	Covenants
    of Patch	26
	3.3	Mutual
    Covenants Regarding the Arrangement	32
	3.4	Patch’s
    Covenants Regarding Non-Solicitation	33
	3.5	Access
    to Information	37
	3.6	Resignations	37
	 	 	 
	Article
    4 REPRESENTATIONS AND WARRANTIES	38
	 	 
	4.1	Representations
    and Warranties of the Purchaser	38
	4.2	Representations
    and Warranties of Patch	38
	 	 	 
	Article
    5 CONDITIONS PRECEDENT	38
	 	 
	5.1	Mutual
    Conditions Precedent	38
	5.2	Additional
    Conditions to Obligations of the Purchaser	39
	5.3	Additional
    Conditions to Obligations of Patch	41
	5.4	Notice
    and Effect of Failure to Comply with Conditions	42
	5.5	Satisfaction
    of Conditions	43
	 	 	 
	Article
    6 AMENDMENT	43
	 	 
	6.1	Amendment	43
	6.2	Waiver	43
	 	 	 
	Article
    7 TERMINATION	44
	 	 
	7.1	Termination	44
	7.2	Effect
    of Termination/Survival	46
	 	 	 
	Article
    8 NOTICES	46
	 	 
	8.1	Notices	46
	 	 	 
	Article
    9 GENERAL	47
	 	 
	9.1	Assignment
    and Enurement	47
	9.2	Costs	47
	9.3	Severability	47
	9.4	Further
    Assurances	48
	9.5	Time
    of Essence	48
	9.6	Governing
    Law	48
	9.7	Third
    Party Beneficiaries	48
	9.8	Injunctive
    Relief	48
	9.9	Counterparts	48
	9.10	Survival	48

 

SCHEdULES

SCHEDULE
A – PLAN OF ARRANGEMENT

SCHEDULE
B – ARRANGEMENT RESOLUTION

SCHEDULE
C – REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

SCHEDULE
D – REPRESENTATIONS AND WARRANTIES OF PATCH

 

    	 		 

    	 	- 4 -	 

    

 

ARRANGEMENT
AGREEMENT

 

THIS
ARRANGEMENT AGREEMENT is dated as of the 11th day of November, 2016

 

BETWEEN:

 

STEM
HOLDINGS, INC., a corporation existing under the laws of the State of Nevada (the “Purchaser”)

 

-
and -

 

PATCH
INTERNATIONAL INC., a corporation existing under the laws of the Province of Alberta (“Patch”)

 

WHEREAS
the Parties wish to propose an arrangement involving Patch and the Patch Common Shareholders whereby the Purchaser will acquire
all of the issued and outstanding Patch Common Shares;

 

AND
WHEREAS the Parties intend to carry out the transactions contemplated by this Agreement by way of an arrangement under the
provisions of the ABCA;

 

NOW
THEREFORE, in consideration of the covenants and agreements herein contained and other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged), the Parties do hereby covenant and agree as follows:

 

Article
1

INTERPRETATION

 

1.1
Definitions

 

In
this Agreement, including the recitals hereto, unless there is something in the context or subject matter inconsistent therewith,
the following defined terms have the meanings hereinafter set forth:

 

	 	(a)	“42nd
    Street Lease” means the one or more leases to be entered into between the Purchaser and the owner of the 42nd
    Street Property.
	 	 	 
	 	(b)	“42nd
    Street Property” means the warehouse facility located at 800 N. 42nd Street in Springfield, Oregon
    as described in the Acquisition Agreement.
	 	 	 
	 	(c)	“42nd
    Street Sublease” means the sublease to be entered into between the Purchaser and Opco relating to the 42nd
    Street Property.
	 	 	 
	 	(d)	“ABCA”
    means the Business Corporations Act (Alberta).
	 	 	 
	 	(e)	“Acquisition
    Agreement” means the amended and restated agreement dated October 24, 2016 among the Purchaser, Oregon LLC, Gated
    LLC, Kind LLC and Never LLC.

 

    	 		 

    	 	- 5 -	 

    

 

	 	(f)	“Acquisition
    Proposal” means other than the transactions contemplated by this Agreement, any offer, proposal or inquiry (written
    or oral) from any person or group of persons “acting jointly or in concert” (within the meaning of MI 62-104)
    other than the Purchaser relating to: (i) any direct or indirect sale or disposition (or any lease or other arrangement having
    the same economic effect as a sale), in a single transaction or a series of related transactions, of assets representing 20%
    or more of the consolidated assets of Patch and its subsidiaries; (ii) any direct or indirect take-over bid, tender offer,
    exchange offer, treasury issuance or other transaction that, if consummated, would result in a person or group of persons
    “acting jointly or in concert” (within the meaning of MI 62-104) beneficially owning 20% or more of any class
    of voting or equity securities (including securities convertible into or exercisable or exchangeable for such securities)
    of Patch; (iii) any plan of arrangement, merger, amalgamation, consolidation, share exchange, business combination, reorganization,
    recapitalization, liquidation, dissolution or winding up involving Patch or any of its material subsidiaries; or (iv) any
    other similar transaction or series of transactions involving Patch or any of its subsidiaries, the consummation of which
    would reasonably be expected to impede, interfere with, prevent or materially delay the Arrangement.
	 	 	 
	 	(g)	“Additional
    Consideration” means for each Patch Common Share held: (i) if any Patch Note Collection Proceeds are received on
    or before 10:00 a.m. (MT) on the third last Business Day prior to the Effective Date, the aggregate of each Patch Note Collection
    Payment Per Share; and (ii) if the Patch Note Collection has not been completed in full satisfaction of all amounts owing
    under the Patch Note on or before 10:00 a.m. (MT) on the third last Business Day prior to the Effective Date, one CVR.
	 	 	 
	 	(h)	“Affiliate”
    has the meaning ascribed thereto in the Securities Act.
	 	 	 
	 	(i)	“Aggregate
    Additional Consideration” means the aggregate amount of Additional Consideration to be paid to Patch Shareholders
    at the Effective Time.
	 	 	 
	 	(j)	“Aggregate
    Purchaser Share Consideration” means that number of Purchaser Shares as is equal to the quotient obtained when dividing
    the Patch Working Capital by the deemed price for each Purchaser Share, being US$2.40.
	 	 	 
	 	(k)	“Agreement”,
    “herein”, “hereof”, “hereto”, “hereunder” and
    similar expressions mean and refer to this Arrangement Agreement (including the schedules hereto) as supplemented, modified
    or amended, and not to any particular article, section, schedule or other portion hereof.
	 	 	 
	 	(l)	“Applicable
    Laws” means all laws (including common law), by-laws, statutes, rules, regulations, principles of law, orders, ordinances,
    protocols, codes, guidelines, policies, notices, directions and judgments or other requirements, and the terms and conditions
    of any grant, approval, permission, authority or license of any Governmental Authority, as are applicable to a Party or its
    business, undertaking, property or securities and emanate from a person having jurisdiction over the Party or its business,
    undertaking, property or securities. For greater clarity, “Applicable Laws” includes Securities Laws.

 

    	 		 

    	 	- 6 -	 

    

 

	 	(m)	“Arrangement”
    means an arrangement under Section 193 of the ABCA on the terms and subject to the conditions set out in the Plan of Arrangement,
    subject to any amendments or variations to the Plan of Arrangement made in accordance with the terms of this Agreement or
    made at the direction of the Court in the Final Order with the prior written consent of the Purchaser and Patch, each acting
    reasonably.
	 	 	 
	 	(n)	“Arrangement
    Resolution” means the special resolution to approve the Arrangement to be considered by the Patch Shareholders at
    the Patch Meeting, substantially in the form of Schedule “B”.
	 	 	 
	 	(o)	“Articles
    of Arrangement” means the articles of arrangement in respect of the Arrangement required under Section 193(10) of
    the ABCA to be filed with the Registrar after the Final Order has been granted giving effect to the Arrangement.
	 	 	 
	 	(p)	“Authorization”
    means, with respect to any person, any order, permit, approval, consent, waiver, licence or similar authorization of any Governmental
    Authority having jurisdiction over the person, including in the case of the Purchaser, the Material Permits.
	 	 	 
	 	(q)	“Business
    Day” means any day, other than Saturday, Sunday or a statutory holiday in the Province of Alberta.
	 	 	 
	 	(r)	“Canadian
    Securities Laws” means the Securities Act and any other applicable provincial securities laws.
	 	 	 
	 	(s)	“Certificate”
    means the certificate or proof of filing to be issued by the Registrar pursuant to Section 193(11) or (12) of the ABCA in
    respect of the Articles of Arrangement giving effect to the Arrangement.
	 	 	 
	 	 	 
	 	(t)	“Circular”
    means the notice of the Patch Meeting and the accompanying management proxy circular and proxy statement to be sent by Patch
    to the Patch Shareholders in connection with the Patch Meeting, together with all appendices, schedules and exhibits thereto
    and any financial statements contained therein, and any amendments or supplements thereto.
	 	 	 
	 	(u)	“Consideration”
    means for each Patch Common Share held: (i) the Purchaser Share Consideration, and (ii) the Additional Consideration.
	 	 	 
	 	(v)	“Court”
    means the Court of Queen’s Bench of Alberta.
	 	 	 
	 	(w)	“CVR”
    means a contingent value right of the Purchaser issued pursuant to the Rights Indenture and entitling the holder thereof to
    each Patch Note Collection Payment Per Share upon receipt of Patch Note Collection Proceeds at any time and from time to time
    after the Effective Time.
	 	 	 
	 	(x)	“Depositary”
    means Computershare Trust Company of Canada or such other person that may be appointed by the Purchaser for the purpose of
    receiving deposits of certificates formerly representing Patch Common Shares with the approval of Patch, acting reasonably.

 

    	 		 

    	 	- 7 -	 

    

 

	 	(y)	“Dissent
    Rights” means the rights of dissent made available to Patch Shareholders in respect of the Arrangement described
    in the Plan of Arrangement and the Interim Order.
	 	 	 
	 	(z)	“Effective
    Date” means the date the Arrangement becomes effective under the ABCA, being the date shown on the Certificate.
	 	 	 
	 	(aa)	“Effective
    Time” means 12:01 a.m. (Calgary time) on the Effective Date.
	 	 	 
	 	(bb)	“Encumbrance”
    means any mortgage, pledge, assignment for security, charge, lien, security interest, guarantee or other encumbrance or collateral
    securing the payment obligations of any person, and any agreement, right, privilege, or arrangement (whether by law, contract
    or otherwise) capable of becoming any of the foregoing.
	 	 	 
	 	(cc)	“Executive
    Officers” has the meaning ascribed thereto in Section 1.13.
	 	 	 
	 	(dd)	“Final
    Order” means the final order of the Court in a form acceptable to the Purchaser and Patch, each acting reasonably,
    approving the Arrangement pursuant to Section 193(9)(a) of the ABCA, as such order may be amended by the Court (with the consent
    of both the Purchaser and Patch, each acting reasonably) at any time prior to the Effective Date or, if appealed, then, unless
    such appeal is withdrawn or denied, as affirmed or as amended (provided that any such amendment is acceptable to both the
    Purchaser and Patch, each acting reasonably) on appeal.
	 	 	 
	 	(ee)	“GAAP”
    means the accounting principles generally accepted in Canada determined with reference to the Handbook and in accordance with
    International Financial Reporting Standards as issued by the International Accounting Standards Board under Part I of the
    Handbook, applicable as at the date on which date such calculation is made or required to be made in accordance with generally
    accepted accounting principles applied on a basis consistent with preceding years.
	 	 	 
	 	(ff)	“Gated
    LLC” means Gated Oregon Holdings, LLC, a limited liability company formed under the laws of the State of Oregon.
	 	 	 
	 	(gg)	“Governmental
    Authority” means: (i) any international, multinational, federal, provincial, state, regional, municipal, local or
    other government, governmental or public department, ministry, central bank, court, tribunal, arbitral body, commission, commissioner,
    board, bureau or agency, domestic or foreign; (ii) any subdivision, agency, agent or authority of any of the foregoing; (iii)
    any quasi-governmental or private body, including any tribunal, commission, regulatory agency or self-regulatory organization,
    exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing; or (iv) any
    stock exchange.
	 	 	 
	 	(hh)	“Handbook”
    means the Handbook of the Chartered Professional Accountants of Canada, as amended from time to time.
	 	 	 
	 	(ii)	“Harlequin
    Lease” means the lease to be entered into between the Purchaser and Opco relating to the Harlequin Property.

 

    	 		 

    	 	- 8 -	 

    

 

	 	(jj)	“Harlequin
    Property” means the retail store located at 1027 Willamette Street, Eugene, Oregon as described in the Acquisition
    Agreement.
	 	 	 
	 	(kk)	“Harlequin
    PSA” means the purchase and sale agreement between Stem and the vendor of the Harlequin Property dated November
    1, 2016.
	 	 	 
	 	(ll)	“insider”
    has the meaning set forth in the Securities Act.
	 	 	 
	 	(mm)	“Interim
    Order” means the interim order of the Court pursuant to Section 193(4) of the ABCA in a form acceptable to the Purchaser
    and Patch, each acting reasonably, providing for, among other things, the calling and holding of the Patch Meeting, as such
    order may be amended by the Court with the consent of the Purchaser and Patch, each acting reasonably.
	 	 	 
	 	(nn)	“Kind
    LLC” means Kind Care Holdings, LLC, a limited liability company formed under the laws of the State of Oregon.
	 	 	 
	 	(oo)	“Litigation”
    means any action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of a Party,
    threatened against or affecting a Party or its properties before or by any court, arbitrator, governmental or administrative
    agency or regulatory authority (federal, state, county, local or foreign) which: (i) materially adversely affects or challenges
    the legality, validity or enforceability of this Agreement or (ii) would, if there were an unfavorable decision, individually
    or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect.
	 	 	 
	 	(pp)	“Matching
    Period” has the meaning ascribed thereto in Section 3.4(e)(iv).
	 	 	 
	 	(qq)	“Material
    Adverse Change” or “Material Adverse Effect” means, with respect to the Purchaser or Patch, as
    the case may be, any fact, state of facts, circumstance, change, occurrence or event that is, or would reasonably be expected
    to be, material and adverse to the business, operations, results of operations, assets, properties, liabilities (whether contingent
    or otherwise) capitalization, condition (financial or otherwise), or cash flows of the Party and its subsidiaries, taken as
    a whole, other than any fact, state of facts, circumstance, change, occurrence or event relating to or resulting from: (i)
    general economic, financial, currency exchange, securities, credit or commodity prices; (ii) the announcement of the execution
    of this Agreement or the transactions contemplated hereby; (iii) any change in global, national or regional political conditions,
    including outbreaks of war or acts of terrorism; (iv) any natural disaster; or (v) any changes or effects arising from matters
    permitted or contemplated by this Agreement or consented to or approved in writing by the other Party; provided that in the
    case of (i) and (iii); such effect relating to or resulting from the foregoing does not have a disproportionate Material Adverse
    Effect or Material Adverse Change on the business, operations, results of operations, assets, properties, capitalization,
    condition (financial or otherwise), liabilities (contingent or otherwise) or cash flows of the Purchaser as compared to the
    corresponding effect on persons engaged in the commercial real estate leasing industry generally, or of Patch and its subsidiaries,
    taken as a whole, as compared to the corresponding effect on persons engaged in similar industries, as the case may be; unless
    expressly provided in any particular section of this Agreement, references in certain Sections of this Agreement to dollar
    amounts are not intended to be, and shall not be deemed to be, illustrative for purposes of determining whether a “Material
    Adverse Change” or “Material Adverse Effect” has occurred.

 

    	 		 

    	 	- 9 -	 

    

 

	 	(rr)	“material
    change”, “material fact” and “misrepresentation” have the meanings ascribed
    thereto under the Securities Act.
	 	 	 
	 	(ss)	“Material
    Permits” means any permits and authorizations required for the operation of the Purchaser’s business as presently
    contemplated, including any permits and authorizations required by Opco for the operation of Opco’s business as presently
    contemplated.
	 	 	 
	 	(tt)	“MI
    62-104” means Multilateral Instrument 62-104 – Take-over Bids and Issuer Bids.
	 	 	 
	 	(uu)	“Mutual
    Releases” has the meaning ascribed thereto in Section 3.6.
	 	 	 
	 	(vv)	“Never
    LLC” means Never Again Real Estate, LLC, a limited liability company formed under the laws of the State of Oregon.
	 	 	 
	 	(ww)	“Ordinary
    Course” means, with respect to an action taken by the Purchaser or Patch or its subsidiaries, that such action is
    consistent with the past practices of the Purchaser or Patch, as the case may be, and is taken in the ordinary course of the
    normal day-to-day operations of the business of the Purchaser or Patch, as the case may be.
	 	 	 
	 	(xx)	“Oregon
    LLC” means Oregon Acquisitions JV, LLC, a limited liability company formed under the laws of the State of Oregon.
	 	 	 
	 	(yy)	“Opco”
    means, collectively, the operating companies (and any Affiliates thereof) leasing the Harlequin Property and the 42nd
    Street Property (and any other properties acquired or controlled by the Purchaser), including Opco Holdings, Inc. and
    Oregon LLC.
	 	 	 
	 	(zz)	“Outside
    Date” means January 31, 2017.
	 	 	 
	 	(aaa)	“Parties”
    means the Purchaser and Patch; and “Party” means either one of them.
	 	 	 
	 	(bbb)	“Patch”
    has the meaning ascribed thereto in the recitals hereof.
	 	 	 
	 	(ccc)	“Patch
    Board” means the board of directors of Patch.
	 	 	 
	 	(ddd)	“Patch
    Board Recommendation” has the meaning ascribed thereto in Section 2.5.
	 	 	 
	 	(eee)	“Patch
    Class “A” Preferred Share” means the issued and outstanding Class “A” preferred voting share
    in the capital of Patch.
	 	 	 
	 	(fff)	“Patch
    Class “A” Preferred Special Voting Right” means the special voting right in respect of Patch entitling
    the Trustee under the Patch Voting Trust Agreement to vote, consent to, or otherwise act at a meeting of Patch Common Shareholders
    and representing that number of voting rights (each such voting right equal to the voting rights attached to one Patch Common
    Share) equal to the number of outstanding Patch Exchangeable Shares issued in conjunction with the Patch Class “A”
    Preferred Share outstanding immediately prior to the record date set for such meeting or at such other time as may be determined
    by applicable law for determining Patch Common Shareholders entitled to so vote, consent or otherwise act at such a meeting
    or in respect of such a resolution.

 

    	 		 

    	 	- 10 -	 

    

 

	 	(ggg)	“Patch
    Class “B” Preferred Share” means the issued and outstanding Class “B” preferred voting share
    in the capital of Patch.
	 	 	 
	 	(hhh)	“Patch
    Class “B” Preferred Special Voting Right” means the special voting right in respect of Patch entitling
    the Trustee under the Patch Voting Trust Agreement to vote, consent to, or otherwise act at a meeting of Patch Common Shareholders
    and representing that number of voting rights (each such voting right equal to the voting rights attached to one Patch Common
    Share) equal to the number of outstanding Patch Exchangeable Shares issued in conjunction with the Patch Class “B”
    Preferred Share outstanding immediately prior to the record date set for such meeting or at such other time as may be determined
    by applicable law for determining Patch Common Shareholders entitled to so vote, consent or otherwise act at such a meeting
    or in respect of such a resolution.
	 	 	 
	 	(iii)	“Patch
    Common Shareholders” means the holders of Patch Common Shares.
	 	 	 
	 	(jjj)	“Patch
    Common Shares” means the Class “A” common shares in the capital of Patch issued and outstanding from
    time to time, and for greater certainty, where the context requires, includes those Class “A” common shares in
    the capital of Patch issuable upon the redemption of the Patch Exchangeable Shares as described herein.
	 	 	 
	 	(kkk)	“Patch
    Energy” means Patch Energy Inc., a subsidiary of Patch.
	 	 	 
	 	(lll)	“Patch
    Exchangeable Shareholders” means registered holders of the Patch Exchangeable Shares.
	 	 	 
	 	(mmm)	“Patch
    Exchangeable Shares” means the Series A preferred shares of Patch Energy, which are exchangeable in accordance with
    their terms for no additional consideration into Patch Common Shares on a one-for-one basis.
	 	 	 
	 	(nnn)	“Patch
    Financial Statements” means, collectively, the audited consolidated financial statements of Patch as at and for
    the year ended May 31, 2016, together with the notes thereto and the auditor’s report thereon.
	 	 	 
	 	(ooo)	“Patch
    Information” means the information describing Patch and its business, operations and affairs included in the Circular
    as required under Applicable Laws.
	 	 	 
	 	(ppp)	“Patch
    Meeting” means the special meeting of Patch Shareholders to consider, among other things, the Arrangement Resolution
    and related matters, and any adjournments thereof.

 

    	 		 

    	 	- 11 -	 

    

 

	 	(qqq)	“Patch
    Note” means the promissory note and loan agreement dated November 6, 2015 between Robix Environmental Technologies,
    Inc. as successor to Formation Fluid Management Inc., as borrower, and Patch, as lender.
	 	 	 
	 	(rrr)	“Patch
    Note Collection” means any and all present or future claim, right of action, litigation, arbitration, mediation,
    collection effort or other dispute resolution proceedings or effort of any kind of Patch or any of its Affiliates, or their
    respective successors or assigns, relating to the collection of any and all amounts owing under the Patch Note in full and
    final payment thereof.
	 	 	 
	 	(sss)	“Patch
    Note Collection Proceeds” means all present and future value, order, award, entitlement or remuneration of any kind
    and in any form, including any property, assets, cash or other form of payment in each case paid, payable, recovered, owing
    to, due to, awarded to, ordered or otherwise ordered to be received by Patch or any of its Affiliates, Stem or any of its
    Affiliates, or their respective successors or assigns pursuant to any settlement, award, order, entitlement, collection, judgment,
    sale, disposition, agreement or any other monetization of any kind of the Patch Note or relating to the Patch Note Collection.
	 	 	 
	 	(ttt)	“Patch
    Note Collection Payment Per Share” means if Patch or any of its Affiliates, Stem or any of its Affiliates, or any
    of their respective successors or assigns, receives any Patch Note Collection Proceeds and such Patch Note Collection Proceeds
    consist in whole or in part of: (i) shares or other securities, then that number of shares or other securities equal to the
    quotient obtained when dividing such portion of the Patch Note Collection Proceeds by 43,952,213 (with fractions equal to
    or greater than 0.5 being rounded up and fractions less than 0.5 being rounded down); or (ii) cash or cash equivalents (to
    the extent such cash or cash equivalents are not accounted for in the calculation for the Patch Working Capital), then that
    number of Purchaser Shares as is equal to the quotient obtained when dividing (A) the result obtained when such portion of
    the Patch Note Collection Proceeds (if applicable, as converted to United States dollars using the Bank of Canada daily noon
    exchange rate for the applicable date) is divided by the deemed price for each Purchaser Share, being US$2.40, by (B) 43,952,213
    (with fractions equal to or greater than 0.5 being rounded up and fractions less than 0.5 being rounded down).
	 	 	 
	 	(uuu)	“Patch
    Original Voting Trust Agreements” means the exchange and voting trust agreements among Patch, Patch Energy, 1286664
    Alberta Ltd. and the Patch Exchangeable Shareholders dated December 6, 2006 and January 16, 2007, respectively.
	 	 	 
	 	(vvv)	“Patch
    Public Record” means all information filed by or on behalf of Patch after January 1, 2016 with the Canadian Securities
    Authorities, in compliance, or intended compliance, with any Applicable Laws which is available for public viewing on the
    SEDAR website under Patch’s profile at www.sedar.com.
	 	 	 
	 	(www)	“Patch
    Shareholders” means registered or beneficial holders of the Patch Shares, as the context requires.

 

    	 		 

    	 	- 12 -	 

    

 

	 	(xxx)	“Patch
    Shares” means collectively, (i) the Patch Common Shares, (ii) the Patch Class “A” Preferred Share, and
    (iii) the Patch Class “B” Preferred Share.
	 	 	 
	 	(yyy)	“Patch
    Support Agreements” means the agreements between the Purchaser and the Patch Supporting Securityholders, pursuant
    to which the Patch Supporting Securityholders have agreed to vote the Patch Voting Securities beneficially owned or controlled
    or subsequently acquired by the Patch Supporting Securityholders in favour of the Arrangement Resolution and to otherwise
    support the Arrangement.
	 	 	 
	 	(zzz)	“Patch
    Supporting Securityholders” means all of the officers and directors of Patch and all of those other holders of Patch
    Voting Securities who have signed or who have agreed to sign Patch Support Agreements after the date hereof.
	 	 	 
	 	(aaaa)	“Patch
    Transaction Costs” means all costs and expenses incurred by Patch and its subsidiaries in connection with the transactions
    contemplated by this Agreement, including all legal, accounting, advisory fees, printing and other administrative and professional
    fees, costs and expenses of third parties, and all amounts payable by Patch in respect of the transactions contemplated by
    the Arrangement.
	 	 	 
	 	(bbbb)	“Patch
    Working Capital” means the amount equal to Patch’s current assets minus its current liabilities as at the
    third last Business Day prior to the Effective Date, determined in accordance with GAAP, provided that current liabilities
    shall include only fifty percent (50%) of the Patch Transaction Costs to a maximum of $100,000, such amount expressed in United
    States dollars using the Bank of Canada daily noon exchange rate for the applicable date.
	 	 	 
	 	(cccc)	“Patch
    Working Capital Certificate” means a certificate of Patch addressed to the Purchaser and dated the Effective Date,
    signed on behalf of Patch by an officer of Patch (on Patch’s behalf and without personal liability), confirming the
    Patch Working Capital.
	 	 	 
	 	(dddd)	“Patch
    Voting Securities” means, collectively, the Patch Common Shares and the Patch Exchangeable Shares;
	 	 	 
	 	(eeee)	“Patch
    Voting Trust Agreement” means the agreement of appointment and acceptance dated June 2, 2016 among Patch, Patch
    Energy and the Trustee, pursuant to which the Trustee was appointed as successor trustee under the Patch Original Voting Trust
    Agreements.
	 	 	 
	 	(ffff)	“person”
    includes an individual, limited or general partnership, limited liability company, limited liability partnership, trust, joint
    venture, association, body corporate, unincorporated organization, trustee, executor, administrator, legal representative,
    government (including any Governmental Authority) or any other entity, whether or not having legal status.
	 	 	 
	 	(gggg)	“Plan
    of Arrangement” means the plan of arrangement substantially in the form set out in Schedule “A”
    to this Agreement as amended or supplemented from time to time in accordance with the terms hereof.

 

    	 		 

    	 	- 13 -	 

    

 

	 	(hhhh)	“Private
    Placement” means the private placement offering by the Purchaser of up to 1,250,000 Purchaser Shares at a price
    of US$2.40 per Purchaser Share.
	 	 	 
	 	(iiii)	“Purchaser”
    has the meaning ascribed thereto in the recitals hereof.
	 	 	 
	 	(jjjj)	“Purchaser
    Board” means the board of directors of the Purchaser.
	 	 	 
	 	(kkkk)	“Purchaser
    Financial Statements” means the audited financial statements of the Purchaser, comprised of the statement of financial
    position as at September 30, 2016 and October 12, 2016 and the statements of comprehensive income, changes in shareholders’
    equity and cash flows for the periods from incorporation to September 30, 2016 and October 1, 2016 to October 12, 2016, together
    with the notes thereto and the auditor’s report thereon.
	 	 	 
	 	(llll)	“Purchaser
    Information” means the information describing the Purchaser and its business, operations and affairs specifically
    to be provided by the Purchaser to Patch for inclusion or incorporation by reference in the Circular as required under Applicable
    Laws and the Interim Order.
	 	 	 
	 	(mmmm)	“Purchaser
    Share Consideration” means Purchaser Shares valued at approximately $0.083, being that number of Purchaser Shares
    (expressed to five decimal places) as is equal to the quotient obtained when dividing the Aggregate Purchaser Share Consideration
    by 43,952,213.
	 	 	 
	 	(nnnn)	“Purchaser
    Shares” means the shares of common stock in the share capital of the Purchaser.
	 	 	 
	 	(oooo)	“Real
    Property Agreements” means the 42nd Street Lease, 42nd Street Sublease, Harlequin PSA and
    Harlequin Lease.
	 	 	 
	 	(pppp)	“Registrar”
    means the Registrar of Corporations for the Province of Alberta duly appointed under Section 263 of the ABCA.
	 	 	 
	 	(qqqq)	“Regulatory
    Approvals” means such sanctions, rulings, consents, orders, exemptions, permits and other approvals (including the
    lapse, without objection, of a prescribed time under any law that states that a transaction may be implemented if a prescribed
    time lapses following the giving of notice without an objection being made) of Governmental Authorities required to consummate
    the Plan of Arrangement.
	 	 	 
	 	(rrrr)	“Representative”
    means any officer, director, employee, representative (including any financial or other advisor) or agent of the Purchaser
    or Patch or of any of its subsidiaries, as the case may be.
	 	 	 
	 	(ssss)	“Returns”
    shall mean all reports, filings, notices, schedules, estimates, elections, designations, forms, declarations of estimated
    tax, information statements and returns including any amendments, attachments or appendices and exhibits thereto, made, prepared
    or filed or required to be filed with a Governmental Authority in connection with, any Taxes.

 

    	 		 

    	 	- 14 -	 

    

 

	 	(tttt)	“Rights
    Indenture” means the rights indenture to be entered into between Purchaser and a trust company acceptable to Patch
    and Purchaser, as rights agent, providing for the creation and issuance of the CVRs.
	 	 	 
	 	(uuuu)	“SEC”
    means the United States Securities and Exchange Commission.
	 	 	 
	 	(vvvv)	“Securities
    Act” means the Securities Act (Alberta).
	 	 	 
	 	(wwww)	“Securities
    Authorities” means, collectively, the securities commissions, similar securities regulatory authorities in each
    of the provinces or territories of Canada and the U.S. Securities Authorities.
	 	 	 
	 	(xxxx)	“Securities
    Laws” means the Canadian Securities Laws and the U.S. Securities Laws, and all other applicable Canadian and/or
    U.S. Securities Laws, rules and regulations and published policies thereunder.
	 	 	 
	 	(yyyy)	“subsidiary”
    means, with respect to a specified entity, any:

 

	 	(i)	body
    corporate of which more than 50% of the outstanding shares ordinarily entitled to elect a majority of the board of directors
    thereof (whether or not shares of any other class or classes shall or might be entitled to vote upon the happening of any
    event or contingency) are at the time owned directly or indirectly by such specified entity or indirectly by or for the benefit
    of such specified entity;
	 	 	 
	 	(ii)	entity
    which is not a body corporate, of which more than 50% of the voting or equity interests of such entity (including, for a partnership
    other than a limited partnership, the voting or equity interests in such partnership) are owned, directly or indirectly, by
    such specified entity or indirectly by or for the benefit of such specified entity and, in the case of a limited partnership,
    of which such specified entity, or a subsidiary of such specified entity, is a general partner; and
	 	 	 
	 	(iii)	issuer
    that would constitute a subsidiary as defined in the Securities Act.

 

	 	(zzzz)	“Superior
    Proposal” means any unsolicited bona fide written Acquisition Proposal from a person who is an arm’s length
    third party made after the date of this Agreement: (i) to acquire not less than all of the outstanding Patch Shares or all
    or substantially all of the assets of Patch on a consolidated basis; (ii) that complies with Canadian Securities Laws and
    did not result from or involve a breach of Section 3.4 or any agreement between the person making such Acquisition Proposal
    and Patch; (iii) that the Patch Board has determined in good faith is reasonably capable of being completed without undue
    delay, taking into account, all financial, legal, regulatory and other aspects of such proposal and the person making such
    proposal; (iv) that is not subject to any financing condition and in respect of which it has been demonstrated to the satisfaction
    of the Patch Board, acting in good faith (after receipt of advice from its outside legal counsel) that adequate arrangements
    have been made in respect of any financing required to complete such Acquisition Proposal, or is reasonably likely to be obtained;
    (v) that is not subject to any due diligence and/or access condition; and (vi) in respect of which the Patch Board and any
    relevant committee thereof determines, in its good faith judgment, after taking into account all the terms and conditions
    of the Acquisition Proposal, including all legal, financial, regulatory and other aspects of such Acquisition Proposal and
    the party making such Acquisition Proposal, would, if consummated in accordance with its terms, but without assuming away
    the risk of non-completion, reasonably be expected to result in a transaction which is more favourable, from a financial point
    of view, to Patch Common Shareholders than the Arrangement (including any amendments to the terms and conditions of the Arrangement
    proposed by the Purchaser pursuant to Section 3.4(f)).

 

    	 		 

    	 	- 15 -	 

    

 

	 	(aaaaa)	“Superior
    Proposal Notice” has the meaning ascribed thereto in Section 3.4(e)(iii).
	 	 	 
	 	(bbbbb)	“Tax
    Act” means the Income Tax Act (Canada).
	 	 	 
	 	(ccccc)	“Tax”
    or “Taxes” means all taxes, duties, fees, premiums, assessments, imposts, levies and other charges of any
    kind whatsoever imposed by any Governmental Authority, together with all interest, penalties, fines, additions to tax or other
    additional amounts imposed in respect thereof, including those levied on, or measured by, or referred to as, income, gross
    receipts, profits, capital, large corporation, capital gain, alternative minimum, transfer, land transfer, sales, goods and
    services, harmonized sales, use, value-added, excise, stamp, withholding, business, franchising, property, employer health,
    payroll, employment, health, social services, education and social security taxes, all surtaxes, all customs duties and import
    and export taxes, all employment insurance, health insurance and Canada and other Governmental Authority pension plan and
    workers compensation premiums or contributions including any interest, fines or penalties for failure to withhold, collect
    or remit any tax and any liability for such taxes imposed by law with respect to any other person arising pursuant to any
    tax sharing, indemnification or other agreements or any liability for taxes of any predecessor or transferor entity and whether
    disputed or not.
	 	 	 
	 	(ddddd)	“Third
    Party Beneficiaries” has the meaning ascribed thereto in Section 9.7.
	 	 	 
	 	(eeeee)	“Trustee”
    means 1973803 Alberta Ltd., the trustee for the Patch Exchangeable Shares.
	 	 	 
	 	(fffff)	“United
    States” means the United States of America, its territories and possessions, any state of the United States, and
    the District of Columbia.
	 	 	 
	 	(ggggg)	“U.S.
    Exchange Act” means the United States Securities Exchange Act of 1934.
	 	 	 
	 	(hhhhh)	“U.S.
    Securities Act” means the United States Securities Act of 1933.
	 	 	 
	 	(iiiii)	“U.S.
    Securities Authorities” means, collectively, the SEC and similar securities regulatory authorities in each of the
    United States.
	 	 	 
	 	(jjjjj)	“U.S.
    Securities Laws” means the federal and state securities legislation of the United States and all rules, regulations
    and orders promulgated thereunder, as amended from time to time.

 

    	 		 

    	 	- 16 -	 

    

 

1.2
Interpretation Not Affected by Headings, etc.

 

The
provision of a Table of Contents, the division of this Agreement into Articles, Sections and Schedules and the insertion of headings
are for convenient reference only and are not to affect its interpretation.

 

1.3
Number, etc.

 

Words
importing the singular number include the plural and vice versa and words importing the use of any gender include all genders.

 

1.4
Capitalized Terms

 

All
capitalized terms used in any Schedule, the Purchaser Disclosure Letter or the Patch Disclosure Letter have the meanings ascribed
to them in this Agreement.

 

1.5
Date for Any Action

 

If
any date on which any action is required to be taken hereunder by any of the Parties is not a Business Day, such action is required
to be taken on the next succeeding day which is a Business Day.

 

1.6
Entire Agreement

 

This
Agreement together with the agreements and documents herein referred to, constitute the entire agreement among the Parties pertaining
to the subject matter hereof and supersede all prior agreements, understandings, negotiations and discussions, whether oral or
written, among the Parties with respect to the subject matter hereof. For greater certainty, the Patch Support Agreements are
separate agreements between the parties thereto and are unaffected by this Section 1.6.

 

1.7
Currency

 

Unless
otherwise indicated, all sums of money which are referred to in this Agreement are expressed in lawful money of Canada. References
to “United States dollars” and “US$” are to the lawful money of the United States.

 

1.8
Certain Phrases and References, etc.

 

The
words “including”, “includes” and “include” mean “including (or includes or include)
without limitation,” and “the aggregate of”, “the total of”, “the sum of”, or a phrase
of similar meaning means “the aggregate (or total or sum), without duplication, of.” Unless stated otherwise, “Article”,
“Section” and “Schedule” followed by a number or letter mean and refer to the specified Article or Section
of or Schedule to this Agreement. The term “Agreement” and any reference in this Agreement to this Agreement or any
other agreement or document includes, and is a reference to, this Agreement or such other agreement or document as it may have
been, or may from time to time be, amended, restated, replaced, supplemented or novated and includes all schedules to it.

 

1.9
Accounting Matters

 

Unless
otherwise stated, all accounting terms used in this Agreement shall have the meanings attributable thereto under GAAP and all
determinations of an accounting nature that are required to be made shall be made in a manner consistent with GAAP.

 

    	 		 

    	 	- 17 -	 

    

 

1.10
Disclosure in Writing

 

References
to “disclosed in writing”, “except as previously disclosed in writing” and similar expressions in this
Agreement shall in the case of disclosure by Patch, be construed for purposes of this Agreement as referring to matters disclosed
in (a) the Patch Disclosure Letter; (b) the Patch Financial Statements; (c) Patch’s annual management’s discussions
and analysis for the year ended May 31, 2016; and (d) this Agreement or in the schedules hereto; and in the case of disclosure
by the Purchaser, be construed for purposes of this Agreement as referring to matters disclosed in (a) the Purchaser Disclosure
Letter; (b) the Purchaser Financial Statements; and (c) this Agreement or in the schedules hereto.

 

1.11
References to Legislation

 

References
in this Agreement to any statute or sections thereof shall include such statute as amended or substituted and any regulations
promulgated thereunder from time to time in effect.

 

1.12
Enforceability

 

All
representations, warranties, covenants and opinions in or contemplated by this Agreement as to the enforceability of any covenant,
agreement or document are subject to enforceability being limited by applicable bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and other laws relating to or affecting creditors’ rights generally, and the discretionary nature of certain
remedies (including specific performance and injunctive relief and general principles of equity).

 

1.13
Knowledge

 

Where
any representation or warranty is expressly qualified by reference to the knowledge of a Party, it is deemed to refer to the actual
knowledge of the Executive Officers of the Purchaser or Patch, as the case may be, after reasonable inquiry, and does not include
any constructive, implied or imputed knowledge of such individuals. For purposes of this Section 1.13, “Executive Officers”
(a) in the case of the Purchaser means Adam Berk and Steve Hubbard; and (b) in the case of Patch means Mark Bentsen and David
Hawkins.

 

1.14
Interpretation Not Affected by Party Drafting

 

The
Parties acknowledge that their respective legal counsel have reviewed and participated in negotiating, drafting and settling the
terms of this Agreement, and the Parties agree that any rule of construction to the effect that any ambiguity is to be resolved
against the drafting party will not be applicable in the interpretation of this Agreement.

 

1.15
Schedules

 

	 	(a)	The
    schedules attached to this Agreement form an integral part of this Agreement for all purposes of it.
	 	 	 
	 	(b)	The
    Purchaser Disclosure Letter itself and all information contained in it is confidential information and may not be disclosed
    unless: (i) it is required to be disclosed pursuant to Applicable Law unless such Applicable Law permits the Parties to refrain
    from disclosing the information for confidentiality or other purposes; or (ii) a Party needs to disclose it in order to enforce
    or exercise its rights under this Agreement.
	 	 	 
	 	(c)	The
    Patch Disclosure Letter itself and all information contained in it is confidential information and may not be disclosed unless:
    (i) it is required to be disclosed pursuant to Applicable Law unless such Applicable Law permits the Parties to refrain from
    disclosing the information for confidentiality or other purposes; or (ii) a Party needs to disclose it in order to enforce
    or exercise its rights under this Agreement.

 

    	 		 

    	 	- 18 -	 

    

 

Article
2

THE ARRANGEMENT AND MEETING

 

2.1
Plan of Arrangement

 

The
Parties agree that the Arrangement shall be implemented in accordance with and subject to the terms and conditions contained in
this Agreement and the Plan of Arrangement, pursuant to which, among other things, the Patch Common Shareholders (other than those
who have validly exercised Dissent Rights) shall receive the Consideration for each Patch Common Share held.

 

2.2
Interim Order, Final Order, etc.

 

	 	(a)	As
    soon as reasonably practicable following the date of this Agreement and in any event by no later than December 9, 2016, Patch
    shall apply to the Court, in a manner reasonably acceptable to the Purchaser, for the Interim Order and thereafter, in cooperation
    with the Purchaser, diligently seek the Interim Order and, upon receipt thereof, Patch shall forthwith carry out the terms
    of the Interim Order to the extent applicable to it. The Interim Order shall provide, among other things:
	 	 	 	 
	 		(i)	for
    the calling and holding of the Patch Meeting, including the record date for determining the persons to whom notice is to be
    provided in respect of the Arrangement and the Patch Meeting and for the manner in which such notice is to be provided;
	 	 	 	 
	 		(ii)	that
    the Patch Shareholders shall be entitled to vote with respect to the Arrangement Resolution, with each (A) Patch Common Shareholder
    being entitled to one vote for each Patch Share held, (B) the holder of the Patch Class “A” Preferred Share being
    entitled to the Patch Class “A” Preferred Special Voting Right, and (C) the holder of the Patch Class “B”
    Preferred Share being entitled to the Patch Class “B” Preferred Special Voting Right;
	 	 	 	 
	 		(iii)	that,
    subject to the approval of the Court, the requisite majority for the approval of the Arrangement Resolution shall be at least
    two-thirds of the votes cast by the Patch Shareholders present in person or represented by proxy at the Patch Meeting;
	 	 	 	 
	 		(iv)	that
    in all other respects, the terms, restrictions and conditions of Patch’s articles and by-laws, including quorum requirements
    and all other matters shall apply in respect of the Patch Meeting in respect of Patch Shareholders, except as modified by
    the Interim Order;
	 	 	 	 
	 		(v)	for
    the grant of Dissent Rights to those Patch Shareholders who are registered Patch Shareholders;

 

    	 		 

    	 	- 19 -	 

    

 

	 	(vi)	for
    the notice requirements with respect to the presentation of the application to the Court for the Final Order;
	 	 	 
	 	(vii)	that
    the Patch Meeting may be adjourned or postponed from time to time by Patch in accordance with the terms of this Agreement
    without the need for additional approval of the Court; and
	 	 	 
	 	(viii)	that
    the record date for the Patch Shareholders entitled to notice of and to vote at the Patch Meeting will not change in respect
    of any adjournment(s) of the Patch Meeting, unless required by Applicable Law.

 

	 	(b)	Provided
    all necessary approvals for the Arrangement Resolution are obtained from the Patch Shareholders, Patch shall, as soon as reasonably
    practicable following the Patch Meeting, and in any event no later than three Business Days after the Arrangement Resolution
    is passed at the Patch Meeting in accordance with the Interim Order, submit the Arrangement to the Court and apply for the
    Final Order.
	 	 	 
	 	(c)	No
    later than three Business Days following the issuance of the Final Order and the satisfaction or waiver (subject to Applicable
    Laws) of the conditions (excluding conditions that, by their terms, cannot be satisfied until the Effective Date, but subject
    to the satisfaction or, where permitted, waiver of those conditions as of the Effective Date) set forth in Article 5, Patch
    shall file the Articles of Arrangement, the Final Order and such other documents as may be required to give effect to the
    Arrangement with the Registrar pursuant to Section 193(10) of the ABCA, whereupon the transactions comprising the Arrangement
    shall occur and shall be deemed to have occurred in the order set out in the Plan of Arrangement without any further act or
    formality.

 

2.3
Patch Meeting and Circular

 

	 	(a)	Patch
    shall:

 

	 	(i)	convene
    and conduct the Patch Meeting in accordance with the Interim Order, Patch’s constating documents and Applicable Laws
    as soon as reasonably practicable (and in any event by no later than January 31, 2017), and not adjourn, postpone or cancel
    (or propose the adjournment, postponement or cancellation of) the Patch Meeting without the prior written consent of the Purchaser,
    except:

 

	 	(A)	in
    the case of an adjournment, as required for quorum purposes;
	 	 	 
	 	(B)	as
    required or permitted under Section 3.4(i) and Section 5.4(c); or
	 	 	 
	 	(C)	as
    required by Applicable Laws or a Governmental Authority.

 

	 	(ii)	subject
    to the terms of this Agreement, solicit proxies, in accordance with Applicable Laws, in favour of the approval of the Arrangement
    Resolution and against any resolution submitted by any Patch Shareholder that is inconsistent with the Arrangement Resolution;

 

    	 		 

    	 	- 20 -	 

    

 

	 	(iii)	provide
    the Purchaser with copies of or access to information regarding the Patch Meeting generated by any dealer or proxy solicitation
    services firm, as requested from time to time by the Purchaser;
	 	 	 
	 	(iv)	consult
    with the Purchaser in fixing the date of the Patch Meeting, give notice to the Purchaser of the Patch Meeting and allow the
    Purchaser’s Representatives to attend the Patch Meeting;
	 	 	 
	 	(v)	promptly
    advise the Purchaser, at such times as the Purchaser may reasonably request, as to the aggregate tally of the proxies received
    by Patch in respect of the Arrangement Resolution;
	 	 	 
	 	(vi)	promptly
    advise the Purchaser of any written communication from any Patch Shareholder in opposition to the Arrangement, written notice
    of dissent, purported exercise or withdrawal of Dissent Rights, and written communications sent by or on behalf of Patch to
    any Patch Shareholder exercising or purporting to exercise Dissent Rights;
	 	 	 
	 	(vii)	not
    make any payment or settlement offer, or agree to any payment or settlement prior to the Effective Time with respect to Dissent
    Rights without the prior written consent of the Purchaser; and
	 	 	 
	 	(viii)	not
    change the record date for the Patch Shareholders entitled to vote at the Patch Meeting in connection with any adjournment
    or postponement of the Patch Meeting unless required by Applicable Laws.

 

	 	(b)	Patch
    shall as soon as reasonably practicable following the date of this Agreement (but taking into account the need for the Purchaser
    to provide the Purchaser Information) prepare and complete, in consultation with the Purchaser, the Circular together with
    any other documents required by Applicable Laws in connection with the Patch Meeting and the Arrangement, and Patch shall,
    after obtaining the Interim Order, cause the Circular and such other documents to be filed and sent to each Patch Shareholder
    and each Patch Exchangeable Shareholder and any other person as required by the Interim Order and Applicable Laws, in each
    case so as to permit the Patch Meeting to be held by the date specified in Section 2.3(a)(i).
	 	 	 
	 	(c)	Patch
    shall ensure that the Circular complies in all material respects with Canadian Securities Laws, does not contain any misrepresentation
    at the time of the mailing (excluding the Purchaser Information for which the Purchaser shall be responsible) and provides
    the Patch Shareholders with sufficient information to permit them to form a reasoned judgement concerning the matters to be
    placed before the Patch Meeting. Without limiting the generality of the foregoing, the Circular must include: (i) the Patch
    Board Recommendation; and (ii) a statement that each Patch Supporting Securityholder intends, in accordance with the Patch
    Support Agreements, to vote all of such shareholder’s Patch Voting Securities in favour of the Arrangement Resolution
    and against any resolution submitted by any Patch Shareholder that is inconsistent with the Arrangement.

 

    	 		 

    	 	- 21 -	 

    

 

	 	(d)	The
    Purchaser shall provide the Purchaser Information to be included by Patch in the Circular, any public announcement or regulatory
    filing or other related documents to Patch in writing, and shall ensure that at the time of the mailing, announcement or filing,
    as applicable, such information does not contain any misrepresentation and complies in all material respects with Securities
    Laws.
	 	 	 
	 	(e)	The
    Purchaser hereby indemnifies and saves harmless Patch, its subsidiaries and their respective Representatives from and against
    any and all liabilities, claims, demands, losses, costs, damages and expenses to which Patch, any subsidiary or any of their
    respective Representatives may be subject or may suffer as a result of, or arising from, any misrepresentation or alleged
    misrepresentation contained in the Purchaser Information included in the Circular that was provided by the Purchaser in writing
    for inclusion in the Circular pursuant to Section 2.3(d), including as a result of any order made, or any inquiry, investigation
    or proceeding instituted by any Securities Authority or other Governmental Authority based on such a misrepresentation or
    alleged misrepresentation.
	 	 	 
	 	(f)	Patch
    hereby indemnifies and saves harmless the Purchaser and its Representatives from and against any and all liabilities, claims,
    demands, losses, costs, damages and expenses to which the Purchaser or its Representatives may be subject or may suffer as
    a result of, or arising from:

 

	 	(i)	any
    misrepresentation or alleged misrepresentation contained in the Circular; and
	 	 	 
	 	(ii)	any
    order made, or any inquiry, investigation or proceeding by any Securities Authority or other Governmental Authority, to the
    extent based on any misrepresentation or any alleged misrepresentation in the Circular,

 

	 	 	provided,
    however, that the above noted indemnification obligation of Patch shall not apply to any liabilities, claims, demands, losses,
    costs, damages and expenses arising as a result of any misrepresentation or any alleged misrepresentation in the Circular
    based solely on Purchaser Information supplied in writing by the Purchaser to Patch for inclusion in the Circular in accordance
    with Section 2.3(d) and contained in the Circular.
	 	 	 
	 	(g)	The
    Parties shall cooperate in the preparation, filing and mailing of the Circular. Patch shall provide the Purchaser and its
    Representatives with a reasonable opportunity to review and comment on the Circular and any other relevant documentation and
    reasonable consideration shall be given to any comments made by the Purchaser, provided that all Purchaser Information included
    in the Circular shall be in form and content satisfactory to the Purchaser, acting reasonably, and provided that all Patch
    Information included in the Circular shall be in form and substance satisfactory to Patch, acting reasonably.

 

    	 		 

    	 	- 22 -	 

    

 

2.4
Court Proceedings

 

	 	(a)	Patch
    shall provide the Purchaser and its counsel with a reasonable opportunity to review and comment upon drafts of all material
    to be filed by Patch with the Court in connection with the Arrangement and any supplement or amendment thereto, and reasonable
    consideration shall be given to any comments made by the Purchaser and its counsel, and Patch shall provide counsel to the
    Purchaser on a timely basis with copies of any notice of appearance and evidence served on Patch or its counsel in respect
    of the application for the Interim Order and/or the Final Order or any appeal therefrom and of any notice (written or oral)
    received by Patch indicating any intention to oppose the granting of the Interim Order or the Final Order or to appeal the
    Interim Order or the Final Order. Patch shall ensure that material filed with the Court in connection with the Arrangement
    is consistent in all material respects with the terms of this Agreement and the Plan of Arrangement. In addition, Patch shall
    not object to counsel to the Purchaser making submissions on the application for the Interim Order and the application for
    the Final Order as such counsel considers appropriate, provided that such submissions are consistent with this Agreement and
    the Plan of Arrangement.
	 	 	 
	 	(b)	Patch
    shall not file any material with the Court in connection with the Arrangement or serve any such material and shall not agree
    to modify or amend materials so filed or served except as contemplated hereby or with the prior written consent of the Purchaser,
    such consent not to be unreasonably withheld, conditioned or delayed.

 

2.5
Patch Board Recommendation

 

The
Patch Board has unanimously determined that the Arrangement is in the best interests of Patch and is fair to the Patch Shareholders,
has unanimously approved the Arrangement and the entering into of this Agreement, and has resolved to recommend that Patch Shareholders
vote in favour of the Arrangement (the “Patch Board Recommendation”).

 

2.6
Regulatory Matters

 

	 	(a)	The
    Parties shall co-operate in the preparation of any application for the Regulatory Approvals and any other orders, registrations,
    consents, filings, rulings, exemptions, no-action letters and approvals and the preparation of any documents reasonably deemed
    by either of the Parties to be necessary to discharge its respective obligations or otherwise advisable under Applicable Laws
    in connection with the Arrangement and this Agreement as promptly as practicable hereafter.
	 	 	 
	 	(b)	Each
    Party shall promptly notify the other Party if at any time before the Effective Time it becomes aware that the Circular, an
    application for a Regulatory Approval or any other order, registration, consent, ruling, exemption, no-action letter or approval,
    any circular or other filing under Applicable Laws contains a misrepresentation, or information that otherwise requires an
    amendment or supplement to the Circular, such application, circular or filing, and the Parties shall co-operate in the preparation
    of such amendment or supplement as required, including the distribution and filing of such amendment or supplement by the
    Parties.
	 	 	 
	 	(c)	Each
    Party will promptly inform the other Party of any requests or comments made by Securities Authorities in connection with the
    Circular or the Arrangement. Each of the Parties will cooperate with the other and shall diligently do all such acts and things
    as may be reasonably required in the manner contemplated in the context of the preparation of the Circular and use its commercially
    reasonable efforts to resolve all requests or comments made by Securities Authorities with respect to the Circular or the
    Arrangement and any other required filings under Applicable Laws as promptly as practicable after receipt thereof.

 

    	 		 

    	 	- 23 -	 

    

 

	2.7	Treatment
    of Patch Exchangeable Shares, the Patch Class “A” Preferred Share and the Patch Class “B” Preferred
    Share

 

	 	(a)	The
    Parties acknowledge and agree that all of the outstanding Patch Exchangeable Shares will, pursuant to the terms thereof, be
    redeemed by Patch Energy in exchange for Patch Common Shares on a one-for-one basis prior to the Effective Date, conditional
    upon consummation of the Arrangement, and that Patch, the Patch Board, Patch Energy and its board of directors may take all
    such actions as are necessary or desirable to effect the foregoing.
	 	 	 
	 	(b)	The
    Parties acknowledge and agree that immediately following the redemption of the Patch Exchangeable Shares, and prior to the
    Effective Date, Patch will repurchase the Patch Class “A” Preferred Share and the Class “B” Preferred
    Share from the Trustee for nominal consideration and terminate the Patch Voting Trust Agreement, conditional upon consummation
    of the Arrangement, and that Patch and the Patch Board may take all such actions as are necessary or desirable to effect the
    foregoing.

 

2.8
Officers and Employees

 

Patch
covenants and agrees that all obligations or liabilities of Patch to pay any amount to or on behalf of its directors, officers
or consultants in conjunction with the completion of the Arrangement have been disclosed in writing, and all obligations or liabilities
of Patch to pay any amount to or on behalf of its directors, officers or consultants, including directors’ fees and any
other payments in conjunction with the completion of the Arrangement and the termination of consulting services provided to Patch
and its subsidiaries will be no more than $25,000, payment of which shall be made prior to the Effective Date.

 

2.9
Public Communications

 

The
Parties shall advise, consult and cooperate with each other prior to issuing, or permitting any of their Representatives to issue
any news releases or otherwise make public statements with respect to this Agreement, the Arrangement, the transactions with respect
thereto, from the date hereof until the Effective Time. The Parties shall not issue any such news releases or make any such public
statement prior to such consultation, except as may be required by this Agreement or Applicable Laws including, for greater certainty,
in order to fulfill continuous disclosure obligations under Applicable Laws, but only after using its reasonable commercial efforts
to consult each other taking into account the time constraints to which it is subject as a result of such law or obligation.

 

2.10
Indemnities and Directors’ and Officers’ Insurance

 

	 	(a)	The
    Purchaser agrees that after the Effective Time, Patch and its subsidiaries and their respective successors shall fulfill their
    respective obligations pursuant to, and shall not take any actions to terminate or materially adversely affect, indemnities
    provided or available to past and present officers and directors of Patch and its subsidiaries pursuant to the provisions
    of the constating documents of Patch and its subsidiaries, applicable corporate legislation and any written indemnity agreements
    which have been entered into between Patch and its subsidiaries and such officers and directors effective on or prior to the
    date hereof.

 

    	 		 

    	 	- 24 -	 

    

 

	 	(b)	The
    Purchaser agrees that, for the entire period from the Effective Time until six years after the Effective Time, the Purchaser
    will cause Patch or any successor to Patch to maintain Patch’s current directors’ and officers’ insurance
    policy or an equivalent policy, subject in either case to terms and conditions no less advantageous to the directors and officers
    of Patch and its subsidiaries than those contained in the policy in effect on the date hereof, for all present and former
    directors and officers of Patch and its subsidiaries, covering claims made prior to or within six years after the Effective
    Time.

 

2.11
Tax Withholdings

 

The
Purchaser shall be entitled to deduct and withhold from any consideration otherwise payable to any Patch Shareholder and, for
greater certainty, from any amount payable to a Patch Shareholder who has validly exercised, and not withdrawn, Dissent Rights,
as the case may be, under the Plan of Arrangement, such amounts as the Purchaser is required to deduct and withhold from such
consideration and remit in accordance with applicable Tax laws and administrative policy of the Canada Revenue Agency. Any such
amounts will be deducted, withheld and remitted from the consideration payable pursuant to the Plan of Arrangement and shall be
treated for all purposes as having been paid to the Patch Shareholder, in respect of which such deduction, withholding and remittance
was made, provided that such withheld amounts are actually remitted to the appropriate taxing authority. In connection with any
amount required to be withheld pursuant to the Plan of Arrangement, the Purchaser may direct the Depositary to withhold such number
of the Purchaser Shares that may otherwise be paid to such Patch Shareholder under the Plan of Arrangement and, subject to Applicable
Laws, to sell Purchaser Shares for cash proceeds to be used for such withholding.

 

2.12
Articles of Arrangement

 

Patch
shall amend the Plan of Arrangement from time to time at the reasonable request of the Purchaser, provided that no such amendment
is inconsistent with the Interim Order, the Final Order, applicable terms of this Agreement or is prejudicial to Patch Shareholders
or other Patch securityholders to be bound by the Plan of Arrangement.

 

2.13
Closing

 

The
closing of the Arrangement will take place at the offices of legal counsel to Patch, or at such other location as may be agreed
upon by the Parties.

 

2.14
Effective Date

 

The
Arrangement shall become effective at the Effective Time on the Effective Date. The Certificate shall be conclusive evidence that
the Arrangement has become effective as of the Effective Time. The Parties shall use their reasonable commercial efforts to cause
the Effective Date to occur on or about December 30, 2016 or as soon thereafter as reasonably practicable and, in any event, by
the Outside Date.

 

    	 		 

    	 	- 25 -	 

    

 

	2.15	U.S.
    Securities Laws

 

The
Arrangement shall be structured and executed such that, assuming the Court considers the fairness of the terms and conditions
of the Arrangement (both procedurally and substantively) at a hearing at which Patch Shareholders have a right to appear and grants
the Final Order, the issuance of the Purchaser Shares issuable to Patch Shareholders under the Arrangement will not require registration
under the U.S. Securities Act, in reliance upon Section 3(a)(10) thereof. Each Party agrees to act in good faith, consistent with
the intent of the Parties and the intended treatment of the Arrangement as set forth in this Section 2.15.

 

	2.16	List
    of Securityholders

 

At
the reasonable request of the Purchaser from time to time, and in compliance with Applicable Laws, Patch shall, or shall direct
its registrar and transfer agent to, provide the Purchaser with a list of the registered holders of the Patch Shares and the Patch
Exchangeable Shares, together with their addresses and holdings, and a list of participants and book-based nominee registrants
such as CDS & Co., CEDE & Co. and the Depository Trust Company, and non-objecting beneficial owners of Patch Voting Securities,
together with their addresses and holdings. Patch shall from time to time require that its registrar and transfer agent furnish
Purchaser with such additional information, including updated or additional lists of holders of Patch Shares and Patch Exchangeable
Shares and lists of holdings and other assistance as the Purchaser may reasonably request.

 

	2.17	Patch
    Energy Disposition

 

The
Parties agree that Patch shall use its commercially reasonable efforts to enter into a purchase and sale agreement providing for
the disposition of the shares of Patch Energy owned by Patch, which transaction is to become effective as soon as reasonably practicable
following the Effective Date.

 

	2.18	Patch
    Note

 

The
Parties agree that Patch shall use its commercially reasonable efforts to: (i) pursue the Patch Note Collection and all Patch’s
legal and equitable rights arising in connection with the Patch Note; (ii) work to bring about the reasonable monetization of
the Patch Note through a settlement or other means; and (iii) collect and enforce any settlement, final judgement or award in
respect of the Patch Note, in each case with the aim of Patch receiving Patch Note Collection Proceeds on or before 10:00 a.m.
on the third last Business Day prior to the Effective Date.

 

In
the event that Patch does not receive Patch Note Collection Proceeds sufficient to the settle the full and final amount outstanding
under the Patch Note on or before the 10:00 a.m. on the third last Business Day prior to the Effective Date, Purchaser agrees
to execute and deliver the Rights Indenture, in form and substance acceptable to Patch, and to create and issue the CVRs to be
issued under the Arrangement on the Effective Date.

 

    	 		 

    	 	- 26 -	 

     

Article
3

COVENANTS

 

	3.1	Covenants
    of the Purchaser

 

From
the date hereof until the earlier of the Effective Time and the termination of this Agreement in accordance with Article 7, except
with the prior written consent of Patch and except as otherwise expressly permitted or specifically contemplated by this Agreement
or as otherwise required by Applicable Laws:

 

	 	(a)	other
    than as disclosed in writing to Patch: (i) the Purchaser’s business shall be conducted in the Ordinary Course; and (ii)
    the Purchaser shall use reasonable commercial efforts to preserve intact its business, organization, assets, properties and
    goodwill and maintain satisfactory relationships with contract counterparties and others having advantageous business relationships
    with it;
	 	 	 
	 	(b)	the
    Purchaser shall not, directly or indirectly do or permit to occur any of the following: (i) amend its constating documents;
    (ii) declare, set aside or pay any dividend or other distribution or payment (whether in cash, shares or property) in respect
    of its outstanding shares; (iii) redeem, purchase or otherwise acquire any of its outstanding shares or other securities;
    (iv) split, combine or reclassify any of its securities; (v) adopt a plan of liquidation or resolutions providing for the
    liquidation, dissolution or reorganization of the Purchaser; (vi) reduce the stated capital of the Purchaser or any of the
    outstanding Purchaser Shares; or (vii) enter into or modify any contract, agreement, commitment or arrangement with respect
    to any of the foregoing;
	 	 	 
	 	(c)	the
    Purchaser shall cause its current insurance (or re-insurance) policies (including, to the extent reasonably within its control,
    any such policies obtained by third parties on behalf of the Purchaser) not to be cancelled or terminated or any of the coverage
    thereunder to lapse, unless simultaneously with such termination, cancellation or lapse, replacement policies underwritten
    by insurance or re-insurance companies of recognized standing providing coverage equal to or greater than the coverage under
    the cancelled, terminated or lapsed policies for substantially similar premiums are in full force and effect and shall pay
    all premiums in respect of such insurance policies that become due prior to the Effective Date;
	 	 	 
	 	(d)	neither
    the Purchaser nor the Purchaser Board will agree or consent to the release of any director or officer of the Purchaser from
    any fiduciary duty owed by such person to the Purchaser or the holders of Purchaser Shares, including and without limitation,
    as would allow any such person to pursue any corporate opportunities that would otherwise be the property of the Purchaser
    or any subsidiary controlled by the Purchaser;
	 	 	 
	 	(e)	the
    Purchaser shall not take any action, refrain from taking any action, permit any action to be taken or not taken, inconsistent
    with this Agreement, which might, directly or indirectly, interfere or affect the consummation of the Arrangement, or that
    would render, or would reasonably be expected to render, any representation or warranty made by the Purchaser in this Agreement
    untrue in any material respect at any time prior to completion of the Arrangement or termination of this Agreement, whichever
    first occurs;

 

    	 		 

    	 	- 27 -	 

     

	 	(f)	the
    Purchaser shall promptly notify Patch in writing of any material adverse change (actual, anticipated, contemplated or, to
    the knowledge of the Purchaser threatened, financial or otherwise) in its business, operations, affairs, assets, capitalization,
    financial condition, licenses, permits, rights, privileges or liabilities, whether contractual or otherwise;
	 	 	 
	 	(g)	the
    Purchaser shall promptly advise Patch in writing of any material breach by the Purchaser of any representation, warranty,
    covenant, obligation or agreement contained in this Agreement;
	 	 	 
	 	(h)	the
    Purchaser will use its reasonable commercial efforts to take all necessary action to give effect to the transactions contemplated
    by this Agreement and the Arrangement, including using its reasonable commercial efforts to satisfy or cause the satisfaction
    of the conditions set forth in Section 5.1 and Section 5.3 as soon as reasonably practicable, to the extent the fulfillment
    of the same is within the control of the Purchaser;
	 	 	 
	 	(i)	the
    Purchaser shall use its reasonable commercial efforts to obtain the written consent of any third parties as are required for
    the consummation of the Arrangement or as otherwise contemplated hereby;
	 	 	 
	 	(j)	the
    Purchaser shall cause to be taken all corporate action to allot and reserve for issuance the Purchaser Shares to be issued
    in exchange for the Patch Common Shares;
	 	 	 
	 	(k)	if
    applicable, the Purchaser shall cause to be taken all corporate action to enter into the Rights Indenture and to create and
    issue the CVRs to each former holder of Patch Common Shares at the Effective Time;
	 	 	 
	 	(l)	except
    for non-substantive communications, and communications that the Purchaser is required to keep confidential pursuant to Applicable
    Laws, the Purchaser shall furnish promptly to Patch or Patch’s counsel, a copy of each notice, report, schedule or other
    document delivered, filed or received by the Purchaser from Governmental Authorities in connection with: (i) the Arrangement;
    (ii) any filings under Applicable Laws in connection with the transactions contemplated by this Agreement; and (iii) any dealings
    with Governmental Authorities in connection with the transactions contemplated by this Agreement;
	 	 	 
	 	(m)	the
    Purchaser shall, on the Effective Date, provide the Depositary an irrevocable direction authorizing and directing the Depositary
    to deliver the Aggregate Purchaser Share Consideration and, if applicable, Aggregate Additional Consideration issuable pursuant
    to the Arrangement to holders of the Patch Common Shares in accordance with the Plan of Arrangement;
	 	 	 
	 	(n)	the
    Purchaser shall use all reasonable commercial efforts to take, or cause to be taken, all other actions and to do, or cause
    to be done, all other things necessary, proper or advisable under all Applicable Laws to complete the Arrangement, in accordance
    with the terms thereof, including using its reasonable commercial efforts to:

 

    	 		 

    	 	- 28 -	 

     

	 	(i)	obtain
    all necessary Authorizations and filings as are required to be obtained or made by the Purchaser under any Applicable Laws
    and to satisfy any condition provided for under this Agreement;
	 	 	 
	 	(ii)	oppose,
    lift or rescind any injunction or restraining order or other order or action seeking to stop, or otherwise adversely affect
    its ability to consummate the Arrangement; and
	 	 	 
	 	(iii)	co-operate
    with Patch in connection with the performance by it of its obligations hereunder;

 

	 	(o)	the
    Purchaser will use its reasonable commercial efforts to assist Patch in obtaining the Interim Order and the Final Order and
    to carry out the intent or effect of this Agreement and the Arrangement;
	 	 	 
	 	(p)	the
    Purchaser will use its reasonable commercial efforts to defend all material lawsuits and other legal, regulatory and other
    proceedings arising after the date hereof against it challenging or affecting this Agreement, the Arrangement or the transactions
    contemplated hereby;
	 	 	 
	 	(q)	the
    Purchaser will use its reasonable commercial efforts to take, or cause to be taken, all actions and to do, or cause to be
    done, all things necessary, proper or advisable to close the Private Placement for gross proceeds of not less than US$1,000,000;
    and
	 	 	 
	 	(r)	the
    Purchaser will use its reasonable commercial efforts to take, or cause to be taken, all actions and to do, or cause to be
    done, all things necessary, proper or advisable to ensure that the Purchaser has entered into and performed all obligations
    required to be performed by it under the Real Property Agreements at or prior to the Effective Time.

 

	3.2	Covenants
    of Patch

 

From
the date hereof until the earlier of the Effective Time and the termination of this Agreement in accordance with Article 7, except
with the prior written consent of the Purchaser, and except as otherwise expressly permitted or specifically contemplated by this
Agreement or as required by Applicable Laws:

 

	 	(a)	other
    than as disclosed in writing to the Purchaser: (i) Patch’s business shall be conducted only in the Ordinary Course;
    and (ii) Patch shall use reasonable commercial efforts to preserve intact its business, organization, assets, properties and
    goodwill and maintain satisfactory relationships with contract counterparties and others having advantageous business relationships
    with it, in each case, except where the failure to do so would not reasonably be expected to have a Material Adverse Effect
    on Patch;

 

    	 		 

    	 	- 29 -	 

     

	 	(b)	Patch
    shall consult with the Purchaser in respect of the ongoing material business and affairs of Patch and its subsidiaries and
    keep the Purchaser apprised of all material developments relating thereto;
	 	 	 
	 	(c)	Patch
    shall not, and shall not permit any of its subsidiaries to, directly or indirectly, do or permit to occur any of the following:
    (i) amend its constating documents; (ii) declare, set aside or pay any dividend or other distribution or payment (whether
    in cash, shares or property) in respect of its outstanding shares; (iii) except as specifically contemplated in this Arrangement
    Agreement and the Plan of Arrangement, redeem, purchase or otherwise acquire any of its outstanding shares or other securities;
    (iv) issue (other than Patch Common Shares issued on the redemption of outstanding Patch Exchangeable Shares as specifically
    contemplated by this Arrangement Agreement), grant, sell or pledge or agree to issue, grant, sell or pledge any shares, or
    securities convertible into or exchangeable or exercisable for, or otherwise evidencing a right to acquire shares; (v) split,
    combine or reclassify any of its securities; (vi) pursue, complete or agree to complete any corporate acquisition or disposition,
    amalgamation, merger, arrangement, (vii) make any material change to the business, capital or affairs of Patch or any of its
    subsidiaries, except as specifically contemplated in this Arrangement Agreement; (viii) adopt a plan of liquidation or resolutions
    providing for the liquidation, dissolution, merger, consolidation or reorganization of Patch or any of its subsidiaries; (ix)
    reduce the stated capital of Patch or any of its subsidiaries or any of the outstanding Patch Common Shares; or (x) enter
    into or modify any contract, agreement, commitment or arrangement with respect to any of the foregoing;
	 	 	 
	 	(d)	Patch
    and its subsidiaries shall not, directly or indirectly: (i) sell, pledge, dispose of or encumber any assets; (ii) expend or
    commit to expend any amounts with respect to any capital expenditures or future commitments; (iii) expend or commit to expend
    any amounts with respect to any operating expenses or general and administrative expenses; (iv) acquire (by merger, amalgamation,
    consolidation or acquisition of shares or assets) any corporation, partnership or other business organization or division
    thereof, or make any investment therein either by purchase of shares or securities, contributions of capital or property transfer;
    (v) acquire any assets; (vi) incur any indebtedness for borrowed money in or any other material liability or obligation or
    issue any debt securities or assume, guarantee, endorse or otherwise become responsible for, the obligations of any other
    individual or entity, or make any loans or advances, other than in respect of (A) fees payable to legal and other advisors
    in respect of the Arrangement, and (B) in the Ordinary Course; (vii) pay, discharge or satisfy any material claims, liabilities
    or obligations except as reflected or reserved against in the Patch Financial Statements; (viii) authorize, recommend or propose
    any release or relinquishment or any material contract right; (ix) waive, release, grant or transfer any material rights of
    value or modify or change in any material respect any existing material contract; (x) enter into or terminate any hedges,
    swaps or other financial instruments or like transactions; or (xi) authorize or propose any of the foregoing, or enter into
    or modify any contract, agreement, commitment or transaction to do any of the foregoing;
	 	 	 
	 	(e)	other
    than in connection with payments contemplated by Section 2.8, neither Patch nor any of its subsidiaries shall: (i) hire any
    officer or director; (ii) increase the compensation of any officer, director or consultant in any form; (iii) take any action
    with respect to the amendment of any termination pay policies or arrangements for any officers, directors or consultants;
    (iv) grant any advance or any loan to any officer or director or any other party; or (v) adopt or amend or make any contribution
    to any bonus, employee benefit plan, profit sharing, deferred compensation, insurance, incentive compensation, other compensation
    or other similar plan, agreement, stock purchase plan, fund or arrangement for the benefit of officers, directors or consultants;

 

    	 		 

    	 	- 30 -	 

     

	 	(f)	Patch
    will promptly provide to the Purchaser, prior to filing or issuance of the same, any proposed public disclosure document,
    including any news release or material change report, subject to Patch’s obligations under Applicable Laws to make continuous
    disclosure and timely disclosure of material information, and the Purchaser agrees to keep such information confidential until
    it is filed as part of the Patch Public Record;
	 	 	 
	 	(g)	Patch
    shall cause its current insurance (or re-insurance) policies or those policies of its subsidiaries (including, to the extent
    reasonably within its control, any such policies obtained by third parties on behalf of Patch or its subsidiaries) not to
    be cancelled or terminated or any of the coverage thereunder to lapse, unless simultaneously with such termination, cancellation
    or lapse, replacement policies underwritten by insurance or re-insurance companies of nationally recognized standing providing
    coverage equal to or greater than the coverage under the cancelled, terminated or lapsed policies for substantially similar
    premiums are in full force and effect and shall pay all premiums in respect of such insurance policies that become due prior
    to the Effective Date;
	 	 	 
	 	(h)	Patch
    and its subsidiaries shall withhold from any payment made to any of their present or former directors, officers or consultants
    contemplated by this Agreement all amounts required by law or administrative practice to be withheld by it on account of Taxes
    and other source deductions;
	 	 	 
	 	(i)	neither
    Patch nor the Patch Board nor any subsidiary of Patch will agree or consent to the release of any director or officer of Patch
    or any subsidiary of Patch from any fiduciary duty owed by such person to Patch or any subsidiary of Patch or the Patch Shareholders,
    including as would allow any such person to pursue any corporate opportunities that would otherwise be the property of Patch
    or any of its subsidiaries;
	 	 	 
	 	(j)	Patch
    shall not take any action, refrain from taking any action, permit any action to be taken or not taken by it or any of its
    subsidiaries, inconsistent with this Agreement, which might directly or indirectly interfere or affect the consummation of
    the Arrangement, or that would render, or would reasonably be expected to render, any representation or warranty made by Patch
    or by Patch on behalf of its subsidiaries in this Agreement untrue in any material respect at any time prior to completion
    of the Arrangement or termination of this Agreement, whichever first occurs;
	 	 	 
	 	(k)	Patch
    shall promptly notify the Purchaser in writing of any material change (actual, anticipated, contemplated or, to the knowledge
    of Patch threatened, financial or otherwise) in its or its subsidiaries’ business, operations, affairs, assets, capitalization,
    financial condition, Authorizations, rights, privileges or liabilities, whether contractual or otherwise;

 

    	 		 

    	 	- 31 -	 

     

	 	(l)	Patch
    shall promptly advise the Purchaser in writing of any breach by Patch of any representation, warranty, covenant, obligation
    or agreement contained in this Agreement;
	 	 	 
	 	(m)	Patch
    will use its reasonable commercial efforts to satisfy or cause the satisfaction of the conditions set forth in Sections 5.1
    and 5.2 as soon as practicable, to the extent the satisfaction of the same is within the control of Patch;
	 	 	 
	 	(n)	Patch
    will use its reasonable commercial efforts to take all necessary action to give effect to the transactions contemplated by
    this Agreement and the Arrangement, including using its reasonable commercial efforts to satisfy or cause the satisfaction
    of the conditions set forth in Section 5.1 and Section 5.2 as soon as reasonably practicable, to the extent the fulfillment
    of the same is within the control of Patch;
	 	 	 
	 	(o)	Patch
    shall use its reasonable commercial efforts to obtain the written consent of any third parties as are required for the consummation
    of the Arrangement or as otherwise contemplated hereby;
	 	 	 
	 	(p)	except
    for non-substantive communications with the holders of securities of Patch, and communications that Patch is required to keep
    confidential pursuant to Applicable Laws, Patch shall furnish promptly to the Purchaser or the Purchaser’s counsel,
    a copy of each notice, report, schedule or other document delivered, filed or received by Patch from holders of securities
    of Patch or Governmental Authorities in connection with: (i) the Arrangement; (ii) the Patch Meeting; (iii) any filings under
    Applicable Laws in connection with the transactions contemplated by this Agreement; and (iv) any dealings with Governmental
    Authorities in connection with the transactions contemplated by this Agreement;
	 	 	 
	 	(q)	Patch
    shall provide to the Purchaser all such information respecting its business, operations and affairs as may be reasonably requested
    from time to time by the Purchaser;
	 	 	 
	 	(r)	Patch
    and its subsidiaries shall:

 

	 	(i)	duly
    and timely file all Returns required to be filed by it and duly and timely file all required Returns on or after the date
    hereof but prior to the Effective Time (including all applicable Returns for its most recent financial year end) and ensure
    that all such Returns are true, complete and correct in all material respects;
	 	 	 
	 	(ii)	timely
    pay all Taxes that are due and payable prior to the Effective Time (other than those that are being contested in good faith
    and in respect of which reserves have been provided in the Patch Financial Statements);
	 	 	 
	 	(iii)	not
    make a request for a Tax ruling or enter into any agreement with any taxing authorities;

 

    	 		 

    	 	- 32 -	 

     

	 	(iv)	not
    settle or compromise any claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy relating
    to Taxes;
	 	 	 
	 	(v)	not
    change in any material respect any of its methods of reporting income, deductions or accounting for income tax purposes from
    those employed in the preparation of its income tax return for the taxation year ending May 31, 2015 and prior to the date
    hereof, except as may be required by Applicable Laws;
	 	 	 
	 	(vi)	properly
    reserve (and reflect such reserves in its books and records and financial statements) in accordance with past practice and
    in the Ordinary Course, for all Taxes accruing in respect of Patch which are not due or payable prior to the Effective Date;
	 	 	 
	 	(vii)	not,
    directly or indirectly, reduce the amount or amend the characterization of any of its individual categories of tax attributes;
    and
	 	 	 
	 	(viii)	not
    make any Tax filings outside the Ordinary Course, including making, amending or rescinding any Return, election or designation,
    without the consent of the Purchaser, such consent not to be unreasonably withheld,
	 	 	 
	 	except
    where the failure to comply with any of the foregoing, individually or collectively, would not have a Material Adverse Effect
    on Patch; and

 

	 	(s)	Patch
    shall provide to the Purchaser the Patch Working Capital Certificate by no later than 10:00 a.m. on the third last Business
    Day prior to the Effective Date.

 

	3.3	Mutual
    Covenants Regarding the Arrangement

 

From
the date hereof until the earlier of the completion of the Arrangement and the termination of this Agreement in accordance with
Article 7, each Party shall:

 

	 	(a)	use
    its reasonable commercial efforts to complete the Arrangement on or before December 30, 2016 and, in any event, no later than
    the Outside Date;
	 	 	 
	 	(b)	use
    its reasonable commercial efforts to satisfy (or cause the satisfaction of) the conditions precedent to its obligations hereunder
    and to take, or cause to be taken, all other action and to do, or cause to be done, all other things necessary, proper or
    advisable under Applicable Laws to complete the Arrangement, including using reasonable commercial efforts to:

 

	 

         
	(i)	obtain
    all necessary waivers, consents and approvals required to be obtained by it from other parties to loan agreements, leases
    and other contracts; and
	 	 	 
	 	(ii)	obtain
    all necessary consents, assignments, waivers and amendments to or terminations of any instruments and Authorizations and take
    such measures as may be appropriate to fulfill its obligations hereunder and to carry out the transactions contemplated by
    this Agreement;

    	 		 

    	 	- 33 -	 

     

	 	(c)	use
    its reasonable commercial efforts to effect all necessary registrations and filings and submissions of information requested
    by Governmental Authorities or required to be effected or submitted by it in connection with the Arrangement, and to obtain
    all necessary consents, waivers and approvals (including Regulatory Approvals) required to be obtained by it in connection
    with the Arrangement; and
	 	 	 
	 	(d)	use
    its reasonable commercial efforts to cooperate with the other in connection with the performance by the other of their obligations
    under this Section 3.3 including to maintain ongoing communications as between representatives of the Parties.

 

	3.4	Patch’s
    Covenants Regarding Non-Solicitation

 

	 	(a)	Patch
    shall, and shall cause its subsidiaries and Representatives to immediately cease and terminate, and cause to be ceased and
    terminated, any solicitation, encouragement, discussion or negotiations commenced prior to the date of this Agreement with
    any person (other than the Purchaser) with respect to any inquiry, proposal or offer that constitutes, or may reasonably be
    expected to constitute or lead to, an Acquisition Proposal.
	 	 	 
	 	(b)	Patch
    represents and warrants that it has not waived any confidentiality, standstill, non-disclosure or similar agreement or restriction
    to which it or any of its subsidiaries is a party and covenants and agrees that: (i) it shall take all necessary action to
    enforce each confidentiality, standstill, non-disclosure or similar agreement or restriction; and (ii) neither it, nor any
    of its subsidiaries nor any of their respective Representatives have released or will, without the prior written consent of
    the Purchaser (which may be withheld or delayed in the Purchaser’s sole and absolute discretion), release any person
    from, or waive, amend, suspend or otherwise modify such person’s obligations respecting Patch, or any of its subsidiaries,
    under any confidentiality, standstill, non-disclosure or similar agreement or restriction to which it or any of its subsidiaries
    is a party.
	 	 	 
	 	(c)	If
    Patch or any of its subsidiaries or any of their respective Representatives receives or otherwise becomes aware of any inquiry,
    proposal or offer that constitutes or may reasonably be expected to constitute or lead to an Acquisition Proposal, Patch shall
    immediately notify the Purchaser, at first orally, and then promptly and in any event within 24 hours in writing, of:

 

	 

         
	(i)	such
    Acquisition Proposal, inquiry, proposal, offer or request, including a description of its material terms and conditions and
    the identity of all persons making the Acquisition Proposal, inquiry, proposal, offer or request; and
	 	 	 
	 	(ii)	at
    the Purchaser’s reasonable request, the status of developments and negotiations with respect to such Acquisition Proposal,
    inquiry, proposal, offer or request, including any changes, modifications or other amendments to any such Acquisition Proposal,
    inquiry, proposal, offer or request.

 

	 

         
	(d)	Except
    as expressly provided in this Section 3.4, Patch shall not, directly or indirectly, do or authorize or permit any of its subsidiaries
    or Representatives, to do any of the following:

 

    	 		 

    	 	- 34 -	 

     

	 	(i)	solicit,
    initiate, encourage or otherwise facilitate (including by way of furnishing or providing copies of, access to, or disclosure
    of, any confidential information, books or records of Patch or any of its subsidiaries or entering into any form of agreement,
    arrangement or understanding) any inquiry, proposal or offer that constitutes or may reasonably be expected to constitute
    or lead to, an Acquisition Proposal;
	 	 	 
	 	(ii)	enter
    into or otherwise engage or participate in any discussions or negotiations with any person (other than the Purchaser) regarding
    any inquiry, proposal or offer that constitutes or may reasonably be expected to constitute or lead to, an Acquisition Proposal;
	 	 	 
	 	(iii)	withdraw,
    amend, modify or qualify, or publicly propose or state an intention to withdraw, amend, modify or qualify, the Patch Board
    Recommendation;
	 	 	 
	 	(iv)	accept,
    approve, endorse or recommend, or publicly propose to accept, approve, endorse or recommend, or take no position or remain
    neutral with respect to, any publicly announced or publicly proposed Acquisition Proposal (it being understood that publicly
    taking no position or a neutral position with respect to any Acquisition Proposal for a period of no more than three Business
    Days following the formal announcement of such Acquisition Proposal will not be considered to be in violation of this Section
    3.4(d) provided the Patch Board has rejected such Acquisition Proposal and affirmed the Patch Board Recommendation before
    the end of such three Business Day period); or
	 	 	 
	 	(v)	enter
    into or publicly propose to enter into any agreement in respect of an Acquisition Proposal (other than a confidentiality and
    standstill agreement referred to in Section 3.4(d)(vi)(D)).
	 	 	 
	 	provided,
    however, that notwithstanding the foregoing provisions of this Section 3.4(d), if at any time prior to the Patch Meeting,
    Patch receives a written Acquisition Proposal, it may:

 

	 	(vi)	engage
    in or participate in discussions or negotiations with such person regarding such Acquisition Proposal, and may provide copies
    of, access to or disclosure of confidential information, books or records of Patch and its subsidiaries, if and only if:

 

	 	(A)	the
    Patch Board first determines in good faith, after consultation with its legal counsel, that such Acquisition Proposal constitutes
    or could reasonably be expected to lead to a Superior Proposal;
	 	 	 
	 	(B)	such
    person was not restricted from making such Acquisition Proposal pursuant to an existing confidentiality, standstill, non-disclosure,
    use, business purpose or similar restriction with Patch or any of its subsidiaries;
	 	 	 
	 	(C)	Patch
    has been, and continues to be, in compliance with its obligations under this Section 3.4;
	 	 	 
	 	(D)	prior
    to providing any such copies, access, or disclosure, Patch enters into a confidentiality and standstill agreement with such
    person and any copies, access or disclosure provided to such person shall have already been (or simultaneously be) provided
    to the Purchaser; and
	 	 	 
	 	(E)	Patch
    promptly provides the Purchaser with:

 

    	 		 

    	 	- 35 -	 

     

	 	(1)	prior
    written notice stating Patch’s intention to participate in such discussions or negotiations and to provide such copies,
    access or disclosure; and
	 	 	 
	 	(2)	prior
    to providing any such copies, access or disclosure, a true, complete and final executed copy of the confidentiality and standstill
    agreement referred to in Section 3.4(d)(vi)(D).

 

	 	(e)	If
    Patch receives an Acquisition Proposal that constitutes a Superior Proposal prior to approval of the Arrangement Resolution
    by the Patch Shareholders, the Patch Board, may enter into a definitive agreement with respect to such Acquisition Proposal,
    if and only if:

 

	 	(i)	the
    person making the Superior Proposal was not restricted from making such Superior Proposal pursuant to an existing confidentiality,
    standstill, non-disclosure or similar restriction;
	 	 	 
	 	(ii)	Patch
    has been, and continues to be, in compliance with its obligations under this Section 3.4;
	 	 	 
	 	(iii)	Patch
    has delivered to the Purchaser a written notice of the determination of the Patch Board that such Acquisition Proposal constitutes
    a Superior Proposal and of the intention of the Patch Board to enter into such definitive agreement with respect to such Superior
    Proposal, together with a written notice regarding the value and financial terms that the Patch Board has determined should
    be ascribed to any non-cash consideration offered under the Acquisition Proposal (the “Superior Proposal Notice”);
	 	 	 
	 	(iv)	Patch
    has provided the Purchaser with a copy of the definitive agreement for the Superior Proposal and all supporting agreements,
    if any;
	 	 	 
	 	(v)	at
    least three Business Days (the “Matching Period”) have elapsed from the date that is the later of the date
    on which the Purchaser received the Superior Proposal Notice and a copy of the proposed definitive agreement for the Superior
    Proposal from Patch;
	 	 	 
	 	(vi)	during
    any Matching Period, the Purchaser has had the opportunity (but not the obligation), in accordance with Section 3.4(f) to
    offer to amend this Agreement and the Arrangement in order for such Acquisition Proposal to cease to be a Superior Proposal;

 

    	 		 

    	 	- 36 -	 

     

	 	(vii)	if
    the Purchaser has offered to amend this Agreement and the Arrangement under Section 3.4(f), the Patch Board has determined
    in good faith, after consultation with their legal counsel, that such Acquisition Proposal continues to constitute a Superior
    Proposal compared to the terms of the Arrangement as proposed to be amended by the Purchaser under Section 3.4(f);
	 	 	 
	 	(viii)	after
    the Matching Period, the Patch Board has determined in good faith, after consultation with outside legal counsel that it is
    necessary for Patch to enter into a definitive agreement with respect to such Superior Proposal in order for the Patch Board
    to act in a manner consistent with its fiduciary duties.

 

	 	(f)	During
    the Matching Period, or such longer period as Patch may approve in writing for such purpose: (i) the Patch Board shall review
    any offer under Section 3.4(e)(vi) to amend the terms of this Agreement and the Arrangement in good faith in order to determine
    whether such proposal would, upon acceptance, result in the Acquisition Proposal previously constituting a Superior Proposal
    ceasing to be a Superior Proposal; and (ii) Patch shall negotiate in good faith with the Purchaser to make such amendments
    to the terms of this Agreement and the Arrangement as would enable the Purchaser to proceed with the transactions contemplated
    by this Agreement on such amended terms. If the Patch Board determines that such Acquisition Proposal would cease to be a
    Superior Proposal, it shall promptly so advise the Purchaser and the Parties shall amend this Agreement to reflect such offer,
    and shall take and cause to be taken all such actions as are necessary to give effect to the foregoing.
	 	 	 
	 	(g)	Each
    successive amendment to any Acquisition Proposal shall constitute a new Acquisition Proposal for the purposes of this Section
    3.4 and, if applicable, the Purchaser shall be afforded a new three Business Day Matching Period from the later of the date
    on which the Purchaser received the Superior Proposal Notice and a copy of the proposed definitive agreement for the new Superior
    Proposal from Patch.
	 	 	 
	 	(h)	The
    Patch Board shall promptly reaffirm the Patch Board Recommendation by press release after any Acquisition Proposal is publicly
    made if: (i) the Acquisition Proposal is determined not to be a Superior Proposal; or (ii) a proposed amendment to the terms
    of this Agreement as contemplated under Section 3.4(f) would result in an Acquisition Proposal no longer being a Superior
    Proposal. The Purchaser and its outside legal counsel shall be provided with a reasonable opportunity to review the form and
    content of any such press release and all reasonable amendments to such press release as requested by the Purchaser and its
    legal counsel shall be made to such press release.
	 	 	 
	 	(i)	If
    Patch provides a Superior Proposal Notice to the Purchaser after a date that is less than three Business Days before the Patch
    Meeting, the Parties shall either proceed with or postpone the Patch Meeting, as determined by the Patch Board, acting reasonably
    in a manner consistent with its fiduciary duties, to a date that is not more than three Business Days after the scheduled
    date of the Patch Meeting but before the Outside Date, to the extent permitted by Applicable Law.

 

    	 		 

    	 	- 37 -	 

     

	 	(j)	Patch
    may comply with MI 62-104 and similar provisions under Canadian Securities Laws relating to the provision of directors’
    circulars’ and make appropriate disclosure with respect thereto to its securityholders.
	 	 	 
	 	(k)	Without
    limiting the generality of the foregoing, Patch shall advise its Representatives of the prohibitions set out in this Section
    3.4 and any violation of the restrictions set forth in this Section 3.4 by any such Representative shall be deemed to be a
    breach of this Section 3.4 by Patch.

 

	3.5	Access
    to Information

 

	 	(a)	From
    and after the date hereof until the earlier of the Effective Time or the termination of this Agreement, the Purchaser shall,
    subject to compliance with Applicable Laws and the terms of any contracts, upon reasonable notice, provide Patch and its Representatives
    access, during normal business hours and at such other time or times as Patch and its Representatives may reasonably request,
    to its premises, books, contracts, records, properties and management personnel and shall furnish promptly to Patch all information
    concerning its business, properties and personnel as Patch may reasonably request.
	 	 	 
	 	(b)	The
    Purchaser agrees to keep Patch fully apprised in a timely manner of every circumstance, action, occurrence or event occurring
    or arising after the date hereof that would be relevant and material to a prudent manager of the business and operations of
    Purchaser. The Purchaser shall confer with and obtain Patch’s approval (not to be unreasonably withheld or delayed)
    prior to taking action (other than in emergency situations) with respect to all material matters with respect to its business;
	 	 	 
	 	(c)	Without
    limiting the generality of any of the other provisions of this Agreement, Purchaser shall make available or cause to be made
    available to Patch all land, legal, title documents and related files, books, papers, financial information, Authorizations,
    environmental audits, assessments and reports, all correspondence sent to or received by any Governmental Authority and pertinent
    documents or agreements, as reasonably requested by Patch.
	 	 	 
	 	(d)	The
    Parties acknowledge and agree that all information provided by Purchaser to Patch and its Representatives pursuant to this
    Section 3.5 is strictly confidential.

 

	3.6	Resignations

 

Patch
shall use its reasonable commercial efforts to obtain and deliver to the Purchaser at the Effective Time, resignations effective
as of the Effective Time of all of the directors and officers of Patch and its subsidiaries as requested by the Purchaser. Such
resignations shall be received in consideration for the Purchaser and Patch providing releases to, and receiving releases from,
each such person (the “Mutual Releases”), which Mutual Releases shall be in a form mutually acceptable to the
Purchaser and Patch, acting reasonably, and contain exceptions for amounts or obligations owing to such directors and/or officers,
including payments due pursuant to the Arrangement as a Patch Common Shareholder and other compensation or pursuant to directors’
and officers’ indemnities or insurance arrangements.

 

    	 		 

    	 	- 38 -	 

     

Article
4

REPRESENTATIONS AND WARRANTIES

 

	4.1	Representations
    and Warranties of the Purchaser

 

	 	(a)	Except
    as qualified by the Purchaser Disclosure Letter (which shall make reference to the applicable section in respect of which
    such qualification is being made), the Purchaser hereby makes to Patch the representations and warranties set forth in Schedule
    C hereto and acknowledges that Patch is relying upon such representations and warranties in connection with the entering into
    of this Agreement and the carrying out of the Arrangement.
	 	 	 
	 	(b)	Any
    investigation by Patch and its advisors shall not mitigate, diminish or affect the representations and warranties of the Purchaser
    pursuant to this Agreement.
	 	 	 
	 	(c)	The
    representations and warranties of the Purchaser contained in this Agreement shall expire and be terminated on the earlier
    of the Effective Date and the date on which this Agreement is terminated, provided that such termination shall not affect
    any claim arising from a breach of any such representations or warranties arising prior to termination.

 

	4.2	Representations
    and Warranties of Patch

 

	 	(a)	Except
    as qualified by the Patch Disclosure Letter (which shall make reference to the applicable section in respect of which such
    qualification is being made) or as set forth in the Patch Public Record, Patch hereby makes to the Purchaser the representations
    and warranties set forth in Schedule D hereto and acknowledges that the Purchaser is relying upon such representations and
    warranties in connection with the entering into of this Agreement and the carrying out of the Arrangement.
	 	 	 
	 	(b)	Any
    investigation by the Purchaser and its advisors shall not mitigate, diminish or affect the representations and warranties
    of Patch pursuant to this Agreement.
	 	 	 
	 	(c)	The
    representations and warranties of Patch contained in this Agreement shall expire and be terminated on the earlier of the Effective
    Date and the date on which this Agreement is terminated, provided that such termination shall not affect any claim arising
    from a breach of any such representations or warranties arising prior to termination.

 

Article
5

CONDITIONS PRECEDENT

 

	5.1	Mutual
    Conditions Precedent

 

The
respective obligations of the Parties to consummate the transactions contemplated by this Agreement, and in particular the completion
of the Arrangement, are subject to the satisfaction, on or before the Effective Date or such other time specified, of the following
conditions, any of which may be waived by the mutual written consent of such Parties without prejudice to their right to rely
on any other of such conditions:

 

    	 		 

    	 	- 39 -	 

     

	 	(a)	the
    Interim Order and Final Order shall have been granted on terms consistent with this Agreement, and shall not have been set
    aside or modified in a manner unacceptable to either of the Parties, each acting reasonably, on appeal or otherwise;
	 	 	 
	 	(b)	the
    Arrangement Resolution shall have been passed by the Patch Shareholders in accordance with the Interim Order;
	 	 	 
	 	(c)	the
    Effective Date shall have occurred on or before the Outside Date;
	 	 	 
	 	(d)	all
    Regulatory Approvals and third party approvals and consents necessary for the completion of the Arrangement the failure of
    which to obtain would reasonably be expected to have a Material Adverse Effect on the Purchaser (after giving effect to the
    Arrangement) or prevent or materially impair or materially delay or could reasonably be expected to prevent or materially
    impair or delay the ability of either Party to consummate the transactions contemplated by this Agreement by the Outside Date
    shall have been obtained on terms and conditions satisfactory to the Parties, each acting reasonably;
	 	 	 
	 	(e)	no
    action shall have been taken under any existing Applicable Law or regulation, nor any statute, rule, regulation or order which
    is enacted, enforced, promulgated or issued by any Governmental Authority that:

 

	 	(i)	makes
    illegal or otherwise directly or indirectly restrains, enjoins or prohibits the Arrangement or any other transactions contemplated
    by this Agreement; or
	 	 	 
	 	(ii)	results
    in a judgment or assessment of material damages against the Parties or their subsidiaries, directly or indirectly, relating
    to the transactions contemplated by this Agreement that would have a Material Adverse Effect upon the Purchaser (after giving
    effect to the Arrangement) or prevent or materially impair or materially delay or could reasonably be expected to prevent
    or materially impair or delay the ability of either Party to consummate the transactions contemplated by this Agreement by
    the Outside Date.

 

The
foregoing conditions are for the mutual benefit of the Parties and may be asserted by either Party regardless of the circumstances
and may be waived by either Party (with respect to such Party) in their sole discretion, in whole or in part, at any time and
from time to time without prejudice to any other rights which such Party may have.

 

	5.2	Additional
    Conditions to Obligations of the Purchaser

 

The
obligation of the Purchaser to consummate the transactions contemplated by this Agreement, and in particular to complete the Arrangement,
is subject to the satisfaction, on or before the Effective Date or such other time specified, of the following conditions:

 

	 	(a)	all
    covenants of Patch under this Agreement to be performed on or before the Effective Date shall have been duly complied with
    or performed by Patch in all material respects; and the Purchaser shall have received a certificate of Patch addressed to
    the Purchaser dated the Effective Date, signed on behalf of Patch by an officer of Patch (on Patch’s behalf and without
    personal liability), confirming the same as at the Effective Date;

 

    	 		 

    	 	- 40 -	 

     

	 	(b)	the
    representations and warranties of Patch set forth in this Agreement shall be true and correct (for representations and warranties
    qualified as to materiality, true and correct in all respects, and for all other representations and warranties, true and
    correct in all material respects) as of the Effective Date, as though made on and as of the Effective Date (except for representations
    and warranties made as of a specified date, the accuracy of which shall be determined as of that specified date), except where
    any inaccuracy in such representations and warranties, individually or in the aggregate, would not or would not reasonably
    be expected to have a Material Adverse Effect on Patch or the Purchaser (after giving effect to the Arrangement) or prevent
    or materially impair or materially delay or could reasonably be expected to prevent or materially impair or delay the ability
    of Patch to consummate the transactions contemplated by this Agreement by the Outside Date; and the Purchaser shall have received
    a certificate of Patch addressed to the Purchaser and dated the Effective Date, signed on behalf of Patch by an officer of
    Patch (on Patch’s behalf and without personal liability), confirming the same as at the Effective Date;
	 	 	 
	 	(c)	Patch
    shall have furnished the Purchaser with:

 

	 	(i)	certified
    copies of the resolutions duly passed by the Patch Board approving this Agreement and the consummation of the transactions
    contemplated by this Agreement; and
	 	 	 
	 	(ii)	a
    certified copy of the Arrangement Resolution;

 

	 	(d)	there
    shall be no proceedings against or involving Patch or Patch Energy, or in respect of the business or assets of Patch or Patch
    Energy (whether in progress or, to the knowledge of Patch, threatened), that if adversely determined, would reasonably be
    expected to have a Material Adverse Effect on Patch and there shall be no judgment, writ, decree, injunction, rule, award
    or order of any Governmental Authority outstanding against Patch or Patch Energy, in respect of their business or assets that
    has had or would reasonably be expected to have a Material Adverse Effect on Patch or the Purchaser (after giving effect to
    the Arrangement) or prevent or materially impair or materially delay or could reasonably be expected to prevent or materially
    impair or delay the ability of either Party to consummate the transactions contemplated by this Agreement by the Outside Date;
	 	 	 
	 	(e)	all
    of the outstanding Patch Exchangeable Shares shall have been redeemed and the Patch Voting Trust Agreement terminated;
	 	 	 
	 	(f)	on
    the Effective Date, each of the directors, officers or consultants of Patch and its subsidiaries who are required by Section
    3.6 to deliver resignations and/or Mutual Releases to the Purchaser shall have done so and such resignations and Mutual Releases
    shall remain in effect; and
	 	 	 
	 	(g)	no
    Material Adverse Change shall have occurred in relation to Patch after the date hereof and prior to the Effective Date.

 

    	 		 

    	 	- 41 -	 

     

The
conditions in this Section 5.2 are for the exclusive benefit of the Purchaser and may be asserted by the Purchaser regardless
of the circumstances or may be waived by the Purchaser in its sole discretion, in whole or in part, at any time and from time
to time without prejudice to any other rights which the Purchaser may have.

 

	5.3	Additional
    Conditions to Obligations of Patch

 

The
obligation of Patch to consummate the transactions contemplated by this Agreement, and in particular to complete the Arrangement,
is subject to the satisfaction, on or before the Effective Date or such other time specified, of the following conditions:

 

	 	(a)	all
    covenants of the Purchaser under this Agreement to be performed on or before the Effective Date shall have been duly complied
    with or performed by the Purchaser in all material respects; and Patch shall have received a certificate of the Purchaser
    addressed to Patch dated the Effective Date, signed on behalf of the Purchaser by an officer of the Purchaser (on the Purchaser’s
    behalf and without personal liability), confirming the same as at the Effective Date;
	 	 	 
	 	(b)	the
    representations and warranties of the Purchaser set forth in this Agreement shall be true and correct (for representations
    and warranties qualified as to materiality, true and correct in all respects, and for all other representations and warranties,
    true and correct in all material respects) as of the Effective Date, as though made on and as of the Effective Date (except
    for representations and warranties made as of a specified date, the accuracy of which shall be determined as of that specified
    date), except where any inaccuracy in such representations and warranties, individually or in the aggregate, would not or
    would not reasonably be expected to have a Material Adverse Effect on the Purchaser or prevent or materially impair or materially
    delay or could reasonably be expected to prevent or materially impair or delay the ability of either Party to consummate the
    transactions contemplated by this Agreement by the Outside Date; and Patch shall have received a certificate of the Purchaser
    addressed to Patch and dated the Effective Date, signed on behalf of the Purchaser by an officer of the Purchaser (on the
    Purchaser’s behalf and without personal liability), confirming the same as at the Effective Date;
	 	 	 
	 	(c)	the
    Purchaser shall have furnished Patch with certified copies of the resolutions duly passed by the Purchaser Board approving
    this Agreement and the consummation of the transactions contemplated by this Agreement, which resolutions must be valid and
    subsisting;
	 	 	 
	 	(d)	on
    the Effective Date the Purchaser shall have provided a Mutual Release to all of the directors, officers and consultants of
    Patch and Patch Energy who have provided a Mutual Release to the Purchaser and all payments due to such persons shall have
    been made;
	 	 	 
	 	(e)	if
    applicable, on the Effective Date the Purchaser shall have entered into the Rights Indenture and as of the Effective Date
    shall be legal, valid and binding on the parties thereto and in full force and effect and enforceable by the parties in accordance
    with its terms, and Patch shall have received a certificate of the Purchaser addressed to Patch and dated the Effective Date,
    signed on behalf of the Purchaser by an officer of the Purchaser (on the Purchaser’s behalf and without personal liability),
    confirming the same as at the Effective Date, and the terms of such agreement shall be satisfactory to Patch, acting reasonably;

 

    	 		 

    	 	- 42 -	 

     

	 	(f)	the
    Acquisition Agreement shall be legal, valid and binding on the parties thereto and in full force and effect and enforceable
    by the Purchaser in accordance with its terms, and Patch shall have received a certificate of the Purchaser addressed to Patch
    and dated the Effective Date, signed on behalf of the Purchaser by an officer of the Purchaser (on the Purchaser’s behalf
    and without personal liability), confirming the same as at the Effective Date, and the terms of such agreement shall be satisfactory
    to Patch, acting reasonably;
	 	 	 
	 	(g)	each
    of the Real Property Agreements shall be legal, valid and binding on the parties thereto and in full force and effect and
    enforceable by the Purchaser in accordance with its terms, and Patch shall have received a certificate of the Purchaser addressed
    to Patch and dated the Effective Date, signed on behalf of the Purchaser by an officer of the Purchaser (on the Purchaser’s
    behalf and without personal liability), confirming the same as at the Effective Date, and the terms of such agreements shall
    be satisfactory to Patch, acting reasonably;

 

	 	(h)	the
    Purchaser shall have closed the Private Placement for gross proceeds of not less than US$1,000,000, and Patch shall have received
    a certificate of the Purchaser addressed to Patch and dated the Effective Date, signed on behalf of the Purchaser by an officer
    of the Purchaser (on the Purchaser’s behalf and without personal liability), confirming the same as at the Effective
    Date;
	 	 	 
	 	(i)	(i)
    the Material Permits shall be valid and in full force and effect, (ii) there shall not have been any suspension, cessation
    or termination of any Material Permits, and (iii) there shall not have been any threat or investigation relating to any of
    the Material Permits, and Patch shall have received a certificate of the Purchaser addressed to Patch and dated the Effective
    Date, signed on behalf of the Purchaser by an officer of the Purchaser (on the Purchaser’s behalf and without personal
    liability), confirming the same as at the Effective Date; and

 

	 	(j)	the
    Purchaser shall have complied with its obligations under Section 3.1(l).

 

The
conditions in this Section 5.3 are for the exclusive benefit of Patch and may be asserted by Patch regardless of the circumstances
or may be waived by Patch in its sole discretion, in whole or in part, at any time and from time to time without prejudice to
any other rights which Patch may have.

 

	5.4	Notice
    and Effect of Failure to Comply with Conditions

 

	 	(a)	Each
    Party shall give prompt notice to the other of the occurrence, or failure to occur, at any time from the date hereof until
    the earlier to occur of the termination of this Agreement and the Effective Time, of any event or state of facts which occurrence
    or failure would, or would be likely to: (i) cause any of the representations or warranties of such Party contained herein
    to be untrue or inaccurate in any material respect on the date hereof or at the Effective Time; or (ii) result in the failure
    to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by any Party hereunder prior
    to the Effective Time.
	 	 	 
	 	(b)	Notifications
    provided under this Section 5.4 will not affect the representations, warranties, covenants, agreements or obligations of the
    Parties (or remedies with respect thereto) or the conditions to the obligations of the Parties under this Agreement.

 

    	 		 

    	 	- 43 -	 

     

	 	(c)	The
    Purchaser may not elect to exercise its right to terminate this Agreement pursuant to Section 7.1(d)(i) and Patch may not
    elect to exercise its right to terminate this Agreement pursuant to Section 7.1(c)(i), unless the Party seeking to terminate
    the Agreement (the “Terminating Party”) has delivered a written notice (“Termination Notice”)
    to the other Party (the “Breaching Party”) specifying in reasonable detail all breaches of covenants, representations
    and warranties or other matters which the Terminating Party asserts as the basis for termination. After delivering a Termination
    Notice, provided the Breaching Party is proceeding diligently to cure such matter and such matter is capable of being cured
    prior to the Outside Date (with any intentional breach being deemed to be incurable), the Terminating Party may not exercise
    such termination right until the earlier of: (i) the Outside Date; and (ii) if such matter has not been cured by the date
    that is seven Business Days following receipt of such Termination Notice by the Breaching Party, such date. If the Terminating
    Party delivers a Termination Notice prior to the date of the Patch Meeting, unless the Parties agree otherwise, Patch shall,
    to the extent permitted by Applicable Laws, postpone or adjourn the Patch Meeting to the earlier of: (i) three Business Days
    prior to the Outside Date; and (ii) the date that is seven Business Days following receipt of such Termination Notice by the
    Breaching Party.

 

	5.5	Satisfaction
    of Conditions

 

The
conditions set out in this Article 5 are conclusively deemed to have been satisfied, waived or released when, with the agreement
of the Parties, Articles of Arrangement are filed under the ABCA to give effect to the Arrangement.

 

Article
6

AMENDMENT

 

	6.1	Amendment

 

This
Agreement may, at any time and from time to time, before or after the holding of the Patch Meeting, be amended by written agreement
of the Parties, subject to the Interim Order, the Final Order and Applicable Laws, without further notice to or authorization
on the part of the Patch Shareholders provided that no such amendment reduces or adversely affects the consideration to be received
by a Patch Shareholder without approval by the Patch Shareholders given in the same manner as required for the approval of the
Arrangement or as may be ordered by the Court.

 

	6.2	Waiver

 

Patch,
on the one hand, and the Purchaser, on the other hand, may:

 

    	 		 

    	 	- 44 -	 

     

	 	(a)	extend
    the time for the performance of any of the obligations or acts of the other;
	 	 	 
	 	(b)	waive
    compliance with any of the other’s agreements or the fulfillment of any conditions to its own obligations contained
    herein; or
	 	 	 
	 	(c)	waive
    inaccuracies in any of the other’s representations or warranties contained herein or in any document delivered by the
    other;

 

provided,
however, that any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such
Parties and, unless otherwise provided in the written waiver, will be limited to the specific breach, covenant or condition waived.
A Party’s failure or delay in exercising any right under this Agreement shall not operate as a waiver of that right. A single
or partial exercise of any right shall not preclude a Party from any other further exercise of that right or the exercise of any
other right.

 

Article
7

TERMINATION

 

	7.1	Termination

 

This
Agreement may be terminated at any time prior to the Effective Date:

 

	 	(a)	by
    mutual written agreement of the Parties;
	 	 	 
	 	(b)	by
    either Patch or the Purchaser if:

 

	 	(i)	the
    Arrangement Resolution has not been passed by the Patch Shareholders at the Patch Meeting in accordance with the Interim Order
    provided that a Party may not terminate this Agreement pursuant to this Section 7.1(b)(i) if the failure to so pass the Arrangement
    Resolution has been caused by, or is a result of, a breach by such Party of any of its representations or warranties or the
    failure of such Party to perform any of its covenants or agreements under this Agreement;
	 	 	 
	 	(ii)	after
    the date of this Agreement, any Applicable Laws is enacted, made, enforced or amended, as applicable, that makes the consummation
    of the Arrangement illegal or otherwise permanently prohibits or enjoins Patch or the Purchaser from consummating the Arrangement,
    and such Applicable Laws has become final and non-appealable; or
	 	 	 
	 	(iii)	the
    Effective Time does not occur on or prior to the Outside Date, provided that a Party may not terminate this Agreement pursuant
    to this Section 7.1(b)(iii) if the failure of the Effective Time to so occur has been caused by, or is a result of, a breach
    by such Party of any of its representations or warranties or the failure of such Party to perform any of its covenants or
    agreements under this Agreement.

 

	 	(c)	by
    the Purchaser if:

 

	 	(i)	a
    breach of any representation or warranty or failure to perform any covenant or agreement on the part of Patch under this Agreement
    occurs that would cause any condition in Section 5.1 or Section 5.2 not to be satisfied, and such breach or failure is incapable
    of being cured on or prior to the Outside Date or is not cured in accordance with the terms of Section 5.4(c); provided that
    the Purchaser is not then in breach of this Agreement so as to cause any condition in Section 5.1 or 5.3 not to be satisfied;
	 	 	 
	 	(ii)	if
    any of the events described in paragraphs (A) through (E) below occurs:

 

    	 		 

    	 	- 45 -	 

     

	 	(A)	the
    Patch Board or any committee of the Patch Board fails to unanimously (excluding directors who have recused themselves as described
    in Section 2.5) recommend or withdraws, amends, modifies or qualifies, publicly proposes or states its intention to do so,
    or fails to publicly reaffirm (without qualification) within three Business Days after having been requested in writing by
    the Purchaser to do so, the Patch Board Recommendation, or takes no position or a neutral position with respect to an Acquisition
    Proposal in respect of Patch for more than three Business Days after first learning of an Acquisition Proposal (unless the
    Purchaser is then in material breach of its obligation hereunder and such failure, withdrawal, amendment, modification or
    qualification relates to such breach);
	 	 	 
	 	(B)	the
    Patch Board or any committee of the Patch Board accepts, approves, endorses or recommends to the Patch Shareholders, an Acquisition
    Proposal or recommends that the Patch Shareholders deposit their Patch Shares under, vote in favour of, or otherwise accept
    an Acquisition Proposal;
	 	 	 
	 	(C)	Patch
    enters into an agreement (other than a confidentiality agreement permitted by and in accordance with Section 3.4(d)(vi)(D))
    with respect to an Acquisition Proposal;
	 	 	 
	 	(D)	Patch
    wilfully or intentionally breaches Section 3.4(d) in any respect; or
	 	 	 
	 	(E)	resolves
    or proposes to take any of the foregoing actions; or

 

	 	(iii)	after
    the date of this Agreement there has occurred a Material Adverse Change in respect of Patch.

 

	 	(d)	by
    Patch if:

 

	 	(i)	a
    breach of any representation or warranty or failure to perform any covenant or agreement on the part of the Purchaser under
    this Agreement occurs that would cause any condition in Section 5.1 or Section 5.3 not to be satisfied, and such breach or
    failure is incapable of being cured or is not cured on or prior to the Outside Date in accordance with the terms of Section
    5.4(c); provided that Patch is not then in breach of this Agreement so as to cause any condition in Section 5.1 or Section
    5.2 not to be satisfied;
	 	 	 
	 	(ii)	prior
    to the approval by the Patch Shareholders of the Arrangement Resolution, the Patch Board authorizes Patch to enter into a
    written agreement (other than a confidentiality agreement permitted by and in accordance with Section 3.4(d)(vi)(D)) with
    respect to a Superior Proposal, provided Patch is then in compliance with Section 3.4; or
	 	 	 
	 	(iii)	after
    the date of this Agreement there has occurred a Material Adverse Change in respect of the Purchaser.

 

    	 		 

    	 	- 46 -	 

     

	7.2	Effect
    of Termination/Survival

 

If
this Agreement is terminated pursuant to Section 7.1, this Agreement shall become void and of no further force or effect without
liability of any Party (or any Representative of such Party) to any other Party to this Agreement, except with respect to the
obligations set forth in or as otherwise specified in Sections 1.5, 7.1, 7.2, 8.1, 9.1, 9.2, 9.3, 9.4, 9.6 and 9.7, and provided
further that no Party shall be relieved of any liability for any wilful and material breach by it of this Agreement.

 

Article
8

NOTICES

 

	8.1	Notices

 

All
notices which may or are required to be given pursuant to any provision of this Agreement are to be given or made in writing and
served personally or sent by facsimile or email transmission and in the case of:

 

	 	(a)	The
    Purchaser, addressed to:

 

Stem
Holdings, Inc.

c/o
The Law Offices of Robert Diener

41
Ulua Place

Haiku,
HI 96708

 

Attention:
Adam Berk

Facsimile:
(310) 362-8887

Email:
alb9370@gmail.com

 

with
a copy to (which shall not constitute notice):

 

The
Law Offices of Robert Diener

41
Ulua Place

Haiku,
HI 96708

 

Attention:
Robert L.B. Diener

Facsimile:
(310) 362-8887

Email:
rob@rdienerlaw.com

 

    	 		 

    	 	- 47 -	 

     

	 	(b)	Patch,
    addressed to:

 

Patch
International Inc.

c/o
Dentons Canada LLP

15th
Floor, Bankers Court

850
– 2nd Street SW

Calgary,
AB T2P 0R8

 

Attention:
Mark Bentsen

Facsimile:
(403) 268-3100

Email:
mbentsen@shaw.ca

 

with
a copy to (which shall not constitute notice):

 

Dentons
Canada LLP

15th
Floor, Bankers Court

850
– 2nd Street SW

Calgary,
AB T2P 0R8

 

Attention:
Lucas Tomei

Facsimile:
(403) 268-3100

Email:
lucas.tomei@dentons.com

 

or
such other address as the Parties may, from time to time, advise to the other Party hereto by notice in writing. The date or time
of receipt of any such notice shall be deemed to be the date of delivery or the time such facsimile or email transmission is received.

 

Article
9

GENERAL

 

	9.1	Assignment
    and Enurement

 

This
Agreement shall be binding upon and enure to the benefit of the Parties and their respective successors and permitted assigns.
This Agreement may not be assigned by the Purchaser without the prior consent of Patch, except that the Purchaser may assign all
or a portion of its rights under this Agreement to any subsidiary of the Purchaser, but no assignment shall relieve the Purchaser
of any of its obligations hereunder. This Agreement may not be assigned by Patch without the prior consent of the Purchaser.

 

	9.2	Costs

 

Except
as contemplated herein, each Party covenants and agrees to bear its own fees, costs and expenses in connection with the transactions
contemplated by this Agreement and the Arrangement.

 

	9.3	Severability

 

If
any term or provision of this Agreement should be or become invalid, illegal or unenforceable in any respect in any jurisdiction,
the remaining terms and provisions contained herein shall remain in full force and effect so long as the economic or legal substance
of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith
to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to
the end that the transactions contemplated hereby are fulfilled to the fullest extent possible.

 

    	 		 

    	 	- 48 -	 

     

	9.4	Further
    Assurances

 

Each
Party hereto shall, from time to time and at all times hereafter, at the request of the other Party hereto, but without further
consideration, do all such further acts and things, and execute and deliver all such further documents and instruments and provide
all such further assurances as may be reasonably required in order to fully perform and carry out the terms and intent hereof.

 

	9.5	Time
    of Essence

 

Time
shall be of the essence of this Agreement.

 

	9.6	Governing
    Law

 

This
Agreement shall be governed by and construed in accordance with the laws of the Province of Alberta and the laws of Canada applicable
therein and the Parties hereto irrevocably attorn to the jurisdiction of the courts of the Province of Alberta.

 

	9.7	Third
    Party Beneficiaries

 

The
provisions of Sections 2.3(e), 2.3(f) and 2.10 are: (i) intended for the benefit of all present and former directors, officers
and employees of Patch and the Purchaser and their respective subsidiaries, as the case may be, as and to the extent applicable
in accordance with their terms, and shall be enforceable by each of such persons and his heirs, executors, administrators and
other legal representatives (collectively, the “Third Party Beneficiaries”) and the Purchaser or Patch, as
the case may be, shall hold the rights and benefits of Sections 2.3(e), 2.3(f) and 2.10 in trust for and on behalf of the Third
Party Beneficiaries and the Purchaser or Patch, as the case may be, hereby accepts such trust and agrees to hold the benefit of
and enforce performance of such covenants on behalf of the Third Party Beneficiaries; and (ii) are in addition to, and not in
substitution for, any other rights that the Third Party Beneficiaries may have by contract or otherwise.

 

	9.8	Injunctive
    Relief

 

The
Parties agree that irreparable harm would occur for which money damages would not be an adequate remedy at law in the event that
any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that, before the termination of this Agreement pursuant to Section 7.1, the Parties shall be entitled
to equitable relief, including specific performance and injunctive relief, to prevent breaches or threatened breaches of this
Agreement, and to enforce compliance with the terms of this Agreement, any requirement for the security or posting of a bond in
connection with obtaining such relief being hereby waived. The rights in this Section 9.8 are this being in addition to any other
remedy to which the Parties may be entitled at law or in equity.

 

	9.9	Counterparts

 

This
Agreement may be executed in two or more counterparts and, each of which shall be deemed an original, and all of which together
constitute one and the same instrument. The Parties shall be entitled to rely upon the delivery of an executed facsimile or similar
executed electronic copy of this Agreement, and such facsimile or similar executed electronic document shall be legally effective
to create a valid and binding agreement between the Parties.

 

	9.10	Survival

 

The
representations and warranties contained herein shall terminate on, and may not be relied upon, by either Party after the Effective
Time.

 

[The
remainder of this page has intentionally been left blank]

 

    	 		 

    	 	- 49 -	 

    

 

IN
WITNESS WHEREOF the Parties have caused this Agreement to be executed as of the date first above written by their respective
officers or directors thereunto duly authorized.

 

	 	STEM
    HOLDINGS, INC. 
	 	 
	 	By:	(signed)
    “Adam Berk” 
	 	Name:	Adam
    Berk
	 	Title:	Chief
    Executive Officer and President

 

 

	 	PATCH
    INTERNATIONAL INC. 
	 	 
	 	By:	(signed)
    “Mark Bentsen” 
	 	Name:	Mark
    Bentsen
	 	Title:	Director

 

    	 		 

    	 		 

    

 

SCHEDULE
a

 

PLAN
OF ARRANGEMENT

 

Plan
of Arrangement under Section 193

of
the

Business
Corporations Act (Alberta)

 

ARTICLE
1

INTERPRETATION

 

1.1
In this Plan of Arrangement, the following terms have the following meanings:

 

	 	(a)	“ABCA”
    means the Business Corporations Act, R.S.A. 2000, c.B-9, as from time to time amended or re-enacted, including the
    regulations promulgated thereunder.
	 	 	 
	 	(b)	“Additional
    Consideration” means for each Patch Common Share held: (i) if any Patch Note Collection Proceeds are received on
    or before 10:00 a.m. (MT) on the third last Business Day prior to the Effective Date, the aggregate of each Patch Note Collection
    Payment Per Share; and (ii) if the Patch Note Collection has not been completed in full satisfaction of all amounts owing
    under the Patch Note on or before 10:00 a.m. (MT) on the third last Business Day prior to the Effective Date, one CVR.
	 	 	 
	 	(c)	“Aggregate
    Additional Consideration” means the aggregate amount of Additional Consideration to be paid to Patch Shareholders
    at the Effective Time.
	 	 	 
	 	(d)	“Aggregate
    Purchaser Share Consideration” means that number of Purchaser Shares as is equal to the quotient obtained when dividing
    the Patch Working Capital by the deemed price for each Purchaser Share, being US$2.40.
	 	 	 
	 	(e)	“Arrangement”
    means the arrangement pursuant to Section 193 of the ABCA on the terms and subject to the conditions set forth in this Plan
    of Arrangement, subject to any amendments or variations thereto made in accordance with the provisions of this Plan of Arrangement
    or made at the direction of the Court in the Final Order.
	 	 	 
	 	(f)	“Arrangement
    Agreement” means the arrangement agreement dated November 11, 2016, between the Purchaser and Patch with respect
    to the Arrangement and all amendments thereto.
	 	 	 
	 	(g)	“Arrangement
    Resolution” means the special resolution to approve the Arrangement to be considered by Patch Shareholders at the
    Patch Meeting.
	 	 	 
	 	(h)	“Articles
    of Arrangement” means the articles of arrangement in respect of the Arrangement required under Section 193(10) of
    the ABCA to be filed with the Registrar after the Final Order has been granted giving effect to the Arrangement.
	 	 	 
	 	(i)	“Business
    Day” means any day, other than Saturday, Sunday or a statutory holiday in the Province of Alberta.

 

    	 		 

    	 	- 2 -	 

     

	 	(j)	“Certificate”
    means the certificate or proof of filing to be issued by the Registrar pursuant to Section 193(11) or Section 193(12) of the
    ABCA in respect of the Articles of Arrangement giving effect to the Arrangement.
	 	 	 
	 	(k)	“Circular”
    means the notice of the Patch Meeting and the accompanying management proxy circular and proxy statement to be sent by Patch
    to the Patch Shareholders in connection with the Patch Meeting, together with all appendices, schedules and exhibits thereto
    and any financial statements contained therein, and any amendments or supplements thereto.
	 	 	 
	 	(l)	“Consideration”
    means for each Patch Common Share held: (i) the Purchaser Share Consideration, and (ii) the Additional Consideration.
	 	 	 
	 	(m)	“Court”
    means the Court of Queen’s Bench of Alberta.
	 	 	 
	 	(n)	“CVR”
    means a contingent value right of the Purchaser issued pursuant to the Rights Indenture and entitling the holder thereof to
    each Patch Note Collection Payment Per Share upon receipt of Patch Note Collection Proceeds at any time and from time to time
    after the Effective Time.
	 	 	 
	 	(o)	“Depositary”
    means Computershare Trust Company of Canada or such other person that may be appointed by the Purchaser for the purpose of
    receiving deposits of certificates formerly representing Patch Shares, with the approval of Patch, acting reasonably.
	 	 	 
	 	(p)	“Dissent
    Rights” means the right of a registered Patch Shareholder to dissent to the Arrangement Resolution and to be paid
    the fair value of the Patch Shares in respect of which such holder dissents, all in accordance with section 191 of the ABCA
    as modified by this Plan of Arrangement and the Interim Order.
	 	 	 
	 	(q)	“Dissenting
    Shareholders” means registered Patch Shareholders who have duly and validly exercised their Dissent Rights in strict
    compliance with the terms thereof and who have not withdrawn or been deemed to have withdrawn such exercise of Dissent Rights
    and who are ultimately determined to be entitled to be paid the fair value for their Patch Shares.
	 	 	 
	 	(r)	“Effective
    Date” means the date the Arrangement becomes effective under the ABCA, being the date shown on the Certificate.
	 	 	 
	 	(s)	“Effective
    Time” means 12:01 a.m. (Calgary time) on the Effective Date.
	 	 	 
	 	(t)	“Encumbrance”
    means any mortgage, pledge, assignment for security, charge, lien, security interest, guarantee or other encumbrance or collateral
    securing the payment obligations of any person, and any agreement, right, privilege, or arrangement (whether by law, contract
    or otherwise) capable of becoming any of the foregoing.
	 	 	 
	 	(u)	“Final
    Order” means the final order of the Court approving the Arrangement pursuant to paragraph 193(9)(a) of the ABCA,
    as such order may be affirmed, amended or modified by any court of competent jurisdiction.

 

    	 		 

    	 	- 3 -	 

     

	 	(v)	“Former
    Patch Shareholder” means a registered Patch Shareholder immediately prior to the Effective Time or any person who
    surrenders to the Depositary certificates representing Patch Shares duly endorsed for transfer in accordance with the provisions
    set forth in the Letter of Transmittal, in each case other than a Dissenting Shareholder.
	 	 	 
	 	(w)	“GAAP”
    means the accounting principles generally accepted in Canada determined with reference to the Handbook and in accordance with
    International Financial Reporting Standards as issued by the International Accounting Standards Board under Part I of the
    Handbook, applicable as at the date on which date such calculation is made or required to be made in accordance with generally
    accepted accounting principles applied on a basis consistent with preceding years.
	 	 	 
	 	(x)	“Governmental
    Authority” means: (i) any international, multinational, federal, provincial, state, regional, municipal, local or
    other government, governmental or public department, ministry, central bank, court, tribunal, arbitral body, commission, commissioner,
    board, bureau or agency, domestic or foreign; (ii) any subdivision, agency, agent or authority of any of the foregoing; (iii)
    any quasi-governmental or private body, including any tribunal, commission, regulatory agency or self-regulatory organization,
    exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing; or (iv) any
    stock exchange.
	 	 	 
	 	(y)	“Interim
    Order” means the interim order of the Court pursuant to Section 193(4) of the ABCA containing declarations and directions
    with respect to the Arrangement and the calling and the holding of the Patch Meeting, as such order may be affirmed, amended
    or modified by any court of competent jurisdiction.
	 	 	 
	 	(z)	“Letter
    of Transmittal” means the Letter of Transmittal forwarded to Patch Shareholders pursuant to which Patch Shareholders
    may deliver certificates representing Patch Shares in order to receive, on completion of the Arrangement, Purchaser Shares
    in exchange for their Patch Shares.
	 	 	 
	 	(aa)	“Parties”
    means Patch and the Purchaser; and “Party” means either one of them.
	 	 	 
	 	(bb)	“Patch”
    means Patch International Inc., a corporation existing under the ABCA.
	 	 	 
	 	(cc)	“Patch
    Common Shares” means the Class “A” common shares in the capital of Patch issued and outstanding from
    time to time, and for greater certainty, includes those Class “A” common shares in the capital of Patch to be
    issued upon the redemption of the Patch Exchangeable Shares.
	 	 	 
	 	(dd)	“Patch
    Energy” means Patch Energy Inc., a subsidiary of Patch.
	 	 	 
	 	(ee)	“Patch
    Exchangeable Shares” means the Series A preferred shares of Patch Energy, which are exchangeable in accordance with
    their terms for no additional consideration into Patch Common Shares on a one-for-one basis.
	 	 	 
	 	(ff)	“Patch
    Meeting” means the special meeting of Patch Shareholders to consider, among other things, the Arrangement Resolution
    and related matters, and any adjournment thereof.

 

    	 		 

    	 	- 4 -	 

     

	 	(gg)	“Patch
    Note” means the promissory note and loan agreement dated November 6, 2015 between Robix Environmental Technologies,
    Inc. as successor to Formation Fluid Management Inc., as borrower, and Patch, as lender.
	 	 	 
	 	(hh)	“Patch
    Note Collection” means any and all present or future claim, right of action, litigation, arbitration, mediation,
    collection effort or other dispute resolution proceedings or effort of any kind of Patch or any of its Affiliates, or their
    respective successors or assigns, relating to the collection of any and all amounts owing under the Patch Note in full and
    final payment thereof.
	 	 	 
	 	(ii)	“Patch
    Note Collection Proceeds” means all present and future value, order, award, entitlement or remuneration of any kind
    and in any form, including any property, assets, cash or other form of payment in each case paid, payable, recovered, owing
    to, due to, awarded to, ordered or otherwise ordered to be received by Patch or any of its Affiliates, Stem or any of its
    Affiliates, or their respective successors or assigns pursuant to any settlement, award, order, entitlement, collection, judgment,
    sale, disposition, agreement or any other monetization of any kind of the Patch Note or relating to the Patch Note Collection.
	 	 	 
	 	(jj)	“Patch
    Note Collection Payment Per Share” means if Patch or any of its Affiliates, Stem or any of its Affiliates, or any
    of their respective successors or assigns, receives any Patch Note Collection Proceeds and such Patch Note Collection Proceeds
    consist in whole or in part of: (i) shares or other securities, then that number of shares or other securities equal to the
    quotient obtained when dividing such portion of the Patch Note Collection Proceeds by 43,952,213 (with fractions equal to
    or greater than 0.5 being rounded up and fractions less than 0.5 being rounded down); or (ii) cash or cash equivalents (to
    the extent such cash or cash equivalents are not accounted for in the calculation for the Patch Working Capital), then that
    number of Purchaser Shares as is equal to the quotient obtained when dividing (A) the result obtained when such portion of
    the Patch Note Collection Proceeds (if applicable, as converted to United States dollars using the Bank of Canada daily noon
    exchange rate for the applicable date) is divided by the deemed price for each Purchaser Share, being US$2.40, by (B) 43,952,213
    (with fractions equal to or greater than 0.5 being rounded up and fractions less than 0.5 being rounded down).
	 	 	 
	 	(kk)	“Patch
    Shareholders” means the registered or beneficial holders of the Patch Shares, as the context requires.
	 	 	 
	 	(ll)	“Patch
    Transaction Costs” means all costs and expenses incurred by Patch and its subsidiaries in connection with the transactions
    contemplated by the Arrangement Agreement, including all legal, accounting, advisory fees, printing and other administrative
    and professional fees, costs and expenses of third parties, and all amounts payable by Patch in respect of the transactions
    contemplated by the Arrangement.
	 	 	 
	 	(mm)	“Patch
    Working Capital” means the amount equal to Patch’s current assets minus its current liabilities as at the
    third last Business Day prior to the Effective Date, determined in accordance with GAAP, provided that current assets shall
    include the face value of the Patch Note and current liabilities shall include only fifty percent (50%) of the Patch Transaction
    Costs to a maximum of $100,000, such amount expressed in United States dollars using the Bank of Canada daily noon exchange
    rate for the applicable date.

 

    	 		 

    	 	- 5 -	 

     

	 	(nn)	“person”
    includes an individual, limited or general partnership, limited liability company, limited liability partnership, trust, joint
    venture, association, body corporate, unincorporated organization, trustee, executor, administrator, legal representative,
    government (including any Governmental Authority) or any other entity, whether or not having legal status.
	 	 	 
	 	(oo)	“Plan
    of Arrangement”, “herein”, “hereof”, “hereto”, “hereunder”
    and similar expressions mean and refer to this Plan of Arrangement as amended or supplemented from time to time in accordance
    with the terms hereof, the Arrangement Agreement or at the direction of the Court in the Final Order, and not to any particular
    article, section or other portion hereof.
	 	 	 
	 	(pp)	“Purchaser”
    means Stem Holdings, Inc., a corporation existing under the laws of the State of Nevada.
	 	 	 
	 	(qq)	“Purchaser
    Share Consideration” means Purchaser Shares valued at approximately $0.083, being that number of Purchaser Shares
    (expressed to five decimal places) as is equal to the quotient obtained when dividing the Aggregate Purchaser Share Consideration
    by 43,952,213.
	 	 	 
	 	(rr)	“Purchaser
    Shares” means the shares of common stock in the share capital of the Purchaser.
	 	 	 
	 	(ss)	“Registrar”
    means the Registrar of Corporations duly appointed under Section 263 of the ABCA.
	 	 	 
	 	(tt)	“Rights
    Indenture” means the rights indenture to be entered into between Purchaser and a trust company acceptable to Patch
    and Purchaser, as rights agent, providing for the creation and issuance of the CVRs.

 

	1.2	The
    division of this Plan of Arrangement into articles and sections and the insertion of headings are for convenience of reference
    only and shall not affect the construction or interpretation of this Plan of Arrangement.
	 	 
	1.3	Unless
    reference is specifically made to some other document or instrument, all references herein to articles and sections are to
    articles and sections of this Plan of Arrangement.
	 	 
	1.4	Unless
    the context otherwise requires, words importing the singular number shall include the plural and vice versa and words importing
    any gender shall include all genders.
	 	 
	1.5	In
    the event that the date on which any action is required to be taken hereunder by any of the Parties hereto is not a Business
    Day, such action shall be required to be taken on the next succeeding day which is a Business Day.
	 	 
	1.6	References
    in this Plan of Arrangement to any statute or sections thereof shall include such statute as amended or substituted and any
    regulations promulgated thereunder from time to time in effect prior to the Effective Time.

 

    	 		 

    	 	- 6 -	 

     

	1.7	Time
    shall be of the essence in every matter or action contemplated hereunder.
	 	 
	1.8	Unless
    otherwise indicated, all sums of money which are referred to in this Agreement are expressed in lawful money of Canada. References
    to “United States dollars” and “US$” are to the lawful money of the United States.

 

ARTICLE
2 

ARRANGEMENT
AGREEMENT

 

	2.1	This
    Plan of Arrangement is made pursuant to, is subject to the provisions of and forms part of, the Arrangement Agreement.
	 	 
	2.2	This
    Plan of Arrangement, upon the filing of the Articles of Arrangement and the issuance of the Certificate will become effective
    at the Effective Time and be binding on: (a) the Patch Shareholders; (b) the Purchaser; and (c) Patch.
	 	 
	2.3	The
    Articles of Arrangement and Certificate shall be filed and issued, respectively, with respect to the Arrangement in its entirety.
    The Certificate shall be conclusive evidence that the Arrangement has become effective and that each of the provisions of
    ARTICLE 3 has become effective in the sequence and at the times set out therein.
	 	 
	2.4	Other
    than as expressly provided for herein, no portion of this Plan of Arrangement shall take effect with respect to any party
    or person until the Effective Time.

 

ARTICLE
3 

ARRANGEMENT

 

	3.1	Commencing
    at the Effective Time, each of the events set out below shall occur and shall be deemed to occur in the following order without
    any further act or formality except as otherwise provided herein:

 

	 	(a)	the
    Patch Shares held by Dissenting Shareholders shall, as of the Effective Time, be deemed to have been transferred to the Purchaser
    (free and clear of any Encumbrances) in consideration for a debt claim against the Purchaser in accordance with ARTICLE 4,
    and, as of the Effective Time, such Dissenting Shareholders shall cease to be the holders thereof or have any rights as Patch
    Shareholders and shall only be entitled to be paid by the Purchaser the fair value of their Patch Shares in accordance with
    ARTICLE 4; and
	 	 	 
	 	(b)	each
    outstanding Patch Share shall be transferred to, and acquired by, the Purchaser (free and clear of any Encumbrances) in exchange
    for the Consideration.

 

	3.2	With
    respect to each Former Patch Shareholder at the Effective Time, upon the exchange of Patch Shares for the consideration pursuant
    to Section 3.1(b):

 

	 	(a)	such
    Former Patch Shareholder shall be added to the register of holders of the Purchaser Shares, and if applicable, to the register
    of holders of CVRs, and be entitled to the consideration payable to it pursuant to Section 3.1(b);

 

    	 		 

    	 	- 7 -	 

     

	 	(b)	such
    Former Patch Shareholder shall cease to be a holder of the Patch Shares so exchanged and the name of such Former Patch Shareholder
    shall be removed from the register of Patch Shareholders maintained by or on behalf of Patch as it relates to the Patch Shares
    so exchanged; and
	 	 	 
	 	(c)	the
    Purchaser shall become the holder of the Patch Shares so exchanged and shall be added to the register of Patch Shareholders
    maintained by or on behalf of Patch.

 

ARTICLE
4

DISSENTING
SHAREHOLDERS

 

	4.1	Each
    registered Patch Shareholder shall be entitled to exercise the Dissent Rights in strict compliance with Section 191 of the
    ABCA as modified by this Plan of Arrangement and the Interim Order. A Dissenting Shareholder shall, at the Effective Time,
    cease to have any rights as a Patch Shareholder and shall only be entitled to be paid the fair value of the Dissenting Shareholder’s
    Patch Shares by the Purchaser (as a debt claim owing by the Purchaser) and shall be deemed to have transferred its Patch Shares
    to the Purchaser in accordance with Section 3.1(a). A Dissenting Shareholder who for any reason is not entitled to be paid
    the fair value of the Dissenting Shareholder’s Patch Shares shall be deemed to be a Former Patch Shareholder and to
    have participated in the Arrangement on the same basis as a non-dissenting Patch Shareholder in accordance with Section 3.1(b).
    In either case, neither Patch nor the Purchaser shall be required to recognize such holders as holders of Patch Shares after
    the Effective Time and the name of such holder shall be removed from the register of Patch Shares as at the Effective Time.
    The fair value of the Patch Shares shall be determined as of the close of business on the last Business Day before the day
    on which the Arrangement is approved by the Patch Shareholders at the Patch Meeting. For greater certainty, in addition to
    any other restrictions in Section 191 of the ABCA, no person who has voted or has instructed a proxyholder to vote their Patch
    Shares in favour of the Arrangement shall be entitled to exercise Dissent Rights.

 

ARTICLE
5

OUTSTANDING
CERTIFICATES AND FRACTIONAL SECURITIES

 

	5.1	At
    or before the Effective Time, the Purchaser will deposit or cause to be deposited with the Depositary for the benefit of the
    Former Patch Shareholders the Aggregate Purchaser Share Consideration and the Aggregate Additional Consideration.
	 	 
	5.2	From
    and after the Effective Time: (a) certificates formerly representing Patch Shares held by Former Patch Shareholders shall
    represent only the right to receive the consideration to which the Former Patch Shareholders are entitled under this Plan
    of Arrangement pursuant to Section 3.1(b), and any dividends or distributions thereon pursuant to Section 5.5; and (b) the
    certificates formerly representing Patch Shares held by Dissenting Shareholders shall represent only the right to receive
    the fair value of the Patch Shares represented by such certificates; in each case subject to compliance with the requirements
    set forth in this ARTICLE 5.
	 	 
	5.3	The
    Purchaser shall, as soon as practicable following the later of the Effective Date and the date of deposit by a Former Patch
    Shareholder of a duly completed Letter of Transmittal and the certificates representing applicable Patch Shares, and such
    additional documents and instruments as the Depositary may reasonably require, either:

 

    	 		 

    	 	- 8 -	 

     

	 	(a)	forward
    or cause to be forwarded by first class mail (postage prepaid) to such Former Patch Shareholder at the address specified in
    the Letter of Transmittal; or
	 	 	 
	 	(b)	if
    requested by such Former Patch Shareholder in the Letter of Transmittal, make available or cause to be made available at the
    offices of the Depositary for pickup by such Former Patch Shareholder,

 

	 	certificates
    representing the number of Purchaser Shares issued to such Former Patch Shareholder under the Arrangement (together with any
    dividends or distributions thereon pursuant to Section 5.5), and if applicable, certificates representing the number of shares
    or other securities forming part of the Additional Consideration issued to such Former Patch Shareholder under the Arrangement
    and certificates representing the number of CVRs issued to such Former Patch Shareholder under the Arrangement.
	 	 
	5.4	If
    any certificate which immediately prior to the Effective Time represented an interest in outstanding Patch Shares that were
    exchanged pursuant to Section 3.1(b) has been lost, stolen or destroyed, upon the making of an affidavit of that fact by the
    person claiming such certificate to have been lost, stolen or destroyed, the Depositary will issue and deliver in exchange
    for such lost, stolen or destroyed certificate the consideration to which the Former Patch Shareholder is entitled pursuant
    to this Plan of Arrangement (and any dividends or distributions thereon). The person who is entitled to receive such consideration
    shall, as a condition precedent to the receipt thereof, give a bond to each of the Purchaser and Patch and their respective
    transfer agents, which bond shall be in form and substance satisfactory to each of the Purchaser and Patch and their respective
    transfer agents, or shall otherwise indemnify the Purchaser and Patch and their respective transfer agents against any claim
    that may be made against any of them with respect to the certificate alleged to have been lost, stolen or destroyed.
	 	 
	5.5	All
    dividends or other distributions made with respect to any Purchaser Shares allotted and issued pursuant to Section 3.1(b)
    of the Arrangement but for which a certificate has not been issued shall be paid or delivered to the Depositary to be held
    by the Depositary in trust for the registered holder thereof. Subject to Section 5.6, the Depositary shall pay and deliver
    to any such registered holder, as soon as reasonably practicable after the applicable Former Patch Shareholder has complied
    with the requirements in Section 5.3 and become a registered holder (as applicable) and application therefor is made by the
    registered holder to the Depositary in such form as the Depositary may reasonably require, such dividends and distributions
    to which such holder is entitled (without interest), net of applicable withholding and other taxes.
	 	 
	5.6	Any
    certificate formerly representing Patch Shares that is not deposited with all other documents as required by this Plan of
    Arrangement on or before the last Business Day prior to the fifth anniversary of the Effective Date, or such shorter or longer
    period required under any applicable law, shall cease to represent a right or claim of any kind or nature including the right
    of the Former Patch Shareholder to receive Purchaser Shares (and any dividends and other distributions thereon) or cash and
    the right of the Former Patch Shareholder to receive Purchaser Shares or cash shall be deemed to have been surrendered to
    the Purchaser. In such case, such Purchaser Shares (together with all dividends and other distributions thereon) or cash shall
    be returned to the Purchaser for cancellation and any dividends or other distributions in respect of Purchaser Shares shall
    be returned to the Purchaser.

 

    	 		 

    	 	- 9 -	 

     

	5.7	No
    certificates representing fractional Purchaser Shares shall be issued under this Plan of Arrangement. In lieu of any fractional
    Purchaser Share, each Former Patch Shareholder otherwise entitled to a fractional interest in a Purchaser Share will receive
    the nearest whole number of Purchaser Shares (with fractions equal to or greater than 0.5 being rounded up).

 

ARTICLE
6

WITHHOLDINGS
AND TAX ELECTIONS

 

	6.1	The
    Purchaser, Patch and the Depositary shall be entitled to deduct and withhold from any consideration otherwise payable to any
    Patch Shareholder and, for greater certainty, from any amount payable to any Dissenting Shareholder, as the case may be, under
    this Plan of Arrangement such amounts as the Purchaser is required to deduct and withhold from such consideration in accordance
    with the Income Tax Act (Canada), the United States Internal Revenue Code of 1986 or any other provision of any applicable
    law. Any such amounts will be deducted and withheld from the consideration payable pursuant to this Plan of Arrangement and
    shall be treated for all purposes as having been paid to the Patch Shareholder in respect of which such deduction and withholding
    was made, provided that such withheld amounts are actually remitted to the appropriate taxing authority in accordance with
    applicable law. In connection with any amount required to be withheld pursuant to this Plan of Arrangement, the Purchaser
    may direct the Depositary to withhold the number of Purchaser Shares that may otherwise be paid to such Patch Shareholder
    under this Plan of Arrangement and to sell such shares for cash proceeds to be used for such withholdings, subject to applicable
    laws. Each Patch Shareholder shall be deemed to have granted an irrevocable power of attorney to effect the sale of the applicable
    Purchaser Shares.

 

ARTICLE
7

AMENDMENTS

 

	7.1	The
    Purchaser and Patch may amend, modify and/or supplement this Plan of Arrangement at any time and from time to time prior to
    the Effective Time, provided that each such amendment, modification or supplement must be: (a) set out in writing; (b) approved
    by both Parties; (c) filed with the Court and, if made following the Patch Meeting, approved by the Court; and (d) communicated
    to Patch Shareholders, if and as required by the Court.
	 	 
	7.2	Any
    amendment, modification or supplement to this Plan of Arrangement may be proposed by the Purchaser or Patch at any time prior
    to or at the Patch Meeting (provided that the other party shall have consented thereto) with or without any other prior notice
    or communication and, if so proposed and accepted by the persons voting at the Patch Meeting (other than as may be required
    under the Interim Order), shall become part of this Plan of Arrangement for all purposes.
	 	 
	7.3	Any
    amendment, modification or supplement to this Plan of Arrangement which is approved or directed by the Court following the
    Patch Meeting shall be effective only: (a) if it is consented to by Patch and the Purchaser (each acting reasonably); and
    (b) if required by the Court or applicable law, it is consented to by the Patch Shareholders.
	 	 
	7.4	Any
    amendment, modification or supplement to this Plan of Arrangement may be made unilaterally by the Purchaser following the
    Effective Time, provided that it concerns a matter which, in the reasonable opinion of the Purchaser, is of an administrative
    nature required to better give effect to the implementation of this Plan of Arrangement and is not adverse to the financial
    or economic interests of any Former Patch Shareholder or other Patch Shareholder.

 

ARTICLE
8

FURTHER
ASSURANCES

 

Notwithstanding
that the transactions and events set out herein shall occur and be deemed to occur in the order set out in this Plan of Arrangement
without any further act or formality, each of the Parties to the Arrangement Agreement shall make, do and execute, or cause to
be made, done and executed all such further acts, deeds, agreements, transfers, assurances, instruments or documents as may reasonably
be required by any of them in order further to document or evidence any of the transactions or events set out herein.

 

    	 		 

    	 		 

    

 

SCHEDULE
b

 

ARRANGEMENT
RESOLUTION

 

RESOLUTION
OF THE SHAREHOLDERS OF

PATCH
INTERNATIONAL INC. (“Patch”)

 

BE
IT RESOLVED AS A SPECIAL RESOLUTION THAT:

 

	 	(a)	The
    arrangement (as it may be modified or amended, the “Arrangement”) under Section 193 of the Business
    Corporations Act (Alberta) involving Patch and its securityholders, all as more particularly described and set forth in
    the plan of arrangement (as it may be modified or amended, the “Plan of Arrangement”) attached as Appendix
    ● to the Management Information Circular of Patch dated ●, 2016, is hereby authorized, approved and agreed to.
	 	 	 
	 	(b)	The
    Arrangement Agreement dated as of November 11, 2016 between Patch and Stem Holdings, Inc. as it may be modified or amended
    from time to time (the “Arrangement Agreement”), the actions of the directors of Patch in approving the
    Arrangement and the Arrangement Agreement and the actions of the directors and officers of Patch in executing and delivering
    the Arrangement Agreement and causing the performance by Patch of its obligations thereunder are hereby confirmed, ratified,
    authorized and approved.
	 	 	 
	 	(c)	Notwithstanding
    that this resolution has been passed (and the Arrangement approved and agreed to) by shareholders of Patch or that the Arrangement
    has been approved by the Court of Queen’s Bench of Alberta, the directors of Patch are hereby authorized and empowered
    without further approval of any shareholders of Patch: (i) to amend the Arrangement Agreement or the Plan of Arrangement to
    the extent permitted by the Arrangement Agreement or Plan of Arrangement; and (ii) subject to the terms of the Arrangement
    Agreement, not to proceed with the Arrangement and related transactions.
	 	 	 
	 	(d)	Patch
    be and is hereby authorized to apply for the final order from the Court of Queen’s Bench of Alberta to approve the Arrangement
    on the terms set forth in the Arrangement Agreement and the Plan of Arrangement.
	 	 	 
	 	(e)	Any
    one director or officer of Patch is hereby authorized, empowered and instructed, acting for, in the name and on behalf of
    Patch, to execute or cause to be executed, under the seal of Patch or otherwise, and to deliver or to cause to be delivered,
    all such other documents and to do or to cause to be done all such other acts and things as in such person’s opinion
    may be necessary or desirable in order to carry out the intent of the foregoing paragraphs of these resolutions and the matters
    authorized thereby, such determination to be conclusively evidenced by the execution and delivery of such document or the
    doing of such act or thing.

 

    	 		 

    	 		 

    

 

SCHEDULE
C

 

REPRESENTATIONS
AND WARRANTIES OF THE PURCHASER

 

The
Purchaser represents and warrants to and in favour of Patch and acknowledges that Patch is relying upon such representations and
warranties in connection with the matters contemplated by this Agreement and the consummation of the Arrangement:

 

	 	(a)	The
    Purchaser is a corporation duly incorporated and is validly subsisting under the laws of its jurisdiction of incorporation,
    and the Purchaser has the requisite power and authority to carry on its business as it is now being conducted and to own,
    lease and operate its respective properties and assets.
	 	 	 
	 	(b)	The
    Purchaser is duly registered to do business and is in good standing in each jurisdiction in which the character of its properties,
    owned or leased, or the nature of its activities make such registration necessary.
	 	 	 
	 	(c)	The
    Purchaser has no direct or indirect subsidiaries.
	 	 	 
	 	(d)	The
    Purchaser has the requisite corporate power and authority to enter into this Agreement, the Acquisition Agreement, the Real
    Property Agreements and the Rights Indenture and to carry out its obligations hereunder and thereunder. The execution and
    delivery of this Agreement, the Acquisition Agreement, the Real Property Agreements and the Rights Indenture and the consummation
    by the Purchaser of the transactions contemplated hereunder and thereunder has been duly authorized by the Purchaser Board
    and no other corporate proceedings on the part of the Purchaser are or shall be necessary to consummate the transactions contemplated
    by this Agreement, the Acquisition Agreement, the Real Property Agreements and the Rights Indenture. This Agreement has been
    duly executed and delivered by the Purchaser and constitutes a legal, valid and binding obligation of the Purchaser enforceable
    against the Purchaser in accordance with its terms. The Acquisition Agreement and the Real Property Agreements have been or
    will be duly executed and delivered by the respective parties thereto and constitute or will constitute legal, valid and binding
    obligations of the respective parties thereto enforceable against such parties in accordance with their terms.
	 	 	 
	 	(e)	None
    of the execution and delivery of this Agreement (subject to the issuance of the Interim Order and Final Order by the Court),
    the Acquisition Agreement, the Real Property Agreements or the Rights Indenture by the Purchaser, the consummation by the
    Purchaser of the transactions contemplated hereunder or thereunder nor compliance by the Purchaser with any of the provisions
    hereof or thereof will: (i) violate, conflict with, or result in breach of any provision of, require any consent, approval
    or notice under, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default)
    or result in a penalty, forfeiture or a right of termination or acceleration under, or result in the creation of any Encumbrance,
    claim, trust, royalty or carried, participation, net profits or other third party interest, option, right of first refusal,
    right or privilege, preferential right and any agreement or arrangement (whether by law, contract or otherwise) capable of
    becoming any of the foregoing, upon any of the properties or assets of the Purchaser under, any of the terms, conditions or
    provisions of (A) the articles, bylaws or other constating documents of the Purchaser; or (B) any note, bond, mortgage, indenture,
    loan agreement, deed of trust, agreement, lien, contract or other instrument or obligation to which the Purchaser is a party
    or to which it, or its properties or assets, may be subject or by which the Purchaser is bound; or (ii) violate any judgment,
    ruling, order, writ, injunction, determination, award, decree, statute, ordinance, rule or regulation in Canada or the United
    States applicable to the Purchaser; or (iii) cause a suspension or revocation of any Authorization currently in effect.

 

    	 		 

    	 	- 2 -	 

     

	 	(f)	Other
    than in connection with or in compliance with the provisions of Applicable Laws in relation to the completion of the Arrangement
    or which are required to be fulfilled post-Arrangement:

 

	 	(i)	there
    is no legal impediment to the Purchaser’s consummation of the transactions contemplated by this Agreement, the Acquisition
    Agreement, the Real Property Agreements and the Rights Indenture; and
	 	 	 
	 	(ii)	no
    filing or registration with, or Authorization is necessary by the Purchaser in connection with the consummation of the Arrangement
    or the transactions contemplated by the Acquisition Agreement, the Real Property Agreements and the Rights Indenture.

 

	 	(g)	Subject
    to the approval by the Patch Shareholders of the Arrangement Resolution and the approval of the Interim Order and Final Order
    by the Court, neither the execution and delivery of this Agreement by the Purchaser, the consummation by the Purchaser of
    the transactions contemplated by this Agreement, the Acquisition Agreement, the Real Property Agreements and the Rights Indenture,
    nor compliance by the Purchaser with any of the provisions hereof or thereof, will require any consents or trigger any fees
    or termination rights.
	 	 	 
	 	(h)	The
    Purchaser is authorized to issue 100,000,000 Purchaser Shares with a par value of $0.001 per share, 50,000,000 shares of Series
    A Preferred Shares with a par value of $0.001 per share and 50,000,000 shares of Series B Preferred Shares with a par value
    of $0.001 per share. As at the date hereof, there are not more than 4,794,163 Purchaser Shares issued and outstanding and
    there are no other classes of shares outstanding or securities, options, interests or other rights outstanding entitling the
    holder thereof to acquire securities of the Purchaser from treasury. All outstanding Purchaser Shares have been duly authorized
    and are validly issued as fully paid and non-assessable shares and are not subject to, nor have they been issued in violation
    of, any pre-emptive rights.
	 	 	 
	 	(i)	Since
    October 12, 2016:

 

	 	(i)	there
    has not been any Material Adverse Change respecting the Purchaser from the position set forth in the Purchaser Financial Statements;
	 	 	 
	 	(ii)	there
    have been no material facts, transactions, events or occurrences which, to the knowledge of the Purchaser, could reasonably
    be expected to result in a Material Adverse Change respecting the Purchaser;

 

    	 		 

    	 	- 3 -	 

     

	 	(iii)	the
    Purchaser has conducted its business only in the ordinary and normal course, consistent with past practice; and
	 	 	 
	 	(iv)	no
    liability or obligation of any nature (whether absolute, accrued, contingent or otherwise) material to the Purchaser has been
    incurred other than in the ordinary and normal course of business, consistent with past practice.

 

	 	(j)	There
    is no Litigation against or involving the Purchaser, or in respect of the businesses, properties or assets of the Purchaser
    (whether in progress or, to the knowledge of the Purchaser, threatened) and, to the knowledge of the Purchaser, no event has
    occurred which might reasonably be expected to give rise to any proceeding. There is no judgment, writ, decree, injunction,
    rule, award or order of any Governmental Authority outstanding against the Purchaser in respect of its business, properties
    or assets. With respect to any Litigation that has been settled by the Purchaser, the Purchaser has obtained appropriate releases
    or other documentation to ensure that such settlements are final and non-appealable.
	 	 	 
	 	(k)	There
    is no Litigation against or involving Opco, or in respect of the businesses, properties or assets of Opco (whether in progress
    or, to the knowledge of the Purchaser, threatened) and no event has occurred which might reasonably be expected to give rise
    to any proceeding. There is no judgment, writ, decree, injunction, rule, award or order of any Governmental Authority outstanding
    against Opco in respect of the business, properties or assets of Opco. With respect to any Litigation that has been settled
    by Opco, Opco has obtained appropriate releases or other documentation to ensure that such settlements are final and non-appealable.
	 	 	 
	 	(l)	The
    Purchaser Financial Statements fairly present, in accordance with GAAP, consistently applied, the financial position and condition
    of the Purchaser at the dates thereof and the results of the operations of the Purchaser for the periods then ended and reflect,
    in accordance with GAAP, consistently applied, all material assets, liabilities or obligations (absolute, accrued, contingent
    or otherwise) of the Purchaser as at the dates thereof.
	 	 	 
	 	(m)	The
    Purchaser has not received notice of any violation of or investigation relating to any federal, state or local laws, regulation
    or ordinance with respect to its assets, business or operations and the Purchaser holds all Authorizations which are required
    under federal, state or local laws relating to the assets, business or operations of the Purchaser. The assets of the Purchaser
    are and have been, since the Purchaser acquired its interests in such assets operated and maintained by it in compliance with
    all terms and conditions of Applicable Laws and Authorizations in all respects.
	 	 	 
	 	(n)	Opco
    has not received notice of any violation of or investigation relating to any federal, state or local laws, regulation or ordinance
    with respect to the assets, business or operations of Opcp and Opco holds all Authorizations which are required under federal,
    state or local laws relating to the assets, business or operations of Opco. The assets of Opco are and have been, since Opco
    acquired its interests in such assets operated and maintained by it in compliance with all terms and conditions of Applicable
    Laws and Authorizations in all respects.

 

    	 		 

    	 	- 4 -	 

     

	 	(o)	Neither
    the Purchaser nor the Purchaser Board has agreed or consented to the release of any director or officer of the Purchaser from
    any fiduciary duty owed by such person to the Purchaser, including as would allow any such person to pursue any corporate
    opportunities that would otherwise be the property of the Purchaser.
	 	 	 
	 	(p)	The
    corporate records and minute books, books of account and other records of the Purchaser (whether of a financial or accounting
    nature or otherwise) have been maintained in accordance with Applicable Laws and prudent business practice and will be complete
    and accurate in all respects as at the Effective Date.
	 	 	 
	 	(q)	The
    Purchaser is not a party to any agreement, contract or instrument that shall trigger any rights to acquire Purchaser Shares
    or other securities of the Purchaser or rights, entitlements or privileges in favour of any person upon the entering into
    of this Agreement or the Arrangement.
	 	 	 
	 	(r)	The
    Purchaser is not, and is not an affiliate of a person that is, registered or required to be registered as an “investment
    company” pursuant to the United States Investment Company Act of 1940, as amended.
	 	 	 
	 	(s)	Other
    than as disclosed in the Purchaser Financial Statements, no director, officer, insider or other non-arm’s length party
    of the Purchaser is indebted to the Purchaser or any of its Affiliates.
	 	 	 
	 	(t)	There
    are no material liabilities or obligations of the Purchaser or of any of its subsidiaries other than liabilities or obligations:
    (i) disclosed in the Purchaser Financial Statements; (iii) incurred in the Ordinary Course since October 12, 2016; or (iii)
    incurred in connection with this Agreement or permitted by this Agreement.
	 	 	 
	 	(u)	To
    the knowledge of the Purchaser, the Purchaser has not acquired property from, or disposed of property to, a person with whom
    the Purchaser was not dealing at arm’s length, within the meaning of the Tax Act, for consideration, the value of which
    is greater or less than the fair market value of the property acquired in circumstances which would subject it to a liability
    under section 69 or section 160 of the Tax Act or under any equivalent provisions of any applicable legislation.
	 	 	 
	 	(v)	None
    of the Purchaser, any of its subsidiaries or its Representatives has made, offered or authorized and will not make, offer
    or authorize any payment, gift, promise or other advantage, whether directly or through any other person, to or for the use
    or benefit of any public official (including any person holding a legislative, administrative or judicial office, including
    any person employed by or acting on behalf of a public agency, a public enterprise or a public international organization)
    or any political party or political party official or candidate for office, where such payment, gift, promise or advantage
    would violate the Corruption of Foreign Public Officials Act (Canada) or any similar laws applicable to any such person. Specifically,
    no such person will take any action in furtherance of an offer or promise to pay, lend or give money or anything of value,
    directly or indirectly, to or for the use of any public official, or to any other person while knowing that all or a portion
    of such money or thing of value will be offered, given, loaned or promised, directly or indirectly, to or for the use of or
    benefit of any public official, for any of the following purposes: (i) influencing any act or decision of such public official
    in his or her official capacity; (ii) inducing such public official to do or omit to do any act in violation of the lawful
    duty of the public official; (iii) inducing such public official to use his or her influence with any governmental entity,
    public international organization or political party to affect or influence any act or decision of such entity; or (iv) securing
    any improper advantage to either assist a Person to obtain business or to further the interests of its business.
	 	 	 
	 	(w)	Purchaser
    has not withheld from Patch any material information or documents concerning the Purchaser or its assets or liabilities during
    the course of Patch’s review of Purchaser and its assets and liabilities.

 

    	 		 

    	 		 

    

 

SCHEDULE
D

 

REPRESENTATIONS
AND WARRANTIES OF PATCH

 

Patch
represents and warrants to and in favour of the Purchaser and acknowledges that the Purchaser is relying upon such representations
and warranties in connection with the matters contemplated by this Agreement and the consummation of the Arrangement:

 

	 	(a)	Each
    of Patch and its subsidiaries is a corporation duly incorporated or continued, as the case may be, and is validly subsisting
    under the laws of its jurisdiction of incorporation or continuance, as applicable, and each of Patch and its subsidiaries
    and has the requisite power and authority to carry on its business as it is now being conducted by it and to own, lease and
    operate its respective properties and assets.
	 	 	 
	 	(b)	Each
    of Patch and its subsidiaries is duly registered to do business and is in good standing in each jurisdiction in which the
    character of its properties, owned or leased, or the nature of its activities make such registration necessary, except where
    the failure to be so registered or in good standing would not have a Material Adverse Effect on Patch and its subsidiaries,
    taken as a whole.
	 	 	 
	 	(c)	Patch
    has no material direct or indirect subsidiaries.
	 	 	 
	 	(d)	Patch
    has the requisite corporate power and authority to enter into this Agreement and to carry out its obligations hereunder. The
    execution and delivery of this Agreement and the consummation by Patch of the transactions contemplated by this Agreement
    have been duly authorized by the Patch Board and, subject to obtaining Patch Shareholder approval as contemplated herein,
    no other corporate proceedings on the part of Patch are or shall be necessary to consummate the transactions contemplated
    by this Agreement. This Agreement has been duly executed and delivered by Patch and constitutes a legal, valid and binding
    obligation of Patch enforceable against Patch in accordance with its terms.
	 	 	 
	 	(e)	Subject
    to the approval of the Patch Shareholders of the Arrangement Resolution and the approval of the Interim Order and the Final
    Order by the Court, neither the execution and delivery of this Agreement by Patch, the consummation by Patch of the transactions
    contemplated by this Agreement nor compliance by Patch with any of the provisions hereof will: (i) violate, conflict with,
    or result in breach of any provision of, require any consent, approval or notice under, or constitute a default (or an event
    which, with notice or lapse of time or both, would constitute a default) or result in a penalty, forfeiture or a right of
    termination or acceleration under, or result in the creation of any Encumbrance, claim, trust, royalty or carried, participation,
    net profits or other third party interest, option, right of first refusal, right or privilege, preferential right and any
    agreement or arrangement (whether by law, contract or otherwise) capable of becoming any of the foregoing, upon any of the
    properties or assets of Patch under, any of the terms, conditions or provisions of (A) the articles, bylaws or other constating
    documents of Patch, or (B) any note, bond, mortgage, indenture, loan agreement, deed of trust, agreement, lien, contract or
    other instrument or obligation to which Patch is a party or to which it, or its properties or assets, may be subject or by
    which Patch is bound; or (ii) violate any judgment, ruling, order, writ, injunction, determination, award, decree, statute,
    ordinance, rule or regulation applicable to Patch (except, in the case of each of clauses (i) and (ii) above, for such violations,
    conflicts, breaches, defaults or terminations which, or any consents, approvals or notices which if not given or received,
    would not have any Material Adverse Effect on Patch, taken as a whole, or prevent or materially impair or materially delay
    or could reasonably be expected to prevent or materially impair or delay the ability of Patch to consummate the transactions
    contemplated by this Agreement by the Outside Date; or (iii) cause a suspension or revocation of an Authorization currently
    in effect which would have a Material Adverse Effect on Patch.

 

    	 		 

    	 	- 2 -	 

     

	 	(f)	Other
    than in connection with or in compliance with the provisions of Applicable Laws in relation to the completion of the Arrangement
    including the approval of the Patch Shareholders and the issuance of the Interim Order and Final Order by the Court or which
    are required to be fulfilled post-Arrangement:

 

	 	(i)	there
    is no legal impediment to Patch’s consummation of the transactions contemplated by this Agreement; and
	 	 	 
	 	(ii)	no
    filing or registration with, or Authorization is necessary by Patch or any of its subsidiaries in connection with the consummation
    of the Arrangement, except for such filings or registrations which, if not made, or for such Authorizations, which, if not
    received, would not prevent or materially impair or materially delay or could reasonably be expected to prevent or materially
    impair or delay the ability of Patch to consummate the transactions contemplated by this Agreement by the Outside Date.

 

	 	(g)	Subject
    to the approval of the Patch Shareholders of the Arrangement Resolution and the issuance of the Interim Order and Final Order
    by the Court, neither the execution and delivery of this Agreement by Patch, the consummation by Patch of the transactions
    contemplated by this Agreement nor compliance by Patch with any of the provisions hereof, will require any consents or trigger
    any fees or material rights, other than the Patch Transaction Costs.
	 	 	 
	 	(h)	Capitalization

 

	 	(i)	The
    authorized capital of Patch consists of an unlimited number of Patch Common Shares, an unlimited number of Class “B”
    common voting shares, and unlimited number of Class “C” common non-voting shares, an unlimited number of Class
    “A” preferred voting shares, and unlimited number of Class “B” preferred voting shares and an unlimited
    number of Class “C” preferred shares. As of the close of business on the date of this Agreement, there were: (A)
    37,850,724 Patch Common Shares issued and outstanding; (B) one Patch Class “A” Preferred Share issued and outstanding;
    (C) one Patch Class “B” Preferred Share issued and outstanding; and (D) no other shares in the capital of Patch
    issued and outstanding. All outstanding Patch Shares have been duly authorized and validly issued and are fully paid and non-assessable.
    As of the date of this Agreement there are 6,101,489 Patch Common Shares issuable upon the redemption of the Patch Exchangeable
    Shares. All of the Patch Common Shares issuable upon the redemption of the Patch Exchangeable Shares, have been duly authorized
    and, upon issuance in accordance with their terms, will be validly issued as fully paid and non-assessable and are not and
    will not be subject to or issued in violation of, any pre-emptive rights. No Patch Shares have been issued in violation of
    any Applicable Law or any pre-emptive or similar rights applicable to them.

 

    	 		 

    	 	- 3 -	 

     

	 	(ii)	Except
    for rights under the Patch Exchangeable Shares and this Agreement, there are no issued, outstanding or authorized options,
    equity-based awards, warrants, calls, conversion, pre-emptive, redemption, repurchase, stock appreciation or other rights,
    or any other agreements, arrangements, instruments or commitments of any kind that obligate Patch, directly or indirectly,
    to issue or sell any securities of Patch, or give and person a right to subscribe for or acquire, any securities of Patch.
	 	 	 
	 	(iii)	Other
    than the Patch Exchangeable Shares, there are no issued, outstanding or authorized:

 

	 	(A)	obligations
    to repurchase, redeem or otherwise acquire any securities of Patch, or qualify securities for public distribution in Canada,
    the United States or elsewhere, or, other than as contemplated by this Agreement with respect to the voting or disposition
    of any securities of Patch; or
	 	 	 
	 	(B)	notes,
    bonds, debentures or other evidences of indebtedness or any other agreements, arrangements, instruments or commitments of
    any kind that in each case, give any person, directly or indirectly, the right to vote with holders of Patch Shares on any
    matter.

 

	 	(i)	Since
    May 31, 2016:

 

	 	(i)	there
    has not been any Material Adverse Change respecting Patch from the position set forth in Patch Financial Statements;
	 	 	 
	 	(ii)	there
    have been no material facts, transactions, events or occurrences which, to the knowledge of Patch, could reasonably be expected
    to result in a Material Adverse Change respecting Patch;
	 	 	 
	 	(iii)	each
    of Patch and its subsidiaries has conducted its business only in Ordinary Course; and
	 	 	 
	 	(iv)	no
    liability or obligation of any nature (whether absolute, accrued, contingent or otherwise) material to Patch or any of its
    subsidiaries has been incurred other than in the Ordinary Course.

 

	 	(j)	There
    is no Litigation against or involving Patch or Patch Energy, or in respect of the businesses or assets of Patch or Patch Energy
    (whether in progress or, to the knowledge of Patch, threatened), that if adversely determined, would reasonably be expected
    to have a Material Adverse Effect on Patch or prevent or materially impair or materially delay or could reasonably be expected
    to prevent or materially impair or delay the ability of Patch to consummate the transactions contemplated by this Agreement
    by the Outside Date and, to the knowledge of Patch, no event has occurred which might reasonably be expected to give rise
    to any Litigation. There is no judgment, writ, decree, injunction, rule, award or order of any Governmental Authority outstanding
    against Patch or Patch Energy in respect of their respective businesses or assets that has had or would reasonably be expected
    to have a Material Adverse Effect on Patch or prevent or materially impair or delay or could reasonably be expected to prevent
    or materially impair or delay the ability of Patch to consummate the transactions contemplated by this Agreement by the Outside
    Date.

 

    	 		 

    	 	- 4 -	 

     

	 	(k)	The
    Patch Financial Statements fairly present, in accordance with GAAP, consistently applied, the financial position and condition
    of Patch at the dates thereof and the results of the operations of Patch for the periods then ended and reflect, in accordance
    with GAAP, consistently applied, all material assets, liabilities or obligations (absolute, accrued, contingent or otherwise)
    of Patch, as at the dates thereof.
	 	 	 
	 	(l)	Neither
    Patch nor any of its subsidiaries has received notice of any violation of or investigation relating to any federal, provincial
    or local law, regulation or ordinance with respect to its or Patch Energy’s assets or business and Patch and Patch Energy
    holds all Authorizations which are required under federal, provincial or local laws relating to their respective assets, business
    or operations, except where the failure to comply with the foregoing would not have a Material Adverse Effect on Patch.
	 	 	 
	 	(m)	No
    Securities Authority, other competent authority or stock exchange in Canada or the United States has issued any order which
    is currently outstanding preventing or suspending trading in any securities of Patch, no such proceeding is, to the knowledge
    of Patch, pending, contemplated or threatened and neither Patch or any of its subsidiaries is in material default of any requirement
    of any Applicable Laws.
	 	 	 
	 	(n)	Patch
    has not retained any financial advisor, broker, agent or finder, or paid or agreed to pay or have the Purchaser pay any financial
    advisor, broker, agent or finder on account of this Agreement or the Arrangement, any transaction contemplated hereby or any
    transaction presently ongoing or contemplated.
	 	 	 
	 	(o)	Patch
    is not subject to, or affected by, any unanimous shareholders agreement and is not a party to any shareholder, pooling, voting,
    or other similar arrangement or agreement relating to the ownership or voting of any of the securities of Patch or pursuant
    to which any person other than Patch may have any right or claim in connection with any existing or past equity interest in
    Patch.
	 	 	 
	 	(p)	The
    Patch Board has unanimously determined that the Arrangement is in the best interests of Patch, is fair to the Patch Shareholders
    and has unanimously approved the Arrangement and the entering into of this Agreement and has resolved to recommend that Patch
    Shareholders vote in favour of the Arrangement. Each member of the Patch Board intends, in accordance with the Patch Support
    Agreements, to vote all of such shareholder’s Patch Voting Securities in favour of the Arrangement Resolution and against
    any resolution submitted by any Patch Shareholder that is inconsistent with the Arrangement.

 

    	 		 

    	 	- 5 -	 

     

	 	(q)	The
    corporate records and minute books, books of account and other records of Patch (whether of a financial or accounting nature
    or otherwise) have been maintained in accordance with, in all material respects, Applicable Laws and prudent business practice
    and will be complete and accurate in all material respects as at the Effective Date.
	 	 	 
	 	(r)	No
    director, officer, insider or other non-arm’s length party of Patch or any of its subsidiaries is indebted to Patch
    or any of its subsidiaries.
	 	 	 
	 	(s)	Except
    for indemnity agreements with its directors and officers as contemplated by the by-laws of Patch or Patch Energy and Applicable
    Laws, and other than standard indemnity agreements in the Ordinary Course provided to service providers, neither Patch nor
    any of its subsidiaries is a party to or bound by any agreement, guarantee, indemnification or endorsement or like commitment
    of the obligations, liabilities (contingent or otherwise) or indebtedness of any person which individually or in the aggregate
    could have a Material Adverse Effect on Patch.
	 	 	 
	 	(t)	Patch
    has not withheld from the Purchaser any material information or documents concerning Patch, Patch Energy or any of their respective
    assets or liabilities during the course of the Purchaser’s review of Patch and its subsidiaries and their assets and
    liabilities.
	 	 	 
	 	(u)	There
    are no material liabilities or obligations of Patch or of any of its subsidiaries of any kind whatsoever, whether accrued,
    contingent, absolute, determined, determinable or otherwise, other than liabilities or obligations: (i) disclosed in the Patch
    Financial Statements; (ii) incurred in the Ordinary Course since May 31, 2016; or (iii) incurred in connection with this Agreement.
	 	 	 
	 	(v)	No
    facts, circumstances or events exist or have existed that have resulted in or may result in the application of any of sections
    80 to 80.04 of the Tax Act to Patch.
	 	 	 
	 	(w)	Patch
    has not acquired property from, or disposed of property to, a person with whom Patch was not dealing at arm’s length,
    within the meaning of the Tax Act, for consideration, the value of which is greater or less than the fair market value of
    the property acquired in circumstances which would subject it to a liability under section 69 or section 160 of the Tax Act
    or under any equivalent provisions of any applicable legislation.
	 	 	 
	 	(x)	Patch
    has not made any payment, nor is obligated to make any payment, and is not a party to any agreement under which it could be
    obligated to make any payment that may not be deductible by virtue of section 67 or 78 of the Tax Act or any analogous provincial
    or similar provision.
	 	 	 
	 	(y)	Records
    or documents that meet the requirements of paragraphs 247(4)(a) to (c) of the Tax Act have been made and obtained by Patch
    with respect to all material transactions between Patch and any non-resident person with whom Patch was not dealing at arm’s
    length within the meaning of the Tax Act, during a taxation year commencing after 1998 and ending on or before the Effective
    Date.

 

    	 		 

    	 	- 6 -	 

     

	 	(z)	Patch
    is properly classified as a corporation for United States federal tax purposes.
	 	 	 
	 	(aa)	Patch
    has not been classified as a passive foreign investment company, within the meaning of Section 1297 of the United States Internal
    Revenue Code of 1986, as amended, for any prior year and is not expected to be so classified for the current year.
	 	 	 
	 	(bb)	Patch
    is not incorporated in the United States, is not organized under the laws of the United States and does not have its principal
    office within the United States.
	 	 	 
	 	(cc)	None
    of Patch, any of its subsidiaries or its Representatives has made, offered or authorized and will not make, offer or authorize
    any payment, gift, promise or other advantage, whether directly or through any other person, to or for the use or benefit
    of any public official (including any person holding a legislative, administrative or judicial office, including any person
    employed by or acting on behalf of a public agency, a public enterprise or a public international organization) or any political
    party or political party official or candidate for office, where such payment, gift, promise or advantage would violate the
    Corruption of Foreign Public Officials Act (Canada) or any similar laws applicable to any such person. Specifically,
    no such person will take any action in furtherance of an offer or promise to pay, lend or give money or anything of value,
    directly or indirectly, to or for the use of any public official, or to any other person while knowing that all or a portion
    of such money or thing of value will be offered, given, loaned or promised, directly or indirectly, to or for the use of or
    benefit of any public official, for any of the following purposes: (i) influencing any act or decision of such public official
    in his or her official capacity; (ii) inducing such public official to do or omit to do any act in violation of the lawful
    duty of the public official; (iii) inducing such public official to use his or her influence with any governmental entity,
    public international organization or political party to affect or influence any act or decision of such entity; or (iv) securing
    any improper advantage to either assist a Person to obtain business or to further the interests of its business.
	 	 	 
	 	(dd)	Patch
    is a reporting issuer (where such concept exists) in the province of Alberta and is in material compliance with all Canadian
    Securities Laws therein. The documents and information comprising the Patch Public Record did not at the respective times
    they were filed with the relevant Securities Authorities, contain any misrepresentation, unless such document or information
    was subsequently corrected or superseded in the Patch Public Record prior to the date hereof.

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