Document:

February 1, 2002

PATCH ENERGY INC.

Suite 600

595 Hornby Street

Vancouver, B.C.   V6C 1A4

 

 

February 11, 2002

 

George Tsafalas

Dear Mr. Tsafalas:

Re:Management Services

The following are the terms and conditions upon which Patch Energy Inc. (the "Company") is prepared to contract with you to provide certain management services to the Company.  By signing this letter agreement you accept the following terms and conditions:

1.Work Duties

1.1You will carry out such duties and responsibilities as the board of directors may from time to time determine.

2.Term of Employment

2.1The contract shall be for a three year period, starting February 11, 2002 and ending February 11, 2005 provided that this Agreement shall be automatically renewed for successive terms on a year to year basis unless notice of non-renewal is effected by either party with written notice of non-renewal at least 90 days prior to the expiry of the then applicable term of this Agreement, in which case this Agreement will expire on the last day of such term.

3.Consideration

3.1Subject to the other terms and conditions of this Agreement, the Company agrees to pay consideration of US$25,000 per annum for the services provided hereunder, subject to such annual increases as the board of directors shall determine.

3.2You shall also be eligible for incentive compensation in the form of stock options in the Company, in accordance with the policy formulated by the Company from time to time.  Eligibility for stock options shall be determined by the Company's compensation committee.

4.Expenses

4.1In accordance with policies formulated by the Company from time to time, you will be reimbursed for all reasonable travelling and other expenses actually and properly incurred by you in connection with the performance of your duties and functions.  For all such expenses, you will be required to keep proper accounts and to furnish statements and vouchers to the Company within 30 days after the date the expenses are incurred.

5.Service to the Company

5.1During the term of this Agreement, you shall devote such amount of time as shall be reasonably necessary to performing the services hereunder provided that it is acknowledged that it is not intended that you devote the whole of your working time to providing the services hereunder.

6.Confidentiality

6.1All business and trade secrets and confidential information and knowledge which may be acquired during the terms of this Agreement related to the business and affairs of the Company (collectively the "Confidential Information"), will for all purposes and at all times, both during the term of this Agreement and at all times thereafter, be held by you in trust for the exclusive benefit of the Company.  Neither during the term of this Agreement nor at any time thereafter shall such Confidential Information be disclosed to any corporation or person other than the Company, nor will it be used for any purposes other than those expressly authorized by the Company.  This paragraph does not apply to any information which would be found in the public domain.

7.Termination

7.1The following termination and resignation provisions apply to this Agreement:

(a)it may be terminated by you on 30 days' prior written notice to the Company; and

(b)on receipt of such notice, the Company may elect to pay a pro rata portion of the annual compensation provided for hereunder for such 30 days, in which case the Agreement will terminate immediately upon receipt of such payment.

8.Independent Contractor

8.1In performing the services hereunder, it is acknowledged that you are acting as an independent contractor and not as an employee of the Company.

9.Law of the Contract

9.1Any dispute relating to the terms of this Agreement will be resolved pursuant to the laws of the Province of British Columbia.

If you are prepared to accept employment with the Company on the foregoing terms, kindly confirm your acceptance and agreement by signing the enclosed duplicate copy of this letter where indicated and return one copy to us.

We ask you to fully consider all of the above terms and to obtain any advice you feel is necessary, including legal advice, before you execute this Agreement.

Yours very truly,

PATCH ENERGY INC.

/s/ David Stadnyk

Per:_________________________________

Authorized Signatory

 

Accepted and agreed to this 11th day of February, 2002.  I have read and understand the terms and conditions set out in this Letter Agreement.  I have been given full opportunity to consult legal advisors of my choosing.

/s/ George Tsafalas

____________________________________

GEORGE TSAFALASNONE OF THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR ANY U

NONE OF THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES (AS DEFINED HEREIN) OR TO U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE SECURITIES LAWS.  IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT.  "UNITED STATES" AND "U.S. PERSON" ARE AS DEFINED BY REGULATIONS UNDER THE 1933 ACT.

CONVERTIBLE GRID PROMISSORY NOTE

(the "Note")

April 4, 2002

WHEREAS:

A.Fairchild International Corporation ("Fairchild") has entered into an agreement (the "Farm-in Agreement") with Olympic Resources (Arizona) Ltd. dated April 15, 2002 wherein Fairchild has been granted the right to earn an assignment of an interest (the "Interest") in certain oil and gas wells (the "Wells") to be drilled in California;

B.Patch Energy Inc. ("Patch") has agreed to loan to Fairchild up to US$70,000 (the "Loan") in order to fund Fairchild's obligations under the Farm-in Agreement on the terms and conditions set forth herein;

FOR VALUE RECEIVED, Fairchild hereby promises to pay to the order of Patch at 100 - 856 Homer Street, Vancouver, B.C. or at such other address as Patch may in writing advise Fairchild, the unpaid principal balance of all advances made by Patch to Fairchild under the Loan as recorded by Patch on the grid or grids attached hereto (the "Grid"), together with interest at the rate of 8% per annum calculated monthly.

The outstanding amount of the Loan together with all interest accrued thereon shall be due and payable as follows:

(a)on demand at any time following the drilling of the Wells in circumstances where Fairchild does not earn the Interest; or

(b)in circumstances where Fairchild does earn the Interest, Fairchild shall effect repayment by forwarding to Patch, as and when received, 75% of all revenues received by Fairchild from the operations of the Wells until such time as the Loan and all accrued interest is paid in full.

In circumstances where Fairchild earns the Interest, Fairchild shall, as further consideration for making the Loan:

(a)assign to Patch a 20% working interest in the Interest (the "20% Interest") and in this regard Fairchild shall use its reasonable best efforts to cause the 20% Interest to be transferred directly to Patch provided that, until such transfer is effected Fairchild shall be deemed to hold the 20% Interest in trust for Patch; and

(b)grant to Patch a right of first refusal to participate as to 50% of Fairchild's interest in respect of any oil and gas exploration or production opportunities Fairchild may participate in in the future.

1.Conculsiveness of Grid.  The Grid shall, in the absence of manifest error, constitute conclusive proof of the amounts and dates of all advances and repayment of principal in respect of the Loan.

2.Waiver.  Fairchild hereby waives presentment, demand, notice, protest, and all other demands and notices in connection with the delivery, acceptance, performance and enforcement of this Note, and assent to extensions of the time of payment or forebearance or other indulgence without notice.  No delay or omission of Patch in exercising any right or remedy hereunder shall constitute a waiver of any such demand.  Acceptance by Patch of any payment after demand shall not be deemed a waiver of such demand.  A waiver on one occasion shall not operate as a bar to or waiver of any such right or remedy on any future ocassion.

3.Conversion.  At the election of Patch (in Patch's sole discretion) upon delivery to Fairchild of written notice (a "Conversion Notice"), all of the outstanding principal amount of this Note shall be converted into common shares in the capital of Fairchild at the lesser of: (i) US$0.04 per share; or (ii) the closing bid price of Fairchild's common shares on the OTCBB on the trading day immediately preceding the date of the Conversion Notice, less a 20% discount.

4.Delivery of Share Certificates Upon Conversion.  In the event that Patch elects to convert the outstanding principal as provided above, Fairchild shall deliver to Patch the common shares into which such amount is convertible hereunder within fourteen (14) days from the date of the applicable Conversion Notice.

5.Prepayment by Maker.  Fairchild may, only, prepay all or any part of the amount owing hereunder with notice to, and the consent of, Patch.

6.Agreements of Patch.  In the event that Patch elects to convert the outstanding principal as provided above, Patch agrees to execute such mutually acceptable documents, including a subscription agreement, as Fairchild shall reasonably request to ensure compliance with applicable laws, including U.S. federal, state and all applicable Canadian securities laws.  The obligations of Fairchild to issue securities to Patch hereunder shall be contingent upon Patch's execution of such documents.

7.Applicable Law.  The provisions of this Note shall be governed by, and construed and enforced in accordance with, the substantive laws of the Province of British Columbia, excluding the body of law relating to choice of laws.

 

8.Time.  Time is of the essence of this Note.

IN WITNESS WHEREOF, the undersigned has executed this Note on the date written above.

FAIRCHILD INTERNATIONAL CORPORATION

/s/ Robert Grace

Per: _______________________________

Authorized Signatory

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00054-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00054-of-00352.parquet"}]]