Canadian Buyco

Overview

Pengrowth owes over $0.7B to secured debtholders. A private purchaser (the “Purchaser”) has agreed, under an Alberta Plan of Arrangement, to pay off the secured debt and to acquire all the Pengrowth common shares for $0.05 per share ($28 million in aggregate).

The Circular discloses an agreement of Pengrowth with the purchaser that, in the event that the Plan of Arrangement does not proceed, they would seek to finalize an alternative proceeding (likely under the CCAA) which would proceed on similar terms, but under which “Shareholders may receive the nominal value of $0.001 per Share.”

Initial steps in the proposed Plan of Arrangement entail first the settling by Pengrowth of a litigation trust by assigning its claim in an action in the Court of Queen’s Bench of Alberta together with a contribution of funds (and a commitment to potentially provide further funds) for the costs of the action, and then a dividend in kind by it of the interests in that litigation trust to its shareholders. The Circular does not disclose how that dividend will be valued regarding T3 information reporting. Although unclear, withholding tax on the dividend may be funded out of sale proceeds otherwise payable to a non-resident shareholder for their shares.

Overview

The cash consideration for the proposed acquisition of Clementia Pharmaceuticals (a Canadian-incorporated NASDAQ-listed clinical-stage biopharmaceutical company) by a Canadian Buyco subsidiary of Ipsen S.A. includes not only an up-front cash payment of US$25.00 per share (for an aggregate of US$1.04 billion) but also a deferred payment, on the achievement by the end of 2024 of FDA approval of a new drug application made by Clementia, in the form of a contingent value right ("CVR") of US$6.00 per Share. The Canadian tax disclosure states that the proceeds of disposition to a Clementia shareholder are the Canadian-dollar equivalent of the full U.S.$31 per Share, but that the Clementia shareholders should consult with their tax advisors as to the availability of an s. 42(1)(b) capital loss if the timely FDA approval is not achieved. The U.S. tax consequences to U.S. shareholders turn on whether the fair market value of the CVRs is “reasonably ascertainable.”

Clementia

Clementia is a Canadian-incorporated NASDAQ-listed clinical-stage biopharmaceutical company with 38M issued and outstanding shares.

Ipsen

Ipsen is a global biopharmaceutical company headquartered in Paris, France.

Overview of Consideration

The Arrangement Agreement provides for the implementation of a CBCA Arrangement pursuant to which, among other things, the Shareholders will receive, for each Share held, US$25.00 in cash upfront (the "Cash Consideration") for an initial aggregate consideration of approximately US$1.04 billion, plus deferred payments on the achievement of a future regulatory milestone in the form of a contingent value right ("CVR"), and together with the Cash Consideration, the "Consideration") of US$6.00 per Share upon U.S. Food and Drug Administration (FDA) acceptance, on or prior to December 31, 2024, of the new drug application (NDA) filing for Palovarotene for the treatment of multiple osteochondromas.

Steps in Arrangement

Under the Arrangement, each unvested option and deferred share unit will be deemed to have been vested as of 12:01 a.m. on the date of the Arrangement.

Subsequently, each outstanding option will be deemed to be transferred by the holder to the Corporation in exchange for, in respect of each option for which the Cash Consideration exceeds the exercise price, (i) an amount equal to the Cash Consideration less the applicable exercise price in respect of such option, and (ii) one CVR, less any applicable withholdings, and such option shall be immediately cancelled.

In addition, each outstanding deferred share unit will be deemed to be transferred by the holder to the Corporation in exchange for (i) the Cash Consideration, and (ii) one CVR, less any applicable withholdings.

Each of the Shares held by Dissenting Shareholders shall be deemed to have been transferred to the Purchaser.

Concurrently with the preceding step, each outstanding Share shall be transferred by the holder thereof to the Purchaser in exchange for the Consideration per Share.

CVR Attributes

Each CVR will entitle the registered holder of such CVR (the "CVR Holder") to receive a one-time payment of $6.00 in cash upon the FDA's acceptance, on or prior to December 31, 2024, of submission of an NDA for Palovarotene. Pursuant to the CVR Agreement, Ipsen will unconditionally and irrevocably guarantee in favour of the CVR Holders the due and punctual payment and performance by the Purchaser of each and every obligation of the Purchaser contained in the CVR Agreement. CVRs may not be transferred other than (i) upon the death of a holder, by will or intestacy; (ii) pursuant to a court order; (iii) by operation of law (including by consolidation or merger) or without consideration in connection with the dissolution, liquidation or termination of any corporation, limited liability company, partnership or other entity; (iv) in the case of CVRs held through book-entry or other similar nominee form, from a nominee to the beneficial owner.

Canadian tax consequences

Inclusion of full Milestone amount in proceeds

A Resident Shareholder who disposes of Shares to the Purchaser pursuant to the Arrangement should realize a capital gain (or capital loss) to the extent that the Consideration received by such Shareholder, including the Cash Consideration and the maximum amount of the cash payable under the CVRs received by such Shareholder, exceeds (or is less than) the aggregate of the Resident Shareholder's adjusted cost base in its Shares immediately before the disposition and any reasonable costs of disposition.

Potential s. 42(1)(b) capital loss if Milestone not achieved

The amount of the proceeds of disposition initially reported to Resident Shareholders will include both the Cash Consideration and the maximum amount of cash payable to Resident Shareholders under the CVRs they receive pursuant to the Arrangement. It will be the sole responsibility of Resident Shareholders to determine whether a capital loss may subsequently arise in respect of the CVRs they receive in the event that the Milestone is not achieved and the amount of cash payable in respect of the CVRs is ultimately reduced.

Capital gain or loss on disposition of CVR

A Resident Shareholder who disposes of CVRs acquired pursuant to the Arrangement should realize a capital gain (or capital loss) to the extent that the proceeds of disposition exceed (or are less than) the aggregate of the Resident Shareholder's adjusted cost base in its CVRs immediately before the disposition and any reasonable costs of disposition.

Non-qualified investment

The CVRs will not be qualified investments.

U.S. tax considerations

“Reasonably ascertainable” criterion

Pursuant to Regulations addressing contingent payment obligations analogous to the CVRs, if the fair market value of the CVRs is "reasonably ascertainable," a U.S. Holder should treat the transaction as a "closed transaction" and treat the fair market value of the CVRs as part of the consideration received in the Arrangement for purposes of determining gain or loss. On the other hand, if the fair market value of the CVRs cannot be reasonably ascertained, a U.S. Holder should treat the transaction as an open transaction for purposes of determining gain or loss. These Regulations state that only in "rare and extraordinary" cases would the value of contingent payment obligations not be reasonably ascertainable.

Treatment of open transactions

Subject to the PFIC rules discussed below, if the transaction is treated as an "open transaction" for U.S. federal income tax purposes, the fair market value of the CVRs would not be treated as additional consideration for the Shares at the time the CVRs are received in the Arrangement, and the U.S. Holder would have no tax basis in the CVRs. Instead, the U.S. Holder would take payments under the CVRs into account when made or deemed made in accordance with the U.S. Holder's regular method of accounting for U.S. federal income tax purposes. A portion of such payments would be treated as interest income under section 483 of the U.S. Internal Revenue Code (as discussed below) and the balance, in general, as additional consideration for the disposition of the Shares.

Treatment of closed transactions

Subject to the PFIC rules discussed below, if the receipt of the CVRs is treated as, or determined to be, part of a closed transaction for U.S. federal income tax purposes, then a U.S. Holder of Shares generally would recognize capital gain or loss, if any, in the same manner as if the transaction were an open transaction, except that a U.S. Holder would take into account the "reasonably ascertainable" fair market value of the CVR determined on the Effective Date, as an additional amount realized for purposes of calculating gain or loss with respect to the exchange of Shares pursuant to the Arrangement.

Overview

The acquisition of Canam by the Purchaser (a subsidiary of AIP) occurred for cash consideration of $12.30 per share (the “Consideration” - implying a total enterprise value including debt of $875M), subject to two exceptions.

• First, a group of shareholders, collectively holding 27% of the Canam shares and consisting of (i) the CEO (Mr. Dutil) or family members or holding companies, holding 12% of the shares, and (ii) two Quebec-based Funds, holding 15% of the shares, were permitted to first transfer their shares into new Quebec Holdcos (having no other assets, and no liabilities). The Holdcos were then permitted to pay specified types of dividends (e.g., under s. 84(1) or as stock dividends) to their shareholders. The Holdco shareholders then sold their Holdco shares as part of the Quebec Plan of Arrangement for cash consideration (corresponding to the transaction value of the underlying Canam shares) except as described below.
• Second, members of the same 27% group could timely elect to transfer their Canam or Holdco shares to the Purchaser for Purchaser shares with a value agreed to correspond to the cash consideration. It was anticipated that these “Rollover Shareholders” would hold as much as 40% of the equity of the Purchaser (which was also capitalized with debt).

Canam

A TSX-listed Quebec corporation that directly or through subsidiaries manufactures structural steel products in Canada and the U.S. 75.6% of its 2016 consolidated revenues were derived from the U.S. and at Decembeer 31, 2016, 54.6% of its consolidated plant and equipment was held in the U.S.

Purchaser

The Purchaser is a special-purpose entity that was incorporated for the purposes of completing the Arrangement and, prior to the Arrangement, is wholly owned by an affiliate of AIP. After Closing, all of the securities of the Purchaser will be held by the affiliate of AIP and by the Rollover Shareholders.

AIP

American Industrial Partners (which is headquartered in New York) is an operationally oriented middle-market private equity firm.

Rollover Shareholders

Placements CMI Inc., Marcel Dutil, 9085-6063 Québec Inc., Hélène Dutil, Idmed Inc., Marc Dutil, Charles Dutil, Sophie Dutil Jones, and Anne-Marie Dutil Blatchford and any holding corporation controlled by such Persons (collectively, the “Dutil Shareholders”) and Caisse de dépôt et placement du Québec (“CDPQ”) and Fonds de solidarité des travailleurs du Québec (F.T.Q.) (“FSTQ.”)

The Shares owned or controlled by each Rollover Shareholder are as follows:

Dutil Shareholders

The individuals included in the Dutil Shareholders (listed above) are members of the Dutil family and include Marcel Dutil, Chairman of the Board of the Corporation, Marc Dutil, the President and Chief Executive Officer of the Corporation, Anne-Marie Dutil Blatchford, a director of the Corporation, Hélène Dutil, Charles Dutil and Sophie Dutil Jones.

CDPQ

CDPQ is a long-term institutional investor that manages funds primarily for public and parapublic pension and insurance plans.

FSTQ

FSTQ is a development capital fund that was created on the initiative of the FTQ, Québec’s largest central labour body.

Holdco Alternative

The Purchaser may in its sole discretion, permit persons (“Qualifying Holdco Shareholders”) that (i) are resident in Canada (including a partnership if all members are resident in Canada); (ii) are not exempt from tax under Part I of the Tax Act; (iii) are registered owners of Shares; and (iv) elect in respect of such Shares, by notice in writing provided to the Purchaser (or the Depositary) not later than 5:00 p.m. (Montreal time) on the 10^th business day prior to the effective date of the Arrangement, to sell all of their shares of a corporation (a “Qualifying Holdco”), which shall not be comprised of more than two classes of shares, that meets specified conditions including those listed below:

• such Qualifying Holdco was incorporated under the QBCA not earlier than the date of the Arrangement Agreement, unless written consent is obtained from the Purchaser;
• it is a single purpose corporation that has not carried on any business, has no employees, has not held any assets other than Shares and nominal cash, has never entered into any transaction other than those relating to and necessary for the ownership of Shares or, with the Purchaser’s consent, such other transactions as are necessary to facilitate the transactions described in the Plan of Arrangement;
• at the effective time of the Arrangement (the “Effective Time”), it has no liabilities (except under the terms of the Holdco Alternative);
• “at the Effective Time, it will not have such Qualifying Holdco will not have unpaid declared dividends and, prior to the Effective Time, such Qualifying Holdco shall not have paid any dividends or other distributions, other than an increase in stated capital, a stock dividend, a cash dividend financed with a daylight loan or a dividend paid through the issuance of a promissory note with a determined principal amount and any such promissory note issued in relation to the payment of any such dividend shall no longer be outstanding as of the Effective Time;”
• it shall have no shares outstanding other than the shares being disposed to the Purchaser by its shareholder, who shall be the sole beneficial owner of such shares;
• the Qualifying Holdco Shareholder shall indemnify the Corporation and Purchaser for all liabilities of the Qualifying Holdco (other than tax liabilities of the Qualifying Holdco that arise as a result of the Qualifying Holdco disposing of the Shares after the Effective Date); and
• each Qualifying Holdco Shareholder will be required to enter into a share purchase agreement acceptable to the Purchaser.

Each Qualifying Holdco Shareholder that has elected the Holdco Alternative will be required to enter into a Holdco Agreement providing for the acquisition of all issued and outstanding shares of the Qualifying Holdco in a form consistent with the foregoing.

Quebec headquarters

The Purchaser has agreed to cause the Corporation’s headquarters to remain in Québec so long as the Purchaser owns a majority of the outstanding Shares of the Corporation.

Plan of Arrangement

1. each outstanding Share (other than the Shares (i) held by the dissenting Shareholders; (ii) held by the Qualifying Holdcos; or (iii) that are Rollover Shares) shall be transferred by the holder thereof to the Purchaser in exchange for the Consideration;
2. each outstanding Holdco Share that is not a Rollover Share and that is held by a Qualifying Holdco Shareholder shall be transferred by the holder thereof to the Purchaser in exchange for the Holdco Consideration (being a cash amount equal to (i)(a) the aggregate of the Consideration multiplied by the number of Shares held by such Qualifying Holdco; multiplied by (b) the value of the outstanding Holdco Shares of such Qualifying Holdco other than Rollover Shares divided by the value of the outstanding Holdco Shares of such Qualifying Holdco; (ii) divided by the number of outstanding Holdco Shares (other than Rollover Shares) of such Qualifying Holdco;
3. each outstanding Rollover Share (being the Shares or Holdco Shares to be transferred and assigned by a Rollover Shareholder to the Purchaser pursuant to a Rollover Agreement in exchange for Purchaser Shares as set forth in such Rollover Agreement) shall be transferred by to the Purchaser pursuant to the applicable Rollover Agreement in exchange for Purchaser Shares; and
4. each understanding Share held by a Dissenting Shareholder shall be transferred to the Purchaser.

Capitalization of Purchaser

The Rollover Shareholders have entered into agreements with the Purchaser pursuant to which CDPQ has agreed to make a cash contribution to the Purchaser and the Rollover Shareholders have agreed to make an equity contribution to the Purchaser through the transfer and assignment to the Purchaser, as provided for in the Plan of Arrangement, of all of the Shares owned by the Rollover Shareholders, except for 700,114 Shares held by Placements CMI Inc. and up to 1,436,800 Shares held by FSTQ (which includes Shares under discretionary management) which will be sold to the Purchaser for the cash consideration contemplated by the Plan of Arrangement. It is expected that the Rollover Shareholders would own as much as 40% of equity in the Purchaser upon Closing. The agreements entered into between the Rollover Shareholders and the Purchaser also provide that they will enter into a shareholders agreement at Closing. The transfer of the Rollover Shares will be made at fair market value, being $12.30 per Rollover Share, and the parties to the Rollover Agreement will agree that the consideration received in exchange has an equivalent fair market value. The PUrchaser has obtained commitments from Morgan Stanley Senior FUnding Inc. for a U.S.$100M and U.S.$350M senior secured revolving and term loan credit facility, respectively, of which Cdn.$233M will be used to repay existing indebtedness.

Canadian tax consequences

The acquisition of the Shares that are not Rollover Shares will occur on a taxable basis

Overview

Tembec, which was a TSX-listed CBCA corporation, agreed to a CBCA Plan of Arrangement with NYSE-listed Rayonier AM under which its (common) shares were to be acquired by Rayonier AM for consideration (at each Tembec shareholder’s option) of C$4.75 cash or 0.2542 of a Rayonier AM common share – except that proration would occur so as to result in the overall consideration being more or less fixed at 67% cash and 33% shares. However, the Plan of Arrangement specifies that Rayonier AM may designate a direct or indirect wholly-owned subsidiary to effect the acquisition. If this does not occur, then a large Delaware corporation (Rayonier AM) will be subject to obligations, such as to deliver shares in its capital, under a CBCA Plan of Arrangement. 19.9%, 18.0% and 15.9% of the Tembec shares were held by two US LPs and by Fairfax. No provision for exchangeable shares was made. For reasons that are not indicated, some preliminary steps in the Plan of Arrangement included a drop-down of assets of one subsidiary (Mattagami Railroad Company) into another

Tembec

Tembec is a TSX-listed integrated forest products company with operations principally located in Canada and France. Tembec was formed under the laws of Canada on January 16, 2008, as Tembec Arrangement Inc. It has 100M common shares (“Tembec Shares”) outstanding. Three shareholders (Oaktree Capital Management LP, Restructuring Capital Associates LP and Fairfax Financial Holdings Limited) hold 19.9%, 17.95% and 15.86% of the Tembec Shares. On February 29, 2008, the former Tembec ("Former Tembec") completed a recapitalization transaction pursuant to which Former Tembec became Tembec Holdings Inc. and Tembec Arrangement Inc. changed its name to Tembec Inc.

Rayonier AM

Rayonier AM, with approximately 456,000 metric tons of cellulose specialties sales in 2016, is a global leader in the production of cellulose specialties. It is a Delaware corporation with 43M Rayonier AM Shares outstanding, which are listed on the NYSE. Rayonier AM expects to issue approximately 8.4M Rayonier AM Shares to Tembec Shareholders under the Arrangement.

Plan of Arrangement

1. The Tembec Articles shall be amended to set out therein the stated capital of the Tembec Common Shares.
2. All the assets of Mattagami Railroad Company shall be transferred to Tembec Construction in exchange for Tembec Construction Preferred Shares.
3. Mattagami Railroad Company shall be deemed to have been liquidated into Tembec Industries.
4. Each Employee DSU, Employee Performance DSU, Employee PCSU and Director DSU shall transferred to Tembec in exchange for a cash payment from Tembec equal to the Consideration Cash Value, but with settlements to occur where required on an accelerated basis to comply with Code s. 409A.
5. Each warrant to purchase Tembec Shares pursuant to the 2012 IQ Loan Agreement and the 2013 IQ Loan Agreement shall be cancelled and converted into the right to receive from Rayonier AM an amount in cash based on the excess of the Consideration Cash Value over the exercise price.
6. All Tembec Shares held by Dissenting Shareholders shall be transferred in exchange for a debt claim against Rayonier AM.
7. Each Tembec Share that is a Cash Electing Share, shall be transferred to Rayonier AM in exchange for the Per Share Cash Amount of C$4.05 (increased to C$4.75).
8. Each Tembec Share that is a Stock Electing Share shall be transferred to Rayonier Am in exchange for the Per Share Stock Consideration of 0.2302 of a share of Rayonier AM Common Stock (increased to 0.2542.)
9. The stated capital of the Tembec Shares shall be reduced in an amount up to $500,000,000.

Rayonier AM may, at its sole discretion, designate a direct or indirect wholly-owned subsidiary of Rayonier AM ("Rayonier AM Sub") to be the acquirer for purposes of the Plan of Arrangement. If Rayonier AM makes such designation, all references to Rayonier AM in the above steps are references to Rayonier AM Sub.

Share and cash election

A registered holder of Tembec Shares may elect the Per Share Cash Amount; or (ii) Per Share Stock Consideration, subject to proration to ensure that no more than 63.3% (increased to 67%) of the aggregate Tembec Shares will receive the Per Share Cash Amount and no more than 36.7% (decreased to 33%) of the aggregate Tembec Shares will receive the Per Share Stock Consideration.

Support Agreement

Rayonier AM has entered into irrevocable support and voting agreements with each of Oaktree Capital Management L.P. and Restructuring Capital Associates L.P., who together represent approximately 37% of Tembec's outstanding shares, pursuant to which they have agreed to vote in favor of the Arrangement.

Canadian tax consequences

Resident Tembec Shareholders will realize a taxable disposition of their Tembec Shares under the Arrangement regardless of whether they elect, or are deemed to elect, to receive cash and/or Rayonier AM Shares. Non-resident Tembec Shareholders who do not hold their Tembec Shares as taxable Canadian property will not be subject to tax under the ITA on the disposition of their Tembec Shares.

U.S. tax consequences

The exchange of Tembec Shares for the consideration pursuant to the Arrangement will be a taxable transaction for Code purposes.

Overview of previous proposal

The proposal for the Exxon acquisition of InterOil contemplated that a newly-incorporated B.C. subsidiary of ExxonMobil would acquire InterOil under a Yukon Plan of Arrangement, with the consideration for each InterOil share comprising that number of ExxonMobil shares having a fixed value of U.S.$45.00 per share, plus a cash payment of U.S.$26.87 per share (or U.S.$1.37B in total). However the cash “contingent resource payment” (or “CRP”) of U.S.$26.87 per share, was to be held under an escrow arrangement, to be repaid in full if an interim resource assessment of a Papoua New Guinea natural gas project of InterOil (slated to occur in the 2nd quarter of 2017), showed a resource of less than 6.2 trillion cubic feet equivalent ("tcfe"), and with the CRP having to be repaid on a pro rata basis if the interim assessment showed a resource of between 6.2 and 10 tcfe.

Response to Yukon Court of Appeal decision

Following a decision of the Yukon Court of Appeal reversing approval of the Plan of Arrangement, ExxonMobil has returned with the same offer (set out in a more detailed Circular of InterOil), except that the CRP cap occurs at 11 tcfe rather than 10 tcfe – and also secured a fairness opinion from BMO to InterOil which was paid for on a fixed fee rather than contingent basis.

Overview of Canadian tax disclosure

The Canadian tax disclosure is essentially the same as before, and indicates that the full per share CRP consideration (now of U.S.$ $33.94 rather than U.S.$26.87 per share) - as well as, of course, the share consideration of U.S.$45 per share - will be required to be included in computing a resident InterOil shareholder’s proceeds of disposition, but (under s. 42) if the repayment obligation is triggered before the filing due-date for the shareholder’s return, the repayment would reduce those proceeds of disposition.

Table summarizing contingent payments

The table below shows the CRP payments on a per share and aggregate basis based on the quantum of the interim resource assessment. It also shows the payments which would be received from Total S.A. (pursuant to the 2014 agreement for Total S.A.'s purchase of a 40.13% interest in the natural gas field) resulting from the same interim resource assesssment. The payment due pursuant to the Interim Resource Certification will only be paid by Total S.A. upon completion of the interim resource certification if they average resource as per two independent certifiers is greater than 5.4 tcfe - and for each tcfe that is certified above 12 tcfe, an additional U.S.$401.28 million would be payable to InterOil. The Circular also states that "in the professional judgment of GLJ [Petroleum Consultants Ltd.], based on information available at the effective date of the Updated GLJ Certification, there was a less than 1% probability that the volume of contingent resources in the Elk-Antelope Fields would equal or exceed 11 tcfe."

Overview

It is proposed that a newly-incorporated B.C. subsidiary of ExxonMobil will acquire InterOil under a Yukon Plan of Arrangement. InterOil is a Yukon corporation listed on the NYSE but essentially all of whose assets are natural gas assets held in a Papua New Guinea (“PNG”) subsidiary. The consideration for each InterOil share consists of that number of ExxonMobil shares having a fixed value of U.S.$45.00 per share (or U.S.$2.3B in total), plus a cash payment of U.S.$26.87 per share (or U.S.$1.37B in total). However the cash “contingent resource payment” (or “CRP”) of U.S.$26.87 per share, which will be held under an escrow arrangement, will have to be repaid in full to AcquisitionCo if an interim resource assessment of a PNG natural gas project of InterOil, which is expected to be completed in the 2nd quarter of 2017, shows a resource of less than 6.2 trillion cubic feet equivalent ("tcfe"), and with the CRP having to be so repaid on a pro rata basis if the interim assessment shows a resource of between 6.2 and 10 tcfe. The U.S.$1.37B up-front CRP payment will be lent on behalf of the former InterOil shareholders back to ExxonMobil under a loan which will mature after the completion of the interim resource assessment and at an interest rate which will not be determined until such maturity date - so that it may not be possible to apply requirements to recognize interest on an accrual basis. The full U.S.$26.87 per share CRP consideration will be required to be included in computing a resident InterOil shareholder’s proceeds of disposition for 2016, but (under s. 43) if the repayment obligation is triggered before the filing due-date for the shareholder’s return, the repayment would reduce those proceeds of disposition. If the reduction does not occur until later, it instead will be recognized separately as a capital loss.

Court rejection of Plan

The Yukon Court of Appeal reversed approval of the Plan of Arrangment by a motions judge. See summary under OBCA, s. 182(5)(f).

InterOil

A Yukon corporation whose common shares ("Shares") are listed on the NYSE and Port Moresby stock exchange and whose sole focus is on Papua New Guinea. Its assets include one of Asia's largest undeveloped gas fields (the Elk and Antelope Fields) in the Gulf Province in PNG, and exploration licences covering about 16,000 sq. km. Its subsidiaries are exclusively non-resident (in PNG, the Bahamas, Barbados, Singapore and Australia). An indirect wholly-owned PNG subsidiary (SPI (208) Limited (Company Number 1-31349), which is held through a Bahamas holding company) is a party to an agreement dated March 26, 2014 with Total Holdings International B.V., pursuant to which it is entitled to an "Interim Resource Payment" in the event that the resource for this gas field exceeds a tcfe threshold. Payment under the CRP is not contingent on receiving this amount.

ExxonMobil

A New Jersey corporation listed inter alia on the NYSE. It is the largest publicly traded international oil and gas company in the world.

AcquisitionCo

An indirect wholly-owned subsidiary of ExxonMobil, to be organized under the laws of B.C.

Oil Search

A Papua New Guinea (PNG) oil and natural gas exploration and production company whose Shares are listed on the Australian Stock Exchange (“ASX”) and the Port Moresby stock exchange.

“Consideration” (for InterOil Shares)

Means an (a) ExxonMobil Shares worth $45.00, calculated based on the 10 day VWAP of ExxonMobil's Shares on the NYSE for the 10 consecutive trading days ending on (and including) the Effective Date of the Arrangement, and (b) a CRP.

Receipt of CRP under Plan of Arrangement

Pursuant to the Arrangement and the CRP Agreement, AcquisitionCo will deliver to the a non-resident Escrow Agent, as agent for the InterOil Shareholders disposing of Shares under the Arrangement, U.S.$1,372,361,491.80 in cash (representing the maximum CRP Payment, as described below), so that each such Shareholder will thereby receive a contingent resource payment (“CRP”), so that each such Shareholder will now be the holder of the “Escrow Verification Receipt” (“EVR”) evidencing each CRP deposited into escrow. Immediately following such deposit, the escrowed funds will be lent, on behalf of Holders, to ExxonMobil. Shortly after the “Interim Certification Process” for the InterOil Resource described below is completed (likely in 2Q of 2017, subject to any dispute) the Loan (together with interest) will be repaid by ExxonMobil and the Escrow Agent will immediately use these funds to make any required payouts (the “CRP Payouts”) from escrow to the EVR holders (including any payment shortfall contemplated in the CRP Agreement) and return any remaining funds to AcquisitionCo, on behalf of Holders. The CRP rights are non-transferable.

Calculation of CRP Payouts

CRP Payout effectively increases by US$7.07 per Common Share for each incremental trillion cubic feet equivalent ("tcfe") of the volume of the Elk Field and Antelope Fields in Papua New Guinea that is above 6.2 tcfe (up to a maximum of 10.0 tcfe of certified resources) (excluding any interest payable to holders in respect of such amounts). The calculation of the potential payout on a per EVR basis assumes that the aggregate CRP is divided among holders of 51,082,771 Common Shares.

Any CRP Payout will be made free of deduction for Part XIII taxes, and is subject to gross-up.

Interim Resource Certification

The Total Sale Agreement (described below) provides for an appraisal work program comprising the drilling of two firm appraisal wells and one or more additional appraisal wells in the Elk Field or the Antelope Field. The Antelope 7 appraisal well is currently expected to be the final appraisal well under this program. Under the Total Sale Agreement, following the conclusion of the drilling and potential testing of the Antelope 7 well and receipt of a notec, the Interim Resource Certification process will be launched. An extensive database comprising well and seismic information, production test (including extended production test) data and core information will be provided to two reputable independent firms of expert certifiers for use in this comprehensive resource certification process. It is expected that the Interim Resource Certification will be completed in the second quarter of 2017, and that the CRP Payouts will be made shortly thereafter.

Loan

The Loan will bear interest at a rate per annum equal to the semi-annual equivalent yield to maturity of the United States Treasury security selected by the borrower (ExxonMobil) as having a maturity comparable to the time period from the Effective Date to the Loan payment date, plus a credit spread as determined by the borrower, that would be applicable to U.S.-dollar denominated corporate debt securities of comparable maturity issued by ExxonMobil on the Loan Payment Date.

U.S. securities laws

The ExxonMobil Shares to be issued by ExxonMobil pursuant to the Arrangement will be issued in reliance on the exemption from registration provided by s. 3(a)(10) of the U.S. Securities Act of 1933. A CRP is not a security for the purpose of U.S. securities law. An EVR evidences each CRP Holder's CRP deposited into escrow and entitlement to a CRP Payout distributable from the escrow in respect of a CRP that is separate and apart from the ExxonMobil Shares. A transfer of the ExxonMobil Shares will not result in a transfer of the CRP or EVR.

Oil Search Agreement

Oil Search proposed to use a newly-incorporated Yukon subsidiary to acquire (under a Yukon Plan of Arrangement and pursuant to the “Oil Search Agreement”). The proposed consideration included Oil Search shares or cash (subject to a U.S.$770M cap) and “contingent value rights,” which would trade on the ASX and would entitle the holder to a cash payment based on the extent to which an interim resource assessment of a PNG natural gas project of InterOil showed a resource of greater than 6.2 tcfe equivalent, with the per share payment being US$6.044 per each tcfe increment, rather than US$7.07 per CRP. In contrast to the CRPs, no cap was proposed. InterOil terminated the Oil Search Agreement on July 21, 2016, and a termination fee of $U.S60,000,000 was paid on its behalf by ExxonMobil.

Plan of Arrangement

1. Each Dissent Share will be transferred to AcquisitionCo.
2. All Options, to the extent not exercised prior to the Effective Time of the Arrangement, will be terminated.
3. All the RSUs will vest at the Effective Time and InterOil will issue Comon Shares to each RSU holder.
4. Each Common Share will be transferred to AcquisitionCo in exchange for the Consideration (i.e., ExxonMobil shares and the CRP), and the payment of the CRP portion of the Consideration will be satisfied by the delivery thereof by AcquisitionCo to the Escrow Agent in accordance with the terms of the CRP Agreement.

Canadian tax considerations

Receipt and repayment of CRP

Shareholders resident in Canada should (i) initially be required to include the aggregate CRPs (representing a Shareholder's pro rata share of the maximum CRP payment) received by them at the time of disposition (which amount will be approximately $26.87 per Common Share) as proceeds of disposition (in addition to the fair market value of the ExxonMobil Shares and any cash received in lieu of fractional ExxonMobil Shares received by them pursuant to the Arrangement) in respect of their Common Shares disposed of pursuant to the Arrangement, and (ii) should be required to include in their income their pro rata share of interest (and penalties, if any) on the Loan, notwithstanding that all or a portion of such amounts may be required to be repaid to AcquisitionCo. Accordingly, a Shareholder resident in Canada may be initially required to include in income amounts which exceed the amount of cash that will ultimately be released from escrow to the Shareholder.. The repayment of such amounts will generally give rise to a capital loss or reduced proceeds of disposition of the Common Shares, and will not offset any interest income inclusion.

Interest on Loan

The interest rate on the Loan will be determined based on its term. However, because the term will not be known until the determination of entitlements is subsequently made in accordance with the CRP Agreement, the actual rate of interest applicable to the Loan will not be determined until the time at which the Loan is repaid, at which point such interest rate will be applied to the Loan over its term. It is intended that the interest so determined (and penalties, if any) will be paid to the Escrow Agent for the benefit of Holders when the principal amount of the Loan is repaid. Taxpayers described in s. 12(3) are required to recognize interest on an accrual basis. Furthermore, if at any time the debt should become an "investment contract" in relation to an individual, such Canadian holder will be required to include in computing income for a taxation year any interest that accrues or is deemed to accrue to the Canadian Holder on the debt up to any "anniversary day" in that year to the extent such interest was not otherwise included in the Canadian Holder's income for that year or a preceding year. A Canadian Holder's pro rata share of the Loan generally will be an investment contract for this purpose unless the Canadian Holder includes interest income accrued on the Loan in computing its income at periodic intervals of not more than one year during the term of the Loan.

Application of “accrual” requirement

It is possible that a Canadian Holder may be required to include in income for a taxation year the Canadian Holder's pro rata share of interest on the Loan even though such amount cannot be determined at the applicable time. In other contexts relating to the prescribed interest accrual rules, the CRA has stated that, where the investment return on an instrument cannot be known until maturity, no amount should be deemed to accrue under those rules, and that the entire return on the investment is calculated and reported in the taxation year when such return is known (i.e., the year in which the maturity date falls). Although not free from doubt, Canadian Holders should be required to include in income the full amount of their pro rata share of interest (and penalties, if any) on the Loan.

Integration of CRP repayment with Common Share disposition

The terms of the CRP Agreement are an integral component of the disposition of Common Shares pursuant to the Arrangement. A Holder's pro rata share of the amount of the aggregate CRPs repaid to AcquisitionCo on behalf of Holders as required by the CRP Agreement (including on account of interest and penalties, if any, on the Loan) will constitute a repayment to AcquisitionCo by or on behalf of a Canadian Holder pursuant to a conditional or contingent obligation incurred by the Canadian Holder in respect of their disposition of Common Shares.

Effect of repayment

If the obligation to repay AcquisitionCo pursuant to the CRP Agreement arises before the Canadian Holder's filing-due date for its taxation year in its Common Shares were disposed of (or before the end of its fiscal period, if a partnership), the amount considered to be a repayment should be deemed to be a reduction in its proceeds of such disposition. If such obligation arises thereafter, the amount considered to be a repayment should be deemed to be a capital loss of the Canadian Holder from the disposition of a property by it at that time.

Qualified investment

The Loan should be considered to be a qualified investment for registered plans (except a deferred profit sharing plan to which ExxonMobil, or an employer that does not deal at arm's length with it, has made a contribution) provided that the ExxonMobil Shares are listed on a designated stock exchange.

U.S. tax considerations

The amount, timing and character of any gain, income or loss with respect to the CRP Rights are uncertain. It is not clear whether any right to receive a payment respecting a CRP (a “CRP Right”) may be treated as a payment with respect to a sale or exchange of a capital asset or as giving rise to ordinary income or loss. Because the CRP Rights will not be transferable and the CRP Rights will not be listed on a securities exchange, a holder generally will not be able to recognize a loss with respect to a CRP Right for Code purposes until such holder receives payment in respect of a CRP Right or the holder's CRP Right terminates. Although not entirely clear, a portion of any payment in respect of a CRP Right, if received more than six months following the Effective Date of the Arrangement, may constitute imputed interest taxable as ordinary income under s. 483.

Australian tax considerations

Valuation of CRP

The capital proceeds received by an Australian Shareholder will be equal to the market value of the ExxonMobil Shares plus the market value of the CRP (both determined at the Effective Date), plus any cash received in lieu of fractional interests. ExxonMobil has agreed with InterOil to treat the CRP Right as having a fair market value for U.S. federal income tax purposes generally equal to the excess of (i) the fair market value of an InterOil Common Share over (ii) the fair market value of an ExxonMobil Share(s) (or fraction thereof) to be received with respect to such Common Share pursuant to the Arrangement, in each case, on the day prior to the Effective Date. For example, assuming the ExxonMobil Shares received have a fair market value of $45, where the fair market value of an InterOil share is $49 on the last trading day of its shares, this implies each CRP Right has a market value of $4.

Roll-over relief

Broadly, scrip for scrip roll-over relief may be available to defer a capital gain made by a taxpayer, if under an arrangement, a taxpayer exchanges a share in a company for a share in another company and certain conditions are met. These conditions include ExxonMobil (or a wholly owned subsidiary of ExxonMobil) acquiring 80% or more of the voting shares in InterOil. These conditions should be satisfied. Scrip for scrip roll-over relief is only applicable to the share consideration received by an Australian Shareholder, and does not cover any gain attributable to the value of the CRP or in respect of cash received in lieu of a fractional interest in an ExxonMobil Share. Australian Shareholders who exchange their Common Shares for ExxonMobil Shares will only be able to access scrip for scrip roll-over relief in respect of the capital gain related to the the market value of the ExxonMobil Shares received therefor. The cost base of Common Shares that are disposed of by the Australian Shareholders will need to be apportioned accordingly in a reasonable manner. To the extent that an Australian Shareholder elects to apply scrip for scrip roll-over relief, any capital gain made as a result of the exchange of Common Shares for ExxonMobil Shares should be disregarded.

Capital gains treatment

As an EVR is evidence of each CRP Holders' CRP deposited into escrow and entitlement to receive the CRP Payout, the CRP Payout should be a capital gains tax asset for Australian income tax purposes. The cost base (or reduced cost base) of the CRP should be equal to its market value at the Effective Date, plus any incidental costs in acquiring it. If a payment is made under the CRP Agreement, a capital gain tax event will occur at the payment time. The CRPs should not be treated as "traditional securities" for Australian taxation purposes (and therefore subject to tax on revenue account) on the basis that the CRPs do not exhibit sufficient debt like qualities.

Overview

Oil Search, a Papua New Guinea (“PNG”) corporation listed on the ASX, is proposing to use a newly-incorporated Yukon subsidiary (“Purchaser”) to acquire (under a Yukon Plan of Arrangement) InterOil, which is a Yukon corporation listed on the NYSE but essentially all of whose assets are natural gas assets held in a PNG subsidiary. The consideration incudes not only Oil Search shares or cash (subject to a U.S.$770M cap) but also “contingent value rights,” which will trade on the ASX and will entitle the holder to a cash payment based on the extent to which an interim resource assessment of a PNG natural gas project of InterOil shows a resource of greater than 6.2 trillion cubic feet equivalent ("tcfe"). For example, if the resource is measured at 10 tcfe, the CVRs would pay U.S.$1.17 billion in total. The Arrangement values the equity of InterOil at approximately U.S.$2.1 billion or $40.25 per Common Share. Following the Arrangement, InterOil shareholders will own between 14% and 21% of Oil Search (depending on how many elect for cash). The Canadian tax disclosure suggests that although the CVRs are legally described as “notes,” they might not be subject to the prescribed debt obligation rules given that the amount payable is “uncertain and unlimited.” The U.S. tax disclosure indicates uncertainty as to whether the holders can get the benefit of their basis in the CVRs, and indicates that Code s. 483 imputed interest rules likely would apply.

Oil Search

A Papua New Guinea (PNG) oil and natural gas exploration and production company whose Shares are listed on the Australian Stock Exchange (“ASX”) and the Port Moresby stock exchange. Its American Depositary Shares (currently representing 10 Oil Search Shares) trade on the U.S. over-the-counter market. Its subsidiaries, other than Purchaser, are exclusively non-resident (in PNG, the British Virgin Islands, the Cayman Islands and Australia).

InterOil

A Yukon corporation whose Common Shares are listed on the NYSE and Port Moresby stock exchange and whose sole focus is on Papua New Guinea. Its assets include one of Asia's largest undeveloped gas fields (the Elk and Antelope Fields) in the Gulf Province in PNG, and exploration licenses covering about 16,000 sq. km. Its subsidiaries are exclusively non-resident (in PNG, the Bahamas, Barbados, Singapore and Australia).

Purchaser

A newly-formed Yukon corporation which is wholly owned by InterOil.

“Consideration” (for InterOil Shares/RSUs)

Consists, at the choice of the InterOil Shareholders and RSU Holders, of either: (i) 8.05 Oil Search Shares (or, at the election of a Shareholder, the number of Oil Search ADSs representing 8.05 Oil Search Shares); or (ii) a cash amount equal to the product of 8.05 and the 5-day volume weighted average price of Oil Search's shares on the ASX calculated as of the third business day prior to closing, provided that the aggregate cash consideration will not exceed U.S.$770M (with proration applying where this is relevant). In addition, each Shareholder and RSU Holder will also receive, in exchange for each Common Share (including each Common Share issued to holders of RSUs pursuant to the Arrangement), a CVR which will represent the right to receive a contingent payment in accordance with the terms and conditions of the CVR Agreement.

Contingent Value Rights (CVRs)

Each CVR (governed by a “Note Trust Deed” beteeen Oil Search and an Australian Note Trustee) will deliver a contingent cash payment (the “Redemption Amount”) of approximately US$6.044 for each trillion cubic feet equivalent ("tcfe") of the volume of the Elk Field and Antelope Fields in Papua New Guinea that is above 6.2 tcfe. Any amounts payable on the CVRs will be paid in cash upon completion of an interim Resource certification process. The CVR provides Shareholders and RSU Holders, through their entitlement to hold CVRs, with an uncapped potential additional payment, depending on the volume of such Resources. The CVRs are expected to be listed on the ASX. Sample calculations of the amounts payable for different levels of Resources are:

Plan of Arrangement

1. The InterOil Shareholder Rights Plan will be terminated.
2. InterOil Dissent Shares will be transferred to Purchaser.
3. Unexercised options on InterOil shares will be cancelled.
4. InterOil RSUs will be deemed to vest.
5. In consideration for the Consideration issued or paid by Oil Search (for the benefit of Purchaser in 6) to InterOil’s shareholders, Purchaser shall issue common shares to Oil Search with an aggregate fair market value (“FMV”) and stated capital equal to the FMV of the Consideration.
6. Purchaser will purchase all of the outstanding Company shares for the Consideration paid by Oil Search (5 and 6 occur simultaneosly).

Ineligible Foreign Shareholders

Will not receive Oil Search Securities or CVRs. Instead, the Oil Search Securities and CVRs will be issued to the Depositary for sale on their behalf. "Ineligible Foreign Shareholder" means a Shareholder or RSU Holder who Oil Search reasonably believes it would be contrary to applicable law to issue Oil Search Securities or CVRs to. Those with addresses, as shown in the Common Share and RSU register as at the Effective Date, is a place inside the U.S., Canada, Singapore, Bahamas, PNG, the United Kingdom, Australia, New Zealand, the British Virgin Islands, Hong Kong, Malaysia, or the Philippines is not an Ineligible Foreign Shareholder, unless Oil Search reasonably believes that it would be unlawful to issue Oil Search Securities or CVRs to them.

Canadian tax consequences.

Exchange

A Canadian Holder will realize a capital gain (or capital loss) on disposing of InterOil Common Shares under the Arrangement.

Receipt of CVRs

The characterization of the CVRs is unclear. The CVRs should be considered to be additional proceeds received on the disposition of Common Shares in an amount equal to the fair market value of the CVRs at the time of the disposition. The cost to a Canadian Holder of the CVRs should generally be equal to the FMV of the consideration for which the CVRs were exchanged at the time of the exchange.

Accrual on CVRs

The CVRs are legally described as notes and constitute unsecured obligations of Oil Search. If the CVRs are considered to be a debt obligation for the purposes of the ITA (notwithstanding that the amount ultimately payable under the CVRs is uncertain and unlimited), a Canadian Holder may be required to accrue as income the maximum amount payable under the CVRs held by them (generally in excess of the amount for which the CVRs were issued), in the taxation year of the receipt of the CVRs, in the period during which the CVRs are held, or on a disposition of the CVRs (including in connection with the receipt of a Redemption Amount).

Disposition of CVRs

In general, a Canadian Holder that receives a payment of the Redemption Amount pursuant to the terms of the CVR Agreement or otherwise disposes of a CVR will realize income (or loss) or a gain (or loss), to the extent that their proceeds exceed (or are less than) the cost of the CVR to the Canadian Holder immediately before the time of disposition. The character of any such amount as being ordinary income (or loss) or a capital gain (or capital loss) is uncertain. The amount of income or gain realized by a Canadian Holder on a disposition of a CVR should reflect any amount previously included in income by the Canadian Holder in respect of the CVR.

U.S. tax consequences

Exchange

The receipt of the Consideration in exchange for Common Shares will be a taxable transaction for Code purposes.

PFIC rules

Oil Search has not made a determination of whether it is or ever has been a PFIC.

CVRs

The amount, timing and character of any gain, income or loss with respect to the CVRs are uncertain. For example, it is possible that payment of any Redemption Payment, up to the amount of the U.S. holder's adjusted tax basis in the CVR, may be treated as a non-taxable return of a U.S. holder's adjusted tax basis in the CVR, with any amount received in excess of such basis treated as gain from the disposition of the CVR, or possibly another method of basis recovery may apply. Further, it is not clear whether any Redemption Payment may be treated as a payment with respect to a sale or exchange of a capital asset or as giving rise to ordinary income. A U.S. holder who does not sell, exchange or otherwise dispose of a CVR may not be able to recognize a loss with respect to the CVR until such holder receives a Redemption Payment or the right to receive such payment terminates.

Imputed interest

Although not entirely clear, any Redemption Payment received more than six months following the consummation of the Arrangement, may constitute imputed interest taxable as ordinary income under s. 483. The portion of any Redemption Payment treated as imputed interest under s. 483 generally should equal the excess of the amount of the Redemption Payment over the present value of such amount as of the consummation of the Arrangement, calculated using the applicable federal rate as the discount rate. A U.S. holder of a CVR must include in its taxable income interest imputed pursuant to s. 483 using such U.S. holder's regular method of accounting.

Disposition of CVRs

Upon a sale or other disposition of a CVR, a U.S. holder generally should recognize capital gain or loss equal to the difference between (1) the sum of the amount of any cash and the fair market value of any property received upon such sale or exchange (less any imputed interest, as described below) and (2) the U.S. holder's adjusted tax basis in the CVR.

Australian tax consequences.

Exchange

As a general rule, a capital gain or capital loss will be realized upon the disposal. The capital proceeds received by an Australian Participant will be equal to the cash received or the market value of the Oil Search Shares received on the Effective Date plus the market value of the CVR on the Effective Date. Australian Taxation Office guidance indicates that the VWAP of the Oil Search Shares and CVR on the Effective Date should be used as the method to determine their market value.

Rollover treatment

Broadly, scrip for scrip roll-over relief may be available to defer a capital gain made by a taxpayer, if under an arrangement, a taxpayer exchanges a share in a company for a share in another company and certain conditions are met. This is only applicable to the extent that the Participant elects share rather than cash Consideration, and does not cover any gain attributable to the value of the CVR.

PNG tax consequences

Gains arising from the disposal or transfer of shares in a company would not be subject to PNG taxation unless the Internal Revenue Commission of PNG deemed that a PNG resident shareholder had acquired the shares as part of a profit making scheme (i.e,. is in the business of buying and selling shares in companies). To the extent that PNG resident shareholders of InterOil did not acquire their shares as part of a profit making scheme (i.e., on revenue account) any gains derived from the proposed transfer of shares would not be taxable in PNG.

Overview. It is proposed that RONA will be acquired by Lowe’s Canada (the Nova Scotia ULC operating subsidiary of Lowe’s, a North Carolina public corporation) under a Quebec Plan of Arrangement. The Common Shareholders of RONA (other than dissenting shareholders) will receive $24.00 in cash for each Common Share and, subject to approval of the Arrangement by the Preferred Shareholders, the Preferred Shareholders (other than dissenting shareholders) will receive $20.00 in cash (together with accrued and unpaid dividends) for each Preferred Share. The acquisition requires regulatory approvals, and the Corporation and Lowe's currently anticipate that the Arrangement will be completed in the second half of 2016.

RONA. A Quebec corporation which is a major Canadian retailer and distributor of hardware, building materials and home renovation products. Both its Common Shares and Series 6 Class A Preferred Shares are listed and traded on the TSX. As of February 25, 2016, 106,904,501 Common Shares and 6,900,000 Series 6 Class A Preferred Shares were outstanding.

Lowe’s. A FORTUNE 50 home improvement corporation incorporated under the laws of North Carolina serving approximately 16 million customers a week in the United States, Canada and Mexico through its stores and online.

Lowe’s Canada. A Nova Scotia ULC which is a wholly-owned subsidiary of Lowe’s and which operates as a home improvement retailer in Canada.

Plan of Arrangement.

1. The Corporation’s Rights Plan will be terminated.
2. Each Option outstanding immediately prior to the Effective Time of the Arrangement will be transferred by its holder to the Corporation in exchange for a cash payment equal to the amount (if any) by which $24.00 exceeds the exercise price less applicable withholdings.
3. Each DSU, RSU or PSU will be transferred by its holder to the Corporation in exchange for a cash payment from the Corporation of $24.00, except that such consideration in respect of each PSU granted in calendar year 2013 will be multiplied by the applicable level of achievement percentage determined by the Corporation’s Human Resources and Compensation Committee.
4. Each of the Common Shares or Preferred Shares held by Dissenting Shareholders will be deemed to have been transferred to Lowe’s Canada for its fair value.
5. Each Common Share will be transferred by its holder to Lowe’s Canada in exchange for the applicable cash consideration (of $24.00 per share).
6. Simultaneously with 5 above, each Preferred Share will be transferred by its holder to Lowe’s Canada in exchange for the applicable cash consideration (of $20.00 per share).

Arrangement Agreement guarantee. Lowe’s unconditionally and irrevocably guaranteed the due and punctual performance by Lowe’s Canada of Lowe’s Canada’s obligations under the Arrangement Agreement and under the Plan of Arrangement.

Pre-Arrangement Lowe’s-requested reorganization. The Corporation agrees that, upon request of Lowe’s Canada, it will use its commercially reasonable efforts to (i) perform such reorganizations of its corporate structure, capital structure, business, operations and assets or such other transactions as Lowe’s Canada (each a “Pre-Acquisition Reorganization”). The Corporation will not be obligated to participate in any Pre-Acquisition Reorganization unless the Corporation determines in good faith that such Pre-Acquisition Reorganization: can be completed prior to the Effective Date, and can be reversed or unwound in the event the Arrangement does not become effective without adversely affecting the Corporation, any of its Subsidiaries, the Corporation Securityholders or holders of Debentures; is not prejudicial to the Corporation, any of its Subsidiaries, the Corporation Securityholders or holders of Debentures; and does not require the Corporation or its Subsidiaries to take any action that could reasonably be expected to result in Taxes being imposed on, or any adverse Tax or other consequences to, any Corporation Securityholders or holders of Debentures incrementally greater than the Taxes or other consequences to such party in connection with the completion of the Arrangement in the absence of such action being taken.

Tax reps of Corporation. Standard for an arm’s length share deal.

Canadian tax consequences. Exchange occurs on a taxable basis for non-exempt Canadian residents.

Overview

Under a CBCA Plan of Arrangement, the Company will spin-off its 73% interest in exactEarth under a s. 86 reorg and its Common Shares will be acquired by the Purchaser (an indirect Canadian sub of Honeywell International) for an initial payment of $5.125 per Common Share plus a second “Contingent Payment Amount” approximately two weeks following the closing date of up to $0.125 per Common Share (based on whether the exactEarth shares have appreciated, in their first five trading days on the TSX, over a value of $7.15 per share.)

Company

A CBCA corporation listed on the TSX (with a market cap of $362M) which is a global designer and manufacturer of space hardware and systems. As of November 5, 2015, there were 76,554,352 Common Shares, Options exercisable for 1,806,713 Common Shares, 618,068.649 RSUs, 426,287.458 PSUs, 277,572.30 DSUs and Director Share Units, and 117,239.2275 ESPP Shares issuable under the ESPP to eligible employees. The holders thereof are “Securityholders.”

Purchaser

Honeywell Limited, an indirect wholly-owned Canadian subsidiary of Honeywell International Inc.

exactEarth

exactEarth Ltd., a CBCA corporation which is a leading provider of global maritime vessel data for ship tracking and maritime situational awareness solutions. The Company co-sponsored the creation of exactEarth in 2009 and currently holds a 73% equity ownership position, with the remaining 275 interest held by the Minority Shareholder. In the preliminary transactions below, the two shareholders will convert debt into equity and subscribe for further shares at a price of $6.60 per share, implying a value for the Company's 73% interest of $102 million.

Minority Shareholder

Hisdesat Servicios Estrategicos S.A., a Spanish satellite communications services provider.

Support Agreements

Each of the Directors and Crescendo Partners (collectively, Crescendo Partners II, LP Series JJ and Crescendo Partners III, LP, and a large Shareholder of the Company), has entered into Support Agreements with the Purchaser pursuant to which they have each agreed to vote an aggregate of approximately 11% of the Common Shares of the Company in favour of the Arrangement. The Directors and executive officers of the Company and their associates and affiliates, as a group, beneficially owned, directly or indirectly, or exercised control or direction over, an aggregate of 2,793,265 Common Shares, representing approximately 3.6% of the outstanding Common Shares.

Preliminary exactEarth reorganization

On October 29, 2015, the Company and the Minority Shareholder agreed that:

1. the Company will make a payment of $9,709,961 to the Minority Shareholder;
2. the Minority Shareholder will purchase from the Company $1,882,471 of indebtedness that it holds in exactEarth, such that immediately following such purchase, the pro rata indebtedness held by the Company and the Minority Shareholder in exactEarth shall be 73% and 27%, respectively;
3. the Company and the Minority Shareholder will convert all of the exactEarth indebtedness that each owns (after the debt purchase described above) in the aggregate amount of $47,769,000 into equity at a price per exactEarth Share of $6.50, for 5,365,340 exactEarth shares to the Company and 1,984,441 exactEarth Shares to the Minority Shareholder, all being at a valuation equal to an enterprise value of $125,000,000;
4. the Company will subscribe for $14,600,000 of exactEarth Shares and the Minority Shareholder will subscribe for $5,400,000 of exactEarth Shares at a price per common share of exactEarth of $6.50, such that immediately following such subscription, the pro rata equity interest in exactEarth of the Company and the Minority Shareholder shall be 73% and 27%, respectively;
5. certain members of senior management of exactEarth will subscribe for up to 100,000 exactEarth Shares at a price per exactEarth Share of $6.50; and
6. exactEarth will implement management incentive plans as agreed.

Following the above pre-closing steps, exactEarth will have 21,637,815 exactEarth Shares outstanding,.the Company will own 15,722,605 exactEarth Shares or approximately 73%, while the Minority Shareholder will own 5,815,210 Shares or approximately 27%, consistent with the current ownership split.

Plan of Arrangement

1. The Company shareholder rights plan will be terminated.
2. The authorized share capital of the Company will be reorganized as follows: an unlimited number of New Common Shares will be created (having 10 votes per share); each Common Share will be exchanged with the Company for one New Common Share and 0.1977 of an exactEarth Share; and the amount added to the stated capital account for the New Common Shares will equal the paid-up capital of the Common Shares for purposes of the Tax Act exchanged above less the aggregate fair market value of the exactEarth Shares distributed on such exchange;
3. Each Option, Share Award and ESPP Share issued and outstanding at the Effective Time will be deemed to be fully vested.
4. In the case of any Trust Share Award, such Trust Share shall be sold pursuant to the Plan of Arrangement and the Consideration and exactEarth Shares received shall be paid to the holder thereof by the trustee as soon as practicable.
5. All of the outstanding Options, ESPP Shares and all Non-Trust Share Awards shall be disposed of and surrendered by the holders thereof to the Company in exchange for the Cash-Out Consideration.
6. Each New Common Share of a Dissenting Shareholder will be deemed to be transferred to the Purchaser in consideration for a debt claim against the Purchaser.
7. Each New Common Share… will be transferred to, and acquired by the Purchaser, in exchange for the “Consideration” (comprising $5.125 cash per Common Share and the Contingent Payment)..

Contingent Payment Amount

The Arrangement Agreement provides that the Purchaser will deposit in trust the “Contingent Payment Amount,” which represents $10 million in cash (deposited by the Purchaser for holidng in escrow until distributed), or approximately $0.125 per Security. The Contingent Payment Amount will be used to satisfy the estimated increased Taxes that may be owing in circumstances where the exactEarth Shares increase in value, over the Company’s cost base in the first five trading days on which the exactEarth Shares are trading and, to the extent not required to satisfy an estimated increased Tax liability, such amount will be distributed to Securityholders. Accordingly, if the aggregate market value of the exactEarth Shares distributed by the Company is less than or equal to $112,400,000 (or $7.15 per exactEarth Share) then the full Contingent Payment Amount will be distributed to the former Securityholders, and if their value exceeds $112,400,000, an amount equal to the excess multiplied by 13% will be paid to the Purchaser, with only the balance of the Contingent Payment Amount (together with interest accrued thereon) distributed to the Securityholders on a pro rata basis.

Canadian tax consequences

S. 86 reorg. The Company expects that the fair market value of the exactEarth Shares received on the exchange for Company Common Shares will not exceed the paid-up capital of such Common Shares. A resident shareholder will realize a capital gain on such exchange only to the extent that the the fair market value of the exactEarth Shares received exceeds the adjusted cost base of such shares.

Sale. A Resident Shareholder that transfers New Common Shares under the Arrangement to the Purchaser for the Consideration including any portion of the Contingent Payment Received, will be considered to have disposed of such New Common Shares for proceeds of disposition equal to the amount of the aggregate Consideration, including any portion of the Contingent Payment Amount received.

Overview

On an acquisition of Catamaran (a Canadian public company with a U.S.-focused pharmacy claims management business) under a Yukon Plan of Arrangement by Purchaser, each Catamaran shareholder will receive $61.50 per common share in cash. However, in order to accomplish a partial "de-sandwiching" of the resulting structure, the cash proceeds will be bifurcated. Approximately $18 to $24 per share (or $3.7B to $5B in total) will be received as a result of a (presumably non-Canadian) subsidiary of UnitedHealth Group lending to an indirect LLC subsidiary of Catamaran, with those funds being indirectly distributed to Catamaran which, in turn, will distribute those funds to its shareholders as redemption proceeds for preferred shares - which were issued to them under a s. 86 reorg. The balance of the $61.50 per share will be paid by Purchaser for the "Class X" common shares of Catamaran (also issued under the s. 86 reorg.)

Catamaran

A Yukon corporation trading on the TSX and NASDAQ whose principal executive offices are in Illinois. It has two business segments carried on in the U.S. and Canada: a pharmacy benefits management business (in which it processes one out of five prescription claims made in the U.S.); and health care information technology.

UnitedHealth Group

UnitedHealth Group Incorporated, a Minnesota corporation listed on the NYSE with a market cap of $113B, providing health care coverage and benefits services; and (through Optum) information and technology-enabled health services.

Purchaser

A wholly-owned B.C. subsidiary of UnitedHealth Group formed solely to engage in the contemplated transactions.

Company Sub 1

A Delaware wholly-owned subsidiary of Catamaran.

Company Sub 2

A Texas indirect wholly-owned subsidiary of Catamaran (and direct sub of Company Sub 1) which owes $2B to Luxco.

Company Sub 3

Catamaran PBM of Illinois, Inc., an indirect wholly-owned subsidiary of Catamaran (and direct sub of Company Sub 2) owing $350M to Luxco.

Luxco

Catamaran S. à r. L., a wholly-owned Luxembourg subsidiary of Catamaran.

Parent Sub

A subsidiary of UnitedHealth Group to be designated by it.

Plan of Arrangement

1. Purchaser will subscribe for one common share of Catamaran for $61.50 in cash;
2. Parent Sub will lend an amount to Company Sub 2 sufficient to fund the preferred share redemptions in 13 below;
3. Company Sub 2 will repay all or part of a $275M note owing by it to Catamaran;
4. A dividend or capital distribution will be made by Company Sub 2 to Company Sub 1;
5. Company Sub 2 will repay all or part of the $2B owing by it to Luxco;
6. Company Sub 2 will make a cash contribution to Company Sub 3;
7. Company Sub 3 will repay all or part of the $350M owing by it to Luxco;
8. Luxco will make a capital or dividend distribution to Catamaran;
9. Company Sub 1 will make a capital or dividend distribution to Catamaran;
10. each outstanding stock option, RSU award and PBRSU award granted prior to January 1, 2014 will be cancelled for the cash consideration;
11. each of the common shares held by dissenting holders will be transferred to Purchaser in exchange for a right to be paid the fair value thereof;
12. Catamaran will undertake a s. 86 reorganization of capital pursuant to which: (A) the authorized share capital of Catamaran will be amended to create two new classes of shares consisting of "class X common shares" carrying four votes per share and preferred shares which will be redeemable and retractable for a redemption price which will not exceed the paid-up capital of each common share immediately before the share exchange; and (B) each existing common share of Catamaran (other than any common shares owned by Purchaser) will be automatically exchanged for a newly created preferred share and one-half of a newly-created class X common share, with the stated capital of each preferred share being equal to the redemption consideration and the remainder of the paid-up capital of the common shares immediately before the share exchange being allocated to the stated capital of the class X common shares;
13. each preferred share will be redeemed by Catamaran for a cash redemption price equal to the redemption consideration;
14. each class X common share will be transferred to Purchaser for a cash purchase price equal to the product of (i) $61.50 minus the redemption consideration and (ii) two;
15. each outstanding stock option, RSU award and (performance-based) PBRSU award granted on or after January 1, 2014 will be converted into a UnitedHealth Group share-based option, RSU or PBRSU, as the case may be; and
16. Catamaran's employee share purchase plan will be terminated.

Canadian tax consequences

S. 86 exchange. The share exchange in 12 should not result in the realization of a capital gain (or capital loss) to a Canadian holder.

Pref redemption

The paid-up capital of the preferred shares will be equal to the portion of the arrangement consideration to be paid on the redemption of the preferred shares. Accordingly, a deemed dividend will not arise to Canadian holders on the share redemption in 13.

Taxable exchange

Exchange of Class X shares for cash in 14 will occur on a taxable basis.

U.S. tax consequences

Integrated transaction. The exchange of common shares for class X common shares and preferred shares, the redemption of the preferred shares, and the purchase of the class X common shares pursuant to the plan of arrangement should be treated as an integrated transaction pursuant to which each holder of common shares immediately prior to the consummation of the arrangement should be treated as receiving the arrangement consideration in exchange for common shares.

Dividend alternative

However, the IRS might successfully assert that the portion of the arrangement consideration paid by Catamaran in redemption of the preferred shares (expected to be in the range of $18 to $24 per common share) should instead be treated as a distribution by Catamaran with respect to common shares, followed by a purchase of common shares by UnitedHealth Group. If the transaction were so characterized, a U.S. holder would recognize dividend income equal to the lesser of the portion of the arrangement consideration paid in redemption of the preferred shares and the portion of the arrangement consideration that would be treated as paid out of Catamaran's current or accumulated earnings and profits. The portion of the arrangement consideration that would be treated as paid out of Catamaran's current or accumulated earnings and profits is expected by Catamaran to be materially less than the portion paid in redemption of the preferred shares.

PFIC rules

Catamaran believes that it currently is not a PFIC for U.S. federal income tax purposes and that it has not been a PFIC in prior taxable years.

Overview

Radian, a listed Delaware corporation, is proposing that the Purchaser, a ULC subsidiary, acquire all of the shares of Wheels Group for cash or Radian shares under an OBCA Plan of Arrangement. No rollover treatment is offered. However, the Wheels majority shareholders (i.e., shareholders, including some of the individual company founders, holding 78% of the Wheels shares, who entered into a lock-up agreement with Radian) will agree to be subject to whatever proration will be necessary to ensure that those minority Wheels shareholders who validly elect for cash or Radian shares will not have their choice subject to proration.

Wheels

Wheels is an OBCA corporation trading on the TSXV with 89.6M common shares (the "Wheels Shares") outstanding. It is a supply chain logistics provider.

Purchaser/Radiant

The Purchaser is a wholly-owned subsidiary of Radiant, which is a Delaware corporation trading on the NYSE MKT.

Lock-up Shareholders

They hold 77.7% of the Wheels Shares, and include the "Company Founders" comprising Doug Tozer, Denise Messier and Peter Jamieson holding 39.9%, 10.4% and 5.0% of the Wheels Shares, respectively.

Share/cash election

Under the Arrangement, each Wheels Shareholder may elect to receive, for each Wheels Share, either (i) Cash Consideration of CDN$0.77 per Wheels Share, (ii) Share Consideration of 0.151384 Radiant Shares per Wheels Share, or (iii) a combination thereof. However, the number of Radiant Shares to be transferred to Wheels Shareholders must fall in the range of 4,540,254 to 6,900,000 shares. Any Wheels Shareholder other than a Locked-up Shareholder who makes a timely election will not be subject to proration, so that proration will only apply to the other shareholders. If the Wheels Shareholders elect to receive more than 6,900,000 Radiant Shares, the number of Radiant Shares to be received by the Locked-up Shareholders and all other (minority) shareholders who timely elected to receive Wheels Shares will be subject to proration in order to ensure that only 6,900,000 Radiant Shares are transferred to Wheels Shareholders. Conversely, if Wheels Shareholders elect to receive fewer than 4,540,254 Radiant Shares, the number of Radiant Shares to be received by the Locked-up Shareholders will be prorated to ensure that at least 4,540,254 shares are transferred to Wheels Shareholders.

Lock-up Agreement

Pursuant to the Lock-up Agreements, the Locked-up Shareholders who are Company Founders will elect to receive Share Consideration for 20% of their Wheels Shares and will refrain from transferring the Radiant Shares that they receive for one year following the Effective Date of the Arrangement. The remaining Locked-up Shareholders will elect to receive Share Consideration for 100% of their Wheels Shares and will refrain from transferring 20% of the Radiant Shares that they receive for 90 days following the Effective Date and for one year following the Effective Date as to the remaining 80% of the Radiant Shares.

Plan of Arrangement

Under the Plan of Arrangement:

1. Unexercised Wheels options (and the Wheels Purchase Plan) will be cancelled.
2. Each Wheels Share held by a dissenting shareholder will be transferred to the Purchaser.
3. Each Wheels Share (other of a Dissenting Shareholder) will be transferred to the Purchaser by the holder thereof in exchange for the Cash Consideration, Share Consideration or Combined Consideration elected or deemed to be elected by such former Shareholder, subject to proration of the Share Consideration elected by the Locked-up Shareholders (and any other Wheels Shareholders who did not make a valid election).

Canadian tax considerations

The exchange will occur on a taxable basis.

U.S. tax considerations

The disposition of Wheels Shares for consideration in the Arrangement will be a taxable transaction to U.S. Holders. Wheels believes that likely it was not a PFIC for its tax year ended December 31, 2014.

Overview

Under a CBCA Plan of Arrangement, common shareholders of the Company (other than dissenting shareholders) will receive U.S.$8.00 in cash for each common share, which will be transferred to AcquisitionCo. Preferred shareholders (other than dissenting shareholders) will receive $25.00 in cash plus all accrued but unpaid dividends for each Preferred Share, which will be transferred to AcquisitionCo. Aggregate consideration is approximately U.S.$8.5B. This amount will be reduced by $Cdn.$200M plus accrued but unpaid dividends if Preferred Shareholder approval is not obtained to participate.

The Company

A Canadian oil and gas corporation whose core operations are in the U.S., Canada, Columbia and Asia-Pacific. Its Common shares trade on the TSX and NYE and its Preferred Shares trade on the TSX. It is not quickly apparent from the published materials whether it is a s. 212.3(10)(f) corporation.

Repsol

A Spanish oil and gas corporation whose ordinary shares are listed on four Spanish stock exchanges as well as on the Buenos Aires Stock Exchange and whose ADRs trade on the OTCQX market in the U.S.

AcquisitionCo

An indirect wholly-owned CBCA subsidiary of Repsol.

Dividend

A dividend of U.S.$0.1125 per Common Share will be declared and paid as of a record date before the Plan of Arrangement.

Canadian tax consequences

Acquisition of Company shares will occur on a taxable basis.

U.S. tax consequences

Taxable transaction.

Overview

Kodiak, after being continued from the Yukon to B.C., will be acquired by Whiting Canadian Sub under a B.C. Plan of Arrangement and amalgamated with Whiting Canadian Sub with Kodiak as the survivor (a reverse triangular merger). On the acquisition of Kodiak, its shareholders will receive Whiting common shares from Whiting Canadian Sub with Whiting Canadian Sub simultaneously issuing common shares to Whiting in consideration for such Whiting common shares.

Whiting

Whiting is an independent oil and gas Delaware corporation whose common shares are listed on the NYSE.

Kodiak

Kodiak is a NYSE-listed company incorporated in the Yukon with a post-announcement market cap of U.S.$2.9B and offices in Denver, Colorado. It holds its (U.S. oil and gas) business through wholly-owned U.S. subsidiaries.

Whiting Canadian Sub

Whiting Canadian Sub, a wholly-owned subsidiary of Whiting, was incorporated under the BCBCA for the purpose of effecting the arrangement and has not conducted any non-arrangement related activities.

Continuance

Kodiak will continue from the Yukon to B.C.

Plan of Arrangement

1. Each share of a Kodiak dissenting shareholder will be transferred to Whiting Canadian Sub with the payment therefor to be funded by a cash subscription for common shares of Whiting Canadian Sub by Whiting.
2. Whiting Canadian Sub will acquire all of the outstanding shares of Kodiak in consideration for Whiting common shares (0.177 Whiting common shares for each Kodiak common share), with Whiting Canadian Sub concurrently issuing common shares to Whiting in consideration for such Whiting common shares.
3. Each RSU, option and restricted stock award relating to Kodiak common stock that is outstanding immediately prior to the completion of the arrangement (whether vested or unvested) will be assumed by Whiting and converted automatically at the effective time of the arrangement into an RSU, option, or restricted stock award, as applicable (an "assumed award"), denominated in shares of Whiting common stock based on the exchange ratio and with corresponding adjustments to the per share exercise or purchase price of each assumed award.
4. The aggregate stated capital of the outstanding shares of Kodiak will be reduced to $100.
5. Whiting Canadian Sub will amalgamate with Kodiak to form one corporate entity, with Kodiak surviving the amalgamation as a direct wholly-owned subsidiary of Whiting and with the separate legal existence of Whiting Canadian Sub ceasing.

Canadian tax consequences

The continuance will not result in a disposition of Kodiak shares. The exchange of Kodiak for Whiting shares will occur on a taxable basis for residents.

U.S. tax consequences

Continuance/PFIC. The continuance will qualify as an F reorg. A U.S. holder that is deemed to dispose of Kodiak common shares pursuant to the continuance may be subject to adverse consequences if Kodiak were classified as a PFIC. Kodiak does not believe it has been a PFIC at least since 2005.

Arrangement

It is a condition to the obligation of both Whiting and Kodiak to complete the arrangement that Whiting receive a written opinion from Foley & Lardner LLP, counsel to Whiting that for Code purposes the arrangement transactions should (i) be treated as a single integrated transaction for such purposes and (ii) qualify as a "reorganization" under ss. 368(1)(1)(A) and 368(1)(2)(E). Kodiak agreed to use commercially reasonable efforts to cause Dorsey & Whitney LLP, counsel to Kodiak, to deliver a similar opinion. If Kodiak were a PFIC, and if Code s. 1291(f) were self-executing, a U.S. PFIC holder generally would be required to recognize a taxable gain as a result of the arrangement even if it qualified as such a reorganization, unless it has made certain elections.

Overview

HOC, which is listed in the U.K. and headquartered in Peru, is interested in the 40% minority interest of IMZ in their Peruvian mining and development joint venture company, but not in IMZ's Nevada and Ecuadorian development properties (held through non-resident subsidiaries). IMZ, a Yukon corporation, with 118M common shares outstanding, is listed on the TSX and the Swiss Stock Exchange. IMZ will transfer its non-Peruvian assets and $58M of cash to a newly-incorporated Yukon subsidiary Chaparral Gold. Pursuant to a Yukon Plan of Arrangement, the shares of Chaparral Gold (which are expected to be listed on the TSX and are anticipated by Paradigm Capital Inc. to become worth between $0.58 and $0.85 each) will then be distributed to the IMZ common shareholders on a s. 86 reorganization, and the IMZ shares will be transferred to HOC Canada for $2.38 per share in cash.

For Detailed Summary, see under Spin-offs - S. 86 reorganization spin-offs.

Overview

Under a B.C. plan of arrangement, shareholders of Afferro will receive, for each Afferro share, £0.80 in cash and a 2-year unsecured convertible note of IMIC (the "Convertible Note") bearing simple interest of 8% on the principal of £0.40 (collectively, the "Consideration"). The Afferro shares will be acquired by Subco (a newly-incorporated B.C. direct subsidiary of IMIC) prior to IMIC and Subco amalgamating, with Amalco being a wholly-owned subsidiary of IMIC. Simultaneously with the Subco acquisition of Afferro, a Seychelles subsidiary of Afferro will lend US$70M to IMIC.

Afferro

A TSXV-listed B.C. corporation with a development-stage iron project in Cameroon. The Cameroon subsidiaries are grandchild subsidiaries of a direct Seychelles subsidiary of Afferro (Mano River), which holds substantial cash from a recent sale of Liberian mining assets.

IMIC

A U.K. company listed on the AIM Market.

Convertible Note terms

Upon maturity in 2 years they will be paid in cash, or converted to the equivalent market value in IMIC shares at the time of conversion, at IMIC's discretion. They are anticipated to be listed on the Irish Stock Exchange.

Plan of Arrangement

Under the Plan of Arrangement:

• IMIC will subscribe cash for common shares of Subco (to be issued "concurrently" with the acquisition of the Afferro shares by Subco below), and a further amount, equal to the amount of the Convertible Note consideration to be delivered by Subco, as the subscription amount for further Subco common shares also to be issued at such "concurrent" time
• Each common share of a dissenter will be transferred for its fair value to Subco
• Each Afferro stock option will be cash-surrendered
• Each common share of Afferro, other than of a dissenter, will be transferred to Subco in consideration for the (cash and Convertible Note) Consideration, which IMIC is directed to deliver on Subco's behalf
• Concurrently with the above step, Mano River will make the IMIC Loan to IMIC in the amount of US$70M
• Each Afferro share held by IMIC will be transferred to Subco in consideration for a common shares of Subco
• Afferro will file an election with CRA to cease to be a public corporation
• Afferro and Subco will amalgamate to form one corporate entity ("Amalco") under s. 269 of the BC Business Corporations Act under the name Afferro Mining Inc., with each Subco share continuing as an Amalco share; "the stated capital of the common shares of Amalco will be an amount equal to the paid-up capital, as that term is defined in the Tax Act, attributable to the common shares of Subco immediately prior to the amalgamation"

U.K. Securities Laws

The issuance of the Convertible Notes will not require a prospectus.

Canadian tax consequences

The acquisition will occur on a taxable basis. Discussion of consequences if the Convertible Notes are considered to be issued at a discount. Standard taxable Canadian property disclosure.

UK tax consequences

A disposal of Afferro shares by a UK resident may, depending on the circumstances, give rise to a chargeable gain or an allowable loss . No UK stamp duty.

Overview

Under a B.C. plan of arrangement, shareholders of Kenai will receive ordinary shares (and no deferred shares) of Serabi (representing an 87% premium). The Kenai shares will be acquired by Subco prior to Kenai and Subco amalgamating, with Amalco being a wholly-owned subsidiary of Serabi. Kenai shareholders will hold approximately 19.82% of Serabi's fully diluted shares outstanding. Serabi will lend up to US$2.75M to Kenai before the effective date of the arrangement to fund obligations of, and work on, Kenai's Brazilian property.

Kenai

A TSXV-listed B.C. corporation with a Brazilian gold property held through a wholly-owned Brazilian subsidiary and shareholders' equity of US$8.3M.

Serabi

A U.K. company listed on the TSX and the AIM Market, holding a Brazilian gold property through an indirect Brazilian subsidiary and with shareholders' equity of US$63.9M. Two private companies (Fratelli Investments Limited and Anker Holding AG) hold 51.1% and 11.1% of its shares.

Plan of Arrangement

Under the Plan of Arrangement:

• Each common share of a dissenter will be transferred for its fair value to Subco
• Each common share of Kenai, other than of a dissenter, will be transferred to Subco in consideration for the right to cause the delivery of .85 of an ordinary Serabi share
• As consideration for the issuance of each such ordinary Serabi share, Subco will issue one Subco share and add its fair market value to its stated capital account
• The Kenai warrants will be amended so that they apply to Serabi shares, with the exercise price and number of covered shares adjusted accordingly
• Each Kenai stock option will be exchanged for a replacement option on a Serabi share, with a view to s. 7(1.4) applying
• Subco and Kenai will amalgamate under the name Kenai Resources Ltd., with each Subco share continuing as an Amalco share, and with the stated capital of the shares of Amalco being the stated capital of the Subco shares issued under the arrangement plus the amount of cash to fund payments to dissenters

U.S. Securities Laws

The Serabi shares to be issued will not be registered under the U.S. Securities Act, and reliance will be placed on the s. 3(a)(10) exemption.

Canadian tax consequences

The acquisition will occur on a taxable basis. Standard taxable Canadian property disclosure.

Overview

All the shares of Aurizon (a TSX- and NYSE-listed B.C. company with Quebec gold properties and no significant foreign subsidiaries) are to be acquired under a B.C. Plan of Arrangement by Acquireco (a B.C. wholly-owned subsidiary of Hecla) followed by their amalgamation. Hecla is a Delaware corporation listed on the NYSE. The consideration for each Aurizon share is (i) cash of $4.75 per share (the "Cash Consideration"), or (ii) 0.9953 of a Hecla share (the "Share Consideration"), or (iii) $3.11 in cash and 0.3446 of a Hecla share (the "Cash and Share Consideration"). This consideration represents a premium of 40% to the Aurizon share price before the previous Alamos offer. Although Aurizon shareholders will be able to elect between consideration alternatives, the total cash and share consideration will be limited to $513.6M and 57M Hecla shares (so that if all shareholders elected for the Cash Alternative or the Share Alternative, each shareholder would effectively receive the Cash and Share Consideration). The cash consideration appears to be paid directly by Hecla.

Alamos

The competing Alamos offer expired on March 19, 2013.

U.S. Securities law

The Hecla shares will be issued in reliance on the s. 3(a)(10) exemption.

Break fee

$27.2M.

Plan of Arrangement

Under the Plan of Arrangement:

• each Aurizon stock option will be surrendered to Aurizon for Aurizon shares equal to the options' in-the-money value (based on the Cash Consideration)
• outstanding Aurizon RSUs and DSUs will be cash-surrendered based on the Cash Consideration
• Aurizon shares of dissenting shareholders will be transferred to Acquireco for their fair value
• Hecla will subscribe for shares of Acquireco, with such subscription to be satisfied by Acquireco directing Hecla to deliver Hecla shares to Aurizon shareholders as the Share Consideration
• each outstanding Aurizon share (not held by Hecla) will be transferred to Acquireco for the Cash, Share, or Cash and Share, Consideration, at the election of the Aurizon shareholder, but subject to proration in light of the maximum cash and share consideration – with Acquireco being deemed to have directed Hecla to deliver the Share Consideration on its behalf
• each Aurizon share held by Hecla will be contributed to Acquireco in consideration for an Acquireco common share
• Aurizon will file an election to cease to be a private corporation
• the stated capital of the Aurizon shares will be reduced in aggregate to $1.00
• Aurizon and Acquireco will amalgamate under s. 288 of the Business Corporations Act (B.C.) "to form one corporate entity" (Amalco), with Hecla receiving one Amalco common share for each Acquireco common share, and the Aurizon shares being cancelled

Canadian tax consequences

Taxable exchange for Canadian residents. Taxable Canadian property disclosure for non-residents. Cautionary disclosure re offshore investment fund rules.

U.S. tax consequences

Exchange. Whether a U.S. holder will recognize full gain for Code purposes depends on whether the exchange qualifies as a reorganization under Code s. 368(a)(2)(D) (a forward triangular merger) which, in turn, depends largely on whether the transaction preserves a large part of the target shareholders' proprietary interest in the target (the continuity of interest requirement). Regulations provide that the continuity of interest requirement is satisfied where 40% by value of the total consideration provided to all target shareholders consists of share consideration, but do not establish a minimum percentage to satisfy the continuity of interest requirement. Under the Arrangement, the consideration will consist of approximately 35% share consideration and 65% cash consideration. Such amount of share consideration is not sufficient to establish with certainty that the continuity of interest requirement is satisfied, so that there is a significant risk that a U.S. holder will recognize gain in full on the exchange. Aurizon understands that Hecla intends to take the position that the exchange is a taxable transaction. If the exchange qualifies as a forward traingular merger, a U.S. holder will not recognize gain except to the extent of the cash received.

PFIC rules

Aurizon does not believe that it was a PFIC for it 2012 taxable year.

USRPC status

Based on its public statements, Hecla is not believed to be a U.S. real property holding corporation.

Overview

All the 142.1M shares of Orko, which is a B.C. company listed on the TSX-V and holding a Mexican subsidiary, are to be acquired under a B.C. plan of arrangement by Subco, which is a B.C. wholly-owned subsidiary of Coeur, which is an Idaho corporation listed on the NYSE and TSX. The consideration for each Orko share is (i) cash of $2.60 per share plus 0.01118 of a cashless exercise warrant (a "Warrant"), with a term of four years, and representing an entitlement to receive an amount based on a strike of US$30 per Coeur share, and with such value paid in Coeur shares (collectively, the "Cash Consideration"), or (ii) 0.1118 of a Coeur share and 0.01118 of a Warrant (collectively, the "Share Consideration"), or (iii) $0.70 in cash, 0.0815 of a Coeur share and 0.01118 of a Warrant (collectively, the "Cash and Share Consideration"). This consideration represents a premium of 71% to the Orko share price before the previous First Majestic offer. Although Orko shareholders will be able to elect between consideration alternatives, the total cash and share consideration will be limited to $100,000,000 and 11,584,187 Coeur shares. The acquisition of Orko is to be followed by its merger (as part of the Plan of Arrangement) with a B.C. subsidiary of Coeur, with Orko as the surviving entity. (For another example of a "survivor style" Canadian merger, see the Chesapeake Gold Corporation acquisition of American Gold Capital ca. 2007.)

First Majestic offer

The Orko board recommends approval of this offer (i.e., over the First Majestic offer).

U.S. Securities law

Orko is a foreign private issuer, so that the solicitation of proxies pursuant to the circular is not subject to the requirements of s. 14(a) of the U.S. Exchange Act. The Coeur shares and Warrants will be issued in reliance on the s. 3(a)(10) exemption. The s. 3(a)(10) exemption would not be available on the issuance of Coeur shares on the exercise of Warrants – hence the cashless exercise feature.

Break fee

Coeur has agreed to fund a $11.5M break fee payable to First Majestic.

Plan of Arrangement.

Under the Plan of Arrangement:

• The Orko shareholder rights plan will be cancelled
• Orko shares of dissenters will be transferred to Subco for their fair value
• each outstanding Orko share will be transferred to Subco for the Cash, Share, or Cash and Share, consideration, at the election of the Orko shareholder, but subject to proration in light of the maximum cash and share consideration
• the stated capital of the Orko shares will be reduced in aggregate to $1.00
• Orko and Subco then "shall merge to form one corporate entity ("Amalco") with the same effect as if they had amalgamated under Section 269 of the Business Corporations Act, except that the legal existence of Orko shall not cease and Orko shall survive the merger as Amalco…[and] the separate legal existence of Subco shall cease…and Orko and Subco shall continue as one company…."

These transactions would result in the number of issued and outstanding Coeur shares increasing to 101.5M.

Canadian tax consequences

Taxable exchange for Canadian residents. Taxable Canadian property disclosure for non-residents (including re Coeur shares and Warrants).

U.S. tax consequences

Exchange. A US holder will recognize gain or loss in an amount equal to the difference between the fair market value of the consideration received and the US holder's adjusted tax basis in the Orko shares surrendered.

PFIC rules

Orko believes that it and its subsidiaries have been and are PFICs. Discussion of consequences (e.g., gains recognized under the Arrangement may be taxable to US holders at ordinary-income rates with the tax so determined subject to an interest charge).

Warrants

The cashless exercise of the Warrants is expected to be tax-free.

Non-USRPC status

Coeur does not believe that it is (or has been within the last five years) a US real property holding company. Discussion of 5%-publicly traded exemption if this is not the case.