PREM14A 1 d141920dprem14a.htm PREM14A PREM14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

 

Filed by the Registrant  ☒                             Filed by a Party other than the Registrant  ☐

Check the appropriate box:

 

  Preliminary Proxy Statement
  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
  Definitive Proxy Statement
  Definitive Additional Materials
  Soliciting Material under §240.14a-12

CRH MEDICAL CORPORATION

(Name of Registrant as Specified In Its Charter)

N/A

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

  No fee required
  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
  (1)  

Title of each class of securities to which the transaction applies:

 

Common shares, no par value

  (2)  

Aggregate number of securities to which the transaction applies:

 

As of March 1, 2021, 75,861,696 common shares, which consists of: (a) 71,620,447 common shares issued and outstanding; (b) 979,687 common shares subject to outstanding options; and (c) 3,261,562 common shares subject to outstanding restricted share units

  (3)  

Per unit price or other underlying value of the transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

Solely for the purpose of calculating the filing fee, the underlying value of the transaction was calculated as the sum of: (a) 71,620,447 outstanding common shares multiplied by $4.00, (b) 979,687 common shares subject to outstanding options with an exercise price less than $4.00, multiplied by $2.67 (which is the difference between $4.00 and the weighted average exercise price of $1.33 for such options); and (c) 3,261,562 CRH shares subject to outstanding restricted share units multiplied by $4.00.

  (4)  

Proposed maximum aggregate value of the transaction:

 

$302,143,113

  (5)  

Total fee paid:

 

$32,963.81

  Fee paid previously with preliminary materials.
  Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
  (1)  

Amount Previously Paid:

 

     

  (2)  

Form, Schedule or Registration Statement No.:

 

     

  (3)  

Filing Party:

 

     

  (4)  

Date Filed:

 

     

 

 

 


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PRELIMINARY PROXY STATEMENT – SUBJECT TO COMPLETION

Dated March 5, 2021

CRH MEDICAL CORPORATION

Suite 578 – 999 Canada Place

Vancouver, British Columbia, Canada V6C 3E1

[●], 2021

Dear Fellow CRH Securityholder:

On February 6, 2021, CRH Medical Corporation (“CRH” or the “Company”), entered into an Arrangement Agreement (the “Arrangement Agreement”) with WELL Health Technologies Corp. (“WELL”), WELL Health Acquisition Corp., a wholly owned subsidiary of WELL, and 1286392 B.C. Ltd, a wholly owned subsidiary of WELL. Subject to the terms and conditions of the Arrangement Agreement, WELL (through its subsidiaries) will acquire all of the issued and outstanding common shares in the capital of the Company (“CRH shares”), pursuant to a plan of arrangement to be approved by the Supreme Court of British Columbia in accordance with Section 288 of the Business Corporations Act (British Columbia) (the “Arrangement”). If the Arrangement is completed, CRH shareholders will be entitled to receive US$4.00 in cash (without interest and less any applicable withholding taxes) for each CRH share that they own immediately prior to completion of the Arrangement.

A special meeting of CRH securityholders will be held on [●], 2021, at [●] a.m., Vancouver time (the “CRH meeting”), to vote on certain matters related to the Arrangement. At the CRH meeting, holders of CRH shares, holders of outstanding options to purchase CRH shares (“CRH options”) and holders of outstanding share units with respect to CRH shares (“CRH RSUs”) (collectively, “CRH securityholders”) will be asked to vote on a special resolution to approve the Arrangement (the “Arrangement Resolution”). In addition, CRH shareholders will be asked to vote on a proposal to approve, on an advisory (non-binding) basis, the compensation that may be paid or become payable to CRH’s named executive officers in connection with the Arrangement (the “Compensation Proposal”). The CRH meeting will be held in a virtual format conducted via live audio webcast online at https://web.lumiagm.com/281719465. Notice of the CRH meeting, and the related proxy statement and management information circular (“proxy statement”), are enclosed.

The accompanying proxy statement gives you detailed information about the CRH meeting and the Arrangement, and includes a copy of the Arrangement Agreement as Annex B and the proposed plan of arrangement as Annex C. We encourage you to read the proxy statement (including the Arrangement Agreement and all other annexes thereto) carefully.

CRH’s board of directors (the “CRH Board”), following the unanimous recommendation of a special committee consisting solely of independent directors (the “Special Committee”), unanimously determined that the Arrangement is in the best interests of CRH and fair to CRH shareholders and that the consideration to be received by CRH shareholders pursuant to the Arrangement is fair, from a financial point of view, to CRH shareholders and unanimously approved the execution, delivery and performance of the Arrangement Agreement and the consummation of the transactions contemplated thereby. The Special Committee and the CRH Board made their determinations after consultation with their legal and financial advisors and consideration of a number of factors, as more fully described in the accompanying proxy statement.

The CRH Board unanimously recommends that CRH securityholders vote FOR the approval of the Arrangement Resolution and unanimously recommends that CRH shareholders vote FOR the Compensation Proposal.

YOUR VOTE IS VERY IMPORTANT. The Arrangement cannot be completed unless the Arrangement Resolution is approved by the affirmative vote of not less than (1) two-thirds of the votes cast by CRH shareholders present or represented by proxy at the CRH meeting, (2) two-thirds of the votes cast


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by all of the CRH securityholders present or represented by proxy at the CRH meeting voting as a single class and (3) a simple majority of the votes cast by CRH shareholders present or represented by proxy at the CRH meeting, excluding votes cast by directors, senior officers and certain other related parties of CRH whose votes must be excluded pursuant to Multilateral Instrument 61-101Protection of Minority Securityholders in Special Transactions. For more information on Multilateral Instrument 61-101, please see the section entitled “The Arrangement – Canadian Securities Law Matters,” beginning on page 58 in the accompanying proxy statement.

Whether or not you plan to virtually attend the CRH meeting, please vote as soon as possible. If you hold your CRH securities in your name as a CRH registered CRH securityholder(s), you may vote by submitting your proxy by telephone or via the Internet, or by completing, dating and signing the enclosed Form of Proxy and returning it in the accompanying reply envelope. Specific instructions for registered CRH securityholder(s) who wish to use Internet or telephone voting procedures are included on the enclosed Form of Proxy and in the accompanying proxy statement. CRH securityholders who attend the CRH meeting may revoke their proxies and vote at the CRH meeting. CRH securityholders who have questions or need assistance with voting their securities should contact Laurel Hill Advisory Group, CRH’s proxy solicitor, by telephone at: 1-877-452-7184 (North American Toll Free) or 416-304-0211 (Outside North America), or by email at assistance@laurelhill.com.

If you hold your CRH securities through your broker or another intermediary, please complete and return the Form of Proxy or Voting Instruction Form in accordance with the instructions provided on your Form of Proxy or Voting Instruction Form.

The CRH Board appreciates your continuing support of the Company.

 

Sincerely,
Ian Webb
Lead Director

Neither the Securities and Exchange Commission nor any state, provincial or territorial securities commission has approved or disapproved the Arrangement, passed upon the merits or fairness of the Arrangement or passed upon the adequacy or accuracy of the proxy statement. Any representation to the contrary is a criminal offense.

The proxy statement is dated [●], 2021, and is first being mailed to CRH securityholders on or about [●], 2021.


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CRH MEDICAL CORPORATION

Suite 578 – 999 Canada Place

Vancouver, British Columbia, Canada V6C 3E1

NOTICE OF SPECIAL MEETING OF SECURITYHOLDERS

To Be Held On [], 2021

Dear CRH Securityholder:

PLEASE TAKE NOTICE that a special meeting (the “CRH meeting”) of securityholders of CRH Medical Corporation, a corporation existing under the laws of the Province of British Columbia (“CRH” or the “Company”), will be held in a virtual format conducted via live audio webcast online at https://web.lumiagm.com/281719465 on [●], 2021, at [●] a.m. Vancouver time.

Out of an abundance of caution, to proactively deal with the unprecedented health impact of COVID-19, and to mitigate risks to the health and safety or our communities, shareholders, employees and other stakeholders, we will hold our CRH meeting in a virtual only format, which will be conducted via live audio webcast. Holders of common shares in the capital of the Company (“CRH shares”), holders of outstanding options to purchase CRH shares (“CRH options”) and holders of outstanding share units with respect to CRH shares (“CRH RSUs”) (collectively, “CRH securityholders”) will have an equal opportunity to participate at the CRH meeting online regardless of their geographic location.

CRH registered CRH securityholders as of the record date indicated below and their duly appointed proxyholders can attend the CRH meeting online by going to https://web.lumiagm.com/281719465, where they can participate, vote, or submit questions during the CRH meeting’s live webcast. CRH securityholders whose securities are held in “street name” by a broker, bank or other nominee and who have not been duly appointed as a proxyholder will be able to attend the CRH meeting as guests, but guests will not be able to vote at the CRH meeting. CRH strongly encourages securityholders who wish to attend and participate in the meeting to carefully read and follow the procedures described in this proxy statement to ensure they can attend and participate in the virtual meeting online at https://web.lumiagm.com/281719465.

The CRH meeting will be held for the following purposes:

1. To consider, pursuant to an interim order of the Supreme Court of British Columbia, dated as of [●], 2021 (the “Interim Order”) and, if deemed advisable, to pass, with or without variation, a special resolution (the “Arrangement Resolution”), the full text of which is set forth in Annex A to the accompanying proxy statement and management information circular (the “proxy statement”), to approve an arrangement (the “Arrangement”) under Section 288 of the Business Corporations Act (British Columbia) (the “BCBCA”) pursuant to the Arrangement Agreement, dated as of February 6, 2021 (the “Arrangement Agreement”) between CRH, WELL Health Technologies Corp., a corporation existing under the laws of the Province of British Columbia (“WELL”), WELL Health Acquisition Corp., a corporation existing under the laws of the Province of British Columbia and a wholly owned subsidiary of WELL, and 1286392 B.C. Ltd., a corporation existing under the laws of the Province of British Columbia and a wholly owned subsidiary of WELL, subject to the terms and conditions of which WELL (through its subsidiaries) will acquire all of the outstanding CRH shares.

2. To consider and vote on a proposal to approve, on an advisory (non-binding) basis, the compensation that may be paid or become payable to CRH’s named executive officers in connection with the Arrangement (the “Compensation Proposal”).

3. To act upon other business as may properly come before the CRH meeting and any and all adjourned or postponed sessions thereof.

The record date for the determination of CRH securityholders entitled to notice of and to vote at the CRH meeting is the close of business on [●], 2021. Accordingly, only CRH registered CRH securityholders as of that


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date will be entitled to notice of and to vote at the CRH meeting or any adjournment or postponement thereof. CRH shareholders will be entitled to one vote on each of the Arrangement Resolution and the Compensation Proposal for each CRH share held as of the record date for the CRH meeting, and CRH optionholders and CRH RSU holders will be entitled to one vote on the Arrangement Resolution for each CRH share subject to CRH options and CRH RSUs held as of the record date for the CRH meeting (regardless of whether then vested or unvested). A list of our CRH securityholders will be available at our principal executive and registered offices at Suite 578 – 999 Canada Place, Vancouver, British Columbia V6C 3E1 during ordinary business hours for ten days prior to the CRH meeting.

Please read the accompanying proxy statement carefully, as it sets forth details of the proposed Arrangement and other important information related to the Arrangement and the other matters to be considered at the CRH meeting.

The Arrangement Resolution must be approved by the affirmative vote of not less than (1) two-thirds of the votes cast by CRH shareholders present or represented by proxy at the CRH meeting, (2) two-thirds of the votes cast by all of the CRH securityholders present or represented by proxy at the CRH meeting voting as a single class, and (3) a simple majority of the votes cast by CRH shareholders present or represented by proxy at the CRH meeting, excluding votes cast by directors, senior officers and certain other related parties of CRH whose votes must be excluded pursuant to Multilateral Instrument 61-101Protection of Minority Securityholders in Special Transactions. Approval of the Compensation Proposal requires the affirmative vote of a majority of the votes cast by CRH shareholders present or represented by proxy at the CRH meeting.

CRH’s board of directors unanimously recommends that CRH securityholders vote FOR the approval of the Arrangement Resolution and unanimously recommends that CRH shareholders vote FOR the Compensation Proposal.

Your vote is very important. Whether or not you expect to attend the CRH meeting we urge you to vote your shares as promptly as possible.

If you hold your CRH securities in your name as a CRH registered CRH securityholder(s), you may vote by submitting your proxy by telephone or via the Internet, or by completing, dating and signing the enclosed Form of Proxy and returning it in the accompanying reply envelope. Specific instructions for registered CRH securityholder(s) who wish to use Internet or telephone voting procedures are included on the enclosed Form of Proxy and in the accompanying proxy statement. You may also return your completed, dated and signed Form of Proxy to Computershare Investor Services Inc. (“Computershare”), by fax within North America at 1-866-249-7775, outside North America at 1-416-263-9524, or by mail to Computershare Trust Company of Canada, Proxy Dept., 8th Floor, 100 University Avenue, Toronto, Ontario, M5J 2Y1. Your telephone, Internet, mail or facsimile vote must be received by [●] a.m. on [●], 2021 in order to be counted at the CRH meeting.

If your CRH securities are held in the name of a broker, bank or other nominee, please follow the instructions on the voting instruction form furnished by your broker, bank or other nominee.

If you would like a person, other than the management nominees identified on your Form of Proxy or voting instruction form, to attend and participate online at the CRH meeting as your proxy and vote your CRH securities, including if you are a CRH securityholder whose securities are held in “street name” by a broker, bank or other nominee and you wish to appoint yourself as proxyholder to attend, participate in and vote online at the CRH meeting, you must register such proxyholder with Computershare after having submitted your Form of Proxy or voting instruction form identifying such proxyholder. Failure to register the proxyholder will result in the proxyholder not receiving a username. Without a username, proxyholders will not be able to attend, participate in or vote at the meeting. To register a proxyholder, CRH securityholders must visit http://www.computershare.com/CRHMedical and provide Computershare with their proxyholder’s contact information, so that Computershare may provide the proxyholder with a username via email.

Pursuant to the Interim Order, registered CRH shareholders will have dissent rights with respect to the Arrangement under Sections 237 to 247 of the BCBCA, as amended by the Plan of Arrangement, the Interim


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Order and the final order of the Supreme Court of British Columbia approving the Arrangement. For more information, see the section entitled “Dissent Rights,” beginning on page 94 of the accompanying proxy statement, as well as Annex F and Annex G to the accompanying proxy statement.

 

By Order of the CRH Board of Directors,
Ian Webb
Lead Director

Vancouver, British Columbia

[●], 2021


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ABOUT THIS PROXY STATEMENT

This document, which is referred to as this “proxy statement,” constitutes a proxy statement of CRH under Section 14(a) of the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, and an information circular under the Business Corporations Act (British Columbia) with respect to the special meeting of CRH securityholders described herein, which is being held to consider and vote on certain proposals related to the proposed acquisition of CRH by WELL.

CRH has supplied all information relating to CRH, and WELL has supplied, and CRH has not independently verified, all of the information relating to WELL and its affiliates contained in this proxy statement. You should rely only on the information contained in or incorporated by reference into this proxy statement (including the annexes attached hereto) to vote your securities at the CRH meeting. We have not authorized anyone to provide you with information that is different from what is contained in, or incorporated by reference into, this proxy statement. This proxy statement is dated [●], 2021. You should not assume that the information contained in this proxy statement is accurate as of any date other than that date (or as of an earlier date if so indicated in this proxy statement), and you should not assume that the information incorporated by reference into this proxy statement is accurate as of any date other than the date of the incorporated document. The mailing of this proxy statement does not create any implication to the contrary. This proxy statement does not constitute the solicitation of a proxy in any jurisdiction where, or to or from any person to whom or from whom, it is unlawful to make such proxy solicitation.

To facilitate the reading of this proxy statement, we have included below a glossary of certain terms and phrases used throughout this proxy statement. Unless otherwise indicated or as the context otherwise indicates, when used in this proxy statement:

 

   

Amalco” means the entity formed pursuant to the amalgamation of the Purchaser and Finco as part of the Arrangement, as further described herein;

 

   

Arrangement” means the arrangement of CRH contemplated by the Arrangement Agreement, pursuant to which WELL (through its subsidiaries) will acquire all of the outstanding CRH shares;

 

   

Arrangement Agreement” means the Arrangement Agreement, dated as of February 6, 2021, among CRH and the WELL parties, including all schedules annexed thereto, as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof, a copy of which attached as Annex B to this proxy statement;

 

   

BCBCA” means the Business Corporations Act (British Columbia);

 

   

beneficial CRH shareholder” means a CRH shareholder who is not a registered CRH shareholder;

 

   

Canaccord Genuity” means Canaccord Genuity LLC;

 

   

Citi” means Citigroup Global Markets Inc.;

 

   

Computershare” means Computershare Investor Services Inc.;

 

   

Court” means the Supreme Court of British Columbia;

 

   

CRH,” the “Company,” “we,” “our” or “us” refer to CRH Medical Corporation;

 

   

CRH Board” means the board of directors of CRH, as the same is constituted from time to time;

 

   

CRH meeting” means the special meeting of CRH securityholders, to which this proxy statement relates, including any adjournment or postponement thereof;

 

   

CRH options” means the outstanding options to purchase CRH shares granted under CRH’s option plan;

 

   

CRH RSUs” means the outstanding share units with respect to CRH shares granted under CRH’s share unit plans;

 

   

CRH securities” means collectively, the CRH shares, CRH options and CRH RSUs;


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CRH securityholders” means the holders of one or more CRH shares, CRH options or CRH RSUs;

 

   

CRH shares” means the common shares in the capital of CRH, as constituted from time to time;

 

   

CRH shareholders” means the holders of one or more CRH shares;

 

   

DOJ” means the Antitrust Division of the U.S. Department of Justice;

 

   

Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder;

 

   

Final Order” means the final order of the Court approving the Arrangement, pursuant to Section 291 of the BCBCA (as it may be amended);

 

   

Finco” means 1286392 B.C. Ltd., a wholly owned subsidiary of WELL;

 

   

FTC” means the U.S. Federal Trade Commission;

 

   

Interim Order” means the interim order of the Court with respect to the Arrangement, dated as of [], 2021 (as it may be amended), a copy of which is attached as Annex G to this proxy statement;

 

   

HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended;

 

   

Plan of Arrangement” means the plan of arrangement of CRH, implementing the Arrangement (as it may be amended), a copy of which is attached as Annex C to this proxy statement;

 

   

Purchaser” means WELL Health Acquisition Corp., a wholly-owned subsidiary of WELL;

 

   

registered CRH shareholder” means a registered holder of CRH shares as recorded in the shareholder register of CRH maintained by Computershare;

 

   

Special Committee” means the special committee of the CRH Board, comprised of independent directors, constituted to consider the transactions contemplated by the Arrangement Agreement and related matters;

 

   

TSX” means the Toronto Stock Exchange;

 

   

WELL” means WELL Health Technologies Corp.;

 

   

WELL parties” means, collectively, WELL, Purchaser and Finco; and

 

   

WELL shares” means the common shares of WELL, as constituted from time to time.

We publish our consolidated financial statements in U.S. dollars. All references in this proxy statement to “dollars” or “$” are to U.S. dollars and all references to “C$” are to Canadian dollars, unless otherwise noted. Except as otherwise indicated, all financial statements and financial data of CRH contained in this proxy statement and in the documents incorporated by reference in this proxy statement have been prepared in accordance with accounting principles generally accepted in the United States of America, or “GAAP”, which differs in certain material respects from financial statements prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. These differences are not described in this proxy statement or the documents incorporated by reference in this proxy statement.

Unless the context otherwise requires, references to a number of CRH options refer to the number of CRH shares subject to outstanding CRH options.

Except as otherwise provided herein, all descriptions of the Arrangement and the effects of the Arrangement assume that CRH shareholders do not exercise dissent rights under the BCBCA. A summary of CRH shareholders’ dissent rights can be found in the section of this proxy statement entitled “Dissent Rights,” beginning on page 94.


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TABLE OF CONTENTS

 

SUMMARY TERM SHEET

     1  

The CRH Meeting

     1  

Parties to the Arrangement Agreement

     2  

The Arrangement

     2  

CRH Board and Special Committee Recommendations

     2  

Opinion of the Company’s Financial Advisor

     3  

Interests of the Company’s Directors and Executive Officers in the Arrangement

     3  

Regulatory Approvals

     4  

Financing of the Arrangement

     4  

Material U.S. Federal Income Tax Consequences

     4  

Material Canadian Federal Income Tax Consequences

     4  

The Arrangement Agreement

     4  

Dissent Rights

     7  

Market Price of CRH Shares

     8  

QUESTIONS AND ANSWERS ABOUT THE CRH MEETING AND THE ARRANGEMENT

     9  

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

     15  

THE CRH MEETING

     17  

Date, Time and Place of the CRH Meeting

     17  

Proposals to be Considered at the CRH Meeting

     17  

Record Date

     17  

Voting Rights; Quorum

     17  

Vote Required for Approval

     17  

Broker Non-Votes

     18  

Voting by CRH Directors and Officers

     18  

Voting Procedures

  

Revocation of Proxies

  

Rights of Shareholders Who Wish to Dissent

     21  

Solicitation of Proxies

     21  

Appointment of Proxyholder

     22  

Instructing your Proxyholder and Exercise of Discretion by your Proxyholder

     22  

Attending the CRH Meeting

     22  

Other Business

     23  

Questions and Additional Information

     23  

Availability of Documents

     23  

THE PROPOSALS

     24  

Item 1. The Arrangement Resolution

     24  

Item 2. The Compensation Proposal

     24  

THE PARTIES TO THE ARRANGEMENT

     26  

CRH Medical Corporation

     26  

WELL Health Technologies Inc.

     26  

WELL Health Acquisition Corp.

     26  

1286392 B.C. Ltd.

     26  

THE ARRANGEMENT

     28  

General Description of the Arrangement

     28  

Background to the Arrangement

     28  

Reasons for the Arrangement; Recommendation of the CRH Board

     35  

Certain Unaudited Prospective Financial Information

     39  

Opinion of the Company’s Financial Advisor

     42  

Interests of the Company’s Directors and Executive Officers in the Arrangement

     49  

Golden Parachute Compensation

     53  

Certain Other Compensation Matters

     55  

 

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Certain Effects of the Arrangement

     55  

Effects on the Company if the Arrangement is Not Completed

     55  

Court Approval of the Arrangement

     56  

U.S. Securities Law Matters

     57  

Canadian Securities Law Matters

     58  

Regulatory Approvals

     60  

Financing of the Arrangement

     60  

Voting Agreements

     63  

Material U.S. Federal Income Tax Consequences

     64  

Material Canadian Federal Income Tax Consequences

     66  

Certain Relationships Between WELL and CRH

     69  

Accounting Treatment

     70  

THE ARRANGEMENT AGREEMENT

     71  

Explanatory Note Regarding the Arrangement Agreement

     71  

The Arrangement

     71  

Amalgamation of Finco and The Purchaser

     72  

Share Consideration

     72  

Payment for CRH Shares

     72  

Treatment of CRH Equity Awards

     73  

Representations and Warranties

     74  

Conduct of Business Pending the Arrangement

     77  

Cooperation; Efforts to Complete the Arrangement

     79  

Financing Covenants

     80  

Governmental Approvals

     81  

Restrictions on Solicitations of Other Offers

     82  

Change of CRH Board Recommendation; Termination in Connection with a Superior Proposal

     85  

CRH Meeting Covenants

     87  

Tax Act Covenant

     87  

Guarantee by WELL

     87  

Notice of Certain Events

     87  

Indemnification and Insurance

     88  

Other Covenants of CRH and the WELL Parties

     88  

Conditions to the Arrangement

     89  

Termination of the Arrangement Agreement

     90  

Termination Fees

     92  

Amendment, Extension and Waiver

     92  

Injunctive Relief and Specific Performance

     93  

Governing Law; Waiver of Jury Trial

     93  

DISSENT RIGHTS

     94  

MARKET PRICE AND DIVIDEND DATA

     97  

Market Price of CRH Shares

     97  

Dividends

     97  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     98  

OTHER MATTERS

     100  

Other Matters for Action at the CRH Meeting

     100  

Future Shareholder Proposals

     100  

Householding of CRH Meeting Materials

     100  

Interest of Informed Persons in Material Transactions

     100  

Auditor of the Company

     100  

WHERE YOU CAN FIND MORE INFORMATION

     101  

APPROVAL OF DIRECTORS

     102  

 

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SUMMARY TERM SHEET

This Summary Term Sheet, together with the “Questions and Answers About the CRH Meeting and the Arrangement,” highlights selected information from this proxy statement and may not contain all of the information that is important to you. You should carefully read this entire proxy statement (including the annexes attached hereto) and the other documents to which this proxy statement refers you for a more complete understanding of the Arrangement and the other matters being considered at the CRH meeting. You may obtain additional information without charge by following the instructions in “Where You Can Find More Information.”

The CRH Meeting (page [●])

Date, Time, Place and Purpose (page [])

The CRH meeting is scheduled to be held in a virtual format conducted via live audio webcast as follows:

Date: [●], 2021

Time: [●] a.m., Vancouver time

Website: [●]

At the CRH meeting, CRH securityholders will be asked to vote on a special resolution to approve the Arrangement (which we refer to as the “Arrangement Resolution”), and CRH shareholders will be asked to vote on a proposal to approve, on an advisory (non-binding) basis, the compensation that may be paid or become payable to CRH’s named executive officers in connection with the Arrangement (which we refer to as “Compensation Proposal”). Completion of the Arrangement is conditioned on the approval of the Arrangement Resolution.

Record Date; Voting Rights (page [])

Only CRH registered CRH securityholders as of the close of business on [●], 2021, the record date for the CRH meeting, are entitled to notice of, and to vote at, the CRH meeting. As of the record date, there were approximately [•] CRH shares, approximately [●] CRH options and approximately [●] CRH RSUs issued and outstanding and entitled to vote.

CRH shareholders are entitled to one vote on each of the Arrangement Resolution and the Compensation Proposal for each CRH share held as of the record date for the CRH meeting, and CRH optionholders and CRH RSU holders are entitled to one vote on the Arrangement Resolution for each CRH share subject to CRH options and CRH RSUs held as of the record date for the CRH meeting (regardless of whether then vested or unvested).

Vote Required for Approval (page [])

The votes required for each proposal are as follows:

 

   

Approval of the Arrangement Resolution requires the affirmative vote of not less than (1) two-thirds of the votes cast by CRH shareholders present or represented by proxy at the CRH meeting, (2) two-thirds of the votes cast by all of the CRH securityholders present or represented by proxy at the CRH meeting voting as a single class and (3) a simple majority of the votes cast by CRH shareholders present or represented by proxy at the CRH meeting, excluding votes cast by directors, senior officers and certain other related parties of CRH whose votes must be excluded pursuant to Multilateral Instrument 61-101Protection of Minority Securityholders in Special Transactions.

 

   

Approval of the Compensation Proposal, which is an advisory (non-binding) vote, requires the affirmative vote of a majority of the votes cast by CRH shareholders present or represented by proxy at the CRH meeting.



 

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Abstentions, broker non-votes (if any) and CRH securities which are not voted will have no effect on outcome of the vote to approve the Arrangement Resolution or the Compensation Proposal.

Voting by CRH’s Directors and Executive Officers (page [])

As of [], 2021, the record date for the CRH meeting, the directors and executive officers of CRH held and are entitled to vote, in the aggregate, CRH shares representing approximately []% of the outstanding CRH shares and CRH securities representing approximately []% of the outstanding CRH securities. Each director and executive officer of CRH has agreed to vote all of their CRH securities in favour of the Arrangement Resolution, subject to the terms and conditions of certain voting agreements with the Purchaser, as further described under “The Arrangement – Voting Agreements” on page []. CRH currently expects that each of these individuals will vote all of their CRH securities in favour of both the Arrangement Resolution and the Compensation Proposal.

Parties to the Arrangement Agreement (page [])

CRH is a British Columbia corporation focused on providing gastroenterologists with innovative services and products for the treatment of gastrointestinal diseases. WELL is a British Columbia corporation with the overarching goal to consolidate and modernize primary healthcare assets using digital technologies and processes that improve patient experience, operational efficiency and overall care performance. The Purchaser and Finco are both British Columbia corporations formed for the purpose of consummating the Arrangement and are owned and controlled by WELL.

WELL has advised us that none of the WELL parties nor any of their affiliates or any other person acting jointly or in concert with any of them, beneficially owns or controls, or will prior to the effective date of the Arrangement beneficially own or control, any CRH securities.

The Arrangement (page [])

Subject to the terms and conditions of the Arrangement Agreement, WELL (through its subsidiaries) will acquire all of the outstanding CRH shares at a price of $4.00 per share, pursuant to a Plan of Arrangement. As a result of the Arrangement, CRH will become an indirect wholly owned subsidiary of WELL and will cease to be a publicly traded company.

CRH Board and Special Committee Recommendations (page [])

The Special Committee, which consisted solely of independent directors of CRH, unanimously determined that the consideration to be received by CRH shareholders pursuant to the Arrangement is fair, from a financial point of view, to CRH shareholders and that the Arrangement is in the best interests of the Company, and unanimously recommended to the CRH Board that the Arrangement Agreement be approved and that the Board recommend that CRH shareholders vote in favour of the Arrangement.

The CRH Board, following the unanimous recommendation of the Special Committee, unanimously determined that the Arrangement is in the best interests of CRH and fair to CRH shareholders and that the consideration to be received by the CRH shareholders pursuant to the Arrangement is fair, from a financial point of view, to the CRH shareholders and unanimously approved the execution, delivery and performance of the Arrangement Agreement and the consummation of the transactions contemplated thereby.

The Special Committee and the CRH Board made their determinations after consultation with their legal and financial advisors and consideration of a number of factors, as more fully described in “Reasons for the Arrangement” beginning of page [●].

The CRH Board unanimously recommends that CRH securityholders vote FOR the approval of the Arrangement Resolution and unanimously recommends that CRH shareholders vote FOR the Compensation Proposal.



 

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Opinion of the Company’s Financial Advisor (page 42)

Canaccord Genuity is acting as a financial advisor to CRH in connection with the Arrangement. At a meeting of the Special Committee and the CRH Board held on February 4, 2021 to evaluate the Arrangement, Canaccord Genuity delivered to the Special Committee and the CRH Board an oral opinion, which opinion was confirmed by delivery of a written opinion dated February 4, 2021, to the effect that, as of that date and based upon and subject to certain assumptions, limitations and qualifications set forth in the written opinion, the consideration to be received by CRH shareholders pursuant to the Arrangement is fair, from a financial point of view, to CRH shareholders.

The full text of Canaccord Genuity’s opinion is attached to this proxy statement as Annex E. The description of Canaccord Genuity’s opinion set forth in this proxy statement is qualified in its entirety by reference to the full text of such opinion. CRH shareholders are encouraged to read Canaccord Genuity’s opinion carefully and in its entirety for a description of the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by Canaccord Genuity in connection with its opinion. Canaccord Genuity’s opinion was addressed to the Special Committee, was only one of many factors considered by the Special Committee and the CRH Board in their evaluation of the Arrangement and only addresses the fairness, from a financial point of view and as of the date of the opinion, of the consideration to be received under the Arrangement by CRH shareholders. Canaccord Genuity’s opinion is not intended to, and does not, constitute advice or a recommendation to any CRH securityholder as to whether such holder should vote their CRH securities in favour of the Arrangement or how such securityholder should otherwise act on any other matter with respect to the Arrangement.

Canaccord Genuity’s opinion does not address the relative merits of the Arrangement as compared to other business strategies or transactions that might be available to the Company, nor does it address the underlying business decision of the Company to proceed with the Arrangement. Canaccord Genuity’s opinion was necessarily based on securities, economic, monetary, market and other conditions as in effect on, and the information made available to Canaccord Genuity as of, February 4, 2021, the date of its opinion. Subsequent developments may affect the conclusions expressed in Canaccord Genuity’s opinion, and Canaccord Genuity assumes no responsibility for updating, revising or reaffirming its opinion based on circumstances or events occurring after the date of the opinion.

Pursuant to an engagement letter between CRH and Canaccord Genuity, CRH agreed to pay Canaccord Genuity a fee of $500,000 for its financial advisory services in connection with the Arrangement, all of which was payable upon delivery of Canaccord Genuity’s opinion and none of which is contingent upon completion of the Arrangement. In addition, the Company has agreed to reimburse Canaccord Genuity for certain expenses and to indemnify Canaccord Genuity and related persons against various liabilities, including certain liabilities under applicable securities laws.

Interests of the Company’s Directors and Executive Officers in the Arrangement (page 49)

In considering the recommendation of the CRH Board that you vote FOR the Arrangement Resolution, CRH securityholders should be aware that certain of CRH’s directors and executive officers have interests in the transaction that are different from, and/or in addition to, the interests of CRH securityholders generally, including accelerated vesting of equity awards, potential cash severance and other termination benefits, “golden parachute” excise tax indemnification, transaction bonuses, committee service fees and the provision of indemnification and insurance arrangements. The Special Committee and CRH Board were aware of these interests and considered them, among other matters, in reaching their decisions to recommend approval of and to approve the Arrangement Agreement and to recommend that CRH securityholders vote in favour of approving the Arrangement Resolution.



 

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Regulatory Approvals (page [])

Under the HSR Act and the rules promulgated thereunder, the Arrangement may not be completed until notification and report forms have been filed with the FTC and the DOJ and the applicable waiting period under the HSR Act has expired or been terminated. CRH and WELL each filed its Notification and Report form with respect to the Arrangement with the FTC and DOJ on February 22, 2021.

Financing of the Arrangement (page [])

In connection with the Arrangement, WELL issued subscription receipts of Finco for, in the aggregate, C$302.5 million, pursuant to a private placement with subscription agreements entered into by a group of institutional and individual investors. Such issuance was completed on February 17, 2021, and the proceeds thereof were deposited in escrow for use in connection with completion of the Arrangement. In addition, the Purchaser has entered into commitment letters with Canadian Imperial Bank of Commerce and HSBC Bank Canada, pursuant to which such banks have committed to provide to the Purchaser certain debt financing in connection with the Arrangement, subject to the terms and conditions of such commitment letter.

CRH anticipates that the total funds needed to complete the Arrangement (including the funds to pay CRH shareholders and to pay certain CRH optionholders and CRH RSU holders the amounts due to them under the Arrangement Agreement, as well as to repay certain existing indebtedness of CRH), will be funded through a combination of the foregoing equity financing, debt financing and cash-on-hand of WELL.

The completion of the Arrangement is not conditioned upon WELL’s or the Purchaser’s receipt of financing.

Material U.S. Federal Income Tax Consequences (page [])

The Arrangement will be a taxable transaction for U.S. federal income tax purposes if you are a U.S. Holder (as defined in “The Arrangement – Material U.S. Federal Income Tax Consequences”). Your receipt of cash in exchange for your CRH shares in the Arrangement generally will cause you to recognize capital gain or loss for U.S. federal income tax purposes measured by the difference, if any, between the amount of cash you receive in the Arrangement and your adjusted tax basis in your CRH shares if you hold CRH shares as a capital asset on the effective date of the Arrangement.

Material Canadian Federal Income Tax Consequences (page [])

A Canadian resident who holds CRH shares as capital property will generally recognize a capital gain (or capital loss) for Canadian federal income tax purposes equal to the amount by which the amount of cash received for such CRH shares under the Arrangement exceeds (or is less than) such holder’s adjusted cost base of the CRH shares and any reasonable costs of disposition. Any capital gain realized by a non-resident CRH shareholder upon such holder’s disposition of CRH shares generally will not be subject to Canadian federal income taxation unless such CRH shares constitute “taxable Canadian property,” within the meaning of the Income Tax Act (Canada) (the “Tax Act”), to such non-resident holder and do not constitute “treaty-protected property,” within the meaning of the Tax Act.

The Arrangement Agreement (page [])

Share Consideration (page [])

If the Arrangement is completed, CRH shareholders will be entitled to receive $4.00, without interest and less any applicable withholding taxes, for each CRH share that they own as of immediately prior to Arrangement.



 

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Treatment of CRH Equity Awards (page [])

Upon consummation of the Arrangement, each CRH option and CRH RSU outstanding immediately prior to the effective time of the Arrangement will be treated as follows:

 

   

Vested CRH Options. Each outstanding CRH option that has vested prior the effective time of the Arrangement will be exchanged for a cash payment equal to the difference between $4.00 and the exercise price for such option (net of any applicable withholding tax).

 

   

Unvested CRH Options. Each outstanding CRH option that has not vested prior to effective time of the Arrangement will be exchanged for an option to acquire WELL shares (a “WELL option”). Except as otherwise required to be adjusted by applicable law, each such WELL option issued in exchange for a CRH option will (i) entitle the holder to acquire a number of WELL shares equal to the number of CRH shares subject to the exchanged CRH option, multiplied by 0.652 (rounded down to the nearest whole share), and (ii) have an exercise price per WELL share equal to the exercise price per CRH share pursuant to the exchanged CRH option, divided by 0.652 (rounded up to the nearest whole cent).

 

   

CRH RSUs – 2014 Plan and Former Employees. Each outstanding CRH RSU granted under CRH’s 2014 share unit plan and each outstanding CRH RSU granted under CRH’s 2017 share unit plan that is held by an employee, contractor or director of CRH that does not remain employed by CRH when the Arrangement is completed will be exchanged for $4.00 in cash (net of any applicable withholding tax).

 

   

CRH RSUs – Continuing Employees. Each outstanding CRH RSU granted under CRH’s 2017 share unit plan that is held by an employee, contractor or director of CRH that remains employed when the Arrangement is completed will be exchanged for a restricted stock unit of WELL (a “WELL RSU”). Except as otherwise required to be adjusted by applicable law, each such WELL RSU issued in exchange for a CRH RSU will entitle the holder to acquire a number of WELL shares equal to the number of CRH shares subject to the exchanged CRH RSU, multiplied by 0.652 (rounded down to the nearest whole share).

Any such WELL options and WELL RSUs issued in exchange for CRH options or CRH RSUs will be subject to WELL’s existing omnibus equity plan and will generally have the same terms, conditions, expiration date and vesting schedule as applied to the exchanged CRH option or CRH RSU. No fractional WELL options or WELL RSUs will be issued. Instead, the total number of WELL shares underlying the WELL options or WELL RSUs otherwise issuable to any holder in connection with Arrangement will be rounded down to the nearest whole number.

Restrictions on Solicitations of Other Offers (page [])

Under the Arrangement Agreement, we are subject to certain non-solicitation covenants that restrict our ability to solicit third-party proposals, provide information to third parties and engage in discussions with third parties. The restriction is subject to a “fiduciary-out” provision that allows us, subject to certain procedural requirements, to provide information and participate in discussions with respect to acquisition proposals submitted by third parties not in violation of the non-solicitation covenants and with respect to which the CRH Board determines in good faith, after consultation with outside counsel and financial advisors, that (1) such acquisition proposal constitutes or could reasonably be expected to result in a “superior proposal” (as described in “The Arrangement Agreement – Restrictions on Solicitations of Other Offers,” beginning on page []), and (2) engaging in such discussions or negotiations would not be inconsistent with its fiduciary duties.

Change of CRH Board Recommendation (page [])

The Arrangement Agreement generally requires the CRH Board to recommend that CRH securityholders vote in favour of the Arrangement and restricts the CRH Board from withdrawing, modifying or qualifying such recommendation in a manner adverse to the Purchaser. Any failure by the CRH Board to make such



 

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recommendation or any such change in such recommendation (including a failure to publicly reaffirm such recommendation within a specified timeframe after a request by the Purchaser to do so) will generally result in the Purchaser having a right to terminate the Arrangement Agreement and receive a termination fee from CRH, as further described in “The Arrangement Agreement—Termination of the Arrangement Agreement,” beginning on page [] and “The Arrangement Agreement—Termination Fees,” beginning on page []. CRH has the right to terminate the Arrangement Agreement to enter into a binding written agreement with respect to a superior proposal, subject to compliance with the non-solicitation provisions and related procedural requirements in the Arrangement Agreement, and if the Arrangement Agreement is so terminated, the CRH Board may also change its recommendation.

The Arrangement Agreement does not prevent the CRH Board from making a change in recommendation as a result of the Purchaser having suffered a “Material Adverse Effect” (as described in “The Arrangement Agreement—Representations and Warranties,” beginning on page [•]) or in response to events other than an acquisition proposal, if the CRH Board, acting in good faith and upon the advice of its legal advisors, otherwise determines that the failure to take such action would be inconsistent with the exercise of its fiduciary duties.

Conditions to the Arrangement (page [])

Consummation of the Arrangement is subject to the satisfaction or waiver of certain closing conditions, including, among other things:

 

   

approval of the Arrangement by at least (i) two-thirds of the votes cast by CRH shareholders, (ii) two-thirds of the votes cast by all CRH securityholders, voting as a single class, and (iii) a simple majority of the votes cast by CRH shareholders, excluding votes cast by directors, senior officers and certain other related parties of CRH whose votes must be excluded pursuant to Multilateral Instrument 61-101Protection of Minority Securityholders in Special Transactions;

 

   

obtaining the necessary Interim Order and Final Order of the Court;

 

   

the absence of certain legal restraints prohibiting the consummation of the Arrangement;

 

   

the expiration or termination of the applicable waiting period under the HSR Act;

 

   

the absence of a “Material Adverse Effect” on CRH (as described in “The Arrangement Agreement – Representations and Warranties,” beginning on page [●]);

 

   

dissent rights not having been exercised with respect to more than five percent of the outstanding CRH shares; and

 

   

the absence of certain breaches or termination of the voting agreements between the Purchaser and CRH’s directors and officers.

The obligation of each of CRH and the Purchaser to consummate the Arrangement is also conditioned upon the other party’s representations and warranties being true and correct and the other party having performed its obligations under the Arrangement Agreement (in each case, subject to certain materiality qualifications).

Termination of the Arrangement Agreement (page [])

The Arrangement Agreement may be terminated at any time prior to its effective time as follows (notwithstanding any approval of the Arrangement Agreement or the Arrangement Resolution by the CRH securityholders and/or by the Court, as applicable, but subject to certain restrictions on a party’s right to terminate in the event of certain breaches of the Arrangement Agreement):

 

   

by mutual written agreement of CRH and the Purchaser;

 

   

by either CRH or the Purchaser, if:



 

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the consummation of the Arrangement does not occur on or before June 30, 2021, or such later date as may be agreed to in writing by the Parties;

 

   

any law or order is enacted or made applicable that makes consummation of the Arrangement illegal or otherwise prohibited or enjoins CRH or the Purchaser from consummating the Arrangement and such law or order shall have become final, binding and non-appealable; or

 

   

the requisite approval of CRH shareholders and CRH securityholders shall not have been obtained at the CRH meeting in accordance with the Interim Order;

 

   

by the Purchaser, if:

 

   

prior to the effective time of the Arrangement, (i) except as permitted by the Arrangement Agreement, the CRH Board changes its recommendation that securityholders vote in favour of the Arrangement Resolution including by failing to publicly reaffirm such recommendation within a specified timeframe after a request by the Purchaser to do so; (ii) the CRH Board or a committee thereof approves or recommends any alternative acquisition proposal; or (iii) CRH breaches the non-solicitation covenants in the Arrangement Agreement;

 

   

there is a breach of the Arrangement Agreement on the part of CRH that would cause the conditions to the Arrangement not to be satisfied; or

 

   

the Purchaser has been notified in writing by CRH of a proposed agreement with respect to an alternative acquisition proposal, and either: (i) the Purchaser does not deliver an amended Arrangement proposal within six business days of delivery of the proposed agreement to the Purchaser; or (ii) the Purchaser delivers an amended Arrangement proposal but the CRH Board determines that the acquisition proposal provided in the Proposed Agreement continues to be a superior proposal in comparison to the amended Arrangement terms offered by the Purchaser; and

 

   

by CRH, if:

 

   

there is a breach of the Arrangement Agreement on the part of the Purchaser that would cause the conditions to the Arrangement not to be satisfied; or

 

   

prior to the approval of the Arrangement Resolution, the CRH Board authorizes CRH to enter into a binding written agreement with respect to a superior proposal, subject to compliance with the non-solicitation provisions and related procedural requirements in the Arrangement Agreement in all respects.

Termination Fees (page [])

In connection with a termination of the Arrangement Agreement under certain circumstances specified in the Arrangement Agreement, CRH must pay a termination fee of C$10,000,000 to the Purchaser. These circumstances include, among others, if the Arrangement Agreement is terminated by CRH to enter into an agreement with respect to a superior proposal or by the Purchaser as a result of a change of recommendation by the CRH Board or a material breach by CRH of its non-solicitation covenants. The Purchaser is required to pay CRH a termination fee equal to C$10,000,000 in the event of certain material breaches of its representations, warranties or covenants.

Dissent Rights (page [])

The Interim Order provides that each registered CRH shareholder may exercise dissent rights with respect to the Arrangement in accordance with Sections 237 to 247 of the BCBCA, as amended by the Plan of



 

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Arrangement, the Interim Order and the Final Order. Each registered CRH shareholder who duly exercises such dissent rights will be entitled to be paid the fair value of all, but not less than all, of the CRH shares held by the CRH shareholder, determined as at the point in time immediately before the Arrangement Resolution is approved by the CRH shareholders, provided that the holder duly dissents to the Arrangement Resolution and the Arrangement becomes effective. To exercise the dissent rights, a registered CRH shareholder must dissent with respect to all CRH shares of which it is registered and beneficial owner. Registered CRH shareholders who wish to dissent must deliver a written notice of objection to the Arrangement Resolution, which must be received by CRH, c/o Blake, Cassels & Graydon LLP, 595 Burrard Street, Suite 2600, Vancouver, British Columbia, V7X 1L3, Fax: (604) 631-3309, Attention: Alexandra Luchenko, not later than 5:00 p.m. (Vancouver time) on April [●], 2021, or two business days prior to any adjournment or postponement of the CRH meeting. Such notice of dissent must strictly comply with the requirements of Section 242 of the BCBCA as modified by the Plan of Arrangement, the Interim Order and the Final Order. Any failure by a CRH shareholder to fully comply with the provisions of the BCBCA, as modified by the Plan of Arrangement, the Interim Order and the Final Order, may result in the loss of the holder’s dissent rights. Beneficial CRH shareholders who wish to exercise dissent rights must cause each registered CRH shareholder holding their CRH shares to deliver the notice of dissent or, alternatively, make arrangements to become a registered CRH shareholder.

Market Price of CRH Shares (page [])

The CRH shares trade on NYSE American under the symbol CRHM and on the TSX under the symbol CRH. The closing sale price of CRH shares on the NYSE American on February 5, 2021, the last trading day prior to the announcement of the Arrangement, was $2.18 per share. The $4.00 per share to be paid for each CRH share in the Arrangement represents a premium of approximately 83% to the NYSE American closing price on February 5, 2021 and a premium of approximately 65% to the 90-calendar-day volume-weighted average price of CRH shares on the NYSE American through February 5, 2021. The closing sale price of CRH shares on the NYSE American on [], the latest practicable trading day before the date of this proxy statement, was $[] per share.

The closing sale price of CRH shares on the TSX on February 5, 2021, the last trading day prior to the announcement of the transaction, was C$2.78 per share. The $4.00 to be paid for each CRH share in the Arrangement, or C$5.1108 based on the Bank of Canada closing exchange rate on February 5, 2021, represents a premium of approximately 84% to the TSX closing price on February 5, 2021 and a premium of approximately 61% to the 90-calendar-day volume-weighted average price of CRH shares on the TSX through February 5, 2021. The closing sale price of CRH shares on the TSX on [], the most recent practicable trading day before the date of this proxy statement, was C$[] per share.

You are encouraged to obtain current market quotations for the CRH shares in connection with voting your shares.



 

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QUESTIONS AND ANSWERS ABOUT THE CRH MEETING AND THE ARRANGEMENT

The following questions and answers are intended to address briefly some commonly asked questions regarding the Arrangement Agreement, the Arrangement and the CRH meeting. These questions and answers do not address all questions that may be important to you as a CRH securityholder. Please refer to the “Summary Term Sheet” and the more detailed information contained elsewhere in this proxy statement (including the annexes to this proxy statement), which you should read carefully.

 

Q.

What is the Arrangement?

 

A.

On February 6, 2021, CRH entered into an Arrangement Agreement with WELL, the Purchaser and Finco. Subject to the terms and conditions of the Arrangement Agreement, WELL (through its subsidiaries) will acquire all of the outstanding CRH shares pursuant to a Plan of Arrangement. If the Arrangement is completed, CRH will become an indirect wholly owned subsidiary of WELL, and CRH shares will no longer be publicly traded.

 

Q.

Why am I receiving this document??

 

A.

You are receiving this proxy statement because you were a CRH securityholder as of the record date for the CRH meeting. The Arrangement cannot be completed unless, among other things, the Arrangement is approved by CRH shareholders and CRH securityholders as described in this proxy statement. CRH is holding the CRH meeting to obtain this approval and consider certain other matters related to the Arrangement required by applicable law.

 

Q.

What do I need to do now?

 

A.

This proxy statement contains important information about the Arrangement and the CRH meeting, and you should read it carefully and in its entirety.

Even if you plan to attend the CRH meeting, we urge you to vote as soon as possible by following the instructions included on the enclosed Form of Proxy.

 

Q.

What will CRH shareholders receive in the Arrangement?

 

A.

If the Arrangement is completed, CRH shareholders will be entitled to receive $4.00 in cash, without interest and less any applicable withholding taxes, for each CRH share that they own as of immediately prior to the effective time of the Arrangement.

 

Q.

If I’m a CRH shareholder, how will I receive the consideration for my shares? Where should I send in my share certificates?

 

A.

If you are a registered CRH shareholder, you have received or will receive a letter of transmittal with detailed instructions for exchanging your shares for the consideration to which you are entitled under the Arrangement Agreement. If your CRH shares are held in “street name” by your broker, bank or other nominee, you will receive instructions from your broker, bank or other nominee as to how to effect the surrender of your “street name” shares in exchange for your consideration. Please do NOT enclose or return your share certificate(s) with your Form of Proxy.

 

Q.

What will happen to CRH options and CRH RSUs in the Arrangement?

 

A.

For information regarding treatment of outstanding CRH options and CRH RSUs, see “The Arrangement Agreement – Treatment of CRH Equity Awards,” beginning on page [●].

 

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Q.

When is the Arrangement expected to be completed?

 

A.

We are working toward completing the Arrangement as quickly as possible, and we anticipate that it will be completed in the second quarter of 2021. In order to complete the Arrangement, we must obtain the requisite approval of CRH shareholders and CRH securityholders as described in this proxy statement and the other closing conditions under the Arrangement Agreement must be satisfied or waived (as permitted by the Arrangement Agreement).

 

Q.

When and where is the CRH meeting?

 

A.

The CRH meeting will be held in a virtual format conducted via live audio webcast online at https://web.lumiagm.com/281719465 on [], 2021, at [] a.m. Vancouver time.

 

Q.

What matters will be voted on at the CRH meeting?

 

A.

CRH securityholders will be asked to vote on a special resolution to approve the Arrangement, and CRH shareholders will be asked to vote to approve, on an advisory (non-binding) basis, the compensation that may be paid or become payable to CRH’s named executive officers in connection with the Arrangement.

 

Q.

How does the CRH Board recommend that I vote on the proposals?

 

A.

The CRH Board unanimously recommends that you vote FOR approval of the Arrangement Resolution and FOR the Compensation Proposal.

 

Q.

What vote is required for CRH securityholders to approve the proposals?

 

A.

Approval of the Arrangement Resolution requires the affirmative vote of not less than (1) two-thirds of the votes cast by CRH shareholders present or represented by proxy at the CRH meeting, (2) two-thirds of the votes cast by all of the CRH securityholders present or represented by proxy at the CRH meeting voting as a single class and (3) a simple majority of the votes cast by CRH shareholders present or represented by proxy at the CRH meeting, excluding votes cast by directors, senior officers and certain other related parties of CRH whose votes must be excluded pursuant to Multilateral Instrument 61-101Protection of Minority Securityholders in Special Transactions.

Approval of the Compensation Proposal requires the affirmative vote of a majority of the votes cast by CRH shareholders present or represented by proxy at the CRH meeting.

 

Q.

How do CRH’s directors and officers intend to vote?

 

A.

Our directors and executive officers who, as of the record date for the CRH meeting, collectively owned approximately [●]% of the issued and outstanding CRH shares and approximately [●]% of the issued and outstanding CRH securities, have agreed to vote all of their CRH securities in favour of the Arrangement Resolution, subject to the terms and conditions of certain voting agreements with the Purchaser, as further described under “The Arrangement—Voting Agreements” on page [●]. CRH currently expects that each of these individuals will vote all of their CRH securities in favour of both the Arrangement Resolution and the Compensation Proposal.

 

Q.

Who is entitled to vote at the CRH meeting?

 

A.

Only registered CRH securityholders holding CRH securities as of the close of business on [●], 2021, the record date for the CRH meeting, are entitled to vote at the CRH meeting. As of the record date, there were approximately [●] CRH shares, [●] CRH options and [●] CRH RSUs issued and outstanding.

 

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CRH shareholders are entitled to one vote on each of the Arrangement Resolution and the Compensation Proposal for each CRH share held as of the record date for the CRH meeting, and CRH optionholders and CRH RSU holders are entitled to one vote on the Arrangement Resolution for each CRH share subject to CRH options and CRH RSUs held as of the record date for the CRH meeting (regardless of whether then vested or unvested).

 

Q.

Who can attend the CRH meeting?

 

A.

Registered CRH securityholders as of the record date and their duly appointed proxyholders can attend the CRH meeting online by going to https://web.lumiagm.com/281719465 where they can participate, vote, or submit questions during the CRH meeting’s live webcast. CRH securityholders whose securities are held in “street name” by a broker, bank or other nominee and who have not been duly appointed as a proxyholder will be able to attend the CRH meeting as guests, but guests will not be able to vote at the CRH meeting. CRH strongly encourages securityholders who wish to attend and participate in the meeting to carefully read and follow the procedures described in “The CRH Meeting—Attending the CRH Meeting,” beginning on page [●], to ensure they can attend and participate in the virtual meeting online.

 

Q.

Who is soliciting my vote?

 

A.

This proxy solicitation is being made on behalf of the CRH Board. Proxies may be solicited by CRH directors, officers and employees by personal interview, mail, e-mail, telephone, facsimile or other means of communication, but such persons will not be specially compensated for such service. In addition, we have retained Laurel Hill Advisory Group (“Laurel Hill”) to assist in the solicitation. We will pay Laurel Hill C$50,000 in the aggregate, plus out-of-pocket expenses, for its assistance. In addition, we will indemnify Laurel Hill against any losses arising out of that firm’s proxy soliciting services on our behalf. We will also request that brokers, banks and other nominees forward proxy solicitation material to the beneficial owners of CRH shares that such nominees hold of record, and we will reimburse them for their reasonable out-of-pocket expenses. CRH shall bear all of the costs associated with the solicitation.

 

Q.

How do I vote?

 

A.

Registered CRH securityholders may vote their CRH securities without attending the CRH meeting by choosing one of the following methods to submit a proxy:

 

   

By Mail or Facsimile: Complete, date and sign the enclosed Form of Proxy and return it in the accompanying reply envelope. You may also return your Form of Proxy by mail to Computershare at 8th Floor, 100 University Avenue, Toronto, Ontario, Canada M5J 2Y1, or by fax at 1-866-249-7775 in the United States and Canada and 001-416-263-9524 outside of the United States and Canada.

 

   

By Telephone: Call the telephone number listed on the enclosed Form of Proxy.

 

   

By Internet: Log onto the website indicated on the enclosed Form of Proxy.

Computershare must receive your proxy by [] (Vancouver time) on [], or 48 hours (excluding Saturdays, Sundays and holidays) before the CRH meeting is reconvened if the CRH meeting is adjourned or postponed. Late proxies may be accepted by the Chairman of the CRH meeting in his discretion, and the Chairman is under no obligation to accept or reject any particular late proxy

Registered CRH securityholders and duly appointed proxyholders may also attend and to vote virtually at the CRH meeting by following the instructions under “The CRH Meeting—Attending the CRH Meeting—Registered CRH Shareholders” beginning on page [●]. Even if you plan to virtually attend the CRH meeting, CRH recommends that you vote in advance using one of the methods described above so that your vote will be counted if you later decide not to attend the CRH meeting.

 

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If you hold your CRH securities in a stock brokerage account or if your CRH securities are held by a bank or other nominee (that is, in “street name”), you must provide the registered holder of your securities with instructions on how to vote your securities. Please follow the voting instructions provided by your broker, bank or other nominee to vote your securities.

Any beneficial CRH securityholder wishing to attend and to vote at the CRH meeting online will first need to be appointed as a proxyholder. Please see “The CRH Meeting—Attending the CRH Meeting—Beneficial CRH Securityholders” beginning on page [●] for more information.

 

Q. How do I vote?

 

A.

Registered CRH securityholders may vote their CRH securities without attending the CRH meeting by choosing one of the following methods to submit a proxy:

 

   

By Mail or Facsimile: Complete, date and sign the enclosed Form of Proxy and return it in the accompanying reply envelope. You may also return your Form of Proxy by mail to Computershare at 8th Floor, 100 University Avenue, Toronto, Ontario, Canada M5J 2Y1, or by fax at 1-866-249-7775 in the United States and Canada and 001-416-263-9524 outside of the United States and Canada.

 

   

By Telephone: Call the telephone number listed on the enclosed Form of Proxy.

 

   

By Internet: Log onto the website indicated on the enclosed Form of Proxy.

Computershare must receive your proxy by [] (Vancouver time) on [], or 48 hours (excluding Saturdays, Sundays and holidays) before the CRH meeting is reconvened if the CRH meeting is adjourned or postponed. Late proxies may be accepted by the Chairman of the CRH meeting in his discretion, and the Chairman is under no obligation to accept or reject any particular late proxy

Registered CRH securityholders and duly appointed proxyholders may also attend and to vote virtually at the CRH meeting by following the instructions under “The CRH Meeting—Attending the CRH Meeting—Registered CRH Shareholders” beginning on page [ï,·]. Even if you plan to virtually attend the CRH meeting, CRH recommends that you vote in advance using one of the methods described above so that your vote will be counted if you later decide not to attend the CRH meeting.

If you hold your CRH securities in a stock brokerage account or if your CRH securities are held by a bank or other nominee (that is, in “street name”), you must provide the registered holder of your securities with instructions on how to vote your securities. Please follow the voting instructions provided by your broker, bank or other nominee to vote your securities.

Any beneficial CRH securityholder wishing to attend and to vote at the CRH meeting online will first need to be appointed as a proxyholder. Please see “The CRH Meeting—Attending the CRH Meeting—Beneficial CRH Securityholders” beginning on page [ï,·] for more information.

 

 

Q.

How do I revoke my proxy?

 

A.

If you are a registered CRH securityholder, you have the right to change your vote or revoke your proxy at any time before the vote is taken at the CRH meeting. You can do this:

 

   

by contacting our Corporate Secretary’s office at (425) 658-0151;

 

   

by attending the CRH meeting and voting online at https://web.lumiagm.com/281719465 (your attendance at the CRH meeting will not, by itself, revoke your proxy; you must vote online at the CRH meeting); or

 

   

by timely submitting a later-dated proxy by telephone, Internet, mail or facsimile.

 

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If you hold your CRH shares in “street name” through a broker, bank or other nominee, you can change your vote by contacting your broker, bank or other nominee in sufficient time prior to the CRH meeting to arrange to change the vote, and if necessary, revoke the proxy.

 

Q.

Can I vote by telephone or electronically?

 

A.

If you hold your CRH securities in your name as a registered CRH securityholder, you may vote by telephone or electronically through the Internet by following the instructions included with your Form of Proxy. If your CRH shares are held by your broker, bank or other nominee, often referred to as held in “street name,” please check your nominee’s voting instruction form or contact your broker, bank or nominee to determine whether you will be able to vote by telephone or electronically.

 

Q.

If my CRH shares are held in “street name” by my broker, bank or other nominee, will my broker, bank or other nominee vote my CRH shares for me?

 

A.

Your broker, bank or other nominee will be permitted to vote your CRH shares held in “street name” only if you instruct your broker, bank or other nominee how to vote. You should follow the procedures provided by your broker, bank or other nominee regarding the voting of your CRH shares. Absent specific instructions from the beneficial owner of such CRH shares, banks, brokerage firms or other nominees are not empowered to vote those CRH shares. If you do not instruct your broker, bank or other nominee to vote your CRH shares, your CRH shares will not be voted and will not have an effect on the approval of the Arrangement Resolution or the Compensation Proposal.

 

Q.

What do I do if I receive more than one Form of Proxy or set of voting instructions?

 

A.

If you hold CRH securities in “street name,” and directly as a record holder, or if you otherwise hold your CRH securities through multiple accounts, you may receive more than one Form of Proxy and/or set of voting instructions relating to the CRH meeting. These should each be voted and/or returned separately as described elsewhere in this proxy statement in order to ensure that all of your CRH securities are voted.

 

Q.

How are votes counted?

 

A.

CRH securityholders may vote “FOR” or “AGAINST” with respect to the Arrangement Resolution, and CRH shareholders may vote “FOR” or “AGAINST” with respect to the Compensation Proposal. Abstentions and securities that are not voted will have no effect on the outcome of the vote to approve the Arrangement Resolution or the Compensation Proposal.

If you sign and return your Form of Proxy, but do not mark the boxes showing how you wish to vote on any particular proposal, your CRH securities will be voted in accordance with the recommendation of the CRH Board.

 

Q.

Who will count the votes?

 

A.

A representative of our transfer agent, Computershare, will count the votes and act as scrutineer.

 

Q.

How can I obtain additional information about CRH?

 

A.

We will provide a copy of our most recent Annual Report on Form 10-K (excluding certain of its exhibits) and other filings made with the SEC and the Canadian securities commissions, without charge, to any CRH securityholder who makes a written request to Investor Relations, CRH Medical Corporation, Suite 578 – 999 Canada Place, Vancouver, British Columbia V6C 3E1; or an oral request to (339) 970-2846. Our Annual Report on Form 10-K and other filings made with the SEC and the Canadian securities commissions

 

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  also may be accessed by Internet on the SEC’s website at http://www.sec.gov, on the Canadian Securities Administrators’ website at http://www.sedar.com or on the Company’s website at http://investors.crhsystem.com. Our website address is provided as an inactive textual reference only. The information provided on our website is not, and shall not be deemed to be, incorporated by reference in, or made part of, this proxy statement.

For a more detailed description of the information available, please refer to “Where You Can Find More Information” on page [●].

 

Q.

Who can help answer my questions?

 

A.

If you have additional questions about the Arrangement after reading this proxy statement, please call our proxy solicitor, Laurel Hill, toll-free at 1-877-452-7184 ((416) 304-0211 outside of North America) or by email at assistance@laurelhill.com.

 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements and information included or incorporated by reference into this proxy statement constitute “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and “forward-looking information” within the meaning of Canadian securities laws (collectively, “forward-looking statements”). Forward looking statements include all statements that are not statements of historical fact, including, without limitation, any statements regarding the effects of the Arrangement, the expected financing for the Arrangement, the timetable for obtaining the requisite regulatory, securityholder and Court approvals and clearances with respect to the Arrangement and for completing the Arrangement, the expected benefits of the Arrangement, and CRH’s, WELL’s or the combined company’s future operations, financial or operating results or dividend policy, as well as any other expectations, projections or illustrative examples of financial measures for future periods or other future events. Forward-looking statements are generally identifiable by use of the words “expect,” “anticipate,” “target,” “goal,” “project,” “intend,” “plan,” “believe,” “seek,” “estimate,” “continue,” “endeavor,” “strive,” “aim,” “may,” “will,” “should,” “could,” “outlook,” and variations of such words, and similar expressions.

Forward-looking statements are based on the current expectations of CRH management (and with respect to information regarding WELL, are based on the current expectations of WELL management) regarding future events and performance as of the date of this proxy statement and involve known and unknown risks, uncertainties and other factors which may cause actual results to be materially different those expressed or implied by any forward-looking statements. These forward-looking statements should not be read as guarantees of future results, and there can be no assurance that the results expressed or implied by any forward-looking statements will be achieved. Important factors that could cause actual results to differ materially from the results discussed in forward-looking statements include:

 

   

the risk that CRH shareholders and securityholders do not approve the Arrangement;

 

   

the risk that the regulatory clearances and Court approvals required for the Arrangement may be delayed or not obtained, or are obtained subject to conditions that are not anticipated;

 

   

the possibility that other conditions to the completion of the Arrangement will not be satisfied on a timely basis, or at all;

 

   

the risk that the financing necessary for the completion of the Arrangement is unavailable at the closing of the Arrangement;

 

   

the risk that the parties may be unable to achieve the anticipated benefits of the Arrangement within the expected time-frame, or at all;

 

   

the risk that unexpected costs will be incurred in connection with the completion of the Arrangement and/or the integration of CRH with WELL;

 

   

the inherent uncertainties involved in the estimates and judgments used in the preparation of financial projections and forecasts and the providing of estimates of financial measures;

 

   

uncertainties with respect to CRH’s and WELL’s ability to successfully implement and achieve our and their respective business strategies, including, in the case of CRH, our anticipated growth through acquisitions and the integration of recently acquired businesses and realization of synergies;

 

   

the possibility that CRH and WELL will be unable to retain key personnel;

 

   

the risk of disruption from the announcement, pendency and/or completion of the Arrangement, including potential adverse reactions or changes to business relationships with customers, employees, suppliers or regulators, making it more difficult to maintain business and operational relationships;

 

   

uncertainties related to developments in the COVID-19 pandemic and its impact on CRH’s and WELL’s operations and the completion of the Arrangement; and

 

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uncertainties related to general economic, financial, regulatory and political conditions, as well as potential changes in law and regulatory interpretations and the competitive environment in which CRH and WELL operate.

Additional factors that could cause actual results to differ materially from expectations include, without limitation, the risks identified by CRH in our most recent Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K, which are available on the SEC’s website at http://www.sec.gov or on the Company’s website at https://investors.crhsystem.com. The Company disclaims any intent or obligations to update or revise publicly any forward-looking statements whether as a result of new information, estimates or options, future events or results or otherwise, unless required to do so by law.

 

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THE CRH MEETING

This proxy statement is being furnished in connection with the solicitation of proxies by the CRH Board for use at the CRH meeting described below, which is being held to consider and vote on certain proposals related to the Arrangement.

Date, Time and Place of the CRH Meeting

The CRH meeting is scheduled to be held in a virtual format conducted via live audio webcast as follows:

Date: [], 2021

Time: [] a.m., Vancouver time

Website: https://web.lumiagm.com/281719465

Proposals to be Considered at the CRH Meeting

At the CRH meeting, CRH securityholders will be asked to vote on a special resolution to approve the Arrangement, and CRH shareholders will be asked to vote on a proposal to approve, on an advisory (non-binding) basis, the compensation that may be paid or become payable to CRH’s named executive officers in connection with the Arrangement. Completion of the Arrangement is conditioned on the approval of the Arrangement Resolution. For more information on these proposals, see “The Proposals,” beginning on page [●].

Record Date

We have fixed the close of business on [●], 2021 as the record date for the CRH meeting, and only registered CRH securityholders on the record date are entitled to vote at the CRH meeting. On the record date, there were approximately [●] CRH shares, [●] CRH options and [●] CRH RSUs issued and outstanding and entitled to vote.

Voting Rights; Quorum

CRH shareholders are entitled to one vote on each of the Arrangement Resolution and the Compensation Proposal for each CRH share held as of the record date for the CRH meeting, and CRH optionholders and CRH RSU holders are entitled to one vote on the Arrangement Resolution for each CRH share subject to CRH options and CRH RSUs held as of the record date for the CRH meeting (regardless of whether then vested or unvested). CRH shareholders will also be entitled to one vote on any other matter that may properly coming before the CRH meeting.

A quorum for the transaction of business at the CRH meeting is two shareholders, or one or more proxyholders representing two shareholders, or one shareholder and a proxyholder representing another shareholder and in any such case, such shareholders or proxyholders in attendance at the CRH meeting must hold or represent in the aggregate at least 25% of the eligible vote. In the event that a quorum is not present at the CRH meeting, it is expected that the CRH meeting will be adjourned or postponed to solicit additional attendance. Abstentions are counted as present for the purpose of determining whether a quorum is present. Because brokers, banks and other nominees do not have the authority to vote on any of the proposals at the CRH meeting absent specific instructions from the beneficial owner, CRH securities held by brokers, banks or other nominees for which no voting instructions have been provided are not counted as present for the purpose of determining whether a quorum is present.

Vote Required for Approval

The Arrangement Resolution must be approved by the affirmative vote of not less than (1) two-thirds of the votes cast by CRH shareholders present or represented by proxy at the CRH meeting, (2) two-thirds of the votes

 

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cast by all of the CRH securityholders present or represented by proxy at the CRH meeting, voting as a single class, and (3) a simple majority of the votes cast by CRH shareholders present or represented by proxy at the CRH meeting, excluding votes cast by directors, senior officers and certain other related parties of CRH whose votes must be excluded pursuant to Multilateral Instrument 61-101Protection of Minority Securityholders in Special Transactions. For the proposal to approve the Arrangement Resolution, you may vote FOR or AGAINST.

Approval of the Compensation Proposal, which is an advisory (non-binding) vote, requires the affirmative vote of not less than half of the votes cast by CRH shareholders present or represented by proxy at the CRH meeting. For the Compensation Proposal, you may vote FOR or AGAINST.

Abstentions and CRH securities which are not voted will have no effect on the outcome of the vote to approve the Arrangement Resolution or the Compensation Proposal.

Broker Non-Votes

Under applicable rules and regulations of the NYSE American, brokers, banks or other nominees have the discretion to vote on routine matters, but do not have the discretion to vote on non-routine matters. A “broker non-vote” occurs on an item when a broker, bank or other nominee has discretionary authority to vote on one or more proposals to be voted on at a meeting of securityholders but is not permitted to vote on other proposals without instructions from the beneficial owner of the shares, and the beneficial owner fails to provide the nominee with such instructions. Because all of the proposals to be considered at the CRH meeting are “non-routine” matters for purposes of broker voting, CRH does not expect any broker non-votes at the CRH meeting. Broker non-votes, if any, will have no effect on the outcome of the vote to approve the Arrangement Resolution or the Compensation Proposal.

Voting by CRH Directors and Officers

As of [●], 2021, the record date for the CRH meeting, the directors and executive officers of CRH held and are entitled to vote, in the aggregate, approximately [] CRH shares, representing approximately []% of the issued and outstanding CRH shares entitled to vote, and approximately [] CRH securities, representing approximately []% of the issued and outstanding CRH securities entitled to vote. Each director and executive officer of CRH has agreed to vote all of their CRH securities in favour of the Arrangement Resolution, subject to the terms and conditions of certain voting agreements with the Purchaser, as further described under “The Arrangement—Voting Agreements” on page []. CRH currently expects that each of these individuals will vote all of their CRH securities in favour of both the Arrangement Resolution and the Compensation Proposal.

Voting and Revocation of Proxies

Carefully review and follow the voting instructions below based on whether you are a registered or beneficial CRH securityholder:

 

   

registered CRH securityholder (also referred to as a shareholder of record): the security is registered in your name; or

 

   

beneficial CRH securityholder: your securities are held through a broker, bank or other intermediary.

Registered CRH Securityholders:

Option 1 – Voting by Proxy

 

   

If you are voting by proxy, send your completed proxy by fax or mail to Computershare at 8th Floor, 100 University Avenue, Toronto, Ontario, Canada M5J 2Y1, or by fax at 1-866-249-7775 in Canada

 

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and the United States and 001-416-263-9524 outside of Canada and the United States. You may also vote on the internet or by phone by following the instructions set out in the form of proxy. Computershare must receive your proxy by [●] (Vancouver time) on [●], or 48 hours (excluding Saturdays, Sundays and holidays) before the Meeting is reconvened if the Meeting is adjourned (the “proxy cut-off time”). Late proxies may be accepted by the Chairman of the Meeting in his discretion, and the Chairman is under no obligation to accept or reject any particular late proxy.

Option 2 – Voting Virtually at the CRH meeting at https://web.lumiagm.com/281719465

Registered CRH securityholders and duly appointed proxyholders may virtually attend the CRH meeting using an internet connected device such as a laptop, computer, tablet or mobile phone, and the meeting platform will be supported across browsers and devices that are running the most updated version of the applicable software plugins. Registered CRH securityholders and duly appointed proxyholders attending the CRH meeting online must remain connected to the internet at all times during the meeting in order to vote when balloting commences. It is your responsibility to ensure that you remain connected to the internet for the duration of the meeting.

Registered CRH securityholders and duly appointed proxyholders wishing to attend and to vote virtually at the Meeting should not complete or return the proxy form and should instead follow these steps:

 

  1.

Log into https://web.lumiagm.com/281719465 on the Meeting Date at least 15 minutes before the start of the Meeting. You should allow ample time to check into the virtual Meeting and to complete the related procedures.

 

  2.

Click on “I have a Login”.

 

  3.

Enter your 15-digit Control Number as your username (located on the form of proxy or in the email notification you received).

 

  4.

Enter the Password: crh2021 (case sensitive).

Registered CRH securityholders who have duly appointed a proxyholder to attend and vote at the CRH meeting online MUST register the appointed proxyholder with Computershare by visiting https://web.lumiagm.com/281719465 on or before [] (Vancouver time) on []. Computershare will ask for the appointed proxyholder’s contact information and will send such appointed proxyholder a user ID number or username via email shortly after this deadline and then may proceed with the steps above to log into the virtual Meeting.

Beneficial CRH Securityholders

The information set forth in this section is of significant importance to many CRH securityholders as a substantial number of CRH securityholders do not hold their CRH securities in their own names.

Beneficial CRH securityholders should note that only proxies deposited by CRH securityholders whose names appear on the share register of the Company will be recognized and acted upon at the CRH meeting. If CRH securities are listed in an account statement provided to a CRH securityholder by a broker, then, in almost all cases, those CRH securities will not be registered in the CRH securityholder’s name on the records of the Company. Such CRH securities will more likely be registered under the name of an intermediary, typically the CRH securityholder’s broker or an agent of that broker. In Canada, the vast majority of such CRH securities are registered under the name of CDS & Co. (the registration name for CDS Clearing and Depository Services Inc.), which company acts as a nominee for many Canadian brokerage firms. CRH securities held by brokers (or their agents or nominees) on behalf of a broker’s client may only be voted (for or against resolutions) in accordance with instructions received from the beneficial CRH securityholder. Without specific instructions, brokers and their agents and nominees are prohibited from voting shares for beneficial CRH securityholders

 

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Option 1 – Voting by Instruction

Securities regulatory policies require brokers and other intermediaries to seek voting instructions from beneficial CRH securityholders in advance of securityholders’ meetings. Each broker or intermediary has its own mailing procedures and provide their own return instructions to clients, which should be carefully followed by beneficial securityholders in order to ensure that their CRH securities are voted at the meeting. Often the form of proxy or voting instruction form (“VIF”) supplied to a Non-Registered Shareholder by its broker is identical to the form of proxy provided by the Company to the registered CRH securityholders. However, its purpose is limited to instructing the registered CRH securityholder (i.e., the broker or intermediary) how to vote on behalf of the beneficial holder.

Most brokers delegate responsibility for obtaining instructions from clients to Broadridge in the United States and in Canada. Broadridge mails a VIF in lieu of a proxy provided by the Company. The VIF will name the same persons as the Company’s proxy to represent your securities at the meeting. The completed VIF must be returned by mail (using the return envelope provided) or by facsimile. Alternatively, beneficial CRH securityholders may call a toll-free number or go online to www.proxyvote.com to vote. Broadridge then tabulates the results of all instructions received and provides appropriate instructions respecting the voting of the securities to be represented at the meeting and the appointment of any CRH securityholder’s representative.

The Company may utilize Broadridge’s QuickVoteTM system to assist securityholders with voting their securities. Certain beneficial securityholders who have not objected to the Company knowing who they are (non-objecting beneficial owners) may be contacted by Laurel Hill, which is soliciting proxies on behalf of management of the Company, to conveniently obtain a vote directly over the phone.

A beneficial securityholder who receives a VIF or form of proxy cannot use that form to vote directly at the CRH meeting. The VIF or form of proxy must be returned following the instructions set out on the form well in advance of the meeting in order to have the securities voted at the CRH meeting on your behalf.

Accordingly, each beneficial securityholder should:

 

   

carefully review the VIF or form of proxy and voting procedures that the securityholder’s broker, agent, nominee or other intermediary has furnished with this Information Circular; and

 

   

provide instructions as to the voting of the securityholder’s securities in accordance with those voting procedures.

Option 2 – Voting Virtually at https://web.lumiagm.com/281719465

Beneficial securityholders wishing to attend and to vote at the CRH meeting online or appoint a person (who need not be a securityholder) to attend and act for him, her or it and on his, her or its behalf should instead follow these steps:

 

  1.

Appoint yourself or the desired person to act on your behalf as a proxyholder. Beneficial securityholders who wish to attend the CRH meeting online via the live audio webcast must enter their own names in the blank space on the VIF or form of proxy provided to them and return the same to their broker (or the broker’s agent) in accordance with the instructions provided by such broker.

 

  2.

Register with Computershare. Beneficial securityholders must register themselves or the appointed proxyholder with Computershare by visiting http://www.computershare.com/CRHMedical on or before [●] (Vancouver time) on [●]. Computershare will ask for the beneficial securityholder’s or appointed proxyholder’s contact information and will send such securityholder or appointed proxyholder a user ID number or username via email shortly after this deadline.

 

  3.

Log into https://web.lumiagm.com/281719465 on the Meeting Date at least 15 minutes before the start of the CRH meeting. You should allow ample time to check into the virtual meeting and to complete the related procedures.

 

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  4.

Click on “I have a Login”.

 

  5.

Enter your user ID number or username, which Computershare will have provided to you by email, and enter the Password: crh2021 (case sensitive).

Notwithstanding the foregoing, beneficial securityholders located in the United States will generally have to first obtain a valid legal proxy from their intermediary and will need to submit such legal proxy to Computershare at 8th Floor North Tower, 100 University Avenue, Toronto, Ontario, M5J 2Y1 or by email at: uslegalproxy@computershare.com. For further details, beneficial securityholders located in the United States should contact his, her or its intermediary directly. Additionally, requests for registration from beneficial securityholders located in the United States that wish to attend and vote at the CRH meeting online must be deposited with Computershare by visiting https://web.lumiagm.com/281719465 on or before [] (Vancouver time) on []. Once such legal proxy is deposited with Computershare in accordance with these instructions, such securityholder should receive from Computershare a user ID number or username via email shortly after this deadline and may then proceed with following instructions 3, 4 and 5 above.

If a beneficial securityholder does not comply with these requirements, such beneficial securityholder will be able to attend the CRH meeting online as a guest but will not be able to vote or ask questions at the meeting online.

If you are a CRH securityholder of record, you have the right to change your vote or revoke your proxy at any time before the vote is taken at the CRH meeting. You can do this:

 

   

by contacting our Corporate Secretary’s office at (425) 658-0151;

 

   

by attending the CRH meeting and voting online at https://web.lumiagm.com/281719465 (your attendance at the CRH meeting will not, by itself, revoke your proxy; you must vote online at the CRH meeting); or

 

   

by timely submitting a later-dated proxy by telephone, Internet, mail or facsimile.

Please do not send in your share certificates with your Form of Proxy. If you are a CRH shareholder of record, you have received or will receive a separate letter of transmittal with detailed instructions for exchanging your shares for the consideration to which you are entitled under the Arrangement Agreement.

Rights of Shareholders Who Wish to Dissent

Pursuant to the Interim Order, registered CRH shareholders will have dissent rights with respect to the Arrangement under Sections 237 to 247 of the BCBCA, as modified by the Plan of Arrangement, the Interim Order and the Final Order. See the section entitled “Dissent Rights,” beginning on page [●].

Solicitation of Proxies

This proxy solicitation is being made on behalf of the CRH Board. Proxies may be solicited by CRH directors, officers and employees by personal interview, mail, e-mail, telephone, facsimile or other means of communication, but such persons will not be specially compensated for such service. In addition, we have retained Laurel Hill to assist in the solicitation. We will pay Laurel Hill C$50,000 in the aggregate, plus out-of-pocket expenses, for its assistance. In addition, we will indemnify Laurel Hill against any losses arising out of that firm’s proxy soliciting services on our behalf. We will also request that brokers, banks and other nominees forward proxy solicitation material to the beneficial owners of CRH shares that such nominees hold of record, and we will reimburse them for their reasonable out-of-pocket expenses. CRH shall bear all of the costs associated with the solicitation.

 

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Appointment of Proxyholder

As noted above, if you do not attend CRH meeting, you can still make your vote(s) count by appointing someone who will attend and act as your proxyholder at the CRH meeting. You can appoint the persons named in the enclosed Form of Proxy, who are directors or officers of CRH. Alternatively, you can appoint any other person to attend the CRH meeting as your proxyholder. Such other person need not be a CRH securityholder.

You can appoint a person other than the persons named in the enclosed Form of Proxy to act as your proxyholder by completing a Form of Proxy that appoints an alternative proxyholder and returning it by mail or facsimile, or by submitting a proxy that appoints an alternative proxyholder via the Internet, as described above under “—Voting and Revocation of Proxies by Holders of Record.” You must also register such proxyholder with Computershare after having submitted your proxy identifying such proxyholder, as further described below under “—Attendance at the CRH Meeting.” Failure to register the proxyholder will result in the proxyholder not receiving a username to attend the CRH meeting. Without a username, proxyholders will not be able to attend, participate in or vote at the meeting.

If you return your signed Form of Proxy or submit a proxy via the Internet but do not fill a name in the space provided for the appointment of an alternative proxyholder, the persons named in the Form of Proxy are appointed to act as your proxyholder. Regardless of who you appoint as your proxyholder, you can either instruct that person or company how you want to vote or you can let that person or company decide for you, as further described below.

Instructing your Proxyholder and Exercise of Discretion by your Proxyholder

You may indicate how you wish your proxyholder to vote your CRH securities when you submit your proxy. To do this, simply mark the appropriate box on the enclosed Form of Proxy before returning it, or submit your specific voting choices by telephone or by Internet following the instructions on the enclosed Form of Proxy. If you do this, your proxyholder must vote your CRH securities in accordance with the instructions you have given. To vote your CRH securities, your proxyholder must attend the CRH meeting.

If you do not give any instructions as to how to vote on a particular issue to be decided at the CRH meeting, your proxyholder can vote your CRH securities as he or she thinks fit. If you have appointed the persons designated in the enclosed Form of Proxy as your proxyholder they will, unless you give contrary instructions, vote your CRH shares at the CRH meeting in accordance with the recommendations of the CRH Board on each of the Arrangement Resolution and the Compensation Proposal.

Further details about these matters are set out in this proxy statement. The enclosed Form of Proxy gives the persons named on the form the authority to use their discretion in voting on amendments or variations to matters identified on the notice of meeting.

Attendance at the CRH Meeting

CRH securityholders of record as of the record date for the CRH meeting and their duly appointed proxyholders can attend the CRH meeting online by going to https://web.lumiagm.com/281719465, where they can participate, vote, or submit questions during the CRH meeting’s live webcast. CRH securityholders whose securities are held in “street name” by a broker, bank or other nominee and who have not been duly appointed as a proxyholder will be able to attend the CRH meeting as guests, but guests will not be able to vote at the CRH meeting.

If you would like a person, other than the management nominees identified on your Form of Proxy or voting instruction form, to attend and participate online at the CRH meeting as your proxy and vote your CRH securities, including if you are a CRH securityholder whose securities are held in “street name” by a broker, bank

 

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or other nominee and you wish to appoint yourself as proxyholder to attend, participate in and vote online at the CRH meeting, you must register such proxyholder with Computershare after having submitted your Form of Proxy or voting instruction form identifying such proxyholder. Failure to register the proxyholder will result in the proxyholder not receiving a username. Without a username, proxyholders will not be able to attend, participate in or vote at the meeting. To register a proxyholder, CRH securityholders must visit http://www.computershare.com/CRHMedical and provide Computershare with their proxyholder’s contact information, so that Computershare may provide the proxyholder with a username via email.

Other Business

We are not currently aware of any business to be acted upon at the CRH meeting other than the matters discussed in this proxy statement. If other matters do properly come before the CRH meeting, or at any adjournment or postponement of the CRH meeting, the persons named on the enclosed Form of Proxy gives will vote on them in accordance with their best judgment, pursuant to the discretionary authority conferred by the Form of Proxy with respect to such matters.

Questions and Additional Information

If you have more questions about the Arrangement or how to vote your CRH securities, or if you need additional copies of this proxy statement or the enclosed Form of Proxy, please call our proxy solicitor, Laurel Hill, toll-free at 1-877-452-7184 ((416) 304-0211 outside of North America) or by email at assistance@laurelhill.com.

Availability of Documents

The reports and opinions referenced in this proxy statement will be made available for inspection and copying at the principal executive offices of the Company during its regular business hours by any interested shareholder.

 

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THE PROPOSALS

 

Item 1.

The Arrangement Resolution

At the CRH meeting, CRH securityholders will be asked to consider, and if deemed advisable, to pass, with or without variation, a special resolution to approve the Arrangement, the full text of which is attached as Annex A to this proxy statement.

Subject to the terms and conditions of the Arrangement Agreement, WELL (through its subsidiaries) will acquire all of the outstanding CRH shares pursuant to the Plan of Arrangement. This proxy statement provides a detailed description of the Arrangement and the Arrangement Agreement, and CRH urges securityholders to carefully read this proxy statement (including the annexes attached hereto) and the other documents referred to or incorporated by reference into this proxy statement in their entirety. A copy of the Arrangement Agreement is attached as Annex B to this proxy statement, and a copy of the Plan of Arrangement is attached as Annex C to this proxy statement.

Approval of the Arrangement Resolution by CRH securityholders is required for completion of the Arrangement. The Arrangement Resolution must be approved by the affirmative vote of not less than (1) two-thirds of the votes cast by CRH shareholders present or represented by proxy at the CRH meeting, (2) two-thirds of the votes cast by all of the CRH securityholders present or represented by proxy at the CRH meeting voting as a single class and (3) a simple majority of the votes cast by CRH shareholders present or represented by proxy at the CRH meeting, excluding votes cast by directors, senior officers and certain other related parties of CRH whose votes must be excluded pursuant to Multilateral Instrument 61-101Protection of Minority Securityholders in Special Transactions. Each CRH shareholder is entitled to one vote on each of the Arrangement Resolution for each CRH share held by such shareholder as of the record date for the CRH meeting, and each CRH optionholder and CRH RSU holder is entitled to one vote on the Arrangement Resolution for each CRH share subject to any CRH options and CRH RSUs held by such holder as of the record date for the CRH meeting (regardless of whether then vested or unvested). A failure to vote or to instruct a broker or other nominee how to vote, as well as abstentions, will have no effect on the outcome of the vote on the Compensation Proposal, assuming a quorum is present.

The CRH Board unanimously recommends that CRH securityholders vote FOR approval of the Arrangement Resolution.

 

Item 2.

The Compensation Proposal

Section 14A of the Exchange Act and Rule 14a-21 thereunder, which were enacted as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, requires that CRH provide CRH shareholders with the opportunity to vote to approve, on a non-binding, advisory basis, the payment of certain compensation that will or may become payable by CRH to its named executive officers in connection with the Arrangement, which compensation is disclosed in “The Arrangement – Interests of the Company’s Directors and Executive Officers in the Arrangement – Golden Parachute Compensation,” beginning on page [●], including the footnotes to the table set forth therein.

Accordingly, at the CRH meeting, CRH shareholders will be asked to consider, and if deemed advisable, to pass, the following resolution to approve such compensation on an advisory (non-binding) basis:

BE IT RESOLVED, AS AN ORDINARY RESOLUTION, THAT the shareholders of CRH Medical Corporation approve, on a nonbinding, advisory basis, the compensation that will or may become payable to CRH’s named executive officers that is based on or otherwise relates to the transactions contemplated by the Arrangement Agreement as disclosed pursuant to Item 402(t) of Regulation S-K in the section entitled “Interests of the Company’s Directors and Executive Officers in the Arrangement – Golden Parachute Compensation” in CRH’s proxy statement for the special meeting of securityholders.”

 

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CRH shareholders should note that this proposal is not a condition to completion of the Arrangement, and as an advisory vote, the result will not be binding on CRH, the CRH Board or WELL. Accordingly, regardless of the outcome of the advisory vote, if the Arrangement is completed, CRH’s named executive officers will be eligible to receive the compensation that is based on, or otherwise relates to, the Arrangement in accordance with the terms and conditions applicable to those payments.

Approval of the Compensation Proposal, which is an advisory (non-binding) vote, requires the affirmative vote of a majority of the CRH shareholders. Each CRH shareholder is entitled to one vote for each CRH share that is held by such shareholder as of the record date for the CRH meeting. CRH optionholders and CRH RSU holders are not entitled to vote on the Compensation Proposal. A failure to vote or to instruct a broker or other nominee how to vote, as well as abstentions, will have no effect on the outcome of the vote on the Compensation Proposal, assuming a quorum is present.

The CRH Board unanimously recommends that CRH securityholders vote FOR the Compensation Proposal.

 

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THE PARTIES TO THE ARRANGEMENT

CRH Medical Corporation

CRH is a North American company focused on providing on providing gastroenterologists (“GIs”) with innovative services and products for the treatment of gastrointestinal (“GI”) diseases. In 2014, CRH acquired a full service gastroenterology anesthesia company, Gastroenterology Anesthesia Associates (“GAA”), which provides anesthesia services for patients undergoing endoscopic procedures. CRH has complemented this transaction with twenty-nine additional acquisitions of GI anesthesia companies since GAA.

CRH’s goal is to establish itself as the premier provider of innovative products and essential services to GIs throughout the United States. The Company’s CRH O’Regan System distribution strategy focuses on physician education, patient outcomes, and patient awareness. The CRH O’Regan System is a single use, disposable, hemorrhoid banding technology that is safe and highly effective in treating hemorrhoid grades I – IV. CRH distributes the CRH O’Regan System, treatment protocols, operational and marketing expertise as a complete, turnkey package directly to physicians, allowing CRH to create meaningful relationships with the physicians it serves.

CRH shares are listed on the NYSE American, trading under the symbol “CRHM,” and on the TSX, trading under the symbol “CRH.” For additional information concerning CRH, see “Where You Can Find More Information” on page [].

CRH’s principal executive office is located at Suite 578 – 999 Canada Place, Vancouver, British Columbia V6C 3E1, and its telephone number at that location is (604) 633-1440.

WELL Health Technologies Inc.

WELL is an omni-channel digital health company whose aim is to positively impact health outcomes by leveraging technology to empower and support patients and doctors. WELL operates 20 healthcare clinics located in British Columbia, 5 medical clinics in the province of Quebec and 2 medical clinics in the state of California, provides digital Electronic Medical Records (“EMR”) software and services to over 2,200 medical clinics with over 10,700 medical practitioners across Canada, operates telehealth services in Canada and the United States, and is a provider of digital health applications, billing and cybersecurity related technology solutions. WELL’s overarching goal is to consolidate and modernize primary healthcare assets using digital technologies and processes that improve patient experience, operational efficiency and overall care performance.

WELL shares are listed on the TSX, trading under the symbol “WELL.” For additional information concerning WELL, see Annex H to this proxy statement.

The principal executive office of WELL is located at Suite 200, 322 Water Street, Vancouver, British Columbia, V6B 1B6, and its telephone number at that location is (604) 628-7266.

WELL Health Acquisition Corp.

The Purchaser is a British Columbia corporation and a wholly owned subsidiary of WELL, which was formed for the purpose of completing the Arrangement.

The principal executive office of the Purchaser is located at Suite 200, 322 Water Street, Vancouver, British Columbia, V6B 1B6, and its telephone number at that location is (604) 628-7266.

1286392 B.C. Ltd.

Finco is a British Columbia corporation and a wholly owned subsidiary of WELL, which was formed for the purpose of financing the Arrangement. In connection with the Arrangement, WELL issued subscription receipts

 

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of Finco for, in the aggregate, C$302.5 million, pursuant to a private placement. Such issuance was completed on February 17, 2021 and the proceeds thereof were deposited in escrow for use in connection with completion of the Arrangement. Such proceeds are expected to be combined with certain committed debt financing and WELL’s existing cash-on-hand to fully finance the Arrangement, as further described in “The Arrangement—Financing of the Arrangement,” beginning on page [●].

In conjunction with completion of the Arrangement, each subscription receipt will automatically convert into one common share of Finco. Immediately thereafter, Finco and the Purchaser will amalgamate and continue as one corporation under the BCBCA, and each common share of Finco (other than shares held by WELL) will be exchanged for one WELL share. The entity formed upon such amalgamation will be a wholly owned subsidiary of WELL.

The principal executive office of Finco is located at Suite 200, 322 Water Street, Vancouver, British Columbia, V6B 1B6, and its telephone number at that location is (604) 628-7266.

WELL has advised us that none of the WELL parties nor any of their affiliates or any other person acting jointly or in concert with any of them, beneficially owns or controls, or will prior to the effective date of the Arrangement beneficially own or control, any CRH securities.

 

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THE ARRANGEMENT

This discussion of the Arrangement is qualified by reference to the Arrangement Agreement, which is attached to this proxy statement as Annex B. You should read the entire Arrangement Agreement carefully as it is the legal document that governs the Arrangement.

General Description of the Arrangement

On February 6, 2021, CRH entered into the Arrangement Agreement with WELL, the Purchaser and Finco. Subject to the terms and conditions of the Arrangement Agreement, WELL (through its subsidiaries) will acquire all of the issued and outstanding shares of CRH at a price of $4.00 per CRH share, pursuant to the Plan of Arrangement. As further described below, upon completion of the Arrangement, CRH will become an indirect wholly owned subsidiary of WELL, and shares of CRH will no longer be publicly traded.

Background to the Arrangement

The following chronology summarizes the key meetings and events that led to the signing of the Arrangement Agreement. This chronology does not purport to catalogue every conversation of or among members of the CRH Board, members of the Special Committee, CRH’s representatives, WELL’s representatives and other parties. Other than as described below, there have been no material contacts between CRH and WELL in the past two years.

The CRH Board and CRH management regularly evaluate CRH’s historical performance, future growth prospects, business alternatives and overall strategic direction as part of their ongoing evaluation of developments in the marketplace and consideration of opportunities to strengthen the Company’s business and enhance shareholder value. As part of this evaluation, the CRH Board has, from time to time, considered a variety of potential strategic alternatives, including the continuation of CRH’s business plan as an independent company, modifications to CRH’s strategy and product suite, potential expansion opportunities into new business lines through acquisitions and combinations of CRH with other businesses, a potential divestiture of the CRH O’Regan business, and the potential sale of CRH.

On January 29, 2019, as part of such ongoing review of strategic alternatives, the CRH Board retained Canaccord Genuity as its exclusive financial advisor in connection with the Company’s exploration of potential business combination transactions (the “M&A Program”). In connection with such engagement, Canaccord Genuity was instructed by the CRH Board to proactively seek out a transformative transaction, such as a merger with or acquisition of the Company by a comparably sized or larger company, in order to maximize shareholder value, and to work with the Company’s management and professional advisors to bring such a transaction to completion. In connection with the foregoing, the CRH Board determined that there was benefit to designating one independent director to liaise with management and the Company’s outside financial advisor to facilitate communications between the CRH Board and any proposed acquirors, without the need to communicate through management. The CRH Board authorized Mr. Todd Patrick to take on such role, and there was discussion of whether Mr. Patrick should be given additional compensation in consideration of the expected time and other commitments that would be required of Mr. Patrick in fulfilling such role. The Board determined to defer the approval of any additional compensation until such time as a transaction occurred.

In the year following Canaccord Genuity’s engagement, Canaccord Genuity assisted the Company in identifying possible transaction counterparties and in the course of that process, the Company entered into confidentiality and standstill agreements with, and provided certain diligence materials to, a number of parties, and ultimately received non-binding indicative offers to acquire the Company from five parties. After additional discussions with such parties, only one party, which is referred to herein as “Party A,” continued to express an interest in pursuing a transaction at that time. WELL was not contacted by Canaccord Genuity and did not otherwise participate in the foregoing process.

 

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In connection with the foregoing process, on November 1, 2019, the Company received a non-binding letter of intent from Party A, containing a preliminary, non-binding proposal to acquire the Company for $4.50 per share in cash.

In the week following the Company’s receipt of such proposal, Party A was provided with additional diligence materials and a draft of a potential arrangement agreement with respect to the proposed transaction. Representatives of CRH requested that Party A revert to the Company with confirmation of its proposed price and any significant outstanding issues, after its review of such materials.

On November 11, 2019, Party A delivered to the Company a supplemental letter to confirm its valuation of $4.50 per share, which remained preliminary and subject to the completion of customary acquisition due diligence on CRH, and provided an overview of the material and significant business issues relating to the draft arrangement agreement that had been made available to Party A, including matters relating to financing, non-solicitation, termination fees, closing conditions, operating covenants and regulatory covenants.

On November 14, 2019, CRH and Party A entered into an exclusivity agreement, pursuant to which CRH agreed not to solicit or participate in discussions regarding any competing transaction for a period ending on December 4, 2019.

Over the following weeks, Party A continued to conduct due diligence on the Company, and representatives of CRH, including Mr. Patrick, Dr. Tushar Ramani, the Company’s chief executive officer, and representatives of Canaccord, continued to discuss the potential terms of a transaction with Party A, including the price and certain financing matters. In the course of such discussions, Party A indicated that in light of various factors, it was no longer able to offer a price of $4.50 per share, and indicated that any transaction would need to be at a significantly lower price. CRH and Party A were not thereafter able to come to mutual agreement on an appropriate valuation of the Company.

On December 18, 2019, Party A terminated its discussions with the Company.

In January 2020, following the termination of negotiations with Party A, the CRH Board approved a special one-time payment to payment to Mr. Patrick in the amount of $150,000, as compensation for the work undertaken on behalf of the Company in pursuing a transaction during the 2019 M&A Program.

In April 2020, the Company and Canaccord Genuity terminated Canaccord Genuity’s engagement as exclusive financial advisor to the Company. In connection with such termination, the Company and Canaccord Genuity agreed to continue Canaccord Genuity’s engagement with respect to rendering an opinion as to the fairness from a financial point of view to the Company or its shareholders, as appropriate, of the consideration to be received in a business combination (if any), and agreed that if the Company required such an opinion in any future transaction, Canaccord Genuity would be given the first opportunity to provide it.

On May 18, 2020, CRH entered into an engagement agreement for a renewed M&A Program with Citi, pursuant to which Citi was engaged to act as the Company’s financial advisor in connection with a possible sale, transfer or other disposition, directly or indirectly, of all or a significant portion of the business, assets or securities of the Company, whether by way of a merger or consolidation, reorganization, recapitalization or restructuring, tender or exchange offer, negotiated purchase, leveraged buyout, minority investment or partnership, collaborative venture or otherwise, or any other extraordinary corporate transaction involving the Company. Pursuant to the engagement agreement, the Company agreed that Citi would be entitled to receive certain fees payable upon delivery of an opinion (if requested by the Company) and consummation of any transaction. The Company also agreed to reimburse Citi for certain out-of-pocket expenses incurred by it in connection with its engagement and to indemnify Citi against certain liabilities that may arise out of its engagement. In connection with the Arrangement, Citi is entitled under such engagement agreement to receive a transaction fee of $6.3 million, all of which is payable upon completion of the Arrangement.

 

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Citi worked with CRH through the summer and fall of 2020 to prepare for a renewed M&A Program to identify and approach possible transaction counterparties. In preparation for the new program, which was intended to commence in earnest in January 2021, the Company prepared a package of materials and a virtual data room to support the program, with input and assistance from Citi. Mr. Patrick continued to serve as the designated independent director for purposes of liaising with management and the Company’s outside financial advisor to facilitate communications between the CRH Board and any proposed acquirors in connection with the M&A Program.

On November 14, 2020, prior to Citi’s commencement of an outreach process in connection with the planned M&A Program, Mr. Ammar Shah, Director of M&A of WELL, contacted Mr. Richard Bear, the Company’s chief financial officer, to set up a call to introduce WELL.

On November 16, 2020, Mr. Bear spoke with Mr. Shah, who provided Mr. Bear with an overview of WELL’s business and indicated that the chief executive officer of WELL, Mr. Hamed Shahbazi, was interested in a discussion on collaboration opportunities. Mr. Shah and Mr. Bear did not discuss a potential acquisition of the Company by WELL. Following the call, Mr. Shah and Mr. Bear set up a call with their respective chief executive officers.

On November 19, 2020, there was a conference call between Messrs. Shahbazi, Shah, Ramani and Bear, in which the representatives of CRH and WELL provided introductions and an overview of CRH’s and WELL’s respective businesses and goals. The parties also discussed potential areas of partnership opportunities between the two businesses, including the idea of a combination. The parties did not discuss any specific structure or terms of a potential transaction.

On November 21, 2020, Mr. Shahbazi contacted Dr. Ramani to state that WELL planned to begin modeling a potential transaction, and would keep Dr. Ramani apprised so that the parties could continue discussions.

Over the following weeks, Messrs. Shahbazi, Shah, Ramani and Bear had various discussions regarding CRH”s business, to allow WELL to gain a better understanding of CRH, based on publicly available information.

On December 2, 2020, at a regularly scheduled meeting of the CRH Board, Dr. Ramani provided an update to the CRH Board about the inquiry that had been received from WELL and the preliminary discussions between the parties being undertaken to support WELL’s review and analysis of the Company. The CRH Board expressed its support for continued discussion with WELL and exploration of a potential transaction opportunity.

On December 15, 2020, CRH and WELL entered into a confidentiality agreement to allow the parties to exchange non-public information and discuss a potential transaction. Following their entry into a confidentiality agreement, CRH provided WELL certain limited non-public financial and operating data to allow WELL to gain a better understanding of CRH’s business.

On December 18, 2020, Mr. Shahbazi contacted Dr. Ramani to inform him that WELL intended to submit a proposal to acquire CRH. Although they did not discuss a price or specific transaction terms, Dr. Ramani informed Mr. Shahbazi that the CRH Board would consider any proposal presented and cautioned that any proposed transaction should have a high degree of closing certainty.

On December 21, 2020, Dr. Ramani introduced Mr. Shahbazi by email to a representative of Citi, to permit Citi and Mr. Shahbazi to discuss the Company’s business prospects and market in support of a potential acquisition proposal.

On December 22, 2020, a representative of Citi and Mr. Shahbazi held a conference call to speak about the Company’s business. They did not discuss the terms of a potential transaction.

 

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Also on December 22, 2020, unrelated to any discussions with WELL, CRH announced that it had received notice from its largest customer, United Digestive, advising that United Digestive did not intend to renew certain professional services agreements set to expire on October 31, 2021.

On December 23, 2020, WELL delivered to Dr. Ramani a draft non-binding letter of intent setting out the material terms of a possible transaction that WELL might be willing to pursue with CRH, subject to completion of satisfactory due diligence, and asking for CRH to agree to work exclusively with WELL for a 45-day period. The letter proposed a price of $4.00 per CRH share in cash, representing an 82% premium to the trading price of the CRH shares relative to the closing price following the United Digestive announcement on December 22, and a 46% premium to the trading price prior to the United Digestive announcement. Dr. Ramani promptly delivered the draft letter to Mr. Patrick, who in turn delivered the draft letter to the full CRH Board.

On December 24, 2020, in light of WELL’s submission of a proposal to acquire CRH, Dr. Ramani introduced Mr. Shahbazi to Mr. Patrick, the independent director who had been designated to facilitate communications between the CRH Board and any proposed acquirors in connection with the M&A Program.

Also on December 24, 2020, Mr. Patrick and Mr. Shahbazi held a call to meet each other. During such call and additional calls in the following days, Mr. Shahbazi provided Mr. Patrick with information on WELL’s interest in CRH and additional information regarding WELL’s proposal, including preliminary views on financing. Mr. Patrick indicated that he would discuss WELL’s proposal with the CRH Board.

On December 28, 2020, the full CRH Board met in order to discuss the non-binding letter of intent received from WELL, with representatives of Citi and Blake, Cassels & Graydon LLP (“Blakes”), Canadian legal counsel to CRH, in attendance. The CRH Board discussed the merits of the proposal, including whether the proposed price was sufficient to warrant further discussions with WELL, as well as the relative advantages and disadvantages of further engagement or disengagement with WELL. The members of the CRH Board observed, among other things, that the indicative purchase price in WELL’s non-binding proposal was a significant premium to the then-current trading price and also to the trading price prior to the United Digestive announcement. Blakes reviewed with the CRH Board the corporate duties applicable to directors in considering a sale of a corporation, among other matters. Citi advised the CRH Board on the relative merits of the offer from a financial perspective, and there was a discussion regarding the universe of potential competing buyers and the likelihood that any of them could transact in a timely fashion, and if so, on terms that would be competitive with or superior to the proposal from WELL.

Also at the CRH Board meeting on December 28, 2020, the independent directors, including Mr. Patrick, met without the presence of management, and with Citi and Blakes present, to discuss the recent developments and to discuss WELL’s proposal. The directors determined to form a special committee to evaluate the transaction, which would exclude Mr. Patrick, in light of his role in leading the M&A Program and the potential payments he could receive as compensation therefor, and directed legal counsel to prepare a formal resolution confirming the formation of the Special Committee and setting its mandate. The Special Committee, consisting of Mr. Ian Webb, Mr. Brian Griffin and Dr. David Johnson, then met without Mr. Patrick and engaged in a discussion regarding WELL’s proposal and other strategic alternatives available to CRH in light of recent developments in CRH’s business and discussed in detail the alternatives available, including deferring entering into exclusive negotiations with WELL until such time as a comprehensive market check of all potential acquirors was completed. The Special Committee discussed the risks of such a process, including the risk of losing WELL’s offer, prolonged management distraction, the risk that information regarding such a process leaks and the possibility that competitors could use their knowledge of a sales process to harm CRH’s business. At the conclusion of the meeting, the Special Committee confirmed that the Company should provide due diligence access to WELL and authorized Mr. Patrick to negotiate and sign, on behalf of the Company, the letter of intent proposed by WELL, including granting exclusivity to WELL, but instructed Citi to, in the meantime, reach out to a limited number of potential acquirors for the Company identified in its sale process preparations during the fall and provide them with materials necessary to evaluate the Company on an expedited basis before WELL’s exclusivity period began.

 

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Also on December 28, 2020, following the conclusion of the CRH Board meeting, Mr. Patrick provided Mr. Shahbazi with feedback on WELL’s draft letter of intent. Among other things, Mr. Patrick requested that the exclusivity period be shortened to roughly a 30-day period, ending January 31, 2021, and stated that obtaining financing could not be a condition to closing; rather WELL must secure the financing required to fund the purchase price prior to signing of any definitive agreement. He noted that although CRH had not changed the price of $4.00 in the draft letter of intent, CRH was expecting that WELL would increase the price after being able to conduct additional diligence. Mr. Patrick also communicated that additional details regarding the financing of the proposed transaction would be required before the letter of intent could be signed by CRH.

Beginning on December 28, 2020 and continuing through January 5, 2021, Citi contacted approximately ten potential acquirors of the Company, including Party A and certain other parties who had expressed interest in the Company during the 2019 M&A Program, to explore whether such parties would be interested in a potential acquisition of the Company. In response to such outreach, Party A indicated that it would not be interested in pursuing a transaction at a price that could be competitive, and declined to have further discussions. The Company entered into confidentiality agreements with four other parties, each of whom was provided with materials necessary to support their determination of value for the Company, but none of such parties ultimately submitted an offer for the Company.

During the period from December 29, 2020 to January 5, 2021, Mr. Patrick, Dr. Ramani and a representative of Citi had a number of additional discussions with Mr. Shahbazi about the potential transaction. During these discussions, Mr. Patrick again indicated that CRH believed WELL would be able to support a higher price after additional diligence, and suggested that CRH may be open to consideration consisting partially of WELL shares if a higher price could be achieved. Mr. Shahbazi indicated that he did not believe a cash/stock combination structure would change the price WELL was able to offer. The parties also discussed in detail the proposed financing for the transaction, the potential timing of diligence completion and execution of a transaction and other matters.

On January 4, 2020, WELL was given access to the Company’s virtual data room, and was invited to initiate the necessary confirmatory due diligence in connection with the transaction.

On January 5, 2020, WELL provided the Company with a revised non-binding letter of intent, confirming its offer price of $4.00 per share in cash, which remained subject to the completion of additional due diligence. The revised letter of intent requested that CRH provide WELL with exclusivity for approximately a 30-day period, ending February 5, 2021.

Also on January 5, 2020, WELL provided the Company with “highly confident” letters from each of Eight Capital and Stifel Nicolaus Canada Inc. with respect to a $300 million or greater equity financing.

On January 6, 2021 the Company executed the letter of intent in respect of the proposed transaction.

Over the course of the next several weeks, CRH responded to due diligence inquiries from WELL and added materials to its virtual data room in response thereto, while WELL and its advisors conducted substantial due diligence on CRH. WELL also held due diligence meetings with CRH management.

On January 15, 2021, on behalf of CRH, Blakes delivered an initial draft of the Arrangement Agreement to Citi, who in turn delivered it to Torys LLP (“Torys”), counsel to WELL in connection with the Arrangement.

Over the following weeks, the parties and their respective advisors negotiated the Arrangement Agreement. In connection therewith, Mr. Patrick, and a representative of Citi had a number of additional discussions with Mr. Shahbazi about the potential transaction. During these discussions, the parties discussed, among other things, whether the Company would be permitted to have a “go-shop” period under the Arrangement Agreement to solicit interest after signing of a definitive agreement, treatment of equity awards in the transaction, and the need for delivery of firm commitment letters with respect to the financing for the transaction.

 

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On January 21, 2021 Torys, on behalf of WELL, provided a revised draft of the Arrangement Agreement to Blakes, on behalf of CRH. This revised draft included, among other things, deletion of the Company’s “go-shop” provision.

On January 25, 2021, representatives of Blakes and Torys held a call to discuss certain issues in the draft Arrangement Agreement that had been received by Blakes on January 21, including, among other things, the treatment of employee equity awards, regulatory approvals in connection with the transaction, the proposed non-solicitation provisions, and the need for certainty of closing, including WELL’s ability to provide concrete financing commitments.

On January 29, 2021, the full CRH Board met by videoconference to discuss and consider WELL’s proposal, with representatives of CRH management, Citi, Blakes and the Company’s U.S. counsel, Skadden, Arps, Slate, Meagher & Flom LLP (“Skadden”), in attendance. A representative of Blakes discussed with the CRH Board the current draft of the Arrangement Agreement, including a discussion of key points remaining to be resolved. Following the full CRH Board meeting, the Special Committee met to consider and discuss the transaction. At this meeting, the Special Committee determined to retain Canaccord Genuity for the purposes of providing an independent opinion as to the fairness to CRH shareholders, from a financial point of view, of the consideration to be received by CRH shareholders pursuant to the proposed Arrangement Agreement. The Special Committee also provided feedback to the Company’s advisors with respect to certain terms of the draft Arrangement Agreement and the Special Committee’s position with respect thereto.

Also on January 29, 2021, Blakes, on behalf of CRH, sent revisions on the draft Arrangement Agreement to Torys, on behalf of WELL, reflecting the direction given by the Special Committee. From this time until execution of the Arrangement Agreement, Blakes and Torys exchanged multiple drafts of the Arrangement Agreement.

On January 31, 2021, Torys, on behalf of WELL, sent to Blakes, on behalf of CRH, an initial draft of a proposed voting and support agreement for execution by CRH’s directors and officers in connection with the execution of the Arrangement Agreement.

On February 2, 2021, Blakes, on behalf of CRH, sent Torys, on behalf of WELL, a draft of the disclosure letter to the Arrangement Agreement, as well as feedback on the draft voting and support agreement. From this time until execution of the Arrangement Agreement, Blakes and Torys exchanged multiple drafts of such disclosure letter.

On February 3, 2021, WELL sent CRH a copy of certain equity commitment documentation with respect to WELL’s proposed equity financing for the transaction, including subscription agreements signed by a number of investors totalling over C$180 million. WELL also provided a copy of the near final form of the proposed debt commitment letter with Canadian Imperial Bank of Commerce and HSBC Bank Canada, noting that WELL’s counsel was working on finalizing the commitment letter by February 4.

On February 4, 2021, the full CRH Board met by videoconference to discuss and consider WELL’s proposal, including the current drafts of the Arrangement Agreement and the other transaction agreements, with representatives of CRH management, Citi, Canaccord Genuity, Blakes and Skadden in attendance. At the meeting, a representative of Blakes summarized the principal terms of the proposed Arrangement Agreement and the other transaction agreements. Representatives of Citi reviewed with the CRH Board a presentation prepared by Citi, which summarized, among other things, WELL’s proposal and Citi’s financial analyses of WELL’s proposal. Representatives of Canaccord Genuity reviewed with the CRH Board a presentation prepared by Canaccord Genuity, which summarized, among other things, WELL’s proposal and Canaccord Genuity’s financial analyses of WELL’s proposal. At the conclusion of its presentation, Canaccord Genuity rendered an oral opinion to the CRH Board and the Special Committee to the effect that, as of that date and based upon and subject to the various assumptions made, procedures followed and limitations on the scope of the review undertaken in its opinion, the consideration of $4.00 per CRH share to be received by CRH shareholders pursuant to the Arrangement Agreement was fair, from a financial point of view, to such shareholders.

 

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Following the full CRH Board meeting, the Special Committee met to review the current negotiating positions and concluded that agreement on the terms of a definitive Arrangement Agreement was likely going to be possible in the coming days. The Special Committee took the opportunity to revisit the benefits of widening the process to contact other potential strategic and financial buyers prior to entering into the Arrangement Agreement with WELL and concluded that the potential benefit was outweighed by the negative factors of widening the process, including the risk of losing WELL’s offer, information leaks and the possibility that competitors could use their knowledge of a sales process to harm CRH’s business. Having received the advice of the Company’s financial and legal advisors, the Special Committee concluded that the provisions of the proposed Arrangement Agreement, including the termination fee applicable to a superior proposal, would allow any third party that may be interested in acquiring CRH reasonable time to do so with reasonable additional cost. At the conclusion of the meeting, it was determined to continue to work toward finalization of the Arrangement Agreement in the form discussed at the meeting with the additional points directed by the Special Committee.

Also on February 4, 2020, Mr. Patrick called Mr. Shahbazi to discuss the termination fee that would need to be payable by WELL to the Company in the event of certain breaches of the Arrangement Agreement, given the importance of closing certainty to CRH. During their discussions, Mr. Shahbazi indicated his agreement to a termination fee of $10 million.

Also on February 4, 2021, WELL sent CRH the proposed final form of the debt commitment letter with Canadian Imperial Bank of Commerce and HSBC Bank Canada with respect to a $150 million revolving credit facility. Between February 4 and February 6, 2021, WELL also continued to provide the Company with copies of additional executed subscription agreements in connection with its proposed equity financing, with subscription agreements for a total of over C$295 million being delivered prior to execution of the Arrangement Agreement.

On February 5, 2021, WELL and CRH entered into an amendment to their letter of intent to extend the exclusivity period from February 5, 2021 until February 6, 2021.

On February 6, 2021, the full CRH Board met again by videoconference, with representatives of CRH management, Citi, Blakes and Skadden in attendance. Representatives of Blakes provided an update on the changes to the proposed Arrangement Agreement and other transaction agreements made since the prior meeting and reviewed the timeline for completion of the Arrangement Agreement and announcement of the transaction. Representatives of Blakes also relayed that Canaccord Genuity had advised that the changes to the draft Arrangement Agreement did not change the analysis or opinion of Canaccord Genuity delivered on February 4, 2021.

The Special Committee then met separately to review the status of negotiations and the proposed Arrangement Agreement and to poll each member for their view on whether or not it was appropriate and in the best interests of the Company to proceed with the proposed transaction. Following discussion, each of the Special Committee members expressed his support for a transaction with WELL, based on the terms set out in the draft Arrangement Agreement and the other transaction agreements. The Special Committee then unanimously approved a resolution to (1) recommend to the CRH Board that the CRH Board accept the oral fairness opinion from Canaccord Genuity, (2) advise the CRH Board that the Special Committee has unanimously determined that the consideration to be received by CRH shareholders pursuant to the Arrangement is fair, from a financial point of view, and that the Arrangement is in the best interests of the Company, (3) recommend to the CRH Board that the Arrangement Agreement be approved substantially in the form circulated to the Special Committee and (4) recommend to the CRH Board that the CRH Board recommend that the CRH securityholders vote in favour of the Arrangement.

Following such expression of support by the Special Committee, the full CRH Board reconvened with management in attendance. After considering the proposed terms of the Arrangement Agreement and the other transaction agreements, and having received the advice of the CRH Board’s financial and legal advisors, the CRH Board unanimously (1) determined that the Arrangement is fair to the CRH shareholders, (2) determined

 

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that it was advisable and in the best interests of CRH to enter into the Arrangement Agreement, (3) approved the execution, delivery and performance of the Arrangement Agreement and the consummation of the transactions contemplated thereby and (4) resolved to recommend approval of the arrangement resolution by the CRH securityholders. The CRH Board also authorized a special stipend of $350,000 to be paid to Mr. Patrick as compensation for his extensive efforts leading the renewed M&A Program and culminating in the Arrangement Agreement.

After the CRH Board meeting concluded, CRH and the WELL parties executed the Arrangement Agreement. On February 8, 2021, CRH and WELL each issued a press release announcing the Arrangement Agreement and describing the Arrangement.

Reasons for the Arrangement; Recommendation of the CRH Board

At a meeting of the Special Committee held on February 6, 2021, the Special Committee unanimously approved a resolution to (1) recommend to the CRH Board that the CRH Board accept the oral fairness opinion from Canaccord Genuity, (2) advise the CRH Board that the Special Committee has unanimously determined that the consideration to be received by CRH shareholders pursuant to the Arrangement is fair, from a financial point of view, and that the Arrangement is in the best interests of the Company, (3) recommend to the CRH Board that the Arrangement Agreement be approved substantially in the form circulated to the Special Committee and (4) recommend to the CRH Board that the CRH Board recommend that the CRH securityholders vote in favour of the Arrangement.

At a meeting of the CRH Board held on February 6, 2021, the CRH Board unanimously (1) determined that the Arrangement is in the best interests of CRH and fair to CRH shareholders, (2) determined that the consideration to be received by the CRH shareholders pursuant to the Arrangement is fair, from a financial point of view, to the CRH shareholders, (3) approved the execution, delivery and performance of the Arrangement Agreement and the consummation of the transactions contemplated thereby and (4) resolved to recommend that CRH securityholders vote FOR approval of the Arrangement Resolution.

In evaluating the Arrangement Agreement and the transactions contemplated by the Arrangement Agreement, including the Arrangement, the CRH Board and the Special Committee consulted with CRH’s management and legal and financial advisors and considered a variety of factors with respect to the Arrangement and the other transactions contemplated by the Arrangement Agreement, including the factors described below (not necessarily in order of importance):

 

   

the CRH Board and the Special Committee’s knowledge and understanding of CRH and the industry in which CRH operates, and the CRH Board’s review of CRH’s business, strategy, current and projected financial condition, current earnings and earnings prospects;

 

   

the CRH Board and the Special Committee’s knowledge of the M&A market, including as a result of the various strategic transactions CRH had engaged in since 2017 and as a result of CRH’s discussions with potential buyers;

 

   

the increasing competition, consolidation and other challenges in the healthcare industry and the likely effect thereof on the business, operations, financial condition and prospects of CRH;

 

   

the risks associated with CRH’s execution of its strategy as an independent, publicly traded company, including the uncertainty related to CRH’s ability to complete acquisitions, achieve organic case growth and rates for the services provided; and

 

   

the nature and amount of consideration offered in the Arrangement, as well as the terms and conditions of the Arrangement Agreement.

 

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In the course of reaching its determination, the CRH Board and the Special Committee considered various substantive factors and benefits of the Arrangement, each of which the CRH Board and the Special Committee believed, and continues to believe, supported its decision, including (not necessarily in order of importance):

 

   

that the $4.00 per CRH share consideration exceeded the price at which CRH shares have traded in the prior 52-week and three year periods and represented a premium of approximately (1) 83% to the NYSE American closing price and (2) 84% to the TSX closing price on February 5, 2021, the last trading day prior to the announcement of the Arrangement, as well as a premium of approximately 67% to the 90-calendar-day volume-weighted average price of CRH shares on the NYSE American and the TSX (based on the Bank of Canada closing exchange rate on February 5, 2021) prior to the date the Arrangement Agreement was executed;

 

   

that the $4.00 per CRH share consideration implied a total enterprise value of approximately (1) 8.5 times CRH’s estimated 2021 adjusted operating EBITDA attributable to shareholders of $43.9 million, including the contribution of United Digestive and (2) 11.1 times CRH’s estimated 2021 adjusted operating EBITDA attributable to shareholders of $33.6 million, excluding the contribution of United Digestive, compared to the average forward multiple of adjusted operating EBITDA attributable to shareholders at which CRH shares have traded since 2019 of approximately 7.0 times;

 

   

the CRH Board and the Special Committee’s belief that it was unlikely that the trading price of CRH shares would, in the near to medium term, yield greater value to CRH shareholders compared to the consideration to be received by CRH shareholders pursuant to the Arrangement, based on the risks of CRH not executing its strategic plan as described in further detail below;

 

   

the CRH Board and the Special Committee’s belief that $4.00 per CRH share was the highest price that WELL was willing to pay to acquire 100% of the CRH shares, and that the terms of the Arrangement Agreement were the most favorable that WELL would be willing to agree to, which belief was based on, among other things, the extensive negotiations with WELL and its counsel, and the final terms of the Arrangement Agreement, all as detailed above under “—Background to the Arrangement”;

 

   

the fact that despite a significant effort to identify a transformative transaction, including a possible acquisition, and the proactive outreach program undertaken following receipt of the indicative offer from WELL, as described under “—Background to the Arrangement” above, the Company had not elicited an offer to acquire the Company comparable to the offer provided by WELL or at all;

 

   

the CRH Board and the Special Committee’s belief that there was not a significant likelihood that another potential buyer would be interested in acquiring 100% of CRH shares at a price in excess of $4.00 per CRH share, based on the CRH Board’s knowledge and experience;

 

   

the fact that the consideration to be received by CRH shareholders pursuant to the Arrangement is payable entirely in cash and provides CRH shareholders with immediate liquidity and certainty of value for their investment, and removes the risks and volatility associated with owning shares of CRH as an independent, publicly traded company;

 

   

the near-term, medium-term and long-term risks associated with execution of CRH’s strategic plan as an independent, publicly traded company, including:

 

   

industry trends affecting the healthcare industry as a whole, including pressure on pricing; and

 

   

increased competition and consolidation in the healthcare industry and the fact that CRH faces significant competition from companies with greater size and resources;

 

   

the challenges CRH has faced, largely as a result of the volatility of the markets in which it operates, in projecting future performance and meeting analysts’ and investors’ quarterly expectations;

 

   

the CRH Board and the Special Committee’s belief that the Arrangement Agreement offered reasonable assurances as to the likelihood of consummation of the Arrangement, based on:

 

   

the fact that the Arrangement Agreement is not subject to a financing condition;

 

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the fact that WELL has committed equity and debt financing for the Arrangement, and that CRH is entitled to receive a reverse termination fee of $10,000,000 from WELL if the Arrangement Agreement is terminated under certain circumstances (see “The Arrangement Agreement—Termination Fees”); and

 

   

the likelihood of satisfying all conditions precedent to the closing of the transaction within the timeframe set out in the Arrangement Agreement, including by June 30, 2021, or such later date as may be agreed to in writing by the parties;

 

   

the financial analysis of Citi presented to the CRH Board and the Special Committee;

 

   

the financial analysis of Canaccord Genuity presented to the CRH Board and the Special Committee in connection with the delivery by Canaccord Genuity of its fairness opinion as described below; and

 

   

the opinion of Canaccord Genuity to the effect that, as of the date of their opinion and based upon and subject to the assumptions made, procedures followed, matters considered and limitations on the scope of their review undertaken as set forth in their opinion, the consideration to be received by CRH shareholders pursuant to the Arrangement was fair, from a financial point of view, to CRH shareholders, which opinion is more fully described in the section “—Opinion of the Company’s Financial Advisor”).

In addition, the CRH Board and the Special Committee also considered various procedural factors and terms of the Arrangement Agreement, each of which each of the CRH Board and the Special Committee believed, and continues to believe, supported its decision, including (not necessarily in order of importance):

 

   

that the Special Committee met regularly without management to consider WELL’s proposals, and that negotiation of the Arrangement Agreement and other transaction agreements was conducted under the oversight of the Special Committee;

 

   

that the Special Committee retained Canaccord Genuity as its own independent financial advisor, on a fixed-fee basis and received an opinion from Canaccord Genuity as to the fairness, from a financial point of view, to CRH shareholders of the consideration to be received by CRH shareholders pursuant to the Arrangement;

 

   

that WELL was prohibited under the terms of its confidentiality agreement with CRH from engaging in discussions or entering into agreements or arrangements of any kind with CRH employees (including executive officers) regarding compensation arrangements of any kind without the prior written consent of the CRH Board, and WELL did not seek permission for (nor did the CRH Board permit) such discussions, agreements or arrangements to take place;

 

   

that the Arrangement Agreement allows the CRH Board and the Special Committee to engage in discussions or negotiations with respect to an unsolicited, bona fide acquisition proposal at any time if the CRH Board, acting in good faith after consultation with its financial and legal advisors, determines that the acquisition proposal constitutes or could reasonably be expected to result in a superior proposal (see “The Arrangement Agreement—Restrictions on Solicitations of Other Offers”);

 

   

that the Arrangement Agreement allows the CRH Board to change its recommendation supporting the Arrangement and terminate the Arrangement Agreement to enter into a superior proposal, subject to compliance with the non-solicitation provisions and related procedural requirements in the Arrangement Agreement (see “The Arrangement Agreement—Change of CRH Board Recommendation; Termination in Connection with a Superior Proposal”);

 

   

that completion of the Arrangement will be subject to a judicial determination by the Court that the Arrangement is fair and reasonable;

 

   

that the Arrangement Agreement must be approved by no less than two-thirds of the votes cast by CRH shareholders and CRH securityholders present in person or represented by proxy at the CRH Meeting; and

 

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that CRH shareholders that do not vote in favor of the Arrangement Resolution and follow certain prescribed procedures described in this proxy statement will, if the Arrangement is consummated, be entitled to dissent under the BCBCA and seek fair value for their shares.

The CRH Board and the Special Committee also considered a variety of risks and other potentially negative factors concerning the Arrangement Agreement and the Arrangement, including (not necessarily in order of importance):

 

   

that CRH shareholders will no longer participate in future earnings or growth of CRH and will not benefit from any appreciation in value of CRH to the extent that those benefits exceed the benefits reflected in the consideration to be received by CRH shareholders pursuant to the Arrangement;

 

   

the potential risk of diverting management attention and resources from the operation of CRH’s business, including other strategic opportunities and operational matters, while working toward the completion of the Arrangement;

 

   

the potential negative effect on CRH’s business, including its relationships with employees, suppliers, channel partners and customers, of the pendency of the Arrangement;

 

   

the restrictions on the conduct of CRH’s business prior to completion of the Arrangement;

 

   

the risk that the financing contemplated by Arrangement Agreement for the consummation of the Arrangement might not be obtained and CRH’s potential inability to obtain specific performance to require WELL to complete the Arrangement if the financing is not then available;

 

   

the risk that the Arrangement may not be completed despite the parties’ efforts or that completion of the Arrangement may be unduly delayed, even if the Arrangement Resolution is approved by CRH securityholders, including the possibility that conditions to the parties’ obligations to complete the Arrangement may not be satisfied, and the potential resulting disruptions to CRH’s business;

 

   

the conditions to the Purchaser’s obligation to complete the Arrangement and the rights of the Purchaser to terminate the Arrangement Agreement in certain circumstances;

 

   

the limitations contained in the Arrangement Agreement on CRH’s ability to solicit additional acquisition proposals from third parties, as well as the fact that if the Arrangement Agreement is terminated in certain circumstances, CRH must pay a termination fee to (or as directed by) WELL (see “The Arrangement Agreement—Termination Fees”);

 

   

that the consideration to be received by CRH shareholders in the Arrangement is expected to be taxable for U.S. federal income tax purposes and Canadian federal income tax purposes (See “—Material U.S. Federal Income Tax Consequences” and “—Material Canadian Federal Income Tax Consequences”); and

 

   

that CRH’s directors and officers may have interests in the Arrangement that are different from, or in addition to, those of other CRH shareholders (see “—Interests of the Company’s Directors and Executive Officers in the Arrangement”).

The CRH Board and the Special Committee concluded that the potential negative factors associated with the acquisition of CRH by WELL were outweighed by the potential benefits that the CRH Board and the Special Committee expect CRH and the CRH securityholders to achieve as a result of the Arrangement. Accordingly, the Special Committee recommended approval of, and the CRH Board approved, the Arrangement Agreement and the transactions contemplated by the Arrangement Agreement, including the Arrangement.

In considering the recommendation of the CRH Board that CRH securityholder vote FOR the Arrangement Resolution, CRH securityholders should be aware that certain directors and executive officers of CRH have interests in the Arrangement that are different from, or in addition to, any interests they might have solely as a CRH securityholder (see “The Arrangement—Interests of the Company’s Directors and Executive Officers in the Arrangement” beginning on page [●]).

 

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The foregoing discussion of factors considered by the CRH Board and the Special Committee is not meant to be exhaustive, but includes the material factors considered by the CRH Board and the Special Committee in approving or recommending approval of the Arrangement Agreement and the transactions contemplated by the Arrangement Agreement, including the Arrangement. The CRH Board and the Special Committee did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors considered in reaching its determination. Rather, the members of the CRH Board and the Special Committee made their respective determinations based on the totality of the information presented to them, including the input from CRH’s management and advisors, and the judgments of individual members of the CRH Board and the Special Committee may have been influenced to a greater or lesser degree by different factors. The CRH Board and the Special Committee did not undertake to make any specific determinations as to whether any factor, or any particular aspect of any factor, supported or did not support its ultimate determination. The CRH Board and the Special Committee based their determinations on the totality of the information presented.

The CRH Board unanimously recommends that CRH securityholders vote “FOR” the Arrangement Resolution.

Certain Unaudited Prospective Financial Information

General Note Regarding Certain Unaudited Prospective Financial Information

In connection with CRH’s exploration of a potential sale of CRH and evaluation of the Arrangement, CRH senior management prepared certain non-public, unaudited financial projections and forecasts of CRH’s standalone performance for the fiscal years ending December 31, 2020 through December 31, 2025 (the “forecasts”), which are summarized below. As further described below, CRH senior management provided certain of such forecasts to Citi, Canaccord Genuity, the Special Committee, the CRH Board, WELL and certain other potential acquirers of CRH.

CRH does not, as a matter of course, publicly disclose financial forecasts as to future performance, earnings or other results, given, among other reasons, the uncertainty, unpredictability and subjectivity of the underlying assumptions and estimates. The forecasts are included in this proxy statement solely to give security holders access to non-public information that was provided to the Special Committee, the CRH Board and CRH’s financial advisors in the course of evaluating the Arrangement, and are not intended to influence the decision of any CRH securityholder regarding whether to vote in favor of the Arrangement Resolution or any other proposal at the CRH meeting. The inclusion of the forecasts in this proxy statement should not be regarded as an indication that CRH or any recipient of such information considered or consider the forecasts to necessarily reflect actual future events, and the forecasts should not be considered as such. Neither CRH nor any of its affiliates, advisors or representatives has made or makes any representation to any CRH securityholder or any other person regarding the ultimate performance of CRH compared to the information contained in the forecasts, and similarly, CRH has made no representation to WELL, in the Arrangement Agreement or otherwise, concerning the forecasts.

The forecasts were prepared for internal use and to assist CRH’s financial advisors with their financial analyses of CRH and the Arrangement and were not prepared with view toward public disclosure. Accordingly, they do not necessarily comply with GAAP or the guidelines published by the SEC or Canadian securities commissions or established by the American Institute of Certified Public Accountants with respect to prospective financial information, but, in the view of CRH’s senior management, were prepared on a reasonable basis, reflecting estimates and judgments of CRH’s senior management that they believed were reasonable at the time the forecasts were prepared, taking into account the relevant information available to them at the time. Neither CRH’s independent auditors, nor any other independent accountants, have audited, compiled, examined or performed any procedures with respect to the forecasts, and none of them have expressed any opinion or any other form of assurance on the forecasts or their achievability, and they assume no responsibility for, and disclaim any association with, the forecasts.

 

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CRH uses certain financial measures in the forecasts that are not prepared in accordance with GAAP, such as adjusted operating EBITDA attributable to shareholders and unlevered free cash flow. While CRH believes that such measures provide useful supplemental information in analyzing its financial results, there are limitations associated with the use of such financial measures. Such non-GAAP measures as used by CRH may not be directly comparable to similarly titled measures used by other companies and should not be considered in isolation from, or as a substitute for, financial information presented in accordance with GAAP. Because financial measures included in forecasts provided to a financial advisor and a board of directors in connection with a business combination transaction, such as the forecasts presented herein, are excluded from the definition of “non-GAAP financial measures” under the rules of the SEC, such forecasts are not subject to SEC rules regarding disclosures of non-GAAP financial measures, which would otherwise require a reconciliation of a non-GAAP financial measure to a GAAP financial measure. Reconciliations of non-GAAP financial measures were not provided to or relied upon by the Special Committee, the CRH Board or CRH’s financial advisors in connection with the Arrangement. Accordingly, no reconciliation of the financial measures included in the forecasts is provided in this proxy statement.

The forecasts constitute forward-looking statements that are subject to a number of risks and uncertainties that could cause actual results to differ materially from those predicted, including those described in “Cautionary Note Regarding Forward-Looking Statements” on page [●], and should be read with caution. Although presented with numerical specificity, the forecasts were based on numerous assumptions and estimates with respect to industry performance and competition, general business, economic, regulatory, political, market and financial conditions, and other future events, including assumptions and estimates related to CRH’s future investments and strategies and ability to achieve its strategic objectives, as well as other matters specific to CRH’s business, all of which are inherently uncertain and difficult to predict and many of which are beyond the control of CRH. Key material assumptions underlying the forecasts include, without limitation, that:

 

   

There are no material changes to the United States laws and regulations that regulate payments for medical services or other material changes in the laws, regulations and regulatory interpretations applicable to CRH’s business;

 

   

The tax laws, including corporate tax rates, remain unchanged relative to such laws (including such rates) as in effect on January 1, 2020;

 

   

Revenue from both anesthesia services and product sales recover from the impacts of the COVID-19 pandemic in 2021;

 

   

There is no anesthesia services revenue or EBITDA contribution from United Digestive following the expiration of United Digestive’s services agreements with CRH in the fourth quarter of 2021;

 

   

Anesthesia services same-facility cases and rate per case for locations currently in operation, excluding facilities associated with United Digestive, as well as product sales, grow over the forecast years; and

 

   

CRH continues to make significant investments in each of the forecast years for the acquisition of anesthesia service providers at an average multiple of ~4.5x adjusted operating EBITDA attributable to shareholders, and acquired anesthesia services providers grow post-acquisition.

In addition, the forecasts were prepared assuming CRH remains a stand-alone public company and do not give effect to the Arrangement, including the impact of negotiating or executing the Arrangement Agreement, the expenses that have been and may be incurred in connection with consummating the Arrangement, the potential synergies that may be achieved as a result of consummation of the Arrangement, potential changes in any business or strategic decision or actions that may be undertaken by WELL following consummation of the Arrangement, or the effect of any business or strategic decisions or actions that would likely have been taken if the Arrangement Agreement had not been executed, but that were instead altered, accelerated, postponed or not taken in anticipation of the Arrangement. The forecasts also do not take into account the effect on CRH of any possible failure of the Arrangement be consummated.

 

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The forecasts were prepared by CRH’s senior management based on information available at the time the forecasts were prepared and do not take into account any circumstances or events occurring after the date they were prepared. Further, given that the forecasts cover multiple years, by their nature, they become less predictive with each successive year. Except to the extent required by applicable securities laws, CRH expressly disclaims any responsibility to update or otherwise revise the forecasts to reflect circumstances existing after the date when they were prepared or the occurrence of future events, even in the event that any or all of the assumptions underlying the forecasts are shown to be inappropriate.

In light of the foregoing factors and the uncertainties inherent in the forecasts, security holders are cautioned not to place undue reliance on the forecasts. There can be no assurance that such forecasts will be an accurate prediction of future events, and they should not be relied on as such. Actual results may differ materially from those shown in the forecasts.

The forecasts included in this proxy statement should be evaluated, if at all, in conjunction with the historical financial statements and other information regarding CRH included in this proxy statement and in in its other public filings with the SEC, including CRH’s most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.

CRH High-Growth Case

CRH management prepared certain forecasts in the fall of 2020 for distribution to potential acquirers in connection with CRH’s planned sale process. In addition to the assumptions described under “ —General Note Regarding Certain Unaudited Prospective Financial Information” beginning on page [●], such forecasts were based on various assumptions concerning, among other things, CRH’s ability to deploy capital at an increased rate to drive additional growth through acquisitions and CRH’s achievement of accelerated organic growth, primarily through growth in its anesthesia services business resulting from the potential heightened demand for such services in light of certain shifting healthcare norms and the possibility of certain rate increases in future years. In light of the subsequent notice received by CRH that CRH’s largest customer, United Digestive, did not intend to renew its services agreements with CRH, such forecasts were updated in December 2020 solely to remove any revenue or EBITDA contribution from United Digestive following the expiration of such service agreements in the fourth quarter of 2021. In this proxy statement, we refer to such forecasts, including the revisions to reflect the removal of United Digestive revenue and EBITDA contributions, as the “CRH High-Growth Case.” The CRH High-Growth Case was provided to WELL and to four other potential acquirers of CRH who entered into confidentiality agreements with CRH as a result of Citi’s outreach to potential acquirers between December 28, 2020 and January 5, 2021, as well as to Citi and Canaccord Genuity.

The following table summarizes selected data from the CRH High-Growth Case, including management’s estimates of total revenue and adjusted operating EBITDA attributable to shareholders for the periods presented. The following estimates of unlevered free cash flow (pre- and post-acquisition of anesthesia service providers) were derived by Citi based on the CRH High-Growth Case and other estimates provided by CRH management.

 

     For the Year Ending December 31,  
($ in millions)    2021E      2022E      2023E      2024E      2025E  

Total Revenue

   $ 164.0      $ 179.7      $ 223.1      $ 267.4      $ 314.6  

Adjusted Operating EBITDA Attributable to Shareholders(1)

   $ 45.1      $ 51.2      $ 69.5      $ 88.1      $ 108.5  

Unlevered Free Cash Flow(2)

              

Pre-Acquisition of Anesthesia Service Providers

   $ 41.8      $ 42.3      $ 50.4      $ 65.4      $ 81.2  

Post-Acquisition of Anesthesia Service Providers

   $ 6.8      $ 2.3      $ 10.4      $ 25.4      $ 41.2  

 

(1)

Adjusted operating EBITDA is a non-GAAP measure calculated as operating earnings before interest, taxes, depreciation, amortization, stock based compensation, acquisition related expenses, asset impairment charges, and other non-recurring expenses plus other income related to government assistance. Adjusted operating EBITDA attributable to shareholders excludes the portion of the Company’s adjusted operating EBIDTA attributable to non-controlling interests. Non-controlling interests reflect the ownership interests of persons holding non-controlling interests in non-wholly owned subsidiaries of the Company.

 

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(2)

Unlevered free cash flow is a non-GAAP measure. Unlevered free cash flow (pre-acquisition of anesthesia service providers), as derived by Citi, is calculated as cash from operating activities less distributions to non-controlling interests. Unlevered free cash flow (post-acquisition of anesthesia service providers), as derived by Citi, is calculated as cash from operating activities less distributions to non-controlling interests and acquisitions of anesthesia service providers.

CRH Normalized Case

CRH management prepared certain additional forecasts in January 2021. In addition to the assumptions described under “—General Note Regarding Certain Unaudited Prospective Financial Information” beginning on page [●], such forecasts assumed levels of investment in acquisitions, product sale growth and anesthesia services growth based on and substantially consistent with levels and trends observed by CRH in its prior financial periods. In this proxy statement, we refer to such forecasts as the “CRH Normalized Case.” The CRH Normalized Case was provided to Citi and Canaccord Genuity, and after discussion with CRH’s financial advisors, and taking into account, among other things, the then-current business, economic, regulatory, political, market and financial conditions in the industry and geographies in which CRH operates, CRH management approved the CRH Normalized Case for use by Canaccord Genuity in connection with rendering its opinion described in “—Opinion of CRH’s Financial Advisor” beginning on page [●]. The CRH Normalized Case was also provided to the Special Committee and the CRH Board.

The following table summarizes selected data from the CRH Normalized Case, including management’s estimates of total revenue and adjusted operating EBITDA attributable to shareholders for the periods presented. The following estimates of unlevered free cash flow were derived by Citi and Canaccord Genuity, respectively (as indicated below), based on the CRH Normalized Case and other estimates provided by CRH management.

 

     For the Year Ending December 31,  
($ in millions)    2021E      2022E      2023E      2024E      2025E  

Total Revenue

   $ 159.9      $ 160.8      $ 184.7      $ 207.1      $ 229.6  

Adjusted Operating EBITDA Attributable to Shareholders(1)

   $ 43.9      $ 43.5      $ 52.3      $ 59.9      $ 67.5  

Unlevered Free Cash Flow (Citi) (2)

              

Pre-Acquisition of Anesthesia Service Providers

   $ 41.4      $ 38.0      $ 39.0      $ 45.6      $ 51.7  

Post-Acquisition of Anesthesia Service Providers

   $ 16.4      $ 13.0      $ 14.0      $ 20.6      $ 26.7  

Unlevered Free Cash Flow (Canaccord Genuity) (3)

   $ 45.1      $ 34.3      $ 39.0      $ 45.6      $ 51.7  

 

(1)

Adjusted operating EBITDA is a non-GAAP measure calculated as operating earnings before interest, taxes, depreciation, amortization, stock based compensation, acquisition related expenses, asset impairment charges, and other non-recurring expenses plus other income related to government assistance. Adjusted operating EBITDA attributable to shareholders excludes the portion of the Company’s adjusted operating EBIDTA attributable to non-controlling interests. Non-controlling interests reflect the ownership interests of persons holding non-controlling interests in non-wholly owned subsidiaries of the Company.

For purposes of Citi’s and Canaccord Genuity’s respective financial analyses, the CRH Normalized Case also included estimated total revenue and estimated adjusted operating EBITDA attributable to shareholders for the year ended December 31, 2020 of $106.2 million and $28.8 million, respectively. Such numbers were based on the Company’s preliminary financial statements for such period at the time the CRH Normalized Case was prepared, which were still in the process of being audited.

(2)

Unlevered free cash flow is a non-GAAP measure. Unlevered free cash flow (pre-acquisition of anesthesia service providers), as derived by Citi, is calculated as cash from operating activities less distributions to non-controlling interests. Unlevered free cash flow (post-acquisition of anesthesia service providers), as derived by Citi, is calculated as cash from operating activities less distributions to non-controlling interests and acquisitions of anesthesia service providers.

(3)

Unlevered free cash flow is a non-GAAP measure. Unlevered free cash flow, as derived by Canaccord Genuity, is calculated by tax-effecting operating income to CRH shareholders, which excludes operating income related to non-controlling interests, adding depreciation and amortization, subtracting changes in non-cash net working capital and subtracting capital expenditures.

Opinion of the Company’s Financial Advisor

Canaccord Genuity is acting as a financial advisor to the Company in connection with the Arrangement. At a meeting of the Special Committee and the CRH Board held on February 4, 2021 to evaluate the Arrangement, Canaccord Genuity delivered to the Special Committee and the CRH Board an oral opinion, which opinion was confirmed by delivery of a written opinion dated February 4, 2021, to the effect that, as of that date and based

 

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upon and subject to certain assumptions, limitations and qualifications set forth in the written opinion, the consideration to be received by CRH shareholders pursuant to the Arrangement is fair, from a financial point of view, to CRH shareholders.

The full text of Canaccord Genuity’s opinion is attached to this proxy statement as Annex E. The description of Canaccord Genuity’s opinion set forth in this proxy statement is qualified in its entirety by reference to the full text of such opinion. CRH shareholders are encouraged to read Canaccord Genuity’s opinion carefully and in its entirety for a description of the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by Canaccord Genuity in connection with its opinion. Canaccord Genuity’s opinion was addressed to the Special Committee, was only one of many factors considered by the Special Committee and the CRH Board in their evaluation of the Arrangement and only addresses the fairness, from a financial point of view and as of the date of the opinion, of the consideration to be received under the Arrangement by CRH shareholders. Canaccord Genuity’s opinion is not intended to, and does not, constitute advice or a recommendation to any CRH securityholder as to whether such holder should vote their CRH securities in favour of the Arrangement or how such securityholder should otherwise act on any other matter with respect to the Arrangement.

In connection with rendering the opinion described above and performing its related financial analyses, Canaccord Genuity, among other things:

 

   

reviewed an execution copy of the Arrangement Agreement (including accompanying disclosure schedules) to be dated February 6, 2021;

 

   

reviewed the Company’s audited consolidated financial statements and associated management’s discussion and analysis as at and for the periods ended December 31, 2019 and December 31, 2018;

 

   

reviewed the Company’s unaudited interim condensed consolidated financial statements and associated management’s discussion and analysis as at and for the periods ended September 30, 2020 and September 30, 2019, June 30, 2020 and June 30, 2019, and March 31, 2020 and March 31, 2019;

 

   

reviewed recent press releases, reports and other publicly available documents filed by the Company with the SEC;

 

   

discussed with the Company’s senior management the Company’s financial condition, the industry and its future business prospects;

 

   

reviewed financial results and projections provided by the Company’s management for the fiscal years 2020 through 2025, ending December 31, respectively, and had discussions with the Company’s management surrounding longer-term business and growth prospects of the Company, including capital requirements to achieve said growth prospects;

 

   

reviewed certain other internal financial, operational and corporate information prepared or provided by the Company’s senior management;

 

   

discussed with the Company’s legal counsel certain legal matters including with respect to the Arrangement Agreement;

 

   

reviewed select public market trading statistics and relevant financial information in respect of the Company, as well as other comparable public entities considered by Canaccord Genuity to be relevant;

 

   

reviewed representations contained in certificates, addressed to Canaccord Genuity and dated the date of such opinion, from senior officers of the Company as to the completeness and accuracy of the information upon which such opinion was based and certain other matters; and

 

   

reviewed such other corporate, industry and financial market information, investigations and analyses as Canaccord Genuity considered necessary or appropriate at the time and in the circumstances.

 

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In connection with its review and arriving at its opinion, Canaccord Genuity did not independently verify any of the foregoing information, assumed that all such information was complete and accurate in all material respects, and relied on representations of Company management that they were not aware of any facts that would make the information provided to Canaccord Genuity by the Company or its representatives for the purpose of preparing such opinion misleading. With respect to the CRH Normalized Case forecasts, which were relied upon by Canaccord Genuity in arriving at its opinion with the Company’s consent, Canaccord Genuity assumed that such forecasts were reasonably prepared on bases reflecting the best currently available estimates and judgments of Company management. Canaccord Genuity also assumed that the Arrangement will be consummated substantially in accordance with the terms set forth in the copy of the Arrangement Agreement reviewed by it, without waiver, modification or amendment of any material term, condition or agreement therein which would be in any way meaningful to Canaccord Genuity’s analysis.

Canaccord Genuity’s opinion was rendered on the basis of securities markets, economic, financial and general business conditions prevailing as of February 4, 2021, the date of the opinion, and the conditions and prospects, financial and otherwise, of the Company and its subsidiaries, as they were reflected in the information described above and as they were represented to Canaccord Genuity in discussions with management of the Company. It should be understood that subsequent developments may affect the conclusions expressed in the opinion, and Canaccord Genuity disclaims any obligation to advise any person of any change in any manner affecting the opinion that may come to Canaccord Genuity’s attention after the date of the opinion or to otherwise update, revise or reaffirm its opinion. Canaccord Genuity has not been requested to conduct and has not conducted, nor has Canaccord Genuity relied upon, any independent formal valuation or appraisal of the Company, or any of its securities or assets, and its opinion should not be construed as such. Canaccord Genuity also has not evaluated the solvency of any party to the Arrangement Agreement under any state or federal laws, rules or regulations relating to bankruptcy, insolvency or similar matters. In addition, Canaccord Genuity has assumed, with the Company’s consent, that any material liabilities (contingent or otherwise, known or unknown) of the Company are as set forth in the financial statements of the Company provided to Canaccord Genuity.

Canaccord Genuity’s opinion is limited to the fairness, from a financial point of view and as of the date of the opinion, of the consideration to be received under the Arrangement by CRH shareholders, and Canaccord Genuity did not express any opinion as to the fairness of the Arrangement to the holders of any other class of securities, creditors or other constituencies of the Company. Canaccord Genuity’s opinion did not address the relative merits of the Arrangement as compared to other business strategies or transactions that might be available to the Company, nor did it address the underlying business decision of the Company to proceed with the Arrangement or any view on any other term or aspect of the Arrangement Agreement. Canaccord Genuity is not a legal, accounting, regulatory or tax expert and relied on the assessments made by the Company and its advisors with respect to such matters. Canaccord Genuity has not considered, and expressed no opinion as to, the fairness of the amount or nature of the compensation to be paid to any of the Company’s officers, directors or employees, or class of such persons, relative to the consideration to be paid to CRH shareholders pursuant to the Arrangement.

Summary of Financial Analysis

The following is a summary of the material financial analyses performed by Canaccord Genuity in connection with rendering its opinion dated February 4, 2021 described above. The following summary, however, does not purport to be a complete description of the factors considered or financial analyses performed by Canaccord Genuity, nor does the order of analyses described represent relative importance or weight given to those analyses by Canaccord Genuity. Some of these summaries of the financial analyses include information presented in tabular format. The tables must be read together with the full text of each summary and are alone not a complete description of Canaccord Genuity’s financial analyses.

 

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Selected Public Companies Analysis

Canaccord Genuity performed an analysis using a selected group, which attempts to imply the value of a company by comparing it to identified companies that are publicly traded. For purposes of this analysis, Canaccord Genuity identified the following group of nine publicly traded healthcare services and products companies that share similar business characteristics to the Company based on operational and/or financial metrics, which are referred to as the “selected public companies.” The selected public companies consisted of:

 

   

AMN Healthcare Services, Inc.

 

   

MEDNAX, Inc.

 

   

RadNet, Inc.

 

   

Akumin Inc.

 

   

Cross Country Healthcare, Inc.

 

   

Viemed Healthcare, Inc.

 

   

Utah Medical Products, Inc.

 

   

Protech Home Medical Corp.

 

   

Pro-Dex, Inc.

Based on its review of the relevant metrics for each of the selected public companies, Canaccord Genuity calculated, for each of the selected public companies, the implied enterprise value as a multiple of adjusted operating EBITDA attributable to shareholders, which is referred to in this section as “adjusted EBITDA” (calculated as operating earnings before interest, taxes, depreciation and amortization, stock-based compensation, and excluding non-controlling interests), for the last twelve month period ended September 30, 2020 (“9/30 LTM”) and for estimated calendar year 2020 (“2020E”) and estimated calendar year 2021 (“2021E”). For purposes of this analysis, Canaccord calculated the implied enterprise value for each of the selected companies by multiplying the number of fully diluted outstanding shares of the applicable company by that company’s closing share price on February 3, 2021, and adding the book value of that company’s debt and subtracting cash and cash equivalents. In calculating the implied enterprise value and adjusted EBITDA metrics for the selected public companies, Canaccord Genuity utilized information regarding the selected public companies obtained from filings with the SEC, the Capital IQ database and other public sources. Based on this information, Canaccord Genuity calculated multiples for the selected public companies as follows:

 

Company

   Enterprise Value /Adjusted
EBITDA
 
   9/30 LTM      2020E      2021E  

AMN Healthcare Services, Inc.

     14.1x        13.7x        13.6x  

MEDNAX, Inc.

     11.5x        12.3x        10.9x  

RadNet, Inc.

     11.6x        11.6x        9.0x  

Akumin Inc.

     8.5x        8.1x        7.0x  

Cross Country Healthcare, Inc.

     12.6x        12.5x        12.1x  

Viemed Healthcare, Inc.

     9.8x        9.9x        12.6x  

Utah Medical Products, Inc.

     13.2x        13.2x        N/A  

Protech Home Medical Corp.

     12.6x        11.4x        8.6x  

Pro-Dex, Inc.

     15.7x        15.7x        13.4x  

Based on the analyses and review of the multiples of the selected public companies, Canaccord Genuity selected a representative range of enterprise value to 9/30 LTM adjusted EBITDA multiples of 11.5x–13.2x, a representative range of enterprise value to 2020E adjusted EBITDA multiples of 11.4x–13.2x, and a representative range of enterprise value to 2021E adjusted EBITDA multiples of 8.9x–12.8x, which were derived from the data points for the selected public companies set forth in the tables above based upon the application of its professional judgment.

 

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Canaccord Genuity then calculated ranges of implied enterprise values of the Company by applying these multiples to the Company’s estimated adjusted EBITDA for the relevant periods (based on CRH’s public filings, with respect to the 9/30 LTM adjusted EBITDA, and the CRH Normalized Case forecasts for 2020E and 2021E adjusted EBITDA). Based on information provided by Company management, Canaccord Genuity also adjusted 2021E adjusted EBITDA to exclude any contribution from CRH’s customer United Digestive in 2021E (as the Company had publicly announced on December 22, 2020 that the current services agreements with United Digestive will expire on October 31, 2021 and that United Digestive had given notice that it did not intend to renew), and calculated a range of implied enterprise values of the Company accounting for the loss of United Digestive by applying the representative range of enterprise value to 2021E adjusted EBITDA multiples to such adjusted 2021E adjusted EBITDA. Canaccord then subtracted the Company’s net debt of $70.2 million at December 31, 2020, as provided by Company management, from such implied enterprise values to calculate ranges of implied equity values for the Company and then calculated ranges for the implied per share equity value of CRH shares based on the number of fully diluted CRH shares outstanding as of February 2, 2021 of 75.5 million (calculated using the treasury stock method). The following table summarizes the results of this analysis:

 

Financial Statistic

   Implied Per Share
Equity Value
     Median  

9/30 LTM Adjusted EBITDA

   $ 3.09-$3.69      $ 3.46  

2020E Adjusted EBITDA

   $ 3.41-$4.11      $ 3.75  

2021E Adjusted EBITDA

   $ 4.26-$6.52      $ 5.77  

2021E Adjusted EBITDA, as adjusted to exclude United Digestive

   $ 3.04-$4.77      $ 4.19  

Canaccord Genuity compared these ranges to (i) the closing price of CRH shares on the NYSE American on February 3, 2021, the last trading day prior to the date of its opinion, of $2.18 per CRH share and (ii) the consideration payable to CRH shareholders under the Arrangement Agreement of $4.00 per CRH share.

Selected Precedent Transactions Analysis

Canaccord Genuity performed a precedent transactions analysis, which attempts to imply the value of a company based on publicly available financial terms of selected transactions. Canaccord Genuity selected the precedent transactions listed below based on the similarity of products offered and markets served by the target company as compared to the Company based upon its professional judgment, as well as the financial position and other relevant financial metrics of the target companies. Each of these transactions was publicly announced on or before February 3, 2021.

Based on its review of the relevant metrics for each of the precedent transactions, Canaccord Genuity calculated the implied enterprise value of the applicable target company based on the consideration paid in the transaction as multiple of the target company’s adjusted EBITDA (calculated as operating earnings before interest, taxes, depreciation and amortization, stock-based compensation, and excluding non-controlling interests) over the last twelve month period ended prior to the announcement of the applicable transaction (the “LTM adjusted EBITDA”) for each of the precedent transactions for which public information was available. For purposes of this analysis, Canaccord Genuity utilized information regarding the precedent transactions obtained

 

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from filings with the SEC and other public sources. The results of these calculations for each of the select precedent transactions are set forth below:

 

Announcement Date

  

Target

  

Acquiror

   Enterprise Value /
LTM Adj. EBITDA
October 2, 2020    American Renal Associates    Innovative Renal Care    9.8x
January 27, 2020    NovaBone Products    Halma    N/A
November 5, 2019    Soliant Health    Olympus Partners    11.3x
April 30, 2019    Advanced Medical Personnel Services    AMN Healthcare    3.3x
April 17, 2019    Certain Assets of AngioDynamics    Medline Industries    5.6x
June 11, 2018    Envision Healthcare    KKR & Co.    10.5x
April 21, 2018    Sound Inpatient Physicians    OptumHealth    N/A
July 6, 2017    Ob Hospitalist Group    Gryphon Investors    N/A
June 13, 2017    Advantage RN    Cross Country Healthcare    8.8x
January 9, 2017    Surgical Care Affiliates    Optum    17.0x
October 31, 2016    Team Health Holdings    The Blackstone Group    13.7x
June 15, 2016    Envision Healthcare Holdings    AmSurg    12.7x
September 14, 2015    Medical Innovations Group    Cantel Medical    10.5x
August 4, 2015    IPC Healthcare    Team Health Holdings    20.0x
June 24, 2014    Sound Inpatient Physicians    Fresenius Medical Care    N/A
June 13, 2014    Symbion    Surgery Partners    10.1x
June 10, 2014    Phoenix Physicians    EmCare    15.9x
May 29, 2014    Sheridan Healthcare    AmSurg    12.2x

Canaccord Genuity selected a representative range of enterprise value to LTM adjusted EBITDA multiples of 9.9x-13.4x, derived from the data points for the precedent transactions set forth in the tables above based upon the application of its professional judgment. Canaccord Genuity then calculated a range of implied enterprise values of the Company by applying these multiples to the Company’s estimated adjusted EBITDA for the twelve month period ended December 31, 2020 (as reflected in the CRH Normalized Case). Canaccord Genuity then subtracted the Company’s net debt of 70.2 million at December 31, 2020, as provided by Company management, from such implied enterprise values to calculate a range of implied equity values for the Company, and then calculated a range for the implied per share equity value of CRH shares based on the number of fully diluted CRH shares outstanding of 75.5 million as of February 2, 2021 (calculated using the treasury stock method). The following table summarizes the results of this analysis:

 

Financial Statistic

   Implied Per Share
Equity Value
     Median  

2020E Adjusted EBITDA

   $ 2.84-$4.18      $ 3.23  

Canaccord Genuity compared this range to (i) the closing price of CRH shares on the NYSE American on February 3, 2021, the last trading day prior to the date of its opinion, of $2.18 per CRH share and (ii) the consideration payable to CRH shareholders under the Arrangement Agreement of $4.00 per CRH share.

Discounted Cash Flow Analysis

Canaccord Genuity performed an indicative discounted cash flow analysis of the Company to derive an implied per share equity value range for CRH shares based on the Company as a stand-alone entity. For purposes of this analysis, Canaccord Genuity utilized the CRH Normalized Case forecasts for the calendar years 2021 through 2025 provided by the Company’s management and calculated projected unlevered free cash flows for each of such years by tax-effecting operating income to CRH shareholders, which excludes operating income related to non-controlling interests, adding depreciation and amortization, subtracting changes in non-cash net working capital and subtracting capital expenditures.

 

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A range of implied enterprise values for the Company was determined by Canaccord Genuity using the sum of the present value of the Company’s projected unlevered free cash flows from January 1, 2021 to December 31, 2025 and the present value of an illustrative range of terminal values of the Company as of December 31, 2025. In calculating the illustrative range of terminal values of the Company, Canaccord Genuity applied a perpetual growth rate range of 1.0%—3.0% to the terminal year unlevered free cash flow estimated to be generated by the Company of approximately $51.7 million. Canaccord Genuity selected this perpetual growth rate range based on the application of Canaccord Genuity’s professional judgment and experience. The projected unlevered free cash flows from January 1, 2021 to December 31, 2025 and illustrative terminal values were discounted to present values as of January 31, 2021 at a discount rate range of 16.0% – 18.0%, which was selected, upon the application of Canaccord Genuity’s professional judgment and experience, to reflect the Company’s estimated range of weighted average cost of capital (derived by application of the capital asset pricing model, among other things).

Canaccord Genuity then subtracted the Company’s net debt of $70.2 million at December 31, 2020, as provided by Company management, from such implied enterprise values to calculate a range of implied equity values for the Company, and then calculated a range for the implied per share equity value of CRH shares based on the number of fully diluted CRH shares outstanding of 75.5 million as of February 2, 2021 (calculated using the treasury stock method). This discounted cash flow analysis indicated an implied per share equity value range for CRH shares of $2.82 to $3.71, as compared to (i) the closing price of CRH shares on the NYSE American on February 3, 2021, the last trading day prior to the date of the opinion, of $2.18 per CRH share and (ii) the consideration payable to CRH shareholders under the Arrangement Agreement of $4.00 per CRH share.

General

The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Canaccord Genuity’s opinion. In arriving at its fairness determination, Canaccord Genuity considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis considered by it. Rather, Canaccord Genuity made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. No company or transaction used in the above analyses as a comparison is directly comparable to the Arrangement.

Canaccord Genuity prepared these analyses for purposes of providing its opinion to the Special Committee and CRH Board as to the fairness, from a financial point of view and as of the date of the opinion, of the consideration to be paid to CRH shareholders pursuant to the Arrangement Agreement. These analyses do not purport to be appraisals, nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of the Company, the WELL parties, Canaccord Genuity or any other person assumes responsibility if future results are materially different from those forecast.

The consideration payable to CRH shareholders under the Arrangement Agreement was determined through negotiations between the Company and WELL and was approved by the CRH Board. Canaccord Genuity provided advice to the Special Committee and CRH Board during these negotiations. Canaccord Genuity, however, did not recommend any specific amount of consideration to the Company, the Special Committee or the CRH Board or recommend that any specific amount of consideration constituted the only appropriate consideration for the Arrangement.

Canaccord Genuity and its affiliates are engaged in investment banking and financial advisory services, commercial banking, securities trading, investment management, brokerage activities and other financial and

 

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non-financial activities and services for various persons and entities. In the ordinary course of these activities and services, Canaccord Genuity and its affiliates may acquire, hold or sell, for its own accounts and the accounts of customers, equity, debt and other securities and financial instruments (including bank loans and other obligations) of the Company, the WELL parties, certain of their respective affiliates and any other company that may be involved in the Arrangement, as well as provide investment banking and other financial services to such companies.

Canaccord Genuity and its affiliates in the past have provided and currently are providing investment banking and/or other financial services to the Company and its affiliates. During the 24 months preceding the date on which Canaccord Genuity was first contacted by the Company in respect of the Arrangement, such services included acting as exclusive financial advisor to CRH in connection with CRH’s exploration of potential business combination transactions pursuant to an engagement letter entered into on January 29, 2019 (as amended, the “2019 engagement letter”). Such engagement letter was subsequently amended effective April 17, 2020 to terminate Canaccord Genuity’s engagement as the Company’s exclusive financial advisor but continue Canaccord Genuity’s engagement with respect to rendering an opinion as to the fairness from a financial point of view to the Company or its shareholders, as appropriate, of the consideration to be received in a business combination (if any), with such engagement to continue until September 30, 2021. Because no transaction was completed prior to the termination of Canaccord Genuity’s engagement as the Company’s exclusive financial advisor under the 2019 engagement letter, Canaccord Genuity did not receive any fees in connection with such engagement, and Canaccord Genuity is not entitled to receive any fees under the 2019 engagement letter upon the consummation of any other transaction, including the Arrangement. In addition, Canaccord Genuity and its affiliates in the past have provided investment banking and/or other financial services to WELL and its affiliates. During the 24 months preceding the date on which Canaccord Genuity was first contacted by the Company in respect of the Arrangement, such services included co-manager roles in equity financings, for which Canaccord Genuity received compensation from WELL and its affiliates in an aggregate amount of approximately $300,000. Canaccord Genuity may also provide investment banking and financial advisory services to the Company, WELL or their respective affiliates in the future for which Canaccord Genuity may receive compensation.

The Special Committee selected Canaccord Genuity as its financial advisor because it is an internationally recognized investment banking firm that has substantial experience in transactions similar to the Arrangement. Pursuant to an engagement agreement, dated as of January 30, 2021, the Company engaged Canaccord Genuity to provide certain financial advisory services in connection with the Arrangement, including the delivery of a fairness opinion as described above. Pursuant to the terms of the engagement letter, the Company agreed to pay Canaccord Genuity a fee of $500,000, all of which was payable upon delivery of Canaccord Genuity’s opinion and none of which is contingent upon completion of the Arrangement. In addition, the Company has agreed to reimburse Canaccord Genuity for certain expenses and to indemnify Canaccord Genuity and related persons against various liabilities, including certain liabilities under applicable securities laws.

Canaccord Genuity’s opinion was one of the many factors considered by the Special Committee and the CRH Board in its evaluation of the Arrangement and should not be viewed as determinative of the views of the Special Committee or the CRH Board with respect to the Arrangement.

Interests of the Company’s Directors and Executive Officers in the Arrangement

In considering the recommendation of the CRH Board that you vote FOR the Arrangement Resolution, CRH securityholders should be aware that certain of CRH’s directors and executive officers have interests in the Arrangement that are different from, and/or in addition to, the interests of CRH securityholders generally. These interests are described in more detail below, and with respect to our named executive officers, are individually quantified in the table under “—Golden Parachute Compensation,” beginning on page [●]. The Special Committee and CRH Board were aware of these interests and considered them, among other matters, in reaching their decisions to recommend approval of and to approve the Arrangement Agreement and to recommend that CRH securityholders vote in favour of approving the Arrangement Resolution.

 

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Certain Assumptions

Except as otherwise specifically noted, for purposes of quantifying the potential payments and benefits described in this section, the following assumptions were used:

 

   

The effective date of the Arrangement is June 30, 2021, which is the assumed date of the completion of the Arrangement solely for purposes of the disclosure in this section (the “Change in Control Date”);

 

   

The employment of each CRH executive officer will have been terminated by CRH without “cause” or due to the executive officer’s resignation for “good reason” (as such terms are defined in the relevant plans and agreements), in either case immediately following the Change in Control Date;

 

   

To the extent determined based on the actual level of performance, the performance metrics applicable to annual bonuses will have been achieved at the target level of performance;

 

   

The potential payments and benefits described in this section are not at a level subject to a “cutback” to avoid the “golden parachute” excise tax that may be imposed under Section 4999 of the Code.

For purposes of this disclosure, CRH’s named executive officers are: Tushar Ramani, Chief Executive Officer; Richard Bear, Chief Financial Officer; and James Kreger, President, CRH Anesthesia. CRH does not have any executive officers who are not named executive officers.

As the amounts provided below are estimates based on multiple assumptions that may or may not actually occur or be accurate as of the date referenced, the actual amounts, if any, that may be paid or become payable may materially differ from the amounts set forth below.

Treatment and Quantification of Director and Executive Officer Equity Awards

As further described under “The Arrangement Agreement—Treatment of CRH Equity Awards,” beginning on page [], the Arrangement provides that upon consummation of the Arrangement, each CRH option and CRH RSU outstanding immediately prior to the effective time of the Arrangement will be treated as set forth below.

Treatment of Vested CRH Options

At the effective time of the Arrangement, each outstanding CRH option that has vested prior to the effective time of the Arrangement will, without further action, be deemed to be assigned and transferred by the holder thereof to CRH in exchange for a cash payment from CRH equal to the difference between $4.00 and the exercise price for such option (net of any applicable withholding tax).

Treatment of Unvested CRH Options

At the effective time of the Arrangement, each outstanding CRH option that has not vested prior to effective time of the Arrangement will be exchanged for a replacement WELL option. Except as otherwise required to be adjusted by applicable law, each such WELL option issued in exchange for a CRH option will (i) entitle the holder to acquire a number of WELL shares equal to the number of CRH shares subject to the exchanged CRH option, multiplied by 0.652 (rounded down to the nearest whole share), and (ii) have an exercise price per WELL share equal to the exercise price per CRH share pursuant to the exchanged CRH option, divided by 0.652 (rounded up to the nearest whole cent). Any such WELL options issued in exchange for CRH options will be subject to WELL’s existing omnibus equity plan and will generally have the same terms, conditions, expiration date and vesting schedule as applied to the exchanged CRH option.

Treatment of CRH RSUs – 2014 Plan and Former Employees

At the effective time of the Arrangement, each outstanding CRH RSU granted under CRH’s 2014 share unit plan and each outstanding CRH RSU granted under CRH’s 2017 share unit plan that is held by an employee, contractor or director of CRH that does not remain employed by CRH when the Arrangement is completed will, without further action, be deemed to be assigned and transferred by the holder thereof to CRH in exchange for a cash payment from CRH equal to $4.00 (net of any applicable withholding tax).

 

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Treatment of CRH RSUs – Continuing Employees

At the effective time of the Arrangement, each outstanding CRH RSU granted under CRH’s 2017 share unit plan that is held by an employee, contractor or director of CRH that remains employed when the Arrangement is completed will be exchanged for a replacement WELL RSU. Except as otherwise required to be adjusted by applicable law, each such WELL RSU issued in exchange for a CRH RSU will entitle the holder to acquire a number of WELL shares equal to the number of CRH shares subject to the exchanged CRH RSU, multiplied by 0.652 (rounded down to the nearest whole share). Any such WELL RSUs issued in exchange for CRH RSUs will be subject to WELL’s existing omnibus equity plan and will generally have the same terms, conditions, expiration date and vesting schedule as applied to the exchanged CRH RSU.

Quantification of Unvested CRH Equity Awards

At the effective time of the Arrangement, each outstanding CRH RSU that is held by an non-employee member of the CRH Board will vest (if unvested) and will be exchanged for a cash payment from CRH equal to $4.00 (net of any applicable withholding tax) in the manner described under “—Treatment of CRH RSUs—2014 Plan and Former Employees” above. Based on the assumptions described under “—Certain Assumptions” on page [●], the estimated aggregate amounts that would become payable to CRH’s four non-employee directors in respect of their unvested CRH RSUs is $520,000. However, depending on when the effective time of the Arrangement occurs, certain of these CRH equity awards may vest in accordance with their terms prior to the effective time of the Arrangement.

Each outstanding CRH RSU held by Messrs. Bear and Kreger that was granted under CRH’s 2014 share unit plan will vest and become payable at the effective time of the Arrangement. Mr. Ramani does not hold any CRH RSUs granted under CRH’s 2014 share unit plan. In the event that a CRH named executive officer is terminated by CRH without cause or the named executive officer terminates for good reason, in either case, within one year following the effective time of the Arrangement, each then outstanding CRH RSU held by such named executive officer that was granted under CRH’s 2017 share unit plan will vest and each then outstanding and unvested CRH option held by Mr. Ramani will vest and become exercisable. Mr. Ramani is the only named executive officer who holds unvested CRH options.

See “—Golden Parachute Compensation,” beginning on page [●] for an estimate of the amounts that would become payable to each CRH named executive officer in respect of his unvested CRH equity awards.

Employment Agreements

CRH has entered into employment agreements with each of its named executive officers. Such employment agreements entitle our named executive officers to certain payments in connection with the consummation of the Arrangement or in connection with certain terminations of employment on or following the consummation of the Arrangement, each as discussed below.

See “—Golden Parachute Compensation,” beginning on page [●] for an estimate of the amounts that would become payable to each CRH named executive officer under his employment agreement with CRH.

Tushar Ramani

CRH’s employment agreement with Dr. Ramani provides that he will receive a liquidity event bonus of $5,000,000, based on the $4.00 per CRH share consideration payable in the Arrangement (the “Liquidity Event Bonus”). The Liquidity Event Bonus will vest and become payable at the effective time of the Arrangement, based on Dr. Ramani’s continued employment through such time or, if earlier, upon his termination of employment by CRH without cause or by him for good reason, in either case, within 180 days prior to the effective time of the Arrangement.

CRH’s employment agreement with Dr. Ramani further provides for the following severance benefits upon a termination of employment by CRH without cause or by him for good reason: (i) a lump sum equal to the sum

 

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of (x) 12 months’ base salary plus (y) one additional month of base salary for each year of completed service with CRH up to a total of six months’ base salary; (ii) a prorated annual bonus based on the actual level of performance and payable at the same time as other bonuses to executives who did not terminate employment with CRH; and (iii) up to 18 months of COBRA coverage at the cost of CRH. The foregoing severance benefits are not conditioned upon the execution of a release of claims in favor of CRH. Mr. Ramani is subject to a restrictive covenant agreement with CRH that provides for post-termination noncompetition and nonsolicitation covenants with a one year duration.

Richard Bear

CRH’s employment agreement with Mr. Bear provides for the following severance benefits upon a termination of employment by CRH without cause within 13 months following the effective time of the Arrangement, by him for good reason within 13 months following the effective time of the Arrangement, or by him for any reason within 30 days following the 12 month anniversary of the effective time of the Arrangement: (i) a lump sum equal to 24 months’ base salary; (ii) a lump sum equal to two times the average annual bonus paid to Mr. Bear in the previous two years; and (iii) up to 18 months of COBRA coverage at the cost of CRH.

CRH’s employment agreement with Mr. Bear further provides that CRH will indemnify him in respect of any excise tax imposed under Section 4999 of the Code or any comparable federal, state or local excise taxes.

The foregoing severance benefits are not conditioned upon the execution of a release of claims in favor of CRH. Mr. Bear is subject to a restrictive covenant agreement with CRH that provides for post-termination noncompetition and nonsolicitation covenants with a one year duration.

James Kreger

CRH’s employment agreement with Mr. Kreger provides for the following severance benefits upon a termination of employment by CRH without cause, by him for good reason, or in connection with the completion of the Arrangement: (i) 12 months’ salary continuation, (ii) a prorated annual bonus based on the actual level of performance and payable at the same time as other bonuses to executives who did not terminate employment with CRH and (iii) up to 12 months of COBRA coverage at the cost of CRH. The foregoing severance benefits are not conditioned upon the execution of a release of claims in favor of CRH. Mr. Kreger is subject to a restrictive covenant agreement with CRH that provides for post-termination noncompetition and nonsolicitation covenants with a one year duration.

Compensatory Arrangements After Closing

Prior to the execution of the Arrangement Agreement, WELL was prohibited under the terms of its confidentiality agreement with CRH from engaging in any discussion or entering into any agreement or arrangement with CRH employees (including executive officers) regarding compensation arrangements of any kind without the prior written consent of the CRH Board. During this period, WELL did not seek permission from the CRH Board to have such discussions or enter into such agreements or arrangements nor were such discussions, agreements or arrangements permitted by the CRH Board.

While WELL expects Dr. Ramani and the CRH leadership team to operate CRH following the completion of the Arrangement, as of the date of this proxy statement, none of CRH’s executive officers has entered into any agreement with WELL or any of its affiliates regarding employment with, or the right to purchase or participate in the equity of, WELL or one or more of its affiliates. Prior to or following the completion of the Arrangement, however, some or all of CRH’s executive officers may discuss or enter into agreements with WELL regarding employment with, or the right to purchase or participate in the equity of, WELL or one or more of its affiliates.

Non-Employee Director Success Bonus

The CRH Board granted one of its non-employee directors, Todd Patrick, a success of bonus of $350,000. The success bonus recognizes the significant time and effort that Mr. Patrick expended to enable CRH to enter

 

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into the Arrangement Agreement. The success bonus will be paid to Mr. Patrick immediately prior to the effective time of the Arrangement.

Compensation of the Special Committee

The Special Committee consists of three independent members of the CRH Board: Mr. Ian Webb, Mr. Brian Griffin and Dr. David Johnson. In connection with the formation of the Special Committee on January 29, 2021, and in consideration of the expected time and other commitments that would be required of Special Committee members, the CRH Board approved the payment of the following compensation for each member of the Special Committee: (i) a one-time retainer of $30,000 and (ii) a meeting fee of $1500 (for each Special Committee meeting attended by such member in person) or $750 (for each Special Committee meeting attended by such member by phone). These fees are not dependent on the completion of the Arrangement or any other transaction, or on the Special Committee’s or the CRH Board’s approval of, or recommendations with respect to, the Arrangement or any other transaction.

Indemnification and Insurance

Pursuant to the terms of the Arrangement Agreement, CRH directors and executive officers will be entitled to certain ongoing indemnification and coverage under directors’ and officers’ liability insurance policies following the Arrangement. Such indemnification and insurance coverage is further described in “The Arrangement Agreement – Indemnification and Insurance,” beginning on page [].

Golden Parachute Compensation

In accordance with Item 402(t) of Regulation S-K under the U.S. Securities Act of 1933, as amended, the table below sets forth the compensation that is based on, or otherwise relates to, the Arrangement that will or may become payable to each named executive officer of CRH in connection with the Arrangement. For additional details regarding the terms of the payments and benefits described below, see the discussion under “The Arrangement Agreement – Interests of the Company’s Directors and Executive Officers in the Arrangement,” beginning on page [●], which is incorporated herein.

The amounts shown in the table below are estimates based on multiple assumptions that may or may not actually occur or be accurate on the relevant date, including the assumptions described below and in the footnotes to the table, and do not reflect certain compensation actions that may occur prior to completion of Arrangement. For purposes of quantifying the potential payments and benefits described in this section, the following assumptions were used:

 

   

The effective date of the Arrangement is June 30, 2021, which is the assumed date of the completion of the Arrangement solely for purposes of the disclosure in this section (the “Change in Control Date”);

 

   

The employment of each named executive officer will have been terminated by CRH without “cause” or due to the executive officer’s resignation for “good reason” (as such terms are defined in the relevant plans and agreements), in either case immediately following the Change in Control Date;

 

   

To the extent determined based on the actual level of performance, the performance metrics applicable to annual bonuses will have been achieved at the target level of performance;

 

   

The potential payments and benefits described in this section are not at a level subject to a “cutback” to avoid the “golden parachute” excise tax that may be imposed under Section 4999 of the Code.

Although Edward Wright, CRH’s former Chief Executive Officer, is considered a named executive officer for purposes of this disclosure, Mr. Wright does not hold any unvested CRH equity awards and he does not

 

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otherwise have any interests in the transactions contemplated by the Arrangement Agreement except insofar as he may hold CRH shares.

 

Name

   Cash
($)(1)
     Equity
($)(2)
     Perquisites/
Benefits
($)(3)
     Tax
Reimbursement
($)(4)
     Total
($)
 

Tushar Ramani

     5,758,767        4,665,800        36,000        —          10,460,567  

Richard Bear

     1,123,200        2,844,000        36,000        —          4,003,200  

James Kreger

     330,115        1,406,000        24,000        —          1,809,632  

 

(1)

Cash. Represents (i) Dr. Ramani’s Liquidity Event Bonus of $5,000,000 and (ii) severance payable to each named executive officer upon a termination of employment by CRH without cause or by the named executive officer pursuant to the named executive officer’s employment agreement with CRH. The Liquidity Event Bonus is a “single-trigger” payment, which means that it will become payable solely as a result of the completion of the Arrangement. The severance payable under the employment agreements to each named executive officer constitute “double-trigger” payments, which means that the amounts will only become payable in connection with a qualifying termination of employment. For further details regarding the Liquidity Event Bonus and the severance amounts that may become payable to CRH’s named executive officers, see “The Arrangement – Interests of the Company’s Directors and Executive Officers in the Arrangement – Employment Agreements,” beginning on page [●]. The estimated amount of each such payment is shown in the following table:

 

Named Executive Officer

   Liquidity
Event
Bonus

($)
     Cash
Severance

($)
     Prorated
Annual
Bonus
($)
 

Tushar Ramani

     5,000,000        624,867        133,900  

Richard Bear

     —          1,123,200        —    

James Kreger

     —          330,115        49,517  

 

(2)

Equity. Represents the value of the unvested CRH options, the value of the unvested RSUs granted under CRH’s 2014 share unit plan and the value of the unvested RSUs granted under CRH’s 2017 share unit plan held by each named executive officer. The unvested CRH options and the unvested RSUs granted under CRH’s 2017 share unit plan will vest and become exercisable, as applicable, upon a termination of employment by CRH without cause or by the named executive officer for good reason, in either case, within one year following the effective time of the Arrangement. The amounts payable in respect of the unvested CRH options and the unvested RSUs upon a qualifying termination of employment are “double-trigger” payments, which means that the amounts will become payable upon a qualifying termination of employment within one year following the effective time of the Arrangement. The unvested RSUs granted under CRH’s 2014 share unit plan will vest upon the effective time of the Arrangement and in accordance with the terms of the Arrangement Agreement. The amounts payable in respect of the unvested RSUs granted under CRH’s 2014 share unit plan are “single-trigger” payments, which means that they will become payable solely as a result of the completion of the Arrangement. For further details regarding the treatment of the unvested CRH options and the unvested RSUs, see “The Arrangement – Interests of the Company’s Directors and Executive Officers in the Arrangement – Treatment and Quantification of Director and Executive Officer Equity Awards,” beginning on page [●]. The estimated amount of each such payment is shown in the following table:

 

Named Executive
Officer

   Unvested CRH
Options
     Unvested CRH RSUs
(2014 Plan)
     Unvested CRH RSUs
(2017 Plan)
        
   Shares
(#)
     Value
($)
     Shares
(#)
     Value
($)
     Shares
(#)
     Value
($)
     Total
($)
 

Tushar Ramani

     250,000        305,800        —          —          190,000        4,360,000        4,665,800  

Richard Bear

     —          —          580,000        2,320,000        131,000        524,000        2,844,000  

James Kreger

     —          —          250,000        1,000,000        101,500        406,000        1,406,000  

 

(3)

Perquisites. Represents the value of COBRA continuation benefits at the cost of CRH under the employment agreements between CRH and its named executive officers. The COBRA continuation benefits are “double-trigger” payments, which means that the amounts will become payable only on a qualifying termination of employment. For further details regarding COBRA continuation benefits that may become payable to CRH’s named executive officers, see “The Arrangement – Interests of the Company’s Directors and Executive Officers in the Arrangement – Employment Agreements,” beginning on page [●].

(4)

Tax Reimbursement. While Mr. Bear is entitled under the existing terms of his employment agreement to be indemnified by CRH in respect of any excise tax imposed under Section 4999 of the Code or any comparable federal, state or local excise taxes, Mr. Bear is not expected to incur any excise tax under Section 4999 or any comparable tax in connection with the effective time of the Arrangement. For further details regarding Mr. Bear’s excise tax indemnity, see “The Arrangement – Interests of the Company’s Directors and Executive Officers in the Arrangement – Employment Agreements,” beginning on page [●].

 

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Certain Other Compensation Matters

Securities Authorized for Issuance under Equity Compensation Plans

The share option plan of CRH approved by CRH shareholders on June 8, 2009, the share unit plan approved by the CRH shareholders on June 19, 2014 and the share unit plan approved by the CRH shareholders on June 8, 2017 (as amended with amendments approved by CRH shareholders on June 11, 2020) are the only equity compensation plans of the Company. The following table sets forth summary information relating to our equity compensation plans as of December 31, 2020.

 

Plan category

  Number of CRH shares
to be issued upon
exercise of outstanding
options and share units
(a)
    Weighted-average
exercise price of
outstanding options
($) (b)
    Number of securities remaining available
for future issuance under equity
compensation plans (excluding securities
reflected in column (a)) (c)
 

Equity compensation plans approved by securityholders

    4,266,249     $ 1.69       1,826,096  

Equity compensation plans not approved by securityholders

    —         —         —    

Total

    4,266,249     $ 1.69       1,826,096  

Indebtedness of Directors and Officers

None of the directors or executive officers of the Company, nor any associate of any of such persons, is or has been indebted to the Company or its subsidiaries at any time since the beginning of the Company’s last completed financial year.

Certain Effects of the Arrangement

If the Arrangement is completed, all of the equity interests in CRH will be transferred to WELL or one of its subsidiaries, and in exchange, CRH securityholders will be entitled to the consideration set forth in “The Arrangement Agreement – Share Consideration” on page [●] and “The Arrangement Agreement—Treatment of CRH Equity Awards,” beginning on page [●], as applicable. Following the completion of the Arrangement, WELL (and its subsidiaries) will be the sole beneficiary of our future earnings and growth, if any, and the sole person entitled to vote on corporate matters affecting CRH. Similarly, WELL will also bear the risks of ongoing operations, including the risks of any decrease in our value, after the Arrangement.

The CRH shares are currently registered under the Exchange Act and listed and traded on the NYSE American under the symbol “CRHM.” CRH is also a reporting issuer in the Canadian provinces of British Columbia, Alberta, Saskatchewan, Manitoba and Ontario and the CRH shares are listed on the TSX under the symbol “CRH.” As a result of the Arrangement, the CRH shares will cease to be listed and traded on the NYSE American and the TSX, and sales of CRH shares in the public market will no longer be available. In addition, registration of the CRH shares under the Exchange Act will be terminated, CRH will cease to file reports with the SEC, and CRH will no longer be a reporting issuer in any Canadian province.

Effects on the Company if the Arrangement is Not Completed

If the Arrangement Resolution is not approved by CRH securityholders or if the Arrangement is not completed for any other reason, CRH securityholders will not receive any payment for their CRH securities in connection with the Arrangement. Instead, CRH will remain an independent public company, the CRH shares will continue to be listed and traded on the NYSE American and the TSX and continue to be registered under the Exchange Act, CRH will continue to file reports with the SEC, and CRH will continue to be a reporting issuer in the Canadian provinces of British Columbia, Alberta, Saskatchewan, Manitoba and Ontario.

 

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In addition, if the Arrangement is not completed, we expect that management will operate the business in a manner similar to that in which it is being operated today and that CRH securityholders will continue to be subject to the same risks and opportunities as they currently are, including, among other things, general industry, economic, regulatory and market conditions. Furthermore, if the Arrangement is not completed, and depending on the circumstances that caused the Arrangement not to be completed, the price of CRH shares may decline significantly. If that were to occur, it is uncertain when, if ever, the price of CRH shares would return to the price at which they trade as of the date of this proxy statement. Accordingly, if the Arrangement is not completed, there can be no assurance as to the effect of these risks and opportunities on the future value of your CRH securities.

From time to time, the CRH Board will evaluate and review, among other things, the business operations, properties, dividend policy and capitalization of CRH, make such changes as are deemed appropriate and continue to seek to identify strategic alternatives to enhance CRH shareholder value. If the Arrangement Resolution is not approved by CRH securityholders or if the Arrangement is not consummated for any other reason, there can be no assurance that any other transaction acceptable to CRH will be offered, or that the business, prospects or results of operations of CRH will not be adversely impacted.

Upon termination of the Arrangement Agreement under specified circumstances, CRH will be required to pay WELL a termination fee of $10 million. Similarly, WELL will be required to pay CRH a termination fee of $10 million if the Arrangement Agreement is terminated under different specified circumstances. For more information on such termination fees, see “The Arrangement Agreement—Termination Fees,” beginning on page [●].

Court Approval of the Arrangement

The Arrangement requires Court approval. On [●], 2021, CRH obtained the Interim Order, which provides for the calling and holding of the CRH meeting, dissent rights for registered CRH shareholders and other procedural matters. A copy of the Interim Order is attached hereto as Annex G.

Subject to the approval of the Arrangement Resolution by CRH securityholders at the CRH meeting, the hearing in respect of the final order of the Court approving the Arrangement (which is referred to herein as the “Final Order”) is currently anticipated to take place on [●], 2021 in the Court at 800 Smithe Street, Vancouver, British Columbia. Any CRH securityholder who wishes to appear, or to be represented, and to present evidence or arguments may do so, subject to filing with the Court and serving upon the Corporation a response in the form prescribed by the Supreme Court Civil Rules (British Columbia), together with any evidence or materials that such party intends to present to the Court on or before [] (Vancouver time) on [●], 2021. Service of such notice shall be effected by service upon the solicitors for the Corporation: Blake, Cassels & Graydon LLP, Suite 2600 – 595 Burrard Street, Vancouver, British Columbia, V7X 1L3, Attention: Alexandra Luchenko. In the event that the hearing is postponed, adjourned or rescheduled, then, subject to further order of the Court, only those persons having previously served a Notice of Appearance in compliance with the Interim Order will be given notice of the postponement, adjournment or rescheduled date.

The Court has broad discretion under the BCBCA when making orders with respect to arrangements. The Court will consider, among other things, the fairness of the Arrangement. The Court may approve the Arrangement in any manner the Court may direct, subject to compliance with any terms and conditions, if any, as the Court deems fit. In the event that the hearing is postponed, adjourned or rescheduled, then, subject to further order of the Court, only those persons having previously served a Response to Petition in compliance with the Interim Order will be given notice of the postponement, adjournment or rescheduled date.

The WELL options and WELL RSUs issuable in exchange for certain CRH options and CRH RSUs pursuant to the Arrangement have not been and will not be registered under the U.S. Securities Act of 1933, as amended, (the “Securities Act”), in reliance upon the exemption from the registration requirements of the

 

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Securities Act provided by Section 3(a)(10) thereof. The Court has been advised that the Final Order, if granted, will constitute the basis for an exemption from the registration requirements of the Securities Act, pursuant to Section 3(a)(10) thereof, with respect to the issuance of such WELL options and WELL RSUs to CRH optionholders and CRH RSU holders, as applicable, pursuant to the Arrangement.

It is a condition to completion of the Arrangement that the Final Order be in form and substance acceptable to the both CRH and the Purchaser, each acting reasonably, and not set aside or modified in a manner unacceptable to CRH and the Purchaser, acting reasonably, on appeal or otherwise. Assuming the Final Order is granted in accordance with the Arrangement Agreement and the other conditions to closing contained in the Arrangement Agreement are satisfied or waived (to the extent permitted under the Arrangement Agreement), then the Final Order and related documents, in the form prescribed by the BCBCA, will be filed with the British Columbia Registrar of Companies. Notwithstanding the approval by CRH securityholders of the Arrangement Resolution, CRH reserves the right not to proceed with the Arrangement in accordance with the terms of the Arrangement Agreement.

U.S. Securities Law Matters

The WELL options and WELL RSUs issuable in exchange for certain CRH options and CRH RSUs pursuant to the Arrangement have not been and will not be registered under the Securities Act or any state securities laws, and will be issued in reliance upon the exemption from the registration requirements of the Securities Act provided by Section 3(a)(10) thereof and exemptions under applicable state securities laws. Section 3(a)(10) of the Securities Act exempts the issuance of any security issued in exchange for one or more bona fide outstanding securities from the general requirement of registration where the terms and conditions of such issuance and exchange have been approved by a court of competent jurisdiction that is expressly authorized by law to grant such approval, after a hearing upon the fairness of the terms and conditions of such issuance and exchange at which all persons to whom it is proposed to issue the securities have the right to appear and receive timely notice thereof. The Court is authorized to conduct a hearing at which the fairness of the terms and conditions of the Arrangement will be considered. The Court granted the Interim Order on [●] 2021 and, subject to the approval of the Arrangement by CRH securityholders and satisfaction of certain other conditions, a hearing on the Arrangement is anticipated to take place on [●], 2021. For more information, see “—Court Approval of the Arrangement.”

Section 3(a)(10) of the Securities Act does not exempt the issuance of securities upon the exercise of securities that were previously issued pursuant to the Section 3(a)(10) of the Securities Act. As a result, the WELL shares issuable upon exercise of the WELL options issued in exchange for certain CRH options pursuant to the Arrangement may not be issued in reliance upon Section 3(a)(10) of the Securities Act and may only be exercised pursuant to an available exemption from the registration requirements of the Securities Act and applicable state securities laws or pursuant to a registration statement under the Securities Act.

The enforcement by CRH securityholders and WELL securityholders of civil liabilities under United States federal and state securities laws may be affected adversely by the fact that CRH and WELL are organized under the laws of British Columbia, Canada, being a jurisdiction outside the United States, that some of the officers and directors of each of CRH and WELL are residents of countries other than the United States and that some of the assets of each of CRH and WELL are located outside the United States. As a result, it may be difficult for CRH securityholders and WELL securityholders in the United States to effect service of process within the United States upon CRH or WELL or their respective directors or officers or to realize, against them, upon judgments of courts of the United States predicated upon civil liabilities under the federal securities laws of the United States or “blue sky” laws of any state within the United States. In addition, CRH securityholders and WELL securityholders in the United States should not assume that the courts of Canada (i) would enforce judgments of United States courts obtained in actions against such persons predicated upon civil liabilities under the federal securities laws of the United States or “blue sky” laws of any state within the United States, or (ii) would enforce, in original actions, liabilities against such persons predicated upon civil liabilities under the federal securities laws of the United States or “blue sky” laws of any state within the United States.

 

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The foregoing discussion is only a general overview of certain provisions of United States securities law matters applicable to the issuance of WELL options and WELL RSUs upon completion of the Arrangement. All holders of such securities are urged to consult with counsel to ensure that any subsequent transfer of such securities or securities underlying such securities complies with applicable securities legislation.

Canadian Securities Law Matters

CRH is a reporting issuer in the Canadian provinces of British Columbia, Alberta, Saskatchewan, Manitoba and Ontario, and accordingly is subject to the applicable securities laws of such provinces that have adopted Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions (“MI-61-101”). MI 61-101 governs transactions that raise the potential for conflicts of interest and is intended to ensure equality of treatment among securityholders.

The protections of MI 61-101 generally apply to issuer bids, insider bids, related party transactions and business combinations. MI 61-101 provides that, in certain circumstances, including where a “related party” of an issuer is entitled to receive a “collateral benefit” in connection with an arrangement or any other transaction where the interest of a holder of an equity security of the issuer may be terminated without the holder’s consent (such as the Arrangement), such transaction may be considered a “business combination” for the purposes of MI 61-101 and subject to minority approval requirements.

As further described below, because one of CRH’s officers will receive a collateral benefit in connection with the Arrangement within the meaning of MI 61-101, the Arrangement is a “business combination” that is subject the minority approval requirements described under “—Minority Approval” below.

Collateral Benefit Analysis

Under MI 61-101 a “related party” of CRH includes, among others, (i) directors and senior officers of CRH, (ii) persons who beneficially own or control voting securities of CRH carrying more than 10% of the voting rights attached to all our outstanding voting securities, and (iii) holders of a sufficient number of any securities of CRH to materially affect control of CRH. A “collateral benefit,” as defined in MI 61-101, includes any benefit that a related party of CRH is entitled to receive, directly or indirectly, as a consequence of the Arrangement, including, without limitation, an increase in salary, a lump sum payment, a payment for surrendering securities or other enhancements in benefits related to past or future services as an employee, director or consultant of CRH. However, such a benefit will not constitute a “collateral benefit” if certain conditions are satisfied, as further described below.

Under MI 61-101, a benefit received by a related party of CRH is not considered to be a “collateral benefit” if the benefit is received solely in connection with the related party’s services as an employee, director or consultant of CRH or an affiliated entity and (i) the benefit is not conferred for the purpose, in whole or in part, of increasing the value of the consideration paid to the related party for securities relinquished under the Arrangement, (ii) the conferring of the benefit is not, by its terms, conditional on the related party supporting the Arrangement in any manner, (iii) full particulars of the benefit are disclosed in disclosure document for the transaction, and (iv) (A) at the time the Arrangement was agreed to, the related party and its associated entities beneficially owned or exercised control or direction over less than 1% of the issued and outstanding securities of each class of equity securities of CRH (the “1% Exception”) or (B) an independent committee of CRH determines that the value of the benefit to be received by the related party is less than 5% of the amount of consideration it expects to be entitled to receive under the terms of the Arrangement in exchange for equity securities owned by the party (the “5% Exception”).

Pursuant to the terms of CRH’s 2014 share unit plan, CRH’s Chief Financial Officer Richard Bear is entitled to accelerated vesting of his CRH RSUs in connection with the consummation of the Arrangement. For the purposes of MI 61-101, Richard Bear is a related party. Given that Richard Bear does not meet the 1%

 

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Exception or the 5% Exception, Richard Bear will receive a collateral benefit in connection with the Arrangement within the meaning of MI 61-101 as a result of the accelerated vesting of his CRH RSUs. Accordingly, the Arrangement is a “business combination” and minority approval is required under MI 61-101, and the 368,000 votes attaching to the CRH shares held by Richard Bear will be excluded from the minority approval vote, as required under MI 61-101.

Pursuant to the terms of his employment agreement, CRH’s Chief Executive Office Tushar Ramani is entitled to a bonus payment of $5,000,000 in connection with the consummation of the Arrangement. For the purposes of MI 61-101, Tushar Ramani is a related party. However, Tushar Ramani meets the 1% Exception. Accordingly, the bonus payment to which Tushar Ramani is entitled does not constitute a collateral benefit under MI 61-101, and he will be entitled to participate in the minority approval vote.

Pursuant to the terms of CRH’s 2014 share unit plan, CRH’s President Jay Kreger is entitled to accelerated vesting of his CRH RSUs granted under the CRH’s 2014 share unit plan in connection with the consummation of the Arrangement. However, Jay Kreger meets the 1% Exception. Accordingly, the accelerated vesting to which Jay Kreger is entitled does not constitute a collateral benefit under MI 61-101, and he will be entitled to participate in the minority approval vote.

Todd Patrick, a director of CRH, is entitled to a success fee of US$350,000 for his role representing the CRH Board in investigation of potential acquirers of CRH. For the purposes of MI 61-101, Todd Patrick is a related party. However, Todd Patrick meets the 1% Exception. Accordingly, the success fee to which Todd Patrick is entitled does not constitute a collateral benefit under MI 61-101, and he will be entitled to participate in the minority approval vote.

Pursuant to the terms of his share unit grant, Brian Griffin, a director of CRH, is entitled to accelerated vesting of 25,000 CRH RSUs granted under CRH’s 2017 share unit plan. For the purposes of MI 61-101, Brian Griffin is a related party. However, Brian Griffin meets the 1% Exception. Accordingly, the accelerated vesting to which Brian Griffin is entitled does not constitute a collateral benefit under MI 61-101, and he will be entitled to participate in the minority approval vote.

In addition, employment agreements with certain officers provide that in the event that an officer’s employment is terminated within a specified period of time in connection with a change of control, the officer is entitled to receive certain enhanced severance benefits. The severance benefits payable to executive officers pursuant to the employment agreements upon a qualifying termination of employment may be considered to be “collateral benefits” received by the applicable officers of CRH for the purposes of MI 61-101. No qualifying termination is currently contemplated pursuant to the Arrangement. In addition, except as disclosed above in respect of Richard Bear, the CRH Board has determined that the applicable officers of CRH, and their associated entities, would each meet the 1% Exception. Accordingly, such officers will not be considered to have a “collateral benefit” under MI 61-101 as a result of severance benefits payable pursuant to the employment agreements upon a qualifying termination of employment.

See “— Interests of the Company’s Directors and Executive Officers in the Arrangement,” beginning on page [●] and “—Golden Parachute Compensation,” beginning on page [●], for more detailed information regarding the benefits and other payments to be received by each of CRH’s executive officers and directors in connection with the Arrangement.

Minority Approval

MI 61-101 requires that, in addition to any other required security holder approval, a business combination is subject to “minority approval” of every class of equity securities of the issuer in which the interest of a securityholder would be terminated as a consequence of the transaction, in each case voting separately as a class.

 

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In relation to the Arrangement, the “minority approval” required is approval of the Arrangement Resolution by the affirmative vote of a majority of the [votes attached to the CRH shares held by CRH shareholders present in person or represented by proxy at the CRH meeting], excluding for this purpose votes attached to CRH shares held by (i) CRH, (ii) “interested parties” (which includes any related party of CRH as the time the Arrangement was agreed to that is entitled to receive a collateral benefit as a consequence of the Arrangement), (iii) any related party of an interested party and (iv) any person that is acting jointly or in concert with a person referred to in clause (ii) or (iii) in respect of the Arrangement.

To the knowledge of the directors and senior officers of CRH after reasonable inquiry, as at the date of this proxy statement, the CRH shareholders whose votes are required to be excluded for purposes of “minority approval” in accordance with MI 61-101, as described above, beneficially owned, or exercised control or direction over, an aggregate of 368,000 CRH shares.

Regulatory Approvals

HSR Act

Under the HSR Act and the rules promulgated thereunder, the Arrangement may not be completed until notification and report forms have been filed with the FTC and the DOJ and the applicable waiting period under the HSR Act has expired or been terminated. CRH and WELL each filed its notification and report form with respect to the Arrangement with the FTC and the DOJ on February 22, 2021.

At any time before or after the Arrangement is completed, and notwithstanding the termination of the waiting period under the HSR Act, the DOJ or the FTC could take action under U.S. federal antitrust laws in opposition to the Arrangement, including seeking to enjoin completion of the Arrangement, seeking the divestiture of assets of CRH, WELL or their respective subsidiaries or imposing restrictions on the combined company’s post-merger operations. In addition, U.S. state attorneys general could take such action under state antitrust laws as they deem necessary or desirable in the public interest, including, without limitation, seeking to enjoin completion of the Arrangement or permitting completion subject to regulatory concessions or conditions. Private parties also may seek to take legal action under the U.S. federal or state antitrust laws under some circumstances.

Other Regulatory Matters

Though not a condition to the consummation of the Arrangement, United States and Canadian federal, state and provincial laws and regulations may require that CRH, WELL or their respective subsidiaries obtain approvals or certificates of need from, file new license and/or permit applications with, and/or provide notices to, applicable governmental authorities in connection with the Arrangement.

Financing of the Arrangement

CRH anticipates that the total funds needed to complete the Arrangement (including the funds to pay CRH shareholders and to pay certain CRH optionholders and CRH RSU holders the amounts due to them under the Arrangement Agreement, as well as to repay (if necessary) certain existing indebtedness of CRH), which is expected to be approximately $370 million, will be funded through a combination of some or all of the following:

 

   

Equity financing through the issuance of subscription receipts of Finco, in an aggregate amount of C$302.5 million.

 

   

Debt financing in the form of a $150 million revolving credit facility.

 

   

WELL’s cash-on-hand.

 

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The completion of the Arrangement is not conditioned upon WELL’s or the Purchaser’s receipt of financing.

The Purchaser is required under the Arrangement Agreement to use its commercially reasonable efforts to do, or cause to be done, all things reasonably necessary, proper or advisable to obtain the financing set forth in the debt and equity financing agreements described below. If for any reason all or any portion of such financing becomes unavailable on the terms and conditions of such financing agreements or from the financing sources contemplated thereby, the Purchaser is required to notify CRH thereof and use its reasonable commercial efforts to arrange and obtain alternative equity financing from alternative sources as promptly as practicable following the occurrence of such event and in an amount sufficient to consummate the Arrangement, and notify CRH of any such replacement financing For additional information on the covenants of the Purchaser under the Arrangement Agreement with respect to the financing of the Arrangement, see “The Arrangement Agreement—Financing Covenants,” beginning on page [●].

Equity Financing

In connection with the Arrangement, on February 17, 2021, WELL issued subscription receipts of Finco for, in the aggregate, C$302.5 million, pursuant to a private placement. Such issuance was completed pursuant to certain subscription agreements entered into by a group of institutional and individual investors, including Mr. Li Ka-shing, and the proceeds thereof were deposited in escrow for use in connection with completion of the Arrangement.

Pursuant to the terms of the subscription agreements, the proceeds of such issuance (together with all interest and other income thereon) will be released from escrow to Finco upon satisfaction of the following conditions on or prior to June 30, 2021:

 

   

written confirmation from WELL that all conditions to the completion of the Arrangement have been satisfied or waived, other than the release of such escrowed funds and the closing of the Arrangement, each of which will be completed forthwith upon release of such escrowed funds;

 

   

the distribution of the common shares of Finco underlying the subscription receipts and the WELL shares to be issued in exchange for the underlying shares pursuant to the Arrangement being exempt from applicable prospectus and registration requirements of applicable securities laws; and

 

   

the delivery of a written notice from Finco to the subscription receipt agent confirming that the above conditions have been satisfied or waived.

Upon satisfaction of the above conditions on or before June 30, 2021, each subscription receipt will automatically be converted without payment of any additional consideration or any further action by the holder thereby for one common share of Finco. Immediately thereafter, Finco and the Purchaser will amalgamate and continue as one corporation under the BCBCA, and each common share of Finco (other than shares held by WELL) will be exchanged for one WELL share. The entity formed upon such amalgamation will be a wholly owned subsidiary of WELL.

In the event that the above conditions are not satisfied or waived (to the extent permitted) on or before June 30, 2021, the subscription receipt holders will, on June 30, 2021, be entitled to receive the aggregate subscription price for their subscription receipts, plus their pro rata portion of the interest earned thereon pursuant to the terms of the subscription agreements, and the subscription receipts will be cancelled without any further action on the part of the subscription receipt holders. To the extent that the escrowed funds are not sufficient to fund such payments, Finco and WELL will be responsible for any shortfall.

Debt Financing

In connection with the entry into the arrangement agreement, the Purchaser has entered into a commitment letter with Canadian Imperial Bank of Commerce (“CIBC”) and HSBC Bank Canada (“HSBC”). Pursuant to the

 

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commitment letter, CIBC and HSBC (collectively, the “Banks”) and the Purchaser are expected to enter into definitive documentation to provide the Purchaser with a $150 million, two-year revolving credit facility, inclusive of a letter of credit sublimit in the amount of $5 million (the “Credit Facility”).

The proceeds of the Credit Facility are expected to be used (i) to partially finance the Arrangement, including the repayment (if necessary) of existing indebtedness of CRH and the transaction expenses related to the Arrangement, (ii) to finance permitted acquisitions and (iii) for working capital and general corporate purposes, in the form of revolving loans, letters of credit and overdraft loans on or after the closing date of the Credit Facility until the maturity of the Credit Facility, which is the second anniversary of the closing date. Amounts borrowed under the Credit Facility that are repaid or prepaid may be re-borrowed.

The obligations of the Banks to provide the Credit Facility are subject to a number of conditions, including:

 

   

the Purchaser directly owning 100% of the voting and economic interests in CRH immediately after giving effect to the transactions contemplated by the Arrangement Agreement;

 

   

the CRH Board and the board of directors of the Purchaser having authorized and approved the transactions contemplated by the Arrangement Agreement and CIBC, as administrative agent, having received satisfactory evidence of the same;

 

   

all conditions precedent (other than the payment of any portion of the purchase price being funded with proceeds of the Credit Facility) as set out in the Arrangement Agreement in substantially the same form and substance as provided to the Banks in writing as of the date of the commitment letter, having been satisfied or waived by the Purchaser, such that the Arrangement will be consummated on the closing date of the Credit Facility;

 

   

the Purchaser having delivered to the CIBC, as administrative agent, true and complete final copies of the Arrangement Agreement and all amendments thereto, if any, since the Arrangement Agreement was previously delivered to CIBC, and the Arrangement Agreement with such amendments being in form and substance satisfactory to the Banks;

 

   

the Banks having received and satisfactorily reviewed pro forma projections with respect to the Purchaser for a two year period following the closing date of the Credit Facility with an annual breakdown of covenants and projections, and the Banks being satisfied, based on financial statements (actual and pro forma), projections and other evidence provided by the Purchaser, or requested by the Banks, that the Purchaser, after incurring the indebtedness contemplated by the Credit Facility, will be solvent, able to satisfy its obligations as they mature and remain adequately capitalized;

 

   

there not having occurred or become known any material adverse change or any condition or event that could reasonably be expected to result in a “Material Adverse Effect” with respect to CRH (as described in “The Arrangement Agreement—Representations and Warranties,” beginning on page [●]);

 

   

the Banks having received a detailed Quality of Earnings report, prepared by KPMG or another nationally recognized accounting firm and acceptable to the Banks, of CRH for the fiscal year ended December 31, 2020, in form and substance acceptable to the Banks;

 

   

the Banks having received satisfactory evidence (including supporting schedules and other data) that, after giving pro forma effect to the transactions contemplated by the Arrangement Agreement, the total leverage ratio of the Purchaser will not exceed 3.25:1.00;

 

   

no law or regulation being applicable in the judgment of the Banks that restrains, prevents or imposes material adverse conditions upon any component of the transactions contemplated by the Arrangement Agreement or the financing thereof, including the Credit Facility;

 

   

the Banks being satisfied with their business, financial, accounting, tax, legal, insurance, ownership, corporate governance and environmental due diligence as well as third party due diligence, including, but not limited to, a quality of earnings report, tax review and insurance review; and

 

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the Banks having received such other legal opinions, corporate documents and other instruments and/or certificates as the Banks may reasonably request.

As of the date of this proxy statement, the commitment letter remains in effect, and WELL has not notified us of any plans to utilize financing in lieu of the financing described above. The documentation governing the debt financing contemplated by the commitment letter has not been finalized and, accordingly, the actual terms of the debt financing may differ from those described in this proxy statement.

Voting Agreements

In connection with CRH’s execution of the Arrangement Agreement, each director and officer of CRH, including Messrs. Patrick, Webb, Johnson, Ramani, Griffin, Bear and Kreger, entered into a voting and support agreement with the Purchaser (each, a “voting agreement”). Pursuant to the voting agreements, and subject to the terms conditions thereof, such directors and officers have agreed, among other things:

 

   

to vote their CRH securities in favour of the Arrangement Resolution and any other matter that would reasonably be expected to facilitate the Arrangement, and against any matter that would reasonably be expected to delay, prevent or frustrate the successful completion of the Arrangement;

 

   

not to exercise any dissent rights or make any statements against the Arrangement;

 

   

not to solicit, encourage or knowingly facilitate any inquiries, proposals or offers regarding or that may reasonably be expected to lead to an acquisition proposal, or engage in any discussions or negotiations or take certain other actions with respect thereto;

 

   

immediately cease any existing discussions or negotiations with respect to any acquisition proposal;

 

   

not to requisition or join in the requisition of any meeting of CRH shareholders for the purpose of considering any resolution without the prior written consent of the Purchaser; and

 

   

not to transfer any of their CRH securities (except upon the exercise or settlement of equity awards);

The voting agreements are binding on CRH’s directors and officers only in their capacities as CRH securityholders and not in their capacities as directors and officers of the Company, and nothing in the voting agreements limits or restricts the parties from properly fulfilling their fiduciary duties as directors and officers of the Company.

The voting agreements will terminate upon the earliest of: (i) the occurrence of a change in recommendation by the CRH Board (including if the CRH Board fails to recommend that CRH securityholders vote in favour of the Arrangement Resolution, or withdraws, amends, modifies or qualifies such recommendation in a manner adverse to the Purchaser, or fails to publicly reaffirm such recommendation within five business days (and in any case prior to the CRH meeting) after a request by the Purchaser to do so), (ii) termination of the Arrangement Agreement in accordance with its terms, and (iii) the effective time of the Arrangement. A voting agreement may be terminated by the applicable director or officer if any of the representations and warranties of the Purchaser contained therein is untrue or inaccurate in any material respect or any applicable laws are passed that makes fulfilment of the voting agreement illegal or otherwise prohibited.

As of [●], 2021, the record date of the CRH meeting, such directors and officers held in the aggregate, approximately [●] CRH shares, representing approximately [●]% of the issued and outstanding CRH shares entitled to vote, and approximately [●] CRH securities, representing approximately [●]% of the issued and outstanding CRH securities entitled to vote.

A copy of the form of voting agreement executed by all such directors and executive officers is attached as Annex D to this proxy statement. The foregoing description of the voting agreements does not purport to describe all of the terms of the voting agreements and is qualified in its entirety by reference to the complete text of the

 

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form of voting agreement attached as Annex D to this proxy statement, which is incorporated into this proxy statement by reference. We encourage you to read the form of voting agreement carefully and in its entirety because this summary may not contain all the information about the voting agreements that is important to you.

Material U.S. Federal Income Tax Consequences

The following is a general discussion of the material U.S. federal income tax consequences of the Arrangement to U.S. Holders (as defined below) of CRH shares whose CRH shares are converted into the right to receive cash in the Arrangement. This discussion does not purport to consider all aspects of U.S. federal income taxation that might be relevant to our shareholders or to any particular holder of CRH shares in light of such holder’s particular facts and circumstances. For purposes of this discussion, we use the term “U.S. Holder” to mean a beneficial owner of CRH shares that holds such CRH shares as a capital asset (generally, property held for investment) and that is, for U.S. federal income tax purposes:

 

   

An individual who is a citizen or resident of the United States;

 

   

a corporation (or any entity or arrangement treated as a corporation) created or organized in or under the laws of the United States or any State thereof or the District of Columbia;

 

   

a trust if (i) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (ii) the trust has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person; or

 

   

an estate that is subject to U.S. federal income tax on its income regardless of its source.

If a partnership (or other entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds CRH shares, the tax treatment of a partner in such partnership (or other entity or arrangement treated as a partnership) for U.S. federal income tax purposes will generally depend on the status of the partner and the activities of the partnership. A partner of a partnership holding CRH shares is urged to consult his, her or its own tax advisor.

This discussion is based on provisions of the Internal Revenue Code of 1986, as amended from time to time (the “Code”), Treasury Regulations promulgated thereunder, judicial decisions and published rulings and administrative decisions of the Internal Revenue Service (the “IRS”), each as of the date hereof and each of which is subject to change or differing interpretation, possibly with retroactive effect. Any such change or differing interpretation could affect the accuracy of the statements and conclusions set forth in this discussion. This discussion applies only to beneficial owners of CRH shares who are U.S. Holders and hold CRH shares as capital assets within the meaning of the Code, and it does not apply to CRH shares received in connection with the exercise of CRH options, CRH RSUs, or otherwise as compensation, CRH shareholders who hold an equity interest, directly, indirectly or constructively, in the Purchaser or an affiliate of the Purchaser after the Arrangement, CRH shareholders who hold, directly, indirectly or constructively, 10% or more of the total combined voting power or of the total value of the stock of the Company, or certain types of beneficial owners who may be subject to special rules (such as insurance companies, banks, tax-exempt organizations, financial institutions, broker-dealers, partnerships, S corporations or other pass-through entities (or investors therein), mutual funds, traders in securities who elect the mark-to-market method of accounting, CRH shareholders subject to the alternative minimum tax, U.S. expatriates or CRH shareholders who are former U.S. citizens or long-term U.S. residents, CRH shareholders that have a functional currency other than the U.S. dollar, CRH shareholders other than U.S. Holders (except as expressly noted below in respect of backup withholding), CRH shareholders required to report income no later than when such income is reported on an “applicable financial statement,” or CRH shareholders who hold CRH shares as part of a hedge, straddle or a constructive sale or conversion transaction or other risk reduction or integrated transaction). In addition, this discussion does not address CRH shareholders (i) that are a resident, or are deemed to be a resident, in Canada for purposes of the Tax Act, (ii) that use or hold, or are deemed to use or hold, CRH shares in connection with carrying on a business

 

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in Canada, (iii) whose CRH shares constitute “taxable Canadian property” (as defined in the Tax Act) at the time of disposition, or (iv) that have a permanent establishment in Canada for purposes of the U.S.-Canada Tax Convention.

This discussion does not address the receipt of cash in connection with warrants or the cancellation of CRH options, CRH RSUs, or any matters relating to equity compensation or benefit plans. This discussion also does not address any aspect of state, local, non-U.S. or other tax laws or any tax consequences arising under the unearned income Medicare contribution tax pursuant to the Health Care and Education Reconciliation Act of 2010.

Subject to the discussions below under the heading ““—Passive Foreign Investment Company Considerations,” the exchange of CRH shares for cash in the Arrangement will be a taxable transaction to U.S. Holders, including any U.S. Holder that properly exercises dissent rights, for U.S. federal income tax purposes. In general, a U.S. Holder whose CRH shares are converted into the right to receive cash in the Arrangement (or in connection with the exercise of dissent rights) will recognize capital gain or loss for U.S. federal income tax purposes equal to the difference, if any, between the amount of cash received with respect to CRH shares in the Arrangement (or in connection with the exercise of dissent rights) and the U.S. Holder’s adjusted tax basis in such CRH shares (other than, with respect to the exercise of dissent rights, amounts, if any, that are or are deemed to be interest for U.S. federal income tax purposes, which amounts will be taxed as ordinary income). Gain or loss will be determined separately for each block of CRH shares (i.e., CRH shares acquired at the same time and cost in a single transaction). Such gain or loss will be long-term capital gain or loss provided that a U.S. Holder’s holding period for such CRH shares is more than one year at the time of the consummation of the Arrangement. Long-term capital gains of noncorporate U.S. Holders, including individuals, generally are eligible for preferential rates of taxation. There are significant limitations on the deductibility of capital losses.

Passive Foreign Investment Company Considerations

A non-U.S. corporation will be classified as a “passive foreign investment company” (a “PFIC”) for any taxable year, if after the application of certain “look-through” rules, (a) at least 75% of its gross income is “passive income” as that term is defined in the relevant provisions of the Code (e.g., dividends, interest, royalties, or gains on the disposition of certain minority interests), or (b) at least 50% of the average value of its assets consists of assets that produce, or are held for the production of, “passive income.” To the Company’s knowledge, the Company is not, and has never been, a PFIC. If the Company were classified as a PFIC for any taxable year during which a U.S. Holder held CRH shares, such classification could result in adverse tax consequences to such U.S. Holder, and U.S. federal income tax consequences of the receipt of cash by such U.S. Holder in exchange for CRH shares different than those described above might apply. These consequences could include having gains realized on the receipt of cash in exchange for CRH shares treated as ordinary income rather than capital gain and being subject to punitive interest charges on such gains. U.S. Holders should consult their own tax advisors regarding the potential application of the PFIC rules to their disposition of CRH shares in connection with the Arrangement.

Backup Withholding and Information Reporting

Backup withholding of tax (currently at a rate of 24%) may apply to cash payments received by a non-corporate U.S. Holder in the Arrangement, unless the U.S. Holder or other payee provides a taxpayer identification number (social security number, in the case of individuals, or employer identification number, in the case of other U.S. Holders), certifies, under penalties of perjury, that such number is correct, and otherwise complies with the backup withholding rules. U.S. Holders should complete, date and sign the IRS Form W-9 included as part of the letter of transmittal and return it to the depositary and paying agent, in order to provide the information and certification necessary to avoid backup withholding, unless an exemption applies and is established in a manner satisfactory to the paying agent. Certain non-U.S. CRH shareholders receiving payments at an address in the United States may be required to provide a valid Form W-8BEN, W-8BEN-E or other

 

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applicable Form W-8 to avoid backup withholding. Failure to provide a correct, completed and signed IRS Form W-9 or an appropriate IRS Form W-8, as applicable, may subject a CRH shareholder to U.S. federal income tax withholding on any payments made to such CRH shareholder pursuant to the Arrangement. All CRH shareholder are urged to consult their own tax advisors to determine whether they are exempt from these backup withholding requirements and to determine which form should be used to avoid backup withholding.

Backup withholding is not an additional tax. Amounts withheld under the backup withholding rules are generally allowable as a refund or a credit against a U.S. Holder’s U.S. federal income tax liability provided that the required information is timely furnished to the IRS.

Payments received in the Arrangement will also be subject to information reporting unless an exemption applies.

The U.S. federal income tax consequences set forth above are not intended to constitute a complete description of all tax consequences relating to the Arrangement. Because individual circumstances may differ, each CRH shareholder is urged to consult the CRH shareholder’s tax advisor regarding the applicability of the rules discussed above to the CRH shareholder and the particular tax effects to the CRH shareholder of the Arrangement in light of such CRH shareholder’s particular circumstances, the application of state, local, non-U.S., and other tax laws, and, if applicable, the tax consequences of the receipt of cash in connection with the cancellation of CRH RSUs or CRH options, including the transactions described in this proxy statement relating to our other equity compensation and benefit plans. U.S. Holders who own, directly, indirectly or constructively, 10% or more of the total combined voting power or the total value of the stock of the Company should consult with their tax advisors regarding the tax consequences to them and the effect of any election under Section 338(g) of the Code that may be made by the Purchaser or any of its affiliates with respect to the Company or any of its subsidiaries in connection with the consummation of the Arrangement, as well as any alternatives for mitigating any adverse tax consequences to such CRH shareholders potentially resulting therefrom (including the desirability of selling their CRH shares prior to the consummation of the Arrangement).

Material Canadian Federal Income Tax Consequences

The following is a general summary of the principal Canadian federal income tax consequences in respect of the Arrangement generally applicable to a CRH shareholder who is the beneficial owner of CRH shares and who, for the purposes of the Tax Act and at all relevant times, holds such CRH shares as capital property, deals at arm’s length and is not affiliated with either CRH or Amalco, and disposes of CRH shares to Amalco under the Arrangement (“Holder”). CRH shares will generally be capital property to a Holder unless the Holder holds such CRH shares in the course of carrying on a business of buying or selling securities or acquired such CRH shares in a transaction or transactions considered to be an adventure or concern in the nature of trade. Certain Holders who are resident in Canada and whose CRH shares might not otherwise be considered capital property may, in certain circumstances, make an irrevocable election in accordance with subsection 39(4) of the Tax Act to have the CRH shares and all other “Canadian securities” as defined in the Tax Act owned by such Holder in the taxation year in which the election is made and in all subsequent taxation years deemed to be capital property. Such holders should consult their own tax advisors regarding whether an election under subsection 39(4) is available and advisable in their particular circumstances.

This summary does not address the tax consequences to a holder who is a beneficial owner of CRH options, or CRH RSUs. Such holders should consult their own tax advisors.

This summary is based upon the current provisions of the Tax Act and the regulations thereunder in force as of the date hereof, and CRH’s understanding, based on publicly available materials published in writing prior to the date hereof, of the current administrative practices of the Canada Revenue Agency (“CRA”). This summary also takes into account all specific proposals to amend the Tax Act and the regulations thereunder publicly

 

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announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof (the “Tax Proposals”) and assumes that all Tax Proposals will be enacted in the form proposed. However, there can be no assurance that the Tax Proposals will be enacted in their current form, or at all. This summary is not exhaustive of all possible Canadian federal income tax consequences and, except for the Tax Proposals, does not take into account or anticipate any changes in law or administrative practice, whether by legislative, regulatory, administrative or judicial decision or action, nor does it take into account or consider other federal or any provincial, territorial or foreign tax considerations, which may differ significantly from the Canadian federal income tax consequences described herein. Consequently, Holders may wish to consult their own tax advisors for advice regarding the income tax consequences to them of disposing of their CRH shares pursuant to the Arrangement, having regard to their own particular circumstances, and any other consequences to them of such transactions under Canadian federal, provincial, local and foreign tax laws.

This summary is not applicable to a Holder (i) that is a “financial institution” as defined in the Tax Act for the purposes of the “mark-to-market” rules, (ii) that is a “specified financial institution” as defined in the Tax Act, (iii) an interest in which would be a “tax shelter investment” within the meaning of the Tax Act, (iv) who has acquired CRH shares on the exercise of an employee stock option, (v) who reports “Canadian tax results” within the meaning of section 261 of the Tax Act in a currency other than Canadian currency; or (vi) that has entered into a “derivative forward agreement” or “synthetic disposition agreement” as those terms are defined in the Tax Act in respect of the CRH shares. Such Holders should consult their own tax advisors.

This summary is not intended to be, nor should it be construed to be, legal or tax advice to any particular Holder and no representations with respect to any particular Holder are made. This summary is not exhaustive of all Canadian federal income tax considerations. Consequently, Holders may wish to consult their own tax advisors for advice regarding the income tax consequences to them of disposing of their CRH shares pursuant to the Arrangement, having regard to their own particular circumstances, and any other consequences to them of such transactions under Canadian federal, provincial, local and foreign tax laws.

Currency Conversion

For the purposes of the Tax Act, all amounts must be expressed in Canadian dollars including the adjusted cost base and proceeds of disposition. Amounts denominated in U.S. dollars must be converted into Canadian dollars based upon the exchange rates as determined in accordance with the Tax Act.

Holders Resident in Canada

The following portion of the summary is generally applicable to a Holder who, at all relevant times, is, or is deemed to be, resident in Canada for purposes of the Tax Act (a “Resident Holder”).

Disposition of CRH Shares Under the Arrangement

Generally, a Resident Holder who disposes of CRH shares to Amalco under the Arrangement will realize a capital gain (or capital loss) to the extent that the proceeds of disposition received by the Resident Holder for such CRH shares under the Arrangement, net of any reasonable costs of disposition, exceed (or are less than) the adjusted cost base to the Resident Holder of such CRH shares immediately before the disposition and any reasonable costs of disposition. The tax treatment of capital gains and capital losses is discussed in greater detail below under the heading “Capital Gains and Losses”.

Capital Gains and Losses

Generally, a Resident Holder is required to include in computing its income for a taxation year one-half of the amount of any capital gain (a “taxable capital gain”) realized by the Resident Holder in such taxation year. Generally, a Resident Holder is required to deduct one-half of the amount of any capital loss (an “allowable

 

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capital loss”) realized in a taxation year from taxable capital gains realized by the Resident Holder in such taxation year. Allowable capital losses in excess of taxable capital gains may be carried back and deducted in any of the three preceding taxation years or carried forward indefinitely and deducted in any subsequent taxation year against net taxable capital gains realized by the Resident Holder in such years in the circumstances described in the Tax Act.

The amount of any capital loss realized by a Resident Holder that is a corporation on the disposition of a CRH share may be reduced by the amount of any dividends received or deemed to be received at or before such time on the CRH share, subject to and in accordance with the provisions of the Tax Act. Similar rules may apply where the CRH share is owned by a partnership or trust of which a corporation, trust or partnership is a member or beneficiary. Resident Holders to whom these rules may apply should consult their own tax advisors.

Capital gains realized by individuals or trusts, other than certain trusts, may give rise to minimum tax under the Tax Act. Resident Holders should consult their own tax advisors with respect to the potential application of the alternative minimum tax.

Additional Refundable Tax

A Resident Holder that is throughout the year a “Canadian-controlled private corporation”, as defined in the Tax Act, may be liable to pay an additional refundable tax on certain investment income, including taxable capital gains and interest income.

Dissenting Resident Holders

As described under “Dissent Rights,” a Resident Holder who has validly exercised that Resident Holder’s dissent right under the Arrangement (“Resident Dissenting Holder”) will be considered to have disposed of such Holder’s CRH shares to Amalco and will be entitled to receive a payment from Amalco of an amount equal to the fair value of the CRH shares held by such Resident Dissenting Holder.

Generally, a Resident Dissenting Holder will realize a capital gain (or capital loss) to the extent that the proceeds of disposition received from Amalco on the disposition of the CRH shares, less any interest awarded by the Court, exceeds (or is less than) the adjusted cost base to the Resident Dissenting Holder of such CRH shares immediately before the disposition and any reasonable costs of disposition. The tax consequences as described above under “Material Canadian Federal Income Tax Consequences—Holders Resident in Canada—Capital Gains and Losses,” beginning on page [●], will apply to the taxation of capital gains and losses to a Resident Dissenting Holder.

Any interest awarded by a Court must be included in the dissenting Resident Dissenting Holder’s income for the purposes of the Tax Act.

Holders Not Resident in Canada

The following portion of the summary is generally applicable to a Holder who, for the purposes of the Tax Act, and at all relevant times, is not and has not been a resident or deemed to be a resident of Canada and does not use or hold, and is not deemed to use or hold, the CRH shares in connection with carrying on a business in Canada (a “Non-Resident Holder”). Special rules, which are not discussed in this summary, may apply to a Non-Resident Holder that is (i) an insurer carrying on business in Canada and elsewhere or (ii) an “authorized foreign bank,” as defined in the Tax Act.

Disposition of CRH Shares Under the Arrangement

A Non-Resident Holder will not be subject to tax under the Tax Act on any capital gain, or entitled to deduct any capital loss, realized on the disposition of CRH shares to Amalco under the Arrangement unless such CRH

 

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shares constitute “taxable Canadian property” to the Non-Resident Holder and do not constitute “treaty-protected property” within the meaning of Tax Act.

Provided the CRH shares are listed on a “designated stock exchange” as defined in the Tax Act (which currently includes the TSX), a CRH share will generally not be taxable Canadian property to a Non-Resident Holder at the time of disposition unless, at any time during the 60 month period immediately preceding the disposition of the CRH shares, the following two conditions are met concurrently: (i) the Non-Resident Holder, persons with whom the Non-Resident Holder does not deal at arm’s length, partnerships in which the Non-Resident Holder or a non-arm’s length person holds a membership interest directly or indirectly through one or more partnerships or any combination of the foregoing, owned 25% or more of the issued shares of any class or series in the capital of CRH; and (ii) more than 50% of the fair market value of the CRH shares was derived directly or indirectly, from one or any combination of real or immovable property situated in Canada, “Canadian resource properties”, “timber resource properties” (each as defined in the Tax Act), and options in respect of or interests in, or for civil law rights in, any such property (whether or not such property exists). Notwithstanding the forgoing, a CRH share may be deemed to be taxable Canadian property for purposes of the Tax Act in certain circumstances.

Even if the CRH shares are taxable Canadian property to a Non-Resident Holder at the time of disposition, a taxable capital gain resulting from the disposition of the CRH shares will not be included in computing the Non-Resident Holder’s income for the purposes of the Tax Act if the CRH shares constitute “treaty-protected property.” CRH shares owned by a Non-Resident Holder will generally be treaty-protected property if the gain from the disposition of such property would, because of an applicable income tax treaty to which Canada is a signatory, be exempt from tax under Part I of the Tax Act. In the event that CRH shares constitute taxable Canadian property but not treaty-protected property to a particular Non-Resident Holder, the tax consequences as described above under “Material Canadian Federal Income Tax Consequences – Holders Resident in Canada –Disposition of CRH shares Under the Arrangement,” beginning on page [] will generally apply. A Non-Resident Holder who disposes of taxable Canadian property that is not treaty protected property should consult its own tax adviser, including with regard to any Canadian income tax reporting requirement arising from the Arrangement.

Dissenting Non-Resident Holders

As described under “Dissent Rights,” a Non-Resident Holder who has validly exercised that Non-Resident Holder’s dissent right under the Arrangement (“Non-Resident Dissenting Holder”) will be considered to have disposed of such Holder’s CRH shares to Amalco and will be entitled to receive a payment from Amalco of an amount equal to the fair value of the Non-Resident Dissenting Holder’s CRH shares. A Non-Resident Dissenting Holder will realize a capital gain (or capital loss) to the extent that the proceeds of disposition received from Amalco on the disposition of the CRH shares, less any interest awarded by the Court, exceed (or are less than) the adjusted cost base to the Non-Resident Dissenting Holder of such CRH shares immediately before the disposition and any reasonable costs of disposition. The taxation of capital gains and losses is described above under “Material Canadian Federal Income Tax Consequences – Holders Not Resident in Canada – Disposition of CRH shares Under the Arrangement,” beginning on page [].

A Non-Resident Dissenting Holder will not be subject to Canadian withholding tax on any amount of interest that is awarded by a court provided such interest is not “participating debt interest” (as defined in the Tax Act).

Certain Relationships Between WELL and CRH

There are no material relationships between WELL or any of its affiliates, on the one hand, and CRH or any of its affiliates, on the other hand, other than in respect of the Arrangement Agreement and those arrangements described above under “The Arrangement – Background to the Transaction,” beginning on page [], “The

 

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Arrangement – Voting Agreements,” beginning on page [], “The Arrangement – Interests of the Company’s Directors and Executive Officers in the Arrangement,” beginning on page 56, and “The Arrangement – Financing of the Arrangement,” beginning on page [].

Accounting Treatment

WELL prepares its accounting statements in accordance with IFRS. The Arrangement is anticipated to be accounted for as a business combination, using the acquisition method under IFRS.

 

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THE ARRANGEMENT AGREEMENT

This section of the proxy statement describes the material provisions of the Arrangement Agreement but does not purport to describe all of the terms of the Arrangement Agreement. The following summary is qualified in its entirety by reference to the complete text of the Arrangement Agreement, which is attached as Annex B to this proxy statement and incorporated into this proxy statement by reference. We urge you to read the full text of the Arrangement Agreement because it is the legal document that governs the Arrangement. It is not intended to provide you with any other factual information about us. Such information can be found elsewhere in this proxy statement and in the public filings we make with the SEC and the Canadian securities commissions, as described in the section entitled “Where You Can Find More Information” below.

Explanatory Note Regarding the Arrangement Agreement

The Arrangement Agreement and this summary are included to provide you with information regarding the Arrangement Agreement’s material terms. Factual disclosures about the Company contained in this proxy statement or in the Company’s public reports filed with the SEC and the Canadian securities commissions (as described in the section entitled “Where You Can Find More Information” on page [●]) may supplement, update or modify the factual disclosures about the Company contained in the Arrangement Agreement. The representations, warranties and covenants made in the Arrangement Agreement by the Company and the WELL parties were made solely to the parties to, and solely for the purposes of, the Arrangement Agreement and as of specific dates and were qualified by and subject to important limitations agreed to by the Company and the WELL parties in connection with negotiating the terms of the Arrangement Agreement. In particular, in your review of the representations and warranties contained in the Arrangement Agreement and described in this summary, it is important to bear in mind that the representations and warranties were negotiated with the principal purposes of establishing the circumstances in which a party to the Arrangement Agreement may have the right not to consummate the Arrangement if the representations and warranties of the other party prove to be untrue due to a change in circumstance or otherwise, and allocating risk between the parties to the Arrangement Agreement, rather than establishing matters as facts. The representations and warranties may also be subject to a contractual standard of materiality different from those generally applicable to shareholders and reports and documents filed with the SEC and the Canadian securities commissions and in some cases were qualified by the matters contained in the confidential disclosure letter executed by CRH and delivered to the Purchaser concurrently with the execution of the Arrangement Agreement, which disclosures were not reflected in the Arrangement Agreement. Moreover, information concerning the subject matter of the representations and warranties may have changed since the date of the Arrangement Agreement, which subsequent information may not be fully reflected in the Company’s public disclosures except as required by law. For the foregoing reasons, the representations, warranties, covenants and agreements and any descriptions of those provisions should be read only in conjunction with the other information provided elsewhere in this proxy statement and in the Company’s public reports filed with the SEC and the Canadian securities commissions.

The Arrangement

Subject to the terms and conditions of the Arrangement Agreement, WELL (through its subsidiaries) will acquire all of the outstanding CRH shares pursuant to the Plan of Arrangement. As a result of the Arrangement, CRH will become an indirect wholly owned subsidiary of WELL and will cease to be a publicly traded company.

The Arrangement will become effective on the first business day following the date on which all of the conditions precedent to the completion of the Arrangement described under the heading “—Conditions to the Arrangement,” beginning on page [●] have been satisfied or waived (other than those conditions which cannot, by their terms, be satisfied until the effective date of the Arrangement, but subject to satisfaction or waiver of such conditions as of the effective date), or on such other date as may be mutually agreed by CRH and the WELL parties.

 

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CRH or the Purchaser may terminate the Arrangement Agreement prior to the consummation of the Arrangement in some circumstances, whether before or after the approval of the Arrangement Resolution by CRH securityholders. Additional details on termination of the Arrangement Agreement are described in “Termination of the Arrangement Agreement,” beginning on page [].

Amalgamation of Finco and The Purchaser

As part of the Arrangement, immediately prior to the transfer of CRH securities as further described below, Finco and the Purchaser will be amalgamated and continued as one corporation under the BCBCA. The entity formed upon such amalgamation is sometimes referred to herein as “Amalco.” Upon completion of such amalgamation, Amalco will be a wholly owned subsidiary of WELL.

Share Consideration

Upon consummation of the Arrangement, each CRH share issued and outstanding immediately before the Arrangement will be transferred to Amalco, and each holder thereof, other than CRH shareholders who have properly demanded and perfected dissent rights, will be entitled to receive $4.00 in cash, without interest and less any applicable withholding taxes, per CRH share that such holder owns. Because the consideration will be payable in U.S. dollars, the value of the consideration expressed in Canadian dollars will fluctuate.

After the Arrangement is effective, each holder of CRH shares as of immediately before the Arrangement (other than CRH shares for which dissent rights have been properly exercised) will no longer have any rights with respect to the CRH shares, except for the right to receive the foregoing consideration upon surrender of such shares as described under “—Payment for CRH Shares,” beginning on page [●]. For more information on the exercise of dissent rights, see “Dissent Rights,” beginning on page [].

Payment for CRH Shares

Before the consummation of the Arrangement, the Purchaser will designate a trust company, bank or other financial institution for the purpose of, among other things, exchanging CRH shares for the share consideration described above (the “Depositary”). The Purchaser will, following receipt by CRH of the Final Order and in any event prior to or at the effective time of the Arrangement, deposit, or cause to be deposited, in escrow with the Depositary sufficient funds to satisfy the share consideration payable to the CRH shareholders pursuant to the Plan of Arrangement (other than CRH shareholders exercising dissent rights and who have not withdrawn their notice of objection).

Upon the consummation of the Arrangement and the settlement of transfers that occurred prior to the effective time of the Arrangement, we will close our stock ledger. After that time, there will be no further transfer of CRH shares.

If you are a registered CRH shareholder, you have received or will receive a Letter of Transmittal and instructions advising you how to surrender your certificates or book-entry shares in exchange for the consideration to which you are entitled under the Arrangement Agreement. The Depositary will pay you your consideration after you have (1) surrendered your certificates to the Depositary (or, if the applicable CRH shares are held in book-entry or other uncertificated form, upon the entry through a book-entry transfer agent of the surrender of such CRH shares on a book-entry account statement), and (2) provided to the Depositary your signed Letter of Transmittal and any other items reasonably requested by the Depositary.

Interest will not be paid or accrue in respect of any consideration payable under the Arrangement Agreement. In addition, WELL, the Purchaser, Amalco, CRH and the Depositary will be entitled to deduct and withhold from any consideration payable to any person under the Arrangement Agreement, and from all dividends, interest or other amounts payable to any person, such amounts as any of them is required to deduct

 

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and withhold therefrom under any provision of applicable tax laws. Any amounts so deducted and withheld such amounts will be treated for all purposes as having been paid to the person to whom such amounts would otherwise have been paid, provided that such withheld amounts are actually remitted to the appropriate governmental authority.

YOU SHOULD NOT FORWARD YOUR SHARE CERTIFICATES TO THE DEPOSITARY WITHOUT A LETTER OF TRANSMITTAL, AND YOU SHOULD NOT RETURN YOUR SHARE CERTIFICATES WITH THE ENCLOSED FORM OF PROXY.

The transmittal instructions will tell you what to do if you have lost your share certificate, or if it has been stolen or destroyed. You will have to give a bond satisfactory to the Purchaser and the Depositary in such amount as the Purchaser and the Depositary may direct, or otherwise indemnify the Purchaser and the Depositary, in a manner satisfactory to the Purchaser and the Depositary, against any claim that may be made against the Purchaser or the Depositary with respect to the certificate alleged to have been lost, stolen or destroyed, and you will otherwise have to take such actions as may be required by the articles and notice of articles of the Purchaser.

If any cash deposited with the Depositary for consideration is not properly claimed by a former CRH shareholder within six years following the effective date of the Arrangement, then the consideration that such former CRH shareholder was entitled to receive under the Arrangement Agreement shall be automatically cancelled without any repayment of capital in respect thereof and the consideration to which such former CRH shareholder was entitled shall be delivered to the Purchaser by the Depositary.

Treatment of CRH Equity Awards

Upon consummation of the Arrangement, each CRH option and CRH RSU outstanding immediately prior to the effective time of the Arrangement will be treated as follows:

 

   

Vested CRH Options. Each outstanding CRH option that has vested prior the effective time of the Arrangement will be deemed to be fully vested and exercisable, and will, without further action, be deemed to be assigned and transferred by the holder thereof to CRH in exchange for a cash payment from CRH equal to the difference between $4.00 and the exercise price for such option (net of any applicable withholding tax).

 

   

Unvested CRH Options. Each outstanding CRH option that has not vested prior to effective time of the Arrangement will be exchanged for a replacement WELL option. Except as described below, each such WELL option issued in exchange for a CRH option will (i) entitle the holder to acquire a number of WELL shares equal to the number of CRH shares subject to the exchanged CRH option, multiplied by 0.652 (rounded down to the nearest whole share), and (ii) have an exercise price per WELL share equal to the exercise price per CRH share pursuant to the exchanged CRH option, divided by 0.652 (rounded up to the nearest whole cent). Any such WELL options issued in exchange for CRH options will be subject to WELL’s existing omnibus equity plan and will generally have the same terms, conditions, expiration date and vesting schedule as applied to the exchanged CRH option.

It is intended that the provisions of subsection 7(1.4) of the Tax Act apply to the exchange of an unvested CRH option for a WELL option. Therefore, in the event that the WELL Option In-The-Money Amount (as defined below) in respect of any WELL option issued in exchange for unvested CRH options as described above would exceed the “Unvested CRH Option In-The-Money Amount” (as defined below) in respect of the unvested CRH option for which it is exchanged, the number of WELL shares that may be acquired on exercise of such WELL option will be adjusted at the effective time of the Arrangement to ensure such WELL Option In-The-Money Amount does not exceed such Unvested CRH Option In-The-Money Amount, and the ratio of the amount payable to acquire such shares to the value of such shares to be acquired will be unchanged. For purposes of the foregoing, (i) the “WELL Option In-The-Money Amount” is the amount, if any, by which total fair

 

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market value (determined immediately after the effective time of the Arrangement) of the WELL shares that a holder is entitled to acquire on exercise of a WELL option exceeds the amount payable to acquire such shares, and (ii) the “Unvested CRH Option In-The-Money Amount” is the amount, if any, by which total fair market value (determined immediately prior the effective time of the Arrangement) of the CRH shares that a holder would have been entitled to acquire on exercise of an unvested CRH option, if vested, exceeds the amount payable to acquire such shares.

 

   

CRH RSUs – 2014 Plan and Former Employees. Each outstanding CRH RSU granted under CRH’s 2014 share unit plan and each outstanding CRH RSU granted under CRH’s 2017 share unit plan that is held by an employee, contractor or director of CRH that does not remain employed by CRH when the Arrangement is completed will, without further action, be deemed to be assigned and transferred by the holder thereof to CRH in exchange for a cash payment from CRH equal to $4.00 (net of any applicable withholding tax).

 

   

CRH RSUs – Continuing Employees. Each outstanding CRH RSU granted under CRH’s 2017 share unit plan that is held by an employee, contractor or director of CRH that remains employed when the Arrangement is completed will be exchanged for a replacement WELL RSU. Except as described below, each such WELL RSU issued in exchange for a CRH RSU will entitle the holder to acquire a number of WELL shares equal to the number of CRH shares subject to the exchanged CRH RSU, multiplied by 0.652 (rounded down to the nearest whole share). Any such WELL RSUs issued in exchange for CRH RSUs will be subject to WELL’s existing omnibus equity plan and will generally have the same terms, conditions, expiration date and vesting schedule as applied to the exchanged CRH RSU.

It is intended that the provisions of subsection 7(1.4) of the Tax Act apply to the exchange of a CRH RSU for a WELL RSU. Therefore, in the event that the value of a WELL RSU issued in exchange for a CRH RSU as described above would exceed the value of the CRH RSU for which it is exchanged, the number of WELL shares that may be acquired on exercise or settlement of such WELL RSU will be adjusted at the effective time of the Arrangement to ensure the value of such WELL RSU does not exceed the value of such CRH RSU.

In addition, the Arrangement Agreement provides that that to the extent that an amount is paid to a CRH optionholder that holds vested CRH Options on the surrender or termination of his, her or its CRH options as provided above, (i) CRH will elect under subsection 110(1.1) of the Tax Act, in prescribed form, that neither CRH, nor any person who does not deal at arm’s length with CRH, will deduct in computing income for the purposes of the Tax Act, any amount in respect of such payment made to a CRH optionholder, and (ii) CRH will provide such CRH optionholder with evidence in writing of such election under subsection 110(1.1) of the Tax Act.

Representations and Warranties

The Arrangement Agreement contains representations and warranties made by us to the Purchaser and representations and warranties made by the WELL parties to us.

In the Arrangement Agreement, CRH and the WELL parties each made representations and warranties relating to, among other things:

 

   

corporate existence, good standing and power to enter into the Arrangement Agreement;

 

   

the authorization of its execution of the Arrangement Agreement;

 

   

the enforceability of the Arrangement Agreement;

 

   

the absence of conflicts with or defaults under organizational documents, other material contracts and applicable laws;

 

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the absence of undisclosed litigation; and

 

   

the accuracy of information supplied for inclusion in this proxy statement and other documents filed with the SEC.

In the Arrangement Agreement, the WELL parties also made representations and warranties relating to, among other things:

 

   

the availability of the funds necessary to pay in full the consideration at the effective time of the Arrangement;

 

   

the debt and equity financing agreements described in “The Arrangement—Financing of the Arrangement,” beginning on page [●] and the financial commitments pursuant thereto;

 

   

the WELL parties’ and their affiliates’ lack of ownership of CRH securities; and

 

   

the status of the WELL parties under the Investment Canada Act.

CRH also made representations and warranties relating to, among other things:

 

   

required regulatory filings and consents and approvals of governmental entities as a result of the Arrangement;

 

   

the capital structure of CRH, including the number of CRH shares, CRH options and CRH RSUs outstanding;

 

   

the subsidiaries of CRH, including their corporate existence and good standing and CRH’s ownership of their issued and outstanding shares and other securities;

 

   

the qualification of CRH and its subsidiaries to do business in applicable jurisdictions;

 

   

receipt by us of an opinion of Canaccord Genuity;

 

   

our audited financial statements as at and for the years ended December 31, 2019 and December 31, 2018, and our unaudited consolidated financial statements as at, and for the three, six and nine months ended, September 30, 2019, and September 30, 2020;

 

   

documents we have filed with the SEC and Canadian securities commissions since January 1, 2020;

 

   

our status as a reporting issuer in certain Canadian provinces;

 

   

our disclosure controls and procedures and internal controls over financial reporting;

 

   

the absence of undisclosed liabilities and off-balance sheet arrangements;

 

   

the absence of certain changes or events since September 30, 2020, including the absence of a“Material Adverse Effect” with respect to CRH (as further described below);

 

   

licenses and permits required to operate our business;

 

   

our title to assets;

 

   

our material contracts;

 

   

our minute books and other corporate records, as well as our financial records, business information and other books and records;

 

   

real property leased by us and our subsidiaries;

 

   

our intellectual property and privacy matters;

 

   

tax matters;

 

   

employee benefit and employment matters;

 

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compliance with applicable laws, including applicable health care laws, anticorruption laws, anti-money laundering laws, securities laws and stock exchange rules;

 

   

absence of non-arm’s length transactions;

 

   

our insurance policies;

 

   

absence of undisclosed finder’s fees; and

 

   

the availability of the funds necessary to pay any fees and expenses CRH may be responsible for under the Arrangement Agreement (including any termination fee).

Many of the parties’ representations and warranties are qualified by knowledge, materiality and/or a “Material Adverse Effect” standard. For purposes of the Arrangement Agreement, a “Material Adverse Effect” with respect to the Purchaser is defined to mean any one or more changes, effects, events, occurrences, circumstances, or states of fact, including any escalation in COVID-19 after the date of the Arrangement Agreement, either individually or in the aggregate, that would prevent or materially delay, or would reasonably be expected to prevent or materially delay, the Purchaser’s ability to consummate the Arrangement. A “Material Adverse Effect” with respect to CRH is defined to mean any one or more changes, effects, events, occurrences, circumstances, or states of fact, including any escalation in COVID-19 after the date of the Arrangement Agreement, either individually or in the aggregate, that is, or would reasonably be expected to be, material and adverse to the assets, liabilities, business, operations, property, prospects, obligations or financial condition of CRH and its subsidiaries, taken as a whole, other than those resulting from any of the following:

 

   

(the announcement, pendency or consummation of the Arrangement, or the failure to take actions as a result of any terms or conditions set forth in the Arrangement Agreement, including any loss of or change in the relationship with employees, customers, partners, licensees, licensors, suppliers or other persons having business relationships with CRH;

 

   

changes affecting the healthcare industry generally;

 

   

changes in the general political, economic, financial, currency exchange or market (including the capital, financial, credit or securities market) conditions;

 

   

the commencement, continuation or escalation of any war, armed hostilities, acts of terrorism, earthquakes or similar catastrophes or the incurrence of any other calamity or crisis;

 

   

a change or proposed change in GAAP or applicable law or the interpretation thereof;

 

   

any action permitted or required to be taken by the Arrangement Agreement;

 

   

any failure to meet internal or public projections, forecasts, performance measures, operating statistics or revenue or earnings predictions for any reason (it being understood that the underlying cause or any such failure may be taken into account when determining whether a “Material Adverse Effect” has occurred unless otherwise excluded pursuant to the terms of the definition thereof);

 

   

any change in the market price or trading volume of any securities of CRH (it being understood that the underlying cause or any such failure may be taken into account when determining whether a “Material Adverse Effect” has occurred unless otherwise excluded pursuant to the terms of the definition thereof);

 

   

any action, omission, effect, change, event or occurrence taken, made, caused, requested or directed in writing by or on behalf of the Purchaser; or

 

   

any matter fairly disclosed in the confidential disclosure letter executed by CRH and delivered to the Purchaser concurrently with the execution of the Arrangement Agreement.

However, any exception described in the second through the fifth bullet points above will apply only to the extent such matter does not have a material disproportionate effect on CRH and its subsidiaries, taken as a whole,

 

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Conduct of Business Pending the Arrangement

We have agreed in the Arrangement Agreement that, prior to the effective date of the Arrangement, unless the Purchaser otherwise consents (such consent not to be unreasonably withheld or delayed) or as otherwise expressly contemplated or permitted by the Arrangement Agreement, CRH will conduct its business and maintain its facilities in the ordinary course of business consistent with past practice and in compliance with applicable laws, and will use commercially reasonable efforts to preserve intact its present business organization, goodwill, employees, business relationships (including with customers, suppliers, distributors, licensors, partners and other persons with which CRH or any of its subsidiaries has material business relations) and its assets and properties and to perform and comply with all of its obligations under its material contracts.

Without limiting the generality of the foregoing, we have also agreed that, prior to the effective date of the Arrangement, unless the Purchaser otherwise consents (such consent not to be unreasonably withheld or delayed) or as otherwise expressly contemplated or permitted by the Arrangement Agreement, CRH will not, directly or indirectly:

 

   

issue, sell, grant, award, pledge, dispose of, encumber or agree to issue, sell, grant, award, pledge, dispose of or encumber any CRH securities or rights of any kind to acquire any securities of CRH, other than (i) pursuant to the exercise of CRH options and the vesting, in accordance with their terms, of CRH RSUs outstanding on the date of the Arrangement Agreement and (ii) pursuant to the terms of existing contractual commitments that were disclosed to the Purchaser;

 

   

except in the ordinary course of business consistent with past practice, sell, pledge, lease, dispose of, mortgage, licence, encumber or agree to sell, pledge, dispose of, mortgage, licence, encumber or otherwise transfer any assets of CRH or any interest in any assets of CRH having a value greater than $100,000 in the aggregate;

 

   

amend or propose to amend CRH’s organizational documents or the terms of any securities of CRH;

 

   

split, combine, reclassify, redeem, purchase or offer to purchase or reduce the stated capital of any securities of CRH;

 

   

declare, set aside or pay any dividend or other distribution in respect of any CRH shares;

 

   

reorganize, amalgamate or merge CRH or any subsidiary of CRH with any other person;

 

   

other than investments made in the ordinary course of CRH’s business consistent with past practice, acquire or agree to acquire (by merger, amalgamation, acquisition of shares or assets or otherwise) any person, or make any investment either by purchase of shares or securities, contributions of capital, property transfer or purchase of any property or assets of any other person for an amount greater than $100,000 in the aggregate;

 

   

enter into any joint venture or similar agreement, arrangement or relationship, subject to certain exceptions previously disclosed to or agreed by the Purchaser;

 

   

except in the ordinary course of business consistent with past practice, incur, create, assume or otherwise become liable for any material indebtedness for borrowed money or any other material liability or obligation or issue any debt securities, or guarantee, endorse or otherwise as an accommodation become responsible for, the obligations of any other person or make any loans or advances;

 

   

adopt a plan of liquidation or resolutions providing for the liquidation or dissolution of CRH or any of its subsidiaries;

 

   

sell, lease, dispose of, voluntarily lose the right to use, license or otherwise dispose of or transfer any assets of CRH or of any of its subsidiaries or any interest in any assets of CRH and its subsidiaries other than assets and inventory disposed of in the ordinary course consistent with past practice, subject to certain exceptions previously disclosed to or agreed by the Purchaser;

 

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make any capital expenditure or commit to do so, other than in the ordinary course consistent with past practice and certain capital expenditures previously agreed to by the Purchaser (provided that in the case of capital expenditures expended to address emergencies or other urgent matters involving the potential loss or damage to property or personal safety, the Purchaser’s consent will not be required where it cannot be received in a reasonably expedient manner);

 

   

pay, discharge, settle, satisfy, compromise, waive, assign or release any material claims, liabilities or obligations, other than the payment, discharge or satisfaction, in the ordinary course of business consistent with past practice, of liabilities reflected or reserved against in certain financial statements of CRH or incurred in the ordinary course of business consistent with past practice;

 

   

waive, release, grant, transfer, exercise, modify or amend in any material respect, other than in the ordinary course of business consistent with past practice, (i) any existing contractual rights in respect of any material assets, (ii) any material permit, lease or concession or a material contract or other document, or (iii) any other material legal rights or claims;

 

   

waive, release, grant or transfer any material rights of value or modify or change in any material respect any existing licence, lease, contract or other document, other than in the ordinary course of business consistent with past practice;

 

   

make any loans, advances or capital contributions to, or investments in, or assume, guarantee or otherwise become liable with respect to the liabilities or obligations of, any other person other than a subsidiary in the ordinary course of business or in respect of financings in the ordinary course consistent with past practice;

 

   

prepay any long-term indebtedness before its scheduled maturity or create, incur, assume or otherwise become liable with respect to any indebtedness for borrowed money or guarantees thereof in any amount, other than (i) for operating costs and other costs incurred in the ordinary course consistent with past practice, (ii) to pay legal fees and financial advisory fees to Canaccord Genuity and other costs in respect of the Arrangement, or (iii) any other capital expenditures not prohibited by the Arrangement Agreement;

 

   

grant any lien (other than certain permitted liens) on any assets of the CRH or its subsidiaries other than in the ordinary course consistent with past practice;

 

   

enter into any interest rate, currency, equity or commodity swaps, hedges, derivatives, forward sales contracts or similar financial instruments other than in the ordinary course consistent with past practice;

 

   

make any bonus or profit sharing distribution or similar payment of any kind (including any grants of CRH options or CRH RSUs), except as may be required by the terms of any written employment contract and employee plans in place as of the date of the Arrangement Agreement, subject to certain exceptions previously disclosed to or agreed by the Purchaser;

 

   

make any material change in the CRH’s methods of accounting, except as required by GAAP or pursuant to written instructions, comments or orders of a governmental authority;

 

   

commence any litigation or waive, release, assign, settle or compromise any litigation, proceedings or governmental investigations in excess of an amount of $100,000 in the aggregate;

 

   

abandon or fail to diligently pursue any application for any material company authorizations, leases, permits or registrations or take any action, or fail to take any action, that would reasonably be expected to lead to the termination of any material company authorizations, leases, permits or registrations;

 

   

enter into or amend any contract with any broker, finder or investment banker;

 

   

increase the benefits payable or to become payable to its directors and advisors or materially increase the benefits payable or to become payable to its officers, enter into or materially modify any employment, severance or similar agreements or arrangements with, or grant any material bonuses,

 

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salary increases, severance or termination pay to, any officer or director of CRH, other than as required pursuant to the terms of agreements already entered into or in the ordinary course of business consistent with past practice; or

 

   

in the case of employees who are not officers or directors of CRH, take any action, other than in the ordinary course of business consistent with past practice, with respect to the grant of any material bonuses, salary increases, severance or termination pay or with respect to any material increase of benefits payable in effect on the date of the Arrangement Agreement.

In addition, prior to the effective date of the Arrangement, unless the Purchaser otherwise consents (such consent not to be unreasonably withheld or delayed) or as otherwise expressly contemplated or permitted by the Arrangement Agreement, we have agreed that:

 

   

we will not establish, adopt, enter into, amend or waive any performance or vesting criteria or accelerate vesting, exercisability or funding under any of our employee benefit plans or any agreement, trust, fund, policy or arrangement for the benefit or welfare of any directors, officers, current or former employees of CRH or any person providing management services to CRH;

 

   

we will use all reasonable commercial efforts to cause our current insurance (or re-insurance) policies not to be cancelled or terminated or any of the coverage thereunder to lapse, unless replacement policies meeting certain criteria are effective simultaneously therewith;

 

   

we will provide the Purchaser with prompt notice of certain events, including any Material Adverse Effect with respect to CRH, and copies of any communication from any governmental authority or from any person alleging such person’s consent is required in connection with the Arrangement and of any filing or proceedings affecting CRH or its subsidiaries or that relate to the Arrangement;

 

   

we will not enter into or renew any contract containing certain material restrictions on our business or that would reasonably be expected to materially delay or prevent the consummation of the Arrangement;

 

   

with respect to tax matters, we will (i) duly and timely file all tax returns, (ii) timely withhold, collect, remit and pay all taxes which are to be withheld, collected, remitted or paid to the extent due and payable, (iii) not make or rescind any material express or deemed election relating to taxes, (iv) not make a request for a tax ruling or enter into any agreement with any taxing authorities or consent to any extension or waiver of any limitation period with respect to taxes, (v) not settle or compromise any claim, audit or controversy relating to taxes for an amount greater than $100,000, and (vi) not file any amended tax return involving a material amount of additional taxes or change any of our methods of reporting income, deductions or accounting for income tax purposes, except as may be required by applicable laws; and

 

   

we will not authorize or propose, or enter into or modify any contract to do any of the matters prohibited by any of the foregoing provisions of the Arrangement Agreement.

Cooperation; Efforts to Complete the Arrangement

Each of CRH and the Purchaser has agreed to perform all obligations required to be performed it under the Arrangement Agreement, co-operate with the other party in connection therewith and do all such other acts and things as may be necessary in order to consummate and make effective the transactions contemplated by the Arrangement Agreement, including, among other things:

 

   

performing in all material respects all of the obligations required to be performed by it pursuant to Article 2 of the Arrangement Agreement, including its applicable obligations relating to obtaining the Interim Order and the Final Order, the holding of the CRH meeting, the preparation and filing of this proxy statement, the preparation of other filings and documents in connection with the Arrangement and the issuance of certain announcements and shareholder communications;

 

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using its commercially reasonable efforts to obtain and assist the other party in obtaining all required regulatory approvals;

 

   

using commercially reasonable efforts to defend all lawsuits or other legal, regulatory or other proceedings (i) in the case of CRH, against CRH relating to the Arrangement, and (ii) in the case of the Purchaser, against the Purchaser challenging or affecting the Arrangement Agreement or the consummation of the transactions contemplated thereby; and

 

   

using commercially reasonable efforts to satisfy all conditions precedent in the Arrangement Agreement.

Without limiting the foregoing obligations, CRH has further agreed to:

 

   

use its commercially reasonable efforts to obtain as soon as practicable all consents of third parties (provided, that, except as otherwise expressly set forth in the Arrangement Agreement, no such consents will be conditions to the completion of the Arrangement);

 

   

use reasonable commercial efforts to obtain voting agreements in the form executed by CRH’s directors and executive officers from any CRH shareholder who holds greater than 5% of the issued and outstanding CRH shares;

 

   

use commercially reasonable efforts to effect all necessary or advisable registrations, filings and submissions of information required by governmental authorities from CRH relating to the Arrangement;

 

   

promptly address and remedy, to Purchaser’s satisfaction, any identified failure of CRH or any of its subsidiaries to be in compliance with applicable laws (if any non-compliance is so identified);

 

   

use commercially reasonable efforts to, upon reasonable consultation with the Purchaser, oppose, lift or rescind any injunction or ruling seeking to restrain, enjoin or otherwise prohibit or adversely affect the consummation of the Arrangement and defend, or cause to be defended, any proceedings to which it is a party or brought against it or its directors or officers challenging the Arrangement;

 

   

use commercially reasonable efforts to obtain and deliver to the Purchaser evidence of the resignation, effective as of the effective time of the Arrangement, of those directors of CRH and its subsidiaries designated by the Purchaser to CRH;

 

   

not take any action, or refrain from taking any commercially reasonable action, or permitting any action to be taken or not taken, which is inconsistent with the Arrangement Agreement or which would reasonably be expected to prevent, materially delay or otherwise impede the consummation of the Arrangement; and

 

   

use commercially reasonable efforts to take all steps set forth in the Interim Order.

Financing Covenants

Without limiting its obligations described under “—Cooperation; Efforts to Complete the Arrangement,” beginning on page [●], the Purchaser has further agreed to, and to cause its applicable subsidiaries to use their respective commercially reasonable efforts to do, or cause to be done, all things reasonably necessary, proper or advisable to obtain the financing set forth in the debt and equity financing agreements described in “The Arrangement—Financing of the Arrangement,” beginning on page [●] as promptly as practicable after the date of the Arrangement Agreement, on or substantially on the terms set forth therein.

In addition, if for any reason all or any portion of such financing becomes unavailable on the terms and conditions of such financing agreements or from the financing sources contemplated thereby, the Purchaser will notify CRH thereof and use its reasonable commercial efforts to arrange and obtain alternative equity financing from alternative sources as promptly as practicable following the occurrence of such event and in an amount

 

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sufficient to consummate the Arrangement, and notify CRH of any such replacement financing. The Purchaser has further agreed to keep CRH informed on a reasonably current basis in reasonable detail of such financings, provide to CRH copies of any material amendments related thereto and provide to CRH prompt written notice of:

 

   

any material breach or material default (or any event or circumstance that, with or without notice, lapse of time or both, could reasonably be expected to give rise to any material breach or material default) by any party to any such financing agreement;

 

   

the receipt of any notice or written communication from any party to any such financing agreement or other definitive agreement or document related to such financing with respect to any actual or threatened material breach, default, withdrawal, termination or repudiation of any provision of such financing agreement;

 

   

any material dispute or disagreement between or among a WELL party and any of the other parties to any such financing agreement; and

 

   

Purchaser becoming aware of any fact, circumstance, event or other reason that would reasonably be expected to result in Finco or the Purchaser, as applicable, not being able to timely obtain all or any portion of such financing on the terms, in the manner or from the financing sources contemplated by such financing agreements.

It is not a condition to completion of the Arrangement or any of the Purchaser’s obligations under the Arrangement Agreement that the WELL parties obtain financing pursuant to any or all of such financing agreements or from any other source for or related to any of the transactions contemplated by the Arrangement Agreement.

Governmental Approvals

Subject to the terms and conditions of the Arrangement Agreement, each of CRH and the WELL parties has agreed to use its reasonable commercial efforts to do, or cause to be done, all things necessary, proper or advisable to consummate the transactions contemplated by the Arrangement Agreement, including preparing and filing as promptly as practicable all documentation to effect all necessary or appropriate filings, consents, waivers, approvals, authorizations, permits or orders from all governmental authorities or other persons. The parties also agreed to make, or cause to be made:

 

   

within 10 business days of the date of the Arrangement Agreement, an appropriate filing of a Notification and Report Form pursuant to the HSR Act with respect to the transactions contemplated by the Arrangement Agreement; and

 

   

as soon as practicable after the date of the Arrangement Agreement, all other filings and authorizations required under applicable law in connection with the transactions contemplated by the Arrangement Agreement.

Each party further agreed to supply, as promptly as reasonably practicable, and subject to appropriate confidentiality measures, any information and documentary material that may be reasonably required by the other party in order to make the required filings, and such additional information and documentary material that may be requested by a governmental authority under applicable law in connection with the transactions contemplated by the Arrangement Agreement, and to use its reasonable commercial efforts to take or cause to be taken all other actions necessary, proper or advisable, consistent with the terms of the Arrangement Agreement, to cause the expiration or termination of the applicable waiting periods, or receipt of required authorizations or approvals, as applicable, as required under applicable law as soon as reasonably practicable.

In furtherance of the foregoing, the Purchaser is required to use its reasonable commercial efforts to avoid the entry of or have lifted, vacated, reversed or terminated any impediment to closing of the Arrangement so as to enable the parties to consummate the transactions contemplated by the Arrangement Agreement prior to June 30,

 

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2021, including by taking certain remedial actions that may be required to obtain the necessary clearances or approvals of governmental authorities with respect to the Arrangement, except that the Purchaser is not required take any remedial action that, individually or in the aggregate, would reasonably be expected to materially impair the benefits being realized by Purchaser and its affiliates from the transactions contemplated by the Arrangement Agreement.

In addition, each of the Purchaser and CRH further agreed to, in connection with the efforts referenced above to obtain all requisite approvals and authorizations for the transactions contemplated hereby, use its reasonable commercial efforts to (i) cooperate in all respects with each other in connection with any filing or submission and in connection with any investigation or other inquiry, (ii) keep the other party reasonably informed of any communication received by such party from, or given by such party to, any governmental authority and of any communication received or given in connection with any proceeding by a private party, in each case regarding any of the transactions contemplated by the Arrangement Agreement, and (iii) permit, subject to appropriate confidentiality measure, the other party to review any filing, submission, communication given by it to, and consult with each other in advance of any meeting or conference with, any governmental authority, and to the extent permitted by such governmental authority, give the other party the opportunity to attend and participate in such meetings and conferences.

Notwithstanding anything to the contrary in the Arrangement Agreement, in no event (i) will CRH or any subsidiary of CRH be permitted to subject itself or any other person to any regulatory requirement without the prior written consent of the Purchaser (which consent may not be unreasonably withheld), or (ii) will the Purchaser, CRH or any of their respective subsidiaries be obligated to subject itself to any regulatory requirement unless such regulatory requirement is conditioned upon, and only effective as of, the closing of the Arrangement.

From the date of the Arrangement Agreement to the effective time of the Arrangement, the Purchaser has agreed that it will not take any action or fail to take any action that is intended to, or would reasonably be expected to, individually or in the aggregate, prevent, materially delay or materially impede the ability of the Purchaser to consummate the transactions contemplated by the Arrangement Agreement (provided that the foregoing will not require the Purchaser to waive any condition to its obligations thereunder), or require the Purchaser to waive, or prohibit the Purchaser from exercising, any of its rights granted thereunder.

Restrictions on Solicitations of Other Offers

The Arrangement Agreement provides that, except as otherwise expressly provided in the Arrangement Agreement, CRH will not, directly or indirectly, and shall not permit any person to:

 

   

make, solicit, assist, initiate, encourage, engage in, respond to or otherwise facilitate (including by way of furnishing or providing access to any confidential information, properties, facilities, books or records of CRH or entering into any form of agreement, arrangement or understanding) any inquiries, proposals or offers relating to any “acquisition proposal” (as further described below), or otherwise cooperate in any way with, or assist or participate in, facilitate or encourage, any effort or attempt by a person other than the Purchaser pursuant to the Arrangement Agreement to do or seek to do any of the foregoing;

 

   

enter into or otherwise engage in any discussions or negotiations regarding, or furnish any information relating to CRH or offer or provide access to the business, properties, assets, books and records of CRH, or otherwise co-operate in any way with, or assist or participate in, facilitate or encourage, any effort or attempt to make or complete any acquisition proposal (but CRH may advise any person making an unsolicited acquisition proposal that such proposal does not constitute a superior proposal under the Arrangement Agreement when the CRH Board has so determined);

 

   

withdraw, modify or qualify, or propose publicly to withdraw, modify or qualify, in any manner adverse to the Purchaser, the recommendation of the CRH Board that CRH securityholders vote in favour of the Arrangement Resolution;

 

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accept, approve, endorse, recommend or remain neutral with respect to, or propose publicly to accept, approve, endorse, recommend or remain neutral with respect to, any acquisition proposal (it being understood that publicly taking no position or a neutral position with respect to a publicly disclosed acquisition proposal for a period of no more than five business days following the public disclosure thereof will not be considered to be in violation of such covenant, provided the CRH Board has affirmed its recommendation that CRH securityholders vote in favour of the Arrangement Resolution before the end of such five business day period (or in the event that the CRH meeting is scheduled to occur within such five business day period, not later than the third business day prior to the date of the CRH meeting); or

 

   

accept, approve, endorse, recommend or execute or enter into, or publicly propose to accept, approve, endorse, recommend or execute or enter into, any agreement, understanding or arrangement (including any letter of intent or agreement in principle) that constitutes or would reasonably be expected to lead to an acquisition proposal, other than a confidentiality and standstill agreement in the form agreed by the Purchaser in connection with the execution of the Arrangement Agreement or providing for the payment of any break, termination or similar fees or expenses to any person in the event CRH completes the transactions contemplated thereby;

CRH is also required to immediately cease any existing discussions or negotiations with any person (other than the Purchaser) with respect to any potential acquisition proposal and, in connection therewith, CRH must discontinue access to any of its confidential information to all such persons.

Under the Arrangement Agreement, an “acquisition proposal” includes any offer, proposal or inquiry from any person or group of persons “acting jointly or in concert” (within the meaning of National Instrument 62-104 – Take-Over Bids and Issuer Bids), whether or not in writing and whether or not delivered to the CRH securityholders, after the date of the Arrangement Agreement (and excluding the transactions contemplated by the Arrangement Agreement and other than any transaction involving only CRH and/or one or more if its wholly owned subsidiaries) relating to:

 

   

any direct or indirect sale, disposition, alliance or joint venture (or any lease, long-term supply agreement or other arrangement having the same economic effect as a sale), in a single transaction or a series of related transactions, of assets (including shares of subsidiaries of CRH) representing 20% or more of the consolidated assets or contributing 20% or more of the consolidated revenue of CRH and its subsidiaries or of 20% or more of the voting, equity or other securities of CRH (or rights or interests therein or thereto);

 

   

any direct or indirect take-over bid, tender offer, exchange offer, treasury issuance or other transaction that, if consummated, would result in a person or group of persons beneficially owning 20% or more of any class of voting, equity or other securities or any other equity interests (including securities convertible into or exercisable or exchangeable for securities or equity interests) of CRH;

 

   

any plan of arrangement, merger, amalgamation, consolidation, share exchange, business combination, reorganization, recapitalization, liquidation, dissolution, winding up;

 

   

any exclusive license involving CRH or any of its subsidiaries that represents or constitutes 20% or more of the consolidated assets or revenues of CRH; or

 

   

any other similar transaction or series of transactions involving CRH or any of its subsidiaries.

Notwithstanding the restrictions described above, the CRH Board is permitted to (i) enter into, participate, facilitate and maintain discussions or negotiations, respond to enquiries, and otherwise cooperate or assist and (ii) provide copies of, access to or disclosure of information, properties, facilities, books or records of CRH or its subsidiaries in connection with an acquisition proposal, if and only if:

 

   

the CRH Board has determined, acting in good faith and after consultation with its financial and legal advisors, that such acquisition proposal constitutes or could reasonably be expected to result in a

 

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“superior proposal” (as further described below) and, after consulting with its outside legal counsel, engaging in such discussions or negotiations would not be inconsistent with its fiduciary duties;

 

   

such person was not restricted from making such acquisition proposal pursuant to an existing confidentiality, standstill, non-disclosure, use, business purpose or similar restriction with the CRH any of its subsidiaries;

 

   

such acquisition proposal did not result from a breach by CRH of its obligations under the non-solicitation provisions of the Arrangement Agreement;

 

   

before providing any such copies, access or disclosure, CRH enters into a confidentiality and standstill agreement with such person in the form agreed by the Purchaser in connection with the execution of the Arrangement Agreement and any such copies, access or disclosure provided to such person is substantially simultaneously provided to the Purchaser (if not previously provided); and

 

   

CRH promptly provides the Purchaser with:

 

   

one business day’s prior written notice stating CRH’s intention to participate in such discussions or negotiations and to provide such copies, access or disclosure and the CRH Board has determined that taking such action is not inconsistent with its fiduciary duties; and

 

   

a true, complete and final executed copy of a confidentiality and standstill agreement, before providing any such copies, access or disclosure.

Under the Arrangement Agreement, a “superior proposal” is an unsolicited bona fide acquisition proposal made by a third party to CRH or the CRH shareholders in writing after the date of the Arrangement Agreement:

 

   

to purchase or otherwise acquire, directly or indirectly, by means of a merger, take-over bid, amalgamation, plan of arrangement, business combination, consolidation, recapitalization, liquidation, winding-up or similar transaction, all of the CRH shares, or to purchase or otherwise acquire, directly or indirectly, all or substantially all of the assets of CRH;

 

   

that is reasonably capable of being completed without undue delay, taking into account all legal, financial, regulatory and other aspects of such proposal and the party making such proposal;

 

   

that is not subject to any financing condition and in respect of which any required financing to complete such acquisition proposal has been demonstrated to be available at the time and on the basis set out therein to the satisfaction of the CRH Board, acting in good faith (after receipt of advice from its financial advisors and its outside legal counsel); and

 

   

in respect of which the CRH Board determines in good faith that, (i) failure to recommend such acquisition proposal to its shareholders would be inconsistent with its fiduciary duties and (ii) which taking into account all of the terms and conditions of such acquisition proposal, if consummated in accordance with its terms (but not assuming away any risk of non-completion and taking into account the requirement of CRH to pay a termination fee to the Purchaser under the Arrangement Agreement), results in a transaction more favourable to CRH shareholders from a financial point of view than the Arrangement (including any adjustment to the terms and conditions of the Arrangement proposed by the Purchaser in response to such acquisition proposal).

In connection with the foregoing, CRH represented and warranted that CRH has not waived any confidentiality, standstill or similar agreement or restriction applicable to another person to which CRH or any subsidiary thereof is a party, and agreed that:

 

   

CRH shall use commercially reasonable efforts to enforce each confidentiality, standstill, non-disclosure, non-solicitation, use, business purpose or similar agreement, restriction or covenant to which CRH or any subsidiary thereof is a party; and

 

   

neither CRH, nor any subsidiary thereof, nor any of their respective representatives, have or will, without the prior written consent of the Purchaser (which may be withheld or delayed in the

 

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Purchaser’s sole and absolute discretion), release any person from, or waive, amend, suspend or otherwise modify such person’s obligations respecting CRH or its subsidiaries under any confidentiality, standstill, non-disclosure, non-solicitation, use, business purpose or similar agreement, restriction or covenant.

CRH is further required to immediately provide notice to the Purchaser of any bona fide unsolicited acquisition proposal or any proposal or offer that could lead to an acquisition proposal, or any amendments to the foregoing, or any request for non-public information relating to CRH in connection with such an acquisition proposal or for access to the properties, books or records of CRH by any person that informs CRH or any member of the CRH Board that it is considering making, or has made, an acquisition proposal.

Change of CRH Board Recommendation; Termination in Connection with a Superior Proposal

The Arrangement Agreement generally requires the CRH Board to recommend that CRH securityholders vote in favour of the Arrangement Resolution. CRH has agreed that it will not (i) accept, approve or enter into any agreement with any person providing for or to facilitate any acquisition proposal, other than a confidentiality and standstill agreement as contemplated above, (ii) withdraw, modify or qualify (or propose to withdraw, modify or qualify) in any manner adverse to the Purchaser the recommendation of the CRH Board that CRH securityholders vote in favour of the Arrangement Resolution, or (iii) accept, approve or recommend any acquisition proposal, unless:

 

   

the person making proposal was not restricted from making such proposal pursuant to an existing confidentiality, standstill, non-disclosure, use, business purpose or similar restriction;

 

   

such acquisition proposal did not result from a breach by CRH of its obligations under the non-solicitation provisions of the Arrangement Agreement;

 

   

the CRH Board acting in good faith, after consultation with its outside legal advisors, determines that the acquisition proposal constitutes a superior proposal;

 

   

the CRH meeting has not occurred;

 

   

CRH has complied with the non-solicitation provisions of the Arrangement Agreement;

 

   

CRH has provided the Purchaser with a notice in writing that there is a superior proposal, together with the terms of such superior proposal, including the financial terms of such superior proposal (which will include the value ascribed to any non-cash consideration offered under such superior proposal, if applicable) and a copy of any proposed agreement relating to such superior proposal, not less than six business days prior to the latest of the proposed acceptance, approval, recommendation or execution of the proposed agreement relating to such superior proposal by the CRH Board;

 

   

six business days shall have elapsed from the date the Purchaser received the foregoing notice and documentation from CRH and, if the Purchaser has proposed to amend the terms of the Arrangement in response thereto, the CRH Board determines, in good faith, after consultation with its financial advisors and outside legal counsel, that the acquisition proposal is a superior proposal compared to the proposed amendment to the terms of the Arrangement by the Purchaser;

 

   

the CRH Board authorizes CRH to enter into a binding written agreement with respect to the superior proposal (other than a confidentiality and standstill agreement) and accordingly CRH terminates the Arrangement Agreement; and

 

   

CRH has paid or concurrently pays to the Purchaser a termination fee of $10 million.

During the six business day period referred to above, or such longer period as CRH may agree for such purpose, the Purchaser will have the opportunity, but not the obligation, to propose to amend the terms of the Arrangement Agreement and the Arrangement, and CRH has agreed to reasonably co-operate with the Purchaser

 

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with respect thereto, including negotiating in good faith with the Purchaser to enable the Purchaser to make such adjustments to the terms and conditions of the Arrangement Agreement and the Arrangement as the Purchaser deems appropriate and as would enable the Purchaser to proceed with the Arrangement and any related transactions on such adjusted terms. The CRH Board will review any proposal by the Purchaser to amend the terms of the Arrangement in order to determine, in good faith in the exercise of its fiduciary duties, whether the Purchaser’s proposal to amend the Arrangement would result in the applicable acquisition proposal not being a superior proposal compared to the proposed amendment to the terms of the Arrangement. If the CRH Board determines that such acquisition proposal would cease to be a superior proposal, CRH will promptly so advise the Purchaser, and CRH and the Purchaser will amend the Arrangement Agreement to reflect such offer made by the Purchaser.

Each successive modification of any acquisition proposal constitutes a new acquisition proposal for the purposes of the foregoing provisions of the Arrangement Agreement. If CRH provides the Purchaser with the notice of an acquisition proposal on a date that is less than six business days prior to the CRH meeting, CRH may (and will at the request of the Purchaser) adjourn or postpone the CRH meeting to the latest date specified by either CRH or the Purchaser that, in either case, is not later than the earlier of (i) ten business days after the date on which CRH meeting was originally scheduled, and (ii) five business days prior to June 30, 2021, or such later date as may be agreed to in writing by the parties.

The CRH Board is required to promptly reaffirm its recommendation that CRH securityholders vote in favour of the Arrangement Resolution by press release after: (i) the determination by the CRH Board that any publicly announced acquisition proposal is not a superior proposal; or (ii) the determination by the CRH Board that a proposed amendment to the terms of the Arrangement would result in the publicly announced acquisition proposal not being a superior proposal, and the Purchaser has so amended the terms of the Arrangement. CRH is required to provide the Purchaser and its outside legal counsel with a reasonable opportunity to review the form and content of any such press release and must consider in good faith all reasonable amendments to such press release as requested by the Purchaser and its counsel.

The CRH Board is also required to reaffirm its recommendation that CRH securityholders vote in favour of the Arrangement Resolution at the Purchaser’s written request, which reaffirmation must be done promptly, and in any event within five business days of the request (or in the event that CRH Meeting is scheduled to occur within such five business day period, prior to the third business day prior to the date of CRH meeting).

Nothing in the Arrangement Agreement prevents the CRH Board from responding, through a directors’ circular or otherwise as required by applicable securities laws, to an acquisition proposal that it determines is not a superior proposal, or from changing its recommendation as a result of the Purchaser having suffered a Material Adverse Effect. In addition, nothing in Arrangement Agreement prevents the CRH Board from taking any action, including changing its recommendation, if the CRH Board, or from making any disclosure to any CRH securityholder, if the CRH Board, acting in good faith and upon the advice of its legal advisors, determines that the failure to take such action or make such disclosure would be inconsistent with the exercise of its fiduciary duties or such disclosure is otherwise required under applicable law (except that the CRH Board is not permitted to change its recommendation in response to an acquisition proposal other than as permitted above).

If prior to the effective time of the Arrangement, the CRH Board fails to recommend that CRH securityholders vote in favour of the Arrangement Resolution, or withdraws, amends, modifies or qualifies such recommendation in a manner adverse to the Purchaser, or fails to publicly reaffirm such recommendation within five business days (and in any case prior to the CRH meeting) after a request by the Purchaser to do so, the Purchaser will generally have a right to terminate the Arrangement Agreement and receive a termination fee of $10 million from CRH, as further described in “—Termination of the Arrangement Agreement,” beginning on page [●] and in “—Termination Fees,” beginning on page [●].

 

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CRH Meeting Covenants

CRH has agreed to convene and conduct the CRH meeting in accordance with the Interim Order, its organizational documents and applicable laws as soon as reasonably practicable following receipt of the Interim Order, and in any event on or before the May 31, 2021. Subject to the limited exceptions described under “—Change of CRH Board Recommendation; Termination in Connection with a Superior Proposal,” beginning on page [●], CRH is required to solicit proxies in favour of the Arrangement Resolution, against any resolution submitted by any other CRH shareholder, and take all other actions that are reasonably necessary or desirable to seek the requisite approval of the Arrangement Resolution from CRH shareholders and CRH securityholders.

CRH is generally not permitted to adjourn, postpone or cancel (or propose to adjourn, postpone or cancel) the CRH meeting without the prior written consent of the Purchaser, except (i) if CRH reasonably believes that it is necessary to postpone or adjourn the CRH meeting to ensure that any supplement or amendment to this proxy statement required by applicable law is provided to CRH securityholders within a reasonable amount of time in advance of the CRH meeting or (ii) if CRH will not have a sufficient number of securities represented (either in person or by proxy) to constitute a quorum necessary to conduct the business of the CRH meeting, then CRH will have the right to, on one or more occasions, without the prior written consent of the Purchaser, postpone or adjourn the CRH meeting for the minimum duration necessary to remedy the circumstances giving rise to such adjournment or postponement. CRH may also postpone or adjourn the CRH meeting if CRH provides the Purchaser with the notice of an acquisition proposal on a date that is less than six business days prior to the CRH meeting, as described under “—Change of CRH Board Recommendation; Termination in Connection with a Superior Proposal,” beginning on page [●]. CRH is not permitted to change the record date in connection with any adjournment or postponement of the CRH meeting unless required by law.

Tax Act Covenant

CRH and the WELL parties have agreed to make any amendment required to the Plan of Arrangement to allow WELL or any affiliate thereof to obtain the benefit of paragraph 88(1)(d) of the Tax Act, provided such amendment does not result in adverse consequences to CRH or any CRH securityholder.

Guarantee by WELL

In the Arrangement Agreement, WELL agreed to cause the Purchaser and Finco to carry out all of its obligations thereunder and under the financing agreements, as applicable, and unconditionally and irrevocably guaranteed in favour of CRH the due and punctual performance by the Purchaser and Finco of each of their respective covenants and obligations thereunder, including the obligation to pay the applicable consideration to CRH shareholders in accordance with the Arrangement Agreement, and the accuracy of the representations and warranties of the WELL parties provided therein. WELL, Finco and the Purchaser will be jointly and severally liable to CRH with respect to any breach by WELL, Finco or the Purchaser of its covenants and obligations or any inaccuracy of the representations and warranties of the WELL parties provided in the Arrangement Agreement.

Notice of Certain Events

During the period prior to the effective time of the Arrangement (or earlier termination of the Arrangement Agreement), each party to the Arrangement Agreement has agreed to give prompt notice to the others of the occurrence, or failure to occur, of any event or state of facts that would, or would be likely to:

 

   

cause any of the representations or warranties of such party contained in the Arrangement Agreement to be untrue or inaccurate in any material respect as of the effective time of the Arrangement (other than any event or state of facts resulting from the actions or omissions required under the Arrangement Agreement); or

 

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result in the failure to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by such party under the Arrangement Agreement prior to the effective time of the Arrangement.

Neither CRH nor the Purchaser may elect not to complete Arrangement pursuant to the conditions or termination rights arising from a breach of a representation or warranty of the other party or a failure by the other party to perform any covenant or agreement, and no termination fee will be payable as a result of such termination, unless the party intending to rely thereon has delivered a written notice to the other party specifying in reasonable detail all breaches of covenants, representations and warranties or other matters which the party delivering such notice is asserting as the basis for the non-fulfilment or the applicable condition or termination right, as the case may be. If any such notice is delivered, then provided that the other party is proceeding diligently to cure such matter and such matter is capable of being cured, such party may not terminate the Arrangement Agreement until the earlier of June 30, 2021 and the expiration of a period of ten business days from delivery of such notice to the breaching party.

Indemnification and Insurance

Prior to the completion of the Arrangement, CRH is required to purchase director and officer liability “run-off” insurance for the benefit of the former directors and officers of CRH for a period of not less than six years following the completion of the Arrangement no less favourable than the current CRH policy, and the Purchaser has agreed to maintain such policy in full force and effect and not to take any action to diminish the scope and extent of such insurance coverage for and throughout such period (provided that the Purchaser will not be required to pay any amounts in respect of such coverage prior to or after the effective time of the Arrangement and the cost of such policies may not exceed 300% of CRH’s current annual aggregate premium for policies currently maintained by CRH). The former officers and directors of CRH will be indemnified by the Purchaser and CRH in accordance with the terms of the articles of incorporation of CRH as currently constituted, in addition to the terms of any indemnity agreements entered into between CRH and such officers and directors, the terms of which agreements will be binding upon the Purchaser.

Other Covenants of CRH and the WELL Parties

The Arrangement contains certain other covenants and agreements of CRH and the WELL Parties, including covenants relating to:

 

   

obtaining the Interim Order and the Final Order, and the parties’ cooperation in connection therewith;

 

   

notice by CRH of communications in opposition to the Arrangement or the exercise or withdrawal of dissent rights, review by the Purchaser of communications to CRH shareholders exercising dissent rights, and consent by the Purchaser to any settlements with respect to dissent rights;

 

   

the preparation and filing of this proxy statement;

 

   

the preparation of other filings and documents in connection with the Arrangement;

 

   

the issuance of certain announcements and shareholder communications;

 

   

access by the Purchaser and its representatives to certain information about CRH during the period prior to the effective time of the Arrangement (or earlier termination of the Arrangement Agreement);

 

   

actions by CRH to exempt certain dispositions of CRH shares (and derivative securities in respect thereof) under Rule 16b-3 promulgated under the Exchange Act;

 

   

cooperation by CRH to enable the delisting the CRH shares from the NYSE American and the TSX, the deregistration of CRH shares under the Exchange Act, and CRH’s ceasing to be a reporting issuer in Canada and promptly as practicable after the effective time of the Arrangement;

 

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Conditions to the Arrangement

Mutual Conditions Precedent. The obligations of CRH and the WELL parties to complete the Arrangement are subject to the fulfillment of each of the following conditions precedent on or before the effective time of the Arrangement, each of which may only be waived with the mutual consent of the parties:

 

   

the Arrangement Resolution having been approved and adopted by CRH shareholders and CRH securityholders at the CRH meeting in accordance with the Interim Order;

 

   

the Interim Order and the Final Order having been obtained on terms consistent with the Arrangement Agreement, and not set aside or modified in a manner unacceptable to CRH and the Purchaser, acting reasonably, on appeal or otherwise;

 

   

no act, action, suit, proceeding, objection or opposition having been taken or threatened in writing before or by any governmental authority, and no law or order (whether or not having the force of law and whether temporary, preliminary or permanent) having been enacted, promulgated, amended or applied, in either case, that enjoins, prevents, prohibits or makes illegal the consummation of the Arrangement;

 

   

the waiting period applicable to the Arrangement under the HSR Act having expired or been terminated; and

 

   

the Arrangement Agreement not having been terminated.

Additional Conditions Precedent to the Obligations of the Purchaser. The obligation of the Purchaser to complete the Arrangement is subject to the fulfillment of each of the following conditions precedent on or before the effective time of the Arrangement (each of which is for the exclusive benefit of the Purchaser and may be waived by the Purchaser in whole or in part at any time):

 

   

(i) the representations and warranties of CRH relating to its corporate existence, good standing and power to enter into the Arrangement Agreement, the authorization of its execution of the Arrangement Agreement, and the capital structure of CRH being true and correct in all respects as of the date of the Arrangement Agreement and as of the effective date of the Arrangement as if made as of the effective date of the Arrangement; (ii) the representations and warranties of CRH relating to its subsidiaries being true and correct in all material respects as of the date of the Arrangement Agreement and as of the effective date of the Arrangement as if made as of the effective date of the Arrangement (disregarding for such purpose any materiality qualification therein); and (iii) all other representations and warranties of CRH set forth in the Arrangement Agreement being true and correct in all respects (in the case of any representation or warranty qualified by materiality or Material Adverse Effect) or in all material respects (in the case of any representation and warranty not qualified by materiality or Material Adverse Effect) as of the effective time of the Arrangement, as though made as of the effective time of the Arrangement (except for representations and warranties made as of a specified date, the accuracy of which shall be determined as of that specified date), except where the failure or failures of all such representations and warranties to be so true and correct would not reasonably be expected to have a Material Adverse Effect;

 

   

all covenants of CRH under the Arrangement Agreement to be performed on or before the effective time of the Arrangement which have not been waived by the Purchaser having been duly performed by CRH in all material respects;

 

   

no Material Adverse Effect with respect to CRH having occurred since the date of the Arrangement Agreement;

 

   

dissent rights having not been exercised (or, if exercised, remain outstanding) with respect to more than 5% of the issued and outstanding CRH shares;

 

   

the Purchaser having received a certificate or certificates of CRH, signed on behalf of CRH by a senior executive officer of CRH, confirming each of the foregoing; and

 

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each director and officer of CRH that was the registered or beneficial holder of CRH securities as of the date of the Arrangement Agreement having entered into a voting agreement as described in “The Arrangement – Voting Agreement” on page [●], and:

 

   

all representations and warranties made by such directors and officers in the voting agreements being true and correct in all material respects, as if made on and as of the effective date of the Arrangement (except for representations and warranties made as of a specified date, the accuracy of which will be determined as of that specified date);

 

   

such directors and officers having complied in all material respects with all covenants set forth in the voting agreements that are to be complied with on or before the effective date of the Arrangement;

 

   

the voting agreements having not been terminated; and

 

   

no event having occurred that, with notice or lapse of time or both, would give the Purchaser the right to terminate any of the voting agreements.

Additional Conditions Precedent to the Obligations of CRH. The obligation of CRH to complete the Arrangement is subject to the fulfillment of each of the following conditions precedent on or before the effective time of the Arrangement (each of which is for the exclusive benefit of CRH and may be waived by CRH in whole or part at any time):

 

   

the representations and warranties of the Purchaser set forth in the Arrangement Agreement being true and correct in all respects (in the case of any representation or warranty qualified by materiality or Material Adverse Effect) or in all material respects (in the case of any representation and warranty not qualified by materiality or Material Adverse Effect) as though made on and as of the effective time of the Arrangement (except for representations and warranties made as of a specified date, the accuracy of which shall be determined as of that specified date), except where the failure or failures of all such representations and warranties to be so true and correct in all respects would not reasonably be expected to prevent or materially delay the Purchaser’s ability to consummate the transaction contemplated by the Arrangement Agreement;

 

   

all covenants of the Purchaser under the Arrangement Agreement to be performed on or before the effective time of the Arrangement which have not been waived by CRH having been duly performed by the Purchaser in all material respects;

 

   

CRH having received a certificate or certificates of the Purchaser, signed on behalf of the Purchaser by a senior executive officer of the Purchaser, confirming each of the foregoing; and

 

   

the Purchaser having complied with its obligations with regard to depositing in escrow with the Depositary sufficient funds to satisfy the consideration payable to the CRH shareholders, and the Depositary having confirmed receipt thereof.

Termination of the Arrangement Agreement

The Arrangement Agreement may be terminated at any time prior to the effective time of the Arrangement (notwithstanding any approval of the Arrangement Agreement or the Arrangement Resolution by the CRH securityholders and/or by the Court, as applicable):

 

   

by mutual written agreement of CRH and the Purchaser;

 

   

by either CRH or the Purchaser, if:

 

   

the effective time of the Arrangement does not occur on or before June 30, 2021, except that the right to terminate in this manner is not available to a party whose failure to fulfill any of its obligations or breach any of its representations and warranties under the Arrangement Agreement has been the cause of, or resulted in, the failure of the effective time of the Arrangement to occur by such date;

 

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any law or order is enacted or made applicable that makes consummation of the Arrangement illegal or otherwise prohibited or enjoins CRH or the Purchaser from consummating the Arrangement, and such applicable law or order has become final, binding and non-appealable, except that a party may not terminate the Arrangement Agreement in this manner if the enactment, making, enforcement or amendment of such law or order has been caused by, or is a result of, a breach by such party of any of its representation or warranties or the failure of such party to perform any of its covenants or agreements under the Arrangement Agreement and such party has not used its commercially reasonable efforts to, as applicable, prevent, appeal or overturn such law or order, or otherwise have it lifted or rendered non-applicable in respect of the Arrangement; or

 

   

the requisite CRH shareholder approval or CRH securityholder approval is not obtained at the CRH meeting in accordance with the Interim Order;

 

   

by the Purchaser, if:

 

   

prior to the effective time of the Arrangement, (i) except as permitted by the Arrangement Agreement, the CRH Board changes its recommendation (including if the CRH Board fails to recommend that CRH securityholders vote in favour of the Arrangement Resolution, or withdraws, amends, modifies or qualifies such recommendation in a manner adverse to the Purchaser, or fails to publicly reaffirm such recommendation within five business days (and in any case prior to the CRH meeting) after a request by the Purchaser to do so), unless the Purchaser has made a misrepresentation at the date of the Arrangement Agreement or breached a covenant of the Arrangement Agreement in such a manner that CRH would be entitled to terminate the Arrangement Agreement in accordance with its terms; (ii) the CRH Board or a committee thereof approves or recommends any other acquisition proposal; or (iii) CRH shall breaches the non-solicitation covenants in the Arrangement Agreement;

 

   

there is a breach of any representation or warranty or failure to perform any covenant or agreement set forth in the Arrangement Agreement on the part of CRH that would cause the applicable closing conditions with respect thereto or the parties’ mutual closing conditions not to be satisfied; or

 

   

the Purchaser has been notified in writing by CRH of a proposed agreement with respect to an acquisition proposal (other than a confidentiality and standstill agreement), and either: (i) the Purchaser does not deliver an amended Arrangement proposal within six business days of delivery of such proposed agreement to the Purchaser; or (ii) the Purchaser delivers an amended Arrangement proposal but the CRH Board determines, acting in good faith and in accordance with the terms of the Arrangement Agreement, that the acquisition proposal provided in the proposed agreement continues to be a superior proposal in comparison to the amended Arrangement terms offered by the Purchaser; and

 

   

by CRH, if:

 

   

there is a breach of any representation or warranty or failure to perform any covenant or agreement set forth in the Arrangement Agreement on the part of the Purchaser that would cause the applicable closing conditions with respect thereto or the parties’ mutual closing conditions not to be satisfied; or

 

   

prior to the approval of the Arrangement Resolution, the CRH Board authorizes CRH to enter into a binding written agreement with respect to a superior proposal (other than a confidentiality and standstill agreement), subject to compliance with the non-solicitation provisions in the Arrangement Agreement in all respects (but no such termination will be effective unless and until CRH pays to the Purchaser a termination fee of $10 million).

Any termination of the Arrangement Agreement resulting from a breach of a representation, warranty, covenant or agreement on the part of any party is subject to certain notice requirements and a cure opportunity, as further described in “—Notice of Certain Events,” beginning on page [●].

 

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Termination Fees

The Arrangement Agreement provides that the Purchaser will pay a termination fee of $10 million to CRH if the Arrangement Agreement is terminated by CRH as a result of a breach of any representation or warranty or failure to perform any covenant or agreement set forth in the Arrangement Agreement on the part of the Purchaser that would cause the applicable closing conditions with respect thereto or the parties’ mutual closing conditions not to be satisfied.

The Arrangement Agreement provides that CRH will pay a termination fee of $10 million to the Purchaser if:

 

   

the Arrangement Agreement is terminated by the Purchaser prior to the CRH meeting as a result of (i) the CRH Board changing its recommendation, (ii) the CRH Board or a committee thereof approving or recommending any other acquisition proposal, or (iii) CRH breaching the non-solicitation covenants in the Arrangement Agreement (provided there is a material breach of the non-solicitation covenants);

 

   

the Arrangement Agreement is terminated by the Purchaser prior to the CRH meeting as a result of its receipt of notice of a proposed agreement with respect to an acquisition proposal (other than a confidentiality and standstill agreement), and the failure by Purchaser to deliver an amended Arrangement proposal within six business days thereafter that would cause such acquisition proposal to no longer be a superior proposal;

 

   

the Arrangement Agreement is terminated by CRH prior to approval of the Arrangement Resolution to enter into a binding written agreement with respect to a superior proposal;

 

   

the Arrangement Agreement is terminated by either party because the requisite CRH shareholder approval or CRH securityholder approval is not obtained at the CRH meeting in accordance with the Interim Order, but only if (i) prior to such termination, a bona fide acquisition proposal for CRH was publicly announced by any person other than the Purchaser and (ii) within twelve months following the date of such termination, CRH or one or more of its subsidiaries enters into a definitive agreement in respect of an acquisition proposal (whether or not such acquisition proposal is the same acquisition proposal).

Amendment, Extension and Waiver

Subject to the provisions of the Interim Order, the Plan of Arrangement and applicable laws, the Arrangement Agreement and the Plan of Arrangement may, at any time and from time to time before or after the holding of the CRH meeting but not later than the effective time of the Arrangement, be amended by mutual written agreement of CRH and the WELL parties, without further notice to or authorization on the part of the CRH securityholders. Any such amendment may, without limitation:

 

   

change the time for performance of any of the obligations or acts of the parties;

 

   

waive any inaccuracies or modify any representation or warranty contained therein or in any document delivered pursuant thereto;

 

   

waive compliance with or modify any of the covenants therein and waive or modify performance of any of the obligations of the parties; and

 

   

waive compliance with or modify any mutual closing conditions therein.

Any party may (a) extend the time for the performance of any of the obligations or acts of the other party, (b) waive compliance, except as provided in the Arrangement Agreement, with any of the other party’s agreements or the fulfilment of any conditions to its own obligations contained in the Arrangement Agreement, or (c) waive inaccuracies in any of the other party’s representations or warranties contained in the Arrangement Agreement or in any document delivered by the other party. Any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party and, unless otherwise provided in the written waiver, will be limited to the specific breach or condition waived.

 

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Injunctive Relief and Specific Performance

CRH and the WELL parties have agreed that, in the event of any breach or threatened breach of the Arrangement Agreement by a party, the non-breaching party will be entitled, without the requirement of posting a bond or other security, to equitable relief, including injunctive relief and specific performance, which includes the right of CRH to cause the WELL parties, jointly and severally, to fully enforce the terms of the financing agreements, and the parties have agreed not to object to the granting of injunctive or other equitable relief on the basis that there exists an adequate remedy at law. Subject to the terms of the Arrangement Agreement, such remedies will not be the exclusive remedies for any breach of the Arrangement Agreement but will be in addition to all other remedies available at law or equity to each of the parties.

Governing Law; Waiver of Jury Trial

The Arrangement Agreement is governed, including as to validity, interpretation and effect, by the laws of the Province of British Columbia and the laws of Canada applicable therein. Each of CRH and the WELL parties attorned to the exclusive jurisdiction of the courts of the Province of British Columbia in respect of all matters arising under and in relation to the Arrangement Agreement and the Arrangement and waived any defences to the maintenance of an action in the Courts of the Province of British Columbia. Each of the parties also waived any right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to the Arrangement Agreement or the transactions contemplated thereby or the actions of the parties in the negotiation, administration, performance and enforcement of the Arrangement Agreement.

 

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DISSENT RIGHTS

The following is a summary of the provisions of the BCBCA relating to the dissent rights, appraisal rights or the dissent procedures. It is not a comprehensive statement of such rights and procedures and is qualified in its entirety by the reference to the full text of sections 237 to 247 of the BCBCA (which are attached to this proxy statement as Annex F), as modified by the Plan of Arrangement (which is attached to this proxy statement as Annex C]) and the Interim Order (which is attached to this proxy statement as Annex G). The Court hearing the application for the Final Order has the discretion to alter the dissent rights described herein based on the evidence presented at such hearing.

The statutory provisions dealing with the right of dissent are technical and complex. A registered CRH shareholder who intends to exercise the dissent rights should carefully consider and comply with the provisions of Sections 237 to 247 of the BCBCA, as modified by the Plan of Arrangement, the Interim Order and the Final Order and seek legal advice. Failure to comply strictly with the provisions of the BCBCA, as modified by the Plan of Arrangement, Interim Order and Final Order, and to adhere to the procedures established therein, may result in the loss of all rights thereunder.

Pursuant to the Interim Order, each registered CRH shareholder may exercise dissent rights in respect of the Arrangement under Sections 237 to 247 of the BCBCA, as modified by the Plan of Arrangement, the Interim Order or the Final Order. Registered CRH shareholders who duly and validly exercise such dissent rights (“Dissenting Shareholders”) and who:

 

   

are ultimately determined to be entitled to be paid fair value for the CRH shares in respect of which they have exercised dissent rights will not be entitled to any other payment or consideration (including any payment that would be payable under the Arrangement had such holders not exercised their dissent rights in respect of such CRH shares) and will be deemed to have irrevocably transferred such CRH shares to Amalco at the effective time of the Arrangement, without any further act or formality, free and clear of any liens; or

 

   

are ultimately not entitled, for any reason, to be paid fair value for the CRH shares in respect of which they have purported to exercise dissent rights will be deemed to have participated in the Arrangement on the same basis as a CRH shareholder that has not exercised dissent rights, and shall only be entitled to receive the consideration for their CRH shares provided for in the Arrangement Agreement,

but in no case will the Purchaser, CRH or any other person be required to recognize such Dissenting Shareholders as CRH shareholders after the cancellation of the dissenting shares, which cancellation is to occur at the effective time of the Arrangement, and each Dissenting Shareholder will cease to be entitled to the rights of a CRH shareholder in respect of the dissenting shares in relation to which such Dissenting Shareholder has exercised dissent rights and the central securities register will be amended to reflect that such former holder is no longer the holder of such CRH shares as and from the effective time of the Arrangement.

Persons who are beneficial CRH shareholders who wish to dissent with respect to their CRH shares should be aware that only registered CRH shareholders are entitled to dissent with respect to them. A registered CRH shareholder such as an intermediary who holds CRH shares as nominee for beneficial CRH shareholders, some of whom wish to dissent, must exercise dissent rights on behalf of such beneficial CRH shareholders with respect to the CRH shares held for such beneficial CRH shareholders. In such case, the Notice of Dissent (as defined below) should set forth the number of CRH shares it covers.

Pursuant to Section 238 of the BCBCA, every registered CRH shareholder who duly and validly dissents from the Arrangement Resolution in strict compliance with Sections 237 to 247 of the BCBCA will be entitled to be paid by Amalco the fair value of the CRH shares held by such Dissenting Shareholder determined as at the point in time immediately before the passing of the Arrangement Resolution.

 

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To exercise dissent rights, a registered CRH shareholder must dissent with respect to all CRH shares in which the holder owns a beneficial interest. A registered CRH shareholder who wishes to dissent must deliver written notice of dissent (a “Notice of Dissent”) to CRH, c/o Blake, Cassels & Graydon LLP, Suite 2600 – 595 Burrard Street, Vancouver, BC, V7X 1L3 Attention: Alexandra Luchenko by 5:00 p.m. (Vancouver time) on April [●], 2021 (or the business day that is two business days immediately preceding the CRH meeting if it is not held on April [●], 2021), and such Notice of Dissent must strictly comply with the requirements of Section 242 of the BCBCA. Any failure by a CRH shareholder to fully comply may result in the loss of that holder’s dissent rights. Beneficial CRH shareholders who wish to exercise dissent rights must arrange for the registered CRH shareholder holding their CRH shares to deliver the Notice of Dissent.

The delivery of a Notice of Dissent does not deprive a Dissenting Shareholder of the right to vote at the CRH meeting on the Arrangement Resolution; however, a Dissenting Shareholder is not entitled to exercise the dissent rights with respect to any of his or her CRH shares if the Dissenting Shareholder votes in favour of the Arrangement Resolution. A vote against the Arrangement Resolution, whether in person or by proxy, does not constitute a Notice of Dissent.

A registered CRH shareholder that wishes to exercise dissent rights must prepare a separate Notice of Dissent for himself or herself, if dissenting on his or her own behalf, and for each other person who beneficially owns CRH shares registered in the Dissenting Shareholder’s name and on whose behalf the Dissenting Shareholder is dissenting, and must dissent with respect to all of the CRH shares registered in his or her name beneficially owned by the beneficial CRH shareholder on whose behalf he or she is dissenting. The Notice of Dissent must set out the number of CRH shares in respect of which the Notice of Dissent is to be sent (the “Notice Shares”) and:

 

   

if such CRH shares constitute all of the CRH shares of which the Dissenting Shareholder is the registered and beneficial owner, a statement to that effect;

 

   

if such CRH shares constitute all of the CRH shares of which the Dissenting Shareholder is both the registered and beneficial owner, but the Dissenting Shareholder owns additional CRH shares beneficially, a statement to that effect and the names of the registered CRH shareholders, the number of CRH shares held by such registered owners and a statement that written Notices of Dissent has or will be sent with respect to such CRH shares; or

 

   

if the dissent rights are being exercised by a registered owner who is not the beneficial owner of such CRH shares, a statement to that effect and the name of the beneficial owner and a statement that the registered owner is dissenting with respect to all CRH shares of the beneficial owner registered in such registered owner’s name.

If the Arrangement Resolution is approved by the CRH securityholders and if CRH notifies the Dissenting Shareholder of the Company’s intention to act upon the Arrangement Resolution, the Dissenting Shareholder is then required, within one month after CRH gives such notice, to send to CRH the certificates (if any) representing the Notice Shares and a written statement that requires CRH to purchase all of the Notice Shares (including a written statement prepared in accordance with Section 244(1)(c) of the BCBCA if the dissent is being exercised by a registered CRH shareholder on behalf of a beneficial CRH shareholder), whereupon, subject to the provisions of the BCBCA relating to the termination of dissent rights, the CRH shareholder becomes a Dissenting Holder, and is bound to sell, and Amalco is bound to purchase, those CRH shares. Such Dissenting Holder may not vote or exercise or assert any rights of a CRH shareholder in respect of such Notice Shares, other than the rights set forth in Sections 237 to 247 of the BCBCA, as modified by the Plan of Arrangement, Interim Order and Final Order.

The Dissenting Shareholder and Amalco may agree on the payout value of the Notice Shares; otherwise, either party may apply to the Court to determine the fair value of the Notice Shares. There is no obligation on Amalco or CRH to make an application to the Court. After a determination of the payout value of the Notice

 

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Shares, Amalco must then promptly pay that amount to the Dissenting Shareholder. There can be no assurance that the amount a Dissenting Shareholder may receive as fair value for its CRH Shares will be more than or equal to the consideration under the Arrangement.

A Dissenting Shareholder loses his or her dissent right if, before full payment is made for the Notice Shares, CRH abandons the corporate action that has given rise to the dissent right (namely, the Arrangement), a court permanently enjoins the action, or the Dissenting Shareholder withdraws the Notice of Dissent with CRH’s consent. When these events occur, CRH must return the share certificates (if any) to the Dissenting Shareholder and the Dissenting Shareholder regains the ability to vote and exercise shareholder rights.

In no circumstances will CRH, WELL, the Purchaser, Amalco or any other person be required to recognize a person as a Dissenting Holder: (i) unless such person is the holder of the CRH shares in respect of which dissent rights are purported to be exercised immediately prior to the effective time of the Arrangement; (ii) if such person has voted or instructed a proxyholder to vote the Notice Shares in favour of the Arrangement Resolution; or (iii) unless such person has strictly complied with the procedures for exercising dissent rights set out in Sections 237 to 247 of the BCBCA, as modified by the Plan of Arrangement, Interim Order and Final Order, and does not withdraw such person’s Notice of Dissent prior to the effective time of the Arrangement.

If a Dissenting Shareholder fails to strictly comply with the requirements of the dissent rights set out in the Interim Order, it will lose its dissent rights, CRH will return to the Dissenting Shareholder the certificates representing the Notice Shares that were delivered to CRH, if any, and if the Arrangement is completed, that Dissenting Shareholder will be deemed to have participated in the Arrangement on the same terms as a CRH shareholder.

If a Dissenting Shareholder strictly complies with the foregoing requirements of the dissent rights, but the Arrangement is not completed, CRH will return to the Dissenting Shareholder the certificates delivered to CRH by the Dissenting Shareholder, if any.

All Notices of Dissent to the Arrangement pursuant to Sections 237 to 247 of the BCBCA should be sent to CRH at:

Blake, Cassels & Graydon LLP

Attention: Alexandra Luchenko

Suite 2600 – 595 Burrard Street

Vancouver, BC V7X 1L3

The discussion above is only a summary of the dissent rights, which are technical and complex. A CRH shareholder who intends to exercise dissent rights should carefully consider and comply with the provisions of Sections 237 to 247 of the BCBCA, as modified by the Plan of Arrangement, Interim Order and Final Order. Persons who are beneficial holders of CRH shares registered in the name of an intermediary such as a broker, custodian, nominee, other intermediary, or in some other name, who wish to dissent should be aware that only the registered owner of such CRH shares is entitled to dissent.

CRH suggests that any CRH shareholder wishing to avail themselves of the dissent rights seek their own legal advice as failure to comply strictly with the applicable provisions of the BCBCA, as modified by the Plan of Arrangement, Interim Order and the Final Order may result in the loss of all dissent rights. Dissenting Shareholders should note that the exercise of dissent rights can be a complex, time-consuming and expensive process.

For a general summary of certain income tax implications to a Dissenting Shareholder, see “The Arrangement – Material U.S. Federal Income Tax Consequences,” beginning on page [] and “The Arrangement – Material Canadian Federal Income Tax Consequences,” beginning on page [].

 

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MARKET PRICE AND DIVIDEND DATA

Market Price of CRH Shares

The CRH shares trade on NYSE American under the symbol CRHM and on the TSX under the symbol CRH. As of [●], 2021, there were [●] CRH shares issued and outstanding held by [●] registered CRH shareholders. Certain shares of our common stock are held in “street name” and accordingly, the number of beneficial owners of such shares is not known or included in the foregoing number. The following table shows the high and low sales prices on the NYSE American of one CRH share for the periods indicated:

 

Year ended December 31, 2019    High      Low  

First Quarter

   $ 3.41      $ 2.53  

Second Quarter

   $ 3.11      $ 2.61  

Third Quarter

   $ 3.32      $ 2.62  

Fourth Quarter

   $ 3.75      $ 2.88  

Year ended December 31, 2020

     

First Quarter

   $ 4.43      $ 0.89  

Second Quarter

   $ 2.87      $ 1.16  

Third Quarter

   $ 2.87      $ 1.96  

Fourth Quarter

   $ 2.98      $ 1.95  

The following table shows the high and low sales prices on the TSX of one CRH share for the periods indicated:

 

Year ended December 31, 2019    High      Low  

First Quarter

   C$ 4.53      C$ 3.37  

Second Quarter

   C$ 4.15      C$ 3.51  

Third Quarter

   C$ 4.43      C$ 3.43  

Fourth Quarter

   C$ 4.93      C$ 3.78  

Year ended December 31, 2020

     

First Quarter

   C$ 5.90      C$ 1.26  

Second Quarter

   C$ 3.85      C$ 1.65  

Third Quarter

   C$ 3.80      C$ 2.72  

Fourth Quarter

   C$ 3.92      C$ 2.60  

The closing sale price of CRH shares on the NYSE American on February 5, 2021, the last trading day prior to the announcement of the Arrangement, was $2.18 per CRH share. The $4.00 per CRH share to be paid for each CRH share in the Arrangement represents a premium of approximately 83% to the NYSE American closing price on February 5, 2021, and a premium of approximately 65% to the 90-calendar-day volume-weighted average price of CRH shares on the NYSE American through February 5, 2021. The closing sale price of CRH shares on the TSX on February 5, 2021, was C$2.78 per CRH share. The $4.00 per CRH share to be paid for each CRH share in the Arrangement, or C$5.1108 based on the Bank of Canada daily exchange rate on February 5, 2021, represents a premium of approximately 84% to the TSX closing price on February 5, 2021, and a premium of approximately 61% to the 90-calendar-day volume-weighted average price of CRH shares on the TSX through February 5, 2021. On [], 2021, the most recent practicable trading day before the date of this proxy statement, the closing sale price of CRH shares on the NYSE American was $[] per CRH share and on the TSX was C$[per CRH share. You are encouraged to obtain current market quotations for CRH shares in connection with voting your CRH shares.

Dividends

We have not declared or paid any dividends on our outstanding common shares since our inception and we do not anticipate that we will do so in the foreseeable future. The declaration of dividends on the CRH shares is within the discretion of the CRH Board and will depend on the assessment of, among other factors, earnings, capital requirements and our operating and financial condition. At the present time, anticipated capital requirements are such that we intend to follow a policy of retaining earnings in order to finance the further development of the business.

 

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information regarding the beneficial ownership of CRH shares as of March 1, 2021 (except as otherwise noted) and shows the number of CRH shares and percentage of outstanding CRH shares owned by:

 

   

each person or entity who is known by us to own beneficially 5% or more of the CRH shares;

 

   

each of our directors;

 

   

each of our named executive officers; and

 

   

all of our directors and executive officers as a group.

Beneficial ownership is determined in accordance with SEC rules, which generally attribute beneficial ownership of securities to each person or entity who possesses, either solely or shared with others, the power to vote or dispose of those securities. These rules also treat as outstanding all shares that a person would receive upon exercise of stock options or warrants, or upon conversion of convertible securities held by that person that are exercisable or convertible within 60 days of the determination date, which in the case of the following table is March 1, 2021. CRH shares issuable pursuant to exercisable or convertible securities are deemed to be outstanding for computing the percentage ownership of the person holding such securities but are not deemed outstanding for computing the percentage ownership of any other person. The percentage of beneficial ownership for the following table is based on 71,620,447 CRH shares outstanding as of March 1, 2021. To our knowledge, except as indicated in the footnotes to this table and pursuant to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all CRH shares shown as beneficially owned by them, and none of the CRH shares beneficially owned by our directors and executive officers was pledged.

 

Name and Address of Beneficial Owner

   Beneficial Ownership  
   Number of
CRH Shares
     Percentage
of Class
 

Five Percent and Greater CRH shareholders:

     

Nantahala Capital Management, LLC(1)

     6,892,005        9.6

Beutel, Goodman & Company Ltd.(2)

     5,348,770        7.5

Directors and Named Executive Officers:

     

Richard Bear(3)

     748,000        1.0

Dr. David Johnson(4)

     423,900       

James Kreger(5)

     96,088       

Todd Patrick(6)

     500,000       

Ian Webb(7)

     185,800       

Dr. Tushar Ramani(8)

     290,000       

Brian Griffin

     —          —    

All executive officers and directors as a group (7 persons)

     2,243,788        3.1
  

 

 

    

 

 

 

 

*

Represents holdings of less than one percent of the outstanding CRH shares.

(1)

Based on information set forth in the Schedule 13G/A filed by Nantahala Capital Management, LLC with the SEC on February 16, 2021. Nantahala Capital Management, LLC reporrted that, as of December 31, 2020, it was deemed to have shared voting power and shared dispositive power for 6,892,005 CRH shares, all of which were held by funds and separately managed accounts under its control. Nantahala Capital Management, LLC further reported that, as the managing members of Nantahala Capital Management, LLC, each of Mr. Wilmot B. Harkey and Mr. Daniel Mack may also be deemed to be a beneficial owner of those shares. The address for Nantahala Capital Management, LLC is 130 Main St., 2nd Floor, New Canaan, CT 06840.

 

(2)

Based on information set forth in the Schedule 13G filed by Beutel, Goodman & Company Ltd. with the SEC on February 11, 2021. Beutel, Goodman & Company Ltd. reported that, as of December 31, 2020, it was deemed to have sole voting power for 4,994,250 CRH shares and sole dispositive power for 5,348,770 CRH shares, all of which are owned by its investment advisory clients. The address for Beutel, Goodman & Company Ltd. is 20 Eglinton Avenue West, Suite 2000, Toronto, Ontario, M4R 1K8, Canada.

 

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(3)

Consists of 368,000 common shares, 350,000 vested stock options, and 30,000 share units vesting on March 17, 2021.

(4)

Consists of 423,900 common shares.

(5)

Consists of 76,088 common shares and 20,000 share units vesting on March 17, 2021.

(6)

Consists of 495,313 common shares and 4,687 vested stock options.

(7)

Consists of 160,800 common shares and 25,000 vested stock options.

(8)

Consists of 125,000 vested stock options, 125,000 stock options vesting on April 8, 2021, and 40,000 RSU’s vesting on March 17, 2021.

 

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OTHER MATTERS

Other Matters for Action at the CRH Meeting

As of the date of this proxy statement, the CRH Board knows of no matters that will be presented for consideration at the CRH meeting other than as described in this proxy statement.

Future Shareholder Proposals

If the Arrangement is consummated, we will not have public CRH shareholders and there will be no public participation in any future meeting of CRH shareholders. However, if the Arrangement is not completed, we expect to hold a 2021 annual general meeting of CRH shareholders. The BCBCA and Rule 14a-8 promulgated under the Exchange Act provide that, in certain circumstances, eligible shareholders are entitled to submit to the Company notice of a matter that such shareholder proposes to raise at a meeting of shareholders. The final date by which we must receive such a proposal to be raised at our next annual general meeting of CRH shareholders, (i) if submitted pursuant to the BCBCA, is March 11, 2021 and (ii) if submitted pursuant to Rule 14a-8 promulgated under the Exchange Act, is December 31, 2020. Any eligible CRH shareholder who may wish to exercise this right should carefully consider whether they are eligible to make such a proposal, and comply with the relevant provisions of the BCBCA and the rules and regulation of the SEC. Any CRH shareholder proposals to be considered timely for inclusion in the proxy statement for our next annual general meeting must be submitted in writing to CRH Medical Corporation, Suite 578 – 999 Canada Place, Vancouver, British Columbia V6C 3E1, Attention: Corporate Secretary.

Householding of CRH Meeting Materials

The SEC has adopted rules that permit companies and intermediaries, such as brokers and banks, to satisfy the delivery requirements for proxy statements with respect to two or more shareholders sharing an address by delivering a single proxy statement, as applicable, addressed to those shareholders, unless contrary instructions have been received. Accordingly, only one copy of this proxy statement is being delivered by CRH to CRH shareholders residing at the same address, unless CRH shareholders have notified CRH of their desire to receive multiple copies of this proxy statement. This procedure, which is commonly referred to as “householding,” reduces the amount of duplicate information that shareholders receive and lowers printing and mailing costs for companies.

If you wish to opt out of this procedure and receive a separate set of proxy materials in the future, or if you are receiving multiple copies and would like to receive only one, you should contact CRH at the address and telephone number below. A separate copy of these proxy materials will be promptly delivered upon oral or written request to any CRH shareholder residing at an address to which only one copy was mailed. Requests for additional copies should be directed to CRH at Investor Relations, CRH Medical Corporation, Suite 578 – 999 Canada Place, Vancouver, British Columbia V6C 3E1 or by calling (339) 970-2846.

If you hold your shares in “street name” by a broker, bank or other nominee, please contract your broker, bank or other nominee for more information on their householding procedures.

Interest of Informed Persons in Material Transactions

Except as otherwise disclosed in this proxy statement, CRH is not aware of any director, executive officer or any person who, to the knowledge of the directors or officers of CRH, beneficially owns or controls or exercises discretion over CRH shares carrying more than 10% of the votes attached to the CRH shares, or any associate or affiliate of any of the foregoing, having any material interest, direct or indirect, in any transaction or proposed transaction since January 1, 2021, which has materially affected or would materially affect CRH or any of its subsidiaries.

Auditor of the Company

The Company’s auditor is KPMG LLP, Chartered Accountants, of Vancouver, British Columbia.

 

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WHERE YOU CAN FIND MORE INFORMATION

CRH files annual, quarterly and current reports and other information with the SEC and with Canadian securities commissions. You can obtain free copies of the documents we file with the SEC through the SEC’s website at http://www.sec.gov and of the documents we file with Canadian securities commissions on the Canadian Securities Administrators’ website at http://www.sedar.com. You may also obtain copies of such documents without charge from CRH (excluding certain exhibits thereto) by requesting them in writing or by telephone at the following address and telephone number:

CRH Medical Corporation

Suite 578 – 999 Canada Place

Vancouver, British Columbia, Canada V6C 3E1

Attention: Investor Relations

Telephone: (604) 633-1440

You can also find copies of our filings with the SEC and the Canadian securities commissions, as well as other information about CRH, at https://investors.crhsystem.com. Information contained on the CRH website does not constitute part of this proxy statement and is not, and shall not be deemed to be, incorporated by reference into this proxy statement.

If you would like to request documents from us, please do so no later than five business days before the CRH meeting in order to receive timely delivery of those documents prior to the CRH meeting.

If you have more questions about the Arrangement or how to vote your CRH securities, or if you need additional copies of this proxy statement or the enclosed Form of Proxy, please contact our proxy solicitor, Laurel Hill by telephone at :1-877-452-7184 (North American Toll Free) or 416-304-0211 (Outside North America); or by email at: assistance@laurelhill.com.

 

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APPROVAL OF DIRECTORS

The undersigned hereby certifies that the contents and the sending of this proxy statement have been approved by the CRH Board.

DATED as of [●], 2021

 

BY ORDER OF THE CRH BOARD OF DIRECTORS
By:               
  Name: Ian Webb
  Title: Lead Director

 

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ANNEX A

ARRANGEMENT RESOLUTION

BE IT RESOLVED, AS A SPECIAL RESOLUTION THAT:

 

1.

The arrangement (the “Arrangement”) under Section 288 of the Business Corporations Act (British Columbia) (the “BCBCA”) involving CRH Medical Corporation (“CRH”), all as more particularly described and set forth in the proxy statement and management information circular (the “Circular”) of CRH dated [●], 2021, accompanying the notice of this meeting (as the Arrangement may be, or may have been, modified or amended in accordance with its terms), is hereby authorized, approved and adopted.

 

2.

The plan of arrangement (the “Plan of Arrangement”), involving CRH and implementing the Arrangement, the full text of which is set out in Annex C to the Circular (as the Plan of Arrangement may be, or may have been, modified or amended in accordance with its terms), is hereby authorized, approved and adopted.

 

3.

The arrangement agreement (the “Arrangement Agreement”) between CRH, WELL Health Technologies Corp., WELL Health Acquisition Corp. and 1286392 B.C. Ltd., dated February 6, 2021, and all the transactions contemplated therein, the actions of the directors of CRH in approving the Arrangement and the actions of the directors and officers of CRH in executing and delivering the Arrangement Agreement and any amendments thereto are hereby ratified and approved.

 

4.

Notwithstanding that this resolution has been passed (and the Arrangement approved) by the securityholders of CRH or that the Arrangement has been approved by the British Columbia Supreme Court, the directors of CRH are hereby authorized and empowered, without further notice to, or approval of, the securityholders of CRH:

 

  (a)

to amend the Arrangement Agreement or the Plan of Arrangement to the extent permitted by the Arrangement Agreement or the Plan of Arrangement; or

 

  (b)

subject to the terms of the Arrangement Agreement, not to proceed with the Arrangement.

 

5.

Any director or officer of CRH is hereby authorized and directed for and on behalf of CRH to execute, whether under corporate seal of CRH or otherwise, and to deliver such records, documents and information as are necessary or desirable to the Registrar of Companies under the BCBCA in accordance with the Arrangement Agreement for filing.

 

6.

Any one or more directors or officers of CRH is hereby authorized, for and on behalf and in the name of CRH, to execute and deliver, whether under corporate seal of CRH or otherwise, all such agreements, forms waivers, notices, certificate, confirmations and other documents and instruments and to do or cause to be done all such other acts and things as in the opinion of such director or officer may be necessary, desirable or useful for the purpose of giving effect to these resolutions, the Arrangement Agreement and the completion of the Plan of Arrangement in accordance with the terms of the Arrangement Agreement, including:

 

  (a)

all actions required to be taken by or on behalf of CRH, and all necessary filings and obtaining the necessary approvals, consents and acceptances of appropriate regulatory authorities; and

 

  (b)

the signing of the certificates, consents and other documents or declarations required under the Arrangement Agreement or otherwise to be entered into by CRH;

such determination to be conclusively evidenced by the execution and delivery of such document, agreement or instrument or the doing of any such act or thing.

 

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ANNEX B

WELL HEALTH TECHNOLOGIES CORP.

AND

WELL HEALTH ACQUISITION CORP.

AND

1286392 B.C. LTD.

AND

CRH MEDICAL CORPORATION

 

 

ARRANGEMENT AGREEMENT

 

 

DATED FEBRUARY 6, 2021

 

 

 

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TABLE OF CONTENTS

 

         Page  
ARTICLE 1  

INTERPRETATION

     B-2  
1.1  

Definitions

     B-2  
1.2  

Interpretation Not Affected by Headings

     B-13  
1.3  

Number and Gender

     B-13  
1.4  

Date and Time for Any Action

     B-13  
1.5  

Currency

     B-14  
1.6  

Accounting Matters

     B-14  
1.7  

Subsidiaries

     B-14  
1.8  

Knowledge

     B-14  
1.9  

Schedules

     B-14  
ARTICLE 2  

THE ARRANGEMENT

     B-14  
2.1  

Arrangement

     B-14  
2.2  

Interim Order

     B-14  
2.3  

CRH Meeting

     B-15  
2.4  

CRH Circular

     B-16  
2.5  

Preparation of Filings

     B-17  
2.6  

Final Order

     B-18  
2.7  

Court Proceedings

     B-18  
2.8  

Effective Date

     B-19  
2.9  

Payment of Share Consideration

     B-19  
2.10  

Treatment of Convertible Securities

     B-19  
2.11  

Announcement and Shareholder Communications

     B-19  
2.12  

Withholding Taxes

     B-19  
2.13  

U.S. Securities Matters

     B-20  
ARTICLE 3  

GUARANTEE BY PARENT

     B-20  
ARTICLE 4  

REPRESENTATIONS AND WARRANTIES OF CRH

     B-20  
4.1  

Representations and Warranties.

     B-20  
4.2  

Survival of Representations and Warranties

     B-36  
ARTICLE 5  

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

     B-36  
5.1  

Representations and Warranties

     B-36  
5.2  

Survival of Representations and Warranties

     B-38  
ARTICLE 6  

COVENANTS

     B-38  
6.1  

Covenants of CRH Regarding the Conduct of Business

     B-38  
6.2  

Covenants of CRH Relating to the Arrangement

     B-41  
6.3  

Covenants of the Purchaser Relating to the Arrangement

     B-42  
6.4  

Covenant Relating to CRH Options

     B-43  
ARTICLE 7  

CONDITIONS

     B-44  
7.1  

Mutual Conditions Precedent

     B-44  
7.2  

Additional Conditions Precedent to the Obligations of the Purchaser

     B-44  
7.3  

Additional Conditions Precedent to the Obligations of CRH

     B-45  
7.4  

Satisfaction of Conditions

     B-45  
ARTICLE 8  

ADDITIONAL AGREEMENTS

     B-46  
8.1  

Non-Solicitation

     B-46  
8.2  

Access to Information; Confidentiality

     B-50  
8.3  

Notices of Certain Events

     B-50  
8.4  

Insurance and Indemnification

     B-50  
8.5  

Section 16 Matters

     B-51  
8.6  

Stock Exchange Delisting: Deregistration

     B-51  
8.7  

Reasonable Commercial Efforts

     B-51  

 

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         Page  
ARTICLE 9  

TERM, TERMINATION, AMENDMENT AND WAIVER

     B-53  
9.1  

Term

     B-53  
9.2  

Termination

     B-53  
9.3  

Termination Fees

     B-54  
9.4  

Amendment

     B-55  
9.5  

Waiver

     B-56  
ARTICLE 10  

GENERAL PROVISIONS

     B-56  
10.1  

Privacy

     B-56  
10.2  

Notices

     B-56  
10.3  

Governing Law; Waiver of Jury Trial

     B-58  
10.4  

Injunctive Relief

     B-58  
10.5  

Time of Essence

     B-58  
10.6  

Entire Agreement, Binding Effect and Assignment

     B-58  
10.7  

No Liability

     B-58  
10.8  

Severability

     B-59  
10.9  

Counterparts, Execution

     B-59  
SCHEDULE A—PLAN OF ARRANGEMENT   
SCHEDULE B—ARRANGEMENT RESOLUTION   

 

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ARRANGEMENT AGREEMENT

THIS ARRANGEMENT AGREEMENT dated February 6, 2021,

AMONG:

WELL HEALTH TECHNOLOGIES CORP., a corporation existing under the Laws of the Province of British Columbia (the “Parent”)

- and -

WELL HEALTH ACQUISITION CORP., a corporation existing under the Laws of the Province of British Columbia (the “Purchaser”)

- and -

1286392 B.C. LTD., a corporation existing under the under the Laws of the Province of British Columbia (“Finco”)

- and -

CRH MEDICAL CORPORATION, a corporation existing under the Laws of the Province of British Columbia (“CRH,” and together with the Purchaser, Finco and the Parent, the “Parties” and each a “Party”)

RECITALS:

 

A.

The Purchaser desires to acquire all of the issued and outstanding CRH Shares (defined below).

 

B.

The Parties intend to carry out the transactions contemplated in this Agreement by way of an Arrangement under the provisions of the Business Corporations Act (British Columbia) and the regulations made thereunder, as now in effect and as they may be promulgated or amended from time to time (the “BCBCA”).

 

C.

The Purchaser has entered into the CRH Voting Agreement with the Locked-up CRH Shareholders, pursuant to which each of the Locked-up CRH Shareholders has agreed to vote their CRH Securities in favour of the Arrangement Resolution on the terms and subject to the conditions set forth in the CRH Voting Agreements.

 

D

Concurrently with the execution and delivery of this Agreement, and as an inducement to CRH’s willingness to enter into this Agreement, the Parent and Finco have delivered to CRH a series of executed subscription agreements of Finco (the “Finco Subscription Agreements”) for the purchase of subscription receipts (the “Subscription Receipts”) by certain arm’s length third party investors for, in aggregate, C$300,000,000.

 

E.

The CRH Board has determined, after receiving independent financial and legal advice, that the Share Consideration to be received by CRH Shareholders pursuant to the Arrangement is fair and that the Arrangement is in the best interests of CRH, and the CRH Board has resolved to recommend that the CRH Securityholders vote in favour of the Arrangement, all subject to the terms and the conditions contained in this Agreement.

 

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THIS AGREEMENT WITNESSES THAT in consideration of the covenants and agreements herein contained and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the Parties hereto covenant and agree as follows:

ARTICLE 1

INTERPRETATION

 

1.1

Definitions

In this Agreement, unless the context otherwise requires:

2014 CRH RSU Plan” means the share unit plan, approved by the CRH Shareholders on June 19, 2014;

2017 CRH RSU Plan” means the share unit plan, approved by the CRH Shareholders on June 8, 2017, as amended with amendments approved by CRH Shareholders on June 11, 2020;

“Accounts Receivable” means all receivables of the Corporate Group as of the Calculation Time, determined on a gross basis in accordance with the past practice of the Corporate Group consistently applied;

Acquisition Proposal” means, other than the transactions contemplated by this Agreement and other than any transaction involving only CRH and/or one or more if its wholly-owned Subsidiaries, any offer, proposal or inquiry from any Person or group of Persons “acting jointly or in concert” (within the meaning of National Instrument 62-104 – Take-Over Bids and Issuer Bids), whether or not in writing and whether or not delivered to the CRH Securityholders, after the date hereof relating to: (i) any direct or indirect sale, disposition, alliance or joint venture (or any lease, long-term supply agreement or other arrangement having the same economic effect as a sale), in a single transaction or a series of related transactions, of assets (including shares of Subsidiaries of CRH) representing 20% or more of the consolidated assets or contributing 20% or more of the consolidated revenue of CRH and its Subsidiaries or of 20% or more of the voting, equity or other securities of CRH (or rights or interests therein or thereto); (ii) any direct or indirect take-over bid, tender offer, exchange offer, treasury issuance or other transaction that, if consummated, would result in a Person or group of Persons beneficially owning 20% or more of any class of voting, equity or other securities or any other equity interests (including securities convertible into or exercisable or exchangeable for securities or equity interests) of CRH; (iii) any plan of arrangement, merger, amalgamation, consolidation, share exchange, business combination, reorganization, recapitalization, liquidation, dissolution, winding up; (iv) any exclusive license involving CRH or any of its Subsidiaries that represents or constitutes 20% or more of the consolidated assets or revenues of CRH; or (v) any other similar transaction or series of transactions involving CRH or any of its Subsidiaries;

Action” means any claim, action, cause of action, demand, lawsuit, arbitration, judicial or quasi-judicial inquiry, audit, notice of violation, proceeding, litigation, citation, summons, subpoena, notice of assessment, notice of reassessment or investigation of any nature, civil, criminal, administrative, investigative, regulatory or otherwise, whether at law or in equity;

Affiliate” has the meaning ascribed thereto in Section 1.3 of National Instrument 45-106Prospectus Exemptions;

Agreement” means this arrangement agreement, including all schedules annexed hereto, as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms hereof, together with the CRH Disclosure Letter;

Applicable Benefits Laws” means all applicable Laws relating to the Employee Plans;

Arrangement” means the arrangement of CRH under Division 5 of Part 9 of the BCBCA on the terms and subject to the conditions set out in the Plan of Arrangement, subject to any amendments or variations

 

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thereto made in accordance with the terms of this Agreement or the Plan of Arrangement or made at the direction of the Court in the Final Order;

Arrangement Resolution” means the special resolution of the CRH Securityholders approving the Plan of Arrangement which is to be considered at the CRH Meeting and shall be substantially in the form and content of Schedule “B” hereto;

BCBCA” has the meaning ascribed thereto in the Recitals;

Books and Records” means the Financial Records, Business Data, and all other books, records, files and papers of CRH and its Subsidiaries including (a) all of the Corporate Group’s books of account, accounting records and other financial data and information, including copies of filed Tax Returns, assessments and reassessments for each of the financial years of the Corporate Group commencing after the Tax year ended eight years before the Effective Date; (b) the corporate records or similar of each Person in the Corporate Group; (c) drawings, manuals and data, sales and advertising materials, sales and purchase correspondence, lists of present and former customers and suppliers, personnel, employment, credit and pricing information formulae, business, engineering and consulting reports and research and development information of, or relating to, the Corporate Group or the business of the Corporate Group, and (d) all other books, documents, files, records, telephone call recordings, correspondence, data and information, financial or otherwise relating to the Corporate Group, that are in the possession or under the control of the Corporate Group, including all data and information stored electronically or on computer related media;

“Business Data” means (i) all business information and data of the Corporate Group (whether of employees, contractors, consultants, customers, consumers, or other Persons and whether in electronic or any other form or medium) that is collected, processed, stored, shared, distributed, transferred, disclosed, destroyed, or disposed of by Systems of any Person in the Corporate Group; and (ii) all Personal Information;

Business Day means any day, other than a Saturday, a Sunday, a statutory or civic holiday in Vancouver, British Columbia, or a federal holiday in the United States on which banks are required or authorized to close;

“Calculation Time” means 23:59 Pacific Standard Time on the day immediately preceding the Effective Date;

Canadian Securities Administrators has the meaning ascribed thereto in Section 4.1(pp);

Code” means the United States Internal Revenue Code of 1986, as amended;

Commitment Letter” means the commitment letter dated February 4, 2021 among the Purchaser, Canadian Imperial Bank of Commerce and HSBC Bank Canada in connection with the Arrangement;

Company Authorizations” has the meaning ascribed thereto in Section 4.1(m);

Confidentiality Agreement” means the confidentiality agreement between the Purchaser and CRH dated December 15, 2020, as amended;

Consent” means any consent, approval, permit, waiver, ruling, exemption or acknowledgement from any Person (other than CRH) which is provided for or required: (i) in respect of or pursuant to the terms of any Material Contract; or (ii) under any applicable Law, in either case in connection with the completion of the Arrangement on the terms contemplated in this Agreement and set forth in Schedule 4.1(d) of the CRH Disclosure Letter;

Consideration” means collectively, the Share Consideration, the RSU Consideration and the Option Consideration;

Contract” means any contract, agreement, license, franchise, lease, arrangement, commitment, understanding, joint venture, partnership or other right or obligation (written or oral) to which CRH or

 

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any of its Subsidiaries is a party or by which CRH or any of its Subsidiaries is bound or affected or to which any of their respective properties or assets is subject;

Contractor” means any consultant, dependent contractor, independent contractor or other service provider providing services to CRH or any of its Subsidiaries and who is not an Employee;

Corporate Group” means CRH and any Subsidiaries or other Persons listed at Schedule 4.1(g) of the CRH Disclosure Letter;

Court” means the Supreme Court of British Columbia;

COVID-19” means the coronavirus disease 2019 (dubbed as COVID-19), caused by the severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) and/or any evolutions thereof or any other virus or disease developing from or arising as a result of SARS-CoV-2 and/or COVID-19;

CRH Board” means the board of directors of CRH as the same is constituted from time to time;

CRH Board Recommendation” has the meaning ascribed therein in Section 2.4(a);

CRH Change in Recommendation” has the meaning ascribed thereto in Section 9.2(a)(iii)(A);

CRH Circular” means the notice of the CRH Meeting and accompanying proxy statement and management information circular of CRH, including all schedules, appendices and exhibits thereto and enclosures therewith, and information incorporated by reference in, such proxy statement and management information circular, to be sent to the CRH Securityholders in connection with the CRH Meeting, as amended, supplemented or otherwise modified from time to time;

“CRH Constating Documents” means articles, certificate of incorporation, amalgamation, or continuation, as applicable, notice of articles, or other constating documents and all amendments thereto;

CRH Disclosure Letter” means the disclosure letter executed by CRH and delivered to the Purchaser concurrently with the execution of this Agreement;

CRH Meeting” means the special meeting of CRH Securityholders, including any adjournment or postponement thereof permitted pursuant to the terms of this Agreement, to be called and held in accordance with the Interim Order to consider the Arrangement Resolution;

CRH Option Plan” means the amended share option plan of CRH, originally approved by CRH Shareholders on June 8, 2009;

CRH Optionholder” means a holder of CRH Options;

CRH Options” means the Vested CRH Options and Unvested CRH Options;

CRH Public Documents” means all forms, reports, schedules, statements and other documents filed or furnished by CRH since January 1, 2020 with the SEC and the Canadian Securities Administrators;

CRH RSUs” means the outstanding share units granted under the CRH RSU Plans;

CRH RSU Holder” means a holder of one or more CRH RSUs;

CRH RSU Plans” means the 2017 CRH RSU Plan and 2014 CRH RSU Plan;

“CRH SEC Public Documents” means all CRH Public Documents filed or furnished by CRH with the SEC;

CRH Securityholder Approval” has the meaning ascribed thereto in Section 2.2(c)(ii);

CRH Securities” means collectively, the CRH Shares, CRH Options and CRH RSUs;

CRH Securityholders” means the holders of one or more CRH Shares, CRH Options or CRH RSUs;

CRH Shareholders” means the holders of one or more CRH Shares;

 

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CRH Shares” means the common shares in the capital of CRH, as constituted from time to time;

CRH Termination Fee” has the meaning ascribed thereto in Section 9.3(b)(iii);

CRH Termination Fee Event” has the meaning ascribed thereto in Section 9.3(c);

CRH Voting Agreements” means the voting and support agreements entered into prior to or on the date hereof between the Purchaser and the Locked-up CRH Shareholders pursuant to which, among other things, such parties have agreed, subject to the terms and conditions of this Agreement, to vote all CRH Securities held by them in favour of the Arrangement Resolution and against any resolution submitted by any Person that is inconsistent with the Arrangement and otherwise support the transactions contemplated by this Agreement;

Debt Financing” means the debt financing pursuant to the Commitment Letter;

Depositary” means any trust company, bank or other financial institution determined by the Purchaser, and consented to by CRH, acting reasonably, for the purpose of, among other things, exchanging certificates representing CRH Shares for the Share Consideration in connection with the Arrangement;

Dissent Rights” means the rights of dissent exercisable by the CRH Shareholders in respect of the Arrangement described in Section 4.1(a) of the Plan of Arrangement;

“EDGAR” has the meaning ascribed thereto in Section 4.1(cc);

Effective Date” means the effective date of the Arrangement, which shall be the first Business Day following the date on which all of the conditions precedent to the completion of the Arrangement contained in Article 7 have been satisfied or waived in accordance with this Agreement (other than those conditions which cannot, by their terms, be satisfied until the Effective Date, but subject to satisfaction or waiver of such conditions as of the Effective Date), or such other date as may be mutually agreed by the Parties;

Effective Time” has the meaning ascribed thereto in the Plan of Arrangement;

Employee” means an individual who is employed by CRH as of the Effective Date whether on a full-time or part-time basis;

Employee Plans” has the meaning set out in Section 4.1(gg)(i);

Environmental Laws” means all Laws imposing obligations, responsibilities, liabilities or standards of conduct for or relating to: (a) the regulation or control of pollution, contamination, activities, materials, substances or wastes in connection with or for the protection of human health or safety, the environment or natural resources (including climate, air, surface water, groundwater, wetlands, land surface, subsurface strata, wildlife, aquatic species and vegetation); or (b) the use, generation, disposal, treatment, processing, recycling, handling, transport, distribution, destruction, transfer, import, export or sale of Hazardous Substances;

Financing Source” has the meaning ascribed thereto in Section 5.1(j);

Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended;

Fairly Disclosed” means information has been disclosed in the CRH Disclosure Letter in sufficient detail to enable the Purchaser to identify and make a reasonably informed assessment of the nature and scope of the fact, matter or circumstance so disclosed;

Fairness Opinion” has the meaning ascribed thereto in Section 4.1(h);

FDA” means the U.S. Food and Drug Administration, or any successor agency;

FDA Laws” means all Laws applicable to the operation of CRH’s business related to the research, investigation, development, production, marketing, distribution, storage, shipping, transport, advertising, labeling, promotion, sale, export, import, use, handling and control, safety, efficacy, reliability or

 

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manufacturing of medical devices, including, without limitation (i) the Federal Food, Drug, and Cosmetic Act of 1938, as amended (21 U.S.C. 301 et. seq.), (ii) the rules and regulations promulgated and enforced by FDA thereunder, including, as applicable, those requirements relating to the FDA’s Quality System Regulation contained in 21 C.F.R. Part 820, investigational use, premarket notification and premarket approval and applications to market new medical devices, the conduct of non-clinical laboratory studies, including FDA’s Good Laboratory Practices regulations contained in 21 C.F.R. Part 58, the development, conduct, performance, monitoring, auditing, recording, analysis and reporting of clinical trials, including FDA’s Good Clinical Practice regulations contained in 21 C.F.R. Parts 11, 50, 54, 56 and 812, the adverse event and malfunction reporting regulations of FDA and (iii) all comparable state, federal, provincial or foreign Laws relating to any of the foregoing;

Fee” has the meaning ascribed thereto in Section 9.3(b)(i);

Final Order” means the final order of the Court contemplated by Section 2.6 of this Agreement and made pursuant to Section 291 of the BCBCA, contemplated by Section 2.6 of this Agreement and made pursuant to Section 291 of the BCBCA, in a form acceptable to both CRH and the Purchaser, each acting reasonably, after a hearing considering, amongst other things, the procedural and substantive fairness of the terms and conditions of the Arrangement, approving the Arrangement, as such order may be amended by the Court at any time prior to the Effective Date or, if appealed, then, unless such appeal is withdrawn or denied, as affirmed or as amended on appeal (provided that any such amendment is acceptable to both CRH and the Purchaser, each acting reasonably);

Financing Agreements” means the Finco Subscription Agreements and the Commitment Letter;

Financial Advisor” means Canaccord Genuity LLC;

Financial Records” means all of the books of account and other financial data and information of CRH and its Subsidiaries;

Financial Statements” means the audited consolidated annual financial statements of CRH as at, and for the years ended, December 31, 2019 and December 31, 2018, including the notes thereto and the auditor’s report thereon, and the unaudited consolidated financial statements of CRH as at, and for the three (3), six (6) and nine (9) months ended, September 30, 2019, and September 30, 2020 including the notes thereto;

Finco” has the meaning ascribed thereto in the Recitals;

Finco Financing” means the private placement of Subscription Receipts of Finco pursuant to the Finco Subscription Agreements;

Finco Subscription Agreements” has the meaning ascribed thereto in the Recitals;

GAAP” means U.S. generally accepted accounting principles;

Governmental Authority” means: (a) any domestic or foreign government, whether national, federal, provincial, state, territorial, municipal or local (whether administrative, legislative, executive or otherwise); (b) any agency, authority, ministry, department, regulatory body, court, central bank, bureau, board or other instrumentality having legislative, judicial, taxing, regulatory, prosecutorial or administrative powers or functions of, or pertaining to, government; (c) any court, tribunal, commission, individual, arbitrator, arbitration panel or other body having adjudicative, regulatory, judicial, quasi-judicial, administrative or similar functions; and (d) any other body or entity created under the authority of or otherwise subject to the jurisdiction of any of the foregoing, including any stock or other securities exchange or professional association (including the TSX and the NYSE American);

Governmental Programs” means any “federal health care program” as defined in 42 U.S.C. § 1320a-7b(f) (including Medicare, state Medicaid programs, TRICARE, and similar or successor programs) and any other similar federal, state, or local reimbursement or governmental program for which the federal, state or local government pays for the provision of health care services or goods;

 

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Hardware” means mainframes, personal computers, servers, encryption equipment, data storage equipment, network equipment, routers, semi-conductor chips, embedded software, and communication lines and other equipment;

Hazardous Substance” means any pollutant, contaminant, waste or chemical or any toxic, radioactive, ignitable, corrosive, reactive or otherwise hazardous or deleterious substance, waste or material, including hydrogen sulphide, arsenic, cadmium, copper, lead, mercury, petroleum, polychlorinated biphenyls, asbestos and urea-formaldehyde insulation, and any other material, substance, pollutant or contaminant regulated or defined pursuant to, or that could result in liability under, any Environmental Law;

Health Care Laws” means those national, foreign, federal, state and local Laws, regulations, program instructions and guidance, judgments, decrees or orders that are generally applicable to pharmacies, laboratories, ambulatory surgery centers, surgery centers, hospitals, health care providers, physicians, clinicians, medical facilities and services and other entities similar to CRH’s business, CRH and the CRH Subsidiaries including, without limitation, (i) health care licensure, corporate practice of medicine doctrines and laws, permit, certificate of need, provider enrollment and credentialing, DEA registrations, CLIA certifications and/or registrations, and handling and disposal of bio-hazards and medical waste requirements separate and apart from Environmental Law and occupational safety and Health Care Law; (ii) Titles XI, XVIII, XIX and XXI and other relevant provisions of the Social Security Act, 42 U.S.C. ch. 7; (iii) the Federal Physician Self-Referral Law, 42 U.S.C. §1395nn and the regulations promulgated thereunder (the “Stark Law”); (iv) those relating to privacy, security, transmission, retention and storage of medical records, and protected or sensitive health information; (v) laws protecting alcohol and substance abuse treatment records, HIV/AIDs status and treatment records, genetic information, information about sexually transmitted or other communicable diseases, and psychotherapy records, and state privacy, security and data breach laws and any relevant laws relating to consents for these patient populations; (vi) regulation of ordering, prescribing, storing and distributing controlled substances and radioactive materials; (vii) regulation of advertising of physician, provider or health care items or services; (viii) pricing of health care pharmaceuticals, items and services, reporting of quality, utilization, and/or pricing of health care items or services, and/or mandated reporting of illnesses, diseases, and adverse events or incidents; (ix) enforceability of covenants not to compete against physicians, other health care providers and provider organizations; (x) standards of care, and malpractice or professional liability; (xi) those relating to the regulation of pharmaceutical products and medical devices, including, but not limited to, clinical trials, market approval, good manufacturing processes, labelling, off-label promotion and use, and reporting of adverse events; (xii) those governing governmental payment programs; (xiii) the Federal Anti-Kickback Statute, 42 U.S.C. §1320a-7b, and similar state provisions; (xiv) the Civil Monetary Penalties Laws, 42 U.S.C. §1320a-7a, and similar state provisions; (xv) the Federal Civil False Claims Act, 31 U.S.C. §§3729 et seq. and similar state provisions; (xvi) the Federal Criminal False Claims Act, 18 U.S.C. §287 and similar state provisions; (xvii) the False Statements Relating to Health Care Matters Act, 18 U.S.C. §1035, and similar state provisions; and (xviii) the Health Care Fraud Act, 18 U.S.C. §1347, and similar state provisions;

HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended;

HSR Approval” means the expiration or termination of the waiting period, including any extension thereof, in accordance with the HSR Act;

Improvements” means all buildings, fixtures, sidings, parking lots, roadways, structures, erections, fixed machinery, fixed equipment and appurtenances situate on, in, under, over or forming part of, any real property;

including” means including without limitation, and “include” and “includes” have a corresponding meaning;

Intellectual Property” means all rights to and interests in: (a) all business names, trade names, corporate names, telephone numbers, domain names, domain name registrations, website names and

 

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worldwide web addresses and other communications addresses, including the goodwill attaching to the foregoing, related to the business of CRH; (b) all inventions, patents, patent rights, patent applications (including all reissues, divisions, continuations, continuations-in-part and extensions of any patent or patent application) related to the business of the Corporate Group; (c) all industrial designs and applications for and registration of industrial designs, design patents and industrial design registrations related to the business of the Corporate Group; (d) all trade-marks (whether used with wares or services and including the goodwill attaching to such trade-marks) and registrations and applications for registration of trade-marks and all trade dress, logos, slogans and brand names related to the business of the Corporate Group; (e) all works, copyright in all works (including software programs and databases) and database rights and registrations and applications for registrations of copyright related to the business of the Corporate Group, and (f) all rights and interests in and to processes, notebooks, customer lists, data, trade secrets, designs, know-how, manufacturing, engineering and other drawings and manuals, technology, blue prints, research and development reports, agency agreements, technical information, technical assistance, engineering data, design and engineering specifications, and similar materials recording or evidencing expertise or information related to the business of the Corporate Group;

Interim Order” means the interim order of the Court contemplated by Section 2.2 of this Agreement and made pursuant to Section 291 of the BCBCA, in a form acceptable to both CRH and the Purchaser, each acting reasonably, providing for, among other things, the calling and holding of the CRH Meeting as provided for in this Agreement, as the same may be amended by the Court with the consent of both CRH and the Purchaser, each acting reasonably;

Knowledge” has the meaning ascribed thereto in Section 1.8;

Law” or “Laws” means all laws (including common law), by-laws, statutes, rules, regulations, principles of law and equity, orders, rulings, ordinances, judgements, injunctions, determinations, awards, decrees, directives, policies, ordinances, codes, executive orders or other requirements, whether domestic or foreign, and the terms and conditions of any Permit of or from any Governmental Authority or self-regulatory authority (including the TSX and the NYSE American) and expressly includes all Health Care Laws and FDA Laws, and the term “applicable” with respect to such Laws and in a context that refers to a Party, means such Laws as are applicable to such Party and/or its Subsidiaries or their business, undertaking, property or securities and emanate from a Person having jurisdiction over the Party and/or its Subsidiaries or its or their business, undertaking, property or securities;

Leased Premises” means the real property that is leased, subleased, licensed to or otherwise occupied by, CRH including all Improvements situate on, in, under, over or forming part of such real property;

Legal Proceeding” means any litigation, action, application, suit, investigation, hearing, claim, deemed complaint, grievance, civil, administrative, regulatory or criminal, arbitration proceeding or other similar proceeding, before or by any court or other tribunal or Governmental Authority and includes any appeal or review thereof and any application for leave for appeal or review;

Licence” means any material licence, permit, authorization, approval or other evidence of authority issued or granted to, conferred upon, or otherwise created for, CRH by any Governmental Authority which is related to the business of CRH;

Liens” means any hypothecs, mortgages, pledges, assignments, liens, charges, security interests, encumbrances and adverse rights or claims, other third party interest or encumbrance of any kind, in each case whether contingent or absolute, and any agreement, option, right or privilege (whether by Law, contract or otherwise) capable of becoming any of the foregoing;

Locked-up CRH Shareholders” means each director and officer of CRH that, at the date hereof, is the registered or beneficial holder of CRH Shares, CRH Options or CRH RSUs;

Mailing Deadline” means April 15, 2021;

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Material Adverse Effect” means any one or more changes, effects, events, occurrences, circumstances, or states of fact including any escalation in COVID-19 after the date hereof, either individually or in the aggregate, that (a) with respect to CRH, is, or would reasonably be expected to be, material and adverse to the assets, liabilities, business, operations, property, prospects, obligations or financial condition of CRH and its Subsidiaries, taken as a whole, other than changes, effects, events, occurrences, circumstances or states of fact resulting from: (i) the announcement, pendency or consummation of the transactions contemplated by this Agreement, or the failure to take actions as a result of any terms or conditions set forth in this Agreement, including any loss of or change in the relationship with employees, customers, partners, licensees, licensors, suppliers or other persons having business relationships with CRH, (ii) changes affecting the healthcare industry generally, (iii) changes in the general political, economic, financial, currency exchange or market (including the capital, financial, credit or securities market) conditions, (iv) the commencement, continuation or escalation of any war, armed hostilities, acts of terrorism, earthquakes or similar catastrophes or the incurrence of any other calamity or crisis, (v) a change or proposed change in GAAP or applicable Law or the interpretation thereof, (vi) any action permitted or required to be taken by this Agreement, (vii) any failure to meet internal or public projections, forecasts, performance measures, operating statistics or revenue or earnings predictions for any reason (it being understood that the underlying cause or any such failure may be taken into account when determining whether a Material Adverse Effect has occurred unless otherwise excluded pursuant to the terms of this definition), (viii) any change in the market price or trading volume of any securities of CRH (it being understood that the underlying cause or any such failure may be taken into account when determining whether a Material Adverse Effect has occurred unless otherwise excluded pursuant to the terms of this definition), (ix) any action, omission, effect, change, event or occurrence taken, made, caused, requested or directed in writing by or on behalf of the Purchaser, or (x) any matter Fairly Disclosed in the CRH Disclosure Letter, but in the case of each of the foregoing (ii) through (v), only to the extent such matter does not have a material disproportionate effect on CRH and its Subsidiaries, taken as a whole, and (b) with respect to the Purchaser, would prevent or materially delay, or would reasonably be expected to prevent or materially delay, the Purchaser’s ability to consummate the Arrangement;

Material Contract” means any Contract: (i) that if terminated or modified or if it ceased to be in effect, would reasonably be expected to have a Material Adverse Effect; (ii) containing any rights on the part of any Person, including joint venture partners or entities, to acquire property rights from CRH or any of its Subsidiaries; (iii) in respect of which the applicable transaction has not yet been consummated for the acquisition or disposition of assets or securities or other equity interests of another Person; (iv) restricting the ability of CRH or any of its Subsidiaries to offer to purchase or purchase the assets or equity securities of another Person; (v) which entitles a party to rights of termination, the terms or conditions of which may or will be altered, or which entitle a party to any fee, payment, penalty or increased consideration, in each case as a result of the execution of this Agreement, the consummation of the transactions contemplated hereby or a “change in control” of CRH or any of its Subsidiaries; (vi) in respect of a partnership, joint venture or similar arrangement in which the interest of CRH and/or its Subsidiaries exceeds $150,000 (book value or fair market value); (vii) pursuant to which CRH or any of its Subsidiaries will, or would reasonably be expected to, expend more than an aggregate of $150,000 or receive or be entitled to receive revenue of more than $150,000 in either case in the next 12 months and is out of the ordinary course and not including agreements with an Employee or Contractor; (viii) relating directly or indirectly to the guarantee of any liabilities or obligations or to indebtedness (currently outstanding or which may become outstanding) for borrowed money; (ix) restricting the incurrence of indebtedness by CRH or any of its Subsidiaries or (including by requiring the granting of an equal and rateable Lien), the incurrence of any Liens on any properties or assets of CRH or any of its Subsidiaries, or restricting the payment of dividends by CRH or by any of its Subsidiaries; or (x) that limits or restricts in any material respect (A) the ability of CRH or any Subsidiary to engage in any line of business or carry on business in any geographic area, or (B) the scope of Persons to whom CRH or any of its Subsidiaries may sell products or deliver services;

Meeting Deadline” means May 31, 2021;

 

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NYSE American” means the NYSE American LLC;

Option Consideration” means, in respect of each Vested CRH Option, a cash amount equal to the amount, if any, by which (i) the Share Consideration exceeds (ii) the exercise price payable under such Vested CRH Option by the holder thereof to acquire the CRH Share underlying such Vested CRH Option;

Order” means any order, directive, judgment, decree, injunction, decision, ruling, award or writ of any Governmental Authority;

ordinary course of business”, “ordinary course of business consistent with past practice”, or any similar reference, means, with respect to an action taken by a Person, that such action is consistent in nature and scope with the past practices of such Person and is taken in the ordinary course of the normal day-to-day business and operations of such Person;

Outside Date” means June 30, 2021, or such later date as may be agreed to in writing by the Parties;

Parent” has the meaning a