U.S. SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of June, 2017

Commission File No.: 001-04192

MFC Bancorp Ltd.

(Translation of Registrant’s name into English)

Suite #1860 - 400 Burrard Street, Vancouver, British Columbia, Canada V6C 3A6

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Indicate by check mark whether the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark whether the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

If “Yes” is marked, indicate below the file number assigned to the Registrant in connection with Rule 12g3-2(b): o

	NEWS RELEASE
	MFC Bancorp Ltd. Rene Randall Corporate Vice President 1 (604) 683 8286 ex 2 rrandall@bmgmt.com

NEW YORK (June 9, 2017) . . . MFC Bancorp Ltd. (“MFC” or the “Company”) (NYSE: MFCB) announced today that the Supreme Court of British Columbia (the “Court”) has issued an interim order authorizing, among other things, a special meeting (the “Meeting”) of the holders of all of the issued and outstanding common shares of the Company (the “MFC Shares”) to seek approval for a plan of arrangement (the “Arrangement”) under the Business Corporations Act (British Columbia), which was previously announced by the Company in its news release dated March 31, 2017. Pursuant to the Arrangement, among other things:

Upon completion of the Arrangement, MFC shareholders will become shareholders of New MFC, which will be the public parent company of the MFC group. Upon or prior to the completion of the Arrangement, New MFC will be renamed “MFC Bancorp Ltd.”. The Company expects that upon completion of the Arrangement, the New MFC Shares will be listed on the New York Stock Exchange (“NYSE”) under the Company’s existing symbol “MFCB” without interruption.

The Meeting is currently scheduled to be held on July 10, 2017 at 10:00 a.m. (Vancouver time) at 1000 Cathedral Place, 925 West Georgia Street, Vancouver, British Columbia, and the record date for determining registered shareholders entitled to receive notice of and attend and vote at the Meeting is May 17, 2017.

The Company believes that the benefits of the Arrangement are, among other things:

center with a large number of public companies incorporated within such jurisdiction. The legal system of the Cayman Islands is generally based on the English common law system.

Due to the administrative costs of issuing and mailing cash payments to registered MFC shareholders under the Arrangement, cash payments of less than US$10.00 under the Arrangement will not be made to such registered shareholders.

The Arrangement is being carried out pursuant to an amended and restated arrangement agreement (the “Arrangement Agreement”) dated June 7, 2017 among the Company, New MFC and MFC 2017 II Ltd., a wholly-owned subsidiary of New MFC, and is subject to customary conditions, including the receipt of requisite court and approval by at least 66 ² / ₃ % of the votes cast by shareholders present in person, or by proxy, and entitled to vote at the Meeting. If such conditions are satisfied, the Company currently anticipates that the Arrangement will be completed on or about July 14, 2017. If the Arrangement is approved by shareholders at the Meeting, the Company will attend a hearing before the Court, currently scheduled for July 12, 2017, to ask the Court to grant a final order in respect of the Arrangement.

Details regarding the terms of the Arrangement are set out in the Arrangement Agreement and management information circular to be sent to holders of MFC Shares in connection with the Meeting (the “Circular”), each of which will be available under the Company’s profile on SEDAR at www.sedar.com and EDGAR at www.sec.gov . Shareholders are urged to carefully review the Circular and accompanying materials as they contain important information regarding the Arrangement and its consequences for shareholders.

Shareholders are urged to consult their financial and tax advisors regarding the particular consequences of the Arrangement in their situation, including, without limitation, the specific implications of thereof and the applicability and effect of any federal, state, local and foreign tax laws.

About MFC

MFC is a merchant bank that provides financial services and facilitates structured trade for corporations and institutions. We specialize in markets that are not adequately addressed by traditional sources of supply and finance, with an emphasis on providing solutions for small and medium sized enterprises. We operate in multiple geographies and industries.

As a supplement to our operating business, we commit proprietary capital to assets and projects where intrinsic values are not properly reflected. These investments can take many forms, and our activities are generally not passive. The structure of each of these opportunities is tailored to each individual transaction.

Cautionary Statement and Forward-Looking Information

This press release includes forward-looking information and forward-looking statements (together, “forward-looking information”) within the meaning of applicable Canadian and United States securities laws. Forward-looking information includes statements: regarding the Company’s beliefs and expectations regarding the completion and/or timing of the Arrangement; the expected benefits of the Arrangement; and the listing of the New MFC Shares on the NYSE. Users of forward-looking information are cautioned that actual results may vary from the forward-looking information disclosed in this press release. The material risk factors that could cause actual results to differ materially from the forward-looking information contained in this press release include: the risk that the Company will be unable to obtain all necessary Court, shareholder, regulatory or other approvals, including NYSE approval, for the Arrangement; no market may develop for trading the New MFC Shares; and other risks and uncertainties described under the heading “Risk Factors” and elsewhere in the Company’s 2016 Annual Report Form and other documents filed with Canadian securities regulators and the SEC.

Readers are cautioned that the assumptions used in the preparation of forward-looking information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking information. The material assumptions used to develop the forward-looking information include: that the Company will obtain all necessary consents and approvals, including any necessary Court, shareholder and/or regulatory approval for the Arrangement; that the Company will obtain NYSE approval for the listing of the New MFC Shares; and that other conditions under the Arrangement will be fulfilled or waived. The Company does not assume the obligation to update any forward-looking information, except as required by applicable law.

June 9, 2017

Dear Fellow Shareholder,

The Board of Directors of MFC Bancorp Ltd. (“ MFC ”) cordially invites you to attend a special meeting (the “ Meeting ”) of its shareholders (the “ MFC Shareholders ”) to be held at 10:00 a.m. (Vancouver time) on July 10, 2017 at 1000 – 925 West Georgia Street, Vancouver, British Columbia.

At the Meeting, you will be asked to consider and vote upon a resolution (the “ Arrangement Resolution ”) approving an arrangement (the “ Arrangement ”) under the Business Corporations Act (British Columbia), S.B.C., 2002, c.57, pursuant to which, among other things:

Please refer to the enclosed Management Information Circular (the “ Circular ”) for detailed information regarding the steps in the Arrangement. For the Arrangement to proceed, the Arrangement Resolution must be approved by at least 66 ² / ₃ % of the votes cast by MFC Shareholders, present in person or by proxy and entitled to vote at the Meeting.

The Board of Directors has concluded that the terms of the Arrangement are fair and reasonable to, and in the best interests of MFC and the MFC Shareholders, as more particularly set out in the enclosed Circular. The Board of Directors has therefore approved the Arrangement and authorized the submission of the Arrangement to the MFC Shareholders and the Court for approval. The Board of Directors recommends that MFC Shareholders vote in favour of the Arrangement Resolution.

We are enclosing a Notice of Special Meeting, the Circular for the Meeting and a form of proxy. These documents are also available on SEDAR at www.sedar.com. The Circular and the appendices attached to it, which we urge you to read carefully in consultation with your tax, financial, legal or other professional advisors, describe the Arrangement and include certain other information to assist you in considering the Arrangement.

Your vote is important regardless of how many MFC Shares you own. The Board of Directors recommends that MFC Shareholders vote in favour of the Arrangement Resolution approving the Arrangement.

Completion of the Arrangement is subject to a number of conditions, some of which are beyond the control of MFC, including approval by the Supreme Court of British Columbia. Accordingly, the exact timing of implementation of the Arrangement is not currently known. MFC currently anticipates that closing will occur on or about July 14, 2017.

On behalf of the Board of Directors, I would like to thank all MFC Shareholders for their ongoing support.

Yours very truly,

/s/ Michael Smith

Michael Smith

Managing Director, President and Chief Executive Officer

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

TO BE HELD ON JULY 10, 2017

NOTICE IS HEREBY GIVEN that a Special Meeting (the “ Meeting ”) of the shareholders of MFC will be held at 1000 – 925 West Georgia Street, Vancouver, British Columbia, on July 10, 2017 at 10:00 a.m. (Vancouver time) for the following purposes:

Accompanying this Notice of Special Meeting are the Circular and a form of proxy in respect of the shares relating to the Arrangement.

The Board of Directors of MFC has fixed the close of business (Vancouver time) on May 17, 2017 as the record date for determining shareholders who are entitled to receive notice of the Meeting and attend and vote at the Meeting and any adjournment(s) or postponement(s) thereof. The accompanying Circular provides additional information relating to the matters to be dealt with at the Meeting and forms part of this Notice of Special Meeting.

Copies of the Arrangement Resolution, the Arrangement Agreement between MFC, MFC 2017 Ltd. and MFC 2017 II Ltd., which includes the Plan of Arrangement, the Interim Order and the Notice of Application, as defined herein or in the Circular, are attached to the Circular as Schedules “A”, “B”, “C” and “D”, respectively. The foregoing documents are also available for inspection prior to the Meeting at Suite 1860, 400 Burrard Street, Vancouver, British Columbia, during regular business hours, and have been publicly filed on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.

Registered MFC shareholders (shareholders of record) at the close of business (Vancouver time) on May 17, 2017 will be entitled to vote at the Meeting. MFC shareholders who are unable to attend the Meeting in person are requested to sign, date and return the enclosed form of proxy in accordance with the

instructions set forth on the form in the appropriate return envelope addressed to: Proxy Services c/o Computershare Investor Services, PO Box 30170, College Station, Texas, USA 77842-3170. Registered shareholders of MFC can also vote their proxies by telephone or the internet in accordance with the instructions provided in the form of proxy. In order to be valid for use at the Meeting, proxies must be received by 10:00 a.m. (Vancouver time) on July 6, 2017 or, if the Meeting is adjourned or postponed, 48 hours prior to the time to which the Meeting has been adjourned or postponed, excluding Saturdays, Sundays and holidays. The Chairman of the Meeting has the discretion to accept proxies received after this time.

Non-registered MFC shareholders who receive these materials through their broker or other intermediary should carefully follow the instructions provided by their broker or intermediary.

Registered MFC shareholders have the right to dissent with respect to the Arrangement Resolution and, if the Arrangement Resolution becomes effective, to be paid the fair value of their shares in accordance with Sections 237 through 247 of the BCBCA and the provisions of the Interim Order, as applicable. An MFC shareholder’s right to dissent is more particularly described in the Circular and the text of Sections 237 through 247 of the BCBCA are set forth in Schedule “E” accompanying the Circular. Failure to strictly comply with the requirements set forth in such sections, as modified by the Interim Order, may result in the loss of any right to dissent.

The MFC Board of Directors unanimously recommends that shareholders vote IN FAVOUR of the Arrangement Resolution. In the absence of any instructions to the contrary, the common shares represented by proxies appointing the management designees named in the accompanying form of proxy will be voted in favour of the Arrangement Resolution.

DATED at Vancouver, British Columbia this 9 ^th day of June, 2017.

BY ORDER OF THE BOARD OF DIRECTORS

/s/ Michael Smith

Michael Smith

Managing Director, President and Chief Executive Officer

TABLE OF CONTENTS

NOTICE TO MFC SHAREHOLDERS IN THE UNITED STATES

MFC is a corporation existing under the laws of the Province of British Columbia and is a reporting issuer in the Provinces of British Columbia, Alberta and Québec. This solicitation is being conducted in accordance with the proxy solicitation rules under applicable Canadian corporate and securities laws. The proxy solicitation rules under the US Exchange Act are not applicable to MFC or this solicitation, and, accordingly, this solicitation is not being effected in accordance with such rules. This Circular may therefore not contain all of the disclosure required to be included in proxy statements prepared in accordance with the proxy solicitation rules under the US Exchange Act. MFC Shareholders should be aware that disclosure requirements under Canadian corporate and securities laws may be different from requirements under United States corporate and securities laws relating to United States corporations.

The enforcement by MFC Shareholders of civil liabilities under United States securities laws may be affected adversely by the fact that MFC is a corporation existing and governed under the laws of the Province of British Columbia and New MFC and MFC 2017 II are each companies existing and governed under the laws of the Cayman Islands, that some or all of the directors and officers of MFC, New MFC and MFC 2017 II are not residents of the United States and that all or a substantial portion of their respective assets may be located outside the United States. As a result, it may be difficult or impossible for United States MFC Shareholders to effect service of process within the United States upon MFC, New MFC or MFC 2017 II, their respective officers and directors 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, United States MFC Shareholders should not assume that the courts of Canada: (a) 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 (b) 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.

NOTICE RESPECTING FINANCIAL INFORMATION

Any financial statements of MFC incorporated by reference in this Circular have been prepared in accordance with IFRS, which differs from United States Generally Accepted Accounting Principles in certain material respects, and thus may not be comparable to financial statements of United States companies.

FORWARD-LOOKING STATEMENTS

This document contains certain forward-looking information and statements, including statements relating to matters that are not historical facts and statements of MFC or New MFC, beliefs, intentions and expectations about developments, results and events which will or may occur in the future, which constitute “forward-looking information” within the meaning of applicable Canadian securities legislation and “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995 (collectively the “ forward-looking information and statements ”). Forward-looking information and statements are typically identified by words such as “anticipate”, “could”, “should”, “expect”, “seek”, “may”, “intend”, “likely”, “will”, “plan”, “estimate”, “believe” and similar expressions suggesting future outcomes or statements regarding an outlook.

Forward-looking information and statements are included throughout this document and include, but are not limited to, statements with respect to: the successful completion of the Arrangement; the financial condition, results of operations, developments, expectations, projects, goals, objectives and plans of MFC

and New MFC upon completion of the Arrangement; MFC’s and New MFC’s markets, business and other such matters.

All such forward-looking information and statements are based on certain assumptions and analyses made by MFC in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors MFC believes are appropriate in the circumstances. These statements are, however, subject to known and unknown risks and uncertainties and other factors. As a result, actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking information and statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking information and statements will transpire or occur, or if any of them do so, what benefits will be derived therefrom. These risks, uncertainties and other factors include, among others: the Arrangement is subject to the satisfaction or waiver of several conditions; MFC’s and New MFC’s future growth opportunities may be limited; an inability to manage MFC’s and New MFC’s future growth could adversely affect their business; exchange rate fluctuations may adversely affect their businesses; doing business internationally creates certain risks for MFC’s and New MFC’s business; significant transaction costs and/or unknown liabilities of MFC and New MFC; general economic and business conditions that affect MFC and New MFC following the completion of the proposed Arrangement; other factors beyond MFC’s or New MFC’s control; and any other risks described in the Corporation’s public filings with applicable Canadian securities regulators and the SEC, which are available on SEDAR at www.sedar.com and the SEC’s website at www.sec.gov.

Although management of MFC believes that the expectations reflected in such forward-looking information and statements are reasonable, management can give no assurance that such expectations will prove to be accurate. Accordingly, readers should not place undue reliance upon any of the forward-looking information and statements set out in this document. All of the forward-looking information and statements of MFC contained in this document are expressly qualified, in their entirety, by this cautionary statement. The various risks to which MFC and New MFC are exposed are described in additional detail in the section of this Circular entitled “ Information Concerning New MFC - Risk Factors ”, as well as in the 2016 Annual Report and Management’s Discussion and Analysis (“ MD&A ”) for the interim period ended March 31, 2017 filed with Canadian securities regulators and the SEC. The forward-looking information and statements are made as of the date of this document, and none of MFC or New MFC assumes any obligation to update or revise them except as required pursuant to applicable securities laws.

DOCUMENTS INCORPORATED BY REFERENCE

Information has been incorporated by reference in this Circular from documents filed with securities commissions or similar authorities in Canada and the SEC. Copies of the documents incorporated herein by reference may be obtained on request without charge from the Secretary of the Corporation at 1860 – 400 Burrard Street, Vancouver, British Columbia, Canada, telephone (604) 662-8873 and are also available electronically on SEDAR at www.sedar.com or on the SEC’s website at www.sec.gov.

The following documents of the Corporation, filed by the Corporation with applicable securities commissions or similar authorities in Canada and filed or furnished with the SEC, are specifically incorporated by reference into and form an integral part of this Circular:

Any documents of the type referred to above as well as any business acquisition reports and any material change reports (excluding confidential material change reports) subsequently filed by the Corporation with applicable Canadian securities regulatory authorities in Canada, after the date of this Circular and prior to the completion or withdrawal of the Arrangement, shall be deemed to be incorporated by reference in this Circular. Any statement contained in a document incorporated or deemed to be incorporated by reference hereto shall be deemed to be modified or superseded for the purposes of this Circular, to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. The modifying or superseding statement need not state that it has modified or superseded a prior statement or include any other information set forth in the document that it modifies or supersedes. The making of a modifying or superseding statement shall not be deemed an admission for any purposes that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made. Any statement so modified or superseded shall not constitute a part of this Circular, except as so modified or superseded.

REPORTING CURRENCIES

Unless otherwise indicated, all references to “$” or “dollars” in this Circular refer to Canadian dollars, and all references to “US$” refer to United States dollars. Any MFC financial statements included or incorporated by reference herein are reported in Canadian dollars.

The following table sets out exchange rates, based on the Bank of Canada daily noon exchange rate, referred to as the “Noon Rate”, for the translation of United States dollars to Canadian dollars in effect at the end of the following periods, the average exchange rates during these periods (based on daily Noon Rates) and the range of high and low exchange rates for these periods:

On June 8, 2017, the Noon Rate for the translation of United States dollars to Canadian dollars was US$1.00 = $1.3503.

GLOSSARY OF DEFINED TERMS

In this Circular, unless there is something in the subject matter inconsistent therewith, the following terms shall have the respective meanings set out below, and words importing the singular number shall include the plural and vice-versa .

“ 1933 Act ” means the United States Securities Act of 1933 , as may be amended, superseded or replaced from time to time.

“ 2016 Annual Report ” means MFC’s Annual Report on Form 20-F for the year ended December 31, 2016.

“ Arrangement ” means an arrangement under Sections 288 to 299 of the BCBCA on the terms and conditions set forth in the Arrangement Agreement and the Plan of Arrangement and any amendment(s) or variation(s) thereto made in accordance with the terms of the Arrangement Agreement, the Plan of Arrangement or made at the direction of the Court in the Final Order.

“ Arrangement Agreement ” means the amended and restated arrangement agreement dated June 7, 2017, between MFC, New MFC and MFC 2017 II, as it may be amended from time to time.

“ Arrangement Resolution ” means the special resolution of the MFC Shareholders to approve the Arrangement in the form set out in Schedule “A” attached to the Circular.

“ BCBCA ” means the Business Corporations Act , S.B.C., 2002, c.57 as amended, superseded or replaced from time to time, including the regulations promulgated thereunder.

“ Board of Directors ” means the board of directors of MFC.

“ Business Day ” means a day which is not a Saturday, Sunday or a day when commercial banks are not open for business in Vancouver, British Columbia or George Town, Cayman Islands.

“ Cayman Law ” means the Companies Law (Revised) of the Cayman Islands as amended, superseded or replaced from time to time, including any regulations promulgated thereunder.

“ Circular ” means, collectively, the Notice of Meeting and this management information circular of MFC, including all schedules hereto and any material incorporated by reference, sent to MFC Shareholders in connection with the Meeting.

“ Consolidation ” means the consolidation of the MFC Shares on a one hundred (100) for one (1) basis pursuant to the Plan of Arrangement.

“ Court ” means the Supreme Court of British Columbia.

“ Demand for Payment ” has the meaning ascribed thereto under the heading “ The Arrangement - Dissent Rights ” herein.

“ Depositary ” means Computershare Investor Services Inc. at its offices set out in the Letter(s) of Transmittal, or such other Person as may be determined by MFC, New MFC and MFC 2017 II and set out in the Letter(s) of Transmittal.

“ Dissent Notice ” means a written notice sent by a Registered Shareholder and received by the Corporation by no later than 9:00 a.m. (Vancouver time) on the date which is 48 hours (excluding Saturdays, Sundays and holidays) prior to the date of the Meeting, and which notifies the Corporation of such shareholder’s exercise of the shareholder’s Dissent Rights and which otherwise complies with section 242 of the BCBCA and the Plan of Arrangement.

“ Dissent Rights ” means the rights of dissent granted in favour of holders of MFC Shares in accordance with Article 3 of the Plan of Arrangement.

“ Dissenting Shareholder ” means a holder of MFC Shares who dissents in respect of the Arrangement in strict compliance with the Dissent Procedures and who has not withdrawn or deemed to have withdrawn such exercise of Dissent Rights.

“ Dissenting Shares ” has the meaning ascribed thereto under the heading “ The Arrangement - Dissent Rights ” herein.

“ Dissent Procedures ” means the rules pertaining to the exercise of Dissent Rights as set forth in Division 2 of Part 8 of the BCBCA and Article 3 of the Plan of Arrangement.

“ Effective Date ” means the date that is three Business Days after the last of the conditions precedent for the completion of the Arrangement have been satisfied or waived or such earlier or later date as is agreed to by the parties thereto.

“ Effective Time ” means 12:01 a.m. on the Effective Date.

“ Exchange ” means the New York Stock Exchange and any successor stock exchange thereto.

“ Final Order ” means the final order of the Court made in connection with the approval of the Arrangement.

“ IFRS ” means International Financial Reporting Standards as issued by the Accounting Standards Board from time to time.

“ Interim Order ” means the interim order of the Court in respect of the Arrangement dated June 9, 2017, a copy of which is attached at Schedule “C” to the Circular, as such order may be amended, varied or supplemented by the Court at any time prior to the Meeting.

“ Intermediary ” means an intermediary with which a Non-Registered Holder may deal, including banks, trust companies, securities dealers or brokers and trustees or administrators of self-directed trusts governed by registered retirement savings plans, registered retirement income funds, registered education savings plans and similar plans, and their nominees.

“ Letter of Transmittal ” means the letter(s) of transmittal pursuant to which MFC Shareholders are required to deliver to the Depositary or New MFC, as the case may be, certificates representing such MFC Shares in order to receive certificates representing the New MFC Shares issuable to them pursuant to the Arrangement.

“ Meeting ” means the special meeting of the MFC Shareholders (including any adjournment(s) or postponement(s) of that meeting) to be held on July 10, 2017 in accordance with the Interim Order, to consider the Arrangement Resolution.

“ Meeting Materials ” means the Notice of Meeting, the Circular and the form of proxy.

“ MFC ” or the “ Corporation ” means MFC Bancorp Ltd., a corporation existing under the laws of the Province of British Columbia.

“ MFC 2014 Incentive Plan ” means the 2014 Equity Incentive Plan.

“ MFC 2017 Board ” means the board of directors of MFC 2017 II.

“ MFC 2017 II ” means MFC 2017 II Ltd., a company existing under the laws of the Cayman Islands.

“ MFC 2017 II Shares ” means the common shares with a par value of US$0.001 each in the capital of MFC 2017 II to be transferred to New MFC in exchange for the New MFC Shares pursuant to the Arrangement.

“ MFC Incentive Plans ” means, each of the MFC 2014 Incentive Plan, the 2008 Incentive Plan and the 1997 Stock Option Plan of MFC.

“ MFC Options ” means issued and outstanding options to purchase MFC Shares immediately prior to the Effective Time.

“ MFC Shareholder ” means a registered holder of MFC Shares, from time to time.

“ MFC Shares ” means the common shares in the capital of MFC.

“ New MFC ” means MFC 2017 Ltd., a company existing under the laws of the Cayman Islands.

“ New MFC Board ” means the board of directors of New MFC.

“ New MFC Incentive Plan ” or “ Plan ” means the incentive plan to be adopted by New MFC pursuant to the Plan of Arrangement, a form of which is attached as Schedule “G” herein, which is on substantially similar terms as the MFC 2014 Incentive Plan other than as described herein and therein.

“ New MFC Options ” means options entitling the holder to acquire New MFC Shares on full payment of the exercise price pursuant to the New MFC Incentive Plan, as more particularly described therein.

“ New MFC Shares ” means the common shares with a par value of US$0.001 each in the capital of New MFC to be delivered to MFC Shareholders in exchange for the MFC Shares pursuant to the Arrangement.

“ NI 54-101 ” means Canadian National Instrument 54-101 – Communication with Beneficial Owners of Securities of a Reporting Issuer .

“ Non-Registered Holder ” means a non-registered beneficial owner of MFC Shares whose shares are held through an Intermediary.

“ Notice of Application ” means the notice of application of the Final Order attached as Schedule “D” hereto.

“ Notice of Intention ” has the meaning ascribed thereto under the heading “ The Arrangement - Dissent Rights ” herein.

“ Notice of Meeting ” means the notice to the MFC Shareholders which accompanies this Circular.

“ Odd Lot Interest ” means less than 100 MFC Shares immediately prior to the Effective Time.

“ Odd Lot Purchase ” means the payment in cash by New MFC pursuant to the Arrangement to MFC Shareholders who, following the Consolidation, hold fractional MFC Shares.

“ Person ” means and includes an individual, limited or general partnership, limited liability company, limited liability partnership, trust, joint venture, association, body corporate, unlimited liability corporation, trustee, executor, administrator, legal representative, government (including any governmental authority) or any other entity, whether or not having legal status.

“ Plan of Arrangement ” means the plan of arrangement in substantially the form set out in Schedule “A” to the Arrangement Agreement which is attached at Schedule “B” to this Circular, as amended, modified or supplemented from time to time in accordance with the terms thereof.

“ Record Date ” means the close of business (Vancouver time) on May 17, 2017, the record date to receive notice of and to vote at the Meeting.

“ Registered Shareholder ” means the MFC Shareholders of record as of the Record Date.

“ RESP ” means a registered education savings plan.

“ RRIF ” means a registered retirement income fund.

“ RRSP ” means a registered retirement savings plan.

“ SEC ” means the US Securities and Exchange Commission.

“ Tax Act ” means the Income Tax Act (Canada), R.S.C. 1985, c. 1, as amended, including the regulations promulgated thereunder.

“ US Exchange Act ” means the United States Securities and Exchange Act of 1934 , as may be amended, restated or replaced from time to time.

“ US Holder ” has the meaning ascribed thereto under the heading “ Income Tax Considerations – Certain United States Federal Income Tax Considerations ” herein.

•

Share Exchange . Each MFC Share outstanding after the completion of the above Consolidation and split, will be exchanged on a one-for-one basis for: (i) a New MFC Share; and (ii) US$0.0001 per share in cash. Upon or prior to the completion of the Arrangement, New MFC shall be renamed “MFC Bancorp Ltd.” and the MFC Shareholders will become shareholders of New MFC.

 

Additionally, pursuant to the Arrangement, MFC Options will be exchanged for New MFC Options to purchase a number of New MFC Shares equal to one-fifth of the number of MFC Shares issuable on exercise of such MFC Options immediately prior to the Effective Time for an exercise price per New MFC Share equal to the exercise price per share of such MFC Option immediately prior to the Effective Time multiplied by five. The New MFC Options will be on the same terms and conditions of the MFC Options for which it is exchanged except that such New MFC Option will be governed by the terms and conditions of the New MFC Incentive Plan.

 

Please see “ The Arrangement ” for information regarding the transactions contemplated under the Arrangement.

 

The Arrangement is expected to affect shareholders of MFC uniformly, without any effect on any MFC Shareholder’s percentage ownership interests in MFC or proportionate voting power, other than for MFC Shareholders who hold an Odd Lot Interest. The New MFC Shares issued pursuant to the Arrangement will be fully paid and non-assessable. The New MFC Shares will have the same voting rights and rights to dividends and distributions and will be identical in all other material respects to the MFC Shares.

 

The following diagrams illustrate the corporate structure of MFC prior to the Arrangement and New MFC following completion of the Arrangement:

 

	Pre-Arrangement		Post-Arrangement

 

Following the Effective Date, the Corporation may carry out certain intercompany transfers of head office assets and liabilities from MFC to New MFC (such as senior management employment contracts).

 

At the Meeting, MFC Shareholders will be asked to consider, and if deemed advisable, to approve, with or without variation, the Arrangement Resolution, attached as Schedule “A” to this Circular.

MANAGEMENT INFORMATION CIRCULAR

June 9, 2017

This Circular is being furnished to MFC Shareholders in connection with the solicitation of proxies by the Board of Directors and management of the Corporation for use at the Meeting to be held at 1000 – 925 West Georgia Street, Vancouver, British Columbia, on July 10 , 2017 at 10:00 a.m. (Vancouver time) and any adjournment(s) or postponement(s) thereof, for the purposes set forth in the Notice of Meeting which accompanies and is part of this Circular.

The Notice of Meeting, form of proxy and this Circular will be mailed to MFC Shareholders commencing on or about June 19, 2017 . The information contained herein is given as of June 9, 2017 , except as otherwise stated.

VOTING INFORMATION

Solicitation of Proxies

The solicitation of proxies by management of the Corporation will be conducted by mail and may be supplemented by telephone or other personal contact, and such solicitation will be made without special compensation granted to the directors, officers and employees of the Corporation. The Corporation does not reimburse MFC Shareholders, nominees or agents for costs incurred in obtaining, from the principals of such persons, authorization to execute forms of proxy, except that the Corporation has requested brokers and nominees who hold stock in their respective names to furnish this Circular and related proxy materials to their customers, and the Corporation will reimburse such brokers and nominees for their related out of pocket expenses. No solicitation will be made by specifically engaged employees or soliciting agents. The cost of solicitation will be borne by the Corporation.

No person has been authorized to give any information or to make any representation other than as contained in this Circular in connection with the solicitation of proxies. If given or made, such information or representations must not be relied upon as having been authorized by the Corporation. The delivery of this Circular shall not create, under any circumstances, any implication that there has been no change in the information set forth herein since the date of this Circular. This Circular does not constitute the solicitation of a proxy by anyone in any jurisdiction in which such solicitation is not authorized, or in which the person making such solicitation is not qualified to do so, or to anyone to whom it is unlawful to make such an offer of solicitation.

Record Date

The Board of Directors has set the close of business (Vancouver time) on May 17, 2017 as the Record Date for determining which MFC Shareholders shall be entitled to receive notice of and to vote at the

Meeting. Only MFC Shareholders of record as of the Record Date are entitled to receive notice of and to vote at the Meeting. Persons who acquire MFC Shares after the Record Date will not be entitled to vote such MFC Shares at the Meeting.

Appointment of Proxyholders

Registered Shareholders are entitled to vote at the Meeting. A MFC Shareholder is entitled to one vote for each MFC Share that such MFC Shareholder holds on the Record Date on the resolutions to be voted upon at the Meeting and any other matter to come before the Meeting.

The persons named as proxyholders (the “ Designated Persons ”) in the enclosed form of proxy are directors and/or officers of the Corporation.

A Registered Shareholder has the right to appoint a person or corporation (who need not be a MFC Shareholder) to attend and act for or on behalf of that MFC Shareholder at the Meeting, other than the Designated Persons named in the enclosed form of proxy. A Registered Shareholder may exercise this right by striking out the printed names and inserting the name of such other person and, if desired, an alternate to such person in the blank space provided in the form of proxy.

In order to be voted, the completed form of proxy must be received by the Corporation, by mail or by hand, to the attention of Proxy Services c/o Computershare Investor Services, PO Box 30170, College Station, Texas, USA 77842-3170 , by 10:00 a.m. (Vancouver time) on July 6, 2017 (or a day other than a Saturday, Sunday or holiday which is at least 48 hours before the Meeting or any adjournment(s) or postponement(s) of the Meeting). MFC Shareholders may also provide their voting instructions by telephone by calling toll free 1-800-652-VOTE (8683) or through the Internet at www.envisionreports.com/MFCB. The time limit for the deposit of proxies may be waived by the Chair at his discretion without notice.

A proxy may not be valid unless it is dated and signed by the Registered Shareholder who is giving it or by that MFC Shareholder’s attorney-in-fact duly authorized by that MFC Shareholder in writing or, in the case of a corporation, dated and executed by a duly authorized officer, or attorney-in-fact, for the corporation. If a form of proxy is executed by an attorney-in-fact for an individual MFC Shareholder or joint MFC Shareholders or by an officer or attorney-in-fact for a corporate MFC Shareholder, the instrument so empowering the officer or attorney-in-fact, as the case may be, or a notarially-certified copy thereof, should accompany the form of proxy.

Revocability of Proxy

Any Registered Shareholder who has returned a form of proxy may revoke it at any time before it has been exercised. In addition to revocation in any other manner permitted by law, a form of proxy may be revoked by instrument in writing, including a form of proxy bearing a later date, executed by the Registered Shareholder or by his or her attorney-in-fact duly authorized in writing or, if the Registered Shareholder is a corporation, under its corporate seal or by a duly authorized officer or attorney-in-fact thereof. The instrument revoking the form of proxy must be deposited at the same address where the original form of proxy was delivered at any time up to and including the last Business Day preceding the date of the Meeting, or any adjournment or adjournments thereof, or with the Chair of the Meeting on the date of, but prior to the commencement of, the Meeting. A Registered Shareholder who has submitted a form of proxy may also revoke it by attending the Meeting in person (or if the Shareholder is a corporation, by a duly authorized representative of the corporation attending the Meeting) and registering with the scrutineer thereat as a Registered Shareholder present in person, whereupon such form of proxy shall be deemed to have been revoked.

Only Registered Shareholders have the right to revoke a form of proxy. Non-Registered Holders who wish to change their vote must, at least seven days before the Meeting, arrange for their respective Intermediaries to revoke the form of proxy on their behalf.

Voting of MFC Shares and Proxies and Exercise of Discretion by Designated Persons

A MFC Shareholder may indicate the manner in which the Designated Persons are to vote with respect to a matter to be voted upon at the Meeting by marking the appropriate space. If the instructions as to voting indicated in the proxy are certain, the MFC Shares represented by the form of proxy will be voted or withheld from voting in accordance with the instructions given in the form of proxy. If the MFC Shareholder specifies a choice in the form of proxy with respect to a matter to be acted upon, then the MFC Shares represented will be voted or withheld from the vote on that matter accordingly.

If no choice is specified in the form of proxy with respect to a matter to be acted upon, the form of proxy confers discretionary authority with respect to that matter upon the Designated Persons named in the form of proxy. It is intended that the Designated Persons will vote the MFC Shares represented by the form of proxy in favour of each matter identified in the form of proxy.

The enclosed form of proxy confers discretionary authority upon the persons named therein with respect to other matters which may properly come before the Meeting, including any amendments or variations to any matters identified in the Notice of Meeting, and with respect to other matters which may properly come before the Meeting. At the date of this Circular, management of the Corporation is not aware of any such amendments, variations, or other matters to come before the Meeting.

In the case of abstentions from, or withholding of, the voting of the MFC Shares on any matter, the MFC Shares that are the subject of the abstention or withholding will be counted for the determination of a quorum, but will not be counted as affirmative or negative on the matter to be voted upon.

NON-REGISTERED HOLDERS

Only Registered Shareholders or duly appointed proxyholders are permitted to vote at the Meeting. Most MFC Shareholders are “non-registered” Shareholders because the MFC Shares they own are not registered in their names but are instead registered in the name of the brokerage firm, bank or trust company through which they purchased the MFC Shares. More particularly, a person is not a Registered Shareholder in respect of MFC Shares which are held on behalf of that person but which are registered either: (a) in the name of an Intermediary that the Non-Registered Holder deals with in respect of the MFC Shares (Intermediaries include, among others, banks, trust companies, securities dealers or brokers and trustees or administrators or self-administered RRSPs, RRIFs, RESPs and similar plans); or (b) in the name of a clearing agency (such as CDS Clearing and Depository Services Inc. or the Depository Trust & Clearing Corporation) of which an Intermediary is a participant. In accordance with the requirements set out in NI 54-101, the Corporation has distributed copies of the Meeting Materials to the clearing agencies and Intermediaries for onward distribution to Non-Registered Holders.

Intermediaries are required to forward the Meeting Materials to Non-Registered Holders unless a Non-Registered Holder has waived the right to receive them. Very often, Intermediaries will use service companies to forward the Meeting Materials to Non-Registered Holders. Generally, Non-Registered Holders who have not waived the right to receive Meeting Materials will either:

Because the Intermediary has already signed the form of proxy, this form of proxy is not required to be signed by the Non-Registered Holder when submitting the proxy. In this case, the Non-Registered Holder who wishes to submit a proxy should otherwise properly complete the form of proxy and deposit it with the Corporation as provided above; or

In either case, the purpose of this procedure is to permit Non-Registered Holders to direct the voting of the MFC Shares which they beneficially own. Should a Non-Registered Holder who receives one of the above forms wish to vote at the Meeting in person, the Non-Registered Holder should strike out the names of the management proxyholders named in the form and insert the Non-Registered Holder’s name in the blank space provided. In either case, Non-Registered Holders should carefully follow the instructions of their Intermediary, including those regarding when and where the proxy or proxy authorization form is to be delivered.

There are two kinds of beneficial owners – those who object to their name being made known to the issuers of securities which they own (called OBOs for Objecting Beneficial Owners) and those who do not object to the issuers of the securities they own knowing who they are (called NOBOs for Non-Objecting Beneficial Owners). Pursuant to NI 54-101, issuers can obtain a list of their NOBOs from Intermediaries in order to distribute proxy-related materials directly to NOBOs.

These shareholder materials are being sent to both Registered Shareholders and Non-Registered Holders. If you are a Non-Registered Holder and the Corporation or its agent has sent these materials directly to you, your name and address and information about your holdings of securities have been obtained in accordance with applicable securities regulatory requirements from the Intermediary holding such securities on your behalf.

VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF

As at May 17, 2017 , being the Record Date, there were a total of 62,692,272 MFC Shares issued and outstanding. Each MFC Share entitles the holder thereof to one vote at the Meeting. The following table sets forth, as of the date hereof, to the best of the Corporation’s knowledge and based solely upon publicly-available records and filings, the only persons or companies which beneficially own, or control or direct, directly or indirectly, voting securities carrying 10% or more of the votes attached to the issued and outstanding MFC Shares as of the date hereof:

Notes:

THE ARRANGEMENT

At the Meeting, MFC Shareholders will be asked to consider and, if deemed advisable, to approve the Arrangement Resolution which, if approved, will be used to effect a reorganization of MFC to give effect to the Arrangement comprising certain exchanges of securities and certain other corporate transactions.

Pursuant to the Arrangement, among other things:

Please refer to the enclosed Circular for detailed information regarding the steps in the Arrangement.

Additionally, pursuant to the Arrangement, MFC Options will be exchanged for New MFC Options to purchase a number of New MFC Shares equal to one-fifth of the number of MFC Shares issuable on exercise of such MFC Options immediately prior to the Effective Time for an exercise price per New MFC Share equal to the exercise price per share of such MFC Option immediately prior to the Effective Time multiplied by five. The New MFC Options will be on the same terms and conditions of the MFC Options for which it is exchanged except that such New MFC Option will be governed by the terms and conditions of the New MFC Incentive Plan.

The Arrangement is expected to affect shareholders of MFC uniformly, without any effect on any MFC Shareholder’s percentage ownership interests in MFC or proportionate voting power, other than for MFC Shareholders who hold an Odd Lot Interest. The New MFC Shares issued pursuant to the Arrangement will be fully paid and non-assessable. The New MFC Shares will have the same voting rights and rights to dividends and distributions and will be identical in all other material respects to the MFC Shares.

The following diagrams illustrate the corporate structure of MFC prior to the Arrangement and New MFC following completion of the Arrangement:

Pre-Arrangement	Post-Arrangement

Following the Effective Date, the Corporation may carry out certain intercompany transfers of head office assets and liabilities from MFC to New MFC (such as senior management employment contracts).

Background to the Arrangement

Through the Arrangement, management intends to position the assets of MFC for future development and increasing shareholder value. Additionally, management believes that the Arrangement will result in MFC being better positioned to develop its growth strategy and to pursue strategic and financing transactions.

In the first quarter of 2017, management of the Corporation approached the Board of Directors to explore the pros and cons of the Arrangement. During this time, management consulted with the Corporation’s legal, tax and financial advisers regarding structuring such a transaction.

On March 31, 2017, MFC announced that it was pursuing the Arrangement. Subsequently, management worked with MFC’s advisors to develop and finalize the structure thereof and on June 7, 2017, management reported to the Board of Directors recommending that the Corporation proceed with the Arrangement. On June 7, 2017, the Board of Directors unanimously endorsed management’s plan and approved the execution of the Arrangement Agreement and authorized the Corporation to proceed with the Arrangement, subject to the receipt of all requisite approvals.

On June 5, 2017, New MFC and MFC 2017 II were incorporated for the sole purpose of completing the Arrangement, and on June 7, 2017, MFC, New MFC and MFC 2017 II entered into the Arrangement Agreement pursuant to which the parties agreed to complete the Arrangement in accordance with the Plan of Arrangement.

The completion of the Arrangement is conditional upon, among other things, MFC Shareholder approval of the Arrangement and Court approval and the listing of the New MFC Shares (including those New MFC Shares underlying the New MFC Options) for trading on the Exchange. MFC has applied for the listing of the New MFC Shares on the Exchange in substitution of the MFC Shares, and is expecting to receive approval of same prior to the Meeting. On June 9, 2017, the Corporation obtained the Interim Order from the Court. Final approval is conditional on, among other things, approval by the MFC Shareholders and receipt of the Final Order.

Benefits of the Arrangement

The Board of Directors believes that the Arrangement has various significant advantages for MFC and MFC Shareholders, including, among others:

Approval and Recommendation of the Board of Directors

The Board of Directors has determined that the Arrangement is fair to MFC and the MFC Shareholders and unanimously recommends that MFC Shareholders vote in favour of the Arrangement Resolution at the Meeting.

The Arrangement

The Arrangement will result in the exchange of MFC Shares for New MFC Shares. The Arrangement will be undertaken in accordance with the BCBCA and the Plan of Arrangement.

The following description of the Arrangement is qualified in its entirety by reference to the full text of the Plan of Arrangement which is set out in Schedule “A” to the Arrangement Agreement, which is attached at Schedule “B” to this Circular.

Pursuant to the Plan of Arrangement, commencing at the Effective Time, the following principal steps will occur and be deemed to occur in the following chronological order as part of the Arrangement:

provided that each of the foregoing steps (i) to (x) shall be conditional upon the occurrence of the others and none of the foregoing steps (i) to (x) will occur or will be deemed to occur unless all of the foregoing steps occur.

Immediately following the completion of the Arrangement, MFC will surrender to New MFC for cancellation the initial New MFC Share that was issued to it upon incorporation of New MFC.

Exchange of MFC Shares

To receive New MFC Shares or any cash consideration on completion of the Arrangement, or in the case of Odd Lot Interests, any cash which the holder of an Odd Lot Interest is entitled to, the Letter(s) of Transmittal, which will be sent to the MFC Shareholders after the Effective Time, must be completed and returned with the certificate(s) representing such MFC Shares to the Depositary, New MFC or MFC 2017 II, as the case may be, in accordance with the instructions set forth in the Letter(s) of Transmittal. Non-Registered Holders must contact their nominee to deposit their MFC Shares.

The use of mail to transmit certificates representing MFC Shares and the Letter(s) of Transmittal is at the risk of each MFC Shareholder. MFC recommends that such certificates and documents be delivered by hand to the Depositary and a receipt thereof be obtained or that registered mail be used.

No signature guarantee is required on the Letter(s) of Transmittal if the Letter(s) of Transmittal is signed by the MFC Shareholder of the MFC Shares deposited therewith, unless that MFC Shareholder has indicated that the New MFC Shares to be received are to be issued in the name of a Person other than the MFC Shareholder or if the New MFC Shares are to be sent to an address other than the address of the MFC Shareholder as shown on the register of MFC.

In all other cases, all signatures on the Letter(s) of Transmittal must be guaranteed by a Canadian Schedule I chartered bank, a major trust company in Canada, a member of the Securities Transfer Agent Medallion Program (STAMP), a member of the Stock Exchanges Medallion Program (SEMP) or a member of the New York Stock Exchange, Inc. Medallion Signature Program (MSP).

From and after the Effective Time, and subject to the terms of the Arrangement, certificates formerly representing MFC Shares (other than those representing Odd Lot Interests) exchanged pursuant to the Plan of Arrangement shall represent only the right to receive certificates representing New MFC Shares or any cash consideration under the Arrangement or, in the case of Odd Lot Interests, any cash to which the holders are entitled pursuant to the Arrangement.

Each such certificate formerly representing MFC Shares that is not deposited with all other documents as required pursuant to the Plan of Arrangement on or prior to the third anniversary of the Effective Date shall cease to represent a right or claim of any kind or nature whatsoever, including the right of the holder to receive New MFC Shares or any cash consideration, or any dividends or other distributions which may have been declared thereon or otherwise. At the expiry of such period: (i) all remaining New MFC Shares will be returned to New MFC (or any successor thereof) for cancellation and, subject to the requirements of law with respect to unclaimed property, if applicable, any certificate which prior to the Effective Date represented issued and outstanding MFC Shares which has not been surrendered will cease to represent any claim or interest of any kind or nature against MFC, New MFC, MFC 2017 II or the Depositary; and (ii) any cash that has not been distributed to former MFC Shareholders will become the property of New MFC (or any successor thereof), subject to the requirements of law with respect to unclaimed property, if applicable, and any certificate which prior to the Effective Date represented issued and outstanding MFC Shares which has not been surrendered will cease to represent any claim or interest of any kind or nature against MFC, New MFC, MFC 2017 II or the Depositary.

Due to the administrative costs of effecting the exchange, if any person that was an MFC Shareholder immediately prior to the Effective Time would be entitled to a cash payment of less than US$10, such payment will not be made.

Odd Lot Interest in MFC Shares

If an MFC Shareholder immediately prior to the Effective Time is the holder of less than 100 MFC Shares, such holder is an Odd Lot Interest holder.  MFC Shareholders holding an Odd Lot Interest will not receive any New MFC Shares pursuant to the Arrangement.  An Odd Lot Interest holder will only be entitled to receive a cash payment therefor from MFC based on the volume weighted average price of the MFC Shares for the ten trading days immediately prior to the Effective Date. 

The Odd Lot Purchase will only apply to Registered Shareholders. Holders of less than 100 MFC Shares immediately prior to the Effective Time who own such shares beneficially through an Intermediary and who would like to receive a cash payment for their Odd Lot Interest pursuant to the Plan of Arrangement, should contact their Intermediary to arrange to have their MFC Shares held beneficially through an Intermediary to be transferred to registered form. If a holder of 100 or more MFC Shares, immediately

prior to the Effective Time, in the aggregate holds MFC Shares in both registered form and beneficially through an Intermediary, but holds less than 100 MFC Shares, immediately prior to the Effective Time, in registered form, the MFC Shares held in registered form will be eliminated as a result of the Consolidation. To avoid this, such MFC Shareholder should contact their Intermediary or the clearing agency to arrange to have the MFC Shares held in registered form transferred to beneficial ownership through an Intermediary.

Treatment of MFC Options

MFC intends to cancel, with the consent of the holders thereof, all of the outstanding MFC Options as at the Effective Time, substantially all of which are held by the directors and employees of MFC, without any compensation to such holders. The MFC Options will be exchanged for New MFC Options on a five for one basis, and each New MFC Option shall be exercisable at a price five times higher than the existing MFC Options in order to give effect to the Consolidation and subsequent subdivision of the MFC Shares. Each New MFC Option shall have substantially the same terms as each existing MFC Option.

Illegality of Delivery of Securities

If MFC believes that it would be contrary to applicable laws to deliver New MFC Shares pursuant to the Arrangement to a MFC Shareholder, the New MFC Shares that otherwise would be distributed to that person will be delivered to the Depositary for sale by the Depositary on behalf of that person. The New MFC Shares so delivered to the Depositary will be pooled and sold as soon as practicable after the Effective Time of the Arrangement, on such dates and at such prices as New MFC determines in its sole discretion, acting reasonably and in good faith, provided that no sales of any such New MFC Shares shall occur in any jurisdiction in which such sales are not permitted under applicable laws. The Depositary, MFC and New MFC shall not be obligated to seek or obtain a minimum price for any of the New MFC Shares so sold. Each such holder will receive a pro rata share of the cash proceeds from the sale of the New MFC Shares sold by the Depositary (less commissions, other reasonable expenses incurred in connection with the sale of New MFC Shares and any amount withheld in respect of taxes) in lieu of the New MFC Shares that such holder would otherwise have received. None of the Depositary, MFC or New MFC will be liable for any loss arising out of any such sales.

THE ARRANGEMENT AGREEMENT

The following summarizes, among other things, the material terms of the Arrangement Agreement, a copy of which is attached to this Circular at Schedule “B”. MFC Shareholders are urged to read the Arrangement Agreement in its entirety for a complete description of the Arrangement.

Effective Date of the Arrangement

After obtaining the Final Order and subject to the satisfaction, waiver or release of the conditions set forth in the Arrangement Agreement, the Arrangement will become effective on the Effective Date.

Mutual Covenants of MFC, New MFC and MFC 2017 II

In the Arrangement Agreement, each of MFC, New MFC and MFC 2017 II have agreed to do and perform all such acts and things and execute and deliver all such agreements, assurances, notices and other documents and instruments, as may reasonably be required to facilitate the carrying out of the intent and purpose of the Arrangement Agreement, and will use its reasonable efforts to obtain all necessary consents and waivers required to give effect to the Arrangement.

Conditions to Cl o sing

The Arrangement Agreement provides that the obligations of MFC, New MFC and MFC 2017 II to complete the Arrangement are subject to the satisfaction of, or mutual waiver by, MFC, New MFC and MFC 2017 II, on or before the Effective Date, of each of the following conditions, which are for the mutual benefit of MFC, New MFC and MFC 2017 II and which may be waived, in whole or in part, by MFC, New MFC or MFC 2017 II:

Termination

The Arrangement Agreement may at any time before or after the holding of the Meeting but in either case prior to the Effective Time, be unilaterally terminated by direction of the Board of Directors, the New MFC Board or the MFC 2017 II Board in its sole and absolute discretion, at any time without notice to or the approval of the other parties to the Arrangement Agreement or the MFC Shareholders and without liability to any of them, and nothing expressed or implied herein or in the Plan of Arrangement will be construed as fettering the absolute discretion of the Board of Directors, the New MFC Board or the MFC 2017 II Board to terminate the Arrangement Agreement and discontinue efforts to effect the Arrangement for whatever reasons they may consider appropriate.

Required Shareholder Approvals

Subject to any further order(s) of the Court, the Arrangement Resolution, the text of which is attached to the Circular at Schedule “A”, must be approved by at least 66 ² / ₃ % of the votes cast by the MFC Shareholders, present in person or by proxy and entitled to vote at the Meeting. Notwithstanding the foregoing, the Arrangement Resolution authorizes the Board of Directors, without further notice to, or approval of, the MFC Shareholders and subject to the terms of the Arrangement Agreement, to amend the Plan of Arrangement or to decide not to proceed with the Arrangement at any time prior to the Effective Time.

Required Court Approvals

The Arrangement requires approval by the Court. Prior to the mailing of the Circular, MFC obtained the Interim Order providing for the calling and holding of the Meeting and other procedural matters related to the Meeting. A copy of the Interim Order is attached to this Circular at Schedule “C”. Following approval of the Arrangement Resolution by MFC Shareholders at the Meeting, MFC will make application to the Court for the Final Order at 10:00 a.m. (Vancouver time) on July 12, 2017. A copy of the Notice of Application for the Final Order is attached to this Circular at Schedule “D”. In deciding whether to grant the Final Order, the Court will consider, among other things, the fairness of the Arrangement to the MFC Shareholders.

At the hearing for the Final Order, MFC Shareholders or other interested persons are entitled to appear in person or by counsel and to make a submission regarding the Arrangement, subject to filing and serving an appearance and satisfying any other applicable requirements.

At the hearing for the Final Order, the Court may approve the Arrangement either as proposed, or make the Arrangement subject to such terms and conditions as the Court considers appropriate, or may dismiss the application. Depending upon the nature of any required amendments, MFC, New MFC or MFC 2017 II may determine not to proceed with the Arrangement in the event that any amendment ordered by the Court is not satisfactory to each of them.

Dissent Rights

Section 238 of the BCBCA provides Registered Shareholders of a corporation with the right to dissent from certain resolutions, including a resolution to approve an arrangement, if the terms of the arrangement permit dissent. The Plan of Arrangement expressly provides Registered Shareholders with the right to dissent from the Arrangement Resolution pursuant to section 238 of the BCBCA as modified by the Plan of Arrangement, the Interim Order and the Final Order. Any Registered Shareholder who dissents from the Arrangement Resolution in compliance with the relevant provisions of the BCBCA, as they may be modified by the Plan of Arrangement, the Interim Order and the Final Order, will be entitled,

in the event the Arrangement becomes effective, and subject to the BCBCA, to be paid the fair value of the MFC Shares held by such Dissenting Shareholder, as more particularly described below and in the relevant provisions of Division 2, Part 8 of the BCBCA, attached as Schedule “E” to this Circular, as modified by the Plan of Arrangement, the Interim Order and the Final Order.

Under the BCBCA, only a Registered Shareholder may exercise the Dissent Rights in respect of shares registered in that shareholder’s name. In many cases, shares beneficially owned by a Non-Registered Holder are registered either (i) in the name of an Intermediary, or (ii) in the name of a clearing agency (such as CDS Clearing and Depository Services Inc.) of which the Intermediary is a participant. Accordingly, a Non-Registered Holder will not be entitled to exercise its Dissent Rights directly (unless the MFC Shares are re-registered in the Non-Registered Holder’s name). A Non-Registered Holder who wishes to exercise Dissent Rights should immediately contact the Intermediary with whom the Non-Registered Holder deals in respect of its MFC Shares and either: (i) instruct the Intermediary to exercise the Dissent Rights on the Non-Registered Holder’s behalf (which, if the MFC Shares are registered in the name of CDS Clearing and Depository Services Inc. or other clearing agency, would require that the MFC Shares first be re-registered in the name of the Intermediary); or (ii) instruct the Intermediary to request that the MFC Shares be registered in the name of the Non-Registered Holder, in which case such holder would have to exercise the Dissent Rights directly (that is, the Intermediary would not be exercising the Dissent Rights on such holder’s behalf).

A Registered Shareholder who wishes to dissent must provide a written Dissent Notice to the Corporation at its office not later than 9:00 a.m. (Vancouver time) on the date that is at 48 hours (excluding Saturdays, Sundays and holidays) immediately preceding the date of the Meeting, and must not vote any of the MFC Shares it holds in favour of the Arrangement Resolution. It is important that Dissenting Shareholders strictly comply with this requirement.

If the Arrangement Resolution is passed at the Meeting, the Corporation must send to every Dissenting Shareholder a notice (a “ Notice of Intention ”) informing such Dissenting Shareholder that, subject to receipt of the Final Order and satisfaction of the other conditions set out in the Arrangement Agreement, the Corporation intends to complete the Arrangement, and advising the Dissenting Shareholder that if the Dissenting Shareholder intends to proceed with its exercise of its Dissent Rights, it must deliver to the Corporation, within one month after the date of the Notice of Intention, a written statement (a “ Demand for Payment ”) that the Dissenting Shareholder requires MFC 2017 II to purchase all of the MFC Shares in respect of which it has dissented (the “ Dissenting Shares ”) in compliance with the relevant provisions of the BCBCA, attached as Schedule “E” hereto, as they may be modified by the Plan of Arrangement, the Interim Order, the Final Order or any order of the Court, together with the share certificates representing the Dissenting Shares.

Unless the Court orders otherwise, a Dissenting Shareholder who fails to make a Demand for Payment in accordance with the relevant provisions of the BCBCA, as they may be modified by the Plan of Arrangement, Interim Order and the Final Order, will cease to have the right to dissent with respect to the Dissenting Shares under the BCBCA.

A Dissenting Shareholder delivering such a Demand for Payment may not withdraw its dissent and upon delivery of the Demand for Payment and the certificates representing the Dissenting Shares, such Dissenting Shareholder will be deemed to have sold the Dissenting Shares to MFC 2017 II subject to the BCBCA and the Interim Order. MFC 2017 II will pay to each such Dissenting Shareholder the amount agreed between MFC 2017 II and the Dissenting Shareholder for its Dissenting Shares. If no such agreement between MFC 2017 II and a Dissenting Shareholder has been reached, either MFC 2017 II or the Dissenting Shareholder may apply to the Court and the Court may: (i) determine the fair value that the MFC Shares had immediately before the passing of the Arrangement Resolution, excluding any

appreciation or depreciation in anticipation of the Arrangement Resolution, unless such exclusion would be inequitable, or order that the fair value of the MFC Shares be established by arbitration or by reference to the registrar, or a referee, of the Court; (ii) joinder the application of each Dissenting Shareholder who has complied with the Demand for Payment requirements, other than those who have entered into an agreement with MFC 2017 II; and (iii) make consequential orders and give directions it considers appropriate.

Pursuant to the Plan of Arrangement, Dissenting Shareholders who are ultimately determined not to be entitled, for any reason, to be paid fair value for their Dissenting Shares, shall be deemed to have participated in the Arrangement on the same basis as any non-Dissenting Shareholder as at and from the Effective Date.

The foregoing is only a summary of the Dissenting Shareholder provisions of the BCBCA (as they may be modified by the Plan of Arrangement, the Interim Order and the Final Order), which are technical and complex. A complete copy of the relevant provisions of the BCBCA is attached as Schedule “E” to this Circular. It is recommended that any Registered Shareholder wishing to avail itself of its Dissent Rights under those provisions seek legal advice, as failure to comply strictly with the provisions of the BCBCA (as they may be modified by the Plan of Arrangement, the Interim Order and the Final Order) may prejudice its Dissent Rights or may result in the loss of Dissent Rights.

CERTAIN SECURITIES LAW MATTERS

Canadian Securities Law Considerations

The New MFC Shares to be issued to the MFC Shareholders who participate in the Arrangement will be issued under exemptions from the requirements to provide a prospectus under applicable Canadian securities laws. The New MFC Shares may be resold in each of the provinces and territories of Canada without significant restriction, provided that New MFC is a “reporting issuer” under applicable securities legislation in a jurisdiction of Canada at the time of resale, the holder is not a “control person” as defined in the applicable securities legislation, no unusual effort is made to prepare the market or create a demand for the securities, no extraordinary commission or consideration is paid in respect of that sale and there is no order or injunction preventing such resale.

New MFC is not, as at the date hereof, a reporting issuer in any province or territory of Canada. Upon completion of the Arrangement, however, New MFC will be a reporting issuer in British Columbia, Alberta and Québec and has applied to list the New MFC Shares on the Exchange. Following completion of the Arrangement, New MFC and MFC intend to make all necessary applications with applicable securities regulatory authorities for MFC to cease to be a “reporting issuer” pursuant to applicable securities laws.

United States Securities Law Considerations

The New MFC Shares to be issued to MFC Shareholders pursuant to the Arrangement are being issued in reliance upon the exemption from registration provided by Section 3(a)(10) of the 1933 Act. The Final Order will constitute the basis for an exemption from the registration requirements of the 1933 Act, with respect to the New MFC Shares to be issued to MFC Shareholders pursuant to the Arrangement.

The Court will be advised of the effect of the Final Order, before the hearing of the application for the Final Order and will be advised that, if the terms and conditions of the Arrangement are approved by the

Court: (i) New MFC will rely on such Section 3(a)(10) exemption based on the Court’s approval of the Arrangement, and (ii) the New MFC Shares issued pursuant to the Arrangement will not require registration under the 1933 Act. New MFC Shares issued pursuant to the Arrangement to a MFC Shareholder who is not an “affiliate” of MFC or New MFC before the Arrangement and who will not be an “affiliate” of New MFC at the time of any resale of the New MFC Shares for purposes of United States federal securities laws, may be resold pursuant to the general exemptions from registration under Section 4(1) of the 1933 Act. Any resale of such New MFC Shares by such an affiliate (or former affiliate) may be subject to the registration requirements of the 1933 Act, absent an exemption therefrom. Any such affiliate (or former affiliate) should obtain the advice of its legal counsel with respect to the application of the 1933 Act to the offer or sale of such New MFC Shares by such person. For the purposes of the 1933 Act, an “affiliate” of MFC or New MFC is a person which directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, MFC or New MFC, as the case may be.

Shareholders resident in the United States and other MFC Shareholders residing elsewhere than in Canada are urged to consult their legal advisors to determine the extent of all applicable resale provisions.

INCOME TAX CONSIDERATIONS

Certain Canadian Federal Income Tax Considerations

The following is a summary of the principal Canadian federal income tax considerations under the Tax Act relating to the Arrangement generally applicable to a MFC Shareholder who, at all relevant times, for purposes of the Tax Act: (i) deals at arm’s length with MFC, New MFC and MFC 2017 II; (ii) is not affiliated with MFC, New MFC or MFC 2017 II; and (iii) holds its MFC Shares, and will, if applicable, hold any New MFC Shares received upon the Arrangement, as capital property (in this section, a “ Holder ”).

MFC Shares and New MFC Shares will generally be considered to be capital property to a Holder for the purposes of the Tax Act unless such shares are held by the Holder in the course of carrying on a business of buying and selling securities or the Holder acquired or holds such shares in a transaction or transactions considered to be an adventure or concern in the nature of trade.

This summary is based on the current provisions of the Tax Act and the regulations thereunder (in this section, the “ Regulations ”) in force as of the date hereof and our understanding of the current published administrative policies and assessing practices of the Canada Revenue Agency (in this section, the “ CRA ”) published in writing prior to the date hereof. This summary takes into account all specific proposals to amend the Tax Act and the Regulations publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof (in this section, the “ Proposed Amendments ”) and assumes that all Proposed Amendments will be enacted in the form proposed. However, no assurances can be given that the Proposed Amendments will be enacted as proposed, or at all. This summary does not otherwise take into account or anticipate any changes in law or administrative policy or assessing practice whether by legislative, regulatory, administrative or judicial action nor does it take into account tax legislation or considerations of any province, territory or foreign jurisdiction, which may differ from those discussed herein.

This summary is not applicable to a Holder: (i) that is a “financial institution” for the purposes of the “mark-to-market property” rules in the Tax Act; (ii) that is a “specified financial institution” for the purposes of the Tax Act; (iii) an interest in which is, or whose MFC Shares or New MFC Shares are, a “tax shelter investment” for the purposes of the Tax Act; (iv) who makes or has made a “functional currency” reporting election for the purposes of the Tax Act; (v) with respect to whom New MFC will be

a “foreign affiliate” within the meaning of the Tax Act; (vi) that is a “foreign affiliate” of a taxpayer resident in Canada for the purposes of the Tax Act (vii) that has entered into or will enter into a “synthetic disposition arrangement”, or a “derivative forward agreement” (as defined in the Tax Act) in respect of MFC Shares or New MFC Shares; or (viii) that received MFC Shares on exercise of a stock option. This summary also does not apply to a holder of MFC Options.

This summary assumes that, at all relevant times prior to the exchange of MFC Shares pursuant to the Arrangement, the MFC Shares will be listed on a “recognized stock exchange” within the meaning of the Tax Act (which includes the Exchange). This summary further assumes that MFC will be, at all relevant times, a resident of Canada for the purposes of the Tax Act and that New MFC and MFC 2017 II will be, at all relevant times, not resident in Canada for the purposes of the Tax Act.

This summary is of a general nature only and is not exhaustive of all possible Canadian federal income tax considerations. This summary is not, and should not be construed as, legal, business or tax advice to any particular Holder and no representations are made with respect to the tax consequences to any particular Holder. Accordingly all Holders should consult their own tax advisors regarding the Canadian federal income tax consequences of the Arrangement applicable to their particular circumstances.

Currency Conversion

Subject to certain exceptions that are not discussed herein, for the purposes of the Tax Act, all amounts relating to the acquisition, holding or disposition of securities (including dividends, adjusted cost base and proceeds of disposition) must be expressed in Canadian dollars. Amounts denominated in United States dollars must be converted into Canadian dollars, generally based on the Bank of Canada spot exchange rate on the date such amounts arise or such other rate of exchange as is acceptable to the Minister of National Revenue (Canada).

Holders Resident in Canada

This portion of the summary is applicable to a Holder who, at all relevant times, for the purposes of the Tax Act and any applicable income tax treaty or convention: (i) is, or is deemed to be, resident in Canada; and (ii) is not exempt from tax under Part I of the Tax Act (in this section, a “ Resident Holder ”). Certain Resident Holders whose MFC Shares might not otherwise constitute capital property may be eligible to make an irrevocable election in accordance with subsection 39(4) of the Tax Act to have their MFC Shares, and every other “Canadian security” (as defined in the Tax Act) owned by such Resident Holder in the taxation year in which the election is made and in all subsequent taxation years, be deemed to be capital property. Resident Holders considering making such an election should consult their own tax advisors for advice as to whether the election is available or advisable in their own particular circumstances.

MFC Share Consolidation

As part of the Arrangement, and on the Consolidation, a Resident Holder may receive one MFC Share for each 100 MFC Shares held immediately prior to the Consolidation. Under the current administrative policy of the CRA, a Resident Holder should not realize a capital gain or a capital loss as a result of the Consolidation and the aggregate adjusted cost base of the MFC Shares held by such Resident Holder immediately after the Consolidation should be equal to the aggregate adjusted cost base of the MFC Shares held by such Holder immediately before the Consolidation.

Cancellation of Fractional MFC Shares

MFC will cancel all fractional MFC Shares outstanding after completion of the Consolidation.

A Resident Holder who, on the cancellation of fractional MFC Shares, is entitled to receive payment from MFC will be considered to have disposed of the fractional MFC Shares for proceeds of disposition equal to the amount received by the Resident Holder. A Resident Holder generally will be deemed to have received a dividend equal to the amount by which such proceeds exceed the “paid-up capital” (in this section “ PUC ”), as defined in the Tax Act, of such fractional shares, and such deemed dividend will reduce the proceeds of disposition for purposes of computing a capital gain (or a capital loss) on the disposition of such fractional MFC Shares.

Management does not currently expect the amount paid by MFC to a Resident Holder as consideration for the cancellation of fractional MFC Shares to exceed the PUC of such fractional MFC Shares. Accordingly, MFC does not currently expect to be deemed to pay a dividend on the cancellation of fractional MFC Shares.

Dividends deemed to be received on fractional MFC Shares by a Resident Holder who is an individual (including a trust) will be included in computing the individual’s income for tax purposes and will be subject to the gross-up and dividend tax credit rules normally applicable to dividends received from “taxable Canadian corporations”, as defined in the Tax Act. A dividend will be eligible for the enhanced gross-up and dividend tax credit for “eligible dividends”, as defined in the Tax Act, paid by taxable Canadian corporations, to the extent that such dividend is properly designated by MFC as an eligible dividend.

A Resident Holder that is a corporation will include dividends deemed to be received on fractional MFC Shares in computing its income for tax purposes and generally will be entitled to deduct the amount of such dividends in computing its taxable income. In certain circumstances, subsection 55(2) of the Tax Act will treat a taxable dividend received by a Resident Holder that is a corporation as proceeds of disposition or capital gain. Certain corporations, including “private corporations” and “subject corporations”, as such terms are defined in the Tax Act, may be liable to pay a refundable tax under Part IV of the Tax Act at the rate of 38 ^1/3 % of the dividends deemed to be received on MFC Shares to the extent that such dividends are deductible in computing taxable income. Resident Holders that are corporations should consult their own tax advisors having regard to their own circumstances.

A Resident Holder will also realize a capital gain (or a capital loss) to the extent that the proceeds of disposition of such fractional MFC Shares, as reduced by the amount of any deemed dividend as discussed above and net of any reasonable costs of disposition, exceed (or are less than) the adjusted cost base of such shares immediately before the cancellation. For a description of the tax treatment of capital gains and losses realized by Resident Holders on the disposition of fractional MFC Shares, see the discussion under the heading “ Holders Resident in Canada – Taxation of Capital Gains or Capital Losses ” below.

MFC Share Subdivision

As part of the Arrangement, and on the subdivision, a Resident Holder may receive 20 MFC Shares for each MFC Share held immediately prior to the subdivision. Under the current administrative policy of the CRA, a Resident Holder should not realize a capital gain or a capital loss as a result of the subdivision and the aggregate adjusted cost base of the MFC Shares held by such Resident Holder immediately after the subdivision should be equal to the aggregate adjusted cost base of the MFC Shares held by such Holder immediately before the subdivision.

Reduction of MFC Stated Capital

As part of the Arrangement, and on the stated capital reduction, MFC will reduce its stated capital by an amount equal to its retained deficit as at March 31, 2017 (in this section, the “ Stated Capital Reduction ”). Since no amount will be paid by MFC on the Stated Capital Reduction, Resident Holders will not be deemed to have received a dividend by virtue of the Stated Capital Reduction. In addition, the Stated Capital Reduction will not result in any adjustments to the adjusted cost base of the MFC Shares held by Resident Holders.

Exchange of MFC Shares for New MFC Shares and Cash

As part of the Arrangement, a Resident Holder may transfer each MFC Share to MFC 2017 II in exchange for one New MFC Share and US$0.0001 of cash.

A Resident Holder that disposes of a MFC Share under the Arrangement in exchange for a New MFC Share and cash will be considered to have disposed of such MFC Share for proceeds of disposition equal to the aggregate fair market value at the Effective Time of the New MFC Share and cash acquired by such Resident Holder on the exchange. As a result, the Resident Holder will generally realize a capital gain (or a capital loss) to the extent that the proceeds of disposition, net of any reasonable costs of disposition, exceed (or are less than) the adjusted cost base to the Resident Holder of such MFC Share. For a description of the tax treatment of capital gains and losses, see “ Holders Resident in Canada – Taxation of Capital Gains or Capital Losses ” below.

The adjusted cost base to a Resident Holder of a New MFC Share acquired on the exchange will be equal to the fair market value of the New MFC Share at the Effective Time.

Dividends on New MFC Shares

A Resident Holder will be required to include in computing such Resident Holder’s income for a taxation year the amount of dividends, if any, received on New MFC Shares. Dividends received on New MFC Shares by a Resident Holder that is an individual will not be subject to the gross-up and dividend tax credit rules in the Tax Act normally applicable to taxable dividends received from taxable Canadian corporations. A Resident Holder that is a corporation will not be entitled to deduct the amount of such dividends in computing its taxable income.

A Resident Holder that is throughout the year a “Canadian-controlled private corporation”, as defined in the Tax Act, may be liable to pay a refundable tax at a rate of 10⅔% (subject to pro-rating rules for taxation years that end after 2015 and begin before 2016) of its “aggregate investment income”, as defined in the Tax Act, including any dividends received or deemed to be received on New MFC Shares.

If a government of a country other than Canada imposes a withholding tax on dividends paid by New MFC on a New MFC Share held by a Resident Holder, the amount of such tax will generally be eligible for foreign tax credit or deduction treatment, subject to the detailed rules and limitations specified in the Tax Act. Resident Holders are advised to consult their own tax advisors with respect to the availability of a credit or deduction to them having regard to their own particular circumstances.

Disposition of New MFC Shares

A disposition or deemed disposition of New MFC Shares by a Resident Holder will generally result in a capital gain (or capital loss) to the extent that the proceeds of disposition, net of any reasonable costs of the disposition, exceed (or are less than) the adjusted cost base to the holder of the shares immediately

before the disposition. See “ Holders Resident in Canada – Taxation of Capital Gains or Capital Losses ” below.

The Resident Holder may be entitled to claim a foreign tax credit or deduction in respect of any foreign tax payable by the Resident Holder on any gain realized on such disposition or deemed disposition to the extent and under the circumstances provided in the Tax Act. Resident Holders are advised to consult their own tax advisors with respect to the availability of a credit or deduction to them having regard to their own particular circumstances.

Taxation of Capital Gains or Capital Losses

Generally, a Resident Holder will be required to include in computing its income for a taxation year one-half of the amount of any capital gain (in this section, a “ taxable capital gain ”) realized by it in that year. Such a Resident Holder will be required to deduct one-half of the amount of any capital loss (in this section, an “ allowable capital loss ”) realized by it in a taxation year from taxable capital gains realized by the Resident Holder in that year. Allowable capital losses in excess of taxable capital gains realized in a taxation year may be carried back to any of the three preceding taxation years or carried forward to any subsequent taxation year and deducted against net taxable capital gains realized in such years, subject to and in accordance with the detailed rules contained in the Tax Act.

Capital gains realized by an individual (including certain trusts) may give rise to a liability for minimum tax as calculated under the detailed rules set out in the Tax Act.

A Resident Holder that throughout the relevant taxation year, is a “Canadian-controlled private corporation”, as defined in the Tax Act, may be liable to pay a refundable tax at a rate of 10⅔% (subject to pro-rating for taxation years that end after 2015 and begin before 2016) on its “aggregate investment income”, as defined in the Tax Act, including any taxable capital gains.

The amount of any capital loss realized by a Resident Holder that is a corporation on the disposition of a MFC Share may be reduced by the amount of certain dividends previously received (or deemed to be received) by the Resident Holder on such share (or another share where the share has been acquired in exchange for such other share) to the extent and under circumstances prescribed by the Tax Act. Similar rules may apply where a corporation is a member of a partnership or a beneficiary of a trust that owns a MFC Share or where a trust or partnership of which a corporation is a beneficiary or a member is a member of a partnership or a beneficiary of a trust that owns any such share. Resident Holders to whom these rules may be relevant should consult their own tax advisors.

Foreign Property Information Reporting

A Resident Holder that is a “specified Canadian entity” (as defined in the Tax Act) for a taxation year or a fiscal period and whose total “cost amount” of “specified foreign property” (as such terms are defined in the Tax Act), including New MFC Shares, at any time in the year or fiscal period exceeds $100,000 will be required to file an information return for the year or period disclosing prescribed information in respect of such property. Subject to certain exceptions, a taxpayer resident in Canada, other than a corporation or trust exempt from tax under Part I of the Tax Act, will be a “specified Canadian entity”, as will certain partnerships. Substantial penalties may apply where a Resident Holder fails to file the required information return in respect of such Holder’s “specified foreign property” on a timely basis in accordance with the Tax Act.

The reporting rules in the Tax Act relating to “specified foreign property” are complex and this summary does not purport to address all circumstances in which reporting may be required by a

Resident Holder. Resident Holders should consult their own tax advisors regarding the reporting rules contained in the Tax Act.

Offshore Investment Fund Property

The Tax Act contains rules which, in certain circumstances, may require a Resident Holder to include an amount in income in each taxation year in respect of the acquisition and holding of New MFC Shares if: (i) the value of such shares may reasonably be considered to be derived, directly or indirectly, primarily from certain enumerated portfolio investments; and (ii) it may reasonably be concluded that one of the main reasons for the Resident Holder acquiring or holding the shares was to derive a benefit from portfolio investments in such a manner that the taxes, if any, on the income, profits and gains from such portfolio investments for any particular year are significantly less than the tax that would have been applicable under Part I of the Tax Act if the income, profits and gains had been earned directly by the Resident Holder.

Where these rules apply, a Resident Holder will be required to include in income for each taxation year in which such Holder owns the New MFC Shares the amount, if any, by which: (i) an imputed return for the taxation year computed on a monthly basis, where the amount in respect of each month is calculated as the product obtained when the Resident Holder’s “designated cost” (within the meaning of the Tax Act) of the shares at the end of the month is multiplied by one twelfth of the applicable prescribed rate for the period that includes such month plus two percent; exceeds (ii) any dividends or other amounts included in computing such Holder’s income for the year (other than a capital gain) in respect of the shares determined without reference to these rules. Any amount required to be included in computing a Resident Holder’s income under these provisions will be added to the adjusted cost base of the New MFC Shares.

These rules are complex and their application depends, to a large extent, on the reasons for a Resident Holder acquiring or holding New MFC Shares. Resident Holders are urged to consult their own tax advisors regarding the application and consequences of these rules in their own particular circumstances.

Eligibility for Investment of New MFC Shares

Based on the current provisions of the Tax Act, the New MFC Shares will be qualified investments under the Tax Act for trusts governed by a RRSP, a RRIF, a deferred profit sharing plan, a RESP, a registered disability savings plan (in this section, “ RDSP ”) or a tax-free savings account (in this section, “ TFSA ”), at any particular time, provided that, at that time, the New MFC Shares are listed on a “designated stock exchange” (which currently includes the Exchange) or New MFC is a “public corporation” (each as defined in the Tax Act).

Notwithstanding that New MFC Shares may be qualified investments for a trust governed by a RRSP, RRIF or TFSA, the annuitant under an RRSP or RRIF, or the holder of a TFSA, will be subject to a penalty tax on such shares if such shares are a “prohibited investment” (as defined in the Tax Act). The New MFC Shares will generally not be a “prohibited investment” for a trust governed by a TFSA, RRSP or RRIF provided that: (i) the holder of the TFSA or the annuitant under the RRSP or the RRIF, as the case may be, deals at arm’s length with New MFC for purposes of the Tax Act and does not have a “significant interest” (as defined in the Tax Act) in New MFC; or (ii) New MFC Shares are “excluded property” (as defined in subsection 207.01(1) of the Tax Act) for the TFSA, RRSP or RRIF. An annuitant under the RRSP or RRIF, or a holder of a TFSA should consult its own tax advisor in this regard. Pursuant to Proposed Amendments released on March 22, 2017, the rules in respect of “prohibited investments” are also proposed to apply to: (i) RDSPs and the holders thereof; and (ii) RESPs and the subscribers thereof.  

Resident Holders should consult their own tax advisors to ensure that the New MFC Shares would not be a prohibited investment for a trust governed by a TFSA, RRSP, RRIF, RDSP or RESP in their particular circumstances. 

Dissenting Holders

A Resident Holder that is a Dissenting Shareholder (in this section, a “ Resident Dissenting Shareholder ”) who, consequent upon the exercise of Dissent Rights, disposes of MFC Shares in consideration for a cash payment from MFC 2017 II will realize a capital gain (or capital loss) to the extent that the proceeds of disposition, net of any reasonable costs of disposition, exceed (or are less than) the adjusted cost base to the Resident Dissenting Shareholder of its MFC Shares. See “ Holders Resident in Canada – Taxation of Capital Gains or Capital Losses ” above.

Interest awarded to a Resident Dissenting Shareholder by a court will be included in the Resident Dissenting Shareholder’s income for the purposes of the Tax Act. In addition, a Resident Dissenting Shareholder that, throughout the relevant taxation year, is a “Canadian-controlled private corporation”, as defined in the Tax Act, may be liable to pay a refundable tax on its “aggregate investment income”, as defined in the Tax Act, including interest income.

Holders Not Resident in Canada

This portion of the summary applies to a Holder who, at all relevant times: (i) for the purposes of the Tax Act and any applicable income tax treaty or convention, is not, and is not deemed to be, resident in Canada; (ii) does not use or hold, and is not deemed to use or hold, MFC Shares or New MFC Shares in connection with carrying on a business in Canada; and (iii) is not an insurer who carries on an insurance business or is deemed to carry on an insurance business in Canada and elsewhere (in this section, a “ Non-Resident Holder ”).

MFC Share Consolidation

As part of the Arrangement, and on the Consolidation, a Non-Resident Holder may receive one MFC Share for each 100 MFC Shares held immediately prior to the Consolidation. Under the current administrative policy of the CRA, a Non-Resident Holder should not realize a capital gain or a capital loss as a result of the Consolidation and the aggregate adjusted cost base of the MFC Shares held by such Non-Resident Holder immediately after the Consolidation should be equal to the aggregate adjusted cost base of the MFC Shares held by such Holder immediately before the Consolidation.

Cancellation of Fractional MFC Shares

MFC will cancel all fractional MFC Shares outstanding after completion of the Consolidation.

A Non-Resident Holder who, on the cancellation of fractional MFC Shares, is entitled to receive a cash payment from MFC will be considered to have disposed of the fractional MFC Shares for proceeds of disposition equal to the amount received by the Non-Resident Holder. A Non-Resident Holder generally will be deemed to have received a dividend equal to the amount by which such proceeds exceed the PUC of such fractional shares, and such deemed dividend will reduce the proceeds of disposition for purposes of computing a capital gain (or a capital loss) on the disposition of such fractional MFC Shares.

The amount paid by MFC to a Non-Resident Holder as consideration for the cancellation of fractional MFC Shares is not currently expected to exceed the PUC of such fractional MFC Shares.

Accordingly, MFC does not currently expect to be deemed to pay a dividend on the cancellation of fractional MFC Shares.

Dividends deemed to be paid to a Non-Resident Holder on a fractional MFC Share will be subject to Canadian withholding tax at a rate of 25%, subject to any reduction in the rate of withholding tax to which the Non-Resident Holder is entitled under any applicable tax treaty or convention that is in force at the time of the deemed payment of such dividends. For example, under the Canada-United States Tax Convention (1980) (in this section, the “ Convention ”), as amended, where dividends are paid to or derived by a Non-Resident Holder who is a US resident for the purpose of, and who is entitled to the benefits in accordance with the provisions of, the Convention, the applicable rate of Canadian withholding tax generally is reduced to 15%.

A Non-Resident Holder will also realize a capital gain (or a capital loss) to the extent that the proceeds of disposition of such fractional MFC Shares, as reduced by the amount of any deemed dividend as discussed above and net of any reasonable costs of disposition, exceed (or are less than) the adjusted cost base of such shares immediately before the cancellation. For a description of the tax treatment of capital gains and losses realized by Non-Resident Holders on the disposition of fractional MFC Shares, see the discussion under the heading “ Holders Not Resident in Canada – Exchange of MFC Shares for New MFC Shares and Cash ” below.

MFC Share Subdivision

As part of the Arrangement, and on the subdivision, a Non-Resident Holder may receive 20 MFC Shares for each MFC Share held immediately prior to the subdivision. Under the current administrative policy of the CRA, a Non-Resident Holder should not realize a capital gain or a capital loss as a result of the subdivision and the aggregate adjusted cost base of the MFC Shares held by such Non-Resident Holder immediately after the subdivision should be equal to the aggregate adjusted cost base of the MFC Shares held by such Holder immediately before the subdivision.

Reduction of MFC Stated Capital

As part of the Arrangement, and on the Stated Capital Reduction, MFC will reduce its stated capital by an amount equal to its retained deficit. Since no amount will be paid by MFC on the Stated Capital Reduction, Non-Resident Holders will not be deemed to have received a dividend by virtue of the Stated Capital Reduction . In addition, the Stated Capital Reduction will not result in any adjustments to the adjusted cost base of the MFC Shares held by Non-Resident Holders.

Exchange of MFC Shares for New MFC Shares and Cash

As part of the Arrangement, a Non-Resident Holder may transfer each MFC Share to MFC 2017 II in exchange for one New MFC Share and US$0.0001 of cash.

A Non-Resident Holder that disposes of a MFC Share under the Arrangement in exchange for a New MFC Share and cash should not be subject to tax under the Tax Act in respect of any capital gain realized on the exchange unless: (a) the MFC Share constitutes “taxable Canadian property”, as defined in the Tax Act, of the Non-Resident Holder at the time of the exchange; and (b) the MFC Share is not “treaty-protected property”, as defined in the Tax Act, at the time of the exchange.

Generally, a MFC Share will not be “taxable Canadian property” to a Non-Resident Holder at a particular time provided that such share is listed on a “designated stock exchange”, as defined in the Tax Act, (which currently includes the Exchange) unless at any time during the 60-month period immediately

preceding the disposition: (i) the Non-Resident Holder, persons with whom the Non-Resident Holder did not deal at arm’s length, partnerships in which the Non-Resident Holder or persons with whom the Non-Resident Holder do not deal at arm’s length directly or indirectly hold a membership interest or the Non-Resident Holder together with all such persons, owned 25% or more of the issued shares of any class or series of shares of the capital stock of MFC; and (ii) more than 50% of the fair market value of the MFC Share was derived directly or indirectly from one or any combination of real or immovable property situated in Canada, “Canadian resource properties”, as defined in the Tax Act, “timber resource properties”, as defined in the Tax Act, and options in respect of, or interests in, or for civil law rights in, any such properties (whether or not such property exists). MFC Management believes that the MFC Shares did not derive more than 50% of their fair market value from such properties at any particular time during the 60-month period immediately preceding and including the Effective Date under the Arrangement. Notwithstanding the foregoing, in certain circumstances set out in the Tax Act, MFC Shares may be deemed to be taxable Canadian property to the Non-Resident Holder. Non-Resident Holders whose MFC Shares may constitute taxable Canadian property should consult their own tax advisors for advice having regard to their particular circumstances.

Even if a MFC Share constitutes taxable Canadian property to a Non-Resident Holder, a taxable capital gain resulting from the disposition or deemed disposition of such share will not be included in computing the Non-Resident Holder’s taxable income earned in Canada for the purposes of the Tax Act if, at the time of the disposition, the MFC Share constitutes “treaty-protected property” of the Non-Resident Holder for purposes of the Tax Act. MFC Shares will generally be considered treaty-protected property of a Non-Resident Holder for purposes of the Tax Act at the time of the disposition or deemed disposition if the gain from their disposition or deemed disposition would, because of an applicable income tax treaty or convention between Canada and the country in which the Non-Resident Holder is resident for purposes of such treaty or convention, be exempt from tax under the Tax Act.

In cases where a Non-Resident Holder disposes (or is deemed to have disposed) of a MFC Share that is taxable Canadian property to that Non-Resident Holder, and that is not treaty-protected property, the consequences described under the headings “ Exchange of MFC Shares for New MFC Shares and Cash ”, and “ Holders Resident in Canada – Taxation of Capital Gains or Capital Losses ” will generally be applicable to such disposition.

Non-Resident Holders whose MFC Shares may constitute taxable Canadian property should consult their own tax advisors for advice having regard to their particular circumstances, including whether their MFC Shares constitute treaty-protected property and whether any Canadian reporting requirements are applicable.

Disposition of New MFC Shares

A Non-Resident Holder will not be subject to tax under the Tax Act in respect of any capital gain realized on a disposition of a New MFC Share unless: (a) the share constitutes taxable Canadian property of the Non-Resident Holder at the time of the disposition; and (b) the share is not treaty-protected property at the time of the disposition. The Canadian federal income tax consequences of disposing of New MFC Shares are as described above under the heading “ Holders Not Resident in Canada – Exchange of MFC Shares for New MFC Shares and Cash ” with appropriate modifications.

Certain United States Federal Income Tax Considerations

The following is a summary of the anticipated material US federal income tax considerations generally applicable to US Holders (as defined below) arising from and related to the Consolidation, the share split, the exchange of the MFC Shares for New MFC Shares and cash pursuant to the Arrangement and to the

ownership and disposition of New MFC Shares. This summary is for general information purposes only and does not purport to be a complete analysis or listing of all potential US federal income tax considerations that may apply to a US Holder as a result of the Arrangement or of the ownership and disposition of New MFC Shares. In addition, this summary does not take into account the individual facts and circumstances of any particular US Holder that may affect the US federal income tax consequences to such US Holder. Accordingly, this summary is not intended to be, and should not be construed as, legal or US federal income tax advice with respect to any US Holder.

MFC does not believe that it is a controlled foreign corporation for United States federal income tax purposes and this summary is based on the assumption that none of MFC, New FMC or MFC 2017 II is or will become such a controlled foreign corporation. In the event this assumption is incorrect, the conclusion contained in the summary may be materially different from those described herein.

No legal opinion from US legal counsel or ruling from the United States Internal Revenue Service (in this section, “ IRS ”) has been requested or will be obtained regarding the US federal income tax consequences of the Arrangement or the ownership and disposition of New MFC Shares. This summary is not binding on the IRS, and the IRS is not precluded from taking a position that is different from, and contrary to, the positions taken in this summary. In addition, because the authorities upon which this summary is based are subject to various interpretations, the IRS and US courts could disagree with one or more of the positions taken in this summary.

Scope of this Disclosure

Authorities

This summary is based on the United States Internal Revenue Code of 1986 (in this section, the “ Internal Revenue Code ”), Treasury regulations (whether final, temporary or proposed), published rulings of the IRS, published administrative positions of the IRS, US court decisions, and provisions of the Convention that are applicable and, in each case, as in effect and available, as of the date of this Circular. Any of the authorities on which this summary is based could be changed in a material and adverse manner at any time, and any such change could be applied on a retroactive basis. This summary does not discuss the potential effects, whether adverse or beneficial, of any proposed legislation that, if enacted, could be applied on a retroactive or prospective basis.

US Holders

For purposes of this summary, a “US Holder” is a beneficial owner of MFC Shares or New MFC Shares received in the Arrangement, that, for US federal income tax purposes, is (a) an individual who is a citizen or resident of the United States, (b) a corporation, or any other entity taxable as a corporation for US federal income tax purposes, that is created or organized in or under the laws of the United States, any state in the United States, or the District of Columbia, (c) an estate if the income of such estate is subject to US federal income tax regardless of the source of such income, or (d) a trust if (i) such trust has validly elected to be treated as a US person for US federal income tax purposes, or (ii) a US court is able to exercise primary supervision over the administration of such trust and one or more US persons have the authority to control all substantial decisions of such trust.

Non-US Holders

A “non-US Holder” is a beneficial owner of MFC Shares or New MFC Shares received in the Arrangement, other than a US Holder. This summary does not address the US federal income tax considerations of the Arrangement or the ownership or disposition of New MFC Shares to non-US

Holders. Accordingly, non-US Holders should consult their own tax advisors regarding the US federal, state and local, non-US, and any other tax considerations (including the potential application and operation of any tax treaties) of the Arrangement and the ownership and disposition of New MFC Shares.

US Holders Subject to Special US Federal Income Tax Rules Not Addressed

This summary does not address the US federal income tax consequences of the Arrangement or the ownership and disposition of New MFC Shares to US Holders that are subject to special provisions under the Internal Revenue Code, including US Holders that: (a) are tax-exempt organizations, qualified retirement plans, individual retirement accounts, or other tax-deferred accounts; (b) are financial institutions, insurance companies, real estate investment trusts, or regulated investment companies; (c) are dealers in securities or currencies or traders in securities that elect to apply a mark-to-market accounting method; (d) have a “functional currency” other than the US dollar; (e) are liable for the alternative minimum tax under the Internal Revenue Code; (f) own MFC Shares (or, after the Arrangement, New MFC Shares) as part of a straddle, hedging transaction, conversion transaction, constructive sale, synthetic security, or other arrangement involving more than one position; (g) acquired MFC Shares in connection with the exercise of employee stock options or otherwise as compensation for services; (h) hold MFC Shares (or, after the Arrangement, New MFC Shares) other than as capital assets within the meaning of Section 1221 of the Internal Revenue Code (generally, property held for investment purposes); (i) own (directly, indirectly, or constructively) 10% or more of the total combined voting power of all classes of MFC Shares (or, after the Arrangement, New MFC Shares) entitled to vote; (j) own (directly, indirectly, or constructively) 5% or more (by vote or value) of the equity of New MFC after the Arrangement; or (k) US expatriates or former long-term residents of the United States. US Holders that are subject to special provisions under the Internal Revenue Code, including US Holders described immediately above, should consult their own tax advisors regarding the US federal income tax consequences of the Arrangement and of the ownership and disposition of the New MFC Shares received in the Arrangement.

If an entity that is classified as a partnership for US federal income tax purposes holds MFC Shares (or, after the Arrangement, New MFC Shares), the US federal income tax consequences to such partnership and the partners of such partnership of the Arrangement and the ownership and disposition of New MFC Shares generally will depend on the activities of the partnership and the status of such partners. This summary does not address the tax consequences to any such partnership or partner. Partners of entities that are classified as partnerships for US federal income tax purposes should consult their own tax advisors regarding the US federal income tax consequences of the Arrangement and the ownership and disposition of New MFC Shares.

Tax Considerations Not Addressed

This summary does not address any aspect of non-US, US state or local, US federal alternative minimum tax, or US federal estate or gift taxation, or the US federal 3.8% Medicare tax imposed on certain investment income. Accordingly, US Holders should consult their own tax advisors regarding the application to them of any such tax provisions, and any other tax considerations (including the potential application and operation of any tax treaties) of the Arrangement and the ownership and disposition of New MFC Shares. Except as specifically set forth below, this summary does not discuss applicable income tax reporting requirements.

Transactions Not Addressed

This summary does not address the US federal income tax consequences to US Holders of the exchange of MFC Options for New MFC Options or other transactions entered into prior to, concurrently with, or

subsequent to the Arrangement (regardless of whether any such transaction is undertaken in connection with the Arrangement).

The following discussion is for general information purposes only, does not discuss all aspects of US federal income taxation that may be relevant to a particular US Holder in light of such holder’s circumstances and income tax situation, and is not intended to be, nor should it be construed to be, legal or tax advice to any US Holder. No opinion or representation with respect to the US federal income tax consequences to any US Holder is given or is made. Each US Holder is urged to consult his, her or its own tax advisor regarding the particular tax consequences to such US Holder of the transactions contemplated by the Arrangement, including the application of US federal, state and local tax laws, as well as any applicable non-US tax laws, to a US Holder’s particular situation, and of any change in applicable tax laws.

Certain US Federal Income Tax Consequences of the Arrangement

Consolidation, Share Split and Odd Lot Purchases

It is anticipated that the Consolidation and share split (in this section, the “ recapitalization ”) will constitute a tax-deferred reorganization within the meaning of the Internal Revenue Code. Subject to the limitations and qualifications set forth below regarding the treatment of Odd Lot Purchases, a US Holder should not be subject to US income taxation as a result of the recapitalization, and the US Holder’s basis and holding period in the holder’s MFC Shares following the recapitalization should be the same as the holder’s basis and holding period in the MFC Shares prior to the recapitalization

A US Holder of an Odd Lot Interest that ceases to own any MFC Shares as a result of the recapitalization will generally be treated as if the MFC Shares in the Odd Lot Interest had been redeemed. If such a US Holder does not constructively own any MFC Shares immediately after the recapitalization, such holder should recognize gain or loss in an amount equal to the difference, if any, between (a) the cash received by the US Holder in the Odd Lot Purchase and (b) the US Holder’s adjusted basis in the Odd Lot Interest. However, any such US Holder that constructively owns MFC Shares immediately after the recapitalization may be treated as receiving a distribution from MFC to the extent of such cash received, which distribution should be characterized as a dividend to the extent of MFC’s current and accumulated earnings and profits, as a return of capital and reduction of the US Holder’s basis in the MFC Shares to the extent the distribution exceeds MFC’s current and accumulated earnings and profits and is equal to or less than such US Holder’s basis in the MFC Shares, and as capital gain to the extent the distribution exceeds both the current and accumulated earnings and profits of MFC and such US Holder’s basis in the MFC Shares. MFC does not, however, calculate its earnings and profits under US federal income tax rules and therefore will not provide US Holders with such information. Accordingly, it is expected that any such distributions generally will be treated as dividends for US federal income tax purposes.

The tax treatment of a US Holder that receives cash for the holder’s Odd Lot Interest, and continues to actually own MFC Shares immediately after the recapitalization, depends upon whether the cash received is treated as received pursuant to the recapitalization or in a separate transaction. If the cash is treated as received in a separate transaction, the US Holder should be treated as if the MFC Shares in the Odd Lot Interest had been redeemed, which redemption will be treated either as a sale or exchange of such MFC Shares or a distribution by MFC with respect to such MFC Shares, depending on the particular circumstances of the US Holder. The US Holder’s aggregate basis in the MFC Shares immediately after the recapitalization should be the same as the basis of the holder’s MFC Shares immediately before the recapitalization, decreased by any basis allocated to the MFC Shares treated as redeemed (if such redemption is treated as a sale or exchange) or by any recovery of basis (if such redemption is treated as a distribution by MFC). If the cash is instead treated as received pursuant to the recapitalization, the US

Holder’s gain realized on the recapitalization (i.e., the difference between (a) the amount of cash plus the value of all MFC Shares owned by the US Holder immediately after the recapitalization and (b) the adjusted basis of all MFC Shares owned by the US Holder immediately before the recapitalization) should be recognized to the extent of the cash received. Such gain generally will be characterized as a dividend to the extent of the US Holder’s share of MFC’s accumulated earnings and profits, calculated under US federal income tax rules, with any gain in excess of such accumulated earnings and profits characterized as capital gain. MFC does not, however, calculate its earnings and profits under US federal income tax rules and therefore will not provide US Holders with such information. Accordingly, it is expected that any distributions generally will be treated as dividends for US federal income tax purposes. A US Holder’s aggregate basis in the holder’s MFC Shares immediately after the recapitalization should be the same as the basis of such holder’s MFC Shares immediately before the recapitalization, increased by the amount of such dividend income and capital gain recognized by the US Holder as a result of the recapitalization, and decreased by the amount of cash received for the Odd Lot Interest.

Subject to the “passive foreign investment company” rules discussed below, any gain or loss, other than dividend income, should be long-term capital gain or loss if the MFC Shares have been held for more than one year as of the date of the recapitalization. Preferential tax rates apply to long-term capital gains of a US Holder that is an individual, estate or trust. There are currently no preferential tax rates for long-term capital gains of a US Holder that is a corporation. Deductions for capital losses are subject to substantial limitations. Any gain or loss recognized by a US Holder generally will be treated as US-source gain or loss for US foreign tax credit purposes. Subject to the “passive foreign investment company” rules discussed below, dividends generally will be subject to taxation to US Holders that are individuals, trusts or estates at preferential tax rates for long-term capital gains if certain conditions are met. Dividends should be treated as foreign-source dividend income to US Holders and will not be eligible for the dividends received deduction generally allowed to US corporations under the Internal Revenue Code.

US Holders should consult their own tax advisors regarding the amount and character of any gain recognized as a result of the recapitalization and payment for Odd Lot Interests.

Exchange of MFC Shares for New MFC Shares and Cash

As part of the Arrangement, US Holders will transfer MFC Shares to MFC 2017 II in exchange for New MFC Shares and cash. While the matter is not free from doubt, it is anticipated that the exchange of MFC Shares for New MFC Shares and cash should be treated as a taxable transaction for US federal income tax purposes. If the exchange is treated as a taxable transaction, then a US Holder of MFC Shares that exchanges such MFC Shares for New MFC Shares and cash pursuant to the Arrangement generally will be required to recognize gain or loss equal to the difference, if any, between (i) the sum of the cash (including, potentially, any cash received in lieu of a fractional MFC Share in the Consolidation) and the fair market value of the New MFC Shares received by such US Holder as a result of the exchange and (ii) such US Holder’s adjusted tax basis in the MFC Shares exchanged therefor. Subject to the “passive foreign investment company” rules discussed below, a ny gain or loss recognized on the exchange should be long-term capital gain or loss if the MFC Shares have been held for more than one year as of the date of the exchange. Preferential tax rates apply to long-term capital gains of a US Holder that is an individual, estate or trust. There are currently no preferential tax rates for long-term capital gains of a US Holder that is a corporation. Deductions for capital losses are subject to substantial limitations. Any gain or loss recognized by a US Holder generally will be treated as US-source gain or loss for US foreign tax credit purposes. A US Holder would have an aggregate tax basis in New MFC Shares received in the Arrangement that is equal to the fair market value of such MFC Shares as of the effective date of the Arrangement, and the holding period of such MFC Shares would begin on the date after the Arrangement.

The Arrangement will be effected under applicable provisions of Canadian corporate law, which are technically different from analogous provisions of US corporate law. The US federal income tax consequences of the Arrangement are not certain and there can be no assurance that the IRS will not challenge the characterization of the exchange of MFC Shares for New MFC Shares or that, if challenged, a US court would not agree with the IRS. If the IRS were to successfully assert that the exchange qualified as a non-recognition transaction (as defined herein), then the following results would occur: (1) in the case of a US Holder who receives cash (including any cash received in lieu of a fractional MFC Share) and New MFC Shares pursuant to the arrangement, if the sum of the cash and the fair market value of the New MFC Shares received by a US Holder in the Arrangement in exchange for such US Holder’s MFC Shares is greater than such US Holder’s adjusted tax basis in such US Holder’s MFC Shares, then such US Holder will recognize gain equal to the lesser of: (i) the amount, if any, by which the sum of the cash and the fair market value of the New MFC Shares received by US Holder exceeds such US Holder’s adjusted tax basis in such US Holder’s MFC Shares; and (ii) the amount of cash received by such US Holder in the Arrangement or (2) in the case of a US Holder who receives a combination of cash (including any cash received an Odd Lot Purchase) and New MFC Shares pursuant to the Arrangement, if the sum of the cash and the fair market value of the New MFC Shares received by a US Holder in the Arrangement in exchange for such US Holder’s MFC Shares is less than such US Holder’s adjusted tax basis in such US Holder’s MFC Shares, such US Holder will not recognize a loss.

US Holders should consult their own tax advisors regarding the proper treatment of the exchange of MFC Shares for New MFC Shares and cash for US federal income tax purposes.

US Holders Exercising Dissent Rights

A US Holder that exercises Dissent Rights in connection with the Arrangement and is paid cash for all of such holder’s MFC Shares generally will recognize gain or loss in an amount equal to the difference, if any, between (a) the cash received by such US Holder in exchange for the MFC Shares and (b) the adjusted basis of such US Holder in the MFC Shares surrendered. Subject to the “passive foreign investment company” rules discussed below, such gain or loss should be long-term capital gain or loss if the MFC Shares have been held for more than one year when the shares are purchased pursuant to the Dissent Procedures. Preferential tax rates apply to long-term capital gains of a US Holder that is an individual, estate or trust. There are currently no preferential tax rates for long-term capital gains of a US Holder that is a corporation. Deductions for capital losses are subject to substantial limitations. Any gain or loss recognized by a US Holder generally should be treated as US-source gain or loss for US foreign tax credit purposes.

Application of the Passive Foreign Investment Company Rules to the Arrangement

Based upon current and proposed Treasury regulations and IRS guidance and the composition of its income and assets and the nature of its business , MFC does not believe that it is currently a passive foreign investment company ( in this section, “ PFIC ”) for US federal income tax purposes. A corporation organized outside the United States generally is classified as a PFIC for US federal income tax purposes in any taxable year in which either: (a) at least 75% of its gross income is “passive income”; or (b) on average, at least 50% of the gross value of its assets is attributable to assets (including cash) that produce “passive income” or are held for the production of passive income. Passive income for this purpose generally includes dividends, interest, royalties, rents and gains from commodities and securities transactions not generated in an active trade or business. In determining whether it is a PFIC, a non-US corporation is required to take into account a pro rata portion of the income and assets of each corporation in which it owns, directly or indirectly, at least a 25% interest.

Since MFC’s PFIC status during a taxable year that includes a US Holder’s holding period depends upon the composition of MFC’s income and assets and the market value of its assets from time to time, and the PFIC rules are complex, there can be no assurance that MFC was not, or will not be, a PFIC for any taxable year.

If MFC is a PFIC, US Holders generally would be subject to an adverse tax regime. A US Holder would be required to report any gain on the exchange of MFC Shares for New MFC Shares and cash as ordinary income, rather than as capital gain, and to compute the tax liability on the gain as if such items had been earned rateably over each day in the US Holder’s holding period (or a portion thereof) for the MFC Shares pursuant to the “excess distribution” rules discussed below. See “ US Federal Income Tax Considerations Related to the Ownership of New MFC Shares – Passive Foreign Investment Company Rules.” Further, if MFC is a PFIC, all gain required to be recognized by a US Holder exercising Dissent Rights or receiving cash for Odd Lot Interests would also be characterized pursuant to the same rules.

The PFIC rules are complex, and the implementation of certain aspects of the PFIC rules requires the issuance of final Treasury regulations, which, when promulgated, may have retroactive effect. US Holders should consult their own tax advisors about the potential applicability of the PFIC rules to the Arrangement, including the application of any information reporting requirements related to the ownership and disposition of shares of a PFIC.

US Federal Income Tax Considerations Related to the Ownership of New MFC Shares

Distributions on New MFC Shares

Subject to the PFIC rules discussed below, the gross amount of any distribution received by a US Holder with respect to the New MFC Shares should be included in the gross income of the US Holder as a dividend to the extent attributable to New MFC’s current and accumulated earnings and profits, as applicable, determined under US federal income tax principles. If the distribution exceeds current and accumulated earnings and profits, the excess should be a return of capital and reduce the US Holder’s basis in the New MFC Shares, with any remaining amount treated as capital gain. Since New MFC is not expected to calculate its earnings and profits under US federal income tax rules, US Holders should expect that a distribution from New MFC generally should be treated in its entirety as a dividend for US federal income tax purposes. Distributions with respect to New MFC Shares that are treated as dividends generally will be subject to taxation to US Holders that are individuals, trusts or estates at preferential tax rates for long-term capital gains if certain conditions are met. Dividends should be treated as foreign-source dividend income to US Holders and will not be eligible for the dividends received deduction generally allowed to US corporations under the Internal Revenue Code. Any gain should be long-term capital gain if the New MFC Shares have been held for more than one year on the date of the distribution. Preferential tax rates apply to long-term capital gains of a US Holder that is an individual, estate or trust. There are currently no preferential tax rates for long-term capital gains of a US Holder that is a corporation. Any gain recognized by a US Holder generally should be treated as US-source gain or loss for US foreign tax credit purposes. The rules governing the foreign tax credit are complex and US Holders should consult their own tax advisors regarding the availability of the foreign tax credit under their particular circumstances.

Sale, Exchange or Other Taxable Disposition of New MFC Shares

A US Holder should recognize gain or loss on the sale, exchange or other taxable disposition of the New MFC Shares in an amount equal to the difference between the amount realized for the New MFC Shares and the US Holder’s adjusted basis in such New MFC Shares. Subject to the PFIC rules discussed below, the gain or loss will be long-term capital gain or loss if the New MFC Shares have been held for more

than one year as of the date of the sale, exchange or other taxable disposition. Preferential tax rates apply to long-term capital gains of a US Holder that is an individual, estate or trust. There are currently no preferential tax rates for long-term capital gains of a US Holder that is a corporation. Deductions for capital losses are subject to substantial limitations. Any gain or loss recognized by a US Holder generally will be treated as US-source gain or loss for US foreign tax credit purposes.

Passive Foreign Investment Company Rules

Based upon current and proposed Treasury regulations and IRS guidance and the composition of New MFC’s income and assets and the nature of its business, New MFC does not expect it will be a PFIC during its first taxable year and does not anticipate becoming a PFIC in the future. However, because the composition of New MFC’s income and assets will vary over time, there can be no assurance that MFC will not be a PFIC for any taxable year.

If, contrary to expectations, New MFC is classified as a PFIC, a US Holder would be required to report any gain on the disposition of New MFC Shares as ordinary income, rather than as capital gain, and to compute the tax liability on the gain and any “Excess Distribution” (as defined below) received in respect of the New MFC Shares as if such items had been earned rateably over each day in the US Holder’s holding period (or portion thereof) for the New MFC Shares. The amounts allocated to the taxable year of disposition and to years before New MFC became a PFIC would be taxed as ordinary income. The amount allocated to each other taxable year would be subject to tax at the highest rate in effect for that taxable year for individuals or corporations, as applicable, and an interest charge would be imposed on the tax attributable to the allocated amount. An “Excess Distribution” is the amount by which distributions received by a US Holder during a taxable year on its New MFC Shares exceeds 125% of the average amount of distributions in respect thereof received during the three preceding taxable years (or, if shorter, the US Holder’s holding period for the New MFC Shares). For purposes of these rules, certain gifts and transfers upon death, exchanges pursuant to tax-deferred transactions and use of the New MFC Shares as security for a loan may be treated as taxable dispositions of the New MFC Shares.

If New MFC were to be classified as a PFIC, a US Holder may also be able to avoid some of the adverse US tax consequences of PFIC status by making an election to mark New MFC’s shares to market annually. A US Holder may elect to mark-to-market MFC’s shares only if New MFC’s shares are “marketable stock.” New MFC’s shares will be treated as “marketable stock” if they are regularly traded on a “qualified exchange.” New MFC’s shares are expected to be listed on the Exchange, which is a qualified exchange for this purpose. Upon completion of the Arrangement, New MFC intends to seek a secondary listing of the New MFC Shares on an international stock exchange. An international exchange will be treated as a qualified exchange if it is regulated or supervised by a governmental authority in the jurisdiction in which the exchange is located and with respect to which certain other requirements are met. New MFC’s shares will be treated as regularly traded in any calendar year in which more than a de minimus quantity of such shares are traded on at least 15 days during each calendar quarter. There can be no certainty that the New MFC Shares will be sufficiently traded such as to be treated as regularly traded. A mark-to-market election will not be available with respect to any lower-tier PFIC.

In the alternative, a US Holder may avoid the excess distribution rules described above by electing to treat New MFC (for the first taxable year in which the US Holder owns New MFC’s shares and New MFC is a PFIC) and any lower-tier entity (for the first taxable year in which the US Holder is treated as owning an equity interest in such lower-tier entity and such lower-tier entity is a PFIC) as a “qualified electing fund” (in this section, “ QEF ”). If a US Holder makes an effective QEF election with respect to New MFC, the US Holder will be required to include in its gross income each year, whether or not New MFC makes distributions, as capital gains, its pro rata share of New MFC’s net capital gains and, as ordinary income, its pro rata share of New MFC’s net earnings in excess of its net capital gains. US Holders can make a

QEF election with respect to New MFC only if New MFC provides certain information, including the amount of its ordinary earnings and net capital gains determined under US tax principles. New MFC has not determined whether it will provide US Holders with this information if it determines that it is a PFIC. Accordingly, US Holders should assume that they would not be able to make a QEF election.

US Holders should consult their tax advisors regarding the US federal income tax consequences of the PFIC rules. If New MFC is treated as a PFIC, each US Holder generally will be required to file a separate annual information return with the IRS with respect to New MFC and any lower-tier PFICs. A failure to file this return will suspend the statute of limitations with respect to any tax return, event, or period to which such report relates (potentially including with respect to items that do not relate to a US Holder’s investment in New MFC’s shares).

Information Reporting and Backup Withholding

Payments of dividends on New MFC Shares and other proceeds with respect to such shares, including pursuant to the Arrangement, made by a US paying agent or other US intermediary, and certain non-US intermediaries will be reported to the IRS and to the US Holder as may be required under applicable Treasury regulations. Backup withholding may apply to these payments if the US Holder fails to provide an accurate taxpayer identification number or certify exemption from backup withholding or fails to report all interest and dividends required to be shown on its US federal income tax returns. Certain US Holders (including, among others, corporations) are not subject to backup withholding. US Holders should consult their tax advisors as to their qualifications for exemption from backup withholding and the procedure for obtaining an exemption.

Backup withholding is not an additional tax. A US Holder generally will be entitled to credit any amounts withheld under the backup withholding rules against such US Holder’s US federal income tax liability and may be entitled to a credit or refund, provided the required information is furnished to the IRS in a timely manner.

Certain US Holders are required to report information related to an interest in the New MFC Shares subject to exceptions (including an exception for New MFC Shares held in accounts maintained by certain financial institutions), by attaching a completed IRS Form 8938, Statement of Specified Foreign Financial Assets, with their tax returns for each year in which they hold an interest in the New MFC Shares. Persons who are required to report foreign financial assets and fail to do so may be subject to substantial penalties. US Holders are urged to consult their own tax advisors regarding information reporting requirements related to their ownership of the New MFC Shares.

THE SUMMARY ABOVE IS A GENERAL SUMMARY AND DOES NOT COVER ALL TAX MATTERS THAT MAY BE IMPORTANT TO A PARTICULAR US HOLDER. EACH US HOLDER SHOULD CONSULT HIS, HER OR ITS OWN TAX ADVISOR ABOUT THE TAX CONSEQENCES OF PARTICIPATING IN THE ARRANGEMENT AND HOLDING NEW MFC SHARES BASED ON THE US HOLDER’S OWN CIRCUMSTANCES.

INFORMATION CONCERNING NEW MFC

General

New MFC is a wholly-owned subsidiary of MFC and MFC 2017 II is a wholly-owned subsidiary of New MFC, and both were incorporated on June 5, 2017, pursuant to the provisions of the Cayman Law in order to facilitate and participate in the Arrangement. New MFC and MFC 2017 II currently have no material assets. Since incorporation, they have carried on no business other than in connection with the

Arrangement and as otherwise described in this Circular. As of the Effective Time, MFC Shareholders, other than holders of Odd Lot Interests and those who have validly exercised their Dissent Rights, will exchange their MFC Shares for New MFC Shares and the MFC Shareholders will become the shareholders of New MFC. Thereafter, MFC will surrender to New MFC for cancellation the initial New MFC Share that was issued to it upon incorporation of New MFC. As a result, MFC will become a wholly-owned subsidiary of New MFC. In connection with the Arrangement, the New MFC Shares will be listed on the Exchange, and the MFC Shares will be delisted. The financial year end of New MFC is the same as that of the Corporation, being December 31.

A copy of the Memorandum and Articles of Association of New MFC are attached as Schedule “F” to this Circular.

The registered and records office of New MFC will be located at Harneys Services (Cayman) Limited, 4th Floor, Harbour Place, 103 South Church Street, P.O. Box 10240, Grand Cayman KY1-1002, Cayman Islands.

Business of New MFC

From and after the Effective Time, New MFC will act as a public holding corporation and, through its ownership of all of the outstanding MFC Shares through MFC 2017 II, New MFC will carry on the existing business of the Corporation after the Effective Time.

For further information regarding MFC’s business, please refer to the 2016 Annual Report and the Corporation’s MD&A for the three months ended March 31, 2017, each of which are incorporated herein by reference.

Financial Statements of New MFC

After the Effective Date, management believes that the consolidated financial statements of New MFC will be, in all material respects, the same as the financial statements of MFC prior to the Arrangement, on a consolidated basis.

The 2016 Annual Report includes the Corporation’s audited consolidated financial statements for the year ended December 31, 2016, and the Corporation’s unaudited interim condensed consolidated financial statements for the three months ended March 31, 2017, and each is incorporated herein by reference.

Comparison of Shareholders’ Rights Under British Columbia Law and Cayman Islands Law

MFC exists under the laws of the Province of British Columbia, Canada and New MFC exists under the laws of the Cayman Islands. As a result of the Arrangement, MFC Shareholders will become shareholders of New MFC. The following is a summary of the material differences between the rights of holders of common shares, which arise from differences between the BCBCA and the Cayman Law or differences between MFC’s Articles and New MFC’s Memorandum and Articles of Association. The following summary is qualified by reference to applicable legislation (Cayman Islands and British Columbia), MFC’s Articles and New MFC’s Memorandum and Articles of Association. The summary does not purport to include a complete description of all differences between the rights of MFC Shareholders. MFC Shareholders should consult their legal and tax advisors regarding the implications of the Arrangement which may be of particular importance to them.

Share Capital of New MFC

The authorized share capital of New MFC consists of US$450,000 divided into 300,000,000 common shares of US$0.001 par value each and 150,000,000 preference shares divided into US$0.001 par value each.

Based upon the number of MFC Shares outstanding as of the date hereof, it is expected that there will be approximately 12,538,440 New MFC Shares outstanding on the Effective Date, subject to the valid exercise by MFC Shareholders of their Dissent Rights in connection with the Arrangement and the cancellation of any MFC Shares in connection with Odd Lot Purchases.

New MFC Shares

The rights, privileges, restrictions and conditions attaching to the New MFC Shares are substantially the same as the rights, privileges, restrictions and conditions attaching to the MFC Shares. The holders of New MFC Shares are entitled to: (a) receive notice of and to attend and vote at all meetings of the shareholders of New MFC and each New MFC Share confers the right to one vote in person or by proxy at all meetings of shareholders of New MFC; (b) receive such dividends in any financial year as the New MFC Board may by resolution determine; and (c) in the event of the liquidation, dissolution or winding-up of New MFC, whether voluntary or involuntary, receive the remaining property and assets of New MFC subject to the rights of holders of any preferred shares.

New MFC Preferred Shares

Preference shares may be issued from time to time in one or more classes or series, each of such class or series to have such voting powers (full or limited or without voting powers) designations, preferences and relative, participating, optional or other special rights and qualifications, limitations or restrictions thereof as are stated and expressed, or in any resolution providing for the issue of such class or series adopted by the New MFC Board. The New MFC Board has authority, subject to the provisions of the Memorandum and Articles of Association and applicable law, to create one or more classes or series of preference shares and, with respect to each such class or series, to fix by resolution such rights and restrictions upon such preference shares as the New MFC Board may determine.

New MFC Ince n tive Plan

Pursuant to the Arrangement, New MFC will adopt the New MFC Incentive Plan, and the MFC Incentive Plans will be cancelled. There are currently 200,000 MFC Options outstanding under the MFC Incentive Plans. Following the Arrangement, there will be 40,000 New MFC Options outstanding under the New MFC Incentive Plan. The New MFC Incentive Plan will be substantially on the same terms as the MFC 2014 Incentive Plan. Below is a summary of the material features of the New MFC Incentive Plan, which is qualified in its entirety by reference to the full text of the New MFC Incentive Plan, attached hereto as Schedule “G”.

Purpose

The purpose of the New MFC Incentive Plan is to promote the long-term success of New MFC and the creation of shareholder value by encouraging the attraction and retention of employees and non-employee directors with exceptional qualifications, encouraging them to focus on the critical long-range objectives of New MFC and linking their interests directly to shareholder interests through increased share ownership. The New MFC Incentive Plan is intended to achieve this purpose by making a material

portion of their incentive compensation dependent upon the achievement of strategic, financial and operative objectives critical to increasing shareholder value.

Eligibility

Awards granted under the New MFC Incentive Plan may be made only to employees, officers, non-employee directors or consultants to New MFC or any affiliates.

Shares Subject to the New MFC Incentive Plan

Subject to adjustment for changes in capitalization, the total number of New MFC Shares subject to all awards under the New MFC Incentive Plan will be equal to one-fifth of the number of the MFC Shares subject to the existing MFC Incentive Plans immediately prior to the Effective Time.

In addition, the aggregate fair value of Awards (as defined in the New MFC Incentive Plan) granted to any one non-employee director cannot exceed $100,000 in any one year, and the aggregate number of securities issuable to all non-employee directors cannot exceed 1% of the issued and outstanding New MFC Shares.

Types of Awards

The New MFC Incentive Plan allows New MFC to grant the following types of awards: New MFC Options; options; restricted share rights; restricted shares; performance shares; performance share units; and share appreciation rights.

Adjustment to Capitalization

In the event of any change in the outstanding New MFC Shares by reason of a recapitalization, merger, consolidation, combination, reorganization, exchange of shares, or other similar corporate change, the aggregate number of New MFC Shares available under the New MFC Incentive Plan and subject to each outstanding award, and its stated exercise price or the basis upon which the award is measured, shall be adjusted appropriately.

Change in Control Provisions

The New MFC Incentive Plan contains a “double trigger” change in control provision whereby New MFC Incentive Plan participants who are employees or officers of, or consultants to, New MFC only receive benefits in connection with a change in control when either their employment or service terminates due to their discharge without cause or resignation with good reason.

Forfeiture Provisions

New MFC will specify in an award agreement that a participant’s rights, payments and benefits with respect to an award shall be subject to reduction, cancellation or forfeiture upon the occurrence of specified events, such as termination of employment for cause, a violation of company policies, fraud or a breach of a non-competition or confidentiality restrictive covenant.

Award Repricing

The New MFC Incentive Plan explicitly prohibits the repricing of options.

Transferability

According to the New MFC Incentive Plan, with limited exceptions, no award granted under the New MFC Incentive Plan may be sold, transferred, pledged or assigned unless otherwise determined by New MFC.

Amendment, Modification and Termination

The New MFC Board may at any time terminate, amend or modify the New MFC Incentive Plan, provided that such action be subject to approval by shareholders when required by law, regulation, any stock exchange rule for any exchange on which the New MFC Shares are listed or the terms of the New MFC Incentive Plan. Additionally, no amendment, modification or termination of the New MFC Incentive Plan or any award under the New MFC Incentive Plan shall in any manner adversely affect any award previously granted without the consent of the holder thereof.

Specifically, the New MFC Incentive Plan mandates that the New MFC Board may not, without the approval of shareholders: (a) reduce the purchase price or exercise price of any outstanding award, including any option or share appreciation right; (b) extend the expiry date of any outstanding option or share appreciation right, except as expressly permitted by the New MFC Incentive Plan; (c) increase the number of New MFC Shares available under the New MFC Incentive Plan (other than any adjustment as a result of a recapitalization); (d) grant options with an exercise price that is below Fair Market Value (as that term is defined in the New MFC Incentive Plan) on the grant date; (e) amend the New MFC Incentive Plan to remove or to exceed the participation limits set forth in the New MFC Incentive Plan; or (f) cancel any option or share appreciation right in exchange for cash or any other award or in exchange for any option or SAR with an exercise price that is less than the exercise price of the original option or share appreciation right.

Tax Withholding

New MFC has the power to withhold or require a participant to remit to New MFC an amount sufficient to satisfy all withholding tax requirements on any award under the New MFC Incentive Plan.

No Shareholders Rights

No award gives the participant any of the rights of a shareholder unless and until New MFC Shares are in fact issued to such person in connection with such award.

Directors and Officers of New MFC

Michael J. Smith is currently the sole director of New MFC. Prior to the Effective Time, the New MFC Board will be reconstituted to comprise of the same people as the MFC Board of Directors, being Michael J. Smith, Gerardo Cortina, Indrajit Chatterjee, Shuming Zhao, Silke S. Stenger, Friedrich Hondl and Jochen Dümler. Each director of New MFC will hold office until the close of the next annual meeting of shareholders of New MFC or until their successors are elected or appointed. The New MFC Board will have the same committees with the same responsibilities as the Board of Directors as of the Effective Date. In addition, upon completion of the Arrangement, the management team of New MFC shall be comprised of those individuals who are part of the management team of MFC immediately prior to the Effective Date.

Exchange Listings

MFC has applied for the listing of the New MFC Shares on the Exchange in substitution of the MFC Shares, and is expecting to receive approval of same prior to the Meeting. If the Arrangement is completed, the New MFC Shares will be listed on the Exchange upon completion of the Arrangement, and will commence trading at the opening of business on the first trading day after completion of the Arrangement. The New MFC Shares will continue to trade on the Exchange under the existing MFC Share symbol: “MFCB”.

Upon completion of the Arrangement, New MFC intends to seek a secondary listing of the New MFC Shares on an international stock exchange. A secondary listing on an international stock exchange could provide enhanced liquidity to shareholders and provide further exposure and financing alternatives to New MFC.

Beneficial Ownership of Securities of New MFC

To the knowledge of management of the Corporation, the persons who will own beneficially, directly or indirectly, or exercise control or direction over, more than 10% of the New MFC Shares upon completion of the Arrangement will be the same persons, as set out under the section entitled “ Voting Securities and Principal Holders Thereof ”, subject to any adjustments necessary as a result of the valid exercise by MFC Shareholders of their Dissent Rights in connection with the Arrangement and the cancellation of any MFC Shares in connection with Odd Lot Purchases.

Auditors, Transfer Agent and Registrar

The auditors of New MFC will be PricewaterhouseCoopers LLP. It is expected that the transfer agent and registrar of the New MFC Shares will be Computershare, with their office at 480 Washington Boulevard, 27th Floor, Jersey City, New Jersey 07310, USA.

Material Contracts

Following the Arrangement, the material contracts of MFC will (indirectly) be the material contracts of New MFC. See the 2016 Annual Report which is incorporated by reference in this Circular.

Risk Factors

Certain risk factors relating to the activities of MFC are contained in the 2016 Annual Report in the section entitled “ Certain Risk Factors ” and its MD&A for the three months ended March 31, 2017 in the section entitled “ Risk Factors ”, which risk factors are incorporated herein by reference. Risk factors related to the business of MFC as contained in the 2016 Annual Report will generally continue to apply to New MFC after the Effective Date and will not be affected by the Arrangement. If the Arrangement is completed, the business and operations of, and an investment in, securities of New MFC will be subject to these risk factors. MFC Shareholders should carefully consider those risk factors as well as the additional risk factors set forth below and consider all other information contained herein and in MFC’s other public filings before making an investment decision.

Transaction Risks

In evaluating the Arrangement, MFC Shareholders should carefully consider, in addition to the other information contained in this Circular, the risks and uncertainties described below before deciding to vote

in favour of the Arrangement. While this Circular has described risks and uncertainties that management believes to be material, it is possible that other risks and uncertainties affecting the business of New MFC will arise or be material in the future.

If New MFC is unable to effectively address these and other potential risks and uncertainties following a successful completion of the Arrangement, the business, financial condition or results of operations of New MFC could be materially and adversely affected.

The Arrangement May Not Be Completed

The completion of the Arrangement is subject to a number of conditions precedent, certain of which are outside the control of MFC, including MFC Shareholders approving the Arrangement. There is no certainty, nor can MFC provide any assurance, that these conditions will be satisfied.

Possible Failure to Realize Anticipated Benefits of the Arrangement

MFC proposed the Arrangement in order to achieve the benefits set forth in “ The Arrangement - Benefits of the Arrangement ” and “ The Arrangement - Approval and Recommendation of the Board of Directors ”. There can be no assurance, however, that the anticipated benefits of the Arrangement will materialize. It is possible that the risks and uncertainties described in this Circular will arise and become material to such an extent that some or all of the anticipated benefits of the Arrangement never materialize or are nullified.

United States Tax Characterization of the Exchange

Although the matter is not free from doubt, it is intended that the exchange of MFC Shares for New MFC Shares and cash qualify as a taxable transaction for US federal income tax purposes. If the exchange is treated as a taxable transaction, then a US Holder of MFC Shares that exchanges such MFC Shares for New MFC Shares and cash pursuant to the Arrangement generally will be required to recognize gain or loss equal to the difference, if any, between (i) the sum of the cash (including any cash received in lieu of a fractional MFC Share) and the fair market value of the New MFC Shares received by such US Holder in the Arrangement and (ii) such US Holder’s adjusted tax basis in the MFC Shares exchanged therefor.

However, it is possible that the transaction could be treated by the IRS and/or a reviewing court as a transaction described in section 351 or 368 of the Code (in this section, “ non-recognition transaction ”) for US federal income tax purposes. If the IRS were to successfully assert that the exchange qualified as a non-recognition transaction, then the following results would occur: (1) in the case of a US Holder who receives cash (including any cash received in lieu of a fractional MFC Share) and New MFC Shares pursuant to the arrangement, if the sum of the cash and the fair market value of the New MFC Shares received by a US Holder in the arrangement in exchange for such US Holder’s MFC Shares is greater than such US Holder’s adjusted tax basis in such US Holder’s MFC Shares, then such US Holder will recognize gain equal to the lesser of: (i) the amount, if any, by which the sum of the cash and the fair market value of the New MFC Shares received by such US Holder exceeds such US Holder’s adjusted tax basis in such US Holder’s MFC Shares; and (ii) the amount of cash received by such US Holder in the Arrangement; or (2) In the case of a US Holder who receives a combination of cash (including any cash received in lieu of a fractional MFC Share) and New MFC Shares pursuant to the arrangement, if the sum of the cash and the fair market value of the New MFC Shares received by a US Holder in the arrangement in exchange for such US Holder’s MFC Shares is less than such US Holder’s adjusted tax basis in such US Holder’s MFC Shares, such US Holder will not recognize a loss.

All MFC Shareholders are urged to consult their own tax advisors regarding the tax consequences of participating in the Arrangement.

INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS

Except as otherwise disclosed herein, no informed person of the Corporation nor any affiliate or associate of any such informed person, has had any material interest, direct or indirect, in any transaction since the commencement of the Corporation’s most recently completed financial year or in any proposed transaction which has materially affected or would materially affect the Corporation or any of its subsidiaries, except with an interest arising from the ownership of MFC Shares where such person or corporation will receive no extra or special benefit or advantage not shared on a pro rata basis by all holders of the same class of shares who are resident in Canada. For the purposes of this Circular, an “informed person” means (i) a director or officer of the Corporation, (ii) a director or officer of a person or company that is itself an informed person, or (iii) any person or company who beneficially owns, directly or indirectly, and/or exercises control or direction over voting securities of the Corporation carrying more than 10% of the voting rights attaching to all outstanding voting securities of the Corporation.

INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON

Except as otherwise disclosed herein, no individual who has been a director or executive officer of the Corporation any time since the beginning of the last financial year of the Corporation, or any associate or affiliate thereof, has any material interest, direct or indirect, by way of beneficial ownership of MFC Shares or otherwise, in any matter to be acted upon at the Meeting.

ADDITIONAL INFORMATION

The Corporation files annual and other reports, proxy statements and other information with certain Canadian securities regulatory authorities and with the SEC in the United States. The documents filed with the SEC are available to the public at the SEC’s website at www.sec.gov. The documents filed with the Canadian securities regulatory authorities are available under the Corporation’s profile on SEDAR at www.sedar.com. Financial information concerning the Corporation is contained in its annual audited financial statements and MD&A for the year ended December 31, 2016 and its interim financial statements and MD&A for the three months ended March 31, 2017, which can be found at the above mentioned websites. The Corporation will provide to any person or company, upon request to the President of the Corporation, one copy of the Corporation’s financial statements and MD&A.

OTHER BUSINESS

Management knows of no other matters to come before the Meeting other than those referred to in the Notice of Meeting. Should any other matters properly come before the Meeting, the MFC Shares represented by the proxy solicited hereby will be voted on such matter in accordance with the best judgment of the persons voting by proxy.

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CERTIFICATION AND BOARD APPROVAL

The undersigned hereby certifies that the contents and the sending of this Circular to the MFC Shareholders have been approved by the Board of Directors.

DATED at Vancouver, British Columbia, on the 9 ^th day of June, 2017.

ON BEHALF OF THE BOARD OF DIRECTORS OF MFC BANCORP LTD.

SCHEDULE “A”

ARRANGEMENT RESOLUTION

BE IT RESOLVED AS A SPECIAL RESOLUTION THAT:

SCHEDULE “B”

ARRANGEMENT AGREEMENT

AMENDED AND RESTATED

ARRANGEMENT AGREEMENT

BETWEEN

MFC BANCORP LTD.

AND

MFC 2017 LTD.

AND

MFC 2017 II LTD.

June 7, 2017

TABLE OF CONTENTS

AMENDED AND RESTATED ARRANGEMENT AGREEMENT

THIS AGREEMENT dated as of the 7 ^th day of June, 2017.

BETWEEN:

MFC BANCORP LTD. , a corporation existing under the laws of the Province of British Columbia

(“ MFC ”)

AND

MFC 2017 LTD. , a corporation existing under the laws of the Cayman Islands

(“ New M FC ”)

AND

MFC 2017 II LTD. , a corporation existing under the laws of the Cayman Islands

(“ MFC 2017 II ”)

WHEREAS:

NOW THEREFORE , in consideration of the mutual covenants and agreements herein contained and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each of the parties hereto, the parties hereto hereby agree that the Original Arrangement Agreement is, as of and at the date first written above, amended and restated in its entirety as follows:

ARTICLE 1

INTERPRETATION

In this Agreement:

Except where otherwise specified, all sums of money which are referred to in this Agreement are expressed in lawful money of the United States of America.

The division of this Agreement into articles, sections, paragraphs and subparagraphs and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Agreement. The terms “the Agreement”, “hereof”, “herein”, “hereunder”, and similar expressions refer to this Agreement and the schedules hereto and not to any particular article, section or other portion hereof and include any agreement, schedule or instrument supplementary or ancillary hereto.

Unless the context otherwise requires, words importing the singular number only shall include the plural and vice-versa; words importing the use of any gender shall include all genders; and words importing persons shall include firms and corporations and vice-versa.

In the event that any date on which any action is required to be taken hereunder by any of the parties is not a Business Day in the place where the action is required to be taken, such action shall be required to be taken on the next succeeding day which is a Business Day in such place.

ARTICLE 2
THE ARRANGEMENT

ARTICLE 3

REPRESENTATIONS AND WARRANTIES

Each party represents and warrants to the other party as follows and acknowledges that the other party is relying upon such representations and warranties in connection with entering into this Agreement:

The representations and warranties of each party hereto shall survive the execution and delivery of this Agreement and shall continue in full force and effect until the Effective Time.

ARTICLE 4

COVENANTS

Each party will do and perform all such acts and things and execute and deliver all such agreements, assurances, notices and other documents and instruments, as may reasonably be required to facilitate the carrying out of the intent and purpose of this Agreement and will use its reasonable efforts to obtain all necessary consents and waivers required to give effect to the Arrangement.

As soon as practicable, MFC will prepare the MFC Circular, and, subject to the issuance of the Interim Order, will convene the MFC Meeting and mail the MFC Circular to the MFC Shareholders and other parties in accordance with the Interim Order. MFC will file the MFC Circular with the appropriate regulatory authorities in all jurisdictions where the same is required, in accordance with applicable Laws and the Interim Order. MFC will keep New MFC and MFC 2017 II informed of any requests or comments made by regulatory authorities in connection with the MFC Circular.

If the MFC Shareholders approve the Arrangement, MFC will thereafter expeditiously (subject to the exercise of any discretionary authority of its directors and to the satisfaction or waiver of all other conditions under this Agreement and the Plan of Arrangement) apply to Court for the Final Order and, subject to compliance with any other condition in Article 5, file any documentation required to be filed pursuant to Section 292 of the Business Corporations Act.

All information provided by each of MFC, New MFC and MFC 2017 II, in any form whether written, electronic or verbal, as to financial condition, business, properties, title, assets and affairs (including any material contracts) as may reasonably be requested by any of the other parties, including all information to be included in the MFC Circular (the “ Confidential Information ”), will be kept confidential by each party hereto, notwithstanding the termination of this Agreement, other than information that:

No confidential information may be released to third parties other than legal counsel and other advisors to the parties hereto without the consent of the provider thereof, except that the parties hereto agree that they will not unreasonably withhold such consent to the extent that such Confidential Information is compelled to be released by legal process or must be released by regulatory bodies and/or included in public documents.

Nothing contained in this Agreement will prohibit, enjoin or otherwise restrict the board of directors of MFC or any director of MFC, in the fulfilment of their fiduciary duties, from failing to give, qualifying or otherwise amending any recommendation to be or previously given to MFC Shareholders, as applicable, in connection with the Arrangement or the Plan of Arrangement.

MFC confirms that its board of directors has unanimously approved this Agreement, the Arrangement and the Plan of Arrangement, and has determined that the Arrangement is fair to the MFC Shareholders and has resolved to unanimously recommend approval of the Arrangement by the MFC Shareholders. The MFC Circular will set forth (among other things) the recommendation of the board of directors of MFC as described above.

MFC will use commercially reasonable efforts prior to and following the Effective Date, as necessary, to substitute the listing of the MFC Shares for trading on the Exchange for the New MFC Shares on, or as soon as practicable following, the Effective Date.

In connection with, and as part, of the Arrangement New MFC shall adopt the New MFC Incentive Plan upon the terms and as set out in the Plan of Arrangement, and a copy of which shall be appended to the MFC Circular.

ARTICLE 5

CONDITIONS PRECEDENT

The respective obligations of the parties hereto to complete the Arrangement are subject to the satisfaction of, or mutual waiver by the parties on or before the Effective Date of each of the following conditions, which are for the mutual benefit of MFC, New MFC and MFC 2017 II

and which may be waived, in whole or in part, by MFC, New MFC or MFC 2017 II, as applicable, at any time:

ARTICLE 6

TERMINATION OF AGREEMENT

Subject to Section 6.2, this Agreement may at any time before or after the holding of the MFC Meeting, and before or after the granting of the Final Order, but in each case prior to the Effective Date, be terminated by direction of the board of directors of MFC without further action on the part of MFC Shareholders, or by the board of directors of New MFC or MFC 2017 II, and nothing expressed or implied herein or in the Plan of Arrangement will be construed as fettering the absolute discretion of the board of directors of MFC, New MFC or MFC 2017 II to terminate this Agreement and discontinue efforts to effect the Arrangement for whatever reasons it may consider appropriate.

The right of MFC, New MFC or MFC 2017 II or any other party to terminate the Plan of Arrangement pursuant to Section 6.1 will be extinguished on the Effective Date.

ARTICLE 7

GENERAL

All notices and other communications hereunder shall be in writing and shall be delivered by hand to the parties at the following addresses or sent by facsimile at the following numbers or at such other addresses or facsimile numbers as shall be specified by the parties by like notice:

MFC Bancorp Ltd.

Suite 1860 – 400 Burrard Street

Vancouver, British Columbia V6C 3A6

Attention:           President

Facsimile:           604-683-3205

MFC 2017 Ltd.

c/o Harneys Services (Cayman) Limited

4 ^th Floor, Harbour Place, 103 South Church Street

P.O. Box 10240

Grand Cayman KY1-1002

Cayman Islands

Attention:           President

Facsimile:          1-345-949-4451

MFC 2017 II Ltd.

c/o Harneys Services (Cayman) Limited

4 ^th Floor, Harbour Place, 103 South Church Street

P.O. Box 10240

Grand Cayman KY1-1002

Cayman Islands

Attention:           President

Facsimile:          1-345-949-4451

Sangra Moller LLP

1000 – 925 West Georgia Street

Vancouver, British Columbia V6C 3L2

Attention:           H.S. Sangra

Facsimile:          604-669-8803

The date of receipt of any such notice shall be deemed to be the date of delivery thereof or, in the case of notice sent by facsimile, the date of successful transmission thereof (unless transmission is received after business hours, in which case the date of receipt shall be deemed to be the next Business Day in the place of receipt).

Each party will be responsible for and bear all of its own fees, costs and expenses incurred at any time in connection with entering into this Agreement and consummating the transactions contemplated herein and in the Plan of Arrangement.

This Agreement and all the provisions hereof shall be binding upon and enure to the benefit of the parties hereto and their respective successors and permitted assigns. Neither party may assign its rights or obligations under this Agreement or the Arrangement without prior written consent of the other party.

Except for the rights of security holders of MFC to receive securities of New MFC under the Arrangement or as otherwise specifically provided under the Arrangement, the parties intend that this Agreement will not benefit or create any right or cause of action in favour of any Person, other than the parties and that no Person, other than the parties, shall be entitled to rely on the provisions of this Agreement in any action, suit, proceeding, hearing or other forum.

Time is of the essence of this Agreement and of each of the provisions.

This agreement is governed by and construed in accordance with the laws of the Province of British Columbia and applicable federal laws of Canada without giving effect to applicable principles of conflicts of law to the extent that the application of the laws of another jurisdiction would be required thereby. The parties attorn to the exclusive jurisdiction of the Courts of British Columbia situate in Vancouver, British Columbia.

This Agreement constitutes the entire agreement between the parties hereto pertaining to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, between the parties hereto with respect to the subject matter hereof. There are no representations, warranties, covenants or conditions with respect to the subject matter hereof except as contained herein.

Each party shall make, do and execute, or cause to be made, done and executed all such further acts, deeds, agreements, transfers, assurances, instrument or documents as may be reasonably required in order to implement this Agreement, the transactions contemplated herein and in the Plan of Arrangement.

Subject to any requirements imposed by law or by the Court, this Agreement may be supplemented or amended, and any of the terms, covenants, representations, warranties or conditions hereof may be waived, but only by written document executed by both parties; provided, however, that the terms of this Agreement may not be supplemented or amended, or any of the provisions waived, in a manner materially prejudicial to the MFC Shareholders without their approval at the MFC Meeting, as applicable, or, following the MFC Meeting, without such approval, as may be required by the Court. No waiver of any nature, in any one or more instances, shall be deemed or construed as a further or continued waiver of any condition or breach of any other term, representation or warranty in this Agreement. Notwithstanding the foregoing, the Plan of Arrangement may only be supplemented or amended in accordance with the provisions thereof.

[Remainder of page intentionally left blank.]

This Agreement may be executed in counterparts and by facsimile or email transmission, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF this Agreement has been executed by the parties hereto.

MFC BANCORP LTD.

MFC 2017 LTD.

MFC 2017 II LTD.

SCHEDULE A

To the Amended and Restated Arrangement Agreement dated as of June 7, 2017

Between MFC Bancorp Ltd., MFC 2017 Ltd. and MFC 2017 II Ltd.

PLAN OF ARRANGEMENT UNDER THE PROVISIONS OF DIVISION 5 OF PART 9 OF THE BUSINESS CORPORATIONS ACT (BRITISH COLUMBIA)

ARTICLE 1

INTERPRETATION

1.1        Definitions In this Plan of Arrangement, unless there is something in the subject matter or context inconsistent therewith, the following terms shall have the respective meanings set out below and grammatical variations of such terms shall have corresponding meanings:

1.2        Sections and Headings The division of this Plan of Arrangement into sections and the insertion of headings are for reference purposes only and shall not affect the interpretation of this Plan of

Arrangement. Unless otherwise indicated, any reference in this Plan of Arrangement to a section or an exhibit refers to the specified section of or exhibit to this Plan of Arrangement.

1.3        Number, Gender and Persons In this Plan of Arrangement, unless the context otherwise requires, words importing the singular number include the plural and vice-versa and words importing any gender include all genders.

1.4        Date for any Action If any date on which any action is required to be taken under this Plan of Arrangement is not a Business Day, such action shall be required to be taken on the next succeeding Business Day.

1.5        Governing Law This Plan of Arrangement shall be governed by and construed in accordance with the laws of the Province of British Columbia and the federal laws of Canada applicable therein.

1.6        Currency Unless otherwise stated, all references in this Plan of Arrangement to sums of money are expressed in United States dollars.

ARTICLE 2

ARRANGEMENT

2.1        Arrangement Agreement This Plan of Arrangement is made pursuant to, is subject to the provisions of and forms part of the Arrangement Agreement.

2.2        Binding Effect This Plan of Arrangement will become effective at, and be binding at and after, the Effective Time on: (i) MFC; (ii) all MFC Shareholders (including any Dissenting Shareholders); (iii) New MFC; and (iv) MFC 2017 II, without any further act or formality as required on the part of any Person, except as expressly provided herein.

2.3        Corporate Authorizations The adoption, execution, delivery, implementation and consummation of all matters contemplated under this Plan of Arrangement involving corporate action of MFC will occur and be effective as of the Effective Time, and will be authorized and approved under the Arrangement and by the Court, where appropriate, as part of the Final Order, in all respects and for all purposes without any requirement of further action by MFC Shareholders, directors or officers of MFC, other than as contemplated herein or in the Final Order.

2.4        Arrangement Commencing at the Effective Time, the following shall occur and shall be deemed to occur in the following order without any further act or formality:

Effective Time for an exercise price per New MFC Share equal to the exercise price per share of such MFC Option immediately prior to the Effective Time multiplied by five (5). The term to expiry, conditions to and manner of exercise and other terms and conditions of each of the New MFC Options will be the same as the terms and conditions of the MFC Option for which it is exchanged except that such New MFC Option will be governed by the terms and conditions of the New MFC Incentive Plan and, in the event of any inconsistency or conflict the New MFC Incentive Plan will govern; and

provided that each of the foregoing steps (a) to (j) shall be conditional upon the occurrence of the others and none of the foregoing steps (a) to (j) will occur or will be deemed to occur unless all of the foregoing steps occur.

2.5        Minimum Payments . Due to the administrative costs of effecting an exchange, if any person that was an MFC Shareholder immediately prior to the Effective Time would be entitled to a cash payment of less than $10.00 pursuant to Subsections 2.4(c) or 2.4(g) hereof, such payment will not be made.

2.6        Transfer and Assignment Each MFC Shareholder immediately prior to the Effective Time shall be deemed to have executed and delivered all consents, releases, assignments and waivers, statutory or otherwise, required to transfer and assign such MFC Shares to MFC 2017 II in accordance with this Article 2.

2.7        Options It is intended that the provisions of subsection 7(1.4) of the ITA apply to the exchange of MFC Options for New MFC Options. Therefore, in the event that the In-The-Money Amount in respect of a New MFC Option immediately after the Effective Time exceeds the In-The-Money Amount in respect of the MFC Option immediately before the Effective Time, the exercise price of a New MFC Option will be increased such that the In-The-Money Amount of the New MFC Option immediately after the Effective Time does not exceed the In-The-Money Amount of the MFC Option immediately before the Effective Time.

ARTICLE 3

RIGHTS OF DISSENT

3.1        Rights of Dissent Holders of MFC Shares may exercise Dissent Rights with respect to such shares pursuant to and in the manner set forth in Division 2 of Part 8 of the Business Corporations Act and this Section 3.1 (the “ Dissent Procedures ”) in connection with the Arrangement as may be amended by the Interim Order, the Final Order or any order of the Court; provided that, notwithstanding Section 242 of the Business Corporations Act, the written objection to the Arrangement referred to in Section 242 of the Business Corporations Act must be received by MFC not later than 9:00 a.m. (Vancouver time) on the date which is 48 hours preceding the Meeting Date (excluding Saturdays, Sundays and holidays). Holders of MFC Shares who duly exercise such rights of dissent in respect of their MFC Shares and who:

Effective Time pursuant to Subsection 2.4(a) hereof without any further act or formality and free and clear of all liens, claims and encumbrances, in consideration for such fair value; or

but in no case shall New MFC, MFC 2017 II, MFC or any other Person be required to recognize such holders as holders of MFC Shares after the Effective Time, and the names of such holders of MFC Shares shall be deleted from the registers of holders of MFC Shares at the Effective Time.

ARTICLE 4

CERTIFICATES AND FRACTIONAL SHARES

4.1        Exchange of Certificates for New MFC Shares or Cash MFC, New MFC and MFC 2017 II shall as soon as practicable following the later of the Effective Time and the surrender to the Depository for cancellation of certificates that, immediately before the Effective Time, represented a holder’s MFC Shares, together with a duly completed Letter(s) of Transmittal and such other documents and instruments as would have been required to effect the transfer of the shares formerly represented by such certificates under the Business Corporations Act and the Articles of MFC and such additional documents and instruments as the Depository may reasonably require, cause the Depository, MFC, New MFC or MFC 2017 II, as the case may be, to deliver to such holder, as applicable, any cash consideration under Subsection 2.4(c) hereof or a certificate representing that number of New MFC Shares together with any cash consideration under Subsection 2.4(g) hereof, which such holder has the right to receive as determined in accordance with this Plan of Arrangement, (together with any dividends or distributions with respect thereto pursuant to Section 4.2) and the certificate so surrendered shall forthwith be cancelled. In the event of a transfer of ownership of MFC Shares which is not registered in the transfer records of MFC, a certificate representing the proper number of New MFC Shares may be issued to the transferee if the certificate representing such MFC Shares is presented to the Depository, accompanied by all documents required to evidence and effect such transfer to the transferee. Until surrendered as contemplated by this Section 4.1, each certificate which immediately prior to the Effective Time represented one or more outstanding MFC Shares shall be deemed at all times after the Effective Time to represent only the right to receive upon such surrender: (i) as applicable, a certificate representing New MFC Shares and any cash consideration under Subsection 2.4(g) hereof or any cash consideration under Subsection 2.4(c) hereof; in each case, as contemplated by this Section 4.1; and (ii) if applicable, any dividends or distributions with a record date after the Effective Time theretofore paid or payable with respect to such New MFC Shares as contemplated by Section 4.2.

4.2        Distributions with Respect to Unsurrendered Certificates All dividends, if any, made with respect to any New MFC Shares allotted and issued pursuant to this Plan of Arrangement but for which a duly completed Letter of Transmittal together with all required documents has not been received and a certificate has not been issued, shall be paid or

delivered to the Depositary to be held by the Depositary in trust for the registered holder thereof without interest. Subject to Section 4.5, the Depositary shall pay and deliver to any such registered holder, as soon as reasonably practicable after application therefor is made by the registered holder to the Depositary in such form as the Depositary may reasonably require, such dividends to which such holder is entitled, net of applicable withholding and other taxes, upon delivery of the certificate representing the New MFC Shares issued to such holder in accordance with this Plan of Arrangement.

4.3        No Fractional Consideration

4.4        Lost Certificates In the event any certificate which immediately prior to the Effective Time represented one or more outstanding MFC Shares that were exchanged pursuant to Section 2.4 shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such certificate to be lost, stolen or destroyed, the Depositary will: (i) in the case of an exchange pursuant to Subsection 2.4(g), issue in exchange for such lost, stolen or destroyed certificate, one or more certificates representing one or more New MFC Shares, along with any cash consideration under Subsection 2.4(g) (and any dividends or distributions with respect to such shares) deliverable in accordance with such holders’ Letter(s) of Transmittal; and (ii) in the case of an MFC Shareholder that held a fractional MFC Share under Subsection 2.4(c), pay in exchange for such lost, stolen or destroyed certificate the applicable payment as provided herein, deliverable in accordance with such holders’ Letter(s) of Transmittal. When authorizing such payment in exchange for any such lost, stolen or destroyed certificate, the Person to whom such certificates are to be issued or cash is to be paid shall, as a condition precedent to the issuance thereof, give a bond satisfactory to New MFC, MFC 2017 II and the Depositary in such sum as New MFC may direct or otherwise indemnify New MFC in a manner satisfactory to New MFC against any claim that may be made against New MFC with respect to the certificate alleged to have been lost, stolen or destroyed.

4.5        Extinction of Rights Any certificate which immediately prior to the Effective Time represented outstanding MFC Shares that were exchanged pursuant to Section 2.4 and not deposited with all other instruments required by Section 4.1 on or prior to the third anniversary

of the Effective Date shall cease to represent a claim or interest of any kind or nature whatsoever, including as a shareholder of New MFC. On such date, the New MFC Shares and/or cash payment, as the case may be, to which the former registered holder of the certificate referred to in the preceding sentence was ultimately entitled shall be deemed to have been surrendered to New MFC (or any successor thereof) together with, in the case of the New MFC Shares, all entitlements to dividends, distributions and interest thereon held for such former registered holder. None of MFC, New MFC or the Depositary shall be liable to any person in respect of any New MFC Shares (or dividends, distributions and interest in respect of such shares) or cash payment.

4.6        Withholding and Sale Rights Each of MFC, New MFC, MFC 2017 II and the Depositary and their respective agents, shall be entitled to deduct and withhold from: (i) any New MFC Shares, cash or other consideration otherwise issuable, deliverable or payable pursuant to this Plan of Arrangement to any MFC Shareholder; or (ii) any dividend or consideration otherwise payable to any MFC Shareholder or holder of New MFC Shares, such amounts as MFC, New MFC, MFC 2017 II or the Depositary or their respective agents, is required to deduct and withhold with respect to such issuance or payment, as the case may be, under the ITA or any provision of any applicable provincial, state, local or foreign tax law, in each case as amended. To the extent that the amount so required to be deducted or withheld from the New MFC Shares or consideration otherwise issuable or payable to a holder exceeds the cash portion of the consideration otherwise payable to such holder, each of MFC, New MFC, MFC 2017 II and the Depositary is hereby authorized to sell or otherwise dispose of, at such times and at such prices as it determines, in its sole discretion, such portion of the New MFC Shares, otherwise issuable or payable to such holder as is necessary to provide sufficient funds to MFC, New MFC, MFC 2017 II or the Depositary, as the case may be, to enable it to comply with such deduction or withholding requirement, and shall notify the holder thereof and remit to such holder any unapplied balance of the net proceeds of such sale or disposition (after deducting applicable sales commissions and any other reasonable expenses relating thereto) in lieu of the New MFC Shares or other consideration so sold or disposed of. To the extent that amounts are so withheld or New MFC Shares or other consideration are so sold or disposed of, such withheld amounts, or shares or other consideration so sold or disposed of, shall be treated for all purposes as having been paid to the holder of the shares in respect of which such deduction, withholding, sale or disposition was made, provided that such withheld amounts, or the net proceeds of such sale or disposition, as the case may be, are actually remitted to the appropriate taxing authority. Neither MFC, New MFC, MFC 2017 II nor the Depositary shall be obligated to seek or obtain a minimum price for any of the New MFC Shares or other consideration sold or disposed of by it hereunder, nor shall any of them be liable for any loss arising out of any such sale or disposition.

4.7        Illegality of Delivery of New MFC Shares Notwithstanding anything herein to the contrary, if MFC reasonably believes that it would be contrary to applicable Law to deliver New MFC Shares pursuant to this Arrangement to an MFC Shareholder, the New MFC Shares that otherwise would be issued to that person will be delivered to the Depositary for sale by the Depositary on behalf of that person. The New MFC Shares so delivered to the Depositary will be pooled and sold as soon as practicable after the Effective Time, on such dates and at such prices as New MFC determines in its sole discretion, acting reasonably and in good faith, provided that no sales of any such New MFC Shares shall occur in any jurisdiction in which

such sales are not permitted under applicable Laws. The Depositary, MFC, MFC 2017 II and New MFC shall not be obligated to seek or obtain a minimum price for any of the New MFC Shares sold pursuant to this Section 4.7. Each such holder will receive a pro rata share of the cash proceeds from the sale of the New MFC Shares sold by the Depositary (less commissions, other reasonable expenses incurred in connection with the sale of New MFC Shares and any amount withheld in respect of taxes) in lieu of the New MFC Shares that such holder would otherwise have received. None of the Depositary, MFC, MFC 2017 II or New MFC will be liable for any loss arising out of any such sales.

4.8        No Liens Any exchange or transfer of securities pursuant to this Plan of Arrangement shall be free and clear of any liens, restrictions, adverse claims or other claims of third parties of any kind.

4.9        Paramountcy From and after the Effective Time: (i) this Plan of Arrangement shall take precedence and priority over any and all MFC Shares issued prior to the Effective Time; (ii) the rights and obligations of the MFC Shareholders and MFC, New MFC, MFC 2017 II, the Depositary and any transfer agent or other depositary therefor in relation thereto, shall be solely as provided for in this Plan of Arrangement; and (iii) all actions, causes of action, claims or proceedings (actual or contingent and whether or not previously asserted) based on or in any way relating to any MFC Shares shall be deemed to have been settled, compromised, released and determined without liability to MFC, MFC 2017 II or New MFC except as set forth herein.

ARTICLE 5

AMENDMENTS

5.1        MFC reserves the right to amend, modify and/or supplement this Plan of Arrangement from time to time at any time prior to the Effective Time, provided that any such amendment, modification or supplement must be contained in a written document that is filed with the Court prior to the issuance of the Final Order.

5.2        Save and except as may be otherwise provided in the Interim Order, any amendment, modification or supplement to this Plan of Arrangement may be proposed by MFC at any time prior to the Meeting with or without any other prior notice or communication to the holders of MFC Shares and if so proposed and accepted by such holders of MFC Shares voting at the Meeting, will become part of this Plan of Arrangement for all purposes. Subject to Section 5.3 hereof, if such amendment, modification or supplement is made following the Meeting, it shall be approved by the Court and, if required by the Court, communicated to the holders of MFC Shares, and will become part of the Arrangement upon completion of all the conditions required in the Court approval.

5.3        Any amendment, modification or supplement to this Plan of Arrangement may be made by the parties without approval of the MFC Shareholders provided that it concerns a matter which, in the reasonable opinion of MFC, is of an administrative or ministerial nature required to better give effect to the implementation of this Plan of Arrangement and is not materially adverse to the financial or economic interests of any of the holders of MFC Shares.

5.4        This Plan of Arrangement may be withdrawn prior to the Effective Time in accordance with the provisions of the Arrangement Agreement.

ARTICLE 6

FURTHER ASSURANCES

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

SCHEDULE B

MFC RESOLUTIONS

SPECIAL RESOLUTION

BE IT RESOLVED, AS A SPECIAL RESOLUTION THAT:

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 by or on behalf of MFC.

SCHEDULE “C”

INTERIM ORDER

NO.S-175418 VANCOUVER REGISTRY

IN THE SUPREME COURT OF BRITISH COLUMBIA

IN THE MATTER OF SECTIONS 288 AND 291
OF THE BUSINESS CORPORATIONS ACT, S.B.C. 2002, c. 57
AND AMENDMENTS THERETO

AND

IN THE MATTER OF A PROPOSED ARRANGEMENT
BETWEEN MFC BANCORP LTD.,
THE SHAREHOLDERS OF MFC BANCORP LTD., MFC 2017 LTD. AND MFC 2017 II
LTD.

MFC BANCORP LTD.

PETITIONER

ORDER MADE AFTER APPLICATION
(INTERIM ORDER)

ON THE APPLICATION of the Petitioner, MFC Bancorp Ltd., for an Interim Order pursuant to its Petition filed on June 7, 2017

THIS COURT ORDERS THAT:

THE MEETING

RECORD DATE

NOTICE OF MEETING

AMENDMENTS

DEEMED RECEIPT OF MEETING MATERIALS

QUORUM AND VOTING

SCRUTINEERS

APPLICATION FOR FINAL ORDER

THE FOLLOWING PARTIES APPROVE THE FORM OF THIS ORDER AND CONSENT TO EACH OF THE ORDERS, IF ANY, THAT ARE INDICATED ABOVE AS BEING BY CONSENT:

APPROVE AS TO FORM:
Rod Talaifar
Counsel for the Petitioner

BY THE COURT

	REGISTRAR

No. NO.S-175418
VANCOUVER REGISTRY

IN THE SUPREME COURT OF BRITISH COLUMBIA

IN THE MATTER OF SECTIONS 288 AND 291
OF THE BUSINESS CORPORATIONS ACT, S.B.C. 2002, c. 57
AND AMENDMENTS THERETO

AND

IN THE MATTER OF A PROPOSED ARRANGEMENT
BETWEEN MFC BANCORP LTD.,
THE SHAREHOLDERS OF MFC BANCORP LTD. AND MFC 2017 LTD.

MFC BANCORP LTD.

PETITIONER

ORDER MADE AFTER APPLICATION
(INTERIM ORDER)

Sangra Moller LLP
Barristers and Solicitors
1000 Cathedral Place
925 West Georgia Street
Vancouver, BC V6C 3L2
Facsimile: (604) 669-8803

SCHEDULE “D”

NOTICE OF APPLICATION

NO.S-175418

VANCOUVER REGISTRY

IN THE SUPREME COURT OF BRITISH COLUMBIA

IN THE MATTER OF SECTIONS 288 AND 291

OF THE BUSINESS CORPORATIONS ACT , S.B.C. 2002, c. 57

AND AMENDMENTS THERETO

AND

IN THE MATTER OF A PROPOSED ARRANGEMENT

BETWEEN MFC BANCORP LTD.,

THE SHAREHOLDERS OF MFC BANCORP LTD., MFC 2017 LTD. AND MFC 2017 II LTD.

MFC BANCORP LTD.

PETITIONER

NOTICE OF APPLICATION

TAKE NOTICE that a Petition has been filed by MFC Bancorp Ltd. (the “ Petitioner ”) in the Supreme Court of British Columbia (the “ Court ”) for approval of an amended and restated arrangement agreement (the “ Arrangement ”) pursuant to the Business Corporations Act (British Columbia), S.B.C. 2002, c. 57, as amended (the “ Act ”), and for a determination that the terms and conditions of the Arrangement, and the exchange of securities and other matters contemplated therein, are fair and reasonable to the shareholders of the Petitioner (collectively, the “ MFC Shareholders ”), and that the Arrangement be binding upon the Petitioner and the MFC Shareholders upon taking effect, will be heard at the courthouse at 800 Smithe Street, Vancouver, British Columbia V6Z 2E1 on July 12, 2017 at 9:45 a.m. (Vancouver time) or as soon thereafter as counsel may be heard (the “ Final Order ”);

AND NOTICE IS FURTHER GIVEN that by an Interim Order of the Court, pronounced June 9, 2017, the Court has given directions as to the calling of a special meeting of the MFC Shareholders, as of the record date, for the purpose of, inter alia , considering and voting upon the Arrangement and approving the Arrangement;