NOTICE OF SPECIAL MEETING OF UNITHOLDERS. to be held on September 14, and MANAGEMENT INFORMATION CIRCULAR. with respect to a proposed

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1 NOTICE OF SPECIAL MEETING OF UNITHOLDERS to be held on September 14, 2010 and MANAGEMENT INFORMATION CIRCULAR with respect to a proposed PLAN OF ARRANGEMENT involving GAZ MÉTRO LIMITED PARTNERSHIP, GAZ MÉTRO INC., GAZ MÉTRO PLUS INC., VALENER INC. AND PUBLIC UNITHOLDERS OF GAZ MÉTRO LIMITED PARTNERSHIP Upon recommendation from the Independent Committee, the Board of Directors, through its independent and non-interested directors (with the other directors abstaining from voting), has UNANIMOUSLY determined that the Arrangement is fair to Public Unitholders, is in the best interests of Gaz Métro and all Unitholders, and recommended that Unitholders vote IN FAVOUR of the Arrangement Resolution. July 28, 2010

2 Montréal, July 28, 2010 Subject: Special Meeting of Unitholders of Gaz Métro Limited Partnership Dear Madam: Dear Sir: You are invited to attend a special meeting (the Meeting ) of the holders (the Unitholders ) of units ( Units ) of Gaz Métro Limited Partnership ( Gaz Métro ) to be held at Le Windsor, Salon Windsor, First Floor, 1170 Peel Street, Montréal, Québec, on Tuesday, September 14, 2010 at 2:00 p.m. (Montréal time). Enclosed with this letter is a notice of meeting, a management information circular (the Circular ), a voting instruction form or form of proxy as well as a letter of transmittal (as applicable) and an election form. At the Meeting, you will be asked to consider and, if thought advisable, vote on a proposed plan of arrangement under Section 192 of the Canada Business Corporations Act (the Arrangement ) involving Gaz Métro, Gaz Métro inc. ( GMi ), Gaz Métro Plus inc. ( Gaz Métro Plus ), a newly incorporated corporation named Valener Inc. (formerly known as Canada Inc. or Newco ) ( Valener ) and public Unitholders ( Public Unitholders ) aimed at reorganizing Gaz Métro s public ownership structure into a corporation. The Arrangement is being proposed primarily as a result of changes to Canadian federal income tax legislation relating to publicly traded specified investment flow-through trusts and partnerships ( SIFTs ) that were announced by the Department of Finance (Canada) on October 31, 2006 and enacted into legislation (the SIFT Rules ) by the Government of Canada in June Under the Arrangement, all the Units held by Public Unitholders (the Public LP Units ) will be exchanged, on a one-for-one basis, for shares of Valener (the Valener Shares ), a new dividend-paying publicly listed corporation, on the effective date of the Arrangement, which is expected to be September 30, 2010 (the Effective Date ). On the Effective Date, Valener will become a limited partner of Gaz Métro. Public Unitholders will retain, indirectly through Valener, their current proportionate economic interest of approximately 29% in Gaz Métro. It is expected that the Valener Shares will be listed on the Toronto Stock Exchange under the symbol VNR while the Units will be delisted on the Effective Date. GMi and Gaz Métro Plus (a wholly-owned subsidiary of GMi) will maintain their interest in Gaz Métro. It is anticipated that Valener will present going forward the investment characteristics currently attributable to an ownership of Units including as it relates to maximization of cash distributions and risk profile of current underlying investments and projects. The transaction contemplates a modernized governance profile, in line with best practices, and additional rights and protective measures with respect to Valener s investment in Gaz Métro. The Arrangement will also give each of Valener and GMi a pre-emptive right to maintain their respective relative ownership level in Gaz Métro upon any issuance of new Units, and will provide Valener with (i) an increase in Gaz Métro s distributions otherwise payable to Valener based on its approximately 29% economic interest in Gaz Métro by an aggregate amount of $20 million over a period of three years, (ii) a right to nominate a number of representatives on the board of directors of GMi (the Board of Directors ), Gaz Métro s general partner, proportional to its percentage ownership of Units, and (iii) subject to a non-competition undertaking in favour of Gaz Métro, the ability to pursue, for its own benefit, certain development and acquisition strategies, including pursuant to an option to be granted to Valener to acquire 49% of Gaz Métro s 50% indirect interest (through Gaz Métro Éole inc.) in the wind power projects located on Seigneurie de Beaupré land, subject to obtaining all required consents, all as more fully described in the accompanying Circular. Gaz Métro s distribution practice delivers long-term, strong and stable distributions to its Unitholders. Upon completion of the Arrangement, Gaz Métro intends to continue its practice of distributing, in a given financial year, substantially all of its net income for such financial year (the Net Income ), and, in any case, not less than 85% of its Net Income excluding non-recurring items, subject to certain exceptions. In addition, if GMi, as general partner, determines that it is appropriate, for any other reason (including as may be required for investments in the business, financing requirements or capital structure realignment of Gaz Métro), to distribute less than 85% of the Net Income excluding non-recurring items, it may cause Gaz Métro to do so, provided that the resolution of the Board of

3 Directors authorizing such lesser distribution has been adopted with the approval of at least 90% of the votes cast by directors. See The Arrangement - Material Agreements - Amended Partnership Agreement in the accompanying Circular. On June 22, 2010, the date of the public announcement of the Arrangement, Gaz Métro declared, through its general partner GMi, a distribution of $0.31 per Unit payable on September 30, 2010 to Unitholders of record at the close of business on September 15, Provided the Arrangement is approved at the Meeting and the Effective Date of the Arrangement occurs on September 30, 2010, as currently scheduled, this will be the last distribution paid to Public Unitholders by Gaz Métro. It is expected that Valener will adopt a dividend policy of paying out a high proportion of its available cash in the form of quarterly dividends to its shareholders. It is expected that following the completion of the Arrangement, Valener will initially pay an annualized dividend of $1.00 per Valener Share. Dividends are expected to be paid on a quarterly basis. The first such quarterly dividend is expected to be declared to the holders of record of Valener Shares on December 30, 2010 and to be paid on January 17, 2011, and subsequent dividends for the fiscal year 2011 are expected to be paid in April and July See The Arrangement - Effect of the Arrangement - Effect of the Arrangement on Distributions in the accompanying Circular. Following the enactment of the SIFT Rules, the Board of Directors created a committee composed of four independent directors (the Independent Committee ) to review strategic objectives and evaluate available options with the view of assessing implications for Public Unitholders. After analyzing a number of alternatives and negotiating with representatives of Noverco Inc. ( Noverco ), GMi s sole shareholder and Gaz Métro s indirect majority Unitholder, the Independent Committee determined, with the assistance and guidance of independent legal, tax and financial advisors, that the Arrangement, aimed at creating a compelling investment vehicle for Public Unitholders while maintaining an efficient capital structure for Gaz Métro and its controlling partner, GMi, represents the most attractive available alternative for all Unitholders to address the impact of the SIFT Rules. See Background to and Reasons for the Arrangement in the accompanying Circular. The key benefits of the Arrangement are set out in detail in the accompanying Circular and include the following: Shareholders of Valener will benefit from its enhanced financial profile: o o o o o Gaz Métro s distributions otherwise payable to Valener based on its approximately 29% economic interest in Gaz Métro will be increased by an aggregate amount of $20 million over a three-year period; taking into account the above, the timely development of the Seigneurie Project within the contemplated parameters and continued assumptions based on the current economic context of Gaz Métro, an annualized dividend of $1.00 per Valener Share is expected to be paid starting in fiscal year 2011 and would represent a sustainable dividend payout going forward (see The Arrangement - Effect of the Arrangement - Effect of the Arrangement on Distributions ); an annualized dividend of $1.00 per Valener Share is equivalent to an annual distribution of $1.31 per Unit under Gaz Métro s current structure, for a taxable investor in Québec, based on the maximum combined marginal tax rate announced for 2011; an annualized dividend of $1.00 per Valener Share compares favourably to an estimated after-tax distribution per Unit in a range of $0.85 to $0.87 for fiscal year 2011 under a status quo scenario, reflecting, among other things, the dilutive impact of a planned equity offering of $100 million by Gaz Métro in the fall of 2010; Valener s corporate structure will be better suited for public equity markets than the current limited partnership structure of Gaz Métro and will give Valener enhanced flexibility to optimize its capital structure over time; Shareholders of Valener will continue to benefit from Gaz Métro s stable income and high distribution payout; - 2 -

4 Valener will be granted an option to acquire 49% of Gaz Métro s 50% indirect interest (through Gaz Métro Éole inc.) in the wind power projects located on the private property of the Seigneurie de Beaupré owned by the Séminaire de Québec (the Seigneurie Project ), subject to obtaining all required consents; Valener will have independent access to growth opportunities within the parameters of a non-competition undertaking in favour of Gaz Métro; Valener will have a $75 million committed bank facility; Shareholders of Valener will benefit from a modernized governance profile, in line with best practices, with Valener s independent board of directors acting in the best interests of Valener, and from additional rights and protective measures with respect to their investment in Gaz Métro; Valener will be managed by an experienced team of professionals from Gaz Métro pursuant to a 15-year administration and management support agreement to be entered into between Gaz Métro and Valener; and General administrative expenses (including public company costs) incurred by Valener shall be reimbursed by Gaz Métro, subject to a maximum aggregate annual amount of (i) $1.75 million annually for the five-year period following the Effective Date, and (ii) $1 million annually for the subsequent ten-year period, until the termination of the administration and management support agreement. The resolution approving the Arrangement and related matters (the Arrangement Resolution ) must be approved by (i) at least 66⅔% of the votes cast by all Unitholders voting in person or represented by proxy at the Meeting, (ii) at least 66⅔% of the votes cast by all Unitholders other than GMi and Affiliated Entities (as defined in the accompanying Circular) voting in person or represented by proxy at the Meeting, and (iii) a simple majority of the votes cast by all Unitholders voting in person or represented by proxy at the Meeting, excluding Units beneficially owned or over which control or direction is exercised by interested parties and certain related parties to such interested parties (as provided by Section 8.1 of Multilateral Instrument Protection of Minority Security Holders in Special Transactions of the Canadian Securities Administrators). The Arrangement is also subject to the approval of the Superior Court of Québec and all necessary regulatory approvals. See The Arrangement - Approvals in the accompanying Circular. Following the completion of the Arrangement, the board of directors of Valener will initially be comprised of three independent directors, namely Nicolle Forget, Pierre Monahan and Réal Sureau, who are currently members of the Independent Committee. It is expected that a fourth director will be appointed by the board of directors of Valener, as permitted by the articles of Valener and the provisions of the CBCA, before or shortly after the Effective Date. Valener will not initially have its own management team. Gaz Métro, either directly or through GMi, its general partner, will provide administrative and management support services relating solely to Valener s interest in Gaz Métro, related public company matters, Valener s potential interest in the Seigneurie Project and the management of certain indebtedness of Valener. See The Arrangement - Effect of the Arrangement - General, The Arrangement - Material Agreements - Administration and Additional Services Agreements and Appendix E - Information Concerning Valener Directors and Management of Valener in the accompanying Circular. BMO Nesbitt Burns Inc. ( BMO ) provided the Independent Committee and the Board of Directors with an opinion to the effect that, as of June 22, 2010 and as reaffirmed on July 28, 2010, subject to the assumptions, explanations and limitations described in such opinion, the Arrangement is fair, from a financial point of view, to Public Unitholders. The Board of Directors (with interested and non-independent directors abstaining from voting), based on the recommendation of the Independent Committee and upon its own review, including its consideration of the opinion provided by BMO on the fairness of the transaction for the Public Unitholders, has unanimously determined that the Arrangement is fair to Public Unitholders, is in the best interests of Gaz Métro and all Unitholders, and recommended that Unitholders vote in favour of the Arrangement Resolution. We encourage you to read the materials in the accompanying Circular carefully. It contains a detailed description of the Arrangement as well as detailed information regarding Gaz Métro and Valener. Please give this material your careful consideration and, if you require assistance, consult your financial, tax or other professional advisors. Please - 3 -

5 complete and deliver your voting instruction form or form of proxy, delivered with the accompanying Circular, prior to 5:00 p.m. on Friday, September 10, 2010, in order to ensure your representation at the Meeting. A video presentation explaining the reasons for and the key benefits of the Arrangement is also accessible online at On behalf of the Board of Directors, we would like to express our gratitude for the continuing support our Unitholders have demonstrated for Gaz Métro over the years. We would also like to thank our employees who have worked very hard assisting us with this task. We look forward to seeing you at the Meeting. Yours very truly, Sophie Brochu President and Chief Executive Officer - 4 -

6 GAZ MÉTRO LIMITED PARTNERSHIP NOTICE OF SPECIAL MEETING OF UNITHOLDERS to be held on September 14, 2010 NOTICE IS HEREBY GIVEN that, pursuant to an order (the Interim Order ) of the Superior Court of Québec dated July 28, 2010, a special meeting (the Meeting ) of the holders (the Unitholders ) of units (the Units ) of Gaz Métro Limited Partnership ( Gaz Métro ) will be held at Le Windsor, Salon Windsor, First Floor, 1170 Peel Street, Montréal, Québec, on Tuesday, September 14, 2010 at 2:00 p.m. (Montréal time) for the following purposes: 1. to consider pursuant to the Interim Order and, if thought advisable, to pass, with or without variation, an extraordinary resolution, the full text of which is set forth in Appendix A to the accompanying management information circular of Gaz Métro dated July 28, 2010 (the Circular ), to approve a proposed plan of arrangement under Section 192 of the Canada Business Corporations Act and all transactions contemplated thereby, all as more particularly described in this Circular; and 2. to transact such other business as may properly come before the Meeting or any adjournment thereof. This Notice of Meeting is accompanied by the Circular, a voting instruction form or form of proxy as well as a letter of transmittal (if applicable) and a tax election form. Details of the matters to be put before the Meeting are set forth in the Circular. The record date for determination of Unitholders entitled to receive notice of and to vote at the Meeting (the Record Date ) is July 23, Only Unitholders whose names have been entered in the applicable register of Units as of the close of business on the Record Date are entitled to receive notice of and to vote at the Meeting or any adjournment thereof. Unitholders who acquire Units after the Record Date will not be entitled to vote such Units at the Meeting or any adjournment thereof. The failure of any Unitholder entitled to vote to receive notice of the Meeting does not deprive such Unitholder of the right to vote at the Meeting. Regardless of whether or not Unitholders are able to attend the Meeting or any adjournment of the Meeting in person: (i) non-registered Unitholders are requested to date, sign and return the voting instruction form in accordance with the instructions provided by their broker or intermediary; and (ii) registered Unitholders are requested to date, sign and return the accompanying form of proxy to the transfer agent for use at the Meeting or any adjournment of the Meeting. To be effective, proxies must be received by Gaz Métro s transfer agent, CIBC Mellon Trust Company, by facsimile at or or at the address indicated on the envelope we have provided, by no later than 5:00 p.m. (Montréal time) on Friday, September 10, 2010 or on the last business day preceding any adjournment of the Meeting. Unitholders are invited to attend the Meeting as there will be an opportunity to ask questions and meet with management of Gaz Métro inc., Gaz Métro s general partner. For those Unitholders who cannot attend the Meeting in person, Gaz Métro has made arrangements to provide a live webcast of the Meeting. Details on how Unitholders may view the webcast will be found at and will also be provided in a media release prior to the Meeting. Nonetheless, Unitholders viewing the webcast will not be permitted to vote through the webcast facilities or participate in the Meeting.

7 If you have any questions regarding the matters to be dealt with at the Meeting, the procedures for voting or completing the form of proxy or any information contained in the accompanying Circular, please contact Georgeson, Gaz Métro s proxy solicitation agent, toll free at DATED at Montréal, Québec, this 28 th day of July, By order of the board of directors of Gaz Métro inc., in its capacity as general partner of Gaz Métro Limited Partnership Lyne Burelle Corporate Secretary - 2 -

8 TABLE OF CONTENTS Questions and Answers Special Matters to be Acted upon at the Meeting... iii Management Information Circular... 1 Introduction... 1 Forward-Looking Statements... 1 Information For United States Public Unitholders... 2 Glossary of Terms... 4 Summary Information The Meeting The Arrangement Tax Fairness Plan Background to the Arrangement Reasons for and Benefits of the Arrangement Fairness Opinion Recommendation of the Independent Committee and the Board of Directors Procedure for Exchange of Public LP Units Approval of Unitholders Required for the Arrangement Final Order Stock Exchange Listing Certain Canadian Federal Income Tax Considerations Other Tax Considerations Information Concerning Valener Risk Factors General Proxy Matters Solicitation of Proxies Appointment of Proxies by Registered Unitholders Revocation of Proxies by Registered Unitholders Voting of Proxies for Registered Unitholders Voting of Proxies for Non-Registered Unitholders Record Date Quorum Voting Units and Principal Holders Special Business of the Meeting Special Business Approval of the Arrangement Resolution Background to and Reasons for the Arrangement Tax Fairness Plan Background to the Arrangement Reasons for and Benefits of the Arrangement Fairness Opinion Recommendation of the Independent Committee and the Board of Directors The Arrangement Effect of the Arrangement Valener s Tax Position Post-Arrangement Gaz Métro s Tax Position Post-Arrangement Arrangement Steps Arrangement Agreement Material Agreements Procedure for the Arrangement Becoming Effective Approvals Conditions Precedent to the Arrangement i -

9 Timing Procedure for Exchange of Public LP Units Interests of Certain Persons or Companies in the Matters to be Acted Upon Expenses of the Arrangement Securities Law Matters Experts Certain Canadian Federal Income Tax Considerations Unit-for-Share Exchange Holding and Disposing of Valener Shares Taxation of Capital Gains and Capital Losses Reduction of Stated Capital Eligibility for Investment Information Concerning Gaz Métro Structure of Gaz Métro Summary Description of the Business of Gaz Métro Documents Incorporated by Reference Effect of the Arrangement on Election of Directors of GMi Capital Structure Significant Acquisitions Distribution History Price Range and Trading Volume of Public LP Units Legal Proceedings Interests of Informed Persons in Material Transactions Auditors, Transfer Agent and Registrar Additional Information Information Concerning Valener Risk Factors Risk Factors Relating to Gaz Métro Risk Factors Relating to Valener Risk Factors Relating to the Arrangement Approval of Directors of GMi Consent of BMO Nesbitt Burns Inc Auditors Consent Appendix A Arrangement Resolution... A-1 Appendix B Interim Order... B-1 Appendix C Arrangement Agreement... C-1 Appendix D Fairness Opinion... D-1 Appendix E Information Concerning Valener... E-1 Appendix F Valener Mandate of the Board of Directors... F-1 - ii -

10 QUESTIONS AND ANSWERS SPECIAL MATTERS TO BE ACTED UPON AT THE MEETING Capitalized terms not otherwise defined herein are defined in the Glossary of Terms. Why am I receiving this information? The Circular provides a detailed description of the special business to be acted upon at the Meeting. Unitholders will be asked to consider a proposed plan of arrangement under Section 192 of the Canada Business Corporations Act (the Arrangement ) involving Gaz Métro Limited Partnership ( Gaz Métro ), Gaz Métro inc. ( GMi ), Gaz Métro Plus inc. ( Gaz Métro Plus ), a newly incorporated corporation named Valener Inc. (formerly known as Canada Inc. or Newco ) ( Valener ) and Public Unitholders aimed at reorganizing Gaz Métro s public ownership structure into a corporation. Further information on the Arrangement is included in the accompanying Circular. Please give this material your careful consideration. If you have any questions regarding the matters to be dealt with at the Meeting, the procedures for voting or completing the form of proxy or any information contained in the accompanying Circular, please contact Georgeson, Gaz Métro s proxy solicitation agent, toll free at How can I vote? Please ensure that you register your vote by following the instructions under the headings Appointment of Proxies by Registered Unitholders and Voting of Proxies for Non-Registered Unitholders beginning on page 21 of the accompanying Circular and on your voting instruction form (the Voting Form ) or form of proxy, as applicable. Voting is quick and easy and your vote is important. THE ARRANGEMENT What are the specifics of the Arrangement on which I am being asked to vote? More complete details can be found under the heading Special Business of the Meeting beginning on page 23 of the accompanying Circular, but the key elements of the Arrangement are as follows: 1. All Public LP Units will be exchanged automatically, on a one-for-one basis, for common shares of a new publicly listed corporation called Valener Inc. (formerly known as Canada Inc. or Newco ). As a result, Public Unitholders will, upon the completion of the Arrangement, become the sole shareholders of Valener and will retain, indirectly through Valener, the same pro rata financial interest in Gaz Métro as the direct financial interest they currently hold, with Valener holding approximately 29% of all issued and outstanding Units. GMi and Gaz Métro Plus will retain their Units as part of the Arrangement and will remain Unitholders. 2. Gaz Métro s distributions otherwise payable to Valener based on its approximately 29% economic interest in Gaz Métro will be increased by an aggregate amount of $20 million over a three-year period. 3. After the Arrangement, Valener will be entitled to nominate a number of GMi directors that is equivalent to its pro rata interest in Gaz Métro. This contractual right of Valener will be set out in the Amended Partnership Agreement and will remain in effect for as long as Valener beneficially owns, directly or indirectly, at least 7.5% of the outstanding Units. See The Arrangement - Material Agreements - Amended Partnership Agreement. 4. The Arrangement will also give each of Valener and GMi a pre-emptive right to maintain their respective ownership interests in Gaz Métro upon any issuance of new Units. See The Arrangement - Material Agreements - Amended Partnership Agreement. 5. The Partnership Agreement of Gaz Métro will also be amended, among other things, to provide for additional rights and protective measures for the benefit of Valener. See The Arrangement - Material Agreements - Amended Partnership Agreement. - iii -

11 6. In addition to its interest in Gaz Métro obtained through the Arrangement, Valener will have the ability to pursue for its own benefit, subject to a non-competition undertaking in favour of Gaz Métro, certain development and acquisition strategies, including pursuant to an option to be granted to Valener on the Effective Date to acquire 49% of Gaz Métro s 50% indirect interest (through Gaz Métro Éole) in the Seigneurie Project, subject to obtaining all required consents. For an overview of certain risks relating to the Arrangement, please refer to Risk Factors beginning on page 57 of the accompanying Circular. Is the business or strategy of Gaz Métro changing? No, the distribution of natural gas in Québec will remain Gaz Métro s primary mission and Gaz Métro will continue to provide other energy services, including natural gas and electricity distribution in Vermont, and to invest in energy projects that are engines of growth. Gaz Métro intends to continue its practice of distributing, in a given financial year, substantially all of its net income for such financial year (the Net Income ), and, in any case, not less than 85% of its Net Income excluding non-recurring items, subject to certain exceptions, all as more fully described in the accompanying Circular. See The Arrangement - Effect of the Arrangement - Effect of the Arrangement on Distributions. What are the reasons for and benefits of the Arrangement? The Arrangement is a response to the changes affecting Gaz Métro as a result of the Canadian federal government s new tax on publicly traded partnerships and income trusts and on their distributions that is scheduled to take effect in fiscal year 2011 (the SIFT Rules ). Following the enactment of the SIFT Rules, the Board of Directors created a committee composed of four independent directors (the Independent Committee ) to review strategic objectives, evaluate available options and assess implications for Public Unitholders. After analyzing a number of alternatives and negotiating with representatives of Noverco Inc. ( Noverco ), GMi s sole shareholder and Gaz Métro s indirect majority Unitholder, the Independent Committee determined, with the assistance and guidance of independent legal, tax and financial advisors, that the Arrangement, aimed at creating a compelling investment vehicle for Public Unitholders while maintaining an efficient capital structure for Gaz Métro and its controlling partner, GMi, represents the most attractive available alternative for all Unitholders to address the impact of the SIFT Rules. The Arrangement will allow Gaz Métro to effectively sustain its high payout of available cash flow while at the same time ensuring the ongoing financial flexibility and access to capital necessary to pursue attractive growth opportunities. Public Unitholders will benefit from Valener s enhanced financial profile, modernized governance profile, in line with best practices, and independent access to growth opportunities. For details, see Background to and Reasons for the Arrangement beginning on page 24 of the accompanying Circular. How can I determine whether or not the Arrangement is fair to me as a Unitholder? The Independent Committee, composed of independent directors based on the criteria set forth in MI , was formed to review, consider and negotiate the terms of the Arrangement with Noverco, GMi s sole shareholder. The Independent Committee engaged its legal counsel and tax advisor, Osler, Hoskin & Harcourt LLP, and financial advisor, BMO. BMO provided the Fairness Opinion on June 22, 2010 which was reaffirmed on July 28, 2010 that, as at such dates and subject to the assumptions, explanations and limitations contained therein, the Arrangement is fair, from a financial point of view, to the Public Unitholders. The Fairness Opinion is summarized under the heading Background to and Reasons for the Arrangement - Fairness Opinion on page 27 of the accompanying Circular. This summary of the Fairness Opinion is qualified in its entirety by reference to the full text of the Fairness Opinion, a copy of which can be found in Appendix D Fairness Opinion to the accompanying Circular. On June 22, 2010, the Independent Committee unanimously determined that the Arrangement is fair to Public Unitholders, and is in the best interests of Gaz Métro and Public Unitholders, and recommended its approval by the Board of Directors. The Board of Directors met immediately after the Independent Committee meeting on - iv -

12 June 22, 2010, and determined, through its independent and non-interested directors (with the other directors abstaining from voting) that the Arrangement is fair to Public Unitholders, and is in the best interests of Gaz Métro and all Unitholders, and recommended that Unitholders vote IN FAVOUR of the Arrangement Resolution. How will this affect distributions I currently receive? If the Arrangement is approved by the Unitholders at the Meeting, Valener will hold all of the issued and outstanding Public LP Units, representing approximately 29% of all issued and outstanding Units, and, going forward, will receive from Gaz Métro the aggregate distributions previously received by Public Unitholders as well as additional distributions of $20 million in aggregate over a three-year period starting on October 1, Gaz Métro s Units will be held by Valener, GMi and Gaz Métro Plus, and Gaz Métro will therefore not be subject to Canadian federal and provincial corporate income tax on its taxable income. Valener will be subject to Canadian federal and provincial corporate income tax on its taxable income. Valener will include in its income its share of Gaz Métro s income or loss for tax purposes based on distributions received from Gaz Métro for the taxation year of Gaz Métro ending in the taxation year of Valener. Valener expects to be taxable at an effective tax rate of approximately 28% for its 2011 taxation year. The general tax considerations for Canadian holders of Valener Shares are discussed under the heading Certain Canadian Federal Income Tax Considerations beginning on page 46 of the accompanying Circular. Gaz Métro s distribution practice delivers long-term, strong and stable distributions to its Unitholders. Upon completion of the Arrangement, Gaz Métro intends to continue its practice of distributing substantially all of its Net Income, and, in any case, not less than 85% of its Net Income excluding non-recurring items, subject to certain exceptions. In addition, if GMi as general partner determines that it is appropriate, for any other reason (including as may be required for investments in the business, financing requirements or capital structure realignment of Gaz Métro), to distribute less than 85% of the Net Income excluding non-recurring items, it may cause Gaz Métro to do so, provided that the resolution of the Board of Directors authorizing such lesser distribution has been adopted with the approval of at least 90% of the votes cast by directors. See The Arrangement - Material Agreements - Amended Partnership Agreement on page 32 of the accompanying Circular. On June 22, 2010, the date of the public announcement of the Arrangement, Gaz Métro declared, through its general partner GMi, a distribution of $0.31 per Unit payable on September 30, 2010 to Unitholders of record at the close of business on September 15, Provided the Arrangement is approved at the Meeting and the Effective Date of the Arrangement occurs on September 30, 2010, as currently scheduled, this will be the last distribution paid to Public Unitholders by Gaz Métro. It is expected that Valener will adopt a dividend policy of paying out a high proportion of its available cash in the form of quarterly dividends to its shareholders. It is expected that following completion of the Arrangement, Valener will initially pay an annualized dividend of $1.00 per share. Dividends are expected to be paid on a quarterly basis. The first such quarterly dividend is expected to be declared to the holders of record of Valener Shares on December 30, 2010 and to be paid on January 17, 2011, and subsequent dividends for the fiscal year 2011 are expected to be paid in April and July For details, see The Arrangement - Effect of the Arrangement - Effect of the Arrangement on Distributions on p. 30 of the accompanying Circular. Valener s dividends will constitute taxable dividends paid by a taxable Canadian corporation for Canadian income tax purposes. Valener will designate, to the extent permitted by law, such taxable dividends as eligible dividends for purposes of the enhanced gross-up and dividend tax credit rules in the Tax Act. What Unitholder approval is required for the Arrangement? The Arrangement is required to be approved by (i) at least 66⅔% of the votes cast by all Unitholders present in person or represented by proxy at the Meeting, (ii) at least 66⅔% of the votes cast by all Unitholders other than GMi and Affiliated Entities present in person or represented by proxy at the Meeting, and (iii) a simple majority of the votes cast by all Unitholders present in person or represented by proxy at the Meeting, excluding Units beneficially owned or over which control or direction is exercised by interested parties and certain related parties of such interested parties whose votes are required to be excluded in accordance with applicable securities regulation. - v -

13 The voting thresholds described in (ii) and (iii) above are consistent with the Partnership Agreement and MI , respectively, to ensure that Public Unitholders have the opportunity to approve or disapprove the Arrangement independent of GMi and Affiliated Entities, on the one hand, and of interested parties and certain related parties of such interested parties (as provided in Section 8.1 of MI ), on the other hand. See The Arrangement - Approvals - Unitholder Approval on page 39 of the accompanying Circular. No dissent rights will be granted to Public Unitholders in connection with the Arrangement as such rights are not required by the Partnership Agreement or the Interim Order. In addition, representations were made to the Court regarding the basis for the Arrangement not providing for dissent rights including the fact that the underlying beneficial entitlements of the Public Unitholders will not be affected by the Arrangement. See The Arrangement - Approvals - Dissent Rights on page 40 of the accompanying Circular. How may Eligible Unitholders who wish to make an election to obtain a tax deferral do so? An Eligible Unitholder who disposes of Public LP Units in consideration for Valener Shares may, depending upon the circumstances, obtain a full or partial tax deferral in respect of the disposition of Public LP Units by entering into a joint tax election with Valener under Section 85 of the Tax Act (and the corresponding provisions of any applicable provincial or territorial tax legislation) specifying therein an elected amount in accordance with certain limitations provided for in the Tax Act (and in any applicable provincial or territorial tax legislation). An Eligible Unitholder interested in making an election should indicate that intention in the Election Form in the space provided therein and return such Election Form (i) in the case of a Registered Unitholder, to CIBC Mellon along with its form of proxy or (ii) in the case of a Non-Registered Unitholder, to Gaz Métro, by no later than 5:00 p.m. (Montréal time) on Friday, September 10, 2010 or on the last business day preceding any adjournment of the Meeting, Gaz Métro will provide access, on or about December 1, 2010, to a tax instruction letter, together with the relevant tax election forms (including the Québec tax election forms) to the Eligible Unitholder by way of a website accessed through Gaz Métro s main website ( This website will allow the Eligible Unitholder to provide the information required for the tax election forms to be completed. For Eligible Unitholders who do not wish to avail themselves of this website, a paper copy of the tax instruction letter and tax election forms to be completed will be forwarded to Eligible Unitholders who make the request on the Election Form. Eligible Unitholders should consult their own tax advisors to determine whether any separate provincial or territorial election forms are required and to obtain and complete such forms, if necessary. A Holder who does not make a joint tax election with Valener will generally realize a capital gain (or capital loss) in an amount equal to the amount by which the aggregate fair market value of Valener Shares received by the Public Unitholder under the Arrangement exceeds (or is less than) the adjusted cost base to the holder of the Public LP Units disposed of and any reasonable costs of disposition. Public Unitholders should review the more detailed information under the headings Certain Canadian Federal Income Tax Considerations on page 46 of the accompanying Circular, including the procedure for making a joint tax election with Valener, and consult with their own tax advisors regarding their particular circumstances. Any Eligible Unitholder who does not ensure that Valener has received all the relevant information requested in the tax instruction letter on or before January 10, 2011 will not be entitled to benefit from the tax deferral resulting from the Section 85 Election (or the corresponding election under any applicable provincial or territorial tax legislation). Accordingly, all Eligible Unitholders who wish to enter into an election with Valener should give their immediate attention to this matter. The instructions are set out in the Election Form and in the tax instruction letter to be made available by Gaz Métro on or about December 1, Eligible Unitholders are referred to Information Circular 76-19R3 and Interpretation Bulletin IT-291R3 issued by the CRA for further information respecting the election. An Eligible Unitholder who does not make a valid Section 85 Election (or the corresponding election under any applicable provincial or territorial tax legislation) may realize a taxable capital gain. The comments with respect to such elections are provided for general assistance only. The law in this area is complex and contains numerous technical requirements. Eligible Unitholders wishing to make the election should consult their own tax advisors. - vi -

14 Who can vote? Unitholders of record on July 23, 2010 are entitled to receive notice of and vote at the Meeting. Unitholders are entitled to one vote per Unit on any matters that may come before the Meeting. As at July 27, 2010, there were 120,452,214 Units issued and outstanding, including the 34,933,663 Public LP Units. How do I vote? How do I vote if I am a Registered Unitholder? You are a Registered Unitholder if your name appears on your Unit certificate. If you are not sure whether you are a Registered Unitholder, please contact CIBC Mellon at Voting by proxy Accompanying the Circular is a form of proxy for Registered Unitholders. Complete your form of proxy and return it in the envelope we have provided or by facsimile to or , for receipt before 5:00 p.m. (Montréal time) on September 10, 2010 or prior to 5:00 p.m. (Montréal time) on the second last business day preceding any adjournment or postponement of the Meeting. You can appoint a person other than the directors or officers of GMi named in the form of proxy as your proxyholder. This person does not have to be a Unitholder. Fill in the name of the person you are appointing in the blank space provided on the form of proxy. Complete your voting instructions, date and sign the form, and return it to CIBC Mellon as indicated above. Make sure that the person you appoint is aware that he or she has been appointed and attends the Meeting. Voting in person at the Meeting You do not need to complete or return your form of proxy. You will register for voting at the Meeting at the transfer agent s registration desk. How do I vote if I am a Non-Registered Unitholder? You are a Non-Registered Unitholder if your bank, trust company, securities broker or other financial institution (your nominee) holds your Units for you. If you are not sure whether you are a Non-Registered Unitholder, please contact CIBC Mellon at Voting by proxy Your nominee is required to ask for your voting instructions before the Meeting. Please contact your nominee if you did not receive a request for voting instructions in this package. In most cases, Non-Registered Unitholders will receive a Voting Form which allows them to provide voting instructions on the Internet or by mail. You will need your control number found on your Voting Form, if you choose to vote on the Internet. Alternatively, Non-Registered Unitholders may complete the Voting Form and return it by mail, as directed in the Voting Form. Voting in person at the Meeting You can vote your Units in person at the meeting only if you have instructed your nominee to appoint you or another person as proxyholder. To do this, write your name or the name of your appointee, as applicable, in the space provided on the Voting Form and otherwise follow the instructions of your nominee. - vii -

15 If I change my mind, how can I revoke my proxy? In addition to revocation in any other manner permitted by law, a Unitholder giving a proxy and submitting it by mail may revoke it by an instrument in writing executed by the Unitholder or the Unitholder s attorney authorized in writing and deposited either at the Montréal office of CIBC Mellon, 2001 University Street, Suite 1600, Montréal (Québec), H3A 2A6, or at the head office of Gaz Métro, 1717 du Havre Street, Montréal (Québec), H2K 2Z3 (Attention: Corporate Secretary), at any time up to and including the last business day preceding the date of the Meeting, or any adjournment thereof, at which the proxy is to be used, or with the chair of the Meeting prior to the commencement of such Meeting on the day of such Meeting or any adjournment thereof. If the voting instructions were conveyed over the Internet, conveying new voting instructions by Internet or by mail within the cut-off time will revoke the prior instructions. If you need assistance completing your form of proxy or Voting Form, please contact Georgeson, Gaz Métro s proxy solicitation agent, toll free at viii -

16 MANAGEMENT INFORMATION CIRCULAR Introduction This Circular is furnished in connection with the solicitation of proxies by GMi, in its capacity as general partner of Gaz Métro, for use at the Meeting to be held at Le Windsor, Salon Windsor, First Floor, 1170 Peel Street, Montréal, Québec, on Tuesday, September 14, 2010 at 2:00 p.m. (Montréal time) and at any adjournment thereof, for the purposes set forth in the accompanying Notice of Meeting and in this Circular. No Person has been authorized to give any information or make any representation in connection with the Arrangement or any other matters to be considered at the Meeting other than those contained in this Circular and, if given or made, any such information or representation must not be relied upon as having been authorized. All summaries of, and references to, the Arrangement in this Circular are qualified in their entirety by reference to the complete text of the Plan of Arrangement, a copy of which is attached as Exhibit A to the Arrangement Agreement, which agreement is attached as Appendix C to this Circular. You are urged to carefully read the full text of the Plan of Arrangement. All capitalized terms used in this Circular but not otherwise defined herein have the meanings set forth under Glossary of Terms of this Circular or elsewhere in this Circular. Information contained in this Circular is given as of July 27, 2010 unless otherwise specifically stated. Forward-Looking Statements In the interest of providing Unitholders and potential investors with information about Gaz Métro, its Subsidiaries and Valener, including Management s assessment of their future plans and operations, certain information provided in this Circular and otherwise incorporated by reference into this Circular constitutes forward-looking statements or information pursuant to applicable securities laws (collectively, forward-looking statements ). Such forward-looking statements reflect the intentions, plans, expectations and opinions of the management of GMi (the Management ), Gaz Métro s general partner, and are based on information currently available to Management and on assumptions with respect to future events. The words plans, expects, estimates, forecasts, intends, anticipates or believes, or similar expressions, including the negative of these terms and future or conditional forms, often identify forward-looking statements. The forward-looking statements in this Circular include statements on expectations regarding the Arrangement, the satisfaction of conditions in respect of the Arrangement, the receipt and timing of the Final Order and regulatory approvals, the perceived benefits of the Arrangement, expected future distributions to Unitholders and taxability thereof, expected dividends to be paid by Valener following the completion of the Arrangement, the potential acquisition by Valener of a portion of Gaz Métro s indirect interest in the Seigneurie Project, and the financial forecasts for Valener, a corporation which will hold the public unitholders interest in Gaz Métro. Forwardlooking statements involve known and unknown risks and uncertainties and other factors outside Management s control. A number of factors could cause actual results of Gaz Métro and Valener to differ materially from current expectations as described in the forward-looking statements, including, but not limited to, terms of decisions rendered by governmental bodies, general economic conditions, the competitiveness of natural gas in relation to other energy sources, the reliability of natural gas supplies, the integrity of the natural gas distribution system, exchange rates fluctuations, the evolution of development projects, the impact of the SIFT Rules on Gaz Métro and other factors described in the Gaz Métro AIF under the item Risk Factors, and in the Gaz Métro MD&A. In respect of Valener and the Arrangement specifically, these also include risks associated with the uncertainty of future dividend payments, potential changes to Valener s risk profile over time should Valener pursue growth - 1 -

17 opportunities in activities different from those currently pursued by Gaz Métro and the impact of such changes on Valener s results and on the availability of financing for Valener going forward, potential dilution resulting from equity issuances by Gaz Métro that are not fully subscribed by Valener, the inability of Valener to fund the development of the Seigneurie Project on a timely basis and on satisfactory terms or to complete the Seigneurie Project within the contemplated timeframe and parameters, the inability to meet listing requirements, the inability to obtain required approvals, including Unitholder, Court and VPSB approval of the Arrangement, failure to realize the anticipated benefits of the Arrangement and other factors described under Risk Factors. The impact of any one risk, uncertainty or factor on a particular forward-looking statement is not determinable with certainty as these are interdependent and Gaz Métro and Valener s future course of action depends on Management s assessment of all information available at the relevant time. Although the forward-looking statements contained herein are based upon what Management believes to be reasonable assumptions, Management cannot assure investors that actual results will be consistent with these forward-looking statements. Assumptions underlying the forward-looking statements contained in this Circular include assumptions to the effect that all required approvals and consents to implement the Arrangement will be obtained in due time, that no unforeseen changes in the legislative and regulatory framework of energy markets in Québec and in the State of Vermont will occur, that no significant event occurring outside the ordinary course of business will occur, that Gaz Métro will be able to continue its practice of distributing substantially all of its Net Income (but excluding non-recurring items), that the authorized rate of return for Gaz Métro s natural gas distribution activity in Québec will be maintained or will improve, that the Seigneurie Option will be exercised, that the Seigneurie Project will be completed within the contemplated timeframe and parameters, and other assumptions described in the Gaz Métro MD&A. These forward-looking statements do not reflect any potential impact on the financial situation of Gaz Métro or Valener that may result from the adoption of IFRS starting in their respective 2012 fiscal year. These forward-looking statements are made as of the date hereof, and Management assumes no obligation to update or revise them to reflect new events or circumstances, except as required pursuant to applicable securities laws. Readers are cautioned not to place undue reliance on these forward-looking statements. Information For United States Public Unitholders The Valener Shares to be issued to Public Unitholders in exchange for their Public LP Units under the Arrangement have not been and will not be registered under the 1933 Act, and such securities are being issued to Public Unitholders in reliance on the exemption from the registration requirements of the 1933 Act set forth in Section 3(a)(10) thereof on the basis of the approval of the Court which will consider, among other things, the fairness of the Arrangement to Public Unitholders. The solicitation of proxies for the Meeting is not subject to the proxy requirements of Section 14(a) of the 1934 Act. Accordingly, the solicitations and the Arrangement contemplated in this Circular are made in the United States for securities of a Canadian issuer in accordance with Canadian corporate and securities laws, and this Circular has been prepared solely in accordance with disclosure requirements applicable in Canada. Unitholders in the United States should be aware that such requirements are different from those of the United States applicable to registration statements under the 1933 Act and proxy statements under the 1934 Act. Specifically, information concerning the operations of Gaz Métro or Valener contained or incorporated by reference herein has been prepared in accordance with Canadian disclosure standards, which are not comparable in all respects to United States disclosure standards. The unaudited and audited financial statements of Gaz Métro included, and incorporated by reference, in this Circular have been presented in Canadian dollars, were prepared in accordance with Canadian GAAP and are subject to Canadian auditing and auditor independence standards, and thus are not comparable in all respects to financial statements or financial information of United States companies. The enforcement by investors of civil liabilities under United States securities laws may be affected adversely by the fact that Gaz Métro, GMi and Valener are or will be organized under the laws of Canada, that some or all of their respective officers and directors are residents of countries other than the United States, that certain of the experts named in this Circular are residents of countries other than the United States, and that all or a substantial portion of the assets of Gaz Métro are located outside the United States. The 1933 Act imposes restrictions on the resale of securities received pursuant to the Arrangement by Persons who are affiliates of Valener after the Arrangement. See The Arrangement Securities Law Matters United States in this Circular

18 THE VALENER SHARES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR SECURITIES REGULATORY AUTHORITIES OF ANY STATE OF THE UNITED STATES, NOR HAS THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR SECURITIES REGULATORY AUTHORITIES OF ANY STATE OF THE UNITED STATES PASSED ON THE ADEQUACY OR ACCURACY OF THIS INFORMATION CIRCULAR. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE

19 GLOSSARY OF TERMS The following is a glossary of certain terms used in this Circular, including the summary hereof Act means the United States Securities Act of 1933, as amended; 1934 Act means the United States Securities Exchange Act of 1934, as amended; Administration Agreement means the administration and management support agreement to be entered into between Gaz Métro and Valener as of the Effective Date pursuant to which Gaz Métro, either directly or through GMi, its general partner, will provide to Valener certain administration and management support services relating solely to Valener s interest in Gaz Métro and related public company matters and, in certain circumstances, may provide certain additional services, substantially in the form of the draft agreed upon between the relevant parties as of the date of execution of the Arrangement Agreement; Advance Income Tax Ruling has the meaning ascribed thereto under the heading Certain Canadian Federal Income Tax Considerations ; Affiliate has the meaning ascribed thereto in the Securities Act (Québec), unless otherwise indicated; Affiliated Entity means an Affiliate of GMi and, for the purposes of the voting requirement, Affiliate describes the relationship between two Persons: (i) if both are companies, one is the Subsidiary of the other, or both are Subsidiaries of the same company or are controlled by the same Person, as provided in the Securities Act (Québec), (ii) one is a senior executive as defined in the Securities Act (Québec) of the other or of an Affiliate of the other, or (iii) one does not deal at arm s length with the other; Allowable Capital Loss has the meaning ascribed thereto in Section 38 of the Tax Act; Amended Partnership Agreement means the Partnership Agreement to be amended and restated in connection with the Arrangement as of the Effective Date, substantially in the form of the draft agreed upon between the relevant parties as of the date of execution of the Arrangement Agreement; Arrangement means the proposed plan of arrangement under the provisions of Section 192 of the CBCA, on the terms and subject to the conditions set forth in the Plan of Arrangement as supplemented, modified or amended; Arrangement Agreement means the arrangement agreement dated as of June 22, 2010, among Valener (formerly known as Canada Inc. or Newco ), Gaz Métro, GMi, Noverco and Gaz Métro Plus, with respect to the Arrangement, a copy of which agreement is attached as Appendix C to this Circular, including any amendments thereto; Arrangement Resolution means the resolution in respect of the Arrangement and related matters, in substantially the form attached as Exhibit A to this Circular, to be approved by (i) at least 66⅔% of the votes cast by all Unitholders present in person or represented by proxy at the Meeting, (ii) at least 66⅔% of the votes cast by all Unitholders other than GMi and Affiliated Entities present in person or represented by proxy at the Meeting, and (iii) a simple majority of the votes cast by all Unitholders present in person or represented by proxy at the Meeting, excluding Units beneficially owned or over which control or direction is exercised by interested parties and certain related parties to such interested parties (as provided by Section 8.1 of MI ) for purposes of the Arrangement; Articles of Arrangement means the articles of arrangement of Valener in respect of the Arrangement required under Subsection 192(6) of the CBCA to be filed with the Director after the Final Order has been granted in order for the Arrangement to become effective; - 4 -

20 Board of Directors means the board of directors of GMi, acting in its capacity as general partner of Gaz Métro; BMO means BMO Nesbitt Burns Inc.; business day means a day, other than a Saturday, Sunday or statutory holiday, when banks are generally open for business in the City of Montréal, in the Province of Québec, for the transaction of banking business; CBCA means the Canada Business Corporations Act, R.S.C. 1985, c. C-44, as now in effect and as it may be amended from time to time prior to the Effective Date; Certificate means the certificate of arrangement to be issued by the Director pursuant to Subsection 192(7) of the CBCA giving effect to the Arrangement; CIBC Mellon means CIBC Mellon Trust Company; Circular means this management information circular of Gaz Métro dated July 28, 2010, together with all appendices hereto and documents incorporated by reference, forwarded as part of the proxy solicitation materials to Unitholders in connection with the Meeting; Commitment Letter has the meaning ascribed thereto under the heading Appendix E - Information Concerning Valener Credit Facility ; Conversion Rules has the meaning ascribed to it under Summary Information - Background to and Reasons for the Arrangement - Tax Fairness Plan ; Court means the Superior Court of Québec; CRA means the Canada Revenue Agency; Credit Agreement has the meaning ascribed thereto under the heading Appendix E - Information Concerning Valener Credit Facility ; Depositary means CIBC Mellon; Direct Registration Advice has the meaning ascribed to it under The Arrangement - Procedure for Exchange of Public LP Units ; Director means the director appointed under Section 260 of the CBCA; DRIP means the dividend reinvestment plan of Valener; Effective Date means the date the Arrangement becomes effective under the CBCA, as shown on the Certificate, expected to be September 30, 2010; Effective Time means 11:59 p.m. (Montréal time) on the Effective Date; Elected Amount has the meaning ascribed thereto under the heading Certain Canadian Federal Income Tax Considerations - Unit-for-Share Exchange - Tax-Deferred Rollover Under the Tax Act ; Election Form means the form for use by Eligible Unitholders to indicate their intention in making the Section 85 election (and where applicable, the Québec election) in connection with the Arrangement; Eligible Institution means a Canadian schedule I chartered bank, a member of the Securities Transfer Agent Medallion Program (STAMP), a member of the Stock Exchange Medallion Program (SEMP) or a member of the New York Stock Exchange Inc. Medallion Signature Program (MSP); members of these programs are usually members of a recognized stock exchange in Canada or the United States, members of the Investment Industry - 5 -

21 Regulatory Organization of Canada, members of the Financial Industry Regulatory Authority or banks and trust companies in the United States; Eligible Unitholder means a beneficial owner of Public LP Units that is a resident of Canada for purposes of the Tax Act (other than a Person who is exempt from tax under Part I of the Tax Act or who holds its Public LP Units in an Exempt Plan) or a partnership any member of which is a resident of Canada for purposes of the Tax Act and is not exempt from tax under Part I of the Tax Act; Exempt Plans has the meaning ascribed thereto under the heading Certain Canadian Federal Income Tax Considerations - Eligibility for Investment ; Fairness Opinion means the opinion of BMO dated June 22, 2010 and reaffirmed on July 28, 2010, delivered to the Independent Committee and the Board of Directors in connection with the Arrangement, a copy of which is attached as Appendix D to this Circular; Final Order means the final order of the Court approving the Plan of Arrangement as such order may be amended or varied at any time prior to the Effective Time or, if appealed, then unless such appeal is withdrawn or denied, as affirmed or as amended on appeal; First Additional Services Agreement relating to the Debt of Valener means the services agreement with respect to the management of certain indebtedness of Valener to be entered into between Gaz Métro and Valener as of the Effective Date, substantially in the form of the draft to be agreed upon between the parties prior to the Effective Date; GAAP means generally accepted accounting principles in Canada, as in effect from time to time; Gaz Métro means Gaz Métro Limited Partnership, a limited partnership established under the laws of the Province of Québec; Gaz Métro AIF means the Annual Information Form of Gaz Métro dated December 9, 2009 in respect of Gaz Métro s fiscal year ended September 30, 2009, incorporated by reference in this Circular; Gaz Métro Éole means Gaz Métro Éole inc., a company incorporated pursuant to the Companies Act (Québec) and a wholly-owned Subsidiary of Gaz Métro; Gaz Métro Financial Statements means the audited consolidated financial statements of Gaz Métro for the years ended September 30, 2009 and 2008, together with notes thereto and the auditors report thereon, incorporated by reference in this Circular; Gaz Métro MD&A means the Management s Discussion and Analysis of the annual audited consolidated financial statements of Gaz Métro for the years ended September 30, 2009 and 2008, incorporated by reference in this Circular; Gaz Métro Plus means Gaz Métro Plus inc., a company incorporated pursuant to the Companies Act (Québec) and a wholly-owned Subsidiary of GMi; Georgeson means Georgeson Shareholder Communications Canada Inc., the proxy solicitation agent retained by Gaz Métro in connection with the Arrangement; GMi means Gaz Métro inc., a company incorporated pursuant to the Companies Act (Québec) acting as general partner of Gaz Métro, with exclusive authority to manage the business and affairs of Gaz Métro; GMi AIF means the Annual Information Form of GMi dated December 9, 2009 in respect of GMi s fiscal year ended September 30, 2009, incorporated by reference in this Circular; - 6 -

22 GMi Financial Statements means the audited consolidated financial statements of GMi for the years ended September 30, 2009 and 2008, together with notes thereto and the auditors report thereon, incorporated by reference in this Circular; GMi MD&A means the Management s Discussion and Analysis of the annual audited consolidated financial statements of GMi for the years ended September 30, 2009 and 2008, incorporated by reference in this Circular; Holder or Holders has the meaning ascribed thereto under the heading Certain Canadian Federal Income Tax Considerations ; IFRS means International Financial Reporting Standards, as in effect from time to time; Independent Committee means the independent committee of the Board of Directors; interested parties has the meaning ascribed to it in MI and, in the context of the Arrangement, refers to GMi, Noverco and Valener; Interim Order means the interim order of the Court concerning the Arrangement containing declarations and directions with respect to the Arrangement and the holding of the Meeting, as such order may be amended by the Court from time to time; Letter of Transmittal means the letter of transmittal for use by Registered Unitholders in connection with the Arrangement; limited partner shall, for the purposes of this Circular, have the meaning ascribed to special partner in the Civil Code of Québec; Management means the management of GMi, in its capacity as general partner of Gaz Métro; Material Agreements means, collectively, the Amended Partnership Agreement, the Non-Competition Agreement, the Administration Agreement, the First Additional Services Agreement relating to the Debt of Valener and the Seigneurie Option Agreement; Meeting means the special meeting of Unitholders to be held on or about September 14, 2010 to consider the Arrangement and related matters, and any adjournment thereof; MI means Multilateral Instrument Protection of Minority Security Holders in Special Transactions; Minister has the meaning ascribed to it under Summary Information - Tax Fairness Plan ; Net Income means the net income of Gaz Métro for a financial year of Gaz Métro, as per its audited annual consolidated financial statements prepared in accordance with GAAP; Non-Competition Agreement means the non-competition agreement to be entered into as of the Effective Date between Gaz Métro and Valener, substantially in the form of the draft agreed upon between the relevant parties as of the date of execution of the Arrangement Agreement; Non-Registered Unitholder has the meaning ascribed thereto under the heading General Proxy Matters - Voting of Proxies for Non-Registered Unitholders ; Notice of Meeting means the Notice of Special Meeting of Unitholders which accompanies this Circular; Noverco means Noverco Inc., a company incorporated pursuant to the Companies Act (Québec); Partnership Agreement means the amended and restated limited partnership agreement of Gaz Métro executed on January 14, 1993, as amended on November 5, 1996 and March 18, 2009; - 7 -

23 Person includes an individual, limited or general partnership, limited liability company, limited liability partnership, trust, joint venture, association, body corporate, trustee, executor, administrator, legal representative, government (including any governmental entity) or any other entity, whether or not having legal status; Plan of Arrangement means the plan of arrangement pursuant to Section 192 of the CBCA attached as Exhibit A to the Arrangement Agreement, which agreement is attached as Appendix C to this Circular, as amended or supplemented from time to time in accordance with the terms thereof or at the direction of the Court in the Final Order, with the consent of the parties to the Arrangement Agreement, acting reasonably; Proposed Amendments has the meaning ascribed thereto under the heading Certain Canadian Federal Income Tax Considerations ; Public LP Units means the Units of Gaz Métro other than Units held by GMi and Gaz Métro Plus; Public Unitholder means a holder of Public LP Units; Québec SIFT Rules has the meaning ascribed to it under Summary Information - The Arrangement - Tax Fairness Plan ; Record Date means the close of business on July 23, 2010; Registered Unitholder means a registered holder of Units immediately prior to the Effective Date or any Person who surrenders to the Depositary certificates representing Units duly endorsed for transfer to such Person; Regulations has the meaning ascribed to it under Certain Canadian Federal Income Tax Considerations ; related parties has the meaning ascribed to it in MI ; Rule 144 has the meaning ascribed to it under The Arrangement Securities Law Matters United States ; Second Additional Services Agreement with respect to the Seigneurie Project means the services agreement to be executed by Gaz Métro and Valener as of the Effective Date and which will come into force upon the exercise by Valener of the Seigneurie Option, substantially in the form of the draft to be agreed upon between the parties prior to the Effective Date; Section 85 Election has the meaning ascribed thereto under the heading Certain Canadian Federal Income Tax Considerations ; Seigneurie Option means the option in favour of Valener for the acquisition of 49% of Gaz Métro s 50% indirect interest in the Seigneurie Project (through Gaz Métro Éole) under the terms and conditions set forth in the Seigneurie Option Agreement; Seigneurie Option Agreement means the agreement evidencing the Seigneurie Option to be entered into as of the Effective Date between Gaz Métro, GMi, Gaz Métro Éole, Noverco and Valener, substantially in the form of the draft agreed upon between the relevant parties as of the date of execution of the Arrangement Agreement; Seigneurie Project means the development, construction and operation of the wind power projects currently jointly developed and to be jointly developed, directly or indirectly, by Gaz Métro Éole and Boralex Inc. consisting of wind farms to be located on the private property of the Seigneurie de Beaupré owned by the Séminaire de Québec; SIFT means a specified investment flow-through trust or partnership, as defined in the Tax Act; SIFT Rules means the legislative provisions governing the taxation of SIFTs and their unitholders, which were announced by the Minister on October 31, 2006 and which were enacted on June 22, 2007, pursuant to Bill C-52, and all subsequent amendments thereto; - 8 -

24 Subsidiary means, with respect to any Person, a subsidiary (as that term is defined in the CBCA (for such purposes, if such Person is not a corporation, as if such Person were a corporation)) of such Person and includes any limited partnership, joint venture, trust, limited liability company, unlimited liability company or other entity, whether or not having legal status, that would constitute a subsidiary (as described above) if such entity were a corporation; Tax Act means the Income Tax Act, R.S.C. 1985, c. 1. (5 th Supp), and the regulations promulgated thereunder, as amended; Taxable Capital Gain has the meaning ascribed thereto in Section 38 of the Tax Act; TSX means the Toronto Stock Exchange; Unitholders means holders from time to time of Units; Unit means an issued and outstanding unit of Gaz Métro; Valener means Valener Inc. (formerly known as Canada Inc. or Newco ), a corporation incorporated pursuant to the CBCA and a wholly-owned Subsidiary of GMi prior to the Effective Time and to be wholly-owned by the Public Unitholders immediately after the Effective Time; Valener Credit Facility has the meaning ascribed thereto under the heading Appendix E - Information Concerning Valener Credit Facility ; Valener Shareholder means a holder of Valener Shares immediately after the Effective Time and going forward; Valener Shares means the common shares in the share capital of Valener, which common shares will be issued to Public Unitholders in consideration for the transfer of their Public LP Units held as of the Effective Date to Valener on a one-for-one basis pursuant to the Arrangement; Voting Form has the meaning ascribed thereto under the heading General Proxy Matters - Giving Voting Instructions ; and VPSB means the Vermont Public Service Board

25 SUMMARY INFORMATION The following is a summary of certain information contained elsewhere in this Circular, including the appendices hereto, and is qualified in its entirety by reference to the more detailed information contained or referred to elsewhere in this Circular, in the documents incorporated by reference herein and in the appendices hereto. Capitalized terms not otherwise defined herein are defined in the Glossary of Terms. In this summary, all dollar amounts are stated in Canadian dollars. Information contained in this Circular is given as of July 27, 2010 unless otherwise specifically stated. The Meeting The Meeting will be held at Le Windsor, Salon Windsor, First Floor, 1170 Peel Street, Montréal, Québec, on Tuesday, September 14, 2010, commencing at 2:00 p.m. (Montréal time) for the purposes set forth in the accompanying Notice of Meeting. The business of the Meeting will be: (i) to consider and, if thought advisable, vote on the Arrangement Resolution, and (ii) to transact such other business as may properly come before the Meeting or any adjournment thereof. As of the date of this Circular, the directors of GMi, acting in its capacity as general partner of Gaz Métro, are not aware of any changes to these items, and do not expect any other items to be brought forward at the Meeting. If there are changes or new items, your proxyholder can vote your Units on these items as he or she sees fit. The Arrangement General If approved, the Arrangement will result in the reorganization of Gaz Métro s public ownership structure into a new dividend-paying publicly listed corporation to be named Valener Inc. and Public Unitholders will become the sole shareholders of Valener. Immediately after the completion of the Arrangement, Public Unitholders will retain their current proportionate economic interest in Gaz Métro indirectly through Valener, and will benefit, through Valener, from an increase in Gaz Métro s distributions otherwise payable to Valener based on its approximately 29% economic interest in Gaz Métro by an aggregate amount of $20 million over a three-year period. GMi and Gaz Métro Plus will, as part of the Arrangement, retain their Units and will remain Unitholders. Directors and Management of Valener Following the completion of the Arrangement, the board of directors of Valener will initially be comprised of three independent directors, namely Nicolle Forget, Pierre Monahan and Réal Sureau, who are currently members of the Independent Committee. It is expected that a fourth director will be appointed by the board of directors of Valener, as permitted by the articles of Valener and the provisions of the CBCA, before or shortly after the Effective Date. Initially, Valener will not have its own management team. Strategic decisions in Valener s current or potential business operations, affairs or investments (such as the approval of any growth opportunity or the exercise by Valener of its pre-emptive right in the event of a new issuance of units by Gaz Métro) will be approved by the board of directors of Valener while the day-to-day management of Valener s interest in Gaz Métro will be assumed by Gaz Métro pursuant to the Administration Agreement, the First Additional Services Agreement relating to the Debt of Valener and, if the Seigneurie Option is exercised, the Second Additional Services Agreement with respect to the Seigneurie Project. Under such agreements, Valener will receive administrative and management support services from Gaz Métro, either directly or through GMi, its general partner, relating solely to Valener s interest in Gaz Métro and related public company matters, its financing needs, its indirect participation in the Seigneurie Project, and, in certain circumstances, certain additional services. Should the business of Valener no longer be fully managed by Gaz Métro as specifically provided under the Administration Agreement, Valener will appoint its own management team and Gaz Métro will only provide a limited number of services for the management and general administration of the business, operations and affairs of Valener which are solely related to Valener s interest in Gaz Métro and related public company matters. Valener will also appoint its own management team should Gaz Métro perform additional services under the Administration Agreement in respect of any business opportunities that are not in the same line of business as carried on by Gaz Métro at such time. See The Arrangement - Material

26 Agreements - Administration and Additional Services Agreements and Appendix E Information Concerning Valener Directors and Management of Valener. Post Arrangement Structure Following the Effective Date of the Arrangement, the current Public Unitholders will be the sole shareholders of Valener, and Valener will hold all of the issued and outstanding Public LP Units, representing approximately 29% of all issued and outstanding Units. The following diagram illustrates the organizational structure of Gaz Métro immediately following the completion of the Arrangement. *Trencap L.P. Enbridge Inc. GDF SUEZ 50.38% 32.06% 17.56% Public Noverco 34,933,663 Common Shares 100% 100% Valener GMi 100% 70.99% 85,510,000 Units 29% 34,933,663 Units Gaz Métro Plus 0.01% 8,551 Units Gaz Métro *The limited partners of Trencap L.P. are Caisse de dépôt et placement du Québec (51.11%), Fonds de solidarité des travailleurs du Québec (F.T.Q.) (16.66%), SNC-Lavalin Inc. (11.11%), British Columbia Investment Management Corporation (11.11%), Régime des rentes du Mouvement Desjardins (8.33%), and Régime de retraite de l Université du Québec (1.67%). Upon the completion of the Arrangement, 34,933,663 Valener Shares will be issued and outstanding. In connection with the Arrangement, the Partnership Agreement will be amended as provided in the Plan of Arrangement. See The Arrangement Effect of the Arrangement and Appendix E - Information Concerning Valener. Effect of the Arrangement on Public Unitholders The Public LP Units will be transferred to Valener in consideration for Valener Shares on the basis of one Valener Share for each Public LP Unit so transferred. See The Arrangement - Effect of the Arrangement. Effect of the Arrangement on Distributions The quarterly cash distribution of $0.31 per Unit declared on June 22, 2010 to Unitholders of record on September 15, 2010 will be paid, as announced, on September 30, Provided the Arrangement is approved at the Meeting and the Effective Date of the Arrangement occurs on September 30, 2010, as currently scheduled, this will be the last distribution paid to Public Unitholders by Gaz Métro. In the event that the Arrangement is not approved at the Meeting, the Board of Directors will meet to determine the distributions which would be declared

27 payable on the Units after September 30, It is currently estimated that a distribution per Unit in a range of $0.85 to $0.87 for fiscal year 2011 would be paid under such a status quo scenario, reflecting, among other things, the dilutive impact of a planned equity offering of $100 million by Gaz Métro in the fall of 2010, after the Effective Date, in order to, as previously announced, bring the capital structure of Gaz Métro (namely its debt/total capitalization ratio) in line with its historical level. Gaz Métro s distribution practice delivers long-term, strong and stable distributions to its Unitholders. Upon completion of the Arrangement, Gaz Métro intends to continue its practice of distributing substantially all of its Net Income, and, in any case, not less than 85% of its Net Income excluding non-recurring items, subject to certain exceptions. In addition, if GMi as general partner determines that it is appropriate, for any other reason (including as may be required for investments in the business, financing requirements or capital structure realignment of Gaz Métro), to distribute less than 85% of the Net Income excluding non-recurring items, it may cause Gaz Métro to do so, provided that the resolution of the Board of Directors authorizing such lesser distribution has been adopted with the approval of at least 90% of the votes cast by directors. See The Arrangement - Material Agreements - Amended Partnership Agreement. It is expected that Valener will adopt a dividend policy of paying out a high proportion of its available cash in the form of quarterly dividends to its shareholders. The dividend policy will be subject to the discretion of the board of directors of Valener and may vary depending on, among other things, distributions received from Gaz Métro, Valener s earnings, funds required for principal or interest repayments under debt of Valener outstanding from time to time or for general corporate purposes, the satisfaction of solvency tests imposed by the CBCA for the declaration of dividends and other conditions existing at such future time. See Risk Factors. It is expected that following the completion of the Arrangement, Valener will initially pay an annualized dividend of $1.00 per Valener Share. Dividends are expected to be paid on a quarterly basis. The first such quarterly dividend is expected to be declared to the holders of record of Valener Shares on December 30, 2010 and to be paid on January 17, 2011, and subsequent dividends for the fiscal year 2011 are expected to be paid in April and July An annualized dividend of $1.00 per Valener Share would represent a sustainable dividend payout going forward, taking into account the increase in Gaz Métro s distributions otherwise payable to Valener based on its approximately 29% economic interest in Gaz Métro by an aggregate amount of $20 million over a period of three years and the following assumptions based on the current economic context of Gaz Métro: Gaz Métro will be able to continue its practice of distributing substantially all of its Net Income; the authorized rate of return for Gaz Métro s natural gas distribution activity in Québec will be maintained or will improve; the Seigneurie Option will be exercised; the Seigneurie Project will be completed within the contemplated timeframe and parameters and will generate the anticipated cash flows starting in 2014; and Gaz Métro will proceed with an equity offering of $100 million in the fall of 2010, after the Effective Date. If such an issuance takes place as planned, Valener will exercise its pre-emptive right to maintain its relative ownership level in Gaz Métro and will finance its subscription of new Units through an equity offering (see Appendix E Information Concerning Valener Description of Capital Structure ). Both offerings and their potential dilutive impact on Valener Shareholders have been taken into account in determining the annualized dividend expected to be paid by Valener and its sustainability. Such expectation is dependent on other factors, assumptions and risks identified in this Circular and documents incorporated by reference in this Circular. See Management Information Circular - Forward-Looking Statements and Risk Factors

28 Valener s Tax Position Post-Arrangement Valener will be subject to Canadian federal and provincial corporate income tax on its taxable income. If the Arrangement is approved by Unitholders at the Meeting, Valener will include in its income its share of Gaz Métro income or loss for tax purposes based on distributions received from Gaz Métro for the taxation year of Gaz Métro ending in the taxation year of Valener. Valener expects to be taxable at an effective tax rate of approximately 28% for its 2011 taxation year. Gaz Métro s Tax Position Post-Arrangement If the Arrangement is approved by Unitholders at the Meeting, Gaz Métro will not be subject to the SIFT Rules, as its Units will then be held by Valener, GMi and Gaz Métro Plus, and will remain a flow-through entity for tax purposes. Tax Fairness Plan On October 31, 2006, the Minister of Finance (Canada) (the Minister ) announced a Tax Fairness Plan which, in part, proposed changes to the manner in which certain flow-through entities and the distributions from such entities are taxed. Bill C-52, Budget Implementation Act, 2007, which received Royal Assent on June 22, 2007, contained the SIFT Rules, which are designed to implement these proposals. The SIFT Rules provide, among other things, for a tax on certain income earned by a SIFT, as well as generally treating the taxable distributions received by investors from a SIFT as taxable dividends. Under the SIFT Rules, Gaz Métro, as a publicly traded limited partnership, is considered a SIFT and would be subject to taxation at the partnership level as of October 1, In addition, the taxable distributions received by investors from Gaz Métro would be taxable dividends if the Arrangement is not implemented. On November 28, 2008, the Minister released the conversion rules allowing publicly traded income trusts and partnerships to convert into taxable Canadian corporations without any adverse tax consequences to the income trust or partnership, as applicable, or its unitholders (the Conversion Rules ). On February 2, 2009, as a result of the prorogation of Parliament on December 4, 2008, the Minister reintroduced the Conversion Rules in a notice of ways and means motion. The Conversion Rules were enacted in Bill C-10 which received Royal Assent on March 12, On May 15, 2009, a separate Québec tax regime relating to SIFT entities (the Québec SIFT Rules ) was enacted. Under the Québec SIFT Rules, a SIFT with an establishment in Québec at any time in a taxation year will be subject to a Québec tax at a rate generally equal to the Québec tax rate relating to corporations and a business allocation formula based on the gross income of a SIFT and the wages and salaries it pays, similar to the one used for the purposes of determining the tax payable by a corporation that has activities in Québec and outside Québec, will apply to determine the tax payable to Québec by a SIFT that has, in a taxation year, an establishment both in Québec and outside Québec. Bill C-50, Budget Implementation Act, 2008, which was enacted on June 18, 2008, amended the SIFT Rules to provide for harmonization between the SIFT Rules and the Québec SIFT Rules. Background to the Arrangement Following the announcement by the Minister of the SIFT Rules on October 31, 2006, the potential reorganization of Gaz Métro was discussed several times at meetings of the Board of Directors. Management undertook work to assess the financial and legal considerations of such a reorganization and BMO was formally engaged on September 1, 2008 to act as exclusive financial advisor to Gaz Métro in connection with a potential reorganization whereby GMi and Gaz Métro would seek to complete a reorganization or corporate conversion of Gaz Métro in the context of the Conversion Rules. Based on GMi s significant economic interest in Gaz Métro, its role as general partner and the scenarios then under review, the Board of Directors decided to establish an independent committee in order to avoid any potential conflict of interest in evaluating the options available to Gaz Métro in the context of the changes to the tax treatment of publicly traded partnerships. Consequently, the Independent Committee, consisting of Louis P. Gignac (Chairman), Nicolle Forget, Pierre Monahan and Réal Sureau, being independent directors of GMi, was established to analyze the various options available to Gaz Métro and assess the implications for Public Unitholders. The Board of Directors approved a mandate for the Independent Committee whereby, among other things, the Independent

29 Committee was mandated to (i) review any potential transactions or restructurings in response to the SIFT Rules, (ii) carry out all analyses or preparatory work that it considers useful or necessary in connection with a potential transaction, (iii) engage in discussions or negotiations for and on behalf of Gaz Métro with respect to any potential transaction, (iv) supervise the preparation of any fairness opinion in respect of any potential transaction, and (v) make a recommendation to the Board of Directors and periodically report to the Board of Directors in respect of any potential transaction. BMO s engagement letter dated September 1, 2008 was formally amended on November 13, 2009 to appoint BMO as exclusive financial advisor to the Independent Committee regarding the capital markets and financing implications with respect to a potential reorganization. From the period beginning in July 2009 and ending on June 22, 2010, the date of the public announcement of the Arrangement, the Independent Committee met 25 times, most often with BMO as financial advisor and Osler, Hoskin & Harcourt LLP as legal counsel to the Independent Committee ( Osler ) present at the meeting. In executing its mandate, the Independent Committee: considered and reviewed various alternatives for the proposed reorganization; consulted with BMO and Osler on the structure of the Arrangement, the terms and conditions of the Arrangement Agreement and other Material Agreements, and their implications for Public Unitholders; negotiated with Noverco, GMi s sole shareholder and Gaz Métro s indirect majority Unitholder, the structure of the Arrangement and the terms and conditions of the Arrangement Agreement and other Material Agreements, with the view to reaching, in this negotiated context, the best possible outcome for Public Unitholders; considered the benefits of the Arrangement for Public Unitholders, including in respect of the expected amount of distributions by Gaz Métro and the expected amount of dividends by Valener, growth prospects and governance profile, and in several cases put forward suggestions to improve such benefits for Public Unitholders; received presentations, and obtained responses to questions, from Management, BMO and Osler; considered the tax consequences of the Arrangement and reviewed the Advance Income Tax Ruling; and requested the preparation of the Fairness Opinion. The negotiation of the structure of the Arrangement and the terms and conditions of the Arrangement Agreement and other Material Agreements with Noverco was conducted through, among other means, meetings between the Chairman of the Independent Committee, together with BMO and Osler, and representatives of Noverco, together with their financial advisors and legal counsel. Negotiations were also made between legal counsels of the respective parties. In all cases, negotiations on points affecting Public Unitholders were made under the oversight of the Independent Committee. Management and Osler provided BMO with various financial, tax and other information to enable it to complete its analysis and deliver its Fairness Opinion to the Independent Committee and the Board of Directors. On June 22, 2010, BMO delivered the Fairness Opinion, as reaffirmed on July 28, 2010, stating that as of the date thereof and subject to the assumptions, explanations and limitations contained therein, the Arrangement is fair, from a financial point of view, to Public Unitholders. See Background to and Reasons for the Arrangement - Fairness Opinion. After satisfactory conclusion of the negotiation of the structure of the Arrangement and the terms and conditions of the Arrangement Agreement, the Plan of Arrangement and other Material Agreements (other than the form of First Additional Services Agreement relating to the Debt of Valener, which was finalized and approved on July 22, 2010), receipt of the Advance Income Tax Ruling and receipt of the Fairness Opinion, the Independent Committee recommended, on June 22, 2010, that the Board of Directors approve the Arrangement and the entering into of the Arrangement Agreement and other Material Agreements (other than the form of First Additional Services Agreement relating to the Debt of Valener, the signature of which was approved on July 22, 2010)

30 The Board of Directors met on the same date and, after duly considering the financial and legal aspects and other considerations relating to the Arrangement, including the terms of the Advance Income Tax Ruling, the Arrangement Agreement, the Plan of Arrangement and other Material Agreements (other than the form of First Additional Services Agreement relating to the Debt of Valener, which was finalized and approved on July 22, 2010), the directors duties and responsibilities to Unitholders and the Fairness Opinion, the Board of Directors, through its independent and non-interested directors (with the other directors abstaining from voting), unanimously approved the Arrangement and the entering into of the Arrangement Agreement and other Material Agreements (other than the form of First Additional Services Agreement relating to the Debt of Valener, the signature of which was approved on July 22, 2010), concluded that the Arrangement is fair to Public Unitholders, is in the best interests of Gaz Métro and all Unitholders, and recommended that all Unitholders vote in favour of the Arrangement Resolution. On the same date, Valener, Gaz Métro, GMi, Noverco and Gaz Métro Plus entered into the Arrangement Agreement and Gaz Métro issued a press release announcing the Arrangement. Reasons for and Benefits of the Arrangement On October 31, 2006, the Minister announced the SIFT Rules. As a limited partnership, Gaz Métro is a flow-through entity and consequently has not been liable for income tax under the Tax Act. In its current publicly traded partnership structure, commencing in its fiscal year 2011 starting on October 1, 2010, Gaz Métro would be liable, under the SIFT Rules, to pay income tax under the Tax Act at a rate comparable to the combined federal and provincial corporate tax rates, and distributions made to Unitholders would be taxable as dividends. Therefore, the Board of Directors believes that the current limited partnership structure would no longer provide any incremental benefit to Public Unitholders relative to a corporate structure after September 30, The Independent Committee and the Board of Directors, in recommending the Arrangement to Unitholders, believe that the exchange of all Public LP Units for Valener Shares, through the Arrangement, provides a number of compelling and strategic benefits to Public Unitholders, including, without limitation, the following: Valener will benefit from an enhanced financial profile: o o o o o Gaz Métro s distributions otherwise payable to Valener based on its approximately 29% economic interest in Gaz Métro will be increased by an aggregate amount of $20 million over a three-year period; taking into account the above, the timely development of the Seigneurie Project within the contemplated parameters and continued assumptions based on the current economic context of Gaz Métro, an annualized dividend of $1.00 per Valener Share is expected to be paid starting in fiscal year 2011 and would represent a sustainable dividend payout going forward (see The Arrangement - Effect of the Arrangement - Effect of the Arrangement on Distributions ); an annualized dividend of $1.00 per Valener Share is equivalent to an annual distribution of $1.31 per Unit under Gaz Métro s current structure, for a taxable investor in Québec, based on the maximum combined marginal tax rate announced for 2011; an annualized dividend of $1.00 per Valener Share compares favourably to an estimated after-tax distribution per Unit of Gaz Métro in a range of $0.85 to $0.87 for fiscal year 2011 under a status quo scenario, reflecting, among other things, the dilutive impact of a planned equity offering of $100 million by Gaz Métro in the fall of 2010; Valener s corporate structure will be better suited for public equity markets than the current limited partnership structure of Gaz Métro and will give Valener enhanced flexibility to optimize its capital structure over time; Shareholders of Valener will continue to benefit from Gaz Métro s stable income and high distribution payout; Valener will be granted the Seigneurie Option to acquire 49% of Gaz Métro s 50% indirect interest (through Gaz Métro Éole) in the Seigneurie Project, subject to obtaining all required consents;

31 Valener will have independent access to growth opportunities within the parameters of a non-competition undertaking in favour of Gaz Métro; Valener will have a $75 million committed bank facility; Shareholders of Valener will benefit from a modernized governance profile, in line with best practices, with Valener s independent board of directors acting in the best interests of Valener, and from additional rights and protective measures with respect to their investment in Gaz Métro; Valener will be managed by an experienced team of professionals from Gaz Métro pursuant to a 15-year administration and management support agreement to be entered into between Gaz Métro and Valener; and General administrative expenses (including public company costs) incurred by Valener shall be reimbursed by Gaz Métro, subject to a maximum aggregate annual amount of (i) $1.75 million annually for the five-year period following the Effective Date, and (ii) $1 million annually for the subsequent ten-year period, until the termination of the Administration Agreement. Fairness Opinion The Independent Committee retained BMO to address the fairness, from a financial point of view, of the Arrangement. In connection with this mandate, BMO provided the Independent Committee and the Board of Directors with the Fairness Opinion. The Fairness Opinion states that, on the basis of the particular assumptions and considerations summarized therein, in the opinion of BMO, as of June 22, 2010 and as reaffirmed on July 28, 2010, the Arrangement is fair, from a financial point of view, to Public Unitholders. The Fairness Opinion is subject to the assumptions, explanations and limitations contained therein and should be read in its entirety. The summary of the Fairness Opinion described in this Circular is qualified in its entirety by reference to the full text of the Fairness Opinion. See Background to and Reasons for the Arrangement Fairness Opinion and Appendix D Fairness Opinion. The Fairness Opinion was provided for the information of, and assistance to, the Independent Committee and the Board of Directors in connection with their consideration of the Arrangement. The Fairness Opinion is not a recommendation as to how any Unitholder should vote in respect of the Arrangement or any other matter. The Fairness Opinion may not be used by any other Person or relied upon by any other Person other than the Independent Committee and the Board of Directors, and does not confer any rights or remedies upon any employee, creditor, securityholder of Gaz Métro, GMi, Valener or any other party. Recommendation of the Independent Committee and the Board of Directors Upon recommendation from the Independent Committee, the Board of Directors, through its independent and non-interested directors (with the other directors abstaining from voting), has unanimously determined that the Arrangement is fair to Public Unitholders, is in the best interests of Gaz Métro and all Unitholders, and recommended that Unitholders vote IN FAVOUR of the Arrangement Resolution. In reaching its conclusions and formulating its recommendation, the Board of Directors considered, among others, the following information and factors: the recommendation of the Independent Committee; the reasons and benefits of the Arrangement described herein. See Background to and Reasons for the Arrangement - Reasons for and Benefits of the Arrangement ; the termination of the flow-through tax treatment for Unitholders provided by the current structure as a result of the SIFT Rules; the Advance Income Tax Ruling;

32 the fact that the Arrangement Resolution must receive the requisite Unitholder approval in order to be adopted; the fact that the Plan of Arrangement must be sanctioned by the Court; and the Fairness Opinion. See Background to and Reasons for the Arrangement Recommendation of the Independent Committee and the Board of Directors. As at July 27, 2010, the directors and officers of GMi, in its capacity as general partner of Gaz Métro, and their associates, as a group, beneficially owned, directly or indirectly, or exercised control or direction over, an aggregate of approximately 73,589 Public LP Units, representing approximately 0.21% of the outstanding Public LP Units and 0.06% of the outstanding Units. Each of the members of the Board of Directors and each of the senior executive officers of GMi have indicated that they intend to vote all of their Public LP Units in favour of the Arrangement Resolution. Procedure for Exchange of Public LP Units Registered Unitholders will receive, with this Circular, a Letter of Transmittal printed on yellow paper. In order to receive their Valener Shares or another document evidencing the electronic registration of ownership of Valener Shares in the records of Valener following completion of the Arrangement, Registered Unitholders must deposit with the Depositary (at one of the addresses specified on the last page of the Letter of Transmittal) a duly completed Letter of Transmittal together with the certificates representing the holder s Public LP Units in accordance with the instructions contained in the Letter of Transmittal. Public Unitholders whose Public LP Units are registered in the name of a broker, dealer, bank, trust company or other nominee or intermediary must contact their nominee or intermediary to arrange for the exchange of their Public LP Units. The use of the mail to transmit certificates representing Public LP Units and the Letter of Transmittal is at each holder s risk. Gaz Métro recommends that such certificates and documents be delivered by hand to the Depositary and a receipt therefore be obtained or that registered mail be used and that proper insurance be obtained. From and after the Effective Time, certificates formerly representing the Public LP Units exchanged pursuant to the Plan of Arrangement shall represent only the right to receive the consideration to which the holders thereof are entitled under the Arrangement and any distributions that have been made payable by Gaz Métro to Unitholders prior to the Effective Date with respect to such Public LP Units but that are unpaid, as of the Effective Date. Registered Unitholders will not receive Valener Shares or any dividends which may be declared thereon after the Effective Date until they submit the certificates for their Public LP Units to the Depositary along with a duly completed Letter of Transmittal. Each certificate formerly representing Public LP Units that is not deposited with all other documents as required pursuant to the Plan of Arrangement on or prior to the sixth anniversary of the Effective Date shall cease to represent a right or claim of any kind or nature including the right of the holder to receive Valener Shares and any dividends which may be declared thereon. See The Arrangement Procedure for Exchange of Public LP Units. Approval of Unitholders Required for the Arrangement Pursuant to the provisions of the Partnership Agreement, MI and the Interim Order, the number of votes required to pass the Arrangement Resolution shall be (i) at least 66⅔% of the votes cast by all Unitholders present in person or represented by proxy at the Meeting, (ii) at least 66⅔% of the votes cast by all Unitholders other than GMi and Affiliated Entities present in person or represented by proxy at the Meeting, and (iii) a simple majority of the votes cast by all Unitholders present in person or represented by proxy at the Meeting, excluding Units beneficially owned or over which control or direction is exercised by interested parties and certain related parties of such

33 interested parties (as provided by Section 8.1 of MI ). See General Proxy Matters and The Arrangement - Approvals - Unitholder Approval. If you do not specify how you want your Units voted, the persons named as proxyholders will cast the votes represented by proxy at the Meeting FOR the approval of the Arrangement Resolution. Final Order Implementation of the Arrangement requires the satisfaction of several conditions and the approval of the Court. See The Arrangement - Procedure for the Arrangement Becoming Effective. An application for the Final Order approving the Arrangement is expected to be made on September 20, 2010 at 9:15 a.m. (Montréal time), at the Court, 1 Notre-Dame East St., Montréal, Québec, or at any other date following notification by news release to the Unitholders of the date of presentation of such application, at least two days before such date. On the application, the Court will consider the fairness of the Arrangement. If the Final Order is obtained on September 20, 2010 in form and substance satisfactory to Gaz Métro, GMi, Noverco and Valener and all other conditions set forth in the Arrangement Agreement are satisfied or waived, Gaz Métro expects the Effective Date to be on or about September 30, Stock Exchange Listing The TSX has conditionally approved the substitutional listing of the Valener Shares, subject to Valener fulfilling the requirements of such exchange as soon as reasonably practicable after the Effective Time. After the Effective Date, the Valener Shares will be listed on the TSX under the symbol VNR. See The Arrangement - Approvals. Certain Canadian Federal Income Tax Considerations This Circular contains a summary of the principal Canadian federal income tax considerations relevant to Holders and which relate to the Arrangement and the comments below are qualified in their entirety by reference to such summary. An Eligible Unitholder who disposes of Public LP Units in consideration for Valener Shares may, depending upon the circumstances, obtain a full or partial tax deferral in respect of the disposition of Public LP Units by entering into a joint tax election with Valener under Section 85 of the Tax Act (and the corresponding provisions of any applicable provincial or territorial tax legislation) specifying therein an elected amount in accordance with certain limitations provided for in the Tax Act (and in any applicable provincial or territorial tax legislation). An Eligible Unitholder interested in making an election should indicate that intention in the Election Form in the space provided therein and return such Election Form along with its form of proxy to CIBC Mellon (in the case of a Registered Unitholder) or to Gaz Métro (in the case of a Non-Registered Unitholder) by no later than 5:00 p.m. (Montréal time) on Friday, September 10, 2010 or on the last business day preceding any adjournment of the Meeting. Gaz Métro will provide access, on or about December 1, 2010, to a tax instruction letter, together with the relevant tax election forms (including the Québec tax election forms) to the Eligible Unitholder by way of a website accessed through Gaz Métro s main website ( This website will allow the Eligible Unitholder to provide the information required for the tax election forms to be completed. For Eligible Unitholders who do not wish to avail themselves of this website, a paper copy of the tax instruction letter and tax election forms to be completed will be forwarded to Eligible Unitholders who make the request on the Election Form. Eligible Unitholders should consult their own tax advisors to determine whether any separate provincial or territorial election forms are required and to obtain and complete such forms, if necessary. An Eligible Unitholder who does not ensure that Valener has received all the relevant information requested in the tax instruction letter on or before January 10, 2011 will not be entitled to benefit from the rollover provisions of Section 85 of the Tax Act (or the corresponding provisions of any applicable provincial or territorial tax legislation)

34 A Holder who does not make a joint tax election with Valener will generally realize a capital gain (or capital loss) in an amount equal to the amount by which the aggregate fair market value of Valener Shares received by the Holder under the Arrangement exceeds (or is less than) the adjusted cost base to the Holder of the Public LP Units disposed of and any reasonable costs of disposition. Holders should review the more detailed information under the heading Certain Canadian Federal Income Tax Considerations in this Circular, including the procedure for making a joint tax election with Valener, and consult with their own tax advisors regarding their particular circumstances. Other Tax Considerations This Circular does not address any tax considerations of the Arrangement other than Canadian federal income tax considerations to a Holder. Public Unitholders who are resident in jurisdictions other than Canada should consult their tax advisors with respect to the tax implications of the Arrangement, including any associated filing requirements in such jurisdictions, and with respect to the tax implications in such jurisdictions of owning Valener Shares after the Arrangement. Public Unitholders should also consult their own tax advisors regarding Canadian federal, provincial or territorial tax considerations of the Arrangement or of holding Valener Shares. Information Concerning Valener Valener was incorporated on June 15, 2010 pursuant to the provisions of the CBCA for the sole purpose of participating in the Arrangement. The principal and registered office of Valener is located at 1717 du Havre Street, Montréal, Québec, Canada, H2K 2X3. On the Effective Date, Valener will become a reporting issuer in all Canadian jurisdictions and will be subject to the continuous disclosure and reporting requirements under the securities laws of such jurisdictions as a result of the Arrangement. See Information Concerning Valener in this Circular. Risk Factors For a description of certain risk factors in respect of (i) the Arrangement, see Information Concerning Gaz Métro - Risk Factors - Risk Factors Relating to the Arrangement, and (ii) the business of Gaz Métro and the industry in which it operates, which will continue to be relevant to Valener Shareholders after the Effective Date, refer to the Gaz Métro AIF under the heading Risk Factors and the Gaz Métro MD&A. Moreover, the following risk factors relating to the activities of Valener and the ownership of Valener Shares following the Effective Date should be carefully considered by prospective investors before making a decision relating to the Arrangement: the uncertainty of future dividend payments by Valener and the level thereof as Valener s dividend policy and the funds available for the payment of dividends from time to time will be dependent upon, among other things, distributions received by Valener from Gaz Métro, operating cash flows generated by Valener, funds required for principal or interest repayments under debt of Valener outstanding from time to time, development of the Seigneurie Project or for general corporate purposes, and the satisfaction of solvency tests imposed by the CBCA for the declaration and payment of dividends; as long as its participation in Gaz Métro will remain Valener s sole or most significant investment, Valener s results will be dependent on Gaz Métro s profitability, which goes hand in hand with Gaz Métro s ability to invest in the development of its various networks and with the rates of return on deemed common equity authorized by the various regulatory bodies. However, Valener s risk profile may change over time should Valener pursue growth opportunities in activities with a risk profile different from those currently pursued by Gaz Métro, within the limits of the Non-Competition Agreement, and potential changes to Valener s risk profile may impact Valener s results as well as the availability of financing for Valener going forward;

35 an equity issuance by Gaz Métro that is not fully subscribed by Valener, at its pro rata share pursuant to its pre-emptive right set out in the Amended Partnership Agreement, would be dilutive to its subsequent proportionate share of the consolidated earnings of Gaz Métro; the inability of Valener to fund the development of the Seigneurie Project on a timely basis and on satisfactory terms or to complete the Seigneurie Project within the contemplated timeframe and parameters, could result in Valener receiving lesser dividends than anticipated or none at all from the Seigneurie Project, and could adversely impact Valener s results and Valener s ability to maintain its projected dividend payout; the level of the consolidated indebtedness of Valener from time to time could impair Valener s ability to obtain additional financing on a timely basis and on satisfactory terms to take advantage of business opportunities that may arise; and the inability of Valener to manage growth effectively could have a material adverse impact on its business, operations and prospects. The completion of the Arrangement in the form contemplated by the Plan of Arrangement is subject to a number of conditions precedent, some of which are outside the control of Gaz Métro and Valener, including, without limitation, receipt of Unitholder approval at the Meeting, listing on the TSX of the Valener Shares, approval of the Arrangement by the VPSB and issuance of the Final Order by the Court. There can be no certainty, nor can Gaz Métro provide any assurance, that these conditions will be satisfied or, if satisfied, when they will be satisfied. The details regarding the risk factors listed above are contained elsewhere in this Circular

36 GENERAL PROXY MATTERS Solicitation of Proxies This Circular is furnished in connection with the solicitation of proxies by GMi, in its capacity as general partner of Gaz Métro, to be used at the Meeting. The solicitation of proxies for the Meeting will be made primarily by mail but proxies may also be solicited personally or by telephone on behalf of Gaz Métro. Gaz Métro has retained Georgeson to act as proxy solicitation agent for an estimated fee of $27,500. Gaz Métro will bear the total cost in respect of the solicitation of proxies for the Meeting and will bear the legal, printing and other costs associated with the preparation of this Circular. Appointment of Proxies by Registered Unitholders Together with this Circular, Registered Unitholders have also been sent a form of proxy. The persons named in such form of proxy as persons to vote on behalf of Registered Unitholders are officers or directors of GMi, Gaz Métro s general partner. A Registered Unitholder who wishes to appoint some other Person (who need not be a Unitholder) to represent him or her at the Meeting may do so by striking out the names set forth in the enclosed form of proxy and by inserting such Person s name in the blank space provided therein or by completing another form of proxy. To be effective, proxies must be received by Gaz Métro s transfer agent, CIBC Mellon Trust Company, by facsimile at or or at the address indicated on the envelope we have provided, by no later than 5:00 p.m. (Montréal time) on Friday, September 10, 2010 or on the last business day preceding any adjournment of the Meeting. The chair of the Meeting has the discretion to accept late proxies. The document appointing a proxy must be in writing and completed and signed by the Registered Unitholder or his or her attorney duly authorized in writing or, if the Registered Unitholder is a corporation, by its duly authorized officer or attorney. Persons signing as officers, attorneys, executors, administrators or trustees should so indicate and may be asked to provide satisfactory evidence of such authority. Revocation of Proxies by Registered Unitholders A Registered Unitholder who has given a proxy may revoke the proxy: (a) by completing and signing a form of proxy bearing a later date and depositing it as set forth above; (b) by depositing an instrument in writing executed by the Registered Unitholder or by his or her attorney duly authorized in writing: (i) either at the Montréal office of CIBC Mellon, 2001 University Street, Suite 1600, Montréal (Québec) or at the head office of Gaz Métro, 1717 du Havre Street, Montréal (Québec), H2K 2X3 (Attention: Corporate Secretary), at any time up to and including the last business day preceding the date of the Meeting, or any adjournment thereof, at which the proxy is to be used, or (ii) with the chair of the Meeting prior to the commencement of such Meeting on the day of such Meeting or any adjournment thereof; or (c) in any other manner permitted by law. Voting of Proxies for Registered Unitholders The persons named in the accompanying form of proxy will vote Units in respect of which they are appointed on any poll that may be called for, in accordance with the instructions of the Registered Unitholder as indicated on the proxy. In the absence of instructions, such Units will be voted FOR the approval of the Arrangement Resolution set forth in Appendix A to this Circular. The persons named in the accompanying form of proxy are conferred with discretionary authority with respect to amendments or variations of matters identified in the form of proxy and Notice of Meeting and with respect to other matters which may properly come before the Meeting or any adjournment thereof. In the event that amendments or variations to matters identified in the Notice of Meeting are properly brought before the Meeting, it is the intention of the persons named in the accompanying form of proxy to vote in accordance with their best judgment on such matter or business. The directors and officers of GMi, in its capacity as general partner of Gaz Métro, are not aware of any such amendments, variations or other matter

37 A Registered Unitholder which is a corporation may appoint an officer, director or other authorized individual as its representative to attend, vote and act on its behalf at the Meeting and may by a like instrument revoke any such appointment, and for all purposes of the Meeting, other than the giving of notice, an individual so appointed shall be deemed to be the holder of every Unit held by the corporation he or she represents. If two or more persons hold Units jointly, a proxy given on their behalf must be executed by all of them and may only be revoked by all of them. If two or more of those joint holders are present at the Meeting and they do not agree on which of them is to exercise any vote to which they are jointly entitled, they are deemed not to be present for the purposes of voting. Voting of Proxies for Non-Registered Unitholders Information set forth in this section is very important to persons who hold their Public LP Units otherwise than in their own names. Non-Registered Unitholders are Unitholders who hold Public LP Units which are not registered in their name and which are held in the name of a nominee such as a trustee, financial institution or securities broker. For example, Units listed in an account statement provided by the broker of a Unitholder, are, in all likelihood, not registered in the Unitholder s name on the records of Gaz Métro. Such Units are more likely registered under the name of the Unitholder s broker or an agent of such broker. Non-Registered Unitholders should note that only proxies deposited by Unitholders whose names are on the records of Gaz Métro as the Registered Unitholders can be recognized and acted upon at the Meeting. Without specific instructions, Canadian brokers and their agents or nominees are prohibited from voting Units for the broker s client. There are two ways, listed below, for Non-Registered Unitholders to vote their Units. Giving Voting Instructions Applicable securities laws require Non-Registered Unitholders nominees to seek voting instructions from them in advance of the Meeting. Accordingly, Non-Registered Unitholders will receive or have already received from their nominee a request for voting instructions for the number of Units they hold. Every nominee has its own mailing procedures and provides its own signature and return instructions, which should be carefully followed by Non- Registered Unitholders to ensure that their Units are voted at the Meeting. Most brokers now delegate responsibility for obtaining instructions from clients to Broadridge Communications Corporation ( Broadridge, formerly ADP Investor Communications Corporation). Broadridge typically prepares a voting instruction form (a Voting Form ) that it mails to the non-registered holders and asks them to return the Voting Form directly to Broadridge. Broadridge then tabulates the results of all instructions received and provides appropriate instructions representing the voting of units to be represented at the meeting. A Non-Registered Unitholder receiving a Voting Form cannot use that Voting Form to vote Units directly at the Meeting. The Voting Form must be returned to Broadridge well in advance of the Meeting to have the Units voted. Voting In Person However, if Non-Registered Unitholders wish to vote in person at the Meeting, they have to insert their own name in the space provided on the request for voting instructions provided by their nominee to appoint themselves as proxy holder and follow the signature and return instructions of their nominee. Non-Registered Unitholders who appoint themselves as proxy holders should present themselves at the Meeting to a representative of CIBC Mellon Trust Company. Those Non-Registered Unitholders do not otherwise have to complete the request for voting instructions sent to them as they will be voting at the Meeting. Record Date The Record Date for determining those Unitholders entitled to receive notice of and to vote at the Meeting is the close of business on July 23, Only persons registered as Unitholders on the books of Gaz Métro as of the close of business on the Record Date are entitled to receive notice of and to vote at the Meeting, and no Person becoming a Unitholder after the Record Date shall be entitled to receive notice of and to vote at the Meeting or any adjournment thereof. The failure of any Registered Unitholder to receive notice of the Meeting does not deprive the Registered Unitholder of the right to vote at the Meeting. The list of Registered Unitholders so entitled will be available for inspection during normal business hours at the Montréal office of Gaz Métro s registrar and transfer

38 agent, CIBC Mellon Trust Company, located at 2001 University Street, Suite 1600, Montréal, Québec, Canada, H3A 2A6, and at the Meeting. Quorum Pursuant to the Partnership Agreement, a quorum is present at the Meeting if two or more individuals present in person at the commencement of the Meeting either hold personally or represent by proxy 10% or more of the outstanding Units. If a quorum is present within 30 minutes of the time fixed for the Meeting, the Unitholders present or represented by proxy may proceed with the business of the Meeting. If a quorum is not present within 30 minutes of the time fixed for the Meeting, the Meeting shall be adjourned to such date not less than 10 days nor more than 21 days after the original date for the Meeting as shall be determined by GMi, in its capacity as general partner of Gaz Métro, at a time and location determined by GMi. GMi shall give at least seven days notice of the date, time and place of the adjourned meeting to the Unitholders, to each director of GMi and to the auditors but it will not be necessary to repeat the description of the purpose of the meeting in such notice. At an adjourned meeting, the Unitholders present in person or represented by proxy shall form a quorum and may transact business which might have been transacted at the meeting as originally called. Voting Units and Principal Holders As of July 27, 2010, there were 120,452,214 Units issued and outstanding. As of the same date, GMi held 85,518,551 Units, representing approximately 71% of the 120,452,214 outstanding Units (including the 8,551 Units held by Gaz Métro Plus inc., a wholly-owned Subsidiary of GMi), and the remaining 34,933,663 Units were held by Public Unitholders (the Public LP Units ). To the knowledge of the directors and officers of GMi, as general partner of Gaz Métro, no Person, other than GMi, beneficially owns, or exercises control or direction, directly or indirectly, over Units carrying 10% or more of the voting rights attached to all issued and outstanding Units. Special Business SPECIAL BUSINESS OF THE MEETING The Meeting will be constituted as a special meeting. At the Meeting, Unitholders will be asked to consider and, if thought advisable, to pass the Arrangement Resolution approving the Arrangement. The Arrangement involves the conversion of the public interest in Gaz Métro into a corporate form using a newly incorporated federal corporation, Valener. Approval of the Arrangement Resolution Unitholders entitled to attend and vote at the Meeting are entitled to one vote for each Unit held by them. Pursuant to the provisions of the Partnership Agreement, of MI and the Interim Order, the Arrangement must be approved by a resolution passed by (i) at least 66⅔% of the votes cast by all Unitholders present in person or represented by proxy at the Meeting, (ii) at least 66⅔% of the votes cast by all Unitholders other than GMi and Affiliated Entities present in person or represented by proxy at the Meeting, and (iii) a simple majority of the votes cast by all Unitholders present in person or represented by proxy at the meeting, excluding Units beneficially owned or over which control or direction is exercised by interested parties and certain related parties of such interested parties (as provided in Section 8.1 of MI ). A copy of the Arrangement Resolution is set out in Appendix A of this Circular. The persons whose names are printed on the Proxy intend to vote FOR the Arrangement Resolution unless specifically instructed otherwise on the Proxy

39 BACKGROUND TO AND REASONS FOR THE ARRANGEMENT Tax Fairness Plan On October 31, 2006, the Minister announced a Tax Fairness Plan which, in part, proposed changes to the manner in which certain flow-through entities and the distributions from such entities are taxed. Bill C-52, Budget Implementation Act, 2007, which received Royal Assent on June 22, 2007, contained the SIFT Rules, which are designed to implement these proposals. The SIFT Rules provide, among other things, for a tax on certain income earned by a SIFT, as well as generally treating the taxable distributions received by investors from a SIFT as taxable dividends. Under the SIFT Rules, Gaz Métro, as a publicly traded limited partnership, is considered a SIFT and would be subject to taxation at the partnership level as of October 1, In addition, the taxable distributions received by investors from Gaz Métro would be taxable dividends if the Arrangement is not implemented. On November 28, 2008, the Minister released the Conversion Rules allowing publicly traded income trusts and partnerships to convert into taxable Canadian corporations without any adverse tax consequences to the income trust or partnership, as applicable, or its unitholders. On February 2, 2009, as a result of the prorogation of Parliament on December 4, 2008, the Minister reintroduced the Conversion Rules in a notice of ways and means motion. The Conversion Rules were enacted in Bill C-10 which received Royal Assent on March 12, On May 15, 2009, the Québec SIFT Rules were enacted. Under the Québec SIFT Rules, a SIFT with an establishment in Québec at any time in a taxation year will be subject to a Québec tax at a rate generally equal to the Québec tax rate relating to corporations and a business allocation formula based on the gross income of a SIFT and the wages and salaries it pays, similar to the one used for the purposes of determining the tax payable by a corporation that has activities in Québec and outside Québec, will apply to determine the tax payable to Québec by a SIFT that has, in a taxation year, an establishment both in Québec and outside Québec. Bill C-50, Budget Implementation Act, 2008, which was enacted on June 18, 2008, amended the SIFT Rules to provide for harmonization between the SIFT Rules and the Québec SIFT Rules. Background to the Arrangement Following the announcement by the Minister of the SIFT Rules on October 31, 2006, the potential reorganization of Gaz Métro was discussed several times at meetings of the Board of Directors. Management undertook work to assess the financial and legal considerations of such a reorganization and BMO was formally engaged on September 1, 2008 to act as exclusive financial advisor to Gaz Métro in connection with a potential reorganization whereby GMi and Gaz Métro would seek to complete a reorganization or corporate conversion of Gaz Métro in the context of the Conversion Rules. Based on GMi s significant economic interest in Gaz Métro, its role as general partner and the scenarios then under review, the Board of Directors decided to establish an independent committee in order to avoid any potential conflict of interest in evaluating the options available to Gaz Métro in the context of the changes to the tax treatment of publicly traded partnerships. Consequently, the Independent Committee, consisting of Louis P. Gignac (Chairman), Nicolle Forget, Pierre Monahan and Réal Sureau, being independent directors of GMi, was established to analyze the various options available to Gaz Métro and assess the implications for Public Unitholders. The Board of Directors approved a mandate for the Independent Committee whereby, among other things, the Independent Committee was mandated to (i) review any potential transactions or restructurings in response to the SIFT Rules, (ii) carry out all analyses or preparatory work that it considers useful or necessary in connection with a potential transaction, (iii) engage in discussions or negotiations for and on behalf of Gaz Métro with respect to any potential transaction, (iv) supervise the preparation of any fairness opinion in respect of any potential transaction, and (v) make a recommendation to the Board of Directors and periodically report to the Board of Directors in respect of any potential transaction. BMO s engagement letter dated September 1, 2008 was formally amended on November 13, 2009 to appoint BMO as exclusive financial advisor to the Independent Committee regarding the capital markets and financing implications with respect to a potential reorganization

40 From the period beginning in July 2009 and ending on June 22, 2010, the date of the public announcement of the Arrangement, the Independent Committee met 25 times, most often with BMO as financial advisor and Osler as legal counsel to the Independent Committee present at the meeting. In executing its mandate, the Independent Committee: considered and reviewed various alternatives for the proposed reorganization; consulted with BMO and Osler on the structure of the Arrangement, the terms and conditions of the Arrangement Agreement and other Material Agreements, and their implications for Public Unitholders; negotiated with Noverco, GMi s sole shareholder and Gaz Métro s indirect majority Unitholder, the structure of the Arrangement and the terms and conditions of the Arrangement Agreement and other Material Agreements, with the view to reaching, in this negotiated context, the best possible outcome for Public Unitholders; considered the benefits of the Arrangement for Public Unitholders, including in respect of the expected amount of distributions by Gaz Métro and the expected amount of dividends by Valener, growth prospects and governance profile, and in several cases put forward suggestions to improve such benefits for Public Unitholders; received presentations, and obtained responses to questions, from Management, BMO and Osler; considered the tax consequences of the Arrangement and reviewed the Advance Income Tax Ruling; and requested the preparation of the Fairness Opinion. The negotiation of the structure of the Arrangement and the terms and conditions of the Arrangement Agreement and other Material Agreements with Noverco was conducted through, among other means, meetings between the Chairman of the Independent Committee, together with BMO and Osler, and representatives of Noverco, together with their financial advisors and legal counsel. Negotiations were also made between legal counsels of the respective parties. In all cases, negotiations on points affecting Public Unitholders were made under the oversight of the Independent Committee. Management and Osler provided BMO with various financial, tax and other information to enable it to complete its analysis and deliver its Fairness Opinion to the Independent Committee and the Board of Directors. On June 22, 2010, BMO delivered the Fairness Opinion, as reaffirmed on July 28, 2010, stating that as of the date thereof and subject to the assumptions, explanations and limitations contained therein, the Arrangement is fair, from a financial point of view, to Public Unitholders. See Background to and Reasons for the Arrangement - Fairness Opinion. After satisfactory conclusion of the negotiation of the structure of the Arrangement and the terms and conditions of the Arrangement Agreement, the Plan of Arrangement and other Material Agreements (other than the form of First Additional Services Agreement relating to the Debt of Valener, which was finalized and approved on July 22, 2010), receipt of the Advance Income Tax Ruling and receipt of the Fairness Opinion, the Independent Committee recommended that the Board of Directors approve the Arrangement and the entering into of the Arrangement Agreement and other Material Agreements (other than the form of First Additional Services Agreement relating to the Debt of Valener, the signature of which was approved on July 22, 2010), and recommended that all Unitholders vote their Units in favour of the Arrangement. The Board of Directors met on the same date and, after duly considering the financial and legal aspects and other considerations relating to the Arrangement, including the terms of the Advance Income Tax Ruling, the Arrangement Agreement, the Plan of Arrangement and other Material Agreements (other than the form of First Additional Services Agreement relating to the Debt of Valener, which was finalized and approved on July 22, 2010), the directors duties and responsibilities to Unitholders and the Fairness Opinion, the Board of Directors, through its independent and non-interested directors (with the other directors abstaining from voting), unanimously approved the Arrangement and the entering into of the Arrangement Agreement and other Material Agreements (other than

41 the form of First Additional Services Agreement relating to the Debt of Valener, the signature of which was approved on July 22, 2010), concluded that the Arrangement is fair to Public Unitholders, is in the best interests of Gaz Métro and all Unitholders, and recommended that all Unitholders vote in favour of the Arrangement Resolution. On the same date, Valener, Gaz Métro, GMi, Noverco and Gaz Métro Plus entered into the Arrangement Agreement and Gaz Métro issued a press release announcing the Arrangement. Reasons for and Benefits of the Arrangement On October 31, 2006, the Minister announced the SIFT Rules. As a limited partnership, Gaz Métro is a flow-through entity and consequently has not been liable for income tax under the Tax Act. In its current publicly traded partnership structure, commencing in its fiscal year 2011 starting on October 1, 2010, Gaz Métro would be liable, under the SIFT Rules, to pay income tax under the Tax Act at a rate comparable to the combined federal and provincial corporate tax rates, and distributions made to Unitholders would be taxable as dividends. Therefore, the Board of Directors believes that the current limited partnership structure would no longer provide any incremental benefit to Public Unitholders relative to a corporate structure after September 30, The Independent Committee and the Board of Directors, in recommending the Arrangement to Unitholders, believe that the exchange of all Public LP Units for Valener Shares, through the Arrangement, provides a number of compelling and strategic benefits to Public Unitholders, including, without limitation, the following: Valener will benefit from an enhanced financial profile: o o o o o Gaz Métro s distributions otherwise payable to Valener based on its approximately 29% economic interest in Gaz Métro will be increased by an aggregate amount of $20 million over a three-year period; taking into account the above, the timely development of the Seigneurie Project and continued assumptions based on the current economic context of Gaz Métro, an annualized dividend of $1.00 per Valener Share is expected to be paid starting in fiscal year 2011 and would represent a sustainable dividend payout going forward (see The Arrangement - Effect of the Arrangement - Effect of the Arrangement on Distributions ); an annualized dividend of $1.00 per Valener Share is equivalent to an annual distribution of $1.31 per Unit under Gaz Métro s current structure, for a taxable investor in Québec, based on the maximum combined marginal tax rate announced for 2011; an annualized dividend of $1.00 per Valener Share compares favourably to an estimated after-tax distribution per Unit of Gaz Métro in a range of $0.85 to $0.87 for fiscal year 2011 under a status quo scenario, reflecting, among other things, the dilutive impact of a planned equity offering of $100 million by Gaz Métro in the fall of 2010; Valener s corporate structure will be better suited for public equity markets than the current limited partnership structure of Gaz Métro and will give Valener enhanced flexibility to optimize its capital structure over time; Shareholders of Valener will continue to benefit from Gaz Métro s stable income and high distribution payout; Valener will be granted the Seigneurie Option to acquire 49% of Gaz Métro s 50% indirect interest (through Gaz Métro Éole) in the Seigneurie Project, subject to obtaining all required consents; Valener will have independent access to growth opportunities within the parameters of a non-competition undertaking in favour of Gaz Métro; Valener will have a $75 million committed bank facility;

42 Shareholders of Valener will benefit from a modernized governance profile, in line with best practices, with Valener s independent board of directors acting in the best interests of Valener, and from additional rights and protective measures with respect to their investment in Gaz Métro; Valener will be managed by an experienced team of professionals from Gaz Métro pursuant to a 15-year administration and management support agreement to be entered into between Gaz Métro and Valener; and General administrative expenses (including public company costs) incurred by Valener shall be reimbursed by Gaz Métro, subject to a maximum aggregate annual amount of (i) $1.75 million annually for the five-year period following the Effective Date, and (ii) $1 million annually for the subsequent ten-year period, until the termination of the Administration Agreement. Fairness Opinion The Independent Committee retained BMO to address the fairness, from a financial point of view, of the Arrangement. In connection with this mandate, BMO provided the Independent Committee and the Board of Directors with the Fairness Opinion. The Fairness Opinion states that, on the basis of the particular assumptions and considerations summarized therein, in the opinion of BMO, as of June 22, 2010 and as reaffirmed on July 28, 2010, the Arrangement is fair, from a financial point of view, to Public Unitholders. The Fairness Opinion is subject to the assumptions, explanations and limitations contained therein and should be read in its entirety. The summary of the Fairness Opinion described in this Circular is qualified in its entirety by reference to the full text of the Fairness Opinion. See Background to and Reasons for the Arrangement and Appendix D Fairness Opinion. The Fairness Opinion was provided for the information of, and assistance to, the Independent Committee and the Board of Directors in connection with their consideration of the Arrangement. The Fairness Opinion is not a recommendation as to how any Unitholder should vote in respect of the Arrangement or any other matter. The Fairness Opinion may not be used by any other Person or relied upon by any other Person other than the Independent Committee and the Board of Directors, and does not confer any rights or remedies upon any employee, creditor, securityholder of Gaz Métro, GMi, Valener or any other party. Recommendation of the Independent Committee and the Board of Directors The Independent Committee considered the relative advantages and disadvantages of the Arrangement and the financial and legal advice it received, and unanimously determined that the Arrangement is fair to Public Unitholders and is in the best interests of Gaz Métro and Public Unitholders, and recommended its approval by the Board of Directors. On June 22, 2010, upon recommendation from the Independent Committee, the Board of Directors, through its independent and non-interested directors (with the other directors abstaining from voting), unanimously determined that the Arrangement is fair to Public Unitholders, is in the best interests of Gaz Métro and all Unitholders, and recommended that Unitholders vote IN FAVOUR of the Arrangement Resolution. Sophie Brochu, André Dufour, Emmanuel Hedde, Stephen J. J. Letwin, David T. Robottom, Zin Smati, Josée Tremblay and Cyrille Vittecoq, as interested or non-independent directors (as applicable), abstained from voting with respect to any matters related to the Arrangement. In reaching its conclusions and formulating its recommendation, the Board of Directors considered, among others, the following information and factors: the recommendation of the Independent Committee; the reasons and benefits of the Arrangement described herein. See Background to and Reasons for the Arrangement - Reasons for and Benefits of the Arrangement ; the termination of the flow-through tax treatment for Unitholders provided by the current structure as a result of the SIFT Rules;

43 the Advance Income Tax Ruling; the fact that the Arrangement Resolution must receive the requisite Unitholder approval in order to be adopted; the fact that the Plan of Arrangement must be sanctioned by the Court; and the Fairness Opinion. The foregoing discussion of the information and factors considered and given weight by the Board of Directors is not intended to be exhaustive. In reaching the determination to approve and recommend the Arrangement Resolution, the Board of Directors did not assign any relative or specific weight to the factors that were considered, and individual directors may have given different weight to each factor. There are risks associated with the Arrangement, including that some of the potential benefits set forth in this Circular may not be realized or that there may be significant costs associated with realizing such benefits. See Risk Factors - Risk Factors Relating to the Arrangement. As at July 27, 2010, the directors and officers of GMi, in its capacity as general partner of Gaz Métro, and their associates, as a group, beneficially owned, directly or indirectly, or exercised control or direction over, an aggregate of approximately 73,589 Public LP Units, representing approximately 0.21% of the outstanding Public LP Units and 0.06% of the outstanding Units. Each of the members of the Board of Directors and each of the senior executive officers of GMi have indicated that they intend to vote all of their Public LP Units in favour of the Arrangement Resolution. Effect of the Arrangement THE ARRANGEMENT General If approved, the Arrangement will result in the reorganization of Gaz Métro s public ownership structure into a new dividend-paying publicly listed corporation and more specifically in the exchange, on a one-for-one basis, of all Public LP Units for Valener Shares. The Arrangement will result in Public Unitholders holding 34,933,663 Valener Shares, representing 100% of the Valener Shares. Immediately after the completion of the Arrangement, Public Unitholders will retain their current proportionate economic interest in Gaz Métro indirectly through Valener, and will benefit, through Valener, from an increase in Gaz Métro s distributions otherwise payable to Valener based on its approximately 29% economic interest in Gaz Métro by an aggregate amount of $20 million over a three-year period. GMi and Gaz Métro Plus will, as part of the Arrangement, retain their Units on and after the Effective Date, and will remain Unitholders. Directors and Management of Valener Following the completion of the Arrangement, the board of directors of Valener will initially be comprised of three independent directors, namely Nicolle Forget, Pierre Monahan and Réal Sureau, who are currently members of the Independent Committee. It is expected that a fourth director will be appointed by the board of directors of Valener, as permitted by the articles of Valener and the provisions of the CBCA, before or shortly after the Effective Date. Initially, Valener will not have its own management team. Strategic decisions in Valener s current or potential business operations, affairs or investments (such as the approval of any growth opportunity or the exercise by Valener of its pre emptive right in the event of a new issuance of units by Gaz Métro) will be approved by the board of directors of Valener while the day to day management of Valener s interest in Gaz Métro will be assumed by Gaz Métro pursuant to the Administration Agreement, the First Additional Services Agreement relating to the Debt of Valener and, if the Seigneurie Option is exercised, the Second Additional Services Agreement with respect to the Seigneurie Project. Under such agreements, Valener will receive administrative and management support services

44 from Gaz Métro, either directly or through GMi, its general partner, relating solely to Valener s interest in Gaz Métro and related public company matters, its financing needs, its indirect participation in the Seigneurie Project, and, in certain circumstances, certain additional services. Should the business of Valener no longer be fully managed by Gaz Métro as specifically provided under the Administration Agreement, Valener will appoint its own management team and Gaz Métro will only provide a limited number of services for the management and general administration of the business, operations and affairs of Valener which are solely related to Valener s interest in Gaz Métro and related public company matters. Valener will also appoint its own management team should Gaz Métro perform additional services under the Administration Agreement in respect of any business opportunities that are not in the same line of business as carried on by Gaz Métro at such time. See The Arrangement - Material Agreements - Administration and Additional Services Agreements and Appendix E Information Concerning Valener Directors and Management of Valener. Effect on Public Unitholders The Public LP Units will be transferred to Valener in consideration for Valener Shares on the basis of one Valener Share for each Public LP Unit so transferred. See Certain Canadian Federal Income Tax Considerations. Pursuant to the Arrangement, the Valener Shares will be listed on the TSX in substitution for the Public LP Units, and the Units will be de-listed on the Effective Date. See The Arrangement - Approvals - Stock Exchange Listing Approval. Pre-Arrangement Structure The following diagram illustrates the current structure of Gaz Métro. Trencap L.P. (1) Enbridge Inc. (2) GDF SUEZ (3) 50.38% 32.06% 17.56% Noverco 100% 100% GMi 70.99% 85,510,000 Units Public Gaz Métro Plus 0.01% 8,551 Units Gaz Métro 29% 29% 34,933,663 Units Public LP Units (1) The limited partners of Trencap L.P. are: (1) Caisse de dépôt et placement du Québec (51.11%); Fonds de solidarité des travailleurs du Québec (F.T.Q.) (16.66%); SNC-Lavalin Inc. (11.11%); British Columbia Investment Management Corporation (11.11%); Régime des rentes du Mouvement Desjardins (8.33%); and Régime de retraite de l Université du Québec (1.67%). (2) Enbridge Inc. holds its shares through its Subsidiary, IPL System Inc. (3) GDF SUEZ (formerly Gaz de France) holds its shares through its Subsidiary, Laurentides Investissements S.A.S

45 Post-Arrangement Structure On the Effective Date, immediately following the completion of the Arrangement, the Public Unitholders will be the sole Valener Shareholders, and Valener, GMi and Gaz Métro Plus will own all of the issued and outstanding Units. The following diagram illustrates the organizational structure of Gaz Métro and Valener immediately following the completion of the Arrangement. Trencap L.P. Enbridge Inc. GDF SUEZ 50.38% 32.06% 17.56% Public Noverco 34,933,663 Common Shares 100% 100% 100% GMi Valener 70.99% 85,510,000 Units 29% 34,933,663 Units Gaz Métro Plus 0.01% 8,551 Units Gaz Métro Effect of the Arrangement on Distributions The quarterly cash distribution of $0.31 per Unit declared on June 22, 2010 to Unitholders of record on September 15, 2010 will be paid, as announced, on September 30, Provided the Arrangement is approved at the Meeting and the Effective Date of the Arrangement occurs on September 30, 2010, as currently scheduled, this will be the last distribution paid to Public Unitholders by Gaz Métro. In the event that the Arrangement is not approved at the Meeting, the Board of Directors will meet to determine the distributions which would be declared payable on the Units after September 30, It is currently estimated that a distribution per Unit in a range of $0.85 to $0.87 for fiscal year 2011 would be paid under such a status quo scenario, reflecting, among other things, the dilutive impact of a planned equity offering of $100 million by Gaz Métro in the fall of 2010, after the Effective Date, in order to, as previously announced, bring the capital structure of Gaz Métro (namely its debt/total capitalization ratio) in line with its historical level. Gaz Métro s distribution practice delivers long-term, strong and stable distributions to its Unitholders. Upon completion of the Arrangement, Gaz Métro intends to continue its practice of distributing substantially all of its Net Income, and, in any case, not less than 85% of its Net Income excluding non-recurring items, subject to certain exceptions. In addition, if GMi as general partner determines that it is appropriate, for any other reason (including as may be required for investments in the business, financing requirements or capital structure realignment of Gaz Métro), to distribute less than 85% of the Net Income excluding non-recurring items, it may cause Gaz Métro to do so, provided that the resolution of the Board of Directors authorizing such lesser distribution has been adopted with the approval of at least 90% of the votes cast by directors. See The Arrangement - Material Agreements - Amended Partnership Agreement. It is expected that Valener will adopt a dividend policy of paying out a high proportion of its available cash in the form of quarterly dividends to its shareholders. The dividend policy will be subject to the discretion of the board of

46 directors of Valener and may vary depending on, among other things, distributions received from Gaz Métro, Valener s earnings, funds required for principal or interest repayments under debt of Valener outstanding from time to time or for general corporate purposes, the satisfaction of solvency tests imposed by the CBCA for the declaration of dividends and other conditions existing at such future time. See Risk Factors. It is expected that following the completion of the Arrangement, Valener will initially pay an annualized dividend of $1.00 per Valener Share. Dividends are expected to be paid on a quarterly basis. The first such quarterly dividend is expected to be declared to the holders of record of Valener Shares on December 30, 2010 and to be paid on January 17, 2011, and subsequent dividends for the fiscal year 2011 are expected to be paid in April and July An annualized dividend of $1.00 per Valener Share would represent a sustainable dividend payout going forward, taking into account the increase in Gaz Métro s distributions otherwise payable to Valener based on its approximately 29% economic interest in Gaz Métro by an aggregate amount of $20 million over a period of three years and the following assumptions based on the current economic context of Gaz Métro: Gaz Métro will be able to continue its practice of distributing substantially all of its Net Income; the authorized rate of return for Gaz Métro s natural gas distribution activity in Québec will be maintained or will improve; the Seigneurie Option will be exercised; the Seigneurie Project will be completed within the contemplated timeframe and parameters and will generate the anticipated cash flows starting in 2014; and Gaz Métro will proceed with an equity offering of $100 million in the fall of 2010, after the Effective Date. If such an issuance takes place as planned, Valener will exercise its pre-emptive right to maintain its relative ownership level in Gaz Métro and will finance its subscription of new Units through an equity offering (see Appendix E Information Concerning Valener Description of Capital Structure ). Both offerings and their potential dilutive impact on Valener Shareholders have been taken into account in determining the annualized dividend expected to be paid by Valener and its sustainability. Such expectation is dependent on other factors, assumptions and risks identified in this Circular and documents incorporated by reference in this Circular. See Management Information Circular - Forward-Looking Statements and Risk Factors. Valener s Tax Position Post-Arrangement Valener will be subject to Canadian federal and provincial corporate income tax on its taxable income. If the Arrangement is approved by Unitholders at the Meeting, Valener will include in its income its share of Gaz Métro income or loss for tax purposes based on distributions received from Gaz Métro for the taxation year of Gaz Métro ending in the taxation year of Valener. Valener expects to be taxable at an effective tax rate of approximately 28% for its 2011 taxation year. Gaz Métro s Tax Position Post-Arrangement If the Arrangement is approved by Unitholders at the Meeting, Gaz Métro will not be subject to the SIFT Rules, as its Units will then be held by Valener, GMi and Gaz Métro Plus, and will remain a flow-through entity for tax purposes

47 Arrangement Steps Pursuant to the Arrangement, commencing at the Effective Time, each of the events set out below shall occur and shall be deemed to occur in the following order, without any further act or formality except as otherwise provided in the Arrangement Agreement: Exchange of Public LP Units for Valener Shares (a) the Public LP Units held by the Unitholders shall be transferred to Valener (free of any hypothecs or claims) in consideration for Valener Shares on the basis of one Valener Share for each Public LP Unit so transferred. The stated capital maintained in respect of the Valener Shares shall be equal to the fair market value of the Public LP Units so transferred to Valener; Material Agreements (b) the Material Agreements shall become effective; Purchase for Cancellation of the Valener Shares held by GMi (c) all Valener Shares issued to GMi in connection with the incorporation and organization of Valener shall be purchased for cancellation by Valener for consideration equal to the fair market value of such Valener Shares, and shall be cancelled; Reduction of Stated Capital of Valener Shares (d) Valener shall be authorized to reduce the stated capital maintained in respect of the Valener Shares by an amount determined by the board of directors of Valener which shall not exceed $250,000,000, without any payment. Arrangement Agreement The Arrangement is being effected pursuant to the Arrangement Agreement. The Arrangement Agreement contains covenants of and from each of Gaz Métro, GMi, Valener (formerly known as Canada Inc.), Noverco and Gaz Métro Plus, and various conditions precedent, both mutual and with respect to each entity party thereto. The Arrangement Agreement is attached as Appendix C to this Circular and reference is made thereto for the full text thereof. Material Agreements The following is intended to be a summary of the key provisions of the Material Agreements. This summary should not be relied on as a statement of each party s legal rights and obligations. Material Agreements will be filed on SEDAR following the completion of the Arrangement. Amended Partnership Agreement The Partnership Agreement will be amended on the Effective Date as part of the Arrangement to, among other things, (i) provide for additional rights in favour of Valener, as a limited partner of Gaz Métro, (ii) provide for the increase in Gaz Métro s distributions otherwise payable to Valener based on its approximately 29% economic interest in Gaz Métro by an aggregate amount of $20 million over a three-year period and elaborate Gaz Métro s distribution practice going forward, (iii) provide for certain changes to the governance of Gaz Métro, (iv) protect Gaz Métro s tax status post-arrangement, (v) specify disclosure obligations of Gaz Métro towards its partners, (vi) harmonize the rights and obligations of the partners with the other Material Agreements to be entered into as of the Effective Date, (vii) appoint GMi as registrar and transfer agent for the Units, (viii) provide for restrictions on transfers of Units, and (ix) clear ambiguities, delete obsolete concepts and correct and supplement certain

48 provisions. The rights granted to Valener as a limited partner, the right to additional distributions in the aggregate amount of $20 million over a three-year period as well as the board representation rights, all as more fully described below, are non-assignable rights of Valener. Noverco will intervene to the Amended Partnership Agreement in respect of provisions regarding growth prospects of Valener, the right of Valener to participate in a sale of shares of GMi, board representation rights of Valener, and take-over bid protection measures for Valener. Rights Granted to Valener as Limited Partner Growth Prospects of Valener All significant business opportunities and acquisitions considered by Management shall be submitted to the Board of Directors for a determination of whether or not to pursue such business opportunity or acquisition. If the Board of Directors determines not to pursue or to cease to pursue a business opportunity or acquisition identified by Management (but only those not otherwise subject to the Non-Competition Agreement) through Gaz Métro or any of its Affiliates (other than upstream Affiliates of Gaz Métro), Gaz Métro will use its reasonable best efforts, subject to compliance with confidentiality and transfer restriction provisions, to provide Valener, Noverco and Noverco shareholders the opportunity to submit an offer to pursue such business opportunity or acquisition on terms and conditions to be agreed upon, which may include, in certain circumstances, the reimbursement of development costs and the payment of incentive payments to Gaz Métro. Valener shall cease to have such right once it ceases to beneficially own, directly or indirectly, at least 7.5% of the outstanding Units. Right of Valener to Participate in a Sale of Assets by Gaz Métro As long as Valener beneficially owns, directly or indirectly, at least 7.5% of the outstanding Units, Valener shall have the right (subject to compliance with any restrictions or conditions contained in existing agreements) to participate as a potential bidder in any sale of assets by Gaz Métro (but only those not otherwise subject to the provisions of the Non-Competition Agreement, save and except for a sale of all or substantially all of the assets relating to any one of the three business sectors designated as Restricted Activities) that is (i) initiated by Gaz Métro (but if not by way of an auction only if the sale is for cash proceeds), or (ii) following the receipt of a third party offer, but in that case only if Gaz Métro proceeds to seek one or more alternative offers, the whole upon and subject to the terms and conditions applicable to any other bidders. Right of Valener to Participate in Sale of Units or in a Sale of GMi Shares As long as Valener beneficially owns, directly or indirectly, at least 7.5% of the outstanding Units, Valener shall have the right (subject to compliance with any restrictions or conditions contained in existing agreements) to participate as a potential bidder in any sale of Units by GMi and/or shares of GMi by Noverco (including any sale by way of an initial public offering), the whole upon and subject to the terms and conditions applicable to any other bidders. Pre-Emptive Right Any new Units to be issued by Gaz Métro shall first be offered to each of Valener and GMi, which may purchase a number of new Units corresponding to their respective pro rata share of Units at fair market value, as determined by the Board of Directors. Valener shall have a period of 60 days to confirm its intention to exercise its pre-emptive right and commit to complete its capital injection, failing which it shall be deemed to have waived its pre-emptive right, and, if exercised, up to six months from the date of expiry of the 60-day acceptance period to complete its capital injection, failing which no new Units shall be issued to Valener, without limiting any available recourses of Gaz Métro against Valener. In cases where Gaz Métro requires an urgent injection of capital before the expiry of six-month capital injection period (as determined by the Board of Directors, in its entire discretion), if Valener and GMi cannot concurrently fund any such required capital injection by the proposed date of closing of the issue of new Units, the party that agrees to participate alone in such urgent injection shall be entitled to receive from Gaz Métro reasonable supporting/financing fees on the portion injected for the subscription of new Units (based on comparable

49 market fees) until the pro rata injection by the other party is completed, or the expiry of the 60-day acceptance period if the other party does not exercise its pre-emptive right in due time. Take-Over Bid Protection Should Gaz Métro cease to be a reporting issuer under applicable securities legislation following the completion of the Arrangement, GMi undertakes in favour of Valener not to sell any Units and Noverco undertakes in favour of Valener not to sell any shares of GMi, in both cases pursuant to a take-over bid (within the meaning of applicable securities legislation), under circumstances in which applicable securities legislation would have required the same offer to be made to all Unitholders if Gaz Métro were a reporting issuer, unless the same offer is made to Valener upon and subject to the same terms and conditions applicable to the sale of Units or shares of GMi, as applicable. In the event Valener accepts the offer made to it within the 25-day period following receipt of a notice and requires shareholder approval in accordance with applicable laws to proceed with the sale of Units, it shall convene and hold a shareholders meeting at which such matter will be submitted for approval to the Valener Shareholders within 45 days of delivering its acceptance notice, failing which the Valener Shareholders shall be deemed to have voted against such sale. This protection shall not be applicable in circumstances where the private agreement exemption of section 4.2 of Regulation Respecting Take-Over Bids and Issuer Bids, as amended from time to time, is available, provided that a formal valuation confirming that the consideration paid for any securities is not greater than 115% of the value of the securities, prepared by a nationally recognized independent valuator (within the meaning of section 6.1 of MI ), shall be obtained by GMi or Noverco, at GMi or Noverco s cost, as applicable, and delivered to Valener concurrently with a confirmation of the sale of the securities. Minority Protection Measures If Gaz Métro ceases to be a reporting issuer under applicable securities legislation following the completion of the Arrangement, Gaz Métro undertakes in favour of Valener to comply with the provisions of MI which would apply to Gaz Métro if it were a reporting issuer, subject to available exemptions under MI (except for the exemptions that would be available to Gaz Métro strictly on the basis that it is not a reporting issuer). Whenever minority approval would have been required under MI , Gaz Métro undertakes to obtain such minority approval in accordance with Part 8 of MI and Valener s approval, if applicable, shall be obtained within reasonable delays in accordance with the provisions set out in the articles of incorporation of Valener which require Valener to seek shareholder approval by way of an ordinary resolution, subject to available exemptions under MI Distributions of Gaz Métro Additional Distribution One of the key benefits of the Arrangement for Public Unitholders is the increase of Gaz Métro s distributions otherwise payable to Valener by an aggregate amount of $20 million over a three year period. Accordingly, a new provision has been added to the Amended Partnership Agreement stating that, starting October 1, 2010, the amount to be distributed to Valener on a yearly basis, pursuant to the pro rata allocation mechanism among partners of Gaz Métro, shall be increased by $6,666,667, while the amount to be distributed to GMi on a yearly basis shall be reduced by $6,666,667, until Valener shall have received an aggregate amount of $20,000,000 over and above the distributions to which it is entitled based on its approximately 29% economic interest in Gaz Métro. Distribution Practice Upon completion of the Arrangement, it is intented that Gaz Métro will continue to distribute substantially all of its Net Income, and the Amended Partnership Agreement will provide that, in any case, Gaz Métro will distribute not less than 85% of its Net Income excluding non-recurring items, save and except for exceptions required (i) for the benefit of bondholders or lenders of Gaz Métro or GMi, as applicable, (ii) to ensure continued compliance with terms and conditions under the credit facilities and trust deeds of Gaz Métro and GMi, (iii) to comply with applicable regulations and laws, and (iv) to comply with any requirements of a regulatory authority. In addition, if GMi, as general partner, determines that it is appropriate, for any other reason (including as may be required for investments in the business, financing

50 requirements or capital structure realignment of Gaz Métro), to distribute less than 85% of the Net Income excluding non-recurring items, it may cause Gaz Métro to do so provided that the resolution of the Board of Directors authorizing such lesser distribution has been adopted with the approval of at least 90% of the votes cast by directors. Any amendment to this provision of the Amended Partnership Agreement will require the consent of Valener as long as it owns, directly or indirectly, at least 10% of the outstanding Units. Governance Profile of Gaz Métro Board Representations Rights of Valener As long as Valener beneficially owns, directly or indirectly, at least 7.5% of the outstanding Units, Noverco will undertake to exercise the votes attached to all the shares of GMi it holds from time to time in favour of the election of the nominees of Valener (who need not be directors of Valener) as directors of GMi. The number of Valener representatives on the GMi Board of Directors shall be equivalent to Valener s pro rata interest in Gaz Métro. Noverco or any other partner shall not, without the prior written consent of Valener, complete any transaction or take any action that would result in Valener no longer having the ability indirectly to cause the election of its nominees as directors of GMi. Waiver of Default and Release of GMi The Partnership Agreement will be modified to require consent from all partners for a waiver of any default and release of GMi, as general partner of Gaz Métro, from any claims. Gaz Métro s Tax Status Post-Arrangement The Amended Partnership Agreement shall provide that no partner shall take any action or conduct any transaction that, in the reasonable opinion of GMi, as general partner, could cause Gaz Métro to become a SIFT partnership within the meaning of the Tax Act including, for greater certainty, any action or transaction that could cause Gaz Métro to cease to be an excluded subsidiary entity within the meaning of the Tax Act. Disclosure Obligations of Gaz Métro The Amended Partnership Agreement will expressly provide that, unless otherwise required to be provided pursuant to a separate agreement between Gaz Métro and Valener (including the Administration Agreement), as long as Valener is a reporting issuer under applicable securities laws, Gaz Métro shall provide to it, within reasonable delays, but subject to restrictions under applicable laws or confidentiality obligations, financial statements and other information solely related to Valener s interest in Gaz Métro required for compliance with continuous disclosure and reporting requirements, and shall notify Valener without delay of any material change concerning Gaz Métro. Information readily available to Gaz Métro will be provided at no cost whereas information not readily available (other than financial information) will be provided for a consideration equal to the actual cost of operating and other expenses incurred by Gaz Métro to provide such information, without any profit component. Non-Competition Agreement On the Effective Date, Gaz Métro and Valener will enter into the Non-Competition Agreement setting out the parameters within which Valener may pursue (directly or indirectly through affiliates) its own development and acquisition strategies. According to the provisions of the Non-Competition Agreement, as long as Valener beneficially owns, directly or indirectly, at least 7.5% of the outstanding Units, Valener must not in any manner whatsoever, directly or indirectly, and will cause its Affiliates not to, (i) carry on, engage in or be concerned with or interested in, or (ii) advise, invest, lend money to, guarantee the debts or obligations of or permit its name or any part thereof to be used or employed by any person engaged in or concerned with or interested in, any Restricted Activities, without the prior written consent of the Board of Directors. For the purposes of the Non-Competition Agreement, Restricted Activities means any activity consisting of (i) regulated or non-regulated gas related activities in the Province of Québec of any nature whatsoever including, without limitation, the transport, distribution and storage of natural gas, the

51 transport and gathering of shale gas, geothermal activities and natural gas for vehicles activities, (ii) the transport or distribution of natural gas in the State of Vermont, and (iii) the generation, transmission or distribution of electricity in the State of Vermont. This non-competition undertaking may continue to apply, in certain circumstances, in the event of a sale by Gaz Métro of all or substantially all of its assets relating to any one of the three business sectors designated as Restricted Activities. Seigneurie Option Agreement On the Effective Date, Valener, Gaz Métro, Gaz Métro Éole, GMi and Noverco will enter into an agreement pursuant to which Valener will be granted an irrevocable and exclusive option to acquire or subscribe to common shares of Gaz Métro Éole representing 49% of all the issued and outstanding common shares of Gaz Métro Éole, in consideration for an amount representing 49% of all costs incurred, as of March 31, 2010, by or on behalf of Gaz Métro and/or Gaz Métro Éole in connection with the Seigneurie Project, such amount to be increased to reflect any additional costs related to the Seigneurie Project incurred by or on behalf of Gaz Métro and/or Gaz Métro Éole since March 31, 2010 up to and until the closing date of such purchase. The respective obligations of Valener and Gaz Métro to consummate the transactions contemplated by the Seigneurie Option Agreement are subject to the satisfaction, on or before the closing date, of various conditions, including (i) the obtaining of all required third party consents, (ii) the execution of a share purchase agreement including an undertaking by Valener to indemnify Noverco, GMi, Gaz Métro, Gaz Métro Éole or any subsidiary of Gaz Métro for any adverse tax impact for them resulting from the grant of the Seigneurie Option or the transfer of the interest in Gaz Métro Éole, (iii) the compliance with certain principles governing the conduct of Gaz Métro Éole s affairs, to be set out in a shareholders agreement to be entered into as soon as possible after the closing date, (iv) the provision by Valener of satisfactory replacement guarantees to the beneficiaries of all guarantees provided in connection with the Seigneurie Project, in proportion to the interest in Gaz Métro Éole to be acquired by Valener upon exercise of the Seigneurie Option; and (v) the negotiation with Boralex Inc. and the Séminaire de Québec for the renewal and amendment of the development agreement dated October 7, 2005 between Gaz Métro, Boralex Inc. and the Séminaire de Québec in order to renew the rights of exclusivity for the longest period possible and make the changes necessary to ensure that Gaz Métro Éole (in lieu of Gaz Métro) shall benefit from the exclusive right to participate, directly or indirectly, in the Seigneurie Project and any future wind project to be developed on the private property of the Seigneurie de Beaupré owned by the Séminaire de Québec. Valener may exercise the Seigneurie Option, in whole but not in part, at any time and from time to time for a period of ninety (90) days from the Effective Date, after which the Seigneurie Option will be of no further force and effect. Administration and Additional Services Agreements Administration Agreement On the Effective Date, Gaz Métro and Valener will enter into a 15-year administration and management support agreement pursuant to which, inter alia, (i) Gaz Métro, either directly or through GMi, its general partner, will provide to Valener certain administration and management support services solely in respect of Valener s interest in Gaz Métro and related public company matters and, in certain circumstances, may provide certain additional services, and (ii) Gaz Métro will reimburse Valener for certain expenses, subject to certain limitations. Services, Fees and Expenses As long as (i) Valener s activities consist solely of holding its interest in Gaz Métro and that Valener is not engaged, directly or indirectly, in any other business, operations or affairs, has no other assets, investments or projects and is not subject to any indebtedness, or (ii) all of the additional business, operations and affairs of Valener are subject to an agreement between Gaz Métro and Valener (including the First Additional Services Agreement relating to the Debt of Valener and the Second Additional Services Agreement with respect to the Seigneurie Project), Valener will not have its own management team and Gaz Métro will provide all services necessary for the management and general administration of the

52 business, operations and affairs of Valener. See Appendix E Information Concerning Valener Directors and Management of Valener. Should the business of Valener no longer be fully managed by Gaz Métro as specifically provided under the Administration Agreement, Valener will appoint its own management team and Gaz Métro will only provide a limited number of services for the management and general administration of the business, operations and affairs of Valener which are solely related to Valener s interest in Gaz Métro and related public company matters. Valener will also have the right to have reasonable access to the senior management of GMi to assist with investor relations and financial reporting matters, at its cost and on a cost recovery basis, subject to certain exceptions. Gaz Métro, either directly or through GMi, its general partner, may provide to Valener additional services as may be reasonably requested by Valener from time to time, including with respect to the management of other operations, business and affairs, the whole upon terms mutually agreed in writing. Notwithstanding the foregoing, Gaz Métro will have no obligation to provide any services which are not solely related to Valener s interest in Gaz Métro (and related public company matters). It is intended that Valener will have its own management team and employees and/or other consultants to support any development activities at its cost, unless otherwise agreed to between the parties. Gaz Métro shall be reimbursed by Valener for all operating and other expenses incurred in providing the services under the Administration Agreement, calculated by Gaz Métro on a quarterly basis based on the actual cost of providing the services, without any profit component. Reimbursement of Costs by Gaz Métro Gaz Métro shall reimburse Valener for all general administrative expenses (including public company costs) it incurs, subject to a maximum aggregate amount of (i) $1.75 million annually for the five-year period following the Effective Date, and (ii) $1 million annually for the subsequent ten-year period, until the termination of the Administration Agreement, taking into account an annual indexation in accordance with CPI and any fee increases implemented by regulatory authorities or the Toronto Stock Exchange from time to time, which are out of Valener s control. Notwithstanding the foregoing, Gaz Métro will only reimburse attendance fees for board and committee meetings of Valener s directors (and no other directors retainer, compensation, fees and expenses) and the aggregate annual attendance fees comprised in public company costs to be reimbursed to Valener will not be greater than $200,000. Termination Either party may terminate the Administration Agreement by delivering a 60-day prior written notice in case of uncured breach of a material obligation by the other party or upon occurrence of an event of bankruptcy or insolvency. Gaz Métro may also terminate the Administration Agreement: (i) if Valener takes an action or becomes party to a transaction that, in the reasonable opinion of GMi, could cause Gaz Métro to become a SIFT partnership within the meaning of the Tax Act, and (ii) in case of a change of control of Valener. Valener may also terminate the Administration Agreement at any time by delivering a 180-day prior written notice to Gaz Métro. Non-Solicitation Covenants Valener must not, without the prior written consent of GMi, at any time during the term of the Administration Agreement and for a period of (i) 24 months after its expiry or earlier termination or (ii) five years after termination if the Administration Agreement is terminated by Valener for convenience: (a) induce or endeavour to induce any employee of Gaz Métro or any of its Affiliates to leave his or her employment (other than through a general advertisement to the public);

53 (b) employ or attempt to employ or assist any Person to employ any chief executive officer, chief operating officer, chief financial officer, president or vice-president (other than Human Resources and Marketing vice-presidents), or any natural person designated as such or acting in a similar capacity, of Gaz Métro, Vermont Gas Systems, Inc. or Green Mountain Power Corporation within 24 months of the cessation of the person s employment with such entity; or (c) as long as GMi or Gaz Métro holds, directly or indirectly, an interest in the Seigneurie Project, employ or attempt to employ or assist any Person to employ any employee of Gaz Métro or any of its Affiliates who is involved, directly or indirectly, in the Seigneurie Project within 24 months of the cessation of the employee s employment with Gaz Métro or any of its Affiliates. Notwithstanding the foregoing, the restrictions in (b) and (c) above shall not apply with respect to an officer or employee, as applicable, which is terminated (with or without cause). First Additional Services Agreement Relating to the Debt of Valener On the Effective Date, Gaz Métro and Valener will enter into a 15-year services agreement, which will incorporate by reference some of the terms and conditions of the Administration Agreement, mutatis mutandis, and pursuant to which Gaz Métro, either directly or through GMi, its general partner, will provide to Valener certain additional services related to the financing of Valener, through debt or equity, and to the administration of such financings. Valener shall reimburse to Gaz Métro an amount equal to all operating and other expenses incurred by Gaz Métro in providing the additional services under the First Additional Services Agreement Relating to the Debt of Valener, calculated by Gaz Métro based on the actual cost of providing such services, plus an additional fee equal to 10% of the aggregate amount of such operating expenses. The First Additional Services Agreement Relating to the Debt of Valener shall automatically terminate upon the termination of the Administration Agreement. Gaz Métro may also terminate it upon a 60-day prior written notice to Valener in the event that some of the aspects of the operations, business and affairs of Valener are no longer under the overall administration and management of Gaz Métro (either directly or through GMi, its general partner) pursuant to the terms of the Administration Agreement or any other agreement for additional services that may be agreed to from time to time. Second Additional Services Agreement with respect to the Seigneurie Project On the Effective Date, Gaz Métro and Valener will enter into a 15-year services agreement which will only come into force upon the exercice by Valener of the Seigneurie Option. Pursuant to this agreement, which will incorporate by reference some of the terms and conditions of the Administration Agreement, mutatis mutandis, Gaz Métro, either directly or through GMi, its general partner, will provide to Valener certain additional services solely related to Valener s interest in the Seigneurie Project. Valener shall reimburse to Gaz Métro an amount equal to all operating and other expenses incurred by Gaz Métro in providing the additional services under the Second Additional Services Agreement with respect to the Seigneurie Project, calculated by Gaz Métro based on the actual cost of providing such services, plus an additional fee equal to 10% of the aggregate amount of such operating expenses. The Second Additional Services Agreement with respect to the Seigneurie Project shall automatically terminate upon the earlier of: (i) the termination of the Administration Agreement, or (ii) Valener or Gaz Métro ceasing to hold any ownership interest in the Seigneurie Project (directly or indirectly through Gaz Métro Éole). Gaz Métro may also terminate it upon a 60-day prior written notice of termination to Valener in the event that some of the aspects of the operations, business and affairs of Valener are no longer under the overall administration and management of Gaz Métro (either directly or through GMi, its general partner) pursuant to the terms of the Administration Agreement or any other agreement for additional services that may be agreed to from time to time. Procedure for the Arrangement Becoming Effective The Arrangement is proposed to be carried out pursuant to Section 192 of the CBCA. The following procedural steps must be taken for the Arrangement to become effective: (a) the Arrangement must be approved by the Unitholders voting at the Meeting in the manner set forth in the Interim Order;

54 (b) (c) (d) the Arrangement must be approved by the Court pursuant to the Final Order; all conditions precedent to the Arrangement, including those set forth in the Arrangement Agreement, must be satisfied or waived by the appropriate parties; and the Final Order, Articles of Arrangement and related documents, in the form prescribed by the CBCA, must be filed with the Director and the Certificate must be issued by the Director. The Arrangement will be effective on the date shown on the certificate issued by the Director. Approvals Unitholder Approval Pursuant to the provisions of the Partnership Agreement, MI and the Interim Order, the number of votes required to pass the Arrangement Resolution shall be (i) at least 66⅔% of the votes cast by all Unitholders present in person or represented by proxy at the Meeting, (ii) at least 66⅔% of the votes cast by all Unitholders other than GMi and Affiliated Entities present in person or represented by proxy at the Meeting, and (iii) a simple majority of the votes cast by all Unitholders present in person or represented by proxy at the Meeting, excluding Units beneficially owned or over which control or direction is exercised by interested parties and certain related parties of such interested parties (as provided by Section 8.1 of MI ). The voting thresholds described in (ii) and (iii) above are consistent with the Partnership Agreement and MI , respectively, to ensure that Public Unitholders have the opportunity to approve or disapprove the Arrangement independent of GMi and Affiliated Entities, on the one hand, and of interested parties and their related parties, on the other hand. The first two voting thresholds of (i) at least 66⅔% of the votes cast by all Unitholders present in person or represented by proxy at the Meeting, and (ii) at least 66⅔% of the votes cast by all Unitholders other than GMi and Affiliated Entities present in person or represented by proxy at the Meeting are consistent with the terms of the Partnership Agreement given the nature of the amendments proposed to be made to the Partnership Agreement in connection with the Arrangement (see The Arrangement - Material Agreements - Amended Partnership Agreement ). The third voting threshold of a simple majority of the votes cast by all Unitholders present in person or represented by proxy at the Meeting, excluding Units beneficially owned or over which control or direction is exercised by interested parties and certain related parties of such interested parties (as provided by Section 8.1 of MI ), is required given that the Arrangement also constitutes a business combination for the purposes of MI because (i) Noverco and GMi, related parties of Gaz Métro by virtue of their controlling position in Gaz Métro, are parties to contractual arrangements that were negotiated at the same time as the Arrangement and are conditional upon the completion of the Arrangement, and (ii) Valener, a related party of Gaz Métro by virtue of currently being a Subsidiary of GMi, will be granted the Seigneurie Option to acquire 49% of Gaz Métro s 50% indirect interest (through Gaz Métro Éole) in the Seigneurie Project (subject to obtaining all required consents), which contractual arrangements and Seigneurie Option were negotiated at the same time as the Arrangement and are conditional upon the completion of the Arrangement. See The Arrangement - Material Agreements. To the knowledge of Gaz Métro and its general partner, GMi, after reasonable inquiry, the votes attached to Units held by persons identified in the table below must be excluded both for purposes of the approval by at least 66⅔% of the votes cast by all Unitholders other than GMi and Affiliated Entities present in person or represented by proxy at the Meeting and for purposes of the approval by a simple majority of the votes cast by all Unitholders present in person or represented by proxy at the Meeting, excluding Units beneficially owned or over which control or direction is exercised by interested parties and certain related parties of such interested parties (as provided by Section 8.1 of MI ). The information as to Units beneficially owned or over which control or direction is exercised, not being within the knowledge of Gaz Métro, has been furnished by the respective directors and officers of the entities listed below and is effective as of July 27,

55 Name Number of Units GMi 85,510,000 Noverco 0 Trencap L.P. 0 Caisse de dépôt et placement du Québec 0 Capital d Amérique CDPQ inc. 0 Enbridge Inc. (1) 0 GDF SUEZ (2) 0 Gaz Métro Plus 8,551 Directors and senior officers of GMi 73,589 Directors and senior officers of Noverco 0 Directors and senior officers of Trencap L.P. 0 Directors and senior officers of Caisse de dépôt et placement du Québec 1,600 Directors and senior officers of Capital d Amérique CDPQ inc. 0 Directors and senior officers of Gaz Métro Plus 2,520 Directors and officers of Valener 15,523 (3) Officers of other Subsidiaries of Gaz Métro 34,122 (4) Total 85,596,260 Units representing, in the aggregate, 71,06% of all issued and outstanding Units (of which 70,99% are held by GMi) (1) Enbridge Inc. holds its shares of Noverco through its Subsidiary IPL System Inc. (2) GDF SUEZ (formerly Gaz de France) holds its shares of Noverco through its Subsidiary Laurentides Investissements S.A.S. (3) Already included in the aggregate number of Units held by directors and senior officers of GMi. (4) Already included in the aggregate number of Units held by directors and senior officers of GMi and directors and officers of Gaz Métro Plus. As of the Record Date, GMi held 85,510,000 Units (representing approximately 71% of the issued and outstanding Units). To the knowledge of Gaz Métro and GMi, in its capacity as general partner of Gaz Métro, no Person other than GMi beneficially owns or exercises control or direction over more than 10% of all issued and outstanding Units. The persons named in the enclosed form of proxy intend to vote at the meeting FOR the Arrangement Resolution, unless a Unitholder has specified in the applicable form of proxy or Voting Form that such Unitholder s Units are to be voted against the resolution. Dissent Rights No dissent rights will be granted to Public Unitholders in connection with the Arrangement as such rights are not required by the Partnership Agreement or the Interim Order. In obtaining the Interim Order, the following representations were made to the Court regarding the basis for the Arrangement not providing for dissent rights: (a) (b) (c) dissent rights are not required to be granted to shareholders in the context of an arrangement pursuant to section 192 of the CBCA; the underlying beneficial entitlements of the Public Unitholders are not affected by the Arrangement; Public Unitholders which choose to exchange their Public LP Units for Valener Shares will not only continue to benefit indirectly, through the Valener Shares, from Gaz Métro s stable income and high distribution payout but will also benefit from Valener enhanced financial profile;

56 (d) (e) (f) (g) there is a liquid public market in which Public Unitholders can trade their Public LP Units if they are dissatisfied with the terms of the Arrangement; the approval of the Arrangement Resolution is required before any application to the Court for approval of the Arrangement can proceed; before the Arrangement can be implemented, the Court must first determine and declare that the Arrangement and the procedure relating thereto are fair to the persons affected, both from a substantive and a procedural point of view; and before the Arrangement can be implemented, all Unitholders and all other interested persons shall have the right to be heard. Court Approvals Interim Order On July 28, 2010, the Court granted the Interim Order facilitating the calling of the Meeting and prescribing the conduct of the Meeting and other matters. The Interim Order is attached as Appendix B to this Circular. Final Order The CBCA provides that an arrangement requires Court approval. Subject to the terms of the Arrangement Agreement, and if the Arrangement Resolution is approved by Unitholders at the Meeting in the manner required by the Interim Order, Valener will make an application to the Court for the Final Order. The application for the Final Order approving the Arrangement is scheduled for September 20, 2010 at 9:15 a.m. (Montréal time), at the Court, 1 Notre-Dame Street East, Montréal, Québec, or at any other date following notification by news release to the Unitholders of the date of presentation of such application, at least two days before such date. At the hearing, any Unitholder and any other interested party who wishes to participate or to be represented or to present evidence or argument may do so, subject to filing with the Court and serving upon Gaz Métro, GMi, Valener, Noverco and Gaz Métro Plus a notice of intention to appear together with any evidence or materials which such party intends to present to the Court on or before noon (Montréal time) on September 20, 2010 or, if such appearance is with the view to contest the application for the Final Order or to make representations in relation thereto, on or before noon (Montréal time) on September 20, Service of such notice shall be effected by service upon Gaz Métro s legal counsel, Osler, Hoskin & Harcourt LLP, c/o Sylvain Lussier, 1000 De La Gauchetière Street West, Suite 2100, Montréal, Québec, H3B 4W5. The securities to be issued to Public Unitholders pursuant to the Arrangement will not be registered under the 1933 Act, in reliance upon the exemption from registration provided by Section 3(a)(10) thereof. The Court will be advised prior to the hearing of the application for the Final Order that if the terms and conditions of the Arrangement are approved by the Court, the securities issued to Public Unitholders pursuant to the Arrangement will not require registration under the 1933 Act. Gaz Métro has been advised by its counsel, Osler, Hoskin & Harcourt LLP, that the Court has broad discretion under the CBCA when making orders with respect to the Arrangement and that the Court will consider, among other things, the fairness and reasonableness of the Arrangement, both from a substantive and a procedural point of view. The Court may approve the Arrangement, either as proposed or as amended, in any manner the Court may direct, subject to compliance with such terms and conditions, if any, as the Court thinks fit. Depending upon the nature of any required amendments, Gaz Métro may determine not to proceed with the Arrangement. Stock Exchange Listing Approval The TSX has conditionally approved the substitutional listing of the Valener Shares issuable pursuant to the Arrangement, subject to Valener fulfilling the requirements of such exchange as soon as reasonably practicable after the Effective Date. After the Effective Date, the Valener Shares will be listed on the TSX under the symbol VNR and the Units will be delisted on the Effective Date

57 VPSB Approval Vermont law requires that the VPSB approve the direct or indirect acquisition of a controlling interest in a utility company subject to the VPSB s jurisdiction. A controlling interest is defined under Vermont law as an interest representing 10% or more of the outstanding voting securities of a corporation, or such other interest as the VPSB determines to constitute the means to direct or cause the direction of the management or policies of a corporation. Through Valener s right under the Amended Partnership Agreement to nominate directors to the Board of Directors of GMi in proportion to its interest in Gaz Métro, the Arrangement may result in the acquisition by Valener of a controlling interest in several utility companies in the State of Vermont, including Vermont Gas Systems, Inc., Green Mountain Power Corporation and three subsidiaries of Green Mountain Power Corporation, namely Vermont Electric Power Company, Inc., Vermont Transco, LLC, and Vermont Yankee Nuclear Power Corporation. Consequently, Northern New England Energy Corporation, a Subsidiary of Gaz Métro acting as agent for Valener, has petitioned the VPSB for approval of Valener s indirect acquisition of a controlling interest in these companies. The VPSB is expected to act on this petition in early September The Department of Public Service, which represents the interests of the people of the State of Vermont before the VPSB, has filed a letter recommending that the VPSB approve the proposed acquisition of a controlling interest in these companies by Valener without conducting hearings. Should the VPSB determine that it is necessary to convene a hearing in this matter, the Department of Public Service will participate in such hearing. Conditions Precedent to the Arrangement The respective obligations of Gaz Métro, Noverco, GMi, Valener and Gaz Métro Plus to consummate the transactions contemplated by the Arrangement Agreement, and in particular the Arrangement, are subject to the satisfaction, on or before the Effective Date, of each of the following conditions, any of which may be waived collectively by them without prejudice to their right to rely on any other of such conditions. These conditions include, without limitation: (a) (b) (c) (d) (e) (f) the Interim Order shall have been granted in form and substance satisfactory to Valener, Gaz Métro, Noverco and GMi, acting reasonably, not later than July 30, 2010 or such later date as the parties to the Arrangement Agreement may agree and shall not have been set aside or modified in a manner unacceptable to such parties on appeal or otherwise; the Arrangement Resolution shall have been approved by the requisite number of votes cast by the Unitholders at the Meeting in accordance with the provisions of the Interim Order and any applicable regulatory requirements; the Final Order shall have been granted in form and substance satisfactory to Valener, Gaz Métro, Noverco and GMi, acting reasonably, not later than September 24, 2010 or such later date as the parties to the Arrangement Agreement may agree and shall not have been set aside or modified in any manner unacceptable to such parties on appeal or otherwise; the directors of GMi, in its capacity as general partner of Gaz Métro, shall not have determined in their sole and absolute discretion, that to proceed with the Arrangement would not be in the best interests of Gaz Métro and the Unitholders; the Articles of Arrangement and all necessary related documents, in form and substance satisfactory to Valener, Gaz Métro and GMi, acting reasonably, shall have been accepted for filing by the Director in accordance with Subsection 192(6) of the CBCA; no material action or proceeding shall be pending or threatened by any Person and there shall be no action taken under any existing applicable law or regulation, nor any statute, rule, regulation or order which is enacted, enforced, promulgated or issued by any court, department, commission, board, regulatory body, government or governmental authority or similar agency, domestic or foreign, that:

58 (i) (ii) makes illegal or otherwise directly or indirectly restrains, enjoins or prohibits the Arrangement or any other transactions contemplated in the Arrangement Agreement or the Plan of Arrangement; or results in a judgment or assessment of material damages directly or indirectly relating to the transactions contemplated in the Arrangement Agreement or the Plan of Arrangement; (g) (h) (i) (j) (k) all necessary material third party consents and all applicable governmental, regulatory and judicial consents with respect to the transactions contemplated under the Arrangement shall have been obtained including, without limitation, the necessary approval from the VPSB; the Material Agreements shall have been executed to become effective as of the Effective Date; the Second Additional Services Agreement with respect to the Seigneurie Project shall have been executed to become effective on the date of exercise of the Seigneurie Option, only if the parties have agreed to execute such agreement; the TSX shall have conditionally approved the substitutional listing of the Valener Shares to be issued pursuant to the Arrangement, subject only to the filing of required documents which cannot be filed prior to the Effective Date; and the Arrangement Agreement shall not have been terminated. Upon the conditions being fulfilled or waived, Valener intends to file a copy of the Final Order and the Articles of Arrangement with the Director under the CBCA, together with such other materials as may be required by the Director, in order to give effect to the Arrangement as of the Effective Date. Notwithstanding the foregoing, the Arrangement Resolution proposed for consideration by the Unitholders authorizes the Board of Directors, without further notice to or approval of such Unitholders, subject to the terms of the Arrangement, to amend or terminate the Arrangement Agreement or the Plan of Arrangement pursuant to the terms as set out in the Arrangement Agreement, or to revoke the Arrangement Resolution at any time prior to the Arrangement becoming effective pursuant to the provisions of the CBCA. The full text of the Arrangement Resolution is attached as Appendix A to this Circular. Timing If the Meeting is held as scheduled and is not adjourned and the other necessary conditions at that point in time are satisfied or waived, Valener will apply for the Final Order approving the Arrangement on September 20, 2010, or at any other date before or after September 20, 2010 following notification by news release to the Unitholders of the date of presentation of such application, at least two days before such date. If the Final Order is obtained on September 20, 2010, or at any other date before or after September 20, 2010, in form and substance satisfactory to Gaz Métro, GMi, Noverco and Valener and all other conditions set forth in the Arrangement Agreement are satisfied or waived, Gaz Métro expects the Effective Date to be September 30, It is not possible, however, to state with certainty when the Effective Date will occur. The Arrangement will become effective, following the filing with the Director of the Articles of Arrangement and a copy of the Final Order, together with such other materials as may be required by the Director, upon issuance by the Director of the Certificate. Procedure for Exchange of Public LP Units Registered Unitholders will receive, with this Circular, a Letter of Transmittal printed on yellow paper. In order to receive Valener Shares or another document evidencing the electronic registration of ownership of Valener Shares in the records of Valener (a Direct Registration Advice ) following completion of the Arrangement, Registered Unitholders must deposit with the Depositary (at one of the addresses specified on the last

59 page of the Letter of Transmittal) a duly completed Letter of Transmittal together with the certificates representing the holder s Public LP Units in accordance with the instructions contained in the Letter of Transmittal. Public Unitholders whose Public LP Units are registered in the name of a broker, dealer, bank, trust company or other nominee or intermediary must contact their nominee or intermediary to arrange for the exchange of their Public LP Units. Registered Unitholders are advised that use of the mail to transmit certificates representing their Public LP Units and the Letter of Transmittal is at each holder s risk. Gaz Métro recommends that such certificates and documents be delivered by hand to the Depositary and a receipt therefore be obtained or that registered mail be used and that proper insurance be obtained. All signatures on the Letter of Transmittal and on certificates representing Public LP Units must be guaranteed by an Eligible Institution, unless otherwise provided. A Registered Unitholder who has lost or misplaced his or her Public LP Unit certificate(s) should complete the Letter of Transmittal as fully as possible and forward it, together with an affidavit explaining the loss, to the Depositary. The Depositary will assist in making arrangements for the necessary documentation (which may include a bonding requirement) for a Valener Share certificate or Direct Registration Advice to be issued in accordance with the Arrangement. Valener will cause the Depositary to send, by first class mail, Valener Share certificates or Direct Registration Advice to be issued under the Arrangement that a Registered Unitholder is entitled to receive, to such Registered Unitholder s address as shown on Gaz Métro s register, only if such Registered Unitholder has delivered and surrendered to the Depositary a Letter of Transmittal duly completed and executed and such other documents as the Depositary may require, including all certificates representing such holder s Public LP Units. If the Registered Unitholder indicates that he or she wishes to pick up the Valener Share certificates or Direct Registration Advice deliverable under the Arrangement, then such Valener Share certificates or Direct Registration Advice will be available at the offices of the Depositary indicated in the Letter of Transmittal. Upon the Arrangement becoming effective and upon issuance by Valener of the Valener Share certificates to the Depositary, each Registered Unitholder will be removed from Gaz Métro s register and, until validly surrendered, the certificate(s) representing Public LP Units held by any such former Registered Unitholder will represent only the right to receive, upon such surrender, the Valener Shares to be issued under the Arrangement and distributions that have been made payable by Gaz Métro to Unitholders and that are unpaid as of the Effective Date. If a Registered Unitholder fails to deliver and surrender to the Depositary all certificates representing such holder s Public LP Units, together with a duly completed and executed Letter of Transmittal, the Valener Shares issuable to such Person as a result of the Arrangement will be held by the Depositary until the Public LP Unit certificate(s) and Letter of Transmittal have been received by the Depositary, for a maximum of six years less a day from the Effective Date. At the expiry of such period, all remaining Valener Shares will be returned to Valener 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 Public LP Units which has not been surrendered will cease to represent any claim or interest of any kind or nature against Valener or the Depositary. Should the Arrangement not be completed, any deposited Public LP Unit certificates will be returned to the depositing Registered Unitholder at Gaz Métro s expense upon written notice to the Depositary from Gaz Métro by returning the deposited Public LP Unit certificates (and any other relevant documents) by first class insured mail in the name of and to the address specified by the Registered Unitholder in the Letter of Transmittal or, if such name and address is not so specified, in such name and to such address as shown on Gaz Métro s register. Valener and the Depositary will be entitled to deduct and withhold from any consideration otherwise payable to a Registered Unitholder such amounts as Valener, Gaz Métro or the Depositary is required or permitted to deduct and withhold with respect to such payment under applicable laws

60 The Depositary will receive reasonable and customary compensation for its services in connection with the Arrangement, will be reimbursed for certain out-of-pocket expenses and will be indemnified by Gaz Métro against certain liabilities under applicable securities laws and expenses in connection therewith. Interests of Certain Persons or Companies in the Matters to be Acted Upon As at July 27, 2010, the directors and officers of GMi, in its capacity as general partner of Gaz Métro, and their associates, as a group, beneficially owned, directly or indirectly, or exercised control or direction over, an aggregate of approximately 73,589 Public LP Units, representing approximately 0.21% of the outstanding Public LP Units and 0.06% of the outstanding Units. Immediately after giving effect to the Arrangement, assuming no change to their Public LP Unit ownership, it is anticipated that the current directors and officers of GMi, in its capacity as general partner of Gaz Métro, and their associates, as a group, would beneficially own, directly or indirectly, or exercise control or direction over, an aggregate of approximately 73,589 Valener Shares representing approximately 0.21% of the outstanding Valener Shares. The information as to Public LP Units beneficially owned, not being within the knowledge of Gaz Métro or GMi, has been furnished by the directors and officers of GMi and is effective as of July 27, BMO has been engaged as financial advisor to the Independent Committee and the Board of Directors in connection with the Arrangement. BMO has received or will receive fees from Gaz Métro for services rendered. The completion of the Arrangement will involve a number of matters that result in ongoing arrangements between Valener and Gaz Métro. These matters are described under The Arrangement - Material Agreements. Expenses of the Arrangement The estimated costs to be incurred by Gaz Métro with respect to the Arrangement and related matters including, without limitation, financial advisory, accounting, tax and legal fees (including fees of Noverco, subject to certain limitations), and the preparation, printing and mailing of this Circular and other related documents and agreements, are expected to be approximately $8 million. Securities Law Matters Canada The Valener Shares to be issued under the Arrangement to the Public Unitholders will be issued in reliance on exemptions from prospectus and registration requirements of applicable Canadian securities laws and, following completion of the Arrangement, the Valener Shares will generally be freely tradeable (other than as a result of any control block restrictions which may arise by virtue of the ownership thereof) under applicable Canadian securities laws of the provinces and territories of Canada. To the knowledge of Gaz Métro and GMi, in its capacity as general partner of Gaz Métro, there have been no prior valuations of Gaz Métro, the Units, or the property of Gaz Métro in the 24-month period prior to the date of this Circular. No formal valuation is required in connection with the Arrangement pursuant to section 4.3 of MI The minority approval requirement pursuant to section 8.1 of MI is described in detail under the heading The Arrangement - Approvals - Unitholder Approval on page 39. United States The following discussion is only a general overview of certain requirements of U.S. securities laws that may be applicable to the Valener Shares received upon completion of the Arrangement. Recipients of Valener Shares are urged to obtain legal advice to ensure that the resale of such securities complies with applicable U.S. securities laws

61 The following discussion does not address the Canadian securities laws that will apply to the issue of the Valener Shares or the resale of the Valener Shares by U.S. Holders within Canada. U.S. Holders reselling their Valener Shares in Canada must comply with Canadian securities laws as outlined elsewhere in this Circular. The Valener Shares to be issued under the Arrangement to Public Unitholders will not be registered under the 1933 Act. Such securities will be issued in reliance upon the exemption from registration provided by Section 3(a)(10) of the 1933 Act. Section 3(a)(10) exempts from the registration requirements under the 1933 Act securities issued in exchange for one or more bona fide outstanding securities where the terms and conditions of the issuance and exchange of such securities have been approved by a court of competent jurisdiction, after a hearing upon the fairness of the terms and conditions of the issuance and exchange at which all Persons to whom the securities will be issued have the right to appear and receive timely notice thereof. The Court is authorized to conduct a hearing at which the fairness of the terms and conditions of the Arrangement will be considered. Subject to the approval of the Arrangement by the Unitholders, a hearing on the Arrangement will be held on or about September 20, 2010 by the Court. See The Arrangement Approvals Court Approvals Final Order. Accordingly, the Final Order of the Court will, if granted, constitute a basis for the exemption from the registration requirements of the 1933 Act with respect to the Valener Shares issued in connection with the Arrangement. The Valener Shares to be held by Public Unitholders following completion of the Arrangement will be freely tradable in the United States under U.S. federal securities laws, except by Persons who will be affiliates of Valener after the Arrangement. Persons who may be deemed to be affiliates of an issuer include individuals or entities that control, are controlled by, or are under common control with, the issuer, and generally include executive officers and directors of the issuer as well as principal shareholders of the issuer. Any resale of such Valener Shares by such an affiliate may be subject to the registration requirements of the 1933 Act. Such affiliates may immediately resell Valener Shares outside the United States without registration under the 1933 Act pursuant to Regulation S, subject to compliance with the requirements of Regulation S applicable to an issuer and its affiliates. Persons who are affiliates of Valener after the Arrangement may only resell their Valener Shares in the United States in the manner contemplated by Rule 144 under the 1933 Act ( Rule 144 ), or in a transaction exempt from registration. Rule 144 generally requires that such affiliates sell the Valener Shares received pursuant to the Arrangement in accordance with the volume and manner of sale limitations of Rule 144. These limitations generally require that any sales made by an affiliate in any three-month period not exceed the greater of 1% of the outstanding securities of Valener or, if such securities are listed on a U.S. securities exchange, the average weekly trading volume over the four calendar weeks preceding the placement of the sell order, and that sales be made in unsolicited, open market brokers transactions (as such term is defined in Rule 144) at times when certain information specified by Rule 144 is publicly available with respect to Valener. The foregoing discussion is only a general overview of certain requirements of U.S. securities laws applicable to the securities received upon completion of the Arrangement. All holders of such securities are urged to consult with counsel to ensure that the resale of their securities complies with applicable securities legislation. Experts Certain Canadian and United States legal matters relating to the Arrangement are to be passed upon by Osler, Hoskin & Harcourt LLP on behalf of Gaz Métro, Valener and the Independent Committee. Certain Canadian legal matters relating to the Arrangement are to be passed upon by McCarthy Tétrault LLP on behalf of Noverco. As at July 27, 2010, the partners and associates of Osler, Hoskin & Harcourt LLP and McCarthy Tétrault LLP beneficially owned, directly or indirectly, less than 1% of the outstanding Units. CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS In the opinion of Osler, Hoskin & Harcourt LLP, Canadian counsel to Gaz Métro, the following is a general summary of the principal Canadian federal income tax considerations generally applicable to a holder of Public LP Units who disposes of Public LP Units pursuant to the Arrangement and who, for purposes of the application of the Tax Act and at all relevant times (i) holds the Public LP Units, and will hold any Valener Shares received pursuant to the Arrangement, as capital property, (ii) deals at arm s length with and is not affiliated with Gaz Métro or Valener, and (iii) is or is deemed to be resident in Canada (a Holder or Holders ). Public LP Units and the

62 Valener Shares will generally constitute capital property to a Holder provided the Holder does not hold such shares in the course of carrying on a business or as part of an adventure in the nature of trade. This summary is based on the current provisions of the Tax Act and the regulations thereunder (the Regulations ), and Counsel s understanding of the current administrative policies and assessing practices of the Canada Revenue Agency ( 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 (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, administrative or judicial action nor does it take into account tax legislation or considerations of any province, territory or foreign jurisdiction (unless specifically provided for herein), which may differ from those discussed herein. Gaz Métro has obtained an advance tax ruling from the CRA (the Advance Income Tax Ruling ) confirming the Canadian federal income tax consequences of the material aspects of the Arrangement. This summary is not applicable to a Holder: (i) that is a specified financial institution, (ii) an interest in which is a tax shelter investment, (iii) that is a financial institution for purposes of certain rules referred to as the mark-to-market rules, (iv) that is exempt from tax under Part I of the Tax Act, or (v) to whom the functional currency reporting rules apply, each as defined in the Tax Act. Such Holders should consult their own tax advisors with respect to their own particular circumstances. This summary is of a general nature only and is not, and is not intended to be, legal or tax advice to any particular Unitholder. This summary is not exhaustive of all Canadian federal income tax considerations. Accordingly, Unitholders should consult their own tax advisors having regard to their own particular circumstances. Where a Holder jointly makes an election with Valener under section 85 of the Tax Act (the Section 85 Election ) in respect of its Public LP Units as described below, the Valener Shares received in exchange for such Public LP Units will not be Canadian securities, as defined under subsection 39(6) of the Tax Act, to such Holder and therefore will not be deemed to be capital property under subsection 39(4) of the Tax Act. Holders whose Public LP Units might not otherwise be considered to be capital property or whose Valener Shares may not be considered to be capital property should consult their own tax advisor concerning this election. Unit-for-Share Exchange No Tax-Deferred Rollover Under the Tax Act Subject to the availability of the Section 85 Election, a Holder who disposes of Public LP Units pursuant to the Arrangement will realize a capital gain (or capital loss) equal to the amount by which the aggregate fair market value of the Valener Shares received by the Holder for such Public LP Units under the Arrangement exceeds (or is less than) the adjusted cost base to the Holder of the Public LP Units disposed of and any reasonable costs of disposition. Holders will be entitled to increase the adjusted cost base of their Public LP Units by the amount of Gaz Métro income allocated by Gaz Métro to such Holders for the 2010 taxation year. The adjusted cost base of Valener Shares so acquired by the Holder will be equal to the fair market value of such shares. The income tax consequences described below under Certain Canadian Federal Income Tax Considerations Taxation of Capital Gains and Capital Losses will generally apply to a Holder who realizes a capital gain or capital loss from the disposition of Public LP Units. In accordance with the Advance Income Tax Ruling, the suspended and superficial loss rules will not be applicable to the Holders who dispose of Public LP Units pursuant to the Arrangement. Tax-Deferred Rollover Under the Tax Act A Holder that is an Eligible Unitholder may make a joint election with Valener under subsection 85(1) of the Tax Act, or where the Public Unitholder is a partnership, subsection 85(2) of the Tax Act, (and in each case, the

63 corresponding provisions of any applicable provincial or territorial tax legislation), and may thereby obtain a full or partial tax-deferred rollover for Canadian income tax purposes in respect of its disposition of particular Public LP Units, depending on the Elected Amount (as defined below) and the adjusted cost base to the Eligible Unitholder of Public LP Units at the time of the exchange, provided the Eligible Unitholder has properly completed and delivered to Valener the required election forms in the manner and within the time set out below. So long as at the time of the exchange, the adjusted cost base to an Eligible Unitholder of the Eligible Unitholder s Public LP Units equals the Elected Amount, the Eligible Unitholder will not realize a capital gain for purposes of the Tax Act on the exchange. The Elected Amount means the amount selected by an Eligible Unitholder, subject to the limitations described below in the election made pursuant to Section 85 Election, to be treated as the proceeds of disposition of the Public LP Units. In general, the Elected Amount must comply with the following rules: (i) the Elected Amount may not be less than the lesser of the adjusted cost base to the Eligible Unitholder of the Public LP Units exchanged, determined at the time of the exchange, and the fair market value of the Public LP Units at that time; and (ii) the Elected Amount may not exceed the fair market value of the Public LP Units at the time of the exchange. Eligible Unitholders will be entitled to increase the adjusted cost base of their Public LP Units by the amount of Gaz Métro income allocated by Gaz Métro to such Holders for the 2010 taxation year. Where an Eligible Unitholder and Valener make an election, the tax treatment to the Eligible Unitholder generally will be as follows: (i) the Public LP Units will be deemed to have been disposed of by the Eligible Unitholder for proceeds of disposition equal to the Elected Amount; (ii) if such proceeds of disposition of the Public LP Units are equal to the aggregate of the adjusted cost base to the Eligible Unitholder of the Public LP Units, determined immediately before the exchange, and any reasonable costs of disposition, no capital gain or capital loss will be realized by the Eligible Unitholder; (iii) to the extent that such proceeds of disposition of the Public LP Units exceed (or are less than) the aggregate of the adjusted cost base thereof to the Eligible Unitholder determined immediately before the exchange, and any reasonable costs of disposition, the Eligible Unitholder will in general realize a capital gain (or capital loss); and (iv) the aggregate cost to the Eligible Unitholder of the Valener Shares acquired on the exchange will be equal to the Elected Amount. The relevant federal tax election form is CRA Form T2057 (or, in the event that the Public LP Units are held as partnership property, CRA Form T2058). For Eligible Unitholders subject to tax in Québec, Revenu Québec Form TP-518-V (or, in the event that the Public LP Units are held as partnership property, Revenu Québec Form TP-529-V) will also be required. An Eligible Unitholder interested in making an election should indicate that intention in the Election Form in the space provided therein and return such Election Form along with its form of proxy to CIBC Mellon (in the case of a Registered Unitholder) or to Gaz Métro (in the case of a Non-Registered Unitholder) by no later than 5:00 p.m. (Montréal time) on Friday, September 10, 2010 or on the last business day preceding any adjournment of the Meeting. Gaz Métro will provide access, on or about December 1, 2010, to a tax instruction letter, together with the relevant tax election forms (including the Québec tax election forms) to the Eligible Unitholder by way of a website accessed through Gaz Métro s main website ( This website will allow the Eligible Unitholder to provide the information required for the tax election forms to be completed. For Eligible Unitholders who do not wish to avail themselves of this website, a paper copy of the tax instruction letter and tax election forms to be completed will be forwarded to Eligible Unitholders who make the request on the

64 Election Form. Eligible Unitholders should consult their own tax advisors to determine whether any separate provincial or territorial election forms are required and to obtain and complete such forms, if necessary. Valener has agreed to make the Section 85 Election (and any corresponding election under the provincial or territorial legislation) only with Eligible Unitholders who have indicated their intention to make an election in the Election Form and only if Valener has received all the relevant information requested in the tax instruction letter on or before January 10, Valener has retained the services of KPMG LLP to assist with the procedure. Accordingly, in order to make an election, an Eligible Unitholder must ensure that all the necessary information to prepare the tax election forms will be properly completed on the Gaz Métro website or, for Eligible Unitholders who do not wish to avail themselves of this website, that the necessary information will have to be mailed to KPMG LLP in accordance with the procedures set out in the tax instruction letter. On or about February 18, 2011, the Eligible Unitholder will receive by mail the completed tax election forms for approval and signature. Accordingly, in order to make the election, an Eligible Unitholder must ensure that two signed copies of the necessary tax election forms are returned and received by KPMG LLP on or before March 11, Valener will make the Section 85 Election (and the corresponding election under any applicable provincial or territorial tax legislation) only with an Eligible Unitholder, and at the amount selected by the Eligible Unitholder subject to the limitations set out in the Tax Act (and any applicable provincial or territorial tax legislation). Valener will not be responsible for the proper completion or filing of any election and the Eligible Unitholder will be solely responsible for the payment of any late filing penalty. Valener agrees only to execute any properly completed election and to forward such election to the proper tax authorities. At its sole discretion, Valener may accept and execute a tax election form for which the relevant information requested in the tax instruction letter is not received on or before January 10, 2011; however, no assurances can be given that Valener will do so. With the exception of execution of the election by Valener, compliance with the requirements for a valid election will be the sole responsibility of the Eligible Unitholder making the election. Accordingly, none of Valener, Gaz Métro nor the Depositary will be responsible or liable for taxes, interest, penalties, damages or expenses resulting from the failure by anyone to deliver any election in accordance with the procedures set out in the tax instruction letter, to properly complete any election or to properly file it within the time prescribed and in the form prescribed under the Tax Act (or the corresponding provisions of any applicable provincial or territorial tax legislation). Valener will provide to Eligible Unitholder a signed copy of the completed tax election form(s) upon request. In order for the CRA to accept a tax election without a late filing penalty being paid by an Eligible Unitholder, the election must be received by the CRA on or before the day that is the earliest of the days on or before which either Valener or the Eligible Unitholder is required to file an income tax return for the taxation year in which the exchange occurs. Valener s 2010 taxation year is scheduled to end on September 30, 2010 and its tax return is required to be filed within six months from the end of the taxation year. Eligible Unitholders should consult their own advisors respecting the deadlines applicable to their own particular circumstances. However, regardless of such deadlines, the signed and properly completed tax election forms of an Eligible Unitholder must be received by KPMG LLP in accordance with the procedures set out in the tax instruction letter no later than March 11, All Eligible Unitholders who wish to enter into an election with Valener should give their immediate attention to this matter. The instructions are set out in the Election Form and in the tax instruction letter to be made available by Gaz Métro on or about December 1, Eligible Unitholders are referred to Information Circular 76-19R3 and Interpretation Bulletin IT-291R3 issued by the CRA for further information respecting the election. An Eligible Unitholder who does not make a valid Section 85 Election (or the corresponding election under any applicable provincial or territorial tax legislation) may realize a taxable capital gain. The comments herein with respect to such elections are provided for general assistance only. The law in this area is complex and contains numerous technical requirements. Eligible Unitholders wishing to make the election should consult their own tax advisors. Holding and Disposing of Valener Shares Dividends on Valener Shares In the case of a Holder who is an individual, dividends received or deemed to be received on Valener Shares will be included in computing the Holder s income and, subject to certain exceptions that apply to trusts, will be subject to the gross-up and dividend tax credit rules applicable to dividends paid by taxable Canadian corporations under the

65 Tax Act, including the enhanced gross-up and dividend tax credit applicable to any dividend designated as an eligible dividend in accordance with the provisions of the Tax Act. A Holder that is a corporation will be required to include in its income any dividend received or deemed to be received on Valener Shares, and generally will be entitled to deduct an equivalent amount in computing its taxable income. A Holder that is a private corporation (as defined in the Tax Act) or any other corporation controlled, whether because of a beneficial interest in one or more trusts or otherwise, by or for the benefit of an individual (other than a trust) or a related group of individuals (other than trusts), will generally be liable to pay a refundable tax of 33 ⅓% under Part IV of the Tax Act on dividends received (or deemed to be received) on the Valener Shares to the extent such dividends are deductible in computing taxable income for the year. Disposition of Valener Shares Generally, a Holder who disposes of or is deemed to dispose of a Valener Share in a taxation year will be subject to the rules described below under Certain Canadian Federal Income Tax Considerations Taxation of Capital Gains and Capital Losses. Taxation of Capital Gains and Capital Losses Generally, a Holder is required to include in computing its income for a taxation year the Taxable Capital Gain, which is one-half of the amount of any capital gain realized in the year. Subject to and in accordance with the provisions of the Tax Act, a Holder is permitted to deduct the Allowable Capital Loss, which is one-half of the amount of any capital loss realized in a taxation year from Taxable Capital Gains realized in the year by such Holder. Allowable Capital Losses in excess of Taxable Capital Gains may be carried back and deducted in any of the three preceding years or carried forward and deducted in any following year against net Taxable Capital Gains realized in such year to the extent and under the circumstances described in the Tax Act. A Holder that is throughout the year a Canadian controlled private corporation (as defined in the Tax Act) may be liable to pay, in addition to tax otherwise payable under the Tax Act, a refundable tax on certain investment income including Taxable Capital Gains. Reduction of Stated Capital The reduction in the stated capital of the Valener Shares will not result in any immediate Canadian income tax consequences to Valener Shareholders. However, the reduction of the stated capital and paid-up capital of the Valener Shares may, in limited circumstances, have future Canadian income tax consequences to Valener Shareholders if Valener were to repurchase any of its Valener Shares under certain limited circumstances, if Valener were wound up or if Valener were to effect a reduction of its paid-up capital in certain circumstances. Eligibility for Investment On the date of issue, provided that the Valener Shares are listed on a designated stock exchange, which includes the TSX, the Valener Shares will be qualified investments under the Tax Act for trusts governed by registered retirement savings plans, registered retirement income funds, deferred profit sharing plans, registered education savings plans, registered disability savings plans and tax-free savings accounts ( TFSA ), each as defined in the Tax Act ( Exempt Plans ). Valener Shares will not be a prohibited investment under the Tax Act for a TFSA, provided the holder of such TFSA deals at arm s length with Valener, does not have a significant interest (within the meaning of the Tax Act) in Valener, and does not have a significant interest (within the meaning of the Tax Act) in a corporation, partnership or trust that does not deal at arm s length with Valener. Structure of Gaz Métro INFORMATION CONCERNING GAZ MÉTRO Gaz Métro is a limited partnership formed on October 1, 1987 pursuant to the laws of the Province of Québec under the name Gaz Plus and Company, Limited Partnership

66 Gaz Métro s principal place of business is located at 1717 du Havre Street, Montréal, Québec, H2K 2X3. Gaz Métro is registered as a limited partnership with the Registraire des entreprises (Québec) and as an extra-provincial limited partnership in each province of Canada other than Québec. The following table describes the main events and dates relevant to Gaz Métro: Date August 5, 1991 January 14, 1993 November 5, 1996 November 18, 2003 March 18, 2009 Event The original limited partnership agreement was amended and the name was changed to Gaz Métropolitain and Company, Limited Partnership as part of a corporate reorganization of GMi and Gaz Métro under which GMi transferred substantially all of its business and assets to Gaz Métro in exchange for units of Gaz Métro and the assumption by Gaz Métro of substantially all of GMi s liabilities, other than the subordinated debt issued to Noverco Inc., its parent company. The limited partnership agreement was amended to change the status of Gaz Métro to a publicly traded partnership on February 1, 1993, at which time the units of Gaz Métro were listed on the TSX. The Partnership Agreement was amended to provide for certain limitations on Gaz Métro s activities. The name was changed to Gaz Métro Limited Partnership. The Partnership Agreement was amended to provide for a mechanism to assist a potential offeror in a take-over bid to acquire Units held by Unitholders who do not tender to the offer, if 90% of the outstanding Units have otherwise already been tendered to the offer. Since the corporate reorganization of 1991, GMi has acted as general partner of Gaz Métro in accordance with the Partnership Agreement and will continue to act as such following the completion of the Arrangement

67 The following diagram illustrates the shareholdings of Gaz Métro as at September 30, 2009: Trencap L.P. (1) Enbridge Inc. (2) GDF SUEZ (3) 50.38% 32.06% 17.56% Noverco Inc. 100% GMi (General Partner) 71% (5) Gaz Métro 29% (4) Public (Limited Partners) (1) (2) (3) (4) (5) The general partner of Trencap L.P. was Capital d Amérique CDPQ inc. (0.01%), a subsidiary of the Caisse de dépôt et placement du Québec which, as a limited partner of Trencap L.P., held 51.11% of its units. The other limited partners were Fonds de solidarité des travailleurs du Québec (F.T.Q.) (16.66%), SNC-Lavalin Inc. (11.11%), British Columbia Investment Management Corporation (11.11%), the Régime des rentes du Mouvement Desjardins (8.33%) and the Régime de retraite de l Université du Québec (1.67%). Enbridge Inc. held its shares through its Subsidiary, IPL System Inc. GDF SUEZ (formerly Gaz de France) held its shares through its Subsidiary, Laurentides Investissements S.A.S. Groupe SNC-Lavalin Inc. held 3,516,953 Units (10.07% of the Public LP Units) through its wholly-owned Subsidiaries SNC-Lavalin Inc. and Valcartier Real Estate Corporation Inc. Including the 8,551 Units held by Gaz Métro Plus, a wholly-owned Subsidiary of GMi. Pursuant to the Partnership Agreement, GMi has the exclusive power and authority to administer, manage, control and operate the business of Gaz Métro and to hold all the rights to its assets. GMi must exercise its powers and discharge its duties with reasonable skill and with all the care of a prudent and diligent reasonable Person, as would a director of a company under similar circumstances. The authority and powers vested in GMi to manage the business and affairs of Gaz Métro are broad and include all the powers necessary or incidental to carry on the business of Gaz Métro. No limited partner is permitted, in such capacity, to take part in the administration, management or control of the affairs of Gaz Métro. Furthermore, since all of GMi s shares are held by Noverco, the Unitholders cannot select the directors of GMi. GMi receives a fee of $50,000 per fiscal year and is entitled to charge Gaz Métro for all of the expenses it incurs in acting as general partner. Summary Description of the Business of Gaz Métro The primary mission of Gaz Métro is to distribute natural gas in Québec. Gaz Métro also provides other energy services, including natural gas and electricity distribution in Vermont, and invests with partners in energy projects that are engines of growth. For a description of the business of Gaz Métro, see General Development of Business and Narrative Description of Four Main Segments of Activities in the Gaz Métro AIF. Documents Incorporated by Reference Information in respect of Gaz Métro has been incorporated by reference in this Circular from documents filed with securities commissions or similar authorities in Canada. Copies of the documents incorporated herein by reference may be obtained on request, without charge, from the Investor Relations Services, Gaz Métro, 1717 du Havre Street, Montréal, Québec, Canada, H2K 2X3, by telephone: , by fax: , by investors@gazmetro.com or by consulting the SEDAR Website at The following documents of Gaz Métro, filed with the various securities commissions or similar authorities in each of the provinces and territories of Canada, are specifically incorporated by reference into and form an integral part of this Circular:

68 (a) (b) (c) (d) (e) (f) (g) the Gaz Métro AIF; the GMi AIF; the Gaz Métro Financial Statements; the GMi Financial Statements; the Gaz Métro MD&A; the GMi MD&A; the unaudited consolidated interim financial statements of Gaz Métro for the six-month period ended March 31, 2010; (h) the unaudited consolidated interim financial statements of GMi for the six-month period ended March 31, 2010; (i) (j) (k) the Management s Discussion and Analysis dated May 13, 2010 of the unaudited consolidated interim financial statements of Gaz Métro for the six-month period ended March 31, 2010; the Management s Discussion and Analysis dated May 13, 2010 of the unaudited consolidated interim financial statements of GMi for the six-month period ended March 31, 2010; the material change report of Gaz Métro dated June 30, 2010; and (l) the material change report of GMi dated June 30, 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 Gaz Métro with 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 herein 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. Effect of the Arrangement on Election of Directors of GMi Since all of GMi s shares are held by Noverco, the limited partners cannot select the directors of GMi. The terms of the Arrangement will amend this situation so that Valener will, following completion of the Arrangement, be entitled to nominate a number of GMi directors that is approximately equivalent to its pro rata interest in Gaz Métro. This contractual right of Valener will be set out in the Amended Partnership Agreement and will remain in effect for as long as Valener beneficially owns, directly or indirectly, at least 7.5% of the outstanding Units. See The Arrangement - Material Agreements - Amended Partnership Agreement

69 Capital Structure The beneficial interests in Gaz Métro are represented and constituted by Units. An unlimited number of Units may be issued and, as of July 27, 2010, there were 120,452,214 Units issued and outstanding. Except as otherwise specifically provided in the Partnership Agreement, each Unit issued and outstanding is of equal rank with any other Unit with regards to any matter, including the right to receive the distributable income of Gaz Métro, no Unit having any preference nor any priority of privilege or of right whatsoever on any other Unit. As of the same date, GMi held 85,510,000 Units and Gaz Métro Plus, a wholly-owned Subsidiary of GMi, held 8,551 Units representing collectively approximately 71% of the 120,452,214 outstanding Units, and the remaining 34,933,663 Units were held by Public Unitholders. To the knowledge of the directors and officers of GMi, as general partner of Gaz Métro, as at July 27, 2010, no Person, other than GMi, beneficially owns, or controls or directs, directly or indirectly, Units carrying 10% or more of the voting rights attached to all issued and outstanding Units. Gaz Métro is planning to proceed with an equity offering of $100 million in the fall of 2010, after the Effective Date, in order to, as previously announced, bring the capital structure of Gaz Métro (namely its debt/total capitalization ratio) in line with its historical level. If such an issuance takes place as planned, Valener may exercise its pre-emptive right to maintain its relative ownership level in Gaz Métro. A potential subscription of new Units by Valener may be financed by Valener through a public offering of equity, a drawdown from the Valener Credit Facility or another form of debt financing. Significant Acquisitions There are no proposed acquisitions that have progressed to a state where a reasonable Person would believe that the likelihood of the acquisition being completed is high and would be a significant acquisition for the purposes of Part 8 of Regulation respecting Continuous Disclosure Obligations if completed as of the date of this Circular. Distribution History GMi, in its capacity as general partner of Gaz Métro, determines the amount and timing of each distribution. Unless GMi decides otherwise, in its entire discretion, Gaz Métro has a practice of distributing virtually all of its Adjusted Net Income. As at September 30, 2009, Gaz Métro had distributed 98.6% of the Adjusted Net Income it has earned since becoming public in Adjusted Net Income means the Net Income adjusted for future income taxes related to Gaz Métro s Subsidiaries and joint ventures formed as limited partnerships whose activities do not meet the definition of rate-regulated enterprises within the meaning of the Canadian Institute of Chartered Accountants (CICA) Handbook. Distributions are generally made on the first business day which follows the end of each calendar quarter to Unitholders of record on or about the fifteenth day of the month preceding the date of the distribution. On June 22, 2010, the date of the public announcement of the Arrangement, Gaz Métro declared, through its general partner GMi, a distribution of $0.31 per Unit payable on September 30, 2010 to Unitholders of record at the close of business on September 15, Provided the Arrangement is approved at the Meeting and the Effective Date of the Arrangement occurs on September 30, 2010, as currently scheduled, this will be the last distribution paid to Public Unitholders by Gaz Métro. In the event that the Arrangement is not approved at the Meeting, the Board of Directors will meet to determine the next distribution that would be declared payable on the Units. The distribution payout of Gaz Métro over the last ten years has been fairly stable. On August 16, 2000, Gaz Métro declared a distribution to Unitholders in the amount of $0.31 per Unit payable on October 2, Cash distributions have been made by Gaz Métro to Unitholders every quarter since then and have increased or decreased as follows: the quarterly distribution (i) increased to $0.32 per Unit, as announced on November 15, 2000,

70 (ii) increased further to $0.34 per Unit, as announced on November 20, 2002, and (iii) decreased back to $0.31 per Unit, as announced on May 3, The quarterly distribution has been maintained at $0.31 per Unit since that date. Price Range and Trading Volume of Public LP Units The outstanding Public LP Units are listed and posted for trading on the TSX under the symbol GZM.UN. The following table shows the monthly range of high, low and closing prices for Public LP Units as well as total monthly volume traded on the TSX for the 12-month period before the date of this Circular. Month Monthly High ($/Unit) Monthly Low ($/Unit) Close ($/Unit) Total Monthly Volume June ,786 July ,016 August ,045 September ,913 October ,150 November ,474 December ,365 January ,033,258 February ,092,011 March ,152,727 April ,732 May ,057 June ,844 July (until July 27, 2010) ,597 On June 21, 2010, the last trading day on which the Public LP Units traded prior to the announcement by Gaz Métro of the Arrangement, and on July 27, 2010, the last trading day on which the Units traded prior to the date of this Circular, the closing price of the Public LP Units was respectively $15.77 and $ Summary Financial Information Following the completion of the Arrangement, Valener is expected to hold 34,933,663 Units, representing approximately 29% of the outstanding Units and Valener will account for such investment using the equity method of accounting under GAAP. There are no contingent issuances of securities by Gaz Métro contemplated in connection with the Arrangement, but future transactions, including a potential equity offering in the fall of 2010, could affect Valener s proportionate interest. The following chart provides summary information as to the assets, liabilities and results of operations of Gaz Métro for the periods indicated: Summary Financial Information (1) As at and for the years ended September 30, 2009 and 2008 (millions of Canadian dollars) September 30, 2009 September 30, 2008 Total Assets 3,307 3,286 Total Liabilities 2,357 2,345 Revenues 2,250 2,172 Net Income (1) Summary financial information has been extracted from the Gaz Métro Financial Statements prepared in accordance with GAAP. The audit opinions on the Gaz Métro Financial Statements for the periods presented were issued without reservation

71 Prior Sales No securities of Gaz Métro have been purchased or sold by Gaz Métro during the 12-month period preceding the date hereof. Legal Proceedings Gaz Métro is involved in various non-material, ordinary course legal proceedings, none of which Management believes will have any material adverse effects on its financial and operating performance. To the knowledge of Gaz Métro and its general partner, GMi, there were no: (i) penalties or sanctions imposed against Gaz Métro or its Subsidiaries by a court relating to securities laws or by a securities regulatory authority during Gaz Métro s last financial year, (ii) penalties or sanctions imposed by a court or regulatory body against Gaz Métro or its Subsidiaries that would likely be considered important to a reasonable investor in making an investment decision, or (iii) settlement agreements entered into by Gaz Métro or its Subsidiaries with a court relating to securities laws or with a securities regulatory authority during the last financial year. Interests of Informed Persons in Material Transactions Other than as described in this Circular, including in the documents incorporated by reference in this Circular, there are no material interests, direct or indirect, of GMi, any director or executive officer of GMi, or any known associate or affiliate of such persons, in any transaction since September 30, 2009, or in any proposed transaction, that has materially affected or would materially affect Gaz Métro. Auditors, Transfer Agent and Registrar The auditors of Gaz Métro are Raymond Chabot Grant Thornton LLP, Chartered Accountants located at 600 De La Gauchetière West, Suite 2000, Montréal, Québec, Canada, H3B 4L8. After the Effective Date, if the Arrangement is approved, Raymond Chabot Grant Thornton LLP shall also be the auditors of Valener and shall continue in office until the first annual meeting of Valener or until their successors are elected or appointed. The transfer agent and registrar for the Units is CIBC Mellon at its principal transfer offices in Montréal. After the Effective Date, if the Arrangement is approved, CIBC Mellon shall also act as transfer agent and registrar for the Valener Shares. Additional Information Additional information relating to Gaz Métro and GMi may be found through the Internet and SEDAR at or may be obtained on request, without charge, from the Investor Relations Services, Gaz Métro, 1717 du Havre Street, Montréal, Québec, Canada H2K 2X3, by telephone: , by fax: , or by investors@gazmetro.com. Financial information relating to Gaz Métro and GMi is provided in their respective audited consolidated financial statements and Management s Discussion Analysis for their financial year ended September 30, 2009, all of which are incorporated by reference in this Circular and can be accessed on SEDAR, on Gaz Métro s Website at or obtained from the Investor Relations Services of Gaz Métro at the above coordinates. INFORMATION CONCERNING VALENER Valener was incorporated on June 15, 2010 pursuant to the provisions of the CBCA for the sole purpose of participating in the Arrangement. Immediately following the completion of the Arrangement, Public Unitholders will hold 34,933,663 Valener Shares representing 100% of the issued and outstanding Valener Shares. Valener will become a limited partner of Gaz Métro and will hold 34,933,663 Public LP Units, representing approximately 29% of all Units issued and outstanding, and GMi and Gaz Métro Plus will hold the remaining approximately 71%. The business of Valener will initially be limited to the ownership of its interest in Gaz Métro, at least until Valener exercises the Seigneurie Option, as applicable

72 On the Effective Date, Valener will become a reporting issuer in all Canadian jurisdictions and will become subject to the continuous disclosure and reporting requirements under the securities laws of such jurisdictions as a result of the Arrangement. The principal and registered office of Valener is located at 1717 du Havre Street, Montréal, Québec, Canada, H2K 2X3. Reference is made to Appendix E Information Concerning Valener for a more detailed description of Valener and certain pro forma information, including unaudited pro forma financial statements in Exhibit B thereto. The unaudited pro forma financial statements of Valener should be read in conjunction with the Gaz Métro Financial Statements and the Gaz Métro MD&A incorporated by reference in this Circular, which contain information as at September 30, 2009 as to the financial position, risks and outlook of Gaz Métro, in which Valener s ownership of an approximately 29% economic interest will initially constitute the only business of Valener following the completion of the Arrangement. Such unaudited pro forma financial statements of Valener have been prepared for the year ended September 30, 2009 to show how Valener s interest in Gaz Métro following the completion of the Arrangement will be accounted for using the equity method of accounting under GAAP. In management s opinion, pro forma financial statements as at and for the interim period ended March 31, 2010 would not provide any material additional information for the readers in connection with their consideration of the Arrangement and that is not already furnished herein. For reference purposes, unaudited consolidated interim financial statements of Gaz Métro as at and for the six-month period ended March 31, 2010 and the corresponding Management s Discussion & Analysis are incorporated by reference in this Circular. RISK FACTORS An investment in Public LP Units and in Valener Shares is subject to certain risks. Readers should carefully consider the risk factors described under the heading Risk Factors in the Gaz Métro AIF and the Gaz Métro MD&A, incorporated by reference in this Circular, as well as the risk factors set forth below and elsewhere in this Circular. Risk Factors Relating to Gaz Métro Risk factors in respect of the business of Gaz Métro and the industry in which it operates will continue to be relevant to Valener, as holder of Public LP Units, after the Effective Date and will not be affected by the Arrangement. For a description of these risk factors, see Risk Factors in the Gaz Métro AIF and the Gaz Métro MD&A. Risk Factors Relating to Valener For a description of the risk factors specific to Valener, see Appendix E - Information Concerning Valener Risk Factors. Risk Factors Relating to the Arrangement Conditions Precedent and Required Regulatory Approvals The completion of the Arrangement in the form contemplated by the Plan of Arrangement is subject to a number of conditions precedent, some of which are outside the control of Gaz Métro and Valener, including, without limitation, receipt of Unitholder approval at the Meeting, listing on the TSX of the Valener Shares, approval of the Arrangement by the VPSB and issuance of the Final Order by the Court. There can be no certainty, nor can Gaz Métro provide any assurance, that these conditions will be satisfied or, if satisfied, when they will be satisfied. Failure to obtain the Final Order on terms acceptable to the Independent Committee and the Board of Directors would likely result in the decision being made not to proceed with the Arrangement. If any of the required regulatory approvals cannot be obtained on terms satisfactory to the Independent Committee and the Board of Directors or at all, the Plan of Arrangement may have to be amended in order to mitigate against the negative consequence of the failure to obtain any such approval, and accordingly, the benefits available to Public Unitholders resulting from the Arrangement may be reduced. Alternatively, in the event that the Plan of Arrangement cannot be amended so as to mitigate against the negative consequences of the failure to obtain a required regulatory approval, the Arrangement may not proceed at all. If the Arrangement is not completed, the market price of the

73 Public LP Units may be adversely affected. See The Arrangement - Procedure for the Arrangement Becoming Effective. Failure to Realize the Anticipated Benefits from the Arrangement Gaz Métro and Valener are proposing to complete the Arrangement to create the opportunity to realize certain benefits including, among others, those set forth in this Circular under the heading Background to and Reasons for the Arrangement - Reasons for and Benefits of the Arrangement. Achieving the anticipated benefits depends in part on the ability of Valener and Gaz Métro to realize the anticipated growth opportunities arising from the Arrangement. A variety of factors, including those set forth in or incorporated by reference in this Circular, may adversely affect the ability to achieve the anticipated benefits of the Arrangement. Tax-Related Risks Commencing in its fiscal year 2011, if the Arrangement is not effective by September 30, 2010, Gaz Métro will become subject to tax on its income at a rate comparable to the combined federal and provincial corporate tax rates, and distributions of such income to the Unitholders, including Valener, will be taxed as dividends from a taxable Canadian corporation

74 APPROVAL OF DIRECTORS OF GMI The contents and the mailing of this Circular have been approved by the directors of GMi, acting in its capacity as general partner of Gaz Métro. DATED at the City of Montréal, in the Province of Québec, this 28 th day of July By order of the board of directors of Gaz Métro inc., in its capacity as general partner of Gaz Métro Limited Partnership PIERRE DESPARS Executive Vice President, Corporate Affairs and Chief Financial Officer

75 CONSENT OF BMO NESBITT BURNS INC. TO: AND: The board of directors of Gaz Métro inc., in its capacity as general partner of Gaz Métro Limited Partnership (the Board of Directors ) The independent committee of the Board of Directors (the Independent Committee ) We hereby consent to the references to our firm name and to the reference to our fairness opinion dated June 22, 2010 and reaffirmed on July 28, 2010 contained under the headings Questions and Answers Special Matters to be Acted upon at the Meeting, Summary Information - Background to the Arrangement, Summary Information - Fairness Opinion, Summary Information - Recommendation of the Independent Committee and the Board of Directors, Special Business of the Meeting - Background to and Reasons for the Arrangement - Background to the Arrangement, Special Business of the Meeting - Background to and Reasons for the Arrangement - Fairness Opinion, Special Business of the Meeting - Background to and Reasons for the Arrangement - Recommendation of the Independent Committee and the Board of Directors, The Arrangement - Interests of Certain Persons or Companies in the Matters to be Acted Upon and the inclusion of the text of our opinion dated June 22, 2010 and reaffirmed on July 28, 2010 as Appendix D to the management information circular of Gaz Métro Limited Partnership dated July 28, Our fairness opinion was given as at June 22, 2010 and reaffirmed as at July28, 2010 and remains subject to the assumptions, explanations and limitations contained therein. In providing such consent, we do not intend that any person other than the Board of Directors and the Independent Committee shall be entitled to rely on such opinion. Yours very truly, (signed) BMO Nesbitt Burns Inc. Montréal, Québec July 28,

76 AUDITORS CONSENT We have read the Management Information Circular (the Circular ) of Gaz Métro Limited Partnership ( Gaz Métro ) dated July 28, 2010 with respect to a proposed plan of arrangement involving Gaz Métro, Gaz Métro inc. ( GMi ), Gaz Métro Plus inc., Valener Inc. ( Valener ) and public unitholders of Gaz Métro. We have complied with Canadian generally accepted standards for an auditor s involvement with offering documents. We consent to the inclusion in the Circular of our report to the board of directors of Valener on the opening balance sheet of Valener as at June 15, Our report is dated July 23, We also consent to the incorporation by reference in the Circular of our report to the partners of Gaz Métro on the consolidated balance sheets of Gaz Métro as at September 30, 2009 and 2008, and the consolidated statements of income, comprehensive income, partners equity and cash flows for the years then ended. Our report is dated November 17, We also consent to the incorporation by reference in the Circular of our report to the shareholder of GMi on the consolidated balance sheets of GMi as at September 30, 2009 and 2008, and the consolidated statements of income, comprehensive income, shareholder s equity and cash flows for the years then ended. Our report is dated November 17, (signed) Raymond Chabot Grant Thornton LLP 1 Montréal, Canada July 28, Chartered accountant auditor permit no

77 APPENDIX A ARRANGEMENT RESOLUTION BE IT RESOLVED THAT: 1. the arrangement (the Arrangement ) under Section 192 of the Canada Business Corporations Act substantially as set forth in the plan of arrangement (the Plan of Arrangement ) attached as Exhibit A to Appendix C to the management information circular (the Circular ) of Gaz Métro Limited Partnership ( Gaz Métro ) dated July 28, 2010 and all transactions contemplated thereby be and they are hereby authorized and approved; 2. the arrangement agreement (the Arrangement Agreement ) dated June 22, 2010 among Gaz Métro, Gaz Métro inc. ( GMi ), Valener Inc. ( Valener ), Noverco Inc. and Gaz Métro Plus inc., a copy of which is attached as Appendix C to the Circular, together with such amendments or variations thereto made in accordance with the terms of the Arrangement Agreement as may be approved by the persons referred to in paragraph 6 hereof, such approval to be conclusively evidenced by the execution and delivery of any such amendments or variations, be and it is hereby confirmed, ratified and approved; 3. the amendments to Gaz Métro s limited partnership agreement dated January 14, 1993, as amended and restated on November 5, 1996 and March 18, 2009, to be made in connection with the Arrangement and as described in detail in the Circular (the Amended Partnership Agreement ), be and they are hereby authorized and approved; 4. the execution by Gaz Métro, acting through its general partner GMi, of (i) the non-competition agreement to be entered into between Gaz Métro and Valener; (ii) the administration and management support agreement to be entered into between Gaz Métro and Valener pursuant to which Gaz Métro, either directly or through GMi, its general partner, will provide to Valener certain administration and management support services relating solely to Valener s interest in Gaz Métro and related public company matters and, in certain circumstances, may provide certain additional services; (iii) the agreement evidencing the option (the Seigneurie Option ) in favour of Valener for the acquisition of 49% of Gaz Métro s 50% indirect interest (through Gaz Métro Éole inc.) in the development, construction and operation of the wind power projects currently jointly developed and to be jointly developed, directly or indirectly, by Gaz Métro Éole inc. and Boralex Inc. consisting of wind farms to be located on the private property of the Seigneurie de Beaupré owned by the Séminaire de Québec (the Seigneurie Project ); (iv) the services agreement to be entered into between Gaz Métro and Valener pursuant to which Gaz Métro, either directly or through GMi, its general partner, will provide to Valener certain services relating to the management of certain indebtedness of Valener; (v) the services agreement to be entered into between Gaz Métro and Valener which will come into force upon the exercise by Valener of the Seigneurie Option, pursuant to which Gaz Métro, either directly or through GMi, its general partner, will provide to Valener certain services relating to its interest in the Seigneurie Project; (collectively, the Ancillary Agreements ), be and they are hereby authorized and approved; 5. notwithstanding that the approval by the unitholders of Gaz Métro of this extraordinary resolution, the approval of the Arrangement by the Superior Court of Québec, or both, the board of directors of GMi, in its capacity as general partner of Gaz Métro, without further notice to or approval of the unitholders of Gaz Métro, may amend or terminate the Arrangement Agreement or the Plan of Arrangement pursuant to the terms as set out in the Arrangement Agreement or may decide not to proceed with the Arrangement and to revoke this extraordinary resolution at any time prior to the filing of the Articles of Arrangement giving effect to the Arrangement; and A-1

78 6. any two officers among the President and Chief Executive Officer, the Executive Vice President, Corporate Affairs and Chief Financial Officer, the Treasurer and the Corporate Secretary of Gaz Métro be and they are hereby authorized, for and on behalf of Gaz Métro, to execute and deliver the Arrangement Agreement, the Amended Partnership Agreement and the Ancillary Agreements, and to execute and deliver all other documents and instruments and to take all such other actions as such two officers consider in their discretion to be necessary, desirable or useful to implement this resolution and the matters authorized hereby, such determination to be conclusively evidenced by the execution and delivery of any such documents or instruments, and the taking of any such actions. A-2

79 APPENDIX B INTERIM ORDER SUPERIOR COURT CANADA PROVINCE OF QUÉBEC DISTRICT OF MONTRÉAL No: DATE: JULY 28, 2010 IN THE PRESENCE OF : THE HONOURABLE JOËL A. SILCOFF IN THE MATTER OF AN ARRANGEMENT PROPOSED BY VALENER INC. PURSUANT TO SECTION 192 OF THE CANADA BUSINESS CORPORATIONS ACT : VALENER INC., a legal person duly incorporated under the CBCA, having its head office at 1717 du Havre Street, in the City and District of Montréal, Province of Québec, H2K 2X3. Petitioner and GAZ MÉTRO LIMITED PARTNERSHIP, a limited partnership existing under the laws of the Province of Québec, pursuant to a limited partnership agreement dated January 14, 1993, as amended on November 5, 1996 and on March 18, 2009, having its head office at 1717 du Havre Street, in the City and District of Montréal, Province of Québec, H2K 2X3 («Gaz Métro»). and GAZ MÉTRO INC., a legal person duly incorporated under the laws of the Province of Québec, having its head office at 1717 du Havre Street, in the City and District of Montréal, Province of Québec, H2K 2X3 («GMi»). JS 0964 B-1

80 PAGE: 2 and GAZ MÉTRO PLUS INC., a legal person duly incorporated under the laws of the Province of Québec, having its head office at 1717 du Havre Street, in the City and District of Montréal, Province of Québec, H2K 2X3. and NOVERCO INC., a legal person duly incorporated under the laws of the Province of Québec, having its head office at 1000, Place Jean-Paul Riopelle, in the City and District of Montréal, Province of Québec, H2Z 2B3. and THE PUBLIC UNITHOLDERS OF GAZ MÉTRO LIMITED PARTNERSHIP and THE DIRECTOR UNDER THE CBCA, as appointed pursuant to Section 260 of the Canada Business Corporations Act, located at Industry Canada, Complexe Jean-Edmonds South, 365 Laurier Avenue West, 9 th Floor, Ottawa, Ontario, K1A 0C8 (the «CBCA Director») Mis-en-cause JUDGMENT CONSIDERING the Motion for Interim and Final Orders with respect to an Arrangement dated July 27, 2010 (the Motion ) filed by Valener Inc. (the Petitioner ), as well as the Exhibits and the affidavits of Ms. Lyne Burelle and M. Pierre Despars filed in support thereof, and the submissions of counsel for the Petitioner; CONSIDERING the provisions of section 192 of the Canada Business Corporations Act, R.S.C. 1985, c. C-44, as amended (the CBCA ); CONSIDERING the Policy concerning Arrangements under section 192 CBCA adopted by the CBCA Director (Policy Statement 15.1) dated January 4, 2010; B-2

81 PAGE: 3 CONSIDERING the content of the draft Management Information Circular of Gaz Métro and its appendices (Exhibit P-1), with a view to calling, holding and conducting the Meeting of Unitholders for the purpose of approving the Arrangement described in the Motion; CONSIDERING that the Petitioner, GMi and Gaz Métro meet the solvency requirements of section 192(3) of the CBCA, as appears from the exhibits filed and as attested to in the affidavits of Lyne Burelle and Pierre Despars; CONSIDERING that the relevant provisions of the Partnership Agreement (Exhibit P-2) do not require the intervention of the Court to effect the amendments thereto contemplated by the proposed Arrangement; CONSIDERING that the Partnership Agreement (Exhibit P-2) does not afford Unitholders dissent rights in relation to the proposed Arrangement; CONSIDERING the judgment rendered by Pepall J. of the Ontario Superior Court of Justice in Re Acadian Timber Income Fund, [2009] O.J. No. 5517, and in particular the following extracts of the judgment with which the Court concurs: 8. Under section 192 of the CBCA, the court has the power to make such interim orders as it deems fit. The word arrangement is to be given its widest character, limited only by the corporation's own by-laws or gen eral legislation. The purpose of an arrangement is to provide a flexible mechanism that can be adapted to the needs of a particular case. As Farley J. stated in Re Fairmont Hotels & Resorts:... I think it is an error to forget that the very flexibility of the arrangement provision was designed to allow the solution of difficult and awkward situations. In the Policy Statement of the Director, the Director endorses the position that the arrangement provisions of the Act are intended to be facilitative, should not be con strued narr owly, and further recognizes that the term arrangement is not exhaustively defined. [...] 11. In my view, the arrangement provisions should be available to all of the Applicants in this case. It seems to me that the current income trust conundrum is the sort of exceptional situation contemplated by the dicta in Re Fairmont. Assuming that there is compliance with the provisions of the trust deed (a fact that should be addressed at the approval hearing), there is no apparent prejudice to anyone. I also note that a number of income funds that have recently converted into corporate structures have proceeded by way of an arrangement under the CBCA or other comparable provincial statutes. Lastly, while the Director did raise the issue of the ability of the Fund, AT Trust and Acadian Timber LP to be applicants, the Director advised in writing that no position was being taken on this issue for the purposes of this transaction. B-3

82 PAGE: 4 CONSIDERING that the proposed Arrangement constitutes an arrangement, as defined in section 192(1) of the CBCA; CONSIDERING that, for the reasons contained in paragraph 51 of the Motion, it is impracticable for the Petitioner to effect the result contemplated by the Arrangement under any provision of the CBCA other than section 192 of the CBCA; CONSIDERING the letter of the CBCA Director dated July 27, 2010 (Exhibit P-6), confirming, inter alia, that the staff of the Director has determined that the Director does not need to appear or be heard on the present Motion; WHEREFORE, THE COURT, BY MEANS OF AN INTERIM ORDER: [1] GRANTS the Motion insofar as the interim order is concerned (the Interim Order ); [2] DECLARES that, for the purposes of the Interim Order, all capitalized terms used but not otherwise defined herein have the meanings ascribed thereto in the Glossary of Terms of the Management Information Circular (the Circular ) and its appendices, Exhibit P-1; [3] DISPENSES the Petitioner from any obligation to describe at length the names of the Public Unitholders in the description of the corresponding Mis-en-cause; [4] ORDERS that all Unitholders be deemed parties, as Mis-en-cause, to the present proceedings and be bound by the terms of any Order to be rendered herein; [5] DISPENSES the Petitioner from serving the Motion, except to the Director; [6] DECLARES that Gaz Métro Inc. ( GMi ), in its capacity as general partner of Gaz Métro Limited Partnership ( Gaz Métro ), is obliged to cause Gaz Métro to act in accordance with all orders herein binding on Gaz Métro. ON THE MOTION FOR AN INTERIM ORDER: As to the Meeting [7] GIVES ACT to Gaz Métro's decision to call, hold and conduct a special meeting (the Meeting ) of the holders (the Unitholders ) of units ( Units ) of Gaz Métro, such Meeting to be called, held and conducted in accordance with the provisions of the CBCA, the Partnership Agreement, the Circular, the rulings and directions of the chairperson of the Meeting and the Interim Order sought for the purpose of considering and, if deemed advisable, passing an extraordinary resolution (the Arrangement Resolution ) to approve a plan of arrangement (the Plan of Arrangement ) attached as Exhibit A to the Arrangement B-4

83 PAGE: 5 Agreement, which is Appendix "C" to the Circular, Exhibit P-1, and to transact such other business as may properly come before the Meeting; [8] AUTHORIZES Gaz Métro, prior to or at the Meeting and without any additional notice to Unitholders, to make such non-material amendments, revisions or supplements to the Circular, and more specifically to the Plan of Arrangement, as it may determine, subject to the terms of the Arrangement Agreement, and of the Plan of Arrangement, Appendix "C" to the Circular, Exhibit P-1, and provided that such amendments, revisions or supplements are not inconsistent with the terms of this Interim Order, and ORDERS that the Circular, including the Plan of Arrangement, as so amended, revised or supplemented, shall be the Circular submitted to the Meeting and that the amended, revised or supplemented Plan of Arrangement shall be the subject of the Arrangement Resolution; [9] AUTHORIZES Gaz Métro to hold the Meeting on September 14, 2010 at 2:00 p.m. (Montreal time) at Le Windsor, Salon Windsor, First Floor, 1170 Peel Street, Montreal, Québec; [10] DECLARES that the record date for the determination of the Unitholders entitled to vote at the Meeting is 5:00 p.m. (Eastern time) on July 23, 2010 (the Record Date ); [11] DECLARES that the only persons entitled to attend, be heard or vote at the Meeting shall be: (a) (b) (c) (d) (e) (f) the Unitholders on the Record Date; duly appointed proxy holders; the Petitioner s directors; the directors and officers of GMi, in its capacity as general partner of Gaz Métro; the Director; and other persons, with the permission of the Chair of the Meeting. [12] DECLARES that the only persons entitled to vote on the Arrangement Resolution at the Meeting, either in person or by proxy, shall be the Unitholders on the Record Date, subject to the provisions of this Interim Order and subject to the provisions of the CBCA; [13] AUTHORIZES Gaz Métro to adjourn or postpone the Meeting on one or more occasions (whether or not a quorum is present); B-5

84 PAGE: 6 [14] ORDERS that notice of any adjournment or postponement shall be given by mail, press release or newspaper advertisement, as determined to be the most appropriate method of communication by Gaz Métro; As to the Notice of Meeting [15] ORDERS Gaz Métro to send the Notice of Meeting to all registered Unitholders in accordance with the provisions of the Partnership Agreement, by mailing same by unregistered mail, postage prepaid to the address of each Unitholder as recorded on the books of Gaz Métro as of the Record Date, provided that Gaz Métro shall complete the mailing of such Notice of Meeting at least twenty-one days before the Meeting; [16] ORDERS Gaz Métro to cause the Notice of Meeting to be sent to all nonregistered Unitholders on the Record Date pursuant to and in conformity with National Instrument Respecting Communications with Beneficial Owners of Securities of a Reporting Issuer and, in Québec, with Regulation respecting communications with beneficial owners of securities of a reporting issuer (collectively NI ), by mailing multiple copies of same by unregistered mail, postage prepaid to Broadridge Communications Corporation, provided that Gaz Métro shall complete the mailing of such Notice of Meeting at least four (4) business days before the twenty-first (21 st ) day before the Meeting; [17] ORDERS Gaz Métro to send by mail to the Unitholders a copy of the documents filed as Exhibits P-1, P-3 and P-4 in substantially the form filed, being the letter of transmittal, the proxy form and the Circular, the latter including, inter alia, a copy of the Arrangement Resolution, the Arrangement Agreement and this Interim Order, being respectively Appendices A, C and B to the Circular (collectively referred to as the Meeting Materials ); [18] DECLARES that the Meeting Materials shall be deemed, for the purposes of the Interim Order, the Meeting and/or the final order (the Final Order ) to have been received by and/or served on the Unitholders three (3) days after delivery thereof to the post office; [19] DECLARES that the failure or omission to give notice of the Meeting (provided it does not, to the knowledge of Gaz Métro, result in a material number of Unitholders not receiving the Notice of Meeting) as a result of mistake or events beyond the reasonable control of Gaz Métro, or the non-receipt of such notice, shall not invalidate any resolutions passed or proceedings taken at the Meeting and shall not constitute a breach of the Interim Order or defect in the calling of the Meeting, provided that if any such failure or omission is brought to the attention of Gaz Métro, Gaz Métro shall use reasonable efforts to rectify such failure or omission by the method and in the time it determines to be most practicable in the circumstances; B-6

85 PAGE: 7 As to the Forms of Proxy and the Solicitation of Proxies [20] DECLARES that the procedure for the use of proxies at the Meeting shall be as set out in the Circular, Exhibit P-1, provided that Gaz Métro may in its discretion waive generally or change the time limits for the deposit of proxies by the Unitholders; [21] DECLARES that GMi, in its capacity as general partner of Gaz Métro, is authorized to solicit proxies on behalf of Gaz Métro, directly and through its subsidiaries or its subsidiaries' officers and employees, and through such agents or representatives as it may retain for that purpose, and by mail or such other forms of personal or electronic communication as it may determine; and that Gaz Métro may waive, in its discretion, the time limits for the deposit of proxies by the Unitholders, if Gaz Métro considers it advisable to do so; As to Voting at the Meeting [22] DECLARES that the Unitholders may authorize the transactions contemplated in the Plan of Arrangement by the Arrangement Resolution passed at the Meeting by: (a) at least 66⅔% of the votes cast by all Unitholders present in person or represented by proxy and entitled to vote at the Meeting; (b) at least 66⅔% of the votes cast by all Unitholders other than GMi and Affiliated Entities present in person or represented by proxy and entitled to vote at the Meeting; and (c) a simple majority of the votes cast by all Unitholders present in person or represented by proxy at the Meeting, excluding Units beneficially owned or over which control or direction is exercised by "interested parties" (as such expression is defined in the Multilateral Instrument Protection of Minority Security Holders in Special Transactions of the Canadian Securities Administrators (the MI )) and certain related parties of such interested parties. [23] DECLARES that, in respect of the vote on the Arrangement Resolution or any matter determined by the chairperson of the Meeting to be related to the Plan of Arrangement, each Unitholder shall be entitled to cast one vote in respect of each Unit; [24] DECLARES that, for the purposes of the vote on the Arrangement Resolution, or any other vote taken at the Meeting, any spoiled ballots, illegible ballots and defective ballots shall be deemed not to be votes cast by the Unitholders and further ORDERS that proxies that are properly signed and dated but which do not B-7

86 PAGE: 8 contain voting instructions shall be voted in favour of the Arrangement Resolution; [25] ORDERS that, at any reconvening of the Meeting, all proxies will be voted in the same manner as the proxies would have been voted at the original convening of the Meeting, except for any proxies that have been effectively revoked or withdrawn prior to the subsequent reconvening of the Meeting; As to Quorum [26] DECLARES that quorum will be constituted at the Meeting if two or more individuals present in person at the commencement of the Meeting either hold personally or represent by proxy 10% or more of the outstanding Units; As to the Final Order [27] ORDERS that the Petitioner's application for the Final Order be presented on September 20, 2010 before the Superior Court of Québec, sitting in Commercial Division in and for the District of Montreal at the Montreal Courthouse, located at 1 Notre-Dame Street East in Montreal, Québec, Room 16.12, at 9:15 a.m., or so soon thereafter as counsel may be heard; [28] DECLARES that compliance with the terms of the Interim Order shall constitute good and sufficient service of this Motion for Final Order by the Petitioner to all of the Unitholders and to any other person, and that no other form of service need be made and no other material need be sent or served on such persons in respect of these proceedings, whether they reside within Québec or in another jurisdiction; [29] DECLARES that the Petitioner and/or Gaz Métro is entitled to make proof of service by way of an affidavit of one of its officers to the effect that the Meeting Materials were sent in accordance with the Interim Order; [30] DECLARES that the only persons entitled to appear and to be heard at the hearing on the Motion for Final Order shall be the Petitioner and the Mis-en-cause, and any person that: (i) files an Appearance with the Clerk of the Superior Court of Québec, Commercial Division, Judicial District of Montréal, 1 Notre-Dame Street East, Montréal, Québec, H2Y 1 B6, and serves same on Petitioner's counsel, Osler, Hoskin & Harcourt LLP (Attention: Sylvain Lussier, 1000 De la Gauchetière West, 21 st floor, Montréal, Québec, H3B 4W5), no later than three (3) business days before the date of the Meeting; B-8

87 PAGE: 9 (ii) if such Appearance is with the view to contest the Motion for Final Order or to make representations in relation thereto, files a written contestation or written representations, as the case may be, supported, as to the facts, by affidavit(s) and exhibit(s), if any, with the aforementioned Clerk of the Superior Court of Québec, Commercial Division, Judicial District of Montréal, 1 Notre-Dame Street East, Montréal, Québec, H2Y 1B6 and serves a copy of same on Petitioner's counsel, Osler, Hoskin & Harcourt LLP (Attention: Sylvain Lussier, 1000 De la Gauchetière West, 21 st floor, Montréal, Québec, H3B 4W5), no later than one (1) day before the Meeting, failing which no contestation of the Motion for Final Order shall be permitted, unless authorized by the Court. [31] DECLARES that the Unitholders (and any transferee after the Record Date) and all other persons notified in accordance with the Interim Order will be duly called parties to the Motion for Final Order and will be bound by the orders and findings of this Court in connection with the Final Order; [32] ORDERS that the Petitioner present the Motion for Final Order with a certified copy of the Arrangement Resolution duly passed; As to Procedural Matters [33] ORDERS provisional execution of the Interim Order notwithstanding appeal and without the necessity of furnishing security; [34] DECLARES that this Court respectfully seeks and requests de bene esse the aid and recognition of any court or any judicial, regulatory or administrative body constituted pursuant to the Parliament of Canada, or the legislature of any province and any court or any judicial, regulatory or administrative body of the United States of America or elsewhere to act in aid of and to assist this Court in carrying out the terms of any order rendered by this Court in connection with these proceedings, and that Lyne Burelle is authorized, as necessary, to act as a representative of Petitioner in connection therewith; As to Modifications [35] DECLARES that the Petitioner shall be entitled to seek leave to vary the Interim Order upon such terms and upon giving such notice as this Court may decide; B-9

88 PAGE: 10 As to any Additional Interim Order [36] AUTHORIZES the Petitioner to petition this Honourable Court and, if and when necessary, to seek any additional Interim Orders; [37] THE WHOLE without costs. Me George Hendy Me Elizabeth Meloche OSLER, HOSKIN & HARCOURT LLP Attorneys for Petitioner Valener Inc. Date of hearing: July 28, 2010 B-10

89 APPENDIX C ARRANGEMENT AGREEMENT ARRANGEMENT AGREEMENT THIS ARRANGEMENT AGREEMENT is made as of the 22 nd day of June, AMONG: CANADA INC., a corporation incorporated under the Canada Business Corporations Act ( Newco ) and GAZ MÉTRO LIMITED PARTNERSHIP, a limited partnership existing under the laws of the Province of Québec pursuant to a limited partnership agreement dated January 14, 1993, as amended on November 5, 1996 and March 18, 2009, acting through its general partner, GAZ MÉTRO INC. ( Gaz Métro ) and GAZ MÉTRO INC., a company duly incorporated pursuant to the Companies Act (Québec) ( GMi ) and GAZ MÉTRO PLUS INC., a company duly incorporated pursuant to the Companies Act (Québec) ( Gaz Métro Plus ) and NOVERCO INC., a company duly incorporated pursuant to the Companies Act (Québec) ( Noverco ) WHEREAS: (a) (b) (c) Newco, Gaz Métro, GMi and Gaz Métro Plus intend to carry out the transactions contemplated herein by way of an arrangement under the Canada Business Corporations Act involving Newco, Gaz Métro, GMi, Gaz Métro Plus and the Public Unitholders (defined herein); as a result of the transactions contemplated herein, the Public Unitholders will become shareholders of Newco and Newco will own all of the Public LP Units on the Effective Date; the parties hereto have entered into this Agreement to provide for the matters referred to in the foregoing recitals and for the other matters relating to such arrangement. C-1

90 NOW THEREFORE, in consideration of the covenants and agreements herein contained and other good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged), the parties hereto hereby covenant and agree as follows: 1.1 Definitions ARTICLE 1 INTERPRETATION In this Agreement, the following terms have the following meanings: (a) Affiliated Entity means an Affiliate of GMi and, for the purposes of the Partnership Agreement, Affiliate describes the relationship between two Persons: (i) (ii) (iii) if both are companies, one is the subsidiary of the other, or both are subsidiaries of the same company or are controlled by the same Person, as provided in the Securities Act (Québec), one is a senior executive as defined in the Securities Act (Québec) of the other or of an Affiliate of the other, or one does not deal at arm s length with the other; (b) (c) (d) (e) (f) Administration Agreement means the administration and management support agreement to be entered into between Gaz Métro and Newco as of the Effective Date pursuant to which Gaz Métro, either directly or through GMi, its general partner, will provide to Newco certain administration and management support services relating solely to Newco s interest in Gaz Métro and related public company matters and, in certain circumstances, may provide certain additional services, substantially in the form of the draft agreed upon between the relevant parties as of the date hereof; Agreement, herein, hereof, hereto, hereunder and similar expressions mean and refer to this arrangement agreement (including the schedules hereto) as supplemented, modified or amended, and not to any particular article, section, schedule or other portion hereof; Amended Partnership Agreement means the Partnership Agreement to be amended and restated in connection with the Arrangement as of the Effective Date, substantially in the form of the draft agreed upon between the relevant parties as of the date hereof; Arrangement means the proposed arrangement under the provisions of Section 192 of the CBCA, on the terms and subject to the conditions set forth in the Plan of Arrangement as supplemented, modified or amended; Arrangement Resolution means the resolution in respect of the Arrangement and related matters to be considered at the Meeting, a copy of which shall be annexed to the Proxy Circular, to be approved by (i) at least 66⅔% of the votes cast by all Unitholders present in person or by proxy at the Meeting, (ii) at least 66⅔% of the votes cast by Unitholders other than GMi and Affiliated Entities present in person or by proxy at the Meeting, and (iii) a simple majority of the votes cast by all Unitholders present in person or by proxy at the Meeting, excluding Units beneficially owned or over which control or direction is exercised by interested parties and certain others (as provided by Section 8.1 of Multilateral Instrument Protection of Minority Security Holders in Special Transactions of the Canadian Securities Administrators) for purposes of the Arrangement; C-2

91 (g) (h) (i) (j) (k) (l) (m) (n) (o) (p) (q) (r) (s) (t) (u) Articles of Arrangement means the articles of arrangement of Newco in respect of the Arrangement required under Subsection 192(6) of the CBCA to be filed with the Director after the Final Order has been granted in order for the Arrangement to become effective; Business Day means a day, other than a Saturday, Sunday or statutory holiday, when banks are generally open for business in the City of Montreal, in the Province of Québec, for the transaction of banking business; CBCA means the Canada Business Corporations Act, R.S.C. 1985, c. C-44, as now in effect and as it may be amended from time to time prior to the Effective Date; Certificate means the certificate of arrangement to be issued by the Director pursuant to Subsection 192(7) of the CBCA giving effect to the Arrangement; Court means the Superior Court of Québec; Director means the director appointed under Section 260 of the CBCA; Effective Date means the date the Arrangement becomes effective under the CBCA as shown on the Certificate; Effective Time means 11:59 p.m. (Montreal Time) on the Effective Date; Final Order means the final order of the Court approving the Arrangement as such order may be amended or varied at any time prior to the Effective Time or, if appealed, then unless such appeal is withdrawn or denied, as affirmed or as amended on appeal; First Additional Services Agreement relating to the Debt of Newco means the services agreement with respect to the management of certain indebtedness of Newco to be entered into between Gaz Métro and Newco as of the Effective Date, substantially in the form of the draft to be agreed upon between the parties prior to the Effective Date; Gaz Métro Plus LP Units means the units of Gaz Métro held by Gaz Métro Plus; GP Units means the units of Gaz Métro held by GMi; Interim Order means an interim order of the Court concerning the Arrangement containing declarations and directions with respect to the Arrangement and the holding of the Meeting, as such order may be amended by the Court; Letter of Transmittal means the letter of transmittal accompanying the Proxy Circular sent to Public Unitholders pursuant to which such holders are required to deliver certificates representing Public LP Units to receive Newco Shares issuable to them pursuant to the Arrangement; Material Agreements means, collectively, the Amended Partnership Agreement, the Non- Competition Agreement, the Administration Agreement, the First Additional Services Agreement relating to the Debt of Newco and the Seigneurie Option Agreement; (v) Meeting means the special meeting of Unitholders to be held on or around September 8, 2010 to consider the Arrangement and related matters, and any adjournment thereof; C-3

92 (w) (x) (y) (z) (aa) (bb) (cc) (dd) (ee) (ff) (gg) (hh) (ii) Newco Shares means the common shares in the share capital of Newco, which common shares will be issued to Public Unitholders in consideration for the transfer of their Public LP Units held as of the Effective Date to Newco on a one-for-one basis pursuant to the Arrangement; Non-Competition Agreement means the non-competition agreement to be entered into as of the Effective Date between Gaz Métro and Newco, substantially in the form of the draft agreed upon between the relevant parties as of the date hereof; Partnership Agreement means the amended and restated limited partnership agreement of Gaz Métro executed on January 14, 1993, as amended on November 5, 1996 and March 18, 2009; Person includes an individual, limited or general partnership, limited liability company, limited liability partnership, trust, joint venture, association, body corporate, trustee, executor, administrator, legal representative, government (including any governmental entity) or any other entity, whether or not having legal status; Plan of Arrangement means the plan of arrangement pursuant to Section 192 of the CBCA, substantially in the form and content of Exhibit A, as amended or supplemented from time to time in accordance with the terms thereof or at the direction of the Court in the Interim Order or the Final Order, with the consent of the parties hereto, acting reasonably; Proxy Circular means the management proxy circular of Gaz Métro, together with all exhibits thereto, to be forwarded as part of the proxy solicitation materials to Unitholders in connection with the Meeting; Public LP Units means the units of Gaz Métro other than GP Units and Gaz Métro Plus LP Units; Public Unitholders means the holders of Public LP Units; Second Additional Services Agreement with respect to the Seigneurie Project means the services agreement, if required as agreed by the parties, to be executed by Gaz Métro and Newco as of the Effective Date and which will come into force upon the exercise by Newco of the Seigneurie Option, substantially in the form of the draft to be agreed upon between the relevant parties prior to the Effective Date; Seigneurie Option means the option in favour of Newco for the transfer of 49% of Gaz Métro s interests in the Seigneurie Project (through Gaz Métro Éole Inc.) to Newco under the terms and conditions set forth in the Seigneurie Option Agreement; Seigneurie Option Agreement means the agreement evidencing the Seigneurie Option to be entered into as of the Effective Date between Gaz Métro, GMi, Gaz Métro Éole Inc., Noverco and Newco, substantially in the form of the draft agreed upon between the relevant parties as of the date hereof; Seigneurie Project means the development, construction and operation of the wind power projects currently jointly developed and to be jointly developed, directly or indirectly, by Gaz Métro Éole Inc. and Boralex Inc. consisting of wind farms to be located on the private property of the Seigneurie de Beaupré owned by the Séminaire de Québec; Subsidiary means, with respect to any Person, a subsidiary (as that term is defined in the CBCA (for such purposes, if such person is not a corporation, as if such person were a corporation)) of such Person and includes any limited partnership, joint venture, trust, limited C-4

93 liability company, unlimited liability company or other entity, whether or not having legal status, that would constitute a subsidiary (as described above) if such entity were a corporation; (jj) (kk) (ll) TSX means the Toronto Stock Exchange; Unitholders means holders from time to time of Units; and Units means, collectively, the GP Units, the Gaz Métro Plus LP Units and the Public LP Units. 1.2 Currency All sums of money which are referred to in this Agreement are expressed in lawful money of Canada unless otherwise specified. 1.3 Interpretation Not Affected by Headings The division of this Agreement into articles, sections and schedules and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Agreement. 1.4 Article References Unless reference is specifically made to some other document or instrument, all references herein to articles, sections and schedules are to articles, sections and schedules of this Agreement. 1.5 Extended Meanings Unless the context otherwise requires, words importing the singular number shall include the plural and vice versa; words importing any gender shall include all genders, where applicable; and words importing Persons shall include individuals, partnerships, associations, bodies corporate, trusts, unincorporated organizations, governments, regulatory authorities, and other entities. 1.6 Date for any Action In the event that any date on which any action required to be taken hereunder by any of the parties hereto 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. 1.7 Entire Agreement This Agreement, together with the exhibit attached hereto, constitutes the entire agreement between the parties pertaining to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, between the parties with respect to the subject matter hereof. 1.8 Governing Law This Agreement shall be governed by and construed in accordance with the laws of Québec and the federal laws of Canada applicable therein and shall be treated in all respects as a Québec contract. C-5

94 1.9 Exhibit Exhibit A annexed to this Agreement, being the Plan of Arrangement, is incorporated by reference into this Agreement and forms a part hereof Statutory References A reference to a statute includes all regulations made pursuant to such statute and, unless otherwise specified, the provisions of any statute or regulation which amends, supplements or supersedes any such statute or any such regulation. 2.1 Arrangement ARTICLE 2 THE ARRANGEMENT As soon as reasonably practicable, Newco shall (and GMi shall cause Newco) to apply to the Court pursuant to Section 192 of the CBCA for an order approving the Arrangement and in connection with such application shall: (a) (b) (c) forthwith file, proceed with and diligently prosecute an application for an Interim Order under Subsection 192(4) of the CBCA, providing for, among other things, the calling and holding of the Meeting by Gaz Métro for the purpose of, among other things, considering and, if deemed advisable, approving the Arrangement Resolution; subject to Gaz Métro obtaining all necessary approvals of the Unitholders as contemplated in the Interim Order and as may be directed by the Court in the Interim Order, take the steps necessary to submit the Arrangement to the Court and apply for the Final Order; and subject to fulfillment of the conditions set forth herein, shall deliver to the Director Articles of Arrangement and such other documents as may be required to give effect to the Arrangement, whereupon the transactions comprising the Arrangement shall occur and shall be deemed to have occurred in the order set out in the Plan of Arrangement without any act or formality. 2.2 Filing of Articles of Arrangement Subject to the prior satisfaction or waiver of all conditions set forth herein, Newco shall file the Articles of Arrangement no later than September 27, 2010 and request that the Effective Date be September 30, Newco shall promptly deliver to the TSX the Certificate of Arrangement and all other required materials in order for the Units to cease to be listed for trading on the TSX at the latest at the close of the markets on September 30, Effective Date The Arrangement shall become effective at the Effective Time on the Effective Date. C-6

95 ARTICLE 3 COVENANTS 3.1 Covenants of Gaz Métro, GMi, Newco and Gaz Métro Plus Each of Gaz Métro, GMi, Newco and Gaz Métro Plus covenants and agrees that it will: (a) (b) (c) (d) (e) (f) take, and cause its Subsidiaries to take, all actions necessary to give effect to the transactions contemplated by this Agreement and the Arrangement; use all reasonable efforts to obtain all necessary consents, assignments, waivers and amendments to or terminations of any instruments and take such measures as may be appropriate to fulfill its obligations hereunder and to carry out the transactions contemplated hereby; in the case of Newco, apply to the Court for the Interim Order; in the case of Gaz Métro, solicit proxies to be voted at the Meeting in favour of the Arrangement Resolution and prepare the Proxy Circular and proxy solicitation materials and any amendments or supplements thereto as required by, and in compliance with, the Interim Order, applicable corporate and securities laws and the Partnership Agreement, and file and distribute same to the Unitholders in a timely and expeditious manner in all jurisdictions where same are required to be filed and distributed; in the case of Gaz Métro, convene the Meeting as ordered by the Interim Order, applicable corporate and securities laws and the Partnership Agreement, and conduct such Meeting in accordance with the Interim Order, applicable corporate and securities laws and the Partnership Agreement; in the case of Gaz Métro, until the Effective Date, conduct its operations and those of its Subsidiaries in the ordinary and normal course of business and in accordance with applicable laws, generally accepted industry practice and any operating and other agreements applicable to its properties and assets and those of its Subsidiaries; (g) use all reasonable efforts to cause each of the conditions precedent set forth in Article 4 which are within its control to be satisfied on or before the Effective Date; (h) (i) (j) (k) in the case of Newco, subject to the approval of the Arrangement Resolution by the Unitholders, as required by the Interim Order, submit the Arrangement to the Court and apply for the Final Order; forthwith carry out the terms of the Final Order to the extent applicable to it; in the case of Newco, after the issuance of the Final Order and subject to the fulfillment of the conditions precedent set forth in Article 4, with the prior written agreement of the parties, proceed to file the Articles of Arrangement, the Final Order and all related documents with the Director pursuant to Subsection 192(6) of the CBCA on or prior to the Effective Date; until the Effective Date, not merge into or with, or consolidate with, any other Person or, except in the ordinary course of business, perform any act or enter into any transaction or negotiation which might interfere or be inconsistent with the consummation of the transactions contemplated by this Agreement; C-7

96 (l) (m) (n) (o) (p) (q) (r) (s) (t) (u) (v) (w) in the case of Gaz Métro and Gaz Métro Plus, until the Effective Date, except as specifically provided for hereunder and in the Plan of Arrangement and except for any amendments which would not interfere or be inconsistent with the consummation of the transactions contemplated by this Agreement, not alter or amend its constating or governing documents or those of its Subsidiaries as the same exist at the date of this Agreement without the prior consent of Newco and GMi, not to be unreasonably withheld; in the case of Newco, until the Effective Date, other than as contemplated herein, in the Plan of Arrangement or in the Proxy Circular, not carry on any business, enter into any transaction or effect any corporate act whatsoever other than as contemplated herein or in the Proxy Circular without the prior written consent of Gaz Métro and GMi; in the case of Newco, until the Effective Date, not issue any securities or enter into any agreements to issue or grant options, warrants or rights to purchase any of its securities; in the case of Gaz Métro, prior to the Effective Date, apply on behalf of Newco for the listing of the Newco Shares issuable pursuant to the Arrangement on the TSX; in the case of Newco, reserve and authorize for issuance the Newco Shares issuable pursuant to the Arrangement; in the case of Newco, issue the Newco Shares in exchange, on a one-for-one basis, for the Public LP Units on the Effective Date; in the case of GMi, not sell, offer to sell, grant any option, right or warrant for the sale of, or otherwise lend, transfer, assign, hypothecate or dispose of, any of the GP Units as held as of the date hereof until the Effective Time other than pursuant to existing agreements and the exercise of rights thereunder; in the case of Gaz Métro Plus, not sell, offer to sell, grant any option, right or warrant for the sale of, or otherwise lend, transfer, assign, hypothecate or dispose of, any of the Gaz Métro Plus LP Units as held as of the date hereof until the 61 st day following the Effective Date; in the case of Gaz Métro, GMi and Newco, provide Noverco and its counsel with reasonable opportunity to (A) review and comment upon drafts of documents relating directly to the Arrangement (i) to be publicly disclosed (including press releases) or delivered to Unitholders (including the Proxy Circular), and (ii) to be filed with the TSX, tax authorities or with the Court in connection with the Arrangement, and (B) participate in discussions with tax authorities in connection with the Arrangement; in the case of Gaz Métro, cause the Partnership Agreement to be amended and restated as of the Effective Date in connection with the Arrangement in accordance with the Amended Partnership Agreement; in the case of GMi, Gaz Métro Plus and Newco, enter into the Amended Partnership Agreement as of the Effective Date; in the case of Gaz Métro and Newco, enter into the Administration Agreement as of the Effective Date; C-8

97 (x) (y) (z) (aa) in the case of Gaz Métro and Newco, enter into the Second Additional Services Agreement with respect to the Seigneurie Project as of the Effective Date only if the parties have agreed to execute such agreement; in the case of Gaz Métro and Newco, enter into the First Additional Services Agreement relating to the Debt of Newco as of the Effective Date; in the case of Gaz Métro and Newco, enter into the Non-Competition Agreement as of the Effective Date; and in the case of Gaz Métro, GMi, Noverco and Newco, enter into the Seigneurie Option Agreement as of the Effective Date. 4.1 Mutual Conditions Precedent ARTICLE 4 CONDITIONS PRECEDENT The respective obligations of Newco, Noverco, Gaz Métro, GMi and Gaz Métro Plus to complete the transactions contemplated by this Agreement and the Arrangement shall be subject to the fulfilment or satisfaction, on or before the Effective Time, of each of the following conditions precedent, any of which may be waived collectively by them without prejudice to their right to rely on any other condition: (a) (b) (c) (d) (e) (f) the Interim Order shall have been granted in form and substance satisfactory to Newco, Gaz Métro, Noverco and GMi, acting reasonably, not later than July 30, 2010 or such later date as the parties hereto may agree and shall not have been set aside or modified in a manner unacceptable to such parties on appeal or otherwise; the Arrangement Resolution shall have been approved by the requisite number of votes cast by the Unitholders at the Meeting in accordance with the provisions of the Interim Order and any applicable regulatory requirements; the Final Order shall have been granted in form and substance satisfactory to Newco, Gaz Métro, Noverco and GMi, acting reasonably, not later than September 24, 2010 or such later date as the parties hereto may agree and shall not have been set aside or modified in a manner unacceptable to such parties on appeal or otherwise; the directors of GMi, in its capacity as general partner of Gaz Métro, shall not have determined in their sole and absolute discretion, that to proceed with the Arrangement would not be in the best interests of Gaz Métro and the Unitholders; the Articles of Arrangement and all necessary related documents, in form and substance satisfactory to Newco, Gaz Métro and GMi, acting reasonably, shall have been accepted for filing by the Director in accordance with Subsection 192(6) of the CBCA; no material action or proceeding shall be pending or threatened by any Person and there shall be no action taken under any existing applicable law or regulation, nor any statute, rule, regulation or order which is enacted, enforced, promulgated or issued by any court, department, commission, board, regulatory body, government or governmental authority or similar agency, domestic or foreign, that: C-9

98 (i) (ii) makes illegal or otherwise directly or indirectly restrains, enjoins or prohibits the Arrangement or any other transactions contemplated herein; or results in a judgment or assessment of material damages directly or indirectly relating to the transactions contemplated herein; (g) (h) (i) (j) all necessary material third party consents and all applicable governmental, regulatory and judicial consents with respect to the transactions contemplated under the Arrangement shall have been obtained including, without limitation, the necessary approval from the Vermont Public Service Board; the Material Agreements shall have been executed to become effective as of the Effective Date; the Second Additional Services Agreement with respect to the Seigneurie Project shall have been executed to become effective on the date of exercise of the Seigneurie Option only if the parties have agreed to execute such agreement; the TSX shall have conditionally approved the substitutional listing of the Newco Shares to be issued pursuant to the Arrangement, subject only to the filing of required documents which cannot be filed prior to the Effective Date; and (k) this Agreement shall not have been terminated pursuant to Section Additional Conditions to Obligations of Gaz Métro, GMi, Noverco and Gaz Métro Plus In addition to the conditions contained in Section 4.1, the obligation of Gaz Métro, GMi, Noverco and Gaz Métro Plus to complete the transactions contemplated by this Agreement and the Arrangement is subject to the fulfillment or satisfaction (provided that the same may be waived by them), on or before the Effective Date, of each of the covenants, acts and undertakings of Newco to be performed or complied with on or before the Effective Date pursuant to the terms of this Agreement and the Arrangement. 4.3 Additional Conditions to Obligations of Newco In addition to the conditions contained in Section 4.1, the obligation of Newco to complete the transactions contemplated by this Agreement and the Arrangement is subject to the fulfillment or satisfaction (provided that the same may be waived by it), on or before the Effective Date, of each of the covenants, acts and undertakings of Gaz Métro, GMi and Gaz Métro Plus to be performed or complied with on or before the Effective Date pursuant to the terms of this Agreement and the Arrangement. 4.4 Notice and Effect of Failure to Comply with Conditions If any of the conditions precedent set forth in Sections 4.1, 4.2 or 4.3 hereof shall not be complied with or waived by the party or parties for whose benefit such conditions are provided on or before the date required for the performance thereof, then a party for whose benefit the condition precedent is provided may, in addition to any other remedies they may have at law or equity, rescind and terminate this Agreement; provided that prior to the filing of the Articles of Arrangement for the purpose of giving effect to the Arrangement, the party intending to rely thereon has delivered a written notice to the other parties, specifying in reasonable detail all breaches of covenants which the party delivering such notice is asserting as the basis for the non fulfillment of the applicable conditions precedent and the party in breach shall have failed to cure C-10

99 such breach within three Business Days of receipt of such written notice thereof (except that no cure period shall be provided for a breach which by its nature cannot be cured). More than one such notice may be delivered by a party. 4.5 Satisfaction of Conditions The conditions set out in this Article 4 are conclusively deemed to have been satisfied, waived or released when, with the prior written agreement of the parties, Articles of Arrangement are filed under the CBCA to give effect to the Arrangement. 5.1 Amendments ARTICLE 5 AMENDMENT AND TERMINATION This Agreement and the Plan of Arrangement may, subject to the terms of the Plan of Arrangement, Interim Order, Final Order and applicable laws, at any time and from time to time before or after the Meeting, but no later than the Effective Time, be amended in any respect whatsoever by written agreement of the parties hereto without further notice to or authorization on the part of their respective securityholders, and any such amendment may, subject to the Plan of Arrangement, Interim Order, Final Order and applicable laws, without limitation: (a) (b) (c) change the time for performance of any of the obligations or acts of the parties; waive compliance with or modify any of the covenants herein contained and waive or modify performance of any of the obligations of the parties; or waive compliance with or modify any mutual conditions precedent herein contained, provided that any such amendment that changes the consideration to be received by the Public Unitholders pursuant to the Arrangement is brought to the attention of the Court before approval of the Final Order and is subject to such requirements as may be ordered by the Court. 5.2 Termination This Agreement shall be terminated in each of the following circumstances: (a) (b) (c) (d) (e) if the Interim Order has not been granted in form and substance satisfactory to Gaz Métro, GMi, Noverco and Newco, acting reasonably, by July 30, 2010, or has been set aside or modified in a manner unacceptable to such parties on appeal or otherwise; if the Arrangement is not approved by the requisite number of votes cast by the Unitholders at the Meeting in accordance with the provisions of the Interim Order and any applicable regulatory requirements; if the Final Order has not been granted in form and substance satisfactory to Gaz Métro, GMi, Noverco and Newco, acting reasonably, by September 24, 2010, or has been set aside or modified in a manner unacceptable to such parties on appeal or otherwise; the mutual agreement of the parties; the Arrangement shall not have become effective on or before September 30, 2010 or such later date as may be agreed to by the parties hereto; and C-11

100 (f) termination of this Agreement as provided in Section 4.4 hereof. 5.3 Effect of Termination If this Agreement is terminated pursuant to Section 5.2, this Agreement shall become void and of no effect without liability of any party (or any shareholder, unitholder, director, officer, employee, agent, consultant or representative of such party) to any other party hereto. 6.1 Binding Effect ARTICLE 6 GENERAL This Agreement shall be binding upon and enure to the benefit of the parties hereto and their respective successors and permitted assigns. 6.2 No Assignment No party may assign its rights or obligations under this Agreement without prior written consent of the other parties to this Agreement. 6.3 Exclusivity None of the covenants of Gaz Métro or the other parties hereto contained herein shall prevent the board of directors of GMi, in its capacity as general partner of Gaz Métro, or the board of the other parties hereto from responding as required by law to any unsolicited submission or proposal regarding any acquisition or disposition of assets or any unsolicited proposal to amalgamate, merge or effect an arrangement or any unsolicited acquisition proposal generally or make any disclosure to its securityholders with respect thereto which in the judgment of the board of directors of GMi, in its capacity as general partner of Gaz Métro, or the board of the other parties hereto, acting upon the advice of outside counsel, is required under applicable law. 6.4 Equitable Remedies All covenants herein or to be given hereunder as to enforceability in accordance with the terms of any covenant, agreement or document shall be qualified as to applicable bankruptcy and other laws affecting the enforcement of creditors rights generally and to the effect that specific performance, being an equitable remedy, may only be ordered at the discretion of the court. 6.5 Severability If any one or more of the provisions or parts thereof contained in this Agreement should be or become invalid, illegal or unenforceable in any respect in any jurisdiction, the remaining provisions or parts thereof contained herein shall be and shall be conclusively deemed to be, as to such jurisdiction, severable therefrom and: (a) (b) the validity, legality or enforceability of such remaining provisions or parts thereof shall not in any way be affected or impaired by the severance of the provisions or parts thereof severed; and the invalidity, illegality or unenforceability of any provision or part thereof contained in this Agreement in any jurisdiction shall not affect or impair such provision or part thereof or any other provisions of this Agreement in any other jurisdiction. C-12

101 6.6 No Waiver No waiver by any party hereto shall be effective unless such waiver is in writing and any waiver shall affect only the matter, and the occurrence thereof, specifically identified and shall not extend to any other matter or occurrence. 6.7 Further Assurances Each party hereto shall, from time to time and at all times hereafter, at the request of another party hereto, but without further consideration, do all such further acts, and execute and deliver all such further documents and instruments as may be reasonably required in order to fully perform and carry out the terms and intent hereof. 6.8 Time of Essence Time shall be of the essence. 6.9 Counterparts This Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which together constitute one and the same instrument. [Signature page follows] C-13

102 IN WITNESS WHEREOF this Agreement has been executed and delivered by the parties hereto effective as of the date first above written CANADA INC. By: By: (signed) Louis P. Gignac Name: Louis P. Gignac Title: President (signed) Réal Sureau Name: Réal Sureau Title: Director NOVERCO INC. By: By: (signed) Cyrille Vittecoq Name: Cyrille Vittecoq Title: Director (signed) Josée Tremblay Name: Josée Tremblay Title: Director GAZ MÉTRO LIMITED PARTNERSHIP, by its general partner, Gaz Métro inc. By: By: (signed) Sophie Brochu Name: Sophie Brochu Title: President and Chief Executive Officer (signed) Pierre Despars Name: Pierre Despars Title: Executive Vice President, Corporate Affairs and Chief Financial Officer Arrangement Agreement C-14

103 GAZ MÉTRO INC. By: By: (signed) Sophie Brochu Name: Sophie Brochu Title: President and Chief Executive Officer (signed) Pierre Despars Name: Pierre Despars Title: Executive Vice President, Corporate Affairs and Chief Financial Officer GAZ MÉTRO PLUS INC. By: By: (signed) Sophie Brochu Name: Sophie Brochu Title: Chairman of the Board (signed) Pierre Despars Name: Pierre Despars Title: Director Arrangement Agreement C-15

104 EXHIBIT A PLAN OF ARRANGEMENT UNDER SECTION 192 OF THE CANADA BUSINESS CORPORATION ACT ARTICLE 1 INTERPRETATION 1.1 In this Plan of Arrangement, the following terms have the following meanings: (a) Affiliated Entity means an Affiliate of GMi and, for the purposes of the Partnership Agreement, Affiliate describes the relationship between two Persons: (i) if both are companies, one is the subsidiary of the other, or both are subsidiaries of the same company or are controlled by the same Person, as provided in the Securities Act (Québec), (ii) one is a senior executive as defined in the Securities Act (Québec) of the other or of an Affiliate of the other, or (iii) one does not deal at arm s length with the other; (b) (c) (d) (e) (f) Administration Agreement means the administration and management support agreement to be entered into between Gaz Métro and Newco as of the Effective Date pursuant to which Gaz Métro, either directly or through GMi, its general partner, will provide to Newco certain administration and management support services relating solely to Newco s interest in Gaz Métro and related public company matters and, in certain circumstances, may provide certain additional services, substantially in the form of the draft agreed upon between the relevant parties as of the date of execution of the Arrangement Agreement; Amended Partnership Agreement means the Partnership Agreement to be amended and restated in connection with the Arrangement as of the Effective Date, substantially in the form of the draft agreed upon between the relevant parties as of the date of execution of the Arrangement Agreement; Arrangement, herein, hereof, hereto, hereunder and similar expressions mean and refer to the arrangement pursuant to Section 192 of the CBCA set forth in this Plan of Arrangement as supplemented, modified or amended, and not to any particular article, section or other portion hereof; Arrangement Agreement means the arrangement agreement dated June 22, 2010, among Newco, Gaz Métro, Noverco, GMi and Gaz Métro Plus, with respect to the Arrangement and all amendments thereto; Arrangement Resolution means the resolution in respect of the Arrangement and related matters to be considered at the Meeting, a copy of which shall be annexed to the Proxy Circular, to be approved by (i) at least 66⅔% of the votes cast by all Unitholders present in person or by proxy at the Meeting, (ii) at least 66⅔% of the votes cast by Unitholders other than GMi and Affiliated Entities present in person or by proxy at the Meeting, and (iii) a simple majority of the votes cast by all Unitholders present in person or by proxy at the Meeting, excluding Units beneficially owned or over which control or direction is exercised by interested parties and certain others (as provided by Section 8.1 of Multilateral Instrument Protection of C-16

105 Minority Security Holders in Special Transactions of the Canadian Securities Administrators) for purposes of the Arrangement; (g) (h) (i) (j) (k) (l) (m) (n) (o) (p) (q) (r) (s) (t) (u) Articles of Arrangement means the articles in respect of the Arrangement required under Subsection 192(6) of the CBCA to be filed with the Director after the Final Order has been granted; Business Day means a day, other than a Saturday, Sunday or statutory holiday, when banks are generally open for business in the City of Montreal, in the Province of Québec, for the transaction of banking business; CBCA means the Canada Business Corporations Act, R.S.C. 1985, c. C-44, as now in effect and as it may be amended from time to time prior to the Effective Date; Certificate means the certificate of arrangement to be issued by the Director pursuant to Subsection 192(7) of the CBCA giving effect to the Arrangement; Court means the Superior Court of Québec; Depositary means CIBC Mellon Trust Company, or such other person as may be designated by Gaz Métro, GMi, in its capacity as general partner of Gaz Métro, or its officers, and set out in the Letter of Transmittal; Director means the director appointed under Section 260 of the CBCA; Effective Date means the date the Arrangement is effective under the CBCA, as shown on the Certificate; Effective Time means 11:59 p.m. (Montreal time) on the Effective Date; Eligible Unitholder means a beneficial owner of Public LP Units that is not a Non-Resident Unitholder or a Tax-Exempt Unitholder immediately before the Effective Time; Final Order means the final order of the Court approving this Plan of Arrangement as such order may be amended or varied at any time prior to the Effective Time or, if appealed, then unless such appeal is withdrawn or denied, as affirmed or as amended on appeal; First Additional Services Agreement relating to the Debt of Newco means the services agreement with respect to the management of certain indebtedness of Newco to be entered into between Gaz Métro and Newco as of the Effective Date, substantially in the form of the draft to be agreed upon between the parties prior to the Effective Date; Gaz Métro means Gaz Métro Limited Partnership, a limited partnership established under the laws of the Province of Québec; Gaz Métro Plus means Gaz Métro Plus inc., a company incorporated pursuant to the Companies Act (Québec) and a wholly-owned Subsidiary of GMi; Gaz Métro Plus LP Units means the units of Gaz Métro held by Gaz Métro Plus; C-17

106 (v) (w) (x) (y) (z) GMi means Gaz Métro inc., a company incorporated pursuant to the Companies Act (Québec) acting as general partner of Gaz Métro, with exclusive authority to manage the business and affairs of Gaz Métro; GP Units means the units of Gaz Métro held by GMi; Interim Order means the interim order of the Court concerning the Arrangement containing declarations and directions with respect to the Arrangement and the holding of the Meeting, as such order may be amended by the Court from time to time; Letter of Transmittal means the letter of transmittal accompanying the Proxy Circular sent to the Public Unitholders pursuant to which such holders are required to deliver certificates representing Public LP Units to receive certificates representing Newco Shares issuable to them pursuant to the Arrangement; Material Agreements means, collectively, the Amended Partnership Agreement, the Non- Competition Agreement, the Administration Agreement, the First Additional Services Agreement relating to the Debt of Newco and the Seigneurie Option Agreement; (aa) Meeting means the special meeting of Unitholders to be held on or around September 8, 2010 to consider the Arrangement and related matters, and any adjournment thereof; (bb) (cc) (dd) (ee) (ff) (gg) (hh) (ii) Newco means Canada Inc., a corporation incorporated pursuant to the CBCA and a wholly-owned Subsidiary of GMi prior to the Effective Time; Newco Shares means the common shares in the share capital of Newco, which common shares will be issued to Public Unitholders in consideration for the transfer of their Public LP Units held as of the Effective Date to Newco on a one-for-one basis pursuant to the Arrangement; Non-Competition Agreement means the non-competition agreement to be entered into as of the Effective Date between Gaz Métro and Newco, substantially in the form of the draft agreed upon between the relevant parties as of the date of execution of the Arrangement Agreement; Non-Resident Unitholder means a beneficial owner of Public LP Units that is (i) a person who is not a resident of Canada, and not deemed to be resident in Canada for the purposes of the Tax Act or (ii) a partnership that is not a Canadian partnership for the purposes of the Tax Act; Noverco means Noverco inc., a company incorporated pursuant to the Companies Act (Québec); Partnership Agreement means the amended and restated limited partnership agreement of Gaz Métro executed on January 14, 1993, as amended on November 5, 1996 and March 18, 2009; Person includes an individual, limited or general partnership, limited liability company, limited liability partnership, trust, joint venture, association, body corporate, trustee, executor, administrator, legal representative, government (including any governmental entity) or any other entity, whether or not having legal status; Plan of Arrangement means this plan of arrangement pursuant to Section 192 of the CBCA involving Newco, Gaz Métro and all Unitholders, and any amendment or variation made in accordance with the terms hereof; C-18

107 (jj) (kk) (ll) (mm) (nn) (oo) (pp) (qq) (rr) (ss) (tt) (uu) (vv) Proxy Circular means the management proxy circular of Gaz Métro, together with all exhibits thereto, to be forwarded as part of the proxy solicitation materials to Unitholders in connection with the Meeting; Public LP Units means the units of Gaz Métro other than GP Units and Gaz Métro Plus LP Units; Public Unitholders means the holders of Public LP Units; Second Additional Services Agreement with respect to the Seigneurie Project means the services agreement, if required as agreed by the parties, to be executed by Gaz Métro and Newco as of the Effective Date and which will come into force upon the exercise by Newco of the Seigneurie Option, substantially in the form of the draft to be agreed upon between the relevant parties prior to the Effective Date; Seigneurie Option means the option in favour of Newco for the transfer of 49% of Gaz Métro s interests in the Seigneurie Project (through Gaz Métro Éole Inc.) to Newco under the terms and conditions set forth in the Seigneurie Option Agreement; Seigneurie Option Agreement means the agreement evidencing the Seigneurie Option to be entered into as of the Effective Date between Gaz Métro, GMi, Gaz Métro Éole Inc., Noverco and Newco, substantially in the form of the draft agreed upon between the relevant parties as of the date of execution of the Arrangement Agreement; Seigneurie Project means the development, construction and operation of the wind power projects currently jointly developed and to be jointly developed, directly or indirectly, by Gaz Métro Éole Inc. and Boralex Inc. consisting of wind farms to be located on the private property of the Seigneurie de Beaupré owned by the Séminaire de Québec; Subsidiary means, with respect to any Person, a subsidiary (as that term is defined in the CBCA (for such purposes, if such person is not a corporation, as if such person were a corporation)) of such Person and includes any limited partnership, joint venture, trust, limited liability company, unlimited liability company or other entity, whether or not having legal status, that would constitute a subsidiary (as described above) if such entity were a corporation; Tax Act means the Income Tax Act, R.S.C. 1985, c. 1 (5 th Supp), as amended, including the regulations promulgated thereunder; Tax-Exempt Unitholder means a beneficial owner of Public LP Units that is exempt from tax under Part I of the Tax Act; TSX means the Toronto Stock Exchange; Unitholders means holders from time to time of Units; and Units means, collectively, the GP Units, the Gaz Métro Plus LP Units and the Public LP Units. 1.2 The division of this Plan of Arrangement into articles and sections and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Plan of Arrangement. C-19

108 1.3 Unless reference is specifically made to some other document or instrument, all references herein to articles and sections are to articles and sections of this Plan of Arrangement. 1.4 Unless the context otherwise requires, words importing the singular number shall include the plural and vice versa; words importing any gender shall include all genders, where applicable; and words importing Persons shall include individuals, partnerships, associations, corporations, funds, unincorporated organizations, governments, regulatory authorities, and other entities. 1.5 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. 1.6 References in this Plan of Arrangement to any statute or sections thereof shall include such statute as amended or substituted and any regulations promulgated thereunder from time to time in effect. ARTICLE 2 ARRANGEMENT AGREEMENT 2.1 This Plan of Arrangement is made pursuant to, is subject to the provisions of, and forms part of, the Arrangement Agreement. 2.2 This Plan of Arrangement, upon the filing of the Articles of Arrangement and the issuance of the Certificate, shall become effective on, and be binding on and after, the Effective Time on: (i) Newco; (ii) Gaz Métro; and (iii) all Unitholders. 2.3 The Articles of Arrangement and the Certificate shall be filed and issued, respectively, with respect to this Arrangement in its entirety. The Certificate shall be conclusive evidence that the Arrangement has become effective and that each of the provisions of Article 3 has become effective in the sequence and at the times set out therein. 2.4 Other than as expressly provided for herein, no portion of this Plan of Arrangement shall take effect with respect to any party or Person until the Effective Time. Furthermore, each of the events listed in Article 3 shall be, without affecting the timing set out in Article 3, mutually conditional, such that no event described in said Article 3 may occur without all steps occurring, and those events shall effect the integrated transaction which constitutes the Arrangement. ARTICLE 3 ARRANGEMENT 3.1 Steps of the Arrangement - Commencing at the Effective Time, each of the events set out below shall occur and shall be deemed to occur in the following order, without any further act or formality except as otherwise provided herein: Exchange of Public LP Units for Newco Shares (a) the Public LP Units held by the Unitholders shall be transferred to Newco (free of any hypothecs or claims) in consideration for Newco Shares on the basis of one Newco Share for each Public LP Unit so transferred. The stated capital maintained in respect of the Newco Shares shall be equal to the fair market value of the Public LP Units so transferred to Newco; C-20

109 Material Agreements (b) the Material Agreements shall become effective; Purchase for Cancellation of the Newco Shares held by GMi (c) all Newco Shares issued to GMi in connection with the incorporation and organization of Newco shall be purchased for cancellation by Newco for consideration equal to the fair market value of such Newco Shares, and shall be cancelled; Reduction of Stated Capital of Newco Shares (d) Newco shall be authorized to reduce the stated capital maintained in respect of the Newco Shares by an amount determined by the board of directors of Newco which shall not exceed $250,000,000, without any payment. 3.2 Upon the exchange of Public LP Units for Newco Shares at the Effective Time pursuant to Section 3.1(a): (i) (ii) (iii) each former registered holder of such Public LP Units shall cease to be the holder of the Public LP Units so exchanged; each such registered holder of such Public LP Units shall become the holder of Newco Shares exchanged for the Public LP Units held by such holder on the basis of one Newco Share for each Public LP Unit so transferred; and Newco shall become the holder of all of the Public LP Units so exchanged. 3.3 A former beneficial owner of Public LP Units who is an Eligible Unitholder shall be entitled to make an income tax election, pursuant to subsection 85(1) or 85(2) of the Tax Act, as applicable (and the analogous provisions of provincial or territorial income tax law) with respect to the transfer by the Eligible Unitholder of Public LP Units to Newco in the manner to be set forth in the Proxy Circular. ARTICLE 4 OUTSTANDING CERTIFICATES 4.1 From and after the Effective Time, certificates formerly representing Public LP Units that were exchanged under Article 3 shall represent only the right to receive the consideration to which the holders are entitled under the Arrangement and any distributions that have been made payable by Gaz Métro to Unitholders prior to the Effective Date with respect to such Public LP Units but that are unpaid as of the Effective Date. 4.2 Any certificate formerly representing Public LP Units that is not deposited with the Depositary with all other documents as required by this Plan of Arrangement on or before the sixth anniversary of the Effective Date shall cease to represent a right or claim of any kind or nature including the right of the holder of such Public LP Units to receive the Newco Shares (and any dividend paid thereon and held in trust by the Depositary). In such case, such Newco Shares shall be returned to Newco for cancellation together with all dividends thereon held for such holder. 4.3 Registration of interests in and transfers of the Newco Shares will be made through a book-entry only system (the Book Entry System ) administered by CDS Clearing and Depository Services C-21

110 Inc. ( CDS ). On or about the Effective Date, Newco will deliver to CDS one or more certificates evidencing the aggregate number of Newco Shares issued in connection with the Arrangement. 4.4 Newco may issue certificates representing Newco Shares to one or more holders, where such issuance is warranted in the opinion of Newco. Newco also has the option in its sole discretion to terminate registration of the Newco Shares through the Book Entry System, in which case certificates for the Newco Shares in fully registered form would be issued to beneficial owners of such Newco Shares or their nominees. 4.5 Delivery of customer confirmations or certificates representing the Newco Shares to which Public Unitholders are entitled under this Plan of Arrangement shall be made on the second Business Day following the Effective Date. 4.6 If any certificate which immediately prior to the Effective Time represented an interest in outstanding Public LP Units that were transferred pursuant to Article 3 hereof has been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such certificate to have been lost, stolen or destroyed, the registered holder thereof in the Unit register shall, as a condition precedent to the receipt of any Newco Shares to be issued to such person, provide to Newco a bond, in form and substance satisfactory to Newco, or otherwise indemnify Newco to its satisfaction, in its sole and absolute discretion, against any claim that may be made against them with respect to the certificate alleged to have been lost, stolen or destroyed. ARTICLE 5 AMENDMENTS 5.1 Newco, Gaz Métro and GMi may amend this Plan of Arrangement at any time and from time to time prior to the Effective Time, provided that each such amendment must be: (i) set out in writing; (ii) approved by the other parties; and (iii) filed with the Court. 5.2 Any amendment, modification or supplement to this Plan of Arrangement may be made prior to the Effective Time by Newco, Gaz Métro and GMi (or, if following the Effective Time, Newco) without the approval of the Court or the Unitholders, provided that it concerns a matter which, in the reasonable opinion of Newco, Gaz Métro and GMi (or, if following the Effective Time, Newco), is of an administrative nature, solely with respect to Newco, and required to better give effect to the implementation of this Plan of Arrangement or is not adverse to the financial or economic interests of Gaz Métro or any former or current Unitholders. 5.3 Subject to Section 5.2, any amendment to this Plan of Arrangement may be proposed by Newco, Gaz Métro and GMi at any time prior to or at the Meeting (provided that the other parties shall have consented thereto) with or without any other prior notice or communication to Unitholders, and if so proposed and accepted by the persons voting at the Meeting (other than as may be required under the Interim Order), shall become part of this Plan of Arrangement for all purposes. 5.4 Subject to Section 5.2, Newco, Gaz Métro and GMi may amend, modify or supplement this Plan of Arrangement at any time and from time to time after the Meeting and prior to the Effective Time with the approval of the Court and, if and as required by the Court, after communication to Unitholders. C-22

111 ARTICLE 6 GENERAL 6.1 Further Assurances Notwithstanding that the transactions and events set out herein shall occur and be deemed to occur in the order set out in this Plan of Arrangement without any further act or formality, each of the parties to the Arrangement Agreement shall make, do and execute, or cause to be made, done and executed, all such further acts, deeds, agreements, transfers, assurances, instruments or documents as may reasonably be required by any of them in order to further document or evidence any of the transactions or events set out herein. 6.2 Severability of Plan of Arrangement Provisions If, prior to the Effective Date, any term or provision of this Plan of Arrangement is held by the Court to be invalid, void or unenforceable, the Court, at the request of any parties, shall have the power to alter and interpret such term or provision to make it valid or enforceable to the maximum extent practicable, consistent with the original purpose of the term or provision held to be invalid, void or unenforceable, and such term or provision shall then be applicable as altered or interpreted. Notwithstanding any such holding, alteration or interpretation, the remainder of the terms and provisions of this Plan of Arrangement shall remain in full force and effect and shall in no way be affected, impaired or invalidated by such holding, alteration or interpretation. 6.3 Governing Laws This Plan of Arrangement shall be governed by and construed in accordance with the laws of the Province of Québec and the federal laws of Canada applicable therein. Any questions as to the interpretation or application of this Plan of Arrangement and all proceedings taken in connection with this Plan of Arrangement and its provisions shall be subject to the exclusive jurisdiction of the Court. C-23

112 APPENDIX D FAIRNESS OPINION July 28, 2010 The Independent Committee of the Board of Directors and the Board of Directors of Gaz Métro inc. Gaz Métro Limited Partnership 1717 du Havre Montréal (Québec) H2K 2X3 To the Members of the Independent Committee of the Board of Directors and the Members of the Board of Directors of Gaz Métro inc.: BMO Nesbitt Burns Inc. ( BMO Capital Markets or we ) understands that the Board of Directors of Gaz Métro inc. (the Board ), as general partner of Gaz Métro Limited Partnership ( GMLP, and collectively with Gaz Métro inc., Gaz Métro ), has examined available alternatives with regards to the introduction of the Specified Investment Flow-Through ( SIFT ) tax legislation announced in October 2006 and, following such review, is contemplating the creation of a newly-formed publiclytraded taxable corporation named Valener Inc. ( Newco ) to hold the interest in GMLP currently held by limited partners of GMLP other than Gaz Métro inc. The proposed transaction (the Transaction ) would consist of the incorporation of Newco under the Canada Business Corporations Act ( CBCA ) and the subsequent exchange, on a one-for-one basis, of the units currently held by limited partners of GMLP other than Gaz Métro inc. into shares of Newco by way of a Plan of Arrangement. The terms and conditions of, and other matters relating to, the Transaction are described in the Plan of Arrangement and in Gaz Métro s management information circular prepared in connection with the Transaction and to be delivered to limited partners of GMLP (the "Circular"). Engagement of BMO Capital Markets The Independent Committee of the Board (the Committee ) has retained BMO Capital Markets pursuant to an Engagement Agreement dated November 13, 2009 (the Engagement Agreement ) to act as financial advisor in connection with its review of alternatives with regards to the introduction of the SIFT tax legislation. The Committee has asked BMO Capital Markets to provide, pursuant to the Engagement Agreement, an opinion (the Opinion ) as to the fairness of the Transaction, from a financial point of view, to the limited partners of GMLP, other than Gaz Métro inc. BMO Capital Markets was initially contacted by Gaz Métro in July 2008 and was first engaged by Gaz Métro to act as financial advisor to GMLP pursuant to an engagement agreement dated September 1, 2008 to, among other things, review available alternatives with regards to the introduction of the SIFT tax legislation. Following the creation of the Committee to review the selected alternatives, it was decided to modify the terms of the engagement agreement so that BMO Capital Markets would act as a financial advisor to the Committee. The terms of the Engagement Agreement provide that BMO Capital Markets is to be paid a fee for its services as financial advisor, a portion of which is payable regardless of the outcome of the Transaction and a portion of which is payable upon rendering this Opinion and/or upon consummation of the Transaction and certain other events. In addition, BMO Capital Markets is to be reimbursed for its reasonable out-of-pocket expenses and to be indemnified in certain circumstances. D-1

113 The Opinion is provided solely for the exclusive use of the Committee and the Board in their consideration of the Transaction and may not be relied upon by any other person or for any other purpose. The Opinion does not constitute a recommendation to the Committee or the Board as to whether they should recommend or approve the Transaction, nor does it constitute a recommendation to any limited partner of GMLP as to how such limited partners should vote or act with respect to the Transaction or any matter relating thereto. Except as contemplated herein, the Opinion is not to be reproduced, disseminated, quoted from or referred to (in whole or in part) without our prior written consent. Notwithstanding the foregoing paragraph, BMO Capital Markets consents to the inclusion of the Opinion in its entirety and a summary thereof in a form approved by BMO Capital Markets in the Circular, and to the filing thereof, as necessary, by Gaz Métro with the securities commissions and other regulatory authorities, and consents to references to the Opinion in press releases to be issued by Gaz Métro in connection with the Transaction. Relationships with Interested Parties BMO Capital Markets is a wholly-owned subsidiary of the Bank of Montreal ( BMO ). Neither BMO Capital Markets, nor any of its affiliated entities, is an insider, associate or affiliate (as those terms are defined in the Securities Act (Quebec)) of Gaz Métro, or any of their respective associates or affiliates. BMO provides and has provided banking services in the normal course of business to Gaz Métro. In addition to the services being provided under the Engagement Agreement, BMO Capital Markets has in the past provided and may in the future provide financial advisory and investment banking services to Gaz Métro, or any of their respective associates or affiliates. The fees received by BMO Capital Markets in connection with the above activities are not material to either BMO or BMO Capital Markets. There are no understandings, agreements or commitments between BMO Capital Markets, or any of its affiliated entities, on the one hand, and Gaz Métro, or any of their respective associates or affiliates, on the other hand, with respect to any future business dealings that would be material to BMO Capital Markets or any of its affiliated entities. In connection with the Transaction, BMO is expecting to provide Newco with underwritten credit facilities in the aggregate amount of CDN$75 million and is acting in the capacity of lead arranger and administrative agent in connection therewith, for which BMO or one of its affiliates would receive compensation. BMO Capital Markets acts as a trader and dealer, both as principal and agent, in major financial markets and, as such, has, may have had, or may in the future have, positions in the securities of Gaz Métro, or any of their respective associates or affiliates. In addition, BMO Capital Markets, from time to time, may have executed or may execute transactions on behalf of Gaz Métro, or any of their respective associates or affiliates or on behalf of other clients for which BMO Capital Markets received or may receive compensation. As an investment dealer, BMO Capital Markets conducts research on securities and may, in the ordinary course of its business, provide research reports and investment advice to its clients on investment matters, including with respect to Gaz Métro or the Transaction. Credentials of BMO Capital Markets BMO Capital Markets is one of Canada's largest investment banking firms with operations in all facets of corporate and government finance, mergers and acquisitions, equity and fixed income sales and trading, investment research and investment management. BMO Capital Markets has been a financial advisor in numerous transactions throughout North America involving public companies in various industry sectors and has extensive experience in preparing fairness opinions. The Opinion is the opinion of BMO Capital Markets, the form and content of which have been approved for release by a committee of the directors and officers of BMO Capital Markets, each of whom is experienced in mergers and acquisitions, divestitures and fairness opinions. Scope ofreview In connection with rendering the Opinion, we have reviewed and relied upon (without attempting to verify independently the completeness or accuracy thereof), or carried out, among other things, the following: a) the Limited Partnership Agreement of GMLP dated January 14, 1993, as amended; D-2

114 b) the Trust Indenture dated July 15, 1982 entered into between GMi and La Compagnie de Fiducie, Canada Permanent (replaced by Montréal Trust Company of Canada, to which Computershare Trust Company of Canada succeeded as trustee, effective June 30, 2000), as trustee, as amended and restated pursuant to the Trust Deed of Hypothec, Mortgage and Pledge bearing formal date of August 12, 1991 entered into between GMi, Montréal Trust Company of Canada, as trustee (to which Computershare Trust Company of Canada succeeded as trustee, effective June 30, 2000), and Gaz Métro, as guarantor, as further amended and supplemented from time to time; c) the Credit Agreement dated December 21, 2004, entered into among GMi, as borrower, Gaz Métro, as guarantor, Bank of Montreal, as administrative agent and the lenders party thereto; d) the information circular of GMLP dated July 28, 2010 in respect of the Transaction; e) the legal documentation regarding the Transaction, including the draft Amended and Restated Limited Partnership Agreement dated June 22, 2010, the draft Administration and Management Support Agreement dated June 22, 2010, the draft Non-Competition Agreement dated June 22, 2010, and the Arrangement Agreement and Plan of Arrangement dated June 22, 2010; f) the annual reports of Gaz Métro for the three fiscal years ended September 30, 2007, 2008 and 2009; g) the notice of annual shareholder meeting and management proxy circulars of Gaz Métro for the three fiscal years ended September 30, 2007, 2008 and 2009; h) the annual information forms of Gaz Métro for the three fiscal years ended September 30, 2007, 2008 and 2009; i) the audited annual financial statements and accompanying management's discussion and analysis of Gaz Métro for the three fiscal years ended September 30, 2007, 2008 and 2009; j) the interim financial statements and accompanying management's discussion and analysis of Gaz Métro for the first and second quarter of the 2010 fiscal year, respectively ended December 31, 2009 and March 31, 2010; k) selected unaudited historical financial information of Gaz Métro segmented by business unit for the fiscal years ended September 30, 2008 and 2009; l) unaudited consolidated financial forecasts for Gaz Métro, for the years ending September 30, 2010 through September 30, 2015 and unaudited financial forecasts for Gaz Métro segmented by business unit, for the years ending September 30, 2010 through September 30, 2015; m) unaudited consolidated financial forecasts and historical financial information for the Seigneurie wind power project, for the years ending December 31, 2007 through December 31, 2038; n) public information (including that prepared by industry research analysts) relating to the business, operations, financial performance and trading history of Gaz Métro and other public companies we considered relevant; o) public information regarding the SIFT tax legislation; p) the draft option agreement dated June 22, 2010; q) the articles of Newco dated June 15, 2010 and the articles of amendments of Newco dated July 14, 2010; r) the advance income tax ruling of the Canada Revenue Agency dated June 21, 2010; D-3

115 s) the commitment letter for the $75 million credit facilities dated July 22, 2010; t) public information with respect to selected precedent transactions we considered relevant; u) representations contained in a certificate addressed to BMO Capital Markets dated as of the date hereof, from senior officers of Gaz Métro (the "Certificate") as to, among other things, certain factual matters including the completeness, accuracy and fair presentation of the information upon which the Opinion is based; and v) such other corporate, operating, industry and financial market information, investigations and analyses as BMO Capital Markets considered necessary or appropriate in the circumstances. In addition to the written information described above, in preparing the Opinion, BMO Capital Markets has participated, and relied upon discussions and exchanges with, members of the Committee, senior management of Gaz Métro, Osler, Hoskin & Harcourt LLP, the external legal counsel of GMLP and the Committee, and representatives of Noverco Inc. BMO Capital Markets has been granted access to senior management of Gaz Métro and has not, to its knowledge, been denied any requested information. Assumptions and Limitations The Opinion is subject to the assumptions, explanations and limitations set forth below. We have not been asked to prepare and have not prepared a formal valuation or appraisal of Gaz Métro or any of its securities or assets and the Opinion should not be construed as such. We have, however, conducted such analyses as we considered necessary in the circumstances. In addition, the Opinion is not, and should not be construed as, advice as to the price at which the units of GMLP or shares of Newco may trade at any future date. BMO Capital Markets was not engaged to review any legal, tax or accounting aspects of the Transaction. This Opinion does not address the fairness of the amount, nature or any other aspect of any compensation to any of the officers, directors or employees of Gaz Métro, or a class of such persons, relative to the consideration to be received by the limited partners pursuant to the Transaction. In accordance with the Engagement Agreement, BMO Capital Markets has relied upon, and has assumed the completeness, accuracy and fair presentation of, all information, data, advice, opinions, representations and other material (financial or otherwise) (collectively, the "Information") provided by or on behalf of Gaz Métro or any of its subsidiaries, associates or affiliates or their respective directors, officers, associates, affiliates, consultants, advisors and representatives, whether orally or in writing, to BMO Capital Markets, its consultants, advisors and representatives in connection with its engagement and the preparation of the Opinion or obtained by BMO Capital Markets from SEDAR relating to Gaz Métro, its subsidiaries, associates or affiliates, the Transaction or any other transaction. The Opinion is conditional upon the completeness, accuracy and fair presentation of the Information. Subject to the exercise of its professional judgment, BMO Capital Markets has not attempted to verify independently the completeness, accuracy or fair presentation of the Information. With respect to any portions of the Information that constitute forecasts, projections, estimates and/or budgets, we note that projecting future results of any company is inherently subject to uncertainty. We have assumed that such forecasts, projections, estimates and/or budgets (i) were prepared using the probable courses of actions to be taken or events reasonably expected to occur during the period covered thereby, (ii) were prepared using the assumptions identified therein, which in the reasonable belief of the management of Gaz Métro, are (or were at the time and continue to be) reasonable in the circumstances, (iii) were prepared on a basis reflecting the best currently available estimates and judgments of the management of Gaz Métro as to matters covered thereby, (iv) reasonably present the views of such management of the financial prospects and forecasted performance of Gaz Métro, its subsidiaries, associates and affiliates and are consistent with the historical operating experience of Gaz Métro and the accounting policies and procedures applied by Gaz Métro, and (v) are not, in the reasonable belief of the management of Gaz Métro, misleading in any material respect in light of the assumptions used or in light of any developments since the time of their preparation. In rendering this Opinion, BMO Capital Markets expresses no view as to the reasonableness of such forecasts, projections, estimates and/or budgets or the assumptions on which they were based. D-4

116 Senior officers of Gaz Métro have represented to BMO Capital Markets in the Certificate that, among other things: (i) the Information (other than forecasts, projections, estimates or budgets) is complete, true, fairly presented, accurate and correct in all material respects, and did not and does not contain any untrue statement of a material fact (as such term is defined in the Securities Act (Quebec)) in respect of Gaz Métro, its subsidiaries, associates or affiliates, the Transaction or any other transaction and did not and does not omit to state a material fact in respect of Gaz Métro, its subsidiaries, associates or affiliates, the Transaction or any other transaction necessary to make the Information or any statement contained therein not misleading in light of the circumstances under which such Information was provided or any statement was made; and (ii) since the dates on which the Information was provided to BMO Capital Markets, except as disclosed in writing to BMO Capital Markets in connection with its engagement, there has been no material change, financial or otherwise, in the financial condition, assets, liabilities (contingent or otherwise), business, operations or prospects of Gaz Métro or any of its subsidiaries, associates or affiliates and no material change has occurred in the Information or any part thereof which would have or would reasonably be expected to have a material effect on the Opinion or any other fairness opinion provided by BMO Capital Markets. In preparing the Opinion and solely for the purpose of rendering the Opinion, we have made several assumptions, including that all of the conditions required to implement the Transaction will be met without any material adverse effect on the Transaction. We also made numerous assumptions with respect to the regulatory environment, general business, market and economic conditions and other matters, many of which are beyond the control of BMO Capital Markets and any party involved in the Transaction. Although BMO Capital Markets believes that the assumptions used in preparing the Opinion are appropriate in the circumstances, some or all of these assumptions may nevertheless prove to be incorrect. The Opinion is rendered as of the date hereof and on the basis of securities markets, economic and general business and financial conditions prevailing as of the date hereof and the conditions and prospects, financial and otherwise, of Gaz Métro, its subsidiaries and other material interests as they are reflected in the Information reviewed by BMO Capital Markets. BMO Capital Markets disclaims any undertaking or obligation to advise any person of any change in any fact or matter affecting the Opinion which may come or be brought to the attention of BMO Capital Markets after the date hereof. Without limiting the foregoing, BMO Capital Markets is entitled, in its sole discretion and at any time prior to the completion of the Transaction, upon consultation with Gaz Métro, to withdraw, change or modify the Opinion if BMO Capital Markets concludes that there has been a material change in the Transaction or in the business, affairs or financial condition of Gaz Métro, or there has been a material change in any fact or matter affecting the Opinion, or if BMO Capital Markets becomes aware of any information not previously known by BMO Capital Markets, regardless of the source, which in its opinion would make the Opinion misleading in any material respect. BMO Capital Markets believes that its analyses must be considered as a whole. Selecting portions of its analyses or the factors considered by BMO Capital Markets, without considering all factors and analyses together, could create a misleading view of the process underlying the Opinion. The preparation of the Opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Any attempt to do so could lead to undue emphasis on any particular factor or analysis. The Opinion should be read in its entirety. Approach to Fairness In considering the fairness of the Transaction, from a financial point of view, to the limited partners of GMLP (other than Gaz Métro inc.), BMO Capital Markets principally considered and relied upon the following: a) a review of the alternatives available to limited partners of GMLP leading up to September 30, 2010, including but not limited to (i) maintaining GMLP s current Québec limited partnership structure; (ii) converting GMLP into a taxable corporation; and (iii) creating a publicly-traded corporation to hold the interest in GMLP currently held by limited partners of GMLP other than Gaz Métro inc.; b) the expected impact of the introduction of the SIFT tax legislation on GMLP s adjusted net income aftertax, on its ability to distribute cash to its unitholders and on the after-tax distribution available to unitholders; D-5

117 Opinion c) the expected trading characteristics of Newco shares versus the trading characteristics of the GMLP units today; d) the governance and rights put in place to protect minority unitholders of GMLP in conjunction with the Transaction versus their current protection; e) the expected impact of the Transaction on access to capital and growth potential of both Gaz Métro and Newco; and f) a review of other proposed and completed transactions implemented by income trusts to address the SIFT tax legislation. Based upon and subject to the foregoing and such other matters as we considered relevant, BMO Capital Markets is of the opinion that, as of July 28, 2010, the Transaction is fair, from a financial point of view, to the limited partners of GMLP, other than Gaz Métro inc. Yours truly, BMO NESBITT BURNS INC. D-6