Pursuant to section 45 of the Takeovers Act 1993, the Takeovers Panel gives the following notice (to which is appended a statement of reasons of the Takeovers Panel).

Notice

1 Title

This notice is the Takeovers Code (L&M Energy Limited) Exemption Notice 2010.

2 Application

This notice applies to acts or omissions occurring on or after 22 January 2010.

3 Expiry

This notice expires on the close of 31 March 2015.

4 Interpretation

(1) In this notice, unless the context otherwise requires,—

Act means the Takeovers Act 1993

allotment of consideration shares means the allotment by LME of 148 000 000 voting securities to each of Campania, Tangent, and Archibald Geoffrey Loudon (Mr Loudon) as part-consideration for the transfer to LME of shares in L&M Coal Seam Gas Limited pursuant to the merger agreement

Campania means Campania Holding Inc, a company incorporated in the British Virgin Islands

Code means the Takeovers Code under the Act

consideration options means the options to be allotted by LME to Kent Ashley Anson (Mr Anson), Nicola Gail Cummack (Ms Cummack), Kerry David Gordon (Mr Gordon), Gregory Ross Hogan (Mr Hogan), David Alister John Manhire (Mr Manhire), the Jaine trustees, and the Ryan trustees pursuant to the merger agreement

existing options means the options held at the date of the meeting by Campania, Tangent, Mr Hogan, Mr Loudon, Mr Manhire, the Jaine trustees, and the Ryan trustees

Jaine trustees means John Victor Dallison, Shirley Jean Herridge, and Michael Allan McPhail as trustees of the trust known as the Jaine Options Trust established by trust deed dated 15 November 2006

LME means L&M Energy Limited

meeting means the meeting of shareholders of LME that is to be held on or about 22 February 2010 to consider whether to approve, for the purposes of rule 7(d) of the Code, the allotment of voting securities to the option holders on the exercise of the existing options and the consideration options
merger agreement means the agreement dated 24 December 2009 between—
- (a) LME; and
- (b) Campania, Tangent, and Mr Loudon
notice of meeting means the notice of meeting to be sent to shareholders of LME in respect of the meeting

option means an option to acquire a voting security

option holders means Campania, Tangent, Mr Anson, Ms Cummack, Mr Gordon, Mr Hogan, Mr Loudon, Mr Manhire, the Jaine trustees, and the Ryan trustees
relevant date means the earlier of—
- (a) the expiry of all existing options and consideration options; and
- (b) the date on which the last of the existing options and consideration options is exercised
Ryan trustees means Michael John Ryan and Miriam Katherine Ryan as trustees of the trust known as the Ryan Family Trust established by trust deed dated 25 June 2001

Tangent means Tangent International Limited, a company incorporated in the British Virgin Islands

voting security means a voting security in LME.
(2) In this notice, a reference to a person increasing voting control is a reference to the person becoming the holder or controller of an increased percentage of voting rights in LME.

(3) Any term or expression that is defined in the Act or the Code and used, but not defined, in this notice has the same meaning as in the Act or the Code.

5 Exemption from rule 7(d) of Code

Each option holder is exempted from rule 7(d) of the Code in respect of any increase in the option holder’s voting control as a result of the allotment of voting securities to the option holder on the exercise of existing options or consideration options held by the option holder to the extent that rule 7(d) requires the notice of meeting to comply with rule 16(b) of the Code.

6 Exemption from rule 16(b) of Code

LME is exempted from rule 16(b) of the Code in respect of the notice of meeting.

7 Condition of exemptions relating to disclosures in notice of meeting about each option holder

(1) The exemptions in clauses 5 and 6 are subject to the condition that the notice of meeting must contain, or be accompanied by, the following particulars:
- (a) the maximum number of voting securities that could be allotted to each option holder on the exercise of all existing options and consideration options held by the option holder:
- (b) the maximum number of voting securities that could be allotted to each option holder on the exercise of all existing options and consideration options held by the option holder, expressed as a percentage of the total number of voting securities on issue after the allotment:
- (c) the maximum percentage of the voting securities on issue that could be held or controlled by each option holder after the allotment of voting securities on the exercise of all existing options and consideration options held by the option holder:
- (d) the maximum percentage of the voting securities on issue that could be held or controlled by each option holder and the option holder's associates after the allotment of voting securities on the exercise of all existing options and consideration options held by the option holder.
(2) The numbers and percentages referred to in subclause (1) must be calculated on the following basis:
- (a) that the allotment of consideration shares has occurred; and
- (b) that there is no change to the number of voting securities on issue other than as a result of the allotment of consideration shares and the allotment of voting securities to the option holder on the exercise of existing options and consideration options held by the option holder.

8 Condition of exemptions relating to disclosures in notice of meeting about option holders as group

(1) The exemptions in clauses 5 and 6 are subject to the condition that the notice of meeting must contain, or be accompanied by, the following particulars:
- (a) the maximum number of voting securities that could be allotted to the option holders as a group on the exercise of all existing options and consideration options:
- (b) the maximum number of voting securities that could be allotted to the option holders as a group on the exercise of all existing options and consideration options, expressed as a percentage of the total number of voting securities on issue after the allotment:
- (c) the maximum percentage of the voting securities on issue that could be held or controlled by the option holders as a group after the allotment of voting securities on the exercise of all existing options and consideration options:
- (d) the maximum percentage of the voting securities on issue that could be held or controlled by the option holders and each option holder's associates as a group after the allotment of voting securities on the exercise of all existing options and consideration options.
(2) The numbers and percentages referred to in subclause (1) must be calculated on the following basis:
- (a) that the allotment of consideration shares has occurred; and
- (b) that there is no change to the number of voting securities on issue other than as a result of the allotment of consideration shares and the allotment of voting securities on the exercise of the existing options and the consideration options.

9 Further notice of meeting conditions

The exemptions in clauses 5 and 6 are subject to the conditions that—
- (a) the notice of meeting must contain—
  - (i) full particulars of the allotment of consideration shares, the terms of the existing options, and the terms of the consideration options; and
  - (ii) a summary of the terms and conditions of the exemptions in clauses 5 and 6; and
- (b) the notice of meeting must display, in a prominent position, a disclaimer stating that, by exempting the option holders from rule 7(d) of the Code and LME from rule 16(b) of the Code, the Panel is—
  - (i) neither endorsing nor supporting the accuracy or reliability of the contents of the notice of meeting; and
  - (ii) not implying that it has a view on the merits of the proposed issue of voting securities to the option holders on the exercise of the existing options and the consideration options; and
- (c) the form of the notice of meeting must be approved by the Panel.

10 Condition of exemptions relating to LME's annual report

(1) The exemptions in clauses 5 and 6 are subject to the condition that every annual report issued by LME between the date of the meeting and the relevant date must include the following in a prominent position and in a form approved by the Panel:
- (a) a summary of the terms of the existing options and of the consideration options:
- (b) a summary of the terms and conditions of the exemptions in clauses 5 and 6:
- (c) a statement, as at the date of the report, of—
  - (i) the number of voting securities allotted to each option holder on the exercise of the existing options and the consideration options; and
  - (ii) the number of voting securities allotted to each option holder on the exercise of the existing options and the consideration options, expressed as a percentage of the total number of voting securities on issue; and
  - (iii) the total percentage of voting securities on issue held or controlled by each option holder; and
  - (iv) the total percentage of voting securities on issue held or controlled by each option holder and the option holder's associates; and
  - (v) the maximum percentage of the voting securities on issue that could be held or controlled by each option holder and the option holder's associates after the allotment of voting securities on the exercise of all existing options and consideration options held by the option holder.
(2) The percentage referred to in subclause (1)(c)(v) must be calculated on the basis that there is no change to the number of voting securities on issue as at the date of the annual report other than as a result of the allotment of voting securities to the option holder on the exercise of existing options and consideration options held by the option holder.

11 Restrictions on increases in control greater than disclosed maximum, etc

The exemption in clause 5 does not apply —
- (a) to an increase in an option holder's voting control resulting from the exercise of an existing option or a consideration option if, immediately after the allotment of voting securities on the exercise of the option is completed, the total percentage of voting securities on issue held or controlled by the option holder is greater than the maximum disclosed under clause 7(1)(c); or
- (b) to an option holder if there is an increase in the option holder's voting control (other than an increase resulting from the allotment of consideration shares or the exercise of an existing option or a consideration option) between the date of the meeting and the earlier of—
  - (i) the expiry of all the option holder's existing options and consideration options; and
  - (ii) the date on which the last of the option holder's existing options and consideration options is exercised; or
- (c) to Campania if there is a change in control of Campania between the date of the meeting and the earlier of—
  - (i) the expiry of all Campania's existing options; and
  - (ii) the date on which the last of Campania's existing options is exercised; or
- (d) to Tangent if there is a change in control of Tangent between the date of the meeting and the earlier of—
  - (i) the expiry of all Tangent's existing options; and
  - (ii) the date on which the last of Tangent's existing options is exercised.

Dated at Auckland this 28th day of January 2010.

The Common Seal of the Takeovers Panel was affixed in the presence of:

[Seal]

C G Giffney,
Chairperson.

Statement of reasons

This notice applies to acts or omissions occurring on or after 22 January 2010 and expires on 31 March 2015.

The Takeovers Panel (the Panel) has granted exemptions for Campania Holding Inc (Campania), Tangent International Limited (Tangent), Kent Ashley Anson (Mr Anson), Nicola Gail Cummack (Ms Cummack), Kerry David Gordon (Mr Gordon), Gregory Ross Hogan (Mr Hogan), Archibald Geoffrey Loudon (Mr Loudon), David Alister John Manhire (Mr Manhire), the trustees of the Jaine Options Trust (the Jaine trustees), and the trustees of the Ryan Family Trust (the Ryan trustees) (together, the option holders) from rule 7(d) of the Takeovers Code (the Code) and for L&M Energy Limited (LME) from rule 16(b) of the Code in respect of potential future increases in option holders' control of voting rights in LME resulting from the exercise of share options already held by those persons (existing options) and share options to be issued to those persons (consideration options).

LME intends to merge with L&M Coal Seam Gas Limited (LMCSG). The merger involves the current shareholders of LMCSG (Campania, Tangent, and Mr Loudon (together, the investors)) transferring their LMCSG shares to LME in consideration for LME allotting shares to the investors and consideration options to Mr Anson, Ms Cummack, Mr Gordon, Mr Hogan, Mr Manhire, the Jaine trustees, and the Ryan trustees (together, the consideration option recipients). The investors and some of the consideration option recipients also hold existing options.

All of the investors and consideration option recipients may be associates of the other investors and consideration option recipients. The investors have, and are likely to continue to have, control of voting rights in LME in excess of 20%. Accordingly, any allotment of shares on the exercise of existing options or consideration options will trigger the fundamental rule of the Code. Shareholder approval under rule 7(d) will therefore be sought for the allotment of shares on the exercise of those options. Rule 7(d) requires the notice of meeting to contain the information specified by rule 16(b). However, the exact numbers and percentages will not be known at the time the notice of meeting is prepared because this depends on when, and how many, options are ultimately exercised by the option holders. Accordingly, the Panel has granted an exemption that allows disclosure of potential maxima instead of exact numbers and percentages.

The Panel considers that it is appropriate and consistent with the objectives of the Code to grant the exemptions because—

the details required by rule 16(b) cannot be specified in the notice of meeting because it is uncertain when, and how many, shares will be allotted to the option holders on the exercise of their options:
all non-associated shareholders will have an opportunity to vote on the potential allotment of shares to the option holders:
if the non-associated shareholders approve the potential maximum allotment of shares to the option holders, then, by implication, the shareholders also approve the allotment of a lesser number of shares to the option holders.

Issued under the authority of the Legislation Act 2012.

Date of notification in Gazette: 4 February 2010.

Reprints notes

1 General

This is a reprint of the Takeovers Code (L&M Energy Limited) Exemption Notice 2010 that incorporates all the amendments to that notice as at the date of the last amendment to it.

2 Legal status

Reprints are presumed to correctly state, as at the date of the reprint, the law enacted by the principal enactment and by any amendments to that enactment. Section 18 of the Legislation Act 2012 provides that this reprint, published in electronic form, has the status of an official version under section 17 of that Act. A printed version of the reprint produced directly from this official electronic version also has official status.

3 Editorial and format changes

Editorial and format changes to reprints are made using the powers under sections 24 to 26 of the Legislation Act 2012. See also http://www.pco.parliament.govt.nz/editorial-conventions/ .

4 Amendments incorporated in this reprint

Takeovers Code (L&M Energy Limited) Exemption Notice 2010 (SR 2010/3): clause 3

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Takeovers Code (L&M Energy Limited) Exemption Notice 2010