Document:

Exhibit 4.7

 

 

Notice of Special Meeting of the
Shareholders

 

and

 

Management Information Circular

 

of

 

Silver Wheaton Corp.

 

MEETING
OF SHAREHOLDERS

OF
SILVER WHEATON CORP.

TO BE
HELD ON AUGUST 7, 2008

AT
10:00 A.M. (VANCOUVER TIME)

 

DATED:  July 7, 2008

 

 

SILVER WHEATON CORP.

 

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

 

NOTICE IS
HEREBY GIVEN that the Special Meeting of Shareholders (the “Meeting”)
of Silver Wheaton Corp. (the “Company”) will be held at the Company’s head
office located at 666 Burrard Street, Suite 3150, Park Place, Vancouver,
British Columbia, on Thursday, August 7, 2008 at 10:00 a.m. (Vancouver
time), for the following purposes:

 

1.                                      To
consider and, if deemed appropriate, to pass, with or without variation, a
resolution approving the issuance of up to 3,039,423 additional common share
purchase warrants of the Company upon the early exercise of outstanding listed
common share purchase warrants of the Company, as more particularly described
in the accompanying management information circular; and

 

2.                                      To
transact such other business as may properly come before the Meeting or any
adjournment thereof.

 

This notice is accompanied by a management information circular and a
form of proxy.

 

Shareholders who are unable to attend the Meeting are requested to
complete, date, sign and return the enclosed form of proxy so that as large a
representation as possible may be had at the Meeting. The board of directors of
the Company has by resolution fixed the close of business on July 7, 2008
as the record date, being the date for the determination of the registered
holders of common shares of the Company entitled to receive notice of, and to
vote at, the Meeting and any adjournment thereof.

 

The board of directors of the Company has by resolution fixed 48 hours
(excluding Saturdays, Sundays and holidays) before the time for holding the
Meeting or any adjournment thereof as the time before which proxies to be used
or acted upon at the Meeting or any adjournment thereof shall be deposited with
the Company’s transfer agent.

 

DATED at Vancouver, British
Columbia this 7th  day
of July, 2008.

 

 

	
   

  	
  By Order of the Board of Directors

  
	
   

  	
   

  
	
   

  	
  “Peter D. Barnes”

  
	
   

  	
  Peter D. Barnes

  
	
   

  	
  Chief Executive Officer

  

 

 

SILVER WHEATON CORP.

 

MANAGEMENT INFORMATION CIRCULAR

 

Solicitation of Proxies

 

This management information circular is furnished
in connection with the solicitation of proxies by the management of Silver
Wheaton Corp. (the “Company”)
for use at the special meeting of shareholders (the “Meeting”) of the Company
to be held at the time and place and for the purposes set forth in the
accompanying Notice of Meeting.  References in this management information
circular to the Meeting include any adjournment or adjournments thereof.  Proxies may be solicited by mail, personally
or by telephone by officers and directors or other representatives of the
Company.  The cost of solicitation will
be borne by the Company.  Kingsdale
Shareholder Services Inc. has been retained by the Company as proxy
solicitation agent in connection with the solicitation of proxies at the
Meeting at an agreed cost of C$75,000,
plus additional costs relating to out-of-pocket expenses.

 

The board of directors of the Company (the “Board”) has fixed the close
of business on July 7, 2008 as
the record date, being the date for the determination of the registered holders
of common shares of the Company entitled to receive notice of, and to vote at,
the Meeting.  Duly completed and executed proxies must be received by the Company’s transfer agent at the address indicated on
the enclosed envelope no later than 10:00 a.m. (Vancouver time) on August 5,
2008, or no later than 48 hours (excluding Saturdays, Sundays and holidays)
before the time of any adjourned Meeting.

 

Unless otherwise stated, the information contained in this management
information circular is as of July 7, 2008.  All
dollar amounts referenced herein, unless otherwise indicated, are expressed in
United States dollars and Canadian dollars are referred to as “C$”.

 

Appointment and Revocation of Proxies

 

The persons named in the enclosed form of proxy are officers or
directors of the Company.  A shareholder desiring to appoint some other person, who need not be a
shareholder, to represent him at the Meeting, may do so by inserting such
person’s name in the blank space provided in the enclosed form of proxy or by
completing another proper form of proxy and, in either case, depositing the
completed and executed proxy at the office of the Company’s transfer agent
indicated on the enclosed envelope no later than 10:00 a.m.
(Vancouver time) on August 5, 2008,
or no later than 48 hours (excluding Saturdays, Sundays and holidays) before
the time of any adjourned Meeting.

 

A shareholder forwarding the enclosed proxy may indicate the manner in
which the appointee is to vote with respect to any specific item by checking
the appropriate space. If the shareholder giving the proxy wishes to confer a
discretionary authority with respect to any item of business, then the space
opposite the item is to be left blank.  The
shares represented by the proxy submitted by a shareholder will be voted in
accordance with the directions, if any, given in the proxy.

 

A proxy given pursuant to this solicitation may be revoked by an
instrument in writing executed by a shareholder or by a shareholder’s attorney
authorized in writing (or, if the shareholder is a corporation, by a duly
authorized officer or attorney) and deposited either at the registered office
of the Company (Silver Wheaton Corp. c/o Cassels Brock & Blackwell
LLP, 40 King Street West, Suite 2100, Toronto, Ontario  M5H 3C2; Attention: Corporate Secretary) at
any time up to and including the last business day preceding the day of the
Meeting or with the Chairman of the Meeting on the day of the Meeting or in any
other manner permitted by law.

 

 

Exercise of Discretion by Proxies

 

The persons named in the enclosed form of proxy will vote the shares in
respect of which they are appointed in accordance with the direction of the
shareholders appointing them.  In the absence of such direction, such shares will be voted in favour
of the passing of all the resolutions described below.  The enclosed form of proxy confers
discretionary authority upon the persons named therein with respect to
amendments or variations to matters identified in the Notice of Meeting and
with respect to other matters which may properly come before the Meeting.  At the time of printing of this
management information circular, management knows of no such amendments,
variations or other matters to come before the Meeting.  However, if any other matters which are not
now known to management should properly come before the Meeting, the proxy will
be voted on such matters in accordance with the best judgment of the named
proxies.

 

Voting by Non-Registered
Shareholders

 

Only registered shareholders of the Company or the persons they appoint as their proxies are
permitted to vote at the Meeting. Most
shareholders of the Company are
“non-registered” shareholders (“Non-Registered
Shareholders”) because the
shares they own are not registered in their names but are instead registered in
the name of the brokerage firm, bank or trust company through which they
purchased the shares. Shares
beneficially owned by a Non-Registered Shareholder are registered either: (i) in
the name of an intermediary (an “Intermediary”) that the Non-Registered
Shareholder deals with in respect of the shares of the Company (Intermediaries include, among others, banks,
trust companies, securities dealers or brokers and trustees or administrators
of self-administered RRSPs, RRIFs, RESPs and similar plans); or (ii) in
the name of a clearing agency (such as CDS Clearing and Depository Services
Inc. or The Depository Trust & Clearing Corporation) of which the Intermediary is a participant. In
accordance with applicable securities law requirements, the Company will have
distributed copies of the Notice of Meeting, this management information
circular and the form of proxy (collectively, the “Meeting Materials”) to the
clearing agencies and Intermediaries for distribution to Non-Registered
Shareholders.

 

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

 

(i)                                    be given a voting instruction form which is not signed by the Intermediary and
which, when properly completed and signed by the Non-Registered Shareholder and
returned to the Intermediary or its service
company, will constitute voting instructions (often called a “voting
instruction form”) which the Intermediary must follow. Typically, the
voting instruction form will consist of a one page pre-printed form.
Sometimes, instead of the one page pre-printed form, the voting
instruction form will consist of a regular printed proxy form accompanied by a page of
instructions which contains a removable label with a bar-code and other
information. In order for the form of proxy
to validly constitute a voting instruction form, the Non-Registered Shareholder
must remove the label from the instructions and affix it to the form of proxy,
properly complete and sign the form of proxy and submit it to the Intermediary
or its service company in accordance with the instructions of the Intermediary
or its service company; or

 

(ii)                                 be given a form of proxy which has already been signed by the Intermediary
(typically by a facsimile, stamped signature), which is restricted as to the
number of shares beneficially owned by the Non-Registered Shareholder but which
is otherwise not completed by the Intermediary. Because the Intermediary
has already signed the form of proxy, this form of proxy is not required to be
signed by the Non-Registered Shareholder when submitting the proxy. In this case, the Non-Registered Shareholder who
wishes to submit a proxy should properly complete the form of proxy and deposit it with the Company, c/o CIBC Mellon Trust Company, P.O. Box 721, Agincourt,
Ontario  M1S 0A1.

 

In either case, the purpose of these procedures
is to permit Non-Registered Shareholders to direct the voting of the shares of
the Company they beneficially own.
Should a Non-Registered Shareholder who receives one of the above forms wish to vote at the Meeting in person (or have
another person attend and vote on behalf of the Non-Registered Shareholder),
the Non-Registered Shareholder should strike out the 

 

2

 

persons named in the form of proxy and insert the
Non-Registered Shareholder or such other person’s name in the blank space
provided. In either case, Non-Registered Shareholders should
carefully follow the instructions of their Intermediary, including those
regarding when and where the proxy or voting instruction form is to be
delivered.

 

A Non-Registered Shareholder may revoke a voting
instruction form or a waiver of the right to receive Meeting Materials and to
vote which has been given to an Intermediary at any time by written notice to
the Intermediary provided that an Intermediary is not required to act on a
revocation of a voting instruction form or of a waiver of the right to receive
Meeting Materials and to vote which is not received by the Intermediary at
least seven days prior to the Meeting.

 

Voting Securities and Principal Holders Thereof

 

As of July 7, 2008, 223,857,914 common shares (the “Common
Shares”) in the capital of the Company were issued and outstanding.  Each Common Share entitles the holder thereof
to one vote on all matters to be acted upon at the Meeting.  The record date for the determination of
shareholders entitled to receive notice of, and to vote at, the Meeting has
been fixed at July 7, 2008.  In accordance with the provisions of the Business Corporations Act (Ontario), the
Company will prepare a list of holders of Common Shares as of such record
date.  Each holder of Common Shares named
in the list will be entitled to vote the shares shown opposite his or her name
on the list at the Meeting.  All such
holders of record of Common Shares are entitled either to attend and vote
thereat in person the Common Shares held by them or, provided a completed and
executed proxy shall have been delivered to the Company’s transfer agent within
the time specified in the attached Notice of Meeting, to attend and vote
thereat by proxy the Common Shares held by them.

 

To the knowledge of the
directors and executive officers of the Company, as of the date hereof, the
only person or company who beneficially owns, directly or indirectly, or
exercises control or direction over, voting securities of the Company carrying
more than 10% of the voting rights attached to any class of voting securities
of the Company is as follows:

 

	
  Name

  	
   

  	
  Number of

  Common Shares

  	
   

  	
  Percentage of

  Outstanding Common Shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fidelity Management & Research Company and
  Pyramis Global Advisors, LLC (1)

  	
   

  	
  23,476,300

  	
   

  	
  10.49

  	
  %

  

 

(1)                                 This information is based solely on an Early
Warning Report filed under the Alternate Monthly Reporting System of National
Instrument 62-103 dated June 9, 2008.

 

Securities
Authorized for Issuance Under Equity Compensation Plans

 

The following table provides details of compensation plans under which
equity securities of the Company are authorized for issuance as of the financial
year ended December 31, 2007.

 

Equity Compensation Plan Information

 

	
  Plan Category

  	
   

  	
  Number of securities to

  be issued upon exercise

  of outstanding options,

  warrants and rights (1)

  	
   

  	
  Weighted-average

  price of outstanding options,

  warrants and rights

  	
   

  	
  Number of securities

  remaining available for future

  issuance under equity

  compensation plans (2)

  	
   

  
	
  Equity compensation plans approved by
  securityholders

  	
   

  	
  3,151,095

  	
   

  	
  C$

  	
  8.12

  	
   

  	
  4,694,606

  	
   

  
	
  Equity compensation plans not approved by
  securityholders

  	
   

  	
  Nil

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  
	
  Total

  	
   

  	
  3,151,095

  	
   

  	
  C$

  	
  8.12

  	
   

  	
  4,694,606

  	
   

  
										

 

3

 

(1)                                 Represents the number of Common Shares
reserved for issuance upon exercise of outstanding options and restricted share
rights.

 

(2)                                 Based on the maximum number of Common Shares reserved for issuance upon
exercise of options under the Company’s share option plan of 11,460,000 and
upon the expiry of restricted periods with respect to restricted share rights
under the Company’s restricted share plan of 2,000,000.

 

Indebtedness
of Directors and Executive Officers

 

None of the Company’s directors, executive officers or employees, or former directors,
executive officers or employees, nor any associate of such individuals, is as
at the date hereof, or has been, during the financial year ended December 31,
2007, indebted to the Company or any of
its subsidiaries in connection with a purchase of securities or otherwise. In
addition, no indebtedness of these individuals to another entity has been the
subject of a guarantee, support agreement, letter of credit or similar
arrangement or understanding of the Company or any of its subsidiaries.

 

Interest of Certain Persons in
Matters to be Acted Upon

 

No director or executive officer of the Company who
has held such position at any time since January 1, 2007 or any of their
respective associates or affiliates has any material interest, direct or
indirect, by way of beneficial ownership of securities or otherwise, in any
matter to be acted upon at the Meeting.

 

As of July 7,
2008, two insiders of the Company
held an aggregate of 392,500 First Warrants (as defined herein), representing
approximately 0.3% of the outstanding First Warrants, and five
insiders of the Company held an aggregate of 430,000 Series A
Warrants (as defined herein), representing approximately 1.1% of the
outstanding Series A Warrants.

 

Interest
of Informed Persons in Material Transactions

 

Other than as described below and elsewhere in this
management information circular, since the commencement of the Company’s last
completed financial year, no informed person of the Company, nominee for
election as a director of the Company, or any associate or affiliate of an
informed person or nominee, has or had any material interest, direct or
indirect, in any transaction or any proposed transaction which has materially
affected or will materially affect the Company or any of its subsidiaries.

 

Pursuant to an interim services agreement, as amended
(the “Services Agreement”) between the Company and Goldcorp Inc. (“Goldcorp”),
the Company has agreed to reimburse Goldcorp for services provided by Goldcorp
to the Company.  These services included
a portion of Goldcorp’s office facilities for the first nine months of 2007 and
continue to include certain administrative services provided by Goldcorp
personnel.  This services fee is
calculated monthly based on actual time and other expenses incurred by Goldcorp
on the Company’s behalf.  The Services Agreement
is in effect until September 30, 2008 and may be terminated at any time by
the Company upon 30 days notice.  During
the financial year ended December 31, 2007, the Company paid Goldcorp an
aggregate of $193,300 for reimbursement of expenses paid on the Company’s
behalf under the Services Agreement.

 

In May 2007, the Company entered into a nine year lease agreement
with Goldcorp for office space.  The
Company began making lease payments in December 2007 which totaled
$17,500.

 

In July 2007, the Company completed the purchase of 25% of the
life of mine silver production from Goldcorp’s Peñasquito gold project in
Mexico for a cash payment of $485 million.

 

In February 2008, Goldcorp completed the sale of its remaining 108
million Common Shares, for aggregate gross proceeds to Goldcorp of C$1.566
billion. Goldcorp is no longer a shareholder of the Company.

 

The Chairman of the Company (Eduardo
Luna) was also Executive Vice President of Goldcorp during the period January 1
to September 1, 2007 and two of the directors of the Company (Lawrence I.
Bell and Douglas M. Holtby) are also directors of Goldcorp.

 

4

 

Early
Warrant Exercise Transaction

 

References to “Warrants”
are to the First Warrants and the Series A Warrants, collectively.

 

The following table sets forth certain details regarding each series of
Warrants:

 

	
  Series of Warrants

  	
   

  	
  Expiry Date (1)

  	
   

  	
  Exercise Basis

  per Warrant

  	
   

  	
  Exercise Price

  per Warrant

  	
   

  	
  Effective

  Exercise Price

  per Share

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  First Warrants

  	
   

  	
  August 5, 2009

  	
   

  	
  0.2 of a Common Share

  	
   

  	
  C$

  	
  0.80

  	
   

  	
  C$

  	
  4.00

  	
   

  
	
  Series A Warrants

  	
   

  	
  November 30, 2009

  	
   

  	
  0.2 of a Common Share

  	
   

  	
  C$

  	
  1.10

  	
   

  	
  C$

  	
  5.50

  	
   

  

 

(1)                                 The First Warrants expire at 5:00 p.m.
(Calgary time) and the Series A Warrants expire at 5:00 p.m. (Toronto
time) on the respective expiry dates.

 

The holders of the
Warrants are collectively referred to herein as the “Warrantholders”.

 

Distribution
of New Warrants to Warrantholders Upon Early Exercise of Warrants

 

The Company
proposes to provide to Warrantholders up to 3,039,423 additional common share
purchase warrants of the Company (the “New Warrants”) upon the early exercise
of the Warrants.  Each New Warrant will
entitle the holder to purchase one common share of the Company (each a “New
Warrant Share” and, collectively, the “New Warrant Shares”) at a price of $20.00
at any time prior to 5:00 p.m. (Vancouver time) on the date which is five
years following the expiry of the Early Exercise Period (as defined herein),
subject to adjustment in certain events.

 

The First Warrants
are governed by the terms of an amended and restated common share purchase
warrant indenture dated as of June 1, 2005 (the “First Warrant Indenture”)
between the Company and CIBC Mellon Trust Company (the “Warrant Agent”).  The Series A Warrants are governed by the
terms of a common share purchase warrant indenture dated as of November 30,
2004 (the “Series A Warrant Indenture” and, collectively with the First
Warrant Indenture, the “Warrant Indentures”) between the Company and the
Warrant Agent.

 

Subject to the Company receiving all required
approvals, including the requisite approval of the Warrantholders to amend the
respective Warrant Indentures (the amendments to the Warrant Indentures are
collectively referred to herein as the “Warrant Amendments”) and the requisite
approval of the shareholders of the Company (the “Shareholders”) to issue the
New Warrants, each Warrant will entitle the holder thereof to acquire the
number of Common Shares otherwise issuable upon the exercise of the respective
Warrants and a fraction of a New Warrant as set forth in the table
below, in the event such holder exercises its Warrants during a specified 20
business day period, commencing on the day that the respective Warrantholder
approvals are obtained at the Warrantholder Meeting (as defined herein), such
20 business day period being extendable in the sole discretion of the Company (the “Early Exercise Period”):

 

	
  Series of Warrants

  	
   

  	
  Fraction of a New Warrant

  for Each Warrant

  Exercised during Early

  Exercise Period

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  First Warrants

  	
   

  	
  0.0148

  	
   

  
	
  Series A Warrants

  	
   

  	
  0.0340

  	
   

  

 

The Warrant Amendments will be effected
pursuant to the terms of supplemental warrant indentures to be entered into
between the Company and the Warrant Agent.

 

Following the expiry of the
Early Exercise Period, each unexercised First Warrant will continue to entitle
the holder to acquire 0.2 of a Common Share at the exercise price of C$0.80 at
any time prior to 5:00 p.m. (Calgary time) on August 5, 2009 and each
unexercised Series A Warrant will continue to entitle the holder to
acquire 0.2 of a Common Share at the exercise price of C$1.10 at any time prior
to 5:00 p.m. (Toronto time) on November 30, 2009.

 

5

 

Background and Reasons for the Warrant Amendments

 

As of July 7,
2008, 116,464,750 First Warrants and 38,698,386 Series A Warrants were
issued and outstanding, of which two insiders
of the Company held an aggregate of 392,500 First Warrants, representing approximately
0.3% of the outstanding First Warrants, and five
insiders of the Company held an aggregate of 430,000 Series A
Warrants, representing approximately 1.1% of the outstanding Series A
Warrants.  As of July 7,
2008, 223,857,914 Common Shares were issued and outstanding, of which 278,647,
representing approximately 0.1% of the outstanding Common Shares, were held by
insiders of the Company.

 

Management of the Company has reviewed the Company’s
capital structure and considered the possibility of the early exercise of the Warrants
in order to align the Company’s capital needs with the proceeds from the
exercise of the Warrants.  The Company
believes that the trading pattern of the Warrants is currently substantially
the same as the trading pattern of the Common Shares and that the trading price
of the Warrants does not include a significant option value component in
addition to the intrinsic or the “in-the-money” value of the Warrants.  Further, management believes that the market
for the Warrants is relatively illiquid and that it is unlikely that a liquid
trading market for the Warrants will develop prior to the expiry of the Warrants.
 The following table compares the average
trading price and the intrinsic value of each series of Warrants for the five
trading days ending on June 20, 2008.

 

Five Trading Day Premium

(June 16, 2008 to June 20, 2008)

 

	
  Series of Warrants

  	
   

  	
  Trading

  Price

  	
   

  	
  Intrinsic

  Value

  	
   

  	
  Percentage of Premium

  to Intrinsic Value

  	
   

  
	
   

  	
   

  	
  (C$) (1)

  	
   

  	
  (C$) (2)

  	
   

  	
  (%)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  First Warrants

  	
   

  	
  2.01

  	
   

  	
  1.99

  	
   

  	
  0.8

  	
  %

  
	
  Series A Warrants

  	
   

  	
  1.77

  	
   

  	
  1.69

  	
   

  	
  4.6

  	
  %

  

 

(1)           Five day volume weighted average trading price
ending on June 20, 2008 of the respective Warrants on the Toronto Stock
Exchange (the “TSX”).

 

(2)           Five day volume weighted average trading price
ending on June 20, 2008 of the Common Shares on the TSX multiplied by the
Exercise Basis less the exercise price per Warrant of the respective Warrants.

 

On May 14, 2008, the Board approved the
submission of the Warrant Amendments to Warrantholders and Shareholders for
their approval.

 

The Company believes that the transaction
contemplated herein would have the following benefits to the Company,
the Warrantholders and the Shareholders:

 

(a)           the early exercise of
the Warrants would increase the Company’s financial strength and flexibility;

 

(b)           the early exercise of
the Warrants would align the Company’s current capital needs with the proceeds
to be realized upon the exercise of the Warrants;

 

(c)           in the event that all
of the Warrants are exercised during the Early Exercise Period, the Company
would receive gross proceeds of approximately C$136 million which will be
available to fund future growth opportunities;

 

(d)           the early exercise of
the Warrants would enable the Company to access significant proceeds at an
attractive cost of capital relative to an equity financing such as a public
offering or a private placement;

 

(e)           the estimated expenses
associated with the Warrant Amendments of C$2
million are significantly less than the estimated expenses and underwriting
fees which would be incurred in connection with an equity financing such as a
public offering or a private placement;

 

6

 

(f)            the issuance of the
New Warrants will result in less dilution to the Shareholders than an equity
financing such as a public offering or a private placement which would likely
be priced at a discount to the trading price of the Common Shares;

 

(g)           the early exercise of
the Warrants would increase the Company’s public float, which management
believes may increase the trading liquidity of the Common Shares;

 

(h)           management believes the
early exercise of the Warrants should provide the Warrantholders with the
benefits of a more liquid trading market for the Common Shares and the New
Warrants as compared to the trading market for the First Warrants and the Series A
Warrants; and

 

(i)            the Warrant Amendments
would provide the Warrantholders with the opportunity to fully liquidate their
investment for Common Shares in a transaction which provides Warrantholders
with a premium to the theoretical or Black-Scholes value of the Warrants, the
intrinsic or “in-the-money” value of the Warrants and the trading price of the Warrants
prior to the announcement of the Warrant Amendments.

 

Fairness Opinions

 

In connection with the proposed Warrant
Amendments, the Company has engaged GMP Securities L.P. (“GMP”) and Genuity
Capital Markets (“Genuity” and, together with GMP collectively, the “Financial
Advisors”) to act as financial advisors to the Company in connection with the
issuance of the New Warrants to Warrantholders. GMP has provided an opinion
(the “Warrantholder Fairness Opinion”) as to the fairness of the issuance of
the New Warrants, from a financial point of view, to the Warrantholders, excluding
insiders of the Company.  Genuity has
provided an opinion (the “Shareholder Fairness Opinion”) as to the fairness of
the issuance of the New Warrants, from a financial point of view, to the
Shareholders, excluding insiders of the Company.

 

GMP determined that the issuance of the New
Warrants to Warrantholders would be fair, from a financial point of view, to
the Warrantholders, excluding insiders of the Company, if the probable
aggregate value of the Common Shares issuable upon the exercise of each series
of Warrants and the New Warrants to be issued to Warrantholders following the
completion of the transactions contemplated by the Warrant Amendments would
exceed the probable aggregate value available to the Warrantholders in respect
of the Warrants if the Company were to maintain, in all material respects, the
status quo, including its current debt and equity capital structure (the “Status
Quo Alternative”).  GMP did not take into
account any tax consequences or the possibility of a tax liability in connection
with the transactions proposed by the Warrant Amendments or the disposition of
Warrants by the Warrantholders.

 

Genuity determined that the issuance of the
New Warrants to Warrantholders would be fair, from a financial point of view,
to the Shareholders, excluding insiders of the Company, if the probable
aggregate value of the Common Shares to Shareholders as at the date of the
Shareholder Fairness Opinion, after the issuance of the New Warrants to
Warrantholders, would exceed the probable aggregate value available to the
Shareholders on such date under the Status Quo Alternative.  Genuity did not take into account any tax
consequences or the possibility of a tax liability in connection with the
transactions proposed by the Warrant Amendments or the disposition of Warrants
by the Warrantholders.

 

The Shareholder Fairness Opinion is dated as
of June 23, 2008.  Based upon and subject to the assumptions made
and the matters considered in the Shareholder Fairness Opinion, Genuity is of
the opinion that, as of June 23,
2008, the issuance of the New Warrants is fair, from a financial point of view,
to the Shareholders, excluding insiders of the Company.

 

The Shareholder Fairness Opinion is based
upon a variety of factors and assumptions and must be considered as a whole.  The preparation of a fairness opinion is a
complex process and is not necessarily susceptible to partial analysis or
summary description.  A copy of
the Shareholder Fairness Opinion is attached as Schedule “A” to this management
information circular and should be read in its entirety.

 

In addition to providing the Warrantholder Fairness
Opinion and the Shareholder Fairness Opinion, the 

 

7

 

general services covered by the engagement of the
Financial Advisors include providing analysis and advice to the Company in
connection with the Warrant Amendments, assisting management with marketing and
participating in the preparation and review of documentation in connection with
the proposed Warrant Amendments.

 

Recommendation of the Board of Directors of the
Corporation

 

The material factors considered by the Board which
provided support for the conclusion that the issuance of the New Warrants to
Warrantholders is fair to Warrantholders and Shareholders, excluding insiders
of the Company, were:

 

(a)           in the event that
holders of all Warrants exercise their Warrants during the Early Exercise
Period, the Company would issue New Warrants to Warrantholders which, if fully
exercised, would represent approximately 1.4% of the outstanding Common Shares;

 

(b)           the Warrant Amendments
provide Warrantholders with the opportunity to fully liquidate their investment
for Common Shares in a transaction which provides Warrantholders with a premium
to the theoretical or Black-Scholes value of the Warrants, the intrinsic or “in-the-money”
value of the Warrants and the trading price of the Warrants prior to the announcement
of the Warrant Amendments;

 

(c)           the early exercise of
the Warrants should provide the Warrantholders with the benefits of a more
liquid trading market for the Common Shares and the New Warrants as compared to
the relatively illiquid trading market for the Warrants;

 

(d)           the Warrantholder
Fairness Opinion to the Board provides that the issuance of the New Warrants is
fair, from a financial point of view, to the Warrantholders, excluding insiders
of the Company, where fairness is defined only from the perspective that the
proposal provides probable additional value versus the Status Quo Alternative
for Warrantholders;

 

(e)           the Shareholder
Fairness Opinion to the Board provides that the issuance of the New Warrants is
fair, from a financial point of view, to the Shareholders, excluding insiders
of the Company, where fairness is defined only from the perspective that the
proposal provides probable additional value versus the Status Quo Alternative
for Shareholders;

 

(f)            if all of the Warrants
are exercised during the Early Exercise Period, the proceeds from such early
exercise would provide a cost effective alternative source of funds for the Company;

 

(g)           in order to be
effective, the Warrant Amendments for each series of Warrants must be approved
by not less than 662/3% of the votes cast in respect
of such Warrant Amendment by the Warrantholders, excluding insiders of the
Company, of such series; and

 

(h)           pursuant to the
requirements of the TSX, the issuance of the New Warrants must be approved at a
special meeting of Shareholders by a majority of the votes cast thereat by the
Disinterested Shareholders (as defined herein).

 

In light of the number and variety of factors
considered by the Board in connection with their evaluation of the issuance of
the New Warrants, the Board did not find it practicable to assign relative
weights to the foregoing factors; accordingly, they did not do so.

 

In order to arrive at its recommendation, the Board
obtained the advice of its legal counsel and the Financial Advisors, completed
a detailed examination of the terms and conditions of the Warrant Amendments
and completed a detailed examination of the Warrantholder Fairness Opinion and
the Shareholder Fairness Opinion.  The Board
also considered that in order for U.S. Warrantholders to exercise their Warrants
and receive Common Shares and New Warrants, U.S. Warrantholders will be required
to qualify for an applicable exemption from registration under the United States Securities Act of 1933, as amended.

 

8

 

The Board has determined that the issuance of the New
Warrants is in the best interests of the Company and is fair to Warrantholders
and Shareholders, excluding insiders of the Company.  The Board recommends that
Disinterested Shareholders vote in favour of the issuance of the New Warrants.

 

Shareholder Approval

 

Pursuant to the requirements of the TSX, the issuance of the New
Warrants to be issued upon the early exercise of the Warrants requires the
approval of a majority of the votes cast by the Shareholders, excluding
insiders of the Company and shareholders who are also Warrantholders (the “Disinterested
Shareholders”) at the Meeting.

 

As of July 7, 2008, insiders of the Company held an aggregate of 278,647
Common Shares, representing approximately 0.1% of the outstanding Common
Shares, which will be excluded for the purposes of the vote of the
Disinterested Shareholders.  The number
of Common Shares held by shareholders who are also Warrantholders will also be
excluded for the purposes of the Disinterested Shareholders’ vote.  The number of such Common Shares is not known
by the Company as of the date of this management information circular.

 

At the Meeting, the Disinterested Shareholders will be
asked to consider and, if deemed appropriate, to pass, with or without
variation, a resolution, in the form set out below (the “Early Warrant Exercise
Resolution”), subject to such amendments, variations or additions as may be
approved at the Meeting, approving the issuance of the New Warrants.

 

The Board and management recommend the adoption of the
Early Warrant Exercise Resolution.  To be
effective, the Early Warrant Exercise Resolution must be approved by not less
than a majority of the votes cast by the Disinterested Shareholders present in
person, or represented by proxy, at the Meeting.  Unless otherwise
indicated, the persons designated as proxyholders in the accompanying form of
proxy will vote the Common Shares represented by such form of proxy, properly
executed, for the Early Warrant Exercise Resolution.

 

The text of the Early Warrant Exercise Resolution to
be submitted to shareholders at the Meeting is set forth below:

 

“BE IT RESOLVED THAT:

 

1.             the issuance of up to
an additional 3,039,423 common share purchase warrants of the Company (the “New
Warrants”) upon the early exercise of outstanding common share purchase
warrants of the Company, as further described in the management information
circular of the Company dated July 7,
2008, be and is hereby authorized and approved and any director or officer of
the Company is hereby authorized and approved to execute and deliver for and in
the name of and on behalf of the Company, under its corporate seal or
otherwise, certificates representing the New Warrants;

 

2.             any director or
officer of the Company is authorized and directed to execute and deliver for
and in the name of and on behalf of the Company, under its corporate seal or
otherwise, all such certificates, instruments, agreements, notices and other
documents and to do such other acts and things as, in the opinion of such
person, may be necessary or desirable in connection with the issuance of the
New Warrants, with the performance of the Company of its obligations in
connection therewith, and to give effect to the foregoing and facilitate the
implementation of the foregoing resolution; and

 

3.             notwithstanding the
passing of this resolution by the shareholders, the directors of the Company
are hereby authorized and empowered without further notice to or approval of
the shareholders not to proceed with the issuance of the New Warrants, as
described in the management information circular of the Company dated July 7, 2008 or to revoke this
resolution at any time prior to this resolution being effective.”

 

9

 

Additional Information

 

Additional information
relating to the Company can be found on SEDAR at www.sedar.com.  Financial
information is provided in the Company’s audited consolidated financial
statements and the management’s discussion and analysis of results of
operations and financial condition of the Company for the financial year ended December 31,
2007 and the Company’s unaudited interim consolidated financial statements and the
management’s discussion and analysis of results of operations and financial
condition of the Company for the three months ended March 31, 2008 which
can be found on SEDAR at www.sedar.com.
 Shareholders may also contact the
Director, Investor Relations of the Company by phone at (604) 639-9504 or by
e-mail at info@silverwheaton.com to request copies of these documents.

 

Directors’ Approval

 

The contents of this management information circular
and the sending thereof to the Shareholders have been approved by the Board.

 

 

	
   

  	
  BY ORDER OF THE BOARD OF DIRECTORS

  
	
   

  	
   

  
	
   

  	
  “Peter D. Barnes”

  
	
   

  	
  Peter D. Barnes

  
	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
  Vancouver, British Columbia

  	
   

  
	
  July 7,
  2008

  	
   

  

 

10

 

SCHEDULE “A”

 

(See attached Genuity Shareholder Fairness
Opinion.)

 

 

	
  Genuity Capital Markets

  
	
  1068-550 Burrard Street

  
	
  Bentall Five, PO Box 16

  
	
  Vancouver, BC V6 C 2B5

  
	
  

  	
   604.331.1444

  
	
  

  	
   604.331.1446

  
	
  

  	
   genuitycm.com

  

 

June 23, 2008

 

To The Board
of Directors

Silver
Wheaton Corp.

Park
Place, Suite 3150 – 666 Burrard St.

Vancouver,
BC  V6C 2X8

 

To the Members of the Board of Directors:

 

Dear Sirs:

 

Genuity Capital Markets (“Genuity”)
understands that Silver Wheaton Corp. (“Silver Wheaton” or the “Company”) is
considering a transaction (the “Offer”) pursuant to which Silver Wheaton will
amend (the “Warrant Amendments”) the terms of two series (the “First” and “A”
series) of issued and outstanding common share purchase warrants (the “Warrants”)
of the Company listed on the Toronto Stock Exchange (the “TSX”). We have been
advised that the following table sets forth the details regarding the exercise
price of each series of Warrants:

 

	
   

  	
   

  	
   

  	
   

  	
  Exercise Basis

  	
   

  	
  Exercise Price

  	
   

  	
  Exercise Price

  	
   

  
	
  Series of Warrants

  	
   

  	
  Expiry Dates

  	
   

  	
  per Warrant

  	
   

  	
  per Warrant

  	
   

  	
  per Share

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  First Warrants

  	
   

  	
  05-Aug-09

  	
   

  	
  0.20 of a Common Share

  	
   

  	
  C$

  	
  0.80

  	
   

  	
  C$

  	
  4.00

  	
   

  
	
  Series A Warrants

  	
   

  	
  30-Nov-09

  	
   

  	
  0.20 of a Common Share

  	
   

  	
  C$

  	
  1.10

  	
   

  	
  C$

  	
  5.50

  	
   

  

 

Pursuant to the proposed Warrant
Amendments and subject to the Company receiving all approvals, including the
requisite approval of the holders of the Warrants (the “Warrantholders”) to
amend the indentures (the “Warrant Indentures”) that govern the Warrants and
the requisite approval of the shareholders of the Company (the “Shareholders”)
to issue the New Warrants (as hereinafter defined), the Company will enter into
Supplemental Warrant Indentures (the Supplemental Warrant Indentures”). Under
the terms of the Supplemental Warrant Indentures, each Warrant will entitle the
holder thereof to acquire the number of underlying common shares of the Company
otherwise issuable upon the exercise of the Warrants and a fraction of a “new”
common share purchase warrant (a “New Warrant”) of the Company on the basis set
forth in the table below, in the event that such Warrantholder exercises its
Warrants during a period of 20 business days (the “Early Exercise Period”) commencing
on the day that the Warrantholders approve the Warrant Amendments:

 

	
   

  	
   

  	
  Fraction of a New Warrant

  	
   

  
	
  Series of Warrants

  	
   

  	
  for Each Warrant Deemed to be Exercised

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  First Warrants

  	
   

  	
  0.0148

  	
   

  
	
  Series A Warrants

  	
   

  	
  0.0340

  	
   

  

 

 

We further understand that each
New Warrant will entitle the holder thereof to acquire one common share of the
Company at a price of US$20.00 at any time prior to 5:00 p.m. (Vancouver
time) on the date that is five years following the expiration of the Early
Exercise Period, subject to adjustment in certain events.

 

We understand that the terms of
the proposed Warrant Amendments will be described in management information
circulars to be sent to the Warrantholders and the Shareholders (the “Circulars”)
in connection with the meetings of Warrantholders and Shareholders that are to
be held in connection with the proposed Warrant Amendments.

 

Engagement

 

Genuity was engaged by the Company to provide
certain advisory services pursuant to a letter agreement dated October 3,
2007, which was supplemented on June 18, 2008 in connection with the
Warrant Amendments (the “Engagement Agreement”).

 

Under the terms of the Engagement Agreement, the services
to be provided relating to the Warrant Amendments include, among other things,
the provision of this opinion (the “Fairness Opinion”) with respect to the
fairness of the issuance of the New Warrants to the Warrantholders pursuant to
the Warrant Amendments from a financial point of view, to Shareholders
(excluding insiders of the Company).

 

The Fairness Opinion has been prepared in accordance
with disclosure standards for fairness opinions of the Investment Dealers
Association of Canada but the Association has not been involved in the
preparation or review of the Fairness Opinion.

 

Genuity is acting as financial advisor to the Company
and will receive a fee from the Company for its services, including the
delivery of the Fairness Opinion. Genuity is also entitled to other fees in
connection with the Warrant Amendments, some of which are subject to the
successful completion of the Warrant Amendments. In addition, Genuity is to be
reimbursed for its reasonable out-of-pocket expenses and is to be indemnified
by the Company as described in the indemnity that forms part of the Engagement
Agreement.

 

Genuity consents to the inclusion of the Fairness Opinion
in its entirety and a summary thereof in the shareholder circular which will be
mailed to the Shareholders in connection with the Offer (the “Shareholder
Circular”), and to the filing thereof, as necessary, by the Company with the
securities commissions or similar regulatory authorities in each province of
Canada, the Toronto Stock Exchange and the United States Securities and
Exchange Commission.

 

Credentials of Genuity

 

Genuity is a Canadian investment banking firm, with
operations including corporate finance, mergers and acquisitions, corporate
restructuring, equity sales and trading and investment research. The Fairness
Opinion expressed herein represents the opinion of Genuity as a firm. The form
and content herein have been approved for release by a committee of principals
and other professionals of Genuity, each of whom is experienced in merger,
acquisition, divestiture and fairness opinion matters.

 

Independence of Genuity

 

Neither Genuity, nor any of its affiliates, is an
insider, associate or affiliate (as those terms are defined in the Securities Act (Ontario)) of the Company,
or any of its associates or affiliates and is not an advisor to any person or
company in respect of the Warrant Amendments other than to the Company.

 

2

 

Genuity acts as a trader and dealer, both as
principal and agent, in major financial markets and, as such, may have had and
may in the future have positions in the securities of the Company, or any of its
associates or affiliates and, from time to time, may have executed or may
execute transactions on behalf of such companies or clients for which it
received or may receive compensation. As an investment dealer, Genuity 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 the Company.

 

Scope of Review

 

In connection with rendering the Opinion, we have
reviewed and relied upon or carried out, among other things, the following:

 

	
  1.

  	
  a draft
  copy dated June 23, 2008 of the preliminary base shelf short form
  prospectus (the “Prospectus”);

  
	
   

  	
   

  
	
  2.

  	
  a
  representation letter dated letter June 23, 2008 provided to Genuity by
  senior management of Silver Wheaton (the “Certificate”);

  
	
   

  	
   

  
	
  3.

  	
  audited
  consolidated financial statements of the Company as at December 31, 2007
  and December 31, 2006 and 2005;

  
	
   

  	
   

  
	
  4.

  	
  management’s
  discussion and analysis of results of operations and financial condition of
  the Company for the financial year ended December 31, 2007;

  
	
   

  	
   

  
	
  5.

  	
  interim
  unaudited consolidated financial statements of the Company for the three
  months ended March 31, 2008 and for the nine months ended
  October 31, 2007;

  
	
   

  	
   

  
	
  6.

  	
  public
  information relating to the business, operations, financial performance and
  stock trading history of the Company;

  
	
   

  	
   

  
	
  7.

  	
  discussions
  with senior officers and directors of Silver Wheaton regarding the budgets,
  business plans, operations and financial projections for, and current
  financial position of Silver Wheaton, which discussions considered the
  consequences of both completing the Warrant Amendments and not completing the
  Warrant Amendments;

  
	
   

  	
   

  
	
  8.

  	
  discussions
  with the Company’s legal counsel with respect to various matters relating to
  the Warrant Amendments;

  
	
   

  	
   

  
	
  9.

  	
  a review of
  current capital market conditions (debt and equity);

  
	
   

  	
   

  
	
  10.

  	
  a review of
  historical and current trading volumes of the common shares of the Company
  and the Warrants, and observations of their relative trading liquidity;

  
	
   

  	
   

  
	
  11.

  	
  calculations
  of the Black-Scholes value of the Warrants and New Warrants, using a range of
  volatility assumptions considered by Genuity to be appropriate;

  
	
   

  	
   

  
	
  12.

  	
  review of
  the Warrant Indentures and a draft copy dated June 23, 2008 of each
  Supplemental Warrant Indenture reflecting the Warrant Amendments;

  
	
   

  	
   

  
	
  13.

  	
  a draft
  copy dated June 22, 2008 of the New Warrant Indentures;

  
	
   

  	
   

  
	
  14.

  	
  public
  information with respect to other transactions of a comparable nature
  considered by Genuity to be relevant;

  
	
   

  	
   

  
	
  15.

  	
  a review of
  the financial and operating performances and market liquidity and multiples
  for Silver Wheaton and other selected public companies that Genuity
  considered relevant;

  
	
   

  	
   

  
	
  16.

  	
  and certain
  other corporate, industry and financial market information, investigations
  and analyses as Genuity considered necessary or appropriate in the circumstances.

  

 

3

 

Genuity has not, to the best of its knowledge, been
denied access by the Company to any information under its control requested by
Genuity. Genuity did not meet with the auditor of Silver Wheaton and has
assumed the accuracy and fair presentation of and relied upon the audited
consolidated financial statements of Silver Wheaton and the reports of the
auditor thereon.

 

Prior Valuations

 

The Company has represented to Genuity that there
have not been any prior valuations (as defined in Multilateral Instrument
61-101 of the Canadian Securities Administrators) of the Company or its
material assets or liabilities or its securities within the two years preceding
the date hereof.

 

Assumptions and Limitations

 

Genuity has not prepared a
formal valuation or appraisal of the Company or any of its securities or assets
and the Fairness Opinion should not be construed as such. Genuity has, however,
conducted such analyses as it considered necessary in the circumstances. In
addition, the Fairness Opinion is not, and should not be construed as, advice
as to the price at which the common shares of the Company may trade at any
future date. Genuity was similarly not engaged to review any legal, tax or
accounting aspects of the Offer.

 

With the Company’s approval and as provided for in
the Engagement Agreement, Genuity has relied, without independent verification,
upon the completeness, accuracy and fair presentation of all of the financial
and other information, data, advice, opinions or representations obtained by it
from public sources or provided to us by or on behalf of the Company or any of
its subsidiaries, associates and affiliates, or their respective directors,
officers, associates, affiliates, consultants, agents and advisors, or
otherwise obtained pursuant to our engagement (collectively, the “Information”)
and we have assumed that this Information did not omit to state any material
fact or any fact necessary to be stated to make that Information not misleading.
The Fairness Opinion is conditional upon such completeness, accuracy and fair
presentation of such Information. Subject to the exercise of professional
judgment and except as expressly described herein, we have not attempted to
verify independently the completeness, accuracy or fair presentation of any of
the Information.

 

With respect to the financial models, forecasts,
projections and estimates provided to Genuity and used in the analysis
supporting the Fairness Opinion, we note that projecting future results of any
company is inherently subject to uncertainty, and we have assumed that such
financial models, forecasts, projections and estimates have been prepared on
bases reflecting the best currently available estimates and reasonable judgment
of management of the Company, as the case may be, as to the matters covered
thereby, and in rendering the Fairness Opinion we express no view as to the
reasonableness of such forecasts, projections, estimates or assumptions on
which they are based.

 

Senior officers of the Company have represented to
Genuity in their capacity as senior officers in a certificate delivered as of
the date hereof, among other things, that (i) the Information provided by the
Company or any of its, associates and affiliates, and their respective
directors, officers, associates, affiliates, consultants, agents or
representatives either orally or in writing to Genuity for the purpose of the
engagement under the Engagement Agreement or obtained by Genuity from the
System for Electronic Document Analysis and Retrieval (SEDAR) relating to the
Company or its, associates and affiliates was, at the date the Information was
provided to Genuity, and is at the date hereof complete, true and correct in
all material respects, and did not and does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
Information not misleading in light of the circumstances under which the
Information was provided; and that (ii) since the dates on which the
Information was provided to Genuity, except the Offer, there has been no
material change, financial or otherwise, in the financial condition, assets,
liabilities (contingent or otherwise), business, operations or prospects of the
Company or any of its associates or affiliates, and no material change has
occurred in the Information or any part 

 

4

 

thereof which would have or which could reasonably be expected to have a
material effect on the Fairness Opinion.

 

In preparing the Fairness Opinion, Genuity has made
several assumptions, including that all of the conditions required to complete
the Offer described in the Prospectus will be met and that the disclosure
provided in the Prospectus with respect to Silver Wheaton and its associates and
affiliates and the Offer is accurate in all material respects.

 

The Fairness Opinion is rendered on the basis of
securities markets, economic, financial and general business conditions
prevailing as at the date hereof and the condition and prospects, financial and
otherwise, of the Company and its associates and affiliates, as they were
reflected in the Information. In its analyses and in preparing the Fairness
Opinion, Genuity made numerous assumptions with respect to industry
performance, general business and economic conditions and other matters, many
of which are beyond the control of Genuity.

 

The Fairness Opinion has been provided for the use
of and to be relied upon by the board of directors of the Company and may not
be used by any other person or relied upon by any other person and, except as
contemplated herein, may not be quoted from, publicly disseminated or otherwise
communicated to any other person without the express prior written consent of
Genuity other than in the Circulars. The Fairness Opinion is given as of the
date hereof and Genuity disclaims any undertaking or obligation to advise any
person of any change in any fact or matter affecting the Fairness Opinion that
may come or be brought to Genuity’s attention after the date hereof. Without
limiting the foregoing, in the event that there is any material change in any
fact or matter affecting the Fairness Opinion after the date hereof, Genuity
reserves the right to change, modify or withdraw the Fairness Opinion with
effect after the date hereof.

 

Genuity believes that its analysis must be
considered as a whole, and that selecting portions of the analysis or the
factors considered by it without considering all factors and analyses together,
could create a misleading view of the process underlying the Fairness Opinion.
The preparation of a Fairness 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
Fairness Opinion does not constitute a recommendation to the board of directors
of the Company or any Shareholder as to whether Shareholders should accept or
reject the Offer.

 

Approach to Fairness

 

For the purposes of the Fairness Opinion, Genuity
considered that the issuance of the New Warrants to Warrantholders would be
fair, from a financial point of view, to Shareholders if the probable aggregate
value of the Common Shares to Shareholders as at the date hereof, after the
issuance of the New Warrants to Warrantholders, would exceed the probable
aggregate value available to the Shareholders, if the Company were to maintain,
in all material respects, the status quo, including its current debt and equity
capital structure. Genuity did not take into account any tax consequences or
possibility of a tax liability in connection with the transactions proposed by
the Warrant Amendments or the disposition of Warrants by the Warrantholders.

 

Fairness Conclusion

 

Based upon and subject to the foregoing and such
other matters as we consider relevant, Genuity is of the opinion that, as of
the date hereof, the Offer is fair, from a financial point of view, to the Shareholders
(excluding insiders of the Company).

 

Yours very truly,

 

 

Genuity Capital Markets

 

5

 

Any questions
and requests for assistance may be directed to

the Proxy &
Information Agent:

 

 

The Exchange Tower

130 King Street West, Suite 2950,
P.O. Box 361

Toronto, Ontario

M5X 1E2

 

North
American Toll Free Phone:

 

1-866-879-7644

 

Email:  contactus@kingsdaleshareholder.com

 

Facsimile:  416-867-2271

 

Toll Free Facsimile:  1-866-545-5580

 

Outside North America,
Banks and Brokers Call Collect: 
416-867-2272Exhibit 10.1

 

PROMISSORY NOTE

 

	
  $3,000,000

  	
  Austin, Texas     

  

 

July 23, 2008

 

Valence
Technology, Inc., a Delaware corporation (“Maker”), hereby promises
to pay to the order of Berg & Berg Enterprises, LLC (“Lender”),
or its successors and assigns, in lawful money of the United States of America,
Three Million Dollars ($3,000,000), together with accrued and unpaid interest
thereon, September 15, 2008 (the “Maturity Date”).

 

The
unpaid principal amount of this Promissory Note shall bear interest at a rate
per annum equal to 8.0% calculated on the basis of a 365-day year and the actual
number of days elapsed.

 

This
Promissory Note may be prepaid in whole or in part at any time, without premium
or penalty.

 

In
the event that Lender purchases any equity securities of Maker from Maker after
the date of this Promissory Note, all principal and accrued but unpaid interest
then outstanding hereunder may be used by Lender as full or partial, as the
case may be, satisfaction of the purchase price of such equity securities.  In the event that Lender exercises such right
and the entire principal and accrued but unpaid interest then outstanding
hereunder is used to purchase all or a portion of such equity securities, then
all indebtedness and obligations hereunder shall be canceled and extinguished
concurrently therewith.

 

Maker
hereby waives presentment, demand, notice of dishonor, protest, notice of
protest and all other demands, protests and notices in connection with the
execution, delivery, performance, collection and enforcement of this Promissory
Note.  Maker shall pay all costs of
collection when incurred, including reasonable attorneys’ fees, costs and
expenses.

 

This
Promissory Note is being delivered in, is intended to be performed in, shall be
construed and interpreted in accordance with, and be governed by the internal
laws of, the State of Texas, without regard to principles of conflict of laws.

 

This
Promissory Note may only be amended, modified or terminated or any provision
hereof waived by an agreement in writing signed by the party to be
charged.  This Promissory Note shall be
binding upon the successors and assigns of Maker and inure to the benefit of
Lender and its successors, endorsees and assigns.

 

	
   

  	
  VALENCE
  TECHNOLOGY, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Robert L. Kanode

  
	
   

  	
  Name:
  Robert L. Kanode

  
	
   

  	
  Title:
  CEO & President

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