ABOU THE PVIL SHAREHOLDER TRUST 1 October 22, 2015

OVERVIEW PVIL Shareholders voted overwhelmingly on 10/17/2015 to approve the PVIL Shareholder Trust as a Settlement Trust under ANCSA A Trust Agreement between Paug-Vik and the initial Trustees of the Trust establishes the Trust and the rules under which the Trust will operate PVIL’s shareholders are the Beneficiaries of the Trust, that is, the persons who will receive benefits from the Trust 2

OVERVIEW Transfers into the Trust will be made from Paug-Vik’s future profits, as determined by Paug-Vik’s Board The Paug-Vik existing directors are the initial Trustees of the Trust New Paug-Vik Directors automatically become Trustees when they become Paug- Vik Directors 3

OTHER KEY TERMS Contributions: What is placed in the Trust Income: What the Trust earns Principal or Corpus: Contributions plus any income reinvested in the Trust Trust Review: The process by which a decision is made whether certain major modifications should be made to the Trust after the Trust is established 4

Advantages To The Trust Tax Savings Superior Tax Reporting Creditor Protection Permanence Dedication of Assets to Specific Purpose 5

Special ANCSA Rules For The Trust The Trust Cannot Operate A Business – Passive Investment Only PVIL must control Trustee Appointment Only Individuals Can Be Trustees Trust Must Be Registered In Alaska No reconveyance of ANCSA lands by Trust 6

Information About Other Existing ANCSA Settlement Trusts There are presently about 30 ANCSA settlement trusts, holding about $330 million in assets Most common type is a Pro Rata Income Distribution Trust Next common is an Elders Trust There are a small number of other types of Trusts 7

CURRENT TAX TREATMENT OF PVIL & ITS SHAREHOLDERS PVIL is currently fully taxable PVIL will pay a combined state and federal tax rate of about 40% on ALL income Shareholders pay tax on PVIL’s dividends at rates of 0% to approximately 20% “Average” PVIL Shareholder tax rate: 15% 8

SPECIAL TAX RULES APPLY TO THE TRUST AND ITS BENEFICIARIES Contributions to Trust Are Tax Free To the Trust No corporate deduction for contributions Distributions Of Trust Income To Beneficiaries are Tax Free NO 1099s sent to Beneficiaries Beneficiaries do NOT include tax free Trust distributions on their tax returns 9

SPECIAL TAX RULES APPLY TO THE TRUST AND ITS BENEFICIARIES Trust pays a 10% Tax Rate On the Trust’s Ordinary Income Examples: Interest, Rent Contrasted with 40% PVIL tax rate Trust has a 0% Tax Rate On the Trust’s Dividend/Capital Gain Income Contrasted with 40% PVIL tax rate 10

Contrast of Tax Treatment of PVIL & Trust on $500,000 of Income PVIL Trust (With 646 Election) Assumed Income ($10 million investment fund earning 5% annual interest) $500,000 Tax To Either PVIL or Trust (200,000) (50,000) Available for Distribution$ 300,000$ 450,000 Tax to Shareholders (assumed overall 15%) or Beneficiaries (0%) (45,000) (0) Kept By Shareholders or Beneficiaries$ 255,000 (51%) $450,000 (90%) 11

Contrast of Tax Treatment of PVIL & Trust on $500,000 of Income The Trust is highly tax efficient This means more net after tax income is available to produce a given level of distributions for PVIL’s shareholders It also means PVIL’s shareholders (as the Trust’s Beneficiaries) will keep more of what the Trust distributes versus what PVIL distributes 12

SPECIFIC PROVISIONS OF THE PVIL SHAREHOLDER TRUST 13

Title, Parties, Whereas Clauses Provides Introduction, Background Trust Intent: Long Term Distributions to PVIL’s Shareholders Trustees: PVIL BOD Trust Name: THE PVIL SHAREHOLDER TRUST 14

Sections 1 and 2 Beneficiaries PVIL’s Shareholders are the only Beneficiaries Trust Units One PVIL Share = One Trust Unit Regardless of Class 15

Section 3 Covers Certain ANCSA What Ifs? If PVIL shares become transferable (3.1): Separate votes on shares and trust units If PVIL issues additional stock (3.2, 3.4): Decoupling of trust units and PVIL shares If PVIL is dissolved (3.3): Decoupling If PVIL is merged (3.5): Decoupling 16

Sections 4 and 5 Contributions ( ) Directors Not Trustees Decide Contributions $1000 has been contributed to start Trust Trust is Irrevocable (5) 17

Section 6 No distributions unless Trust > $5 MM (6.1) Elders Distribution (6.1.1) Discretionary To Board Can’t Exceed 10% of annual Net Cash Income Annually Non cumulative Elders = 65 and over 18

Section 6 Educational Distributions (6.1.2) Discretionary To Trustees Can’t Exceed 10% of annual Net Cash Income Annually Non cumulative 19

Section 6 Pro Rata Distribution (6.1.3) Discretionary Separate from Elders distribution Separate from Educational distribution Annually Cumulative No principal distributions (6.2) Adjustment if overdistribution > $100K (6.3) 20

Section 7 1 st Review (7.1) 10 yr Anniversary (i.e., 10/17/2025) Modify Distribution/Termination Rules Majority of Trustees & 2/3rds of Unitholders must approve No reversions to PVIL Trust continues unless terminated (“evergreen”) 2 nd & later reviews (7.3) Every 10 years on Anniversary (10/17/2035, etc.) Otherwise same as 1 st review 21

Section 8 Termination for Material Adverse Change (8.1.1, 27.7, ) At any time Event External to Trust 2/3rds of Trustees & Court Must Approve Trust distributed to shareholders 22

Sections 9 and 10 Investments made under investment policy (9) PVIL Directors = Trustees unless decoupling (10.1) Annual Trustees meeting To Be Held (10.2) PVIL Officers = Trust officers unless decoupling (10.3) No Trustee Fees (10.6) or Bonding (10.7) 23

Sections 11 and 12 Unclaimed Distributions (11) Held indefinitely without interest Redistributed if Trust terminates Beneficiary Protection (12) Units not transferable without vote No creditor seizure 24

Sections 13 and 14 Broad Trustee Powers (13) Tax Code section 646 election mandatory (13.11) Trust Certificates Optional (13.13) Trustees indemnified by Trust and PVIL (14.2 and 14.3) 25

Sections 15, 16 and 17 Trustees Must estimate net cash income in good faith (15.4) No duty to equate distributions (15.6) Third parties can rely (17) Annual audited financial statements required (17) Calendar year basis Sent to beneficiaries at same time as PVIL’s financial statements 26

Sections 18 and 19 Distributions to Minors (18): Any Native parent Any sole custodial parent If joint custody, then Native custodial parent Trustees’ allocation power (19) Includes “rainy day” accumulation power Income taxes allocated to income if 646 governs 27

Sections 20 and 21 ANCSA prohibitions (20) No transfers of 7(i) timber No transfers of subsurface No operation as business Minority investments OK Legal representation (21): Sorensen & Edwards represents PVIL only 28

Sections 22, 23, and 24 Savings (22): Any invalid provisions do not invalidate trust Headings (23): Do not control interpretation of Trust Applicable law (24): Alaska law controls Trust must be registered in Alaska 29

Sections 25 and 26 Grammatical references (25): Intended to be neutral Minor, technical changes permissible (26.1): Distribution timing/voting procedures/annual meeting dates/section numbering/bonding Trust must be registered in Alaska Trust modifications in lieu of termination (26.2, 26.4): Material Adverse Effect situations 30

Section 27 Definition of Material Adverse Effect (27.4): Adverse changes in tax law Successful litigation challenges Adverse changes to ANCSA Elimination of investment alternatives Definition of Trust Fund and Principal (27.10, 27.13): Implements “Rainy day” fund concept 31

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