029. MOTION RECORDS, APRIL 4, 2019

8. Distribution and Tax Reports

12.       Under the waterfall (the "Waterfall") provisions approved  by the Court  in  the credit agreement (as amended, the "DIP Credit Agreement") dated  as of April 23, 2012 between Crystallex and Tenor Special Situation Fund I, LLC  and  ultimately  assigned to Luxembourg Investment Company  31 S.a.r.l.  (the "DIP Lender"), Crystallex is required to apply and distribute any proceeds received from or on account of the Award in a specified sequence. The Waterfall is a key feature of the DIP Credit Agreement and provides a clear mechanism to effect stakeholder distributions once such proceeds are available.

13.       The second distribution step in the Waterfall requires Crystallex "to pay any taxes, payable or required to be withheld by the Borrower or by any government in respect of the settlement, judgment or collection in  relation  to  the  Arbitration Proceeding ... ".

14.       The payment of taxes required to be paid or withheld with respect to the Award is required under the Waterfall to be completed  prior  to  all  subsequent  distribution steps, including payment of the principal and  interest  on  the  loan  outstanding under the DIP Credit Agreement and payments to unsecured creditors.

15.       With respect to the taxes to be paid or withheld on account  of the Award,  the DIP Credit Agreement requires that Crystallex retain tax advisors acceptable to  the DIP Lender to prepare certain tax reports pursuant  to the DIP  Credit  Agreement  (the "Tax Reports").

16.      Crystallex has engaged highly qualified tax professionals to prepare the Tax Reports and the information and documentation underlying and supporting the preparation of the Tax Reports (the "Tax Information").

17.      The Tax Information and Tax Reports will be, respectively, confidential to Crystallex, and the Company has taken steps to ensure that any privileges which will attach to the Tax Reports and the Tax Information will be maintained.

18.      The Monitor, in exercise of its responsibilities under the CCAA and the Initial Order in this proceeding, has requested that it be provided with the Tax Reports and the Tax Information. Crystallex is concerned that the provision of the Tax Reports and Tax Information to the Monitor and its counsel not result in the loss of privilege that may attach to the Tax Reports and the Tax Information, as against third parties. Crystallex needs to effectively maintain any privileges with respect  to the Tax  Reports and Tax Information, while at the same time discharging its obligations to provide information to the Monitor.

19.       Accordingly, Crystallex seeks certain declarations and orders from  the Court, as set out in the draft Order attached to the Notice of Motion, that the provision of the Tax Reports and Tax Information to the Monitor and its counsel will not constitute a waiver of privilege with respect to other third parties.