2019-0797821R3 Cross-Border Butterfly

Principal Issues: Whether the proposed cross-border butterfly qualify for the exemption in paragraph 55(3)(b) from the butterfly denial rule in subsection 55(2).

Position: Yes.

Reasons: Meet the statutory requirements and our prior positions and rulings on cross-border butterfly reorganizations.

Author: XXXXXXXXXX
Section: 55(1), 55(2), 55(3)(b), 55(3.1), 212.1, 212.3

XXXXXXXXXX                                                             2019-079782

XXXXXXXXXX, 2020

Dear XXXXXXXXXX

Re: Advance Income Tax Ruling Application
XXXXXXXXXX

This is in reply to your letter dated XXXXXXXXXX, in which you requested an advance income tax ruling on behalf of the above named taxpayers. We also acknowledge the information provided in subsequent correspondence and during our various telephone conversations in connection with your request. The information that you provided in such correspondence and in the telephone discussions form part of this letter only to the extent described herein.

We understand that, to the best of your knowledge and that of the taxpayers involved, none of the issues contained herein:

(i) is in an earlier return of the taxpayer or a related person;

(ii) is being considered by a tax services office or taxation center in connection with a previously filed tax return of the taxpayer or a related person;

(iii) is under objection by the taxpayer or a related person;

(iv) is before the courts or, if a judgment has been issued, the time limit for appeal to a higher court has not expired; or

(v) is the subject of a ruling previously issued by the Directorate.

Unless otherwise expressly stated, every reference herein to the “Act” or to a part, section or subsection, paragraph or subparagraph and clause or subclause is a reference to the relevant provision of the Income Tax Act (Canada), R.S.C. 1985 (5th Supp.) c.1, as amended from time to time and consolidated to the date of this letter and the Income Tax Regulations thereunder are referred to as the “Regulations.”

All references to a currency are to Canadian dollars unless otherwise indicated.

I. LEGAL ENTITIES

In this letter, the following corporations, legal entities and groups of corporations and legal entities will be referred to as follows. Unless otherwise indicated, all references are based on the facts and circumstances prevailing prior to the Subject Transactions:

“Canadian DC” means XXXXXXXXXX, the successor corporation that was formed by the amalgamation of Canco 1 and Canco 2 under the BCA 1 as described in Paragraph 54.11 under Subject Transactions;

“Canadian TC 1” means XXXXXXXXXX, a corporation incorporated under the BCA 1 as described in Paragraph 54.2 under Subject Transactions;

“Canadian TC 2” means XXXXXXXXXX, a corporation incorporated under the BCA 1 as described in Paragraph 54.6 under Subject Transactions;

“Canco 1” means XXXXXXXXXX, a taxable Canadian corporation that is a private corporation incorporated under the BCA 1, a predecessor corporation of Canadian DC and has a XXXXXXXXXX taxation year end and a business number XXXXXXXXXX;

“Canco 2” means XXXXXXXXXX, a taxable Canadian corporation that is a private corporation incorporated under the BCA 2, a predecessor corporation of Canadian DC and has a XXXXXXXXXX taxation year end and a business number XXXXXXXXXX;

“CanFinco” means XXXXXXXXXX, a taxable Canadian corporation that is a private corporation with business number XXXXXXXXXX that is a subsidiary wholly-owned corporation of XXXXXXXXXX corporation that is itself an indirectly held wholly-owned subsidiary of Foreign Pubco;“CanKeepco 1” means XXXXXXXXXX, a taxable Canadian corporation that is a private corporation with a XXXXXXXXXX taxation year end and business number XXXXXXXXXX that is a subsidiary wholly-owned corporation of Canco 1;

“CanKeepco 2” means XXXXXXXXXX, a taxable Canadian corporation that is a private corporation with a XXXXXXXXXX taxation year end and business number XXXXXXXXXX that is a subsidiary wholly-owned corporation of Canco 1;

“CanKeepco 3” means XXXXXXXXXX, a taxable Canadian corporation that is a private corporation with a XXXXXXXXXX taxation year end and business number XXXXXXXXXX that is a subsidiary wholly-owned corporation of Canco 1;

“CanKeepco 4” means XXXXXXXXXX., a taxable Canadian corporation that is a private corporation with a XXXXXXXXXX taxation year end and business number XXXXXXXXXX that is a subsidiary wholly-owned corporation of Canco 1;

“CanKeepcos” means collectively CanKeepco 1, CanKeepco 2, CanKeepco 3, and CanKeepco 4;

“CanKeepco1-Sub1” means XXXXXXXXXX;

“CanKeepco1-Sub2” means XXXXXXXXXX;

“CanSpin1-Canco1” means XXXXXXXXXX, a taxable Canadian corporation that is a private corporation with a XXXXXXXXXX taxation year end and business number XXXXXXXXXX that is a subsidiary wholly-owned corporation of Canco 1;

“CanSpin1-Canco2” means XXXXXXXXXX, a taxable Canadian corporation that is a private corporation with a XXXXXXXXXX taxation year end and business number XXXXXXXXXX that is a subsidiary wholly-owned corporation of Canco 1;

“CanSpin1-Canco3” means XXXXXXXXXX, a taxable Canadian corporation that is a private corporation with a XXXXXXXXXX taxation year and business number XXXXXXXXXX that is a subsidiary wholly-owned corporation of Canco 1;

“CanSpin1-Forsub1” means XXXXXXXXXX, a corporation existing under the laws of XXXXXXXXXX with XXXXXXXXXX% of its issued and outstanding shares owned directly by Canco 1, an additional XXXXXXXXXX% owned indirectly by Canco 1, XXXXXXXXXX% owned indirectly by Foreign Pubco, and the remaining XXXXXXXXXX% owned by arm’s length parties that are unrelated to Foreign Pubco;

“CanSpin1-Forsub2” means XXXXXXXXXX, a corporation existing under the laws of XXXXXXXXXX that is a subsidiary wholly-owned corporation of Canco 1;

“CanSpin1-Forsub3” means XXXXXXXXXX, a corporation existing under the laws of Country B that is a subsidiary wholly-owned corporation of FAHoldco 2;

“CanSpin1-Forsub4” means XXXXXXXXXX, a corporation existing under the laws of XXXXXXXXXX with XXXXXXXXXX% of its issued and outstanding shares owned by CanSpin1-Forsub3 and the remaining issued and outstanding shares owned by arm’s length parties that are unrelated to Foreign Pubco;

“CanSpin1-Forsub5” means XXXXXXXXXX, a corporation existing under the laws of XXXXXXXXXX, XXXXXXXXXX% of its issued and outstanding shares of which is owned by CanSpin1-Canco2, XXXXXXXXXX% owned by Canco 1, and the remaining XXXXXXXXXX% owned by Forco 4;

“CanSpin1-Forsub6” means XXXXXXXXXX, a corporation existing under the laws of the XXXXXXXXXX with XXXXXXXXXX% of its issued and outstanding shares owned by CanSpin1-Forsub3 and the remaining XXXXXXXXXX% owned by third parties unrelated to Foreign Pubco;

“CanSpin1-Forsub7” means XXXXXXXXXX, a corporation existing under the laws of the XXXXXXXXXX with XXXXXXXXXX% of its issued and outstanding shares owned by CanSpin1-Forsub6 and the remaining XXXXXXXXXX% owned by a third party unrelated to Foreign Pubco;

“CanSpin1-Forsub8” means XXXXXXXXXX, a corporation existing under the laws of XXXXXXXXXX with XXXXXXXXXX% of its shares owned by CanSpin1-Forsub5 and the remaining XXXXXXXXXX% of its shares owned indirectly by CanSpin1-Forsub5;

“CanSpin1-Forsub9” means XXXXXXXXXX, a XXXXXXXXXX company existing under the laws of XXXXXXXXXX as described in Paragraph 50.9 under Subject Transactions;

“CanSpin1 Group” means, collectively with their direct and indirect holdings in subsidiaries, CanSpin1-Canco1, CanSpin1-Canco2, CanSpin1-Canco3, CanSpin1-Forsub1, CanSpin1-Forsub2, CanSpin1-Forsub3, and CanSpin1-Forsub5;

“CanSpin2-Canco1” means XXXXXXXXXX, a taxable Canadian corporation that is a private corporation with a XXXXXXXXXX taxation year end and business number XXXXXXXXXX that is a subsidiary wholly-owned corporation of Canco 1;

“CanSpin2-Forsub1” means XXXXXXXXXX, a corporation existing under the laws of Country B that is a subsidiary wholly-owned corporation of FAHoldco 2;

“CanSpin2-Forsub2” means XXXXXXXXXX, a corporation existing under the laws of Country B that is a subsidiary wholly-owned corporation of FAHoldco 2;

“CanSpin2-Forsub3” means XXXXXXXXXX, a corporation existing under the laws of XXXXXXXXXX with XXXXXXXXXX% of its issued and outstanding shares owned by CanSpin2-Forsub2 and the remaining issued and outstanding shares owned by third parties that are unrelated to Foreign Pubco;

“CanSpin2-Forsub4” means XXXXXXXXXX, a corporation existing under the laws of XXXXXXXXXX with XXXXXXXXXX% of its issued and outstanding shares owned by CanSpin1-Forsub5 and the remaining XXXXXXXXXX% owned indirectly by CanSpin1-Forsub5;

“CanSpin2-Forsub5” means XXXXXXXXXX, a XXXXXXXXXX company existing under the laws of XXXXXXXXXX that is a subsidiary wholly-owned corporation of CanSpin2-Forsub2 and with the only property that it owns being the shares of Ca Spin2-Forsub4 as described in Paragraph 50.10 under Subject Transactions; n

“CanSpin2 Group” means, collectively with their direct and indirect holdings in subsidiaries, CanSpin2-Canco1, CanSpin2-Forsub1 and CanSpin2-Forsub2;

“DC Group” means all of Canco 1, Canco 2, and their subsidiaries immediately prior to the Subject Transactions;

[Reserved]

[Reserved]

[Reserved]

“FA4” means XXXXXXXXXX, a non-resident corporation with XXXXXXXXXX% of its issued and outstanding shares owned by CanSpin2-Canco1, and the remaining XXXXXXXXXX% owned by CanSpin2-Forsub1;

“FAHoldco 1” means XXXXXXXXXX, a corporation existing under the laws of Country B that is a subsidiary wholly-owned corporation of Canco 2;

“FAHoldco 2” means XXXXXXXXXX XXXXXXXXXX existing under the laws of Country B that is a corporation that is, indirectly a subsidiary wholly-owned corporation of Canco 2, with XXXXXXXXXX% of its issued and outstanding XXXXXXXXXX owned by Canco 2 and XXXXXXXXXX% of its XXXXXXXXXX owned by FAHoldco 1;

“Finco 1” means XXXXXXXXXX corporation that is an indirectly held subsidiary wholly-owned corporation of Foreign Pubco;

“Finco 2” means XXXXXXXXXX, a corporation resident of Country B that is a subsidiary wholly-owned corporation of Foreign Pubco;

“Forco 1” means XXXXXXXXXX, a corporation formed under the laws of XXXXXXXXXX that is a subsidiary wholly-owned corporation of Foreign Pubco;

“Forco 2” means XXXXXXXXXX, a corporation formed under the laws of Country B, that is a subsidiary wholly-owned corporation of Forco 1;

“Forco 3” means XXXXXXXXXX, a corporation formed under the laws of Country B, that is a subsidiary wholly-owned corporation of Forco 2;

“Forco 4” means XXXXXXXXXX, a corporation existing under the laws of Country A that is a subsidiary wholly-owned corporation of Foreign Pubco;

“Forco 5” means XXXXXXXXXX, a corporation existing under the laws of the XXXXXXXXXX that had XXXXXXXXXX% of its issued and outstanding shares owned by CanSpin1-Forsub7 and the remaining XXXXXXXXXX% owned indirectly by Foreign Pubco;

“Forco 6” means XXXXXXXXXX, a corporation resident of XXXXXXXXXX that is an indirectly held subsidiary wholly-owned corporation of Foreign Pubco;

“Forco 7” means XXXXXXXXXX a corporation existing under the laws of the XXXXXXXXXX with XXXXXXXXXX% of its shares owned by an indirectly held subsidiary wholly-owned corporation of Foreign Pubco and the remaining XXXXXXXXXX% of its shares owned by third parties unrelated to Foreign Pubco;

“Foreign Pubco” means XXXXXXXXXX, a corporation existing under the laws of XXXXXXXXXX;

“Foreign Spinco 1” means XXXXXXXXXX, a corporation formed under the laws of XXXXXXXXXX as described in Paragraph 51 under Subject Transactions;

“Foreign Spinco1-Sub” means XXXXXXXXXX, a corporation formed under the laws of Country B as described in Paragraph 54.9 under Subject Transactions that will be a subsidiary wholly-owned corporation of Foreign Spinco 1;

“Foreign Spinco 2” means XXXXXXXXXX, a corporation formed under the laws of XXXXXXXXXX as described in Paragraph 52 under Subject Transactions;

“Foreign Spinco2-Sub” means XXXXXXXXXX, a corporation formed under the laws of Country B as described in Paragraph 54.10 under Subject Transactions that will be a subsidiary wholly-owned corporation of Foreign Spinco 2;

“ForKeepco 1” means XXXXXXXXXX, a corporation existing under the laws of the XXXXXXXXXX with XXXXXXXXXX% of its issued and outstanding shares owned by Canco 2 and the remaining issued and outstanding shares owned indirectly by Foreign Pubco;

“ForKeepco 2” means XXXXXXXXXX, a corporation existing under the laws of Country C with XXXXXXXXXX% of its issued and outstanding shares owned by Canco 1 and the remaining issued and outstanding shares owned indirectly by Foreign Pubco;

“ForKeepco 3” means XXXXXXXXXX, a corporation existing under the laws of XXXXXXXXXX that is a subsidiary wholly-owned corporation of Canco 1;

“Merger Company 1” means XXXXXXXXXX, a non-resident corporation;

XXXXXXXXXX;

“Non-Canadian DC 1” means XXXXXXXXXX, a XXXXXXXXXX company formed under the laws of XXXXXXXXXX as described in Paragraph 54.1 under Subject Transactions;

“Non-Canadian DC 2” means XXXXXXXXXX, a XXXXXXXXXX company formed under the laws of XXXXXXXXXX as described in Paragraph 54.5 under Subject Transactions;

“Pubco Group” means Foreign Pubco, together with its direct and indirect subsidiaries;

“Spinco 1 Finco” means XXXXXXXXXX, a corporation formed under the laws of XXXXXXXXXX as described in Paragraph 53 under Subject Transactions that will be a subsidiary wholly-owned corporation of Foreign Spinco 1 and is currently a subsidiary wholly owned corporation of Foreign Pubco; and

“Spinco 2 Finco” means XXXXXXXXXX, a corporation formed under the laws of XXXXXXXXXX as described in Paragraph 54 under Subject Transactions that will be an indirectly held subsidiary wholly-owned corporation of Foreign Spinco 2 and is currently a subsidiary wholly owned corporation of Foreign Pubco.

II. DEFINITIONS

In this letter, the following terms have the meanings specified and, where the circumstances so require, the singular should be read as plural and vice versa:

“ACB” means adjusted cost base, as defined in section 54;

“agreed amount” means the amount agreed to by the transferor and the transferee in respect of the transfer of eligible property in a joint election filed pursuant to subsection 85(1);

“Amalgamation” means the amalgamation between Canco 1 and Canco 2, as described in Paragraph 54.11;

“arm’s length” has the meaning assigned by subsection 251(1);

“ASR Programs” has the meaning assigned in Paragraph 9;

“BCA 1” means the XXXXXXXXXX;

“BCA 2” means the XXXXXXXXXX, as amended;

“Business Units” means collectively, Keep Business 1, Keep Business 2, Spin Business 1, and Spin Business 2 and “Business Unit” means any one of Keep Business 1, Keep Business 2, Spin Business 1, or Spin Business 2;

“Butterfly Percentage 1” means the proportion, expressed as a percentage, that the net FMV of the business property owned by Canadian DC that relates to Spin Business 1 is of the net FMV of all of the business property of Canadian DC, determined immediately before Distribution 1, and using the principles set out in Paragraphs 78 to 81 and 103;

“Butterfly Percentage 2” means the proportion, expressed as a percentage, that the net FMV of the business property owned by Canadian DC that relates to Spin Business 2 is of the net FMV of all of the business property of Canadian DC, determined immediately before Distribution 2, and using the principles set out in Paragraphs 78 to 81 and 103;

“Canadian DC Articles” means the certificate of amalgamation and articles of Canadian DC;

“Canadian DC Capital Reorganization” means the reorganization of capital described in Paragraph 69;

“Canadian DC Class A Common Shares” means the shares described in Paragraph 69;

“Canadian DC Class B Preferred Shares” means the shares described in Paragraph 69;

“Canadian DC Class B Redemption Amount” means the redemption amount of a Canadian DC Class B Preferred Share, as described in Paragraph 70;

“Canadian DC Class B Redemption Note” means the promissory note described in Paragraph 88;

“Canadian DC Class C Preferred Shares” means the shares described in Paragraph 69;

“Canadian DC Class C Redemption Amount” means the redemption amount of a Canadian DC Class C Preferred Share, as described in Paragraph 71;

“Canadian DC Class C Redemption Note” means the promissory note described in Paragraph 108;

“Canadian DC Common Shares” means the common shares of Canadian DC described in Paragraph 54.11;

“Canadian DC Share Exchange” has the meaning assigned in Paragraph 72;

“Canadian TC 1 Common Shares” means the common shares of Canadian TC 1 described in Paragraph 54.2;

“Canadian TC 1 Redemption Amount” means the redemption amount of a Canadian TC 1 Special Share, as described in Paragraph 54.3;

“Canadian TC 1 Redemption Note” means the promissory note described in Paragraph 87;

“Canadian TC 1 Special Shares” means the preferred shares of Canadian TC 1 described in Paragraph 54.2;

“Canadian TC 2 Common Shares” means the common shares of Canadian TC 2 described in Paragraph 54.6;

“Canadian TC 2 Redemption Amount” means the redemption amount of a Canadian TC 2 Special Share described in Paragraph 54.7;

“Canadian TC 2 Redemption Note” means the promissory note described in Paragraph 107;

“Canadian TC 2 Special Shares” means the preferred shares of Canadian TC 2 described in Paragraph 54.6;

“Canco 1 Common Shares” means the common shares of Canco 1 described in Paragraph 25.1;

“Canco 1 Loan” means the loan made by CanFinco to Canco 1 described in Paragraph 50.10;

“capital property” has the meaning assigned by section 54 and subsection 248(1);

“Cash Pooling” has the meaning assigned in Paragraph 34;

“CDA” means capital dividend account, as defined in subsection 89(1);

“Code” means the XXXXXXXXXX, as amended, the tax code of Country A;

“cost amount” has the meaning assigned by subsection 248(1);

“Country A” means XXXXXXXXXX;

“Country B” means XXXXXXXXXX;

“Country C” means XXXXXXXXXX;

“CRA” means the Canada Revenue Agency;

“distribution” has the meaning assigned by subsection 55(1);

“Distribution 1” means the transfer of property described in Paragraph 84;

“Distribution 2” means the transfer of property described in Paragraph 104;

“Distributions” means Distribution 1 and Distribution 2 but taking into consideration Paragraph 103;

“Distribution Property 1” means the property relating to Spin Business 1 owned by Canadian DC which will be transferred to Canadian TC 1 pursuant to Distribution 1;

“Distribution Property 2” means the property relating to Spin Business 2 owned by Canadian DC which will be transferred to Canadian TC 2 pursuant to Distribution 2;

“Distribution Steps” means the transactions described in Paragraphs 69 to 117;

“dividend refund” has the meaning assigned by paragraph 129(1)(a);

“eligible property” has the meaning assigned by subsection 85(1.1);

“financial intermediary corporation” has the meaning assigned by subsection 191(1);

“FMV” means fair market value, being the highest price available in an open and unrestricted market between informed prudent parties acting at arm’s length and without compulsion to act, expressed in terms of cash;

“foreign affiliate” has the meaning assigned by subsection 95(1);

“Foreign Spinco1-Sub Common Shares” means the common shares of Foreign Spinco1-Sub described in Paragraph 54.9

“Foreign Spinco2-Sub Common Shares” means the common shares of Foreign Spinco2-Sub described in Paragraph 54.10;

“GST” means the Goods and Services Tax imposed under the laws of Canada;

“HST” means the Harmonized Sales Tax imposed under the laws of Canada, XXXXXXXXXX;

“Keep Business” means collectively, Keep Business 1 and Keep Business 2;

“Keep Business 1” means XXXXXXXXXX described in Paragraph 5(a), or where applicable, the business carried on by that Business Unit;

“Keep Business 2” means the XXXXXXXXXX described in Paragraph 5(b), or where applicable, the business carried on by that Business Unit;

XXXXXXXXXX;

“Merger Company 1 Acquisition” has the meaning assigned in Paragraph 11;

“Merger Company 1 Agreement” has the meaning assigned in Paragraph 11;

XXXXXXXXXX;

“Non-Canadian DC 1 Common Shares” means the common shares of Non-Canadian DC 1 described in Paragraph 54.1;

“Non-Canadian DC 2 Common Shares” means the common shares of Non-Canadian DC 2 described in Paragraph 54.5;

“non-resident” has the meaning assigned by subsection 248(1);

“Paragraph” refers to a numbered paragraph in this letter;

“principal amount” has the meaning assigned by subsection 248(1);

“private corporation” has the meaning assigned by subsection 89(1);

“proceeds of disposition” has the meaning assigned by section 54;

“Proposed Transactions” means the transactions described in Section VI of this letter;

“PST” means the Provincial Sales Tax imposed under the laws of XXXXXXXXXX;

“PUC” means paid-up capital, as defined in subsection 89(1);

“QST” means the Quebec Sales Tax imposed under the laws of Quebec;

“qualifying liquidation and dissolution” has the meaning assigned by subsection 88(3.1);

“RDTOH” means “eligible refundable dividend tax on hand” and “non-eligible refundable dividend tax on hand,” as defined in subsection 129(4);

“related persons” has the meaning assigned by subsection 251(2);

“Rulings” means the advance income tax rulings labelled “A” to “R” in this letter;

“Securities Act” XXXXXXXXXX;

“series of transactions or events” includes the extended meaning assigned by subsection 248(10);

“share” includes an equity interest deemed to be a share under section 93.2 XXXXXXXXXX;

“Share Repurchase Program” has the meaning assigned by Paragraph 9;

“short-term preferred share” has the meaning assigned by subsection 248(1);

“significant influence” has the meaning assigned by IAS 28 of the International Financial Reporting Standards;

“significant shareholders” means the shareholders of Foreign Pubco described in Paragraph 1;

“specified class” has the meaning assigned by subsection 55(1);

“specified financial institution” has the meaning assigned by subsection 248(1);

“specified investment business” has the meaning assigned by subsection 125(7);

“Spin Business 1” means the XXXXXXXXXX described in Paragraph 5(c) or, where applicable the business carried on by that Business Unit;

“Spin Business 2” means the XXXXXXXXXX described in Paragraph 5(d); or where applicable, the business carried on by that Business Unit;

“SR&ED” means scientific research and experimental development as defined in subsection 248(1);

“State A” means the XXXXXXXXXX, a political subdivision of Country A;

“stated capital” means the capital account for shares of a corporation governed by the BCA 1 or BCA 2;

“Stock Exchange” means the XXXXXXXXXX;

“Subject Transactions” means the transactions described in Section V of this letter;

“subsidiary wholly-owned corporation” has the meaning assigned by subsection 248(1);

“substantial interest” has the meaning assigned by paragraph 191(2)(a);

“suppression election” means the election described in subsection 88(3.3);

“taxable Canadian corporation” has the meaning assigned by subsection 89(1);

“taxable Canadian property” has the meaning assigned by subsection 248(1);

“taxable dividend” has the meaning assigned by subsection 89(1);

“taxable preferred share” has the meaning assigned by subsection 248(1);

“taxable RFI share” has the meaning assigned by subsection 248(1);

XXXXXXXXXX;

“term preferred share” has the meaning assigned by subsection 248(1);

“Three-Party Share Exchange 1” means the share exchange described in Paragraph 76;

“Three-Party Share Exchange 2” means the share exchange described in Paragraph 101;

“Three-Party Share Exchange 3” means the share exchange described in Paragraph 110.4; and

“Three-Party Share Exchange 4” means the share exchange described in Paragraph 115.

III. FACTS

Foreign Pubco

1. Foreign Pubco is the parent corporation of the Pubco Group. Foreign Pubco is a non-resident corporation. The issued and outstanding shares of Foreign Pubco consist of common shares that are widely held and publicly traded on the Stock Exchange under the symbol “XXXXXXXXXX”. As of the date of this letter, there were approximately XXXXXXXXXX outstanding common shares of Foreign Pubco, or approximately XXXXXXXXXX common shares on a fully diluted basis. Foreign Pubco does not currently have issued and outstanding preferred shares.

As of XXXXXXXXXX, persons that were known by Foreign Pubco to be owners of more than XXXXXXXXXX% of its issued and outstanding common shares (collectively, the “significant shareholders”) consisted of XXXXXXXXXX (which, together with XXXXXXXXXX of its shares of Foreign Pubco as trustee for the XXXXXXXXXX. The weighted average diluted shares outstanding for XXXXXXXXXX is expected to increase to approximately XXXXXXXXXX shares due to the shares that were issued in XXXXXXXXXX to partially pay for the acquisition of the Merger Company 1.

One or more of the significant shareholders may dispose or may have disposed of their shares (or other securities) of Foreign Pubco in the open market as part of their ordinary course trading activity. Any such dispositions were not or will not be made as part of a series of transactions or events that include the dividends that will be paid as part of the Distribution Steps. Such dispositions will or would have occurred regardless of whether the Distribution Steps occur and the Distribution Steps will occur regardless of any disposition of Foreign Pubco shares by any significant shareholders.  

As of XXXXXXXXXX, Foreign Pubco’s market capitalization is in excess of XXXXXXXXXX.

Business of the Pubco Group

2. Headquartered in Country A in XXXXXXXXXX, the Pubco Group has approximately XXXXXXXXXX employees and operates in approximately XXXXXXXXXX countries.

3. [Reserved]

4. The core business of the Pubco Group consists of four business units (the “Business Units”):

(a) the XXXXXXXXXX business unit (“Keep Business 1”), which is among the XXXXXXXXXX.

(b) the XXXXXXXXXX business unit (“Keep Business 2”), which is a XXXXXXXXXX.

(c) XXXXXXXXXX business unit (“Spin Business 1”), which is a XXXXXXXXXX.

(d) the XXXXXXXXXX business unit (“Spin Business 2”), which is XXXXXXXXXX.

5.1 Total operating profit of the Pubco Group was approximately XXXXXXXXXX. Net sales are expected to increase in future years following the Merger Company 1 Acquisition since Merger Company 1 has historically had over XXXXXXXXXX in annual sales.

5. Each of the Business Units is comprised of groups of similar operating companies, and each Business Unit has its own subsidiaries, all united under the Foreign Pubco brand.

6. [Reserved]

Corporate Activities of Foreign Pubco

7. Foreign Pubco pays quarterly cash dividends on its shares. Foreign Pubco paid dividends on common shares of XXXXXXXXXX per share in the XXXXXXXXXX, totaling approximately XXXXXXXXXX in the aggregate for the XXXXXXXXXX. On XXXXXXXXXX, Foreign Pubco’s Board of Directors declared a dividend of XXXXXXXXXX per share payable XXXXXXXXXX to shareowners of record at the close of business on XXXXXXXXXX. For XXXXXXXXXX, Foreign Pubco paid dividends on common shares of XXXXXXXXXX per share in the XXXXXXXXXX and XXXXXXXXXX per share in the XXXXXXXXXX quarter, totaling approximately XXXXXXXXXX in the aggregate or XXXXXXXXXX in cash dividends per common share. For prior years, Foreign Pubco paid aggregate dividends on its common shares of approximately XXXXXXXXXX, respectively.

8. On XXXXXXXXXX, Foreign Pubco’s Board of Directors authorized a share repurchase program (the “Share Repurchase Program”) for up to XXXXXXXXXX of Foreign Pubco’s common stock. As of XXXXXXXXXX, Foreign Pubco had remaining authority to repurchase approximately XXXXXXXXXX of its common stock under the Share Repurchase Program. XXXXXXXXXX. Any purchase of Foreign Pubco shares by Foreign Pubco under the Share Repurchase Program (or outside of that program as described herein) were independent and not related to or part of a series of transactions or events that will include the taxable dividends that will be paid as part of the Distribution Steps. The purchase of Foreign Pubco shares by Foreign Pubco under the Share Repurchase Program (or outside of that program as described herein) would have occurred regardless of whether the Distribution Steps were completed and the Distribution Steps will occur regardless of whether any purchase of shares under the Share Purchase Program are completed. Repurchases under the Share Repurchase Program remain suspended as described in Paragraph 11.

9. The Pubco Group completes various acquisitions and dispositions involving arm’s length parties on a regular and ongoing basis as part of Foreign Pubco’s general operations and business plan. These transactions involve all of its Business Units. During the XXXXXXXXXX, Foreign Pubco’s investment in business acquisitions was XXXXXXXXXX which consisted of small acquisitions by Business Unit 4. Foreign Pubco’s investment in businesses net of cash acquired in XXXXXXXXXX totaled approximately XXXXXXXXXX (including debt assumed of XXXXXXXXXX and shares issued of XXXXXXXXXX); XXXXXXXXXX (including debt assumed of XXXXXXXXXX) and XXXXXXXXXX respectively. The XXXXXXXXXX investment in businesses by Foreign Pubco primarily consisted of the acquisition of Merger Company 1 as described in Paragraph 11. Foreign Pubco’s investments in businesses in XXXXXXXXXX included the acquisition of a majority interest XXXXXXXXXX by Spin Business 1, the acquisition of a XXXXXXXXXX by Spin Business 2, and a number of small acquisitions. Foreign Pubco’s investments in businesses in XXXXXXXXXX consisted of the acquisition of the majority interest in a Spin Business 1 business, the acquisition of XXXXXXXXXX by Keep Business 2, and a number of relatively small acquisitions. In terms of dispositions, on XXXXXXXXXX, Spin Business 1 completed a sale of XXXXXXXXXX for proceeds of XXXXXXXXXX. As well, on XXXXXXXXXX, Foreign Pubco sold the XXXXXXXXXX business to XXXXXXXXXX for over XXXXXXXXXX in cash. In relation to all of the foregoing these transactions, cash was transferred throughout the Pubco Group as required from a business perspective, including through distributions, contributions or intercompany loans. The Pubco Group also incurs borrowings from or repays borrowings to arm’s length parties in the course of such transactions. To the extent that any member of the DC Group was involved or participated in such transactions, such involvement or participation was in the ordinary course of its business and was not done in contemplation of Distribution 1 or Distribution 2. The acquisitions or dispositions would have occurred regardless of whether Distribution 1 or Distribution 2 is completed and Distribution 1 and Distribution 2 will occur regardless of whether the acquisitions or dispositions were completed.

10. On XXXXXXXXXX, Foreign Pubco announced that it had entered into an agreement to acquire the shares of Merger Company 1, for over XXXXXXXXXX paid in cash and shares of Foreign Pubco. Each Merger Company 1 shareholder received XXXXXXXXXX of cash and XXXXXXXXXX common shares of Foreign Pubco per share of Merger Company 1 (the “Merger Company 1 Acquisition”). The Merger Company 1 Acquisition had an implied deal value of approximately XXXXXXXXXX including net debt of Merger Company 1. To help manage the cash flow and liquidity impact leading up to the acquisition, Foreign Pubco suspended the share repurchases described in Paragraph 9, excluding activity relating to its employee savings plans. Regulatory approval was received on XXXXXXXXXX. The Merger Company 1 Acquisition was completed on XXXXXXXXXX, pursuant to the terms and conditions of the previously-announced Agreement and Plan of Merger, dated XXXXXXXXXX (the “Merger Company 1 Agreement”). As a result, Merger Company 1 became a subsidiary wholly-owned corporation of Foreign Pubco.

11. [Reserved]

12. The Pubco Group and DC Group frequently engage in less material transactions as part of its day-to-day operations, including various acquisitions and dispositions, both involving arm’s length parties and within the Pubco Group. To the extent that any member of the DC Group was involved in or participated in such transactions, such involvement or participation was in the ordinary course of its business and was not in contemplation of Distribution 1 or Distribution 2. These transactions were or will occur regardless of whether Distribution 1 or Distribution 2 are completed and Distribution 1 and Distribution 2 will occur regardless of whether such acquisitions or dispositions are completed.

13. [Reserved]

14. Foreign Pubco has had a standing policy to distribute cash out of its non-Country A subsidiaries, including the DC Group, subject to business constraints and the costs associated with such distributions. The cash is needed for various business reasons globally and its movement out of Canada (and other jurisdictions) is not connected to the Proposed Transactions. The business needs of Foreign Pubco and the Pubco Group for the cash distributed out of Canada include funding (1) worldwide operations, including acquisitions and expansion of operations, as described in Paragraphs 10 and 13; (2) quarterly public dividend payments, as described in Paragraph 8; (3) public common stock repurchases, as described in Paragraph 9; (4) paying interest on debt owed to third parties, as described in Paragraph 20; (5) repaying principal of debt owed to third parties, as described in Paragraph 20; and (6) pension plan contributions, as described in Paragraph 22. All of these items are recurring ongoing business matters that require material amounts of cash and have been consistently occurring for many years such that it is clear that these cash movements are not connected to the Proposed Transactions. In addition to the general business needs and use of the cash by the Pubco Group, Foreign Pubco also has a long-standing policy to move cash out of Canada. This has included dividends, returns of capital and cash movement through intercompany lending from the Cash Pooling and intergroup loans described in Paragraphs 41 to 45. This policy has been implemented for many years. In this respect, the following recent transactions have occurred:

(a) In XXXXXXXXXX, the Pubco Group completed various distributions of cash to Foreign Pubco as part of its ongoing cash management, including paying down debt that was owed by Foreign Pubco to arm’s length parties, as described in Paragraph 20. These dividends were facilitated by the XXXXXXXXXX. In total, approximately XXXXXXXXXX of distributions were paid to Foreign Pubco. This consisted of XXXXXXXXXX of cash distributions, including a $XXXXXXXXXX dividend paid by Canco 1 to Forco 3. All applicable withholding taxes were withheld and remitted to the CRA. The cash for the dividend paid by Canco 1 was sourced from all of the Business Units of the DC Group through distributions from Canadian and non-Canadian corporations of the DC Group through relevant subsidiaries to Canco 1. The remaining XXXXXXXXXX non-cash portion of the XXXXXXXXXX of distributions to Foreign Pubco will be settled with cash payments of XXXXXXXXXX.

(b) In XXXXXXXXXX, Canco 1 made a $XXXXXXXXXX distribution to Forco 3, as a return of capital.

(c) In XXXXXXXXXX, Canco 1 paid approximately a $XXXXXXXXXX dividend to its sole non-Canadian parent corporation at the time, Foreign Pubco. All applicable withholding tax was withheld and remitted to the CRA.

(d) In XXXXXXXXXX, Canco 1 paid a $XXXXXXXXXX stock dividend to its sole non-Canadian parent corporation at the time, Foreign Pubco, XXXXXXXXXX. All applicable withholding tax was withheld and remitted to the CRA. XXXXXXXXXX.

(e) In XXXXXXXXXX, Canco 1 paid approximately a $XXXXXXXXXX dividend to its sole non-Canadian parent corporation at the time, Foreign Pubco. All applicable withholding tax was withheld and remitted to the CRA.

The XXXXXXXXXX stock dividend and the XXXXXXXXXX return of capital and the XXXXXXXXXX dividends paid by Canco 1, included in part, payments by set-off against prior year cash distributions made by Canco 1 in the form of loans and advances. The amount of annual cash distributions made by Canco 1, ignoring the legal form of such distribution, was $XXXXXXXXXX.

Similar transactions will continue to arise in the day-to-day operations of the DC Group and Pubco Group prior to, or during the course of, the Proposed Transactions, consistent with the Pubco Group’s policy to distribute the annual after-tax earnings out of its non-Country A subsidiaries, as described in this Paragraph. The projected annual dividends for XXXXXXXXXX and the actual dividends paid by Canco 1 of $XXXXXXXXXX were in accordance with Foreign Pubco’s policy and Canco 1’s past practice.   These distributions were or will not be made in contemplation of Distribution 1 or Distribution 2 and would have occurred regardless of whether Distribution 1 of Distribution 2 are made and Distribution 1 and Distribution 2 will occur regardless of whether the distributions were or are made.

15. Consistent with the Pubco Group’s policy to distribute the annual after-tax earnings out of its non-Country A subsidiaries, there have been ongoing dividend payments from foreign affiliates and Canadian subsidiaries of Canco 1 and Canco 2 to Canco 1 and Canco 2. Similar transactions will continue to arise in the day-to-day operations of the DC Group and Pubco Group prior to, or during the course of, the Proposed Transactions. The distributions were not in contemplation of Distribution 1 or Distribution 2 and would have occurred regardless of whether Distribution 1 or Distribution 2 are made and Distribution 1 and Distribution 2 will occur regardless of whether such distributions were or are made.

16. For XXXXXXXXXX, similar distributions were projected to occur and were estimated to involve moving XXXXXXXXXX of cash from Pubco Group subsidiaries to Foreign Pubco and other members of the Pubco Group and to include between XXXXXXXXXX from Canco 1 to Forco 3. These distributions were intended to be made in accordance with Foreign Pubco’s distribution policy and the cash so distributed was intended to be used for one or more of the needs described in Paragraph 15. There may also be similar distributions in XXXXXXXXXX. These distributions are independent of and not related to the Proposed Transactions. These distributions (and the determination of the amount thereof) would have occurred or will occur regardless of whether the Proposed Transactions are completed and the Proposed Transactions will occur regardless of whether such distributions (and the determination of the amounts thereof) were or are made.

Stock-based compensations and Liabilities of Foreign Pubco

17. [Reserved]

18.1 As of XXXXXXXXXX, Foreign Pubco had outstanding liabilities in excess of XXXXXXXXXX, including approximately XXXXXXXXXX of current liabilities and XXXXXXXXXX of long-term debt.

18. As of XXXXXXXXXX, Foreign Pubco had credit agreements with various banks permitting aggregate borrowings of up to XXXXXXXXXX, including: (i) a XXXXXXXXXX revolving credit agreement and a XXXXXXXXXX multicurrency revolving credit agreement, both of which expire in XXXXXXXXXX; and (ii) a XXXXXXXXXX revolving credit agreement and a XXXXXXXXXX term credit agreement, both of which were entered into on XXXXXXXXXX and which will expire on XXXXXXXXXX or, if earlier, the date that is XXXXXXXXXX days after the date on which the separation of Spin Business 1 and Spin Business 2 from each other and from the Keep Business have been consummated. XXXXXXXXXX. Commercial paper borrowings at XXXXXXXXXX include approximately XXXXXXXXXX commercial paper. Foreign Pubco uses its commercial paper borrowings for general corporate purposes, including the funding of potential acquisitions, pension contributions, debt refinancing, dividend payments and repurchases of Foreign Pubco’s common stock. The need for commercial paper borrowings arises when the use of domestic cash for general corporate purposes exceeds the sum of domestic cash generation and foreign cash repatriated to Country A. No member of the DC Group was a legal party to or otherwise involved in any of such credit agreements or borrowing.  

19. Foreign Pubco completes various debt issuances and repayments on an ongoing basis, including the following recent transactions:

XXXXXXXXXX.

Similar transactions will continue to arise in the day-to-day operations of Foreign Pubco prior to, or during the course of, the Proposed Transactions. These transactions are independent and unrelated to the Proposed Transactions. No member of the DC Group was a legal party to or otherwise directly involved in any such borrowings, issuances, redemptions or repayments.

20. Foreign Pubco provides various stock-based compensation and incentives to employees of the Pubco Group, which includes stock options, stock awards, stock appreciation rights, performance share units, and restricted stock units. As a result, shares and rights in respect of the shares of Foreign Pubco are granted to directors, officers, and employees of the Pubco Group pursuant to these plans. As a result of the Merger Company 1 Acquisition, a stock-based compensation plan of Merger Company 1 was converted into a corresponding stock-based compensation plan of Foreign Pubco in accordance with the terms of the Merger Company 1 Agreement.

21. Foreign Pubco provides a number of pension plans for a large number of its employees and provides both funded and unfunded XXXXXXXXXX defined benefit pension and other post-retirement benefit plans, and defined contribution plans. For financial statement purposes, the pension and post-retirement benefit plans are reflected as a net liability of Foreign Pubco. As a result of XXXXXXXXXX of cash contributions in recent years, Foreign Pubco is not required to make additional contributions to its XXXXXXXXXX defined benefit pension plans through the end of XXXXXXXXXX.

22. Other than the transactions described herein and the Proposed Transactions, no transactions affecting the shares of Foreign Pubco are currently planned.

23. [Reserved]

DC Group

24. Canco 1 and Canco 2 are the predecessor corporations of Canadian DC. Canco 1 was incorporated on XXXXXXXXXX. Canco 2 was incorporated on XXXXXXXXXX. Each acted as the holding corporations of the DC Group. Canco 1’s head office was located at XXXXXXXXXX. Its mailing address was XXXXXXXXXX. Prior to the continuance described in Paragraph 50.4, Canco 2’s head office was located at XXXXXXXXXX. Following such continuance, Canco 2’s head office was located at the same address as Canco 1’s head office. Its mailing address is XXXXXXXXXX.

Canco 1’s Taxation Centre was the XXXXXXXXXX Tax Centre and its Tax Service Office was the XXXXXXXXXX Tax Service Office. Canco 2’s Taxation Centre was the XXXXXXXXXX Tax Centre and its Tax Service Office was the XXXXXXXXXX Tax Service Office.

25.1 Canco 1’s authorized share capital consisted solely of XXXXXXXXXX common shares (the “Canco 1 Common Shares”). Each class of Canco 1 Common Shares were voting shares but had different voting rights and different stated capital amounts. All of the issued and outstanding Canco 1 Common Shares were owned by Forco 3, which held these shares as capital property.

25.2 Canco 1 owned all of the shares of Canco 2. Canco 1 held such shares as capital property.

25.3 Prior to XXXXXXXXXX, the Canco 1 Common Shares were held by Foreign Pubco. In XXXXXXXXXX, following the incorporation of Forco 1, Forco 2, and Forco 3, the Canco 1 Common Shares were ultimately acquired by Forco 3. XXXXXXXXXX. The transfer of the Canco 1 Common Shares from Foreign Pubco to, ultimately, Forco 3 was independent of and not related to or part of a series of transactions or events that will include the taxable dividends that will be paid as part of the Distribution Steps. Such transfers of the Canco 1 Common Shares would have occurred regardless of whether the Distribution Steps occur and the Distribution Steps will occur regardless of whether the Canco 1 Common Share transfers were completed.

25.4 Prior to the Subject Transactions, the FMV of the Canco 1 Common Shares exceeded and the Canadian DC Common Shares will exceed the ACB of such shares to Forco 3 and the PUC of such shares prior to the Distribution Steps.

25. Canco 1, Canco 2 (and Canadian DC after the Amalgamation) and their subsidiaries (collectively referred to as the DC Group) are actively engaged in the conduct of the business of the Business Units, in the same manner as Foreign Pubco and the Pubco Group. These subsidiaries include Canadian corporations with operations and customers in Canada, and foreign affiliates with operations and customers in various countries, including the XXXXXXXXXX.

26. The subsidiaries of the DC Group include foreign affiliates, which are wholly-owned within the DC Group, jointly owned by arm’s length parties unrelated to Foreign Pubco, or jointly owned by Pubco Group entities outside the DC Group.

27.1 Prior to the Amalgamation, Canco 1 directly owned the following subsidiaries organized by Business Unit:

(a) [Reserved]

(b) Canco 1 owned all of the shares of the CanKeepcos and ForKeepco 3. Canco 1 also owned XXXXXXXXXX% of the shares of ForKeepco 2. These corporations are engaged in the conduct of Keep Business 1 and Keep Business 2 and generally hold subsidiaries that are engaged in the conduct of Keep Business 1 and Keep Business 2. Canco 1 held such shares as capital property.

(c) Canco 1 owned all of the shares of CanSpin1-Canco1, CanSpin1-Canco2, CanSpin1-Canco3, CanSpin1-Forsub2 and CanSpin1-Forsub9. Canco 1 owned XXXXXXXXXX% of the shares of CanSpin1-Forsub5. Canco 1 held such shares as capital property. These corporations are engaged in the conduct of Spin Business 1 and also generally hold subsidiaries that are engaged in the conduct of Spin Business 1.

The indirect subsidiaries of Canco 1 that are engaged in the conduct Spin Business 1 include CanSpin1-Forsub1, CanSpin1-Forsub5 and CanSpin1-Forsub8.  

(d) Canco 1 owned all of the shares of CanSpin2-Canco1. Canco 1 held such shares as capital property. CanSpin2-Canco1 is engaged in the conduct of Spin Business 2 and also generally holds subsidiaries that are engaged in the conduct of Spin Business 2.

The indirect subsidiaries of Canco 1 that are engaged in the conduct of Spin Business 2 include FA4, Forco 5, and CanSpin2-Forsub4.  

27.2 Prior to the Amalgamation, Canco 2 conducted Spin Business 1 and Spin Business 2 through subsidiaries held through FAHoldco 1 and FAHoldco 2. Prior to the liquidation of FAHoldco 1 and FAHoldco 2 as described in Paragraphs 50.5 and 50.6, Canco 2 held XXXXXXXXXX% of the issued and outstanding shares of FAHoldco 1 and XXXXXXXXXX% of the issued and outstanding shares of FAHoldco 2. Canco 2 held such shares as capital property. The remaining XXXXXXXXXX% of the issued and outstanding shares of FAHoldco 2 were held by FAHoldco 1. FAHoldco 1 held such shares as capital property. FAHoldco 1 and FAHoldco 2 were holding corporations that held shares of the following subsidiaries:

(a) FAHoldco 2 held XXXXXXXXXX% of the shares of CanSpin1-Forsub3. FAHoldco 2 held such shares as capital property. CanSpin1-Forsub3 is a corporation that is engaged, directly or through its subsidiaries, in the conduct of Spin Business 1, with the exception of its XXXXXXXXXX% indirect shareholding interest in Forco 5 which is engaged in the conduct of Spin Business 2.

The direct and indirect subsidiaries of FAHoldco 2 that conduct Spin Business 1 include CanSpin2-Forsub4, CanSpin1-Forsub6 and CanSpin1-Forsub7.

(b) FAHoldco 2 held XXXXXXXXXX% of the shares of CanSpin2-Forsub1 and CanSpin2-Forsub2, which are corporations engaged directly or indirectly through its subsidiaries, in the conduct of Spin Business 2, including through their subsidiaries. FAHoldco 2 held such shares as capital property.

The direct and indirect subsidiaries of CanSpin2-Forsub2 that conduct Spin Business 2 include CanSpin2-Forsub3, CanSpin2-Forsub4 after the transactions described in Paragraph 50.10, and CanSpin2-Forsub5.

As a result of the liquidation of FAHoldco 2 and FAHoldco 1, the shares of CanSpin1-Forsub3, CanSpin2-Forsub1 and CanSpin2-Forsub2 were held by Canco 2.

27. 27.3. Canco 2 also owned XXXXXXXXXX% of the issued and outstanding shares of ForKeepco 1, which is engaged, directly or indirectly through subsidiaries, in the conduct of Keep Business 1 and Keep Business 2. The DC Group holds less than XXXXXXXXXX% of the following non-resident corporations:

(a) XXXXXXXXXX, in which CanSpin1-Forsub4 owns a XXXXXXXXXX% interest;

(b) XXXXXXXXXX, in which CanSpin1-Forsub4 owns a XXXXXXXXXX% interest;

(c) XXXXXXXXXX in which CanSpin1-Forsub3 owns a XXXXXXXXXX% interest;

(d) XXXXXXXXXX, in which CanSpin1-Forsub3 owns a XXXXXXXXXX% interest.

These shareholdings represent ownership in joint venture corporations that are actively engaged in the business operations of their respective Business Units and are held as capital property, not held as portfolio investments, and are not known to hold investments that earn a passive income return such as rents, interest or royalties. Each of these joint venture corporations do not hold material amounts of cash relative to their total assets and the cash maintained by each joint venture is intended to support ongoing operational business requirements. The remaining interest in each of these subsidiaries is held by persons dealing at arm’s length with the Pubco Group.

28. [Reserved]

29. [Reserved]

30. [Reserved]

31. [Reserved]

Cash Pooling and Intercompany Loans

32. The Pubco Group and the DC Group cash management policy aims to achieve an efficient deployment of funds, reduce external borrowing costs, and maintain adequate controls over company assets. Cash pools and short-term intercompany loans, among other arrangements, are used to achieve this policy.

The Cash Pooling, Intercompany Loans and Other Loans described in Paragraphs 34 to 45 occur in the ordinary course of the Pubco Group and the DC Group’s business and are independent and not related to Distributions 1 and Distribution 2. Such transactions would have occurred regardless of whether Distribution 1 of Distribution 2 occur and Distribution 1 and Distribution 2 will occur regardless of whether the Cash Pooling, Intercompany Loans and other loans were completed.

Cash Pooling

33. The Pubco Group’s intragroup cash pooling (the “Cash Pooling”) manages intercompany lending among members of the Pubco Group by using available cash from some participating members to fund the operating requirements of other participating members.

34. XXXXXXXXXX.

35. XXXXXXXXXX.

36. XXXXXXXXXX.

37. XXXXXXXXXX.

38. XXXXXXXXXX.

39. XXXXXXXXXX.

Intercompany lending program

40. XXXXXXXXXX.”

41. XXXXXXXXXX.

42. XXXXXXXXXX.

43. XXXXXXXXXX.

Other loans

44. There are other intercompany advances or loans involving the DC Group. These loans generally arise between corporations within a given Business Unit outside of the Cash Pooling or intercompany advances or loans involving the Pubco Group financing corporations described in Paragraphs 41 to 44. Such advances or loans are generally interest bearing and callable on demand and payable on demand.

45. [Reserved]

46. [Reserved]

47. [Reserved]

48. [Reserved]

Tax Audit and Dispute Status

49. The CRA and provincial tax authorities routinely audit the Canadian corporations within the DC Group, which includes the following recent activity:

XXXXXXXXXX.

Beyond these matters, the DC Group is not aware of any tax audit or tax dispute matters involving the corporations within the DC Group. Unless otherwise indicated, it is not known when these tax audits will be completed or whether the CRA or the relevant provincial tax authorities will issue any reassessments prior to the Proposed Transactions.

IV. OVERVIEW OF THE REORGANIZATION

50.1 XXXXXXXXXX.

50.2 [Reserved]

V. SUBJECT TRANSACTIONS

The following Subject Transactions were completed after the request for the advance tax ruling was submitted and before the date hereof.

50.3 XXXXXXXXXX.

Continuance of Canco 2

50.4 On XXXXXXXXXX, Canco 2 continued from the BCA 2 to the BCA 1.

Foreign Affiliate Transactions

50.5 On XXXXXXXXXX, FAHoldco 1 liquidated and dissolved into its sole shareholder, Canco 2. As part of the liquidation and dissolution, Canco 2 acquired the XXXXXXXXXX% shareholding that FAHoldco 1 held in FAHoldco 2. This acquisition occurred as part of the dissolution and liquidation of FAHoldco 1. Accordingly, the XXXXXXXXXX% shareholding in FAHoldco 2 held by FAHoldco 1 was legally transferred to Canco 2 on the liquidation and dissolution of FAHoldco 1 and this acquisition of the XXXXXXXXXX% shareholding in FAHoldco 2 by Canco 2, which resulted in Canco 2 becoming the sole owner of FAHoldco 2, did not result in a dissolution of FAHoldco 2 under Country B law. A qualifying liquidation and dissolution election and a suppression election will be filed in connection with the liquidation and dissolution of FAHoldco 1.

50.6 On XXXXXXXXXX, after the acquisition of the XXXXXXXXXX% shareholding in FAHoldco 2 by Canco 2 described in Paragraph 50.5, FAHoldco 2 liquidated and dissolved into its sole shareholder, Canco 2. As a result of such liquidation and dissolution, Canco 2 acquired FAHoldco 2’s XXXXXXXXXX% shareholdings in CanSpin1-Forsub3, CanSpin2-Forsub1 and CanSpin2-Forsub2. This acquisition occurred as part of the liquidation and dissolution of FAHoldco 2 under Country B law. A qualifying liquidation and dissolution election and a suppression election will be filed in connection with the liquidation and dissolution of FAHoldco 2.

50.7 On XXXXXXXXXX, Forco 4 disposed of XXXXXXXXXX% out of its XXXXXXXXXX% of the issued and outstanding shares of CanSpin-Forsub5 to CanSpin1-Canco2 for consideration that consisted only of cash. The disposition of the shares of CanSpin1-Forsub5 to CanSpin1-Canco 2 was not done in contemplation of Distribution 1 and Distribution 2 and would have occurred regardless of whether Distribution 1 and Distribution 2 are made and Distribution 1 and Distribution 2 will occur regardless of whether that disposition was completed.

50.8 On XXXXXXXXXX, CanSpin1-Forsub7 disposed of XXXXXXXXXX% of its issued and outstanding shares in Forco 5 to Forco 7 for consideration that consisted only of cash. The remaining balance of XXXXXXXXXX% of the issued and outstanding shares of Forco 5 owned by CanSpin1-Forsub7 were disposed of to one of its other shareholders, a third party that is unrelated to Foreign Pubco, for consideration that consisted only of cash. CanSpin1-Forsub7 distributed the cash proceeds received (net of taxes arising from the sale transaction) pro rata to its shareholders, consisting of CanSpin1-Forsub6, the owner XXXXXXXXXX% of the issued and outstanding shares of CanSpin1-Forsub7, and a third party that is unrelated to Foreign Pubco, the owner of the remaining XXXXXXXXXX% of the issued and outstanding shares of CanSpin1-Forsub7. The distribution of the proceeds from the sale was required by the terms of an agreement with an arms’ length third party. The distribution to CanSpin1-Forsub6 was not done in contemplation of and would have occurred regardless of whether Distribution 1 or Distribution 2 occurred and Distribution 1 and Distribution 2 will occur regardless of whether the distributions were paid.  

50.9 On XXXXXXXXXX, Canco 1 disposed of its XXXXXXXXXX% shareholding in CanSpin1-Forsub1 to CanSpin1-Forsub 9 for consideration that consisted only of cash through the following transactions. Canco 1 contributed cash to CanSpin1-Forsub9 equal to the aggregate of the FMV of the XXXXXXXXXX% shareholding in CanSpin1-Forsub1 and the relevant transaction costs.   Prior to the Amalgamation, CanSpin1-Forsub 9 was a subsidiary wholly-owned corporation of Canco 1 and is a subsidiary wholly-owned corporation of Canadian DC. Before such contribution, CanSpin1-Forsub 9 had no assets or liabilities other than a nominal amount of cash from incorporation. CanSpin1-Forsub9 used the cash from the capital contribution to pay the purchase price to acquire all of Canco 1’s XXXXXXXXXX% shareholding in CanSpin1-Forsub1. The foreign affiliate dumping rules under subsection 212.3 applied to Canco 1’s investment in CanSpin1-ForSub9 and all applicable withholding tax under subsection 212.3(2) based on the amount of the contribution was withheld and remitted to the CRA.

50.10 On XXXXXXXXXX, CanSpin1-Forsub5 sold its XXXXXXXXXX% shareholding in CanSpin2-Forsub4 to CanSpin2-Forsub2 for consideration that consisted only of cash and CanSpin1-Forsub8 sold its XXXXXXXXXX% shareholding in CanSpin2-Forsub4 to CanSpin2-Forsub5 for consideration that consisted only of cash through the following transactions:

(a) Canco 1 borrowed XXXXXXXXXX from CanFinco (the “Canco 1 Loan”). The Canco 1 Loan will be repaid in full prior to the Distributions.

(b) Canco 1 used the cash proceeds from the Canco 1 Loan to subscribe for shares of CanSpin2-Forsub2. Canco 1’s investment in CanSpin2-Forsub2 resulted in the foreign affiliate dumping rules in section 212.3 applying and all applicable withholding tax under subsection 212.3(2) was withheld and was, or will be, remitted to the CRA.

(c) CanSpin2-Forsub3 paid a cash dividend of approximately $XXXXXXXXXX to CanSpin2-Forsub2.

(d) CanSpin2-Forsub2 acquired XXXXXXXXXX% of the shares of CanSpin2-Forsub4 from CanSpin1-Forsub5 and XXXXXXXXXX% of the shares of CanSpin2-Forsub4 from CanSpin1-Forsub8 for a purchase price equal to their FMV which purchase price was paid solely by cash. CanSpin2-Forsub2 funded the payment of the purchase price through a combination of the cash that it otherwise held and the cash that it received from the transactions described in Paragraphs 50.10(b) and (c).

(e) CanSpin2-Forsub2 contributed one of the shares of CanSpin2-Forsub4 to CanSpin2-Forsub5 as a contribution of capital (i.e. for share premium). This resulted in CanSpin2-Forsub5 holding XXXXXXXXXX% of the shares of CanSpin2-Forsub4.

(f) CanSpin1-Forsub5 paid a cash dividend in the amount of the proceeds received by it on the sale of the CanSpin1-Forsub4 shares described in Paragraph 50.10(d) to its three shareholders pro rata based on their percentage shareholdings. Canco 1 received XXXXXXXXXX% of the amount of cash distributed, CanSpin1-Canco2 received XXXXXXXXXX% of the amount of cash distributed, and Forco 4 received XXXXXXXXXX% of the amount of cash distributed.

(g) CanSpin1-Canco2 made a distribution to Canco 1 as a return of capital in an amount equal to the amount of the dividend that CanSpin1-Canco 2 received as described in Paragraph 50.10(f) which return was paid by cash. Canco1 used such cash proceeds to repay all or a portion of the Canco 1 Loan. Any remaining balance of the Canco Loan will be repaid prior to the Distributions. If there was any excess cash from the dividend received by Canco 1 after the repayment of the Canco 1 Loan, that excess was included in the amount of the XXXXXXXXXX annual dividends paid by Canco 1 to Forco 3 described in Paragraph 15 to 17.

50.11 The transactions described in Paragraphs 50.5 to 50.10 were taxable events with respect to Canadian taxpayers consisting of Canco 1, Canco 2 and their relevant Canadian subsidiary corporations.

2019 Annual Dividends by Canco 1

50.12 The subsidiaries of Foreign Pubco (including the DC Group) completed the annual cash distributions for XXXXXXXXXX directly or indirectly through one of more subsidiaries to Foreign Pubco (or a subsidiary of Foreign Pubco), consistent with Foreign Pubco’s long standing distribution policy described in Paragraph 15 to 17. The aggregate amount of cash dividends distributed by Canco 1 for XXXXXXXXXX was $XXXXXXXXXX.  

Creation of Foreign Spinco 1, Foreign Spinco 2, Spinco 1 Finco and Spinco 2 Finco

50. Foreign Pubco formed Foreign Spinco 1 on XXXXXXXXXX. Foreign Spinco 1 is a non-resident corporation for purposes of the Act.    

51. Foreign Pubco formed Foreign Spinco 2 on XXXXXXXXXX. Foreign Spinco 2 is a non-resident for purposes of the Act.

52. Foreign Pubco formed Spinco 1 Finco on XXXXXXXXXX. Spinco 1 Finco is a non-resident for purposes of the Act.

53. Foreign Pubco formed Spinco 2 Finco on XXXXXXXXXX. Spinco 2 Finco is a non-resident for purposes of the Act.

Creation of Canadian Butterfly Entities

54.1 Forco 3 incorporated a holding corporation (“Non-Canadian DC 1”) on XXXXXXXXXX as a limited XXXXXXXXXX under the laws of XXXXXXXXXX. Non-Canadian DC 1 is XXXXXXXXXX and will be a non-resident corporation for purposes of the Act. The authorized share capital of Non-Canadian DC 1 consists of an unlimited number of voting, fully participating common shares (the “Non-Canadian DC 1 Common Shares”). On incorporation, Forco 3 subscribed for Non-Canadian DC 1 Common Shares for a nominal amount.  

54.2 Non-Canadian DC incorporated a new corporation (“Canadian TC 1”) on XXXXXXXXXX under the BCA1. Canadian TC 1 is a private corporation and a taxable Canadian Corporation. The authorized share capital of Canadian TC 1 consists of:

(a) an unlimited number of voting, fully participating common shares (the “Canadian TC 1 Common Shares”); and

(b) an unlimited number of preferred shares (the “Canadian TC 1 Special Shares”), with terms and conditions described in Paragraph 54.3

54.3 The Canadian TC 1 Special Shares will have the following terms and conditions:

(a) Non-voting.

(b) Each Canadian TC 1 Special Share will entitle the holder to receive non-cumulative dividends if and when declared by the board of directors of Canadian TC 1.

(c) Each Canadian TC 1 Special Share will be redeemable and retractable, subject to applicable law, at any time at the option of the holder or Canadian TC 1 for a redemption amount (the “Canadian TC 1 Redemption Amount”) equal to the quotient obtained when:

(A) the FMV of the consideration paid to Canadian TC 1 for the issuance of the Canadian TC 1 Special Shares,

is divided by:

(B) the number of Canadian TC 1 Special Shares issued as consideration for the Distribution Property 1;

plus that amount which is equal to all declared but unpaid dividends on such Canadian TC 1 Special Share.

(d) Except with the consent in writing of the holders of all of the Canadian TC 1 Special Shares, no dividend shall at any time be declared and paid on, or declared and set apart for payment on, the Canadian TC 1 Common Shares unless, after the payment of such dividend, the realizable value of the assets of Canadian TC 1 would not be less than the aggregate Canadian TC 1 Redemption Amount, plus any declared but unpaid dividends thereon.

(e) In the event of the dissolution, liquidation or winding-up of Canadian TC 1, whether voluntary or involuntary, or any other distribution of assets of Canadian TC 1 among its shareholders for the purpose of winding-up its affairs, the holders of Canadian TC 1 Special Shares will be entitled to receive from the assets of Canadian TC 1 an amount equal to the aggregate Canadian TC 1 Redemption Amount (plus any declared but unpaid dividends thereon) before any amount will be paid or any assets of Canadian TC 1 are distributed upon any liquidation, dissolution or winding-up of Canadian TC 1 to the holders of the Canadian TC 1 Common Shares. After payment to the holders of Canadian TC 1 Special Shares of the amount so payable to them, such holders shall not be entitled to share in any further distribution of the assets of Canadian TC 1.

54.4. On incorporation, Non-Canadian DC 1 subscribed for common shares of Canadian TC 1 for a nominal amount.

54.5 Forco 3 incorporated a holding company (“Non-Canadian DC 2”) on XXXXXXXXXX as a XXXXXXXXXX company under the laws of XXXXXXXXXX. Non-Canadian DC 2 XXXXXXXXXX and is a non-resident corporation for purposes of the Act. The authorized share capital of Non-Canadian DC 2 consists of an unlimited number of voting, fully participating common shares (the “Non-Canadian DC 2 Common Shares”). Forco 3 subscribed for Non-Canadian DC 2 Common Shares on incorporation for a nominal amount.

54.6 Non-Canadian DC 2 incorporated a new corporation (“Canadian TC 2”) on XXXXXXXXXX under the BCA 1. Canadian TC 2 is a private corporation and a taxable Canadian corporation. The authorized share capital of Canadian TC 2 will consist of:

(a) an unlimited number of voting, fully participating common shares (the “Canadian TC 2 Common Shares”); and

(b) an unlimited number of preferred shares (the “Canadian TC 2 Special Shares”), with terms and conditions described in Paragraph 54.7.

54.7 The Canadian TC 2 Special Shares will have the following terms and conditions:

(a) Non-voting.

(b) Each Canadian TC 2 Special Share will entitle the holder to receive non-cumulative dividends if and when declared by the board of directors of Canadian TC 2.

(c) Each Canadian TC 2 Special Share will be redeemable and retractable, subject to applicable law, at any time at the option of the holder or Canadian TC 2 for a redemption amount (the “Canadian TC 2 Redemption Amount”) equal to the quotient obtained when:

(A) the FMV of the consideration paid to Canadian TC 2 for the issuance of the Canadian TC 2 Special Shares,

is divided by:

(B) the number of Canadian TC 2 Special Shares issued as consideration for the Distribution Property 2;

plus that amount which is equal to all declared but unpaid dividends on such Canadian TC 2 Special Share.

(d) Except with the consent in writing of the holders of all of the Canadian TC 2 Special Shares, no dividend shall at any time be declared and paid on, or declared and set apart for payment on, the Canadian TC 2 Common Shares unless, after the payment of such dividend, the realizable value of the assets of Canadian TC 2 would not be less than the aggregate Canadian TC 2 Redemption Amount, plus any declared but unpaid dividends thereon.

(e) In the event of the dissolution, liquidation or winding-up of Canadian TC 2, whether voluntary or involuntary, or any other distribution of assets of Canadian TC 2 among its shareholders for the purpose of winding-up its affairs, the holders of Canadian TC 2 Special Shares will be entitled to receive from the assets of Canadian TC 2 an amount equal to the aggregate Canadian TC 2 Redemption Amount (plus any declared but unpaid dividends thereon) before any amount will be paid or any assets of Canadian TC 2 are distributed upon any liquidation, dissolution or winding-up of Canadian TC 2 to the holders of the Canadian TC 2 Common Shares. After payment to the holders of Canadian TC 2 Special Shares of the amount so payable to them, such holders shall not be entitled to share in any further distribution of the assets of Canadian TC 2.

54.8 On incorporation, Non-Canadian DC 2 subscribed for common shares of Canadian TC 2 for a nominal amount.

54.9 Foreign Spinco 1 incorporated a holding company (“Foreign Spinco1-Sub”) on XXXXXXXXXX as a corporation under the laws of Country B XXXXXXXXXX. The authorized share capital of Foreign Spinco1-Sub consists of an unlimited number of voting, fully participating common shares (the “Foreign Spinco1-Sub Common Shares”). Foreign-Spinco1-Sub is a non-resident corporation for purposes of the Act.

54.10 Foreign Spinco 2 incorporated a holding company (“Foreign Spinco2-Sub”) on XXXXXXXXXX as a corporation under the laws of Country B XXXXXXXXXX. The authorized share capital of Foreign Spinco2-Sub consists of an unlimited number of voting, fully participating common shares (the “Foreign Spinco2-Sub Common Shares”). Foreign-Spinco2-Sub is a non-resident corporation for purposes of the Act.

Amalgamation of Canco 1 and Canco 2

54.11 On XXXXXXXXXX, Canco 1 and Canco 2 amalgamated in accordance with the provisions of the BCA 1 to form Canadian DC (the “Amalgamation”). Canadian DC adopted the articles of Canco 1, except that all of the Canco 1 Common Shares will be converted into a single class of common shares of Canadian DC (the “Canadian DC Common Shares”). Following the Amalgamation, all of the issued and outstanding shares of Canadian DC, consisting of the Canadian DC Common Shares, became owned by Forco 3 and all of the property of Canco 1 and Canco 2, including the shares of the subsidiary corporations described in Paragraphs 27.1, 27.2 and 27.3 became the property of Canadian DC.

VI. PROPOSED TRANSACTIONS

Initial Steps

Global Restructuring Steps

55 Subsidiaries of Foreign Pubco within the Pubco Group will complete restructuring and distribution transactions to reorganize and consolidate entities of the Keep Business, Spin Business 1, and Spin Business 2 to align such Business Units into separate corporate groups. These transactions began in XXXXXXXXXX and will be completed in XXXXXXXXXX and will not involve any entities of the DC Group.

56 Foreign Pubco will contribute various entities that conduct Spin Business 1 that are outside of the DC Group to Foreign Spinco 1 as a contribution of capital on a tax-deferred basis for Country A tax purposes.

57 Foreign Pubco will contribute various entities that conduct Spin Business 2 that are outside of the DC Group to Foreign Spinco 2 as a contribution of capital on a tax-deferred basis for Country A tax purposes.

58 After the transactions described in Paragraphs 51 to 57, Foreign Spinco 1 will hold directly or indirectly all of the Spin Business 1 assets except for the Spin Business 1 assets held by the DC Group; and Foreign Spinco 2 will hold directly or indirectly all of the Spin Business 2 assets except for the Spin Business 2 assets held by the DC Group.

Intercompany Loans and Cash Pooling Separation

59 The Pubco Group will complete restructuring transactions to align the Cash Pooling and intercompany loans and advances of the subsidiaries of Foreign Pubco by Business Unit. The same or similar transactions will occur to the Cash Pooling and intercompany loans and advances involving the DC Group and will, to the extent applicable, involve the following:

(a) Debtor corporations within the DC Group that owe an intercompany loan or advance to a corporation that is in a different Business Unit will borrow an intercompany loan or advance of a comparable amount with comparable terms to the amount that is outstanding from an entity that is in the same Business Unit. Immediately after this borrowing, the debtor corporation in the DC Group will repay the intercompany loan or advance that is owed to the lender that is not in the same Business Unit.

(b) Creditor corporations within the DC Group that hold an intercompany loan or advance from a corporation within a different Business Unit will have the amount repaid. This will include repayments from internally owned financing corporations of the Pubco Group such as CanFinco, Forco 6, Finco 1 and Finco 2.

(c) Creditor corporations within the DC Group that conduct Spin Business 1 will reloan the amount received from the repayments described in Paragraph 59(b) to Spinco 1 Finco and creditors within the DC Group that conduct Spin Business 2 will reloan the amount received from the repayments described in Paragraph 59(b) to Spinco 2 Finco. The terms of the reloaned amount will be analogous to the terms of the amount that was repaid to the creditor corporation, as described in Paragraph 59(b).

(d) In addition, certain creditors of loans and advances of entities within the DC Group that conduct the Keep Business may be repaid and reloaned to existing internal financing corporations within the Keep Business. The terms of the reloaned amount will be anagolous to the terms of the amount that was repaid.

60 After the transactions described in Paragraph 59, the Cash Pooling and intercompany loans and advances will be separated by Business Unit such that there will generally not be loans owed between entities from different Business Units.

61 For corporations within the DC Group, the intercompany loans and advances following the transactions in Paragraph 59 will consist of the following categories:

(a) Cash Pooling loans and advances that are payable by the debtor and callable by the creditor on demand;

(b) intercompany loans and advances that are due within 12 months; and

(c) intercompany loans that are due after 12 months and are payable by the debtor on demand, but are not necessarily callable by the creditor on demand.

(d) [Reserved]

All such intercompany loans and advances will be interest bearing.

62 Foreign Pubco will contribute Spinco 1 Finco to Foreign Spinco 1 as a contribution of capital.

63 Foreign Pubco will contribute Spinco 2 Finco to Foreign Spinco 2 as a contribution of capital.

64 [Reserved]:

(a) [Reserved]

(b) [Reserved]

(c) [Reserved]

(d) [Reserved]

(e) [Reserved]

(f) [Reserved]

64.1[Reserved]

65 [Reserved]  

66 [Reserved]

Repayment of Canco 1 Loan

66.1 Any balance of the Canco 1 Loan remaining after the repayment described in Paragraph 50.10(g) will be repaid in full by Canco 1 or its successor Canadian DC to CanFinco.

Pre-Butterfly Canadian DC Steps

67. [Reserved]

68. [Reserved]

68.1 Subsidiaries of Canadian DC (or its predecessor corporations, Canco1 and Canco 2), including subsidiaries of Canadian DC that are foreign affiliates and taxable Canadian corporations, will pay dividends and distributions or make loans up through the chain of corporations to Canadian DC (or its predecessor corporations), by transferring cash or intercompany loans that will be classified as cash property. In order to fund the movement of cash, Cash Pooling and intercompany advances owed by the Pubco Group to relevant subsidiaries of the DC Group will be repaid. This will ensure that enough cash or near cash property will be directly held by Canadian DC in order for Canadian DC to transfer sufficient cash or near cash property to Canadian TC 1 on Distribution 1 and to Canadian TC 2 on Distribution 2, as determined by the Butterfly Percentage 1 and Butterfly Percentage 2 based on the pro rata types of property as determined immediately prior to Distribution 1.

68.2. It is anticipated that intercompany loans will be aligned by Business Unit. However, to the extent that distributions of intercompany loans described in Paragraph 68.1 results in intercompany loans that are owed across Business Units, such intercompany loans will be aligned by Business Unit pursuant to transactions that are analogous to those described in Paragraph 59.

68.3. For greater certainty, the transactions described in Paragraphs 68.1 and 68.2 will not: (i) result in the change in the FMV of the issued and outstanding shares of Canadian DC; (ii) for purposes of computing Butterfly Percentage 1 and Butterfly Percentage 2 and the types of property analysis described in Paragraphs 78 to 81 and 103, result in any change to the net FMV of the business property that relates to Spin Business 1 that would otherwise be determined but for such transactions; result in any change to the net FMV of the business property that relates Spin Business 2 that would otherwise be determined but for such transactions; and the net FMV of all of the business property of Canadian DC that would otherwise be determined but for such transactions.    

69. Canadian DC will reorganize its capital (the “Canadian DC Capital Reorganization”) by filing articles of amendment to amend the Canadian DC Articles under the BCA 1 to create and authorize the issuance of the following new classes of shares:

(a) an unlimited number of Class B preferred shares (the “Canadian DC Class B Preferred Shares”), with terms and conditions described in Paragraph 70;

(b) an unlimited number of Class C preferred shares (the “Canadian DC Class C Preferred Shares”), with terms and conditions described in Paragraph 71; and

(c) an unlimited number of common shares (the “Canadian DC Class A Common Shares”), with terms and conditions identical to the Canadian DC Common Shares immediately before such amendment, except that each Canadian DC Class A Common Share will entitle the holder to two votes per share (instead of one vote per share) and there will only be one class of common shares.

70. The Canadian DC Class B Preferred Shares will have the following terms and conditions:

(a) Non-voting.

(b) Each Canadian DC Class B Preferred Share will entitle the holder to receive non-cumulative dividends if and when declared by the board of directors of Canadian DC.

(c) Each Canadian DC Class B Preferred Share will be redeemable and retractable, subject to applicable law, at any time at the option of the holder or Canadian DC, for a redemption amount (the “Canadian DC Class B Redemption Amount”) equal to the quotient obtained when:

(A) the amount equal to the aggregate FMV of all of the issued and outstanding Canadian DC Common Shares, determined immediately prior to the Canadian DC Share Exchange, multiplied by Butterfly Percentage 1;

is divided by:

(B) the number of Canadian DC Class B Preferred Shares issued on the Canadian DC Share Exchange;

plus that amount which is equal to all declared and unpaid dividends on such Canadian DC Class B Preferred Share.

(d) Except with the consent in writing of the holders of all of the Canadian DC Class B Preferred Shares, no dividend shall at any time be declared and paid on, or declared and set apart for payment on any other class of Canadian DC shares unless, after the payment of such dividend, the realizable value of the assets of Canadian DC would not be less than the total of the aggregate Canadian DC Class B Redemption Amount, plus any declared but unpaid dividends thereon and the aggregate Canadian DC Class C Redemption Amount plus any declared but unpaid dividends thereon.

(e) In the event of the dissolution, liquidation or winding-up of Canadian DC, whether voluntary or involuntary, or any other distribution of assets of Canadian DC among its shareholders for the purpose of winding-up its affairs, the holders of Canadian DC Class B Preferred Shares will be entitled to receive from the assets of Canadian DC an amount equal to the aggregate Canadian DC Class B Redemption Amount (plus any declared but unpaid dividends thereon) before any amount will be paid or any assets of Canadian DC are distributed upon any liquidation, dissolution or winding-up of Canadian DC to the holders of any other class of Canadian DC shares except the Canadian DC Class C Preferred Shares. After payment to the holders of Canadian DC Class B Preferred Shares of the amount so payable to them, such holders shall not be entitled to share in any further distribution of the assets of Canadian DC.

71. The Canadian DC Class C Preferred Shares will have the following terms and conditions:

(a) Non-voting.

(b) Each Canadian DC Class C Preferred Share will entitle the holder to receive non-cumulative dividends if and when declared by the board of directors of Canadian DC.

(c) Each Canadian DC Class C Preferred Share will be redeemable and retractable, subject to applicable law, at any time at the option of the holder or Canadian DC, for a redemption amount per share (the “Canadian DC Class C Redemption Amount”) equal to the quotient obtained when

(A) the amount equal to the aggregate FMV of all of the issued and outstanding Canadian DC Common Shares, determined immediately prior to the Canadian DC Share Exchange, multiplied by Butterfly Percentage 2;

        is divided by:

(B) the number of Canadian DC Class C Preferred Shares issued on the Canadian DC Share Exchange;

plus that amount which is equal to all declared and unpaid dividends on such Canadian DC Class C Preferred Share.

(d) Except with the consent in writing of the holders of all of the Canadian DC Class C Preferred Shares, no dividend shall at any time be declared and paid on, or declared and set apart for payment on any other class of Canadian DC shares unless, after the payment of such dividend, the realizable value of the assets of Canadian DC would not be less than the total of the aggregate Canadian DC Class C Redemption Amount, plus any declared but unpaid dividends thereon and the aggregate Canadian DC Class B Redemption Amount, plus any declared but unpaid dividends thereon.

(e) In the event of the dissolution, liquidation or winding-up of Canadian DC, whether voluntary or involuntary, or any other distribution of assets of Canadian DC among its shareholders for the purpose of winding-up its affairs, the holders of Canadian DC Class C Preferred Shares will be entitled to receive from the assets of Canadian DC an amount equal to the aggregate Canadian DC Class C Redemption Amount (plus any declared but unpaid dividends thereon) before any amount will be paid or any assets of Canadian DC are distributed upon any liquidation, dissolution or winding-up of Canadian DC to the holders of any other class of Canadian DC shares except the Canadian DC Class B Preferred Shares. After payment to the holders of Canadian DC Class C Preferred Shares of the amount so payable to them, such holders shall not be entitled to share in any further distribution of the assets of Canadian DC.

72. As part of the Canadian DC Capital Reorganization, Forco 3 will exchange each issued and outstanding Canadian DC Common Share for one Canadian DC Class A Common Share, one Canadian DC Class B Preferred Share, and one Canadian DC Class C Preferred Share, and the Canadian DC Common Shares so exchanged will be cancelled (the “Canadian DC Share Exchange”). The aggregate FMV of the Canadian DC Common Shares immediately before the Canadian DC Share Exchange will equal the aggregate FMV of the Canadian DC Class A Common Shares, Canadian DC Class B Preferred Shares, and Canadian DC Class C Preferred Shares immediately following the Canadian DC Share Exchange. In connection with the Canadian DC Share Exchange:

(a) Canadian DC and Forco 3 will not make a joint election under the provisions of subsection 85(1); and

(b) under the BCA 1, Canadian DC will add to the stated capital accounts of the Canadian DC Class A Common Shares, Canadian DC Class B Preferred Shares, and Canadian DC Class C Preferred Shares issued on the Canadian DC Share Exchange an aggregate amount equal to the aggregate stated capital of the Canadian DC Common Shares immediately before the Canadian DC Share Exchange, and such stated capital will be allocated among the Canadian DC Class A Common Shares, Canadian DC Class B Preferred Shares, and Canadian DC Class C Preferred Shares based on the proportion that the aggregate FMV of the Canadian DC Class A Common Shares, Canadian DC Class B Preferred Shares, and Canadian DC Class C Preferred Shares, as the case may be, is of the aggregate FMV of all of the Canadian DC Class A Common Shares, Canadian DC Class B Preferred Shares, and Canadian DC Class C Preferred Shares issued on Canadian DC Share Exchange.

For greater certainty, subsection 86(2.1) will apply for determining the PUC of the Canadian DC Class A Common Shares; the Canadian DC Class B Preferred Shares and the Canadian DC Class C Preferred Shares.

Spin Business 1 Butterfly Steps

73. [Reserved]

74. [Reserved]

75. [Reserved]

75.1 Notwithstanding the order in which the following transactions are presented, the Proposed Transactions relating to the distribution of Spin Business 2 described in Paragraphs 104 to109 will occur before the Proposed Transactions to distribute Spin Business 1 described in Paragraphs 84 to 89.

76. Pursuant to a three-party transfer agreement between Forco 3, Canadian TC 1, and Non-Canadian DC 1 (the “Three-Party Share Exchange 1”), Forco 3 will transfer its Canadian DC Class B Preferred Shares to Canadian TC 1 for a purchase price equal to the aggregate FMV of such Canadian DC Class B Preferred Shares in the following manner:

(a) Canadian TC 1 will agree to pay the purchase price for Canadian DC Class B Preferred Shares transferred to it by Forco 3 by issuing Canadian TC 1 Common Shares to Non-Canadian DC 1 having an aggregate FMV at the time of the transfer equal to the aggregate FMV of the Canadian DC Class B Preferred Shares so transferred to it by Forco 3, and Canadian TC 1, Non-Canadian DC 1, and Forco 3 will agree that the Canadian TC 1 Common Shares will be issued to Non-Canadian DC 1 in respect of and by virtue of the disposition by Forco 3 of the Canadian DC Class B Preferred Shares to Canadian TC 1;

(b) Forco 3 will agree to pay the purchase price for the Non-Canadian DC 1 Common Shares issued to it as described in Paragraph 76(c) by transferring all of the Canadian DC Class B Preferred Shares to Canadian TC 1; and

(c) Non-Canadian DC 1 will agree to pay the purchase price for the Canadian TC 1 Common Shares issued to it as described in Paragraph 76(a) by issuing Non-Canadian DC 1 Common Shares to Forco 3 having an aggregate FMV at that time equal to the aggregate FMV of the Canadian TC 1 Common Shares issued to it, which will be equal to the aggregate FMV of the Canadian DC Class B Preferred Shares.

In connection with the Three-Party Share Exchange 1, Canadian TC 1 will add an amount to the stated capital of the Canadian TC 1 Common Shares equal to the aggregate stated capital of the Canadian DC Class B Preferred Shares transferred to Canadian TC 1.

For greater certainty, the aggregate PUC of the Canadian TC 1 Common Shares will be subject to the application of paragraph 212.1(1.1)(b).

77. The aggregate FMV, immediately before Distribution 1, of the Non-Canadian DC 1 Common Shares owned by Forco 3 will be equal to or approximate the amount determined by the formula:

    (A × B/C) + D

as found in subparagraph (b)(iii) of the definition of “permitted exchange” in subsection 55(1) on the assumption that Forco 3 is the participant, Canadian DC is the distributing corporation and Non-Canadian DC 1 is the acquiror.

For greater certainty, Forco 3 will at all relevant times prior to the transfer described in Paragraph 110.1 own all of the issued and outstanding shares of Non-Canadian DC 1.

Types of Property Analysis

78. Canadian DC will be considered to have significant influence over a corporation or a partnership if it has significant influence over that corporation or that partnership, or over any other corporation or partnership that has significant influence over that corporation or that partnership, or if Canadian DC in combination with corporations or partnerships over which it has significant influence have significant influence over that corporation or that partnership.

79. Immediately before the Distributions, the property of Canadian DC will be determined on a consolidated look-through basis by including the appropriate pro rata share of the assets of any corporation or partnership over which Canadian DC has the ability to exercise significant influence. The assets of Canadian DC, determined on a consolidated look-through basis as described herein, will be classified into the following three types of property for purposes of the definition of “distribution” in subsection 55(1):

(a) cash or near-cash property, comprising all of the current assets of the DC Group, including cash, short-term deposits and similar amounts receivable within one year, marketable securities (except portfolio investments), accounts receivable (including HST/GST/PST/QST receivables), inventory and prepaid expenses;

(b) business property, comprising all of the assets of the DC Group, other than cash or near-cash property, any income from which would, for purposes of the Act, be income from an active business (other than a specified investment business) including goodwill; and

(c) investment property, comprising all of the assets of the DC Group, other than cash or near-cash property, any income from which would, for purposes of the Act, be income from property or from a specified investment business.

    For greater certainty, for purposes of these determinations:

(d) for the purposes of determining the aggregate FMV of each type of property of Canadian DC, the aggregate FMV of the shares of the capital stock of any corporation, or the FMV of any partnership interest, over which any corporation or partnership has the ability to exercise significant influence and of any indebtedness receivable by any such corporation or partnership from a corporation or partnership over which it has significant influence will be allocated among the types of property described in Paragraphs 79(a), (b), and (c) by multiplying the aggregate FMV of the shares of the capital stock, the partnership interest, or the indebtedness receivable from the particular corporation or partnership, as the case may be, by the proportion that the aggregate net FMV of each type of property owned by the corporation or partnership (as determined in accordance with the methodologies described herein) is of the aggregate net FMV of all property owned by such corporation or partnership (as determined in accordance with the methodologies described herein);

(e) any tax accounts such as the balance of any non-capital losses of the DC Group or the balance of any RDTOH or CDA, if any, will not be considered property;

(f) the amount of any deferred or future income tax asset will not be considered property;

(g) advances and loans receivable, including those owing from non-arm’s length persons, or portions thereof, that are (i) due within the next 12 months, (ii) have no fixed term of repayment, or (iii) are payable or callable on demand will be considered cash or near-cash property;

(h) advances and loans receivable, including those owing from non-arm’s length persons, or portions thereof, that are not due within the next 12 months and that are not payable or callable on demand, or will remain outstanding for 12 months or more, will be considered business property;

(i) accounts receivable will be classified as cash or near-cash property even if they are not expected to be paid within 12 months;

(j) amounts receivable under the Cash Pooling and intercompany loans and advances, as described in Paragraphs 41 to 45, will be considered cash or near-cash property;

(k) the shareholdings held by CanSpin1-Forsub3 in XXXXXXXXXX, and the shareholdings held by CanSpin1-Forsub4 in XXXXXXXXXX, as described in Paragraph 28, will be considered business property;

(l) CanSpin2-Canco1 will be considered to exercise significant influence over FA4 based on the XXXXXXXXXX% shareholding that CanSpin1-Canco1 owns directly in FA4 and CanSpin2-Forsub1 will be considered to exercise significant influence over the XXXXXXXXXX% shareholding that CanSpin2-Forsub1 owns directly in FA4;

(m) CanSpin1-Forsub 3 will be considered to exercise significant influence over the XXXXXXXXXX% shareholding that it owns in CanSpin1-Forsub1 and CanSpin1-Forsub9 will be considered to exercise significant influence over CanSpin1-Forsub 1 based on its XXXXXXXXXX% shareholding that CanSpin1-Forsub9 owns in CanSpin1-Forsub1.

(n) income and other taxes receivable (excluding HST/GST/QST) within a year, as well as any corresponding interest and penalties, which relate to either: an assessment, additional assessment, reassessment or variance thereof received prior to the Distributions or a return filed for a taxation year for which no assessment, additional assessment, reassessment or variance thereof has been received prior to the Distributions, will be classified as cash or near-cash property. Income and other taxes receivable (excluding HST/GST/QST) that relate to taxation years for which a return has not been filed will not be considered property; and

(o) HST/GST/PST/QST receivable within a year, which relates to reporting periods ending prior to the Distributions for which a return has been filed, will be classified as cash or near-cash property. HST/GST/PST/QST receivable that relates to reporting periods ending after the Distributions or to reporting periods for which a return has not been filed will not be considered property.

80. [Reserved]

81. In determining, on a consolidated look-through basis, the net FMV of each type of property of the DC Group immediately before the Distributions, the liabilities of Canadian DC and any corporation or partnership over which Canadian DC exercises significant influence will be allocated to, and will be deducted in the calculation of, the net FMV of each type of property of Canadian DC and such corporation or partnership, in the following manner:

(a) in determining the net FMV of each type of property of a corporation or partnership over which Canadian DC exercises significant influence immediately before the Distributions, the liabilities of that corporation or partnership (other than an amount owing by such corporation or partnership to another corporation or partnership that has the ability to exercise significant influence over the debtor corporation) will be allocated to, and deducted in the calculation of, the net FMV of each type of property of that particular corporation or partnership as follows:

(i) current liabilities of such corporation or partnership will be allocated to each cash or near-cash property of the corporation or partnership in the proportion that the FMV of each such property is of the FMV of all cash or near-cash property of the corporation. To the extent that the total amount of current liabilities to be allocated to the cash or near-cash property exceeds the total FMV of all the cash or near-cash property, such corporation or partnership will be considered to have a negative amount of cash or near-cash property;

(ii) following the allocation of current liabilities to each cash or near-cash property as described in Paragraph 81(a)(i), provided that the net FMV of the cash or near-cash property of such corporation or partnership is positive, any

1. accounts receivables (including HST/GST/PST/QST receivables, and accounts receivables owing from non-arm’s length persons other than any amount owing by such corporation or partnership to another corporation or partnership that has the ability to exercise significant influence over the debtor corporation),

2. inventories, or

3. prepaid expenses

of such corporation or partnership may be reclassified as business property of such corporation or partnership, and excluded from the net FMV of the cash or near-cash property, to the extent that such property will be collected, sold, used or consumed in the ordinary course of business to which such property relates. For greater certainty, the amounts receivable described in Paragraph 79(j) will not be reclassified as business property and will be treated solely as cash or near cash property;

(iii) liabilities, other than current liabilities, of such corporation or partnership that relate to a particular property will be allocated to the particular property (and effectively to the type of property to which the particular property belongs) to the extent of its FMV. Any excess of such liabilities over the FMV of a particular property and liabilities that pertain to a particular type of property, but not to a particular property, will then be allocated to that particular type of property. To the extent that the total amount of liabilities that are to be allocated to a particular type of property as described in Paragraph 81(a)(iii) exceeds the total FMV of that type of property, such corporation or partnership will be considered to have a negative amount of that type of property; and

(iv) if any liabilities remain after the allocations described in Paragraphs 81(a)(i) and (iii) are made, such excess unallocated liabilities will then be allocated to each type of property of such corporation or partnership, based on the relative net FMV of each type of property prior to the allocation of such excess unallocated liabilities. However, where a corporation or partnership is considered to have a negative amount of a type of property because of Paragraphs 81(a)(i) or (iii), for purposes of allocating those remaining liabilities, the net FMV of that type of property will be deemed to be nil resulting in none of those remaining liabilities being allocated to that type of property.

(b) In determining, on a consolidated look-through basis, the net FMV of each type of property of Canadian DC immediately before the Distributions, Canadian DC will include the appropriate pro rata share of the net FMV of each type of property of any corporation or partnership over which Canadian DC exercises significant influence and, for greater certainty, the appropriate negative amount of such type of property of any such corporation or partnership, as determined in accordance with Paragraph 81(a), and any liabilities of Canadian DC will be allocated to, and be deducted in the calculation of, the net FMV of each type of property of Canadian DC in the following manner:

(i) current liabilities of Canadian DC will be allocated to the cash or near-cash property of Canadian DC in the proportion that the FMV of each such property is of the FMV of all cash or near-cash property of Canadian DC. The allocation of current liabilities as described in Paragraph 81(b)(i) will not exceed the aggregate FMV of all the cash or near-cash property of Canadian DC;

(ii) following the allocation of current liabilities to each cash or near-cash property in Paragraph 81(b)(i), any remaining net aggregate FMV of any

1. accounts receivables (including HST/GST/PST/QST receivables, and accounts receivables owing from non-arm’s length persons other than any amount owing by such corporation or partnership to Canadian DC that Canadian DC has the ability to exercise significant influence over the debtor corporation),

2. inventories, or

3. prepaid expenses

of Canadian DC may be reclassified as business property and excluded from the cash or near-cash property to the extent that such property will be collected, sold or used in the ordinary course of the business to which such property relates. For greater certainty, the amounts receivable by Canadian DC described in Paragraph 79(j), if any, will not be reclassified as business property and will be treated solely as cash or near cash property;

(iii) liabilities of Canadian DC, other than current liabilities, that relate to a particular property will be allocated to the particular property (and effectively to the type of property to which the particular property belongs) to the extent of its FMV. Any excess of such liabilities over the FMV of a particular property and liabilities that pertain to a particular type of property, but not to a particular property, will then be allocated to that particular type of property, but not in excess of the net FMV of that type of property after the allocation of liabilities to a particular property as described in Paragraph 81(b)(iii); and

(iv) if any liabilities remain after the allocations described in Paragraphs 81(b)(i) and (b)(iii) are made, such excess unallocated liabilities will then be allocated to each type of property of Canadian DC, on the basis of the relative net FMV of each type of property prior to the allocation of such excess unallocated liabilities, but after the allocation of the liabilities described in Paragraphs 81(b)(i) and (b)(iii).

For greater certainty, for the purposes of these determinations:

(c) no amount will be considered to be a liability unless it represents a legal liability which is capable of quantification. For greater certainty, an obligation that is contingent at the time of the Distributions will not be considered to be a liability as the amount does not represent a legal liability that is capable of quantification at that time;

(d) the amount of any deferred or future income tax liability will not be considered a liability because such amount does not represent a legal liability;

(e) current liabilities will include amounts with no fixed term of repayment and amounts normally classified as current liabilities, including the portion of any long-term debt or advance due within one year, owing to both arm’s length and non-arm’s length parties;

(f) any current pension plan liability (i.e., the current portion of the statutorily created pension plan liability), current post retirement benefit liability and current liability insurance liabilities of the DC Group will be allocated to cash or near-cash property, and any non-current pension plan liability (i.e., non-current portion of the statutorily created pension plan liability), non-current post retirement benefit liability and non-current liability insurance liabilities of the DC Group will be allocated to business property;

(g) income or other taxes due and payable within a year (excluding HST/GST/PST/QST), as well as any corresponding interest and penalties, which relate to either an assessment, additional assessment, reassessment or variance thereof received prior to the Distributions or a return filed for a taxation year for which no assessment, additional assessment, reassessment or variance thereof has been received prior to the Distributions, will be classified as current liabilities. Income and other taxes payable (excluding HST/GST/PST/QST) that relate to taxation years for which a return has not been filed will be classified as contingent liabilities unless they represent non-resident withholding tax or similar non-income taxes which are payable pursuant to the applicable legislation; and

(h) HST/GST/PST/QST payable which relate to reporting periods ending prior to the Distributions for which a return has been filed, will be classified as current liabilities. HST/GST/PST/QST payables that relate to reporting periods ending after the Distributions or to reporting periods for which a return has not been filed will not be considered a liability.

81.1 Based on the principles described in Paragraphs 78 to 81 and 103, Canadian DC is expected to have cash or near-cash property and business property but no investment property at the time of the Distributions.

81.2 As Canadian DC does not directly own assets or have any employees of any of the Business Units and operates such Business Units through its subsidiaries, Distribution 1 will involve transferring shares of corporations that conduct Spin Business 1, and to the extent applicable, transferring cash and near cash property to and having certain of its liabilities assumed by Canadian TC 1.

82. [Reserved]

83. [Reserved]

Distribution of Spin Business 1

84. Canadian DC will transfer (“Distribution 1”) all its assets relating to Spin Business 1 (the “Distribution Property 1”) to Canadian TC 1 for a purchase price equal to the FMV of the Distribution Property 1. The Distribution Property 1 will include the shares of CanSpin1-Canco1, CanSpin1-Canco2, CanSpin1-Canco3, CanSpin1-Forsub2, CanSpin1-Forsub3, CanSpin1-Forsub5 and Can-Spin1-Forsub9 that are held by Canadian DC, and, to the extent necessary, an amount of cash and near-cash property.

As consideration for the Distribution Property 1, Canadian TC 1 will:

(a) if applicable, assume all or a portion of certain liabilities of Canadian DC; and

(b) issue Canadian TC 1 Special Shares to Canadian DC having an aggregate FMV and Canadian TC 1 Redemption Amount equal to the amount by which the aggregate FMV of the Distribution Property 1 transferred to Canadian TC 1 exceeds the aggregate amount of the liabilities assumed by Canadian TC 1 in Paragraph 84(a).

In connection with Distribution 1:

(c) Canadian DC and Canadian TC 1 will jointly elect, in the prescribed form and manner and within the time specified in subsection 85(6), to have subsection 85(1) apply in respect of the transfer of each eligible property transferred to Canadian TC 1 and in respect of which the Canadian TC 1 Special Shares have been issued as full or partial consideration as described in Paragraph 84(b);

(d) a subsection 85(1) election will not be made for the transfer of cash or near-cash property;

(e) the agreed amount in respect of each eligible property so transferred will be, in the case of capital property (other than depreciable property of a prescribed class), an agreed amount equal to the lesser of the amounts described in subparagraphs 85(1)(c.1)(i) and (ii). The agreed amount will not exceed the FMV of the particular eligible property transferred, nor will it be less than the amount permitted under paragraph 85(1)(b);

(f) the amount of any liabilities assumed by Canadian TC 1 which are allocated to a particular eligible property that is the subject of an election under subsection 85(1) as described in Paragraph 84 will not exceed the agreed amount for that particular property;

(g) the amount of any liabilities assumed by Canadian TC 1 which are allocated to a particular property that is not the subject of an election under subsection 85(1), will not exceed the FMV of such particular property;

(h) Canadian TC 1 will add an amount to the stated capital of the Canadian TC 1 Special Shares equal to the amount by which the aggregate cost to Canadian TC 1 of the properties transferred to Canadian TC 1 (determined pursuant to subsection 85(1), where relevant) exceeds the aggregate amount of the liabilities assumed by Canadian TC 1 on the transfer. For greater certainty, the amount that will be added to the stated capital of the Canadian TC 1 Special Shares will not exceed the amount that could have been added, having regard to subsection 85(2.1); and

(i) in determining the aggregate net FMV of each type of property that has been received by Canadian TC 1, a liability assumed by Canadian TC 1 will be allocated to the same type of property to which such liability was allocated in determining the aggregate net FMV of each type of property of Canadian DC (as determined using the principles set out in Paragraphs 78 to 81 and 103). For greater certainty, a current liability, or a portion thereof, allocated to an account receivable, inventory or prepaid expense of Canadian DC that will be reclassified as business property in accordance with Paragraph 81 will be considered to be a liability allocated to a business property.

85. Immediately following the transfer of the Distribution Property 1 to Canadian TC 1 and the assumption of liabilities by Canadian TC 1 as described in Paragraph 84, the net FMV of each type of property received by Canadian TC 1 will be equal to or approximate that proportion of the net FMV of all property of Canadian DC of that type (as determined immediately before such transfer and using the principles set out in Paragraphs 78 to 81 and 103), that:

(a) the aggregate FMV of all the Canadian DC Class B Preferred Shares owned by Canadian TC 1 immediately before the transfer;

is of

(b) the aggregate FMV of all the issued and outstanding shares of Canadian DC immediately before the transfer.

In the event that Canadian DC has cash or near-cash property at the time of the transfer, then no later than 60 days after the date of the transfer of all other property by Canadian DC to Canadian TC 1 as described in Paragraph 84, Canadian DC will transfer to Canadian TC 1 any cash or near cash property that is required to ensure that the FMV of the cash or near cash property of Canadian DC transferred to Canadian TC 1 as described in Paragraph 84 will approximate that proportion described in Paragraphs 85(a) and (b) and such transfer will be considered to have been Distribution Property 1 transferred to Canadian TC 1 as part of Distribution 1 for purposes of section 55.

The expression “approximate that proportion” means that the discrepancy from that proportion, if any, would not exceed 1% determined as a percentage of the aggregate net FMV of each type of property that Canadian TC 1 will receive (or Canadian DC will retain) as compared to what Canadian TC 1 would have received (or Canadian DC would have retained) had it received (or retained) its appropriate pro rata share of the aggregate net FMV of that type of property.

86. Canadian DC and Canadian TC 1 may enter into one or more transitional services agreements, separation agreements, management services agreements, lease agreements, tax matters agreements, or similar agreements relating to the transfer of the Spin Business 1 assets owned by Canadian DC contingent on the liquidation of Non-Canadian DC 1. This is consistent with Spin Business 1 being carried on in distinct legal corporations within the DC Group.

Share Redemptions

87. Canadian TC 1 will redeem all of the outstanding Canadian TC 1 Special Shares held by Canadian DC for an amount equal to their aggregate FMV and Canadian TC 1 Redemption Amount. For greater certainty, there will be no declared and unpaid dividends on the Canadian TC 1 Special Shares. In satisfaction of the aggregate Canadian TC 1 Redemption Amount for such shares, Canadian TC 1 will issue to Canadian DC a non-interest-bearing promissory note, payable on demand (the “Canadian TC 1 Redemption Note”) with a principal amount and FMV equal to the aggregate Canadian TC 1 Redemption Amount of the shares so redeemed. Canadian DC will accept the Canadian TC 1 Redemption Note in full payment of the aggregate Canadian TC 1 Redemption Amount of the redeemed shares. No designation will be made under subsection 89(14) with respect to the dividend deemed to arise under subsection 84(3) on the redemption of the Canadian TC 1 Special Shares.

88. Canadian DC will redeem all of the outstanding Canadian DC Class B Preferred Shares held by Canadian TC 1 for an amount equal to their aggregate FMV and Canadian DC Class B Redemption Amount. For greater certainty, there will be no declared and unpaid dividends on the Canadian DC Class B Preferred Shares. In satisfaction of the aggregate Canadian DC Class B Redemption Amount for such shares, Canadian DC will issue to Canadian TC 1 a non-interest-bearing promissory note, payable on demand (the “Canadian DC Class B Redemption Note”) with a principal amount and FMV equal to the aggregate Canadian DC Class B Redemption Amount of the shares so redeemed. Canadian TC 1 will accept the Canadian DC Class B Redemption Note in full payment of the aggregate Canadian DC Class B Redemption Amount of the redeemed shares. No designation will be made under subsection 89(14) with respect to the dividend deemed to arise under subsection 84(3) on the redemption of the Canadian DC Class B Preferred Shares.

89. Canadian DC and Canadian TC 1 will enter into a set-off agreement, pursuant to which the principal amount owing by Canadian DC to Canadian TC 1 under the Canadian DC Class B Redemption Note and the principal amount owing by Canadian TC 1 to Canadian DC under the Canadian TC 1 Redemption Note will be set-off in full against each other. Following the set-off, each such note will be considered to be paid in full and will be cancelled.

Share-based compensation plans, post-retirement benefit plans

90. It is expected that share-based compensation plans will be established for employees of Canadian TC 1, employees of Canadian TC 1’s subsidiaries and employees of Foreign Spinco 1 and its subsidiaries in respect of shares of Foreign Spinco 1 (or rights in respect of such shares), since such employees of Spin Business 1 of the DC Group and of the Pubco Group currently have plans of this nature with respect to Foreign Pubco shares, as described in Paragraph 21. It is also expected that post-retirement benefit plans (other than defined benefit plans) will be established for employees of Canadian TC 1 and employees of Canadian TC 1’s subsidiaries.

91. [Reserved]

92. [Reserved]

93. [Reserved]

94. [Reserved]

95. [Reserved]

96. [Reserved]

97. [Reserved]

98. [Reserved]

99. [Reserved]

100. [Reserved]

101. Pursuant to a three-party transfer agreement between Forco 3, Canadian TC 2, and Non-Canadian DC 2 (the “Three-Party Share Exchange 2”), Forco 3 will transfer its Canadian DC Class C Preferred Shares to Canadian TC 2 for a purchase price equal to the aggregate FMV of such Canadian DC Class C Preferred Shares in the following manner:

(a) Canadian TC 2 will agree to pay the purchase price for Canadian DC Class C Preferred Shares transferred to it by Forco 3 by issuing Canadian TC 2 Common Shares to Non-Canadian DC 2 having an aggregate FMV at the time of the transfer equal to the aggregate FMV of the Canadian DC Class C Preferred Shares so transferred to it by Forco 3, and Canadian TC 2, Non-Canadian DC 2, and Forco 3 will agree that the Canadian TC 2 Common Shares will be issued to Non-Canadian DC 2 in respect of and by virtue of the disposition by Forco 3 of the Canadian DC Class C Preferred Shares to Canadian TC 2;

(b) Forco 3 will agree to pay the purchase price for the Non-Canadian DC 2 Common Shares issued to it as described in Paragraph 101(c) by transferring all of the Canadian DC Class C Preferred Shares to Canadian TC 2; and

(c) Non-Canadian DC 2 will agree to pay the purchase price for the Canadian TC 2 Common Shares issued to it as described in Paragraph 101(a) by issuing Non-Canadian DC 2 Common Shares to Forco 3 having an aggregate FMV at that time equal to the aggregate FMV of the Canadian TC 2 Common Shares issued to it, which will be equal to the aggregate FMV of the Canadian DC Class C Preferred Shares.

In connection with the Three-Party Share Exchange 2, Canadian TC 2 will add an amount to the stated capital of the Canadian TC 2 Common Shares equal to the aggregate stated capital of the Canadian DC Class C Preferred Shares transferred to Canadian TC 2.

For greater certainty, the aggregate PUC of the Canadian TC 1 Common Shares will be subject to the application of paragraph 212.1(1.1)(b).

102. The aggregate FMV, immediately before Distribution 2, of the Non-Canadian DC 2 Common Shares owned by Forco 3 will be equal to or approximate the amount determined by the formula:

    (A × B/C) + D

as found in subparagraph (b)(iii) of the definition of “permitted exchange” in subsection 55(1) on the assumption that Forco 3 is the participant, Canadian DC is the distributing corporation and Non-Canadian DC 2 is the acquiror.

For greater certainty, Forco 3 will at all relevant times prior the transfer described in Paragraph 111 own all of the issued and outstanding shares of Non-Canadian DC 2.

Types of Property Analysis

103. The property of Canadian DC will be determined and classified on a consolidated look-through basis for purposes of and immediately before Distribution 2 using the principles described in Paragraphs 78 to 81 and this Paragraph 103 and this same property determination and classification will be the property determination and classification of Canadian DC’s property that will apply immediately before Distribution 1 on the basis that there is a single distribution notwithstanding that the transactions described in Paragraphs 104 to 109 (the Proposed Transactions to distribute Spin Business 2) will, unless otherwise indicated, occur in sequence immediately before the transactions described in Paragraphs 84 to 89 (the Proposed Transactions to distribute Spin Business 1) but provided that there is no change in any relevant consideration for making such determinations and classifications in the interim between Distribution 2 and Distribution 1. For greater certainty, notwithstanding the sequencing of the Distributions, Distribution 1 and Distribution 2 will be treated as a single distribution.

103.1 As Canadian DC does not directly own assets or have any employees of any of the Business Units and operates such Business Units through its subsidiaries, Distribution 2 will involve transferring shares of corporations that conduct Spin Business 2, and to the extent applicable, transferring cash and near cash property to and having certain of its liabilities assumed by Canadian TC 2.

Distribution of Spin Business 2

104. Canadian DC will transfer (“Distribution 2”) all its assets relating to Spin Business 2 (the “Distribution Property 2”) to Canadian TC 2 for a purchase price equal to the FMV of the Distribution Property 2. The Distribution Property 2 will include all of the shares of CanSpin2-Canco1, CanSpin2-Forsub1, and CanSpin2-Forsub2 that are held by Canadian DC, and, to the extent necessary, cash and near-cash property.

As consideration for the Distribution Property 2, Canadian TC 2 will:

(a) if applicable, assume all or a portion of certain liabilities of Canadian DC; and

(b) issue Canadian TC 2 Special Shares to Canadian DC having an aggregate FMV and Canadian TC 2 Redemption Amount equal to the amount by which the aggregate FMV of the Distribution Property 2 transferred to Canadian TC 2 exceeds the aggregate amount of the liabilities assumed by Canadian TC 2 in Paragraph 104(a).

In connection with Distribution 2:

(c) Canadian DC and Canadian TC 2 will jointly elect, in the prescribed form and manner and within the time specified in subsection 85(6), to have subsection 85(1) apply in respect of the transfer of each eligible property transferred to Canadian TC 2 and in respect of which the Canadian TC 2 Special Shares have been issued as full or partial consideration as described in Paragraph 104(b);

(d) a subsection 85(1) election will not be made for the transfer of cash or near-cash property;

(e) the agreed amount in respect of each eligible property so transferred will be, in the case of capital property (other than depreciable property of a prescribed class), an agreed amount equal to the lesser of the amounts described in subparagraphs 85(1)(c.1)(i) and (ii). The agreed amount will not exceed the FMV of the particular eligible property transferred, nor will it be less than the amount permitted under paragraph 85(1)(b);

(f) the amount of any liabilities assumed by Canadian TC 2 which are allocated to a particular eligible property that is the subject of an election under subsection 85(1) as described in Paragraph 104 will not exceed the agreed amount for that particular property;

(g) the amount of any liabilities assumed by Canadian TC 2 which are allocated to a particular property that is not the subject of an election under subsection 85(1), will not exceed the FMV of such particular property;

(h) Canadian TC 2 will add an amount to the stated capital of the Canadian TC 2 Special Shares equal to the amount by which the aggregate cost to Canadian TC 2 of the properties transferred to Canadian TC 2 (determined pursuant to subsection 85(1), where relevant) exceeds the aggregate amount of the liabilities assumed by Canadian TC 2 on the transfer. For greater certainty, the amount that will be added to the stated capital of the Canadian TC 2 Special Shares will not exceed the amount that could have been added, having regard to subsection 85(2.1); and

(i) in determining the aggregate net FMV of each type of property that has been received by Canadian TC 2, a liability assumed by Canadian TC 2 will be allocated to the same type of property to which such liability was allocated in determining the aggregate net FMV of each type of property of Canadian DC (as determined using the principles set out in Paragraphs 78 to 81 and 103). For greater certainty, a current liability, or a portion thereof, allocated to an account receivable, inventory or prepaid expense of Canadian DC that will be reclassified as business property in accordance with Paragraph 81 will be considered to be a liability allocated to a business property.

105. Immediately following the transfer of the Distribution Property 2 to Canadian TC 2 and the assumption of liabilities by Canadian TC 2 as described in Paragraph 104, the net FMV of each type of property received by Canadian TC 2 will be equal to or approximate that proportion of the net FMV of all property of Canadian DC of that type (as determined immediately before such transfer and using the principles set out in Paragraphs 78 to 81 and 103), that:

(a) the aggregate FMV of all the Canadian DC Class C Preferred Shares owned by Canadian TC 2 immediately before the transfer;

is of

(b) the aggregate FMV of all the issued and outstanding shares of Canadian DC immediately before the transfer.

In the event that Canadian DC has cash or near-cash property at the time of the transfer, then no later than 60 days after the date of the transfer of all other property by Canadian DC to Canadian TC 2 as described in Paragraph 104, Canadian DC will transfer to Canadian TC 2 any cash or near cash property that is required to ensure that the FMV of the cash or near cash property of Canadian DC transferred to Canadian TC 2 as described in Paragraph 104 will approximate that proportion described in Paragraphs 105(a) and (b) and such transfer will be considered to have been Distribution Property 2 transferred to Canadian TC 2 as part of Distribution 2 for purposes of section 55.

The expression “approximate that proportion” means that the discrepancy from that proportion, if any, would not exceed 1% determined as a percentage of the aggregate net FMV of each type of property that Canadian TC 2 will receive (or Canadian DC will retain) as compared to what Canadian TC 2 would have received (or Canadian DC would have retained) had it received (or retained) its appropriate pro rata share of the aggregate net FMV of that type of property.

106. Canadian DC and Canadian TC 2 may enter into one or more transitional services agreements, separation agreements, management services agreements, lease agreements, tax matters agreements, or similar agreements relating to the transfer of the Spin Business 2 assets owned by Canadian DC contingent on the liquidation of Non-Canadian DC 2. This is consistent with Spin Business 2 being carried on in distinct legal corporations within the DC Group.

Share Redemptions

107. Canadian TC 2 will redeem all of the outstanding Canadian TC 2 Special Shares held by Canadian DC for an amount equal to their aggregate FMV and Canadian TC 2 Redemption Amount. For greater certainty, there will be no declared and unpaid dividends on the Canadian TC 2 Special Shares. In satisfaction of the aggregate Canadian TC 2 Redemption Amount for such shares, Canadian TC 2 will issue to Canadian DC a non-interest-bearing promissory note, payable on demand (the “Canadian TC 2 Redemption Note”) with a principal amount and FMV equal to the aggregate Canadian TC 2 Redemption Amount of the shares so redeemed. Canadian DC will accept the Canadian TC 2 Redemption Note in full payment of the aggregate Canadian TC 2 Redemption Amount of the redeemed shares. No designation will be made under subsection 89(14) with respect to the dividend deemed to arise under subsection 84(3) on the redemption of the Canadian TC 2 Special Shares.

108. Canadian DC will redeem all of the outstanding Canadian DC Class C Preferred Shares held by Canadian TC 2 for an amount equal to their aggregate FMV and Canadian DC Class C Redemption Amount. For greater certainty, there will be no declared and unpaid dividends on the Canadian DC Class C Shares. In satisfaction of the aggregate Canadian DC Class C Redemption Amount for such shares, Canadian DC will issue to Canadian TC 2 a non-interest-bearing promissory note, payable on demand (the “Canadian DC Class C Redemption Note”) with a principal amount and FMV equal to the aggregate Canadian DC Class C Redemption Amount of the shares so redeemed. Canadian TC 2 will accept the Canadian DC Class C Redemption Note in full payment of the aggregate Canadian DC Class C Redemption Amount of the redeemed shares. No designation will be made under subsection 89(14) with respect to the dividend deemed to arise under subsection 84(3) on the redemption of the Canadian DC Class C Preferred Shares.

109. Canadian DC and Canadian TC 2 will enter into a set-off agreement, pursuant to which the principal amount owing by Canadian DC to Canadian TC 2 under the Canadian DC Class C Redemption Note and the principal amount owing by Canadian TC 2 to Canadian DC under the Canadian TC 2 Redemption Note will be set-off in full against each other. Following the set-off, each such note will be considered to be paid in full and will be cancelled.

Share-based compensation plans, post-retirement benefit plans

110. It is expected that share-based compensation plans will be established for employees of Canadian TC 2, employees of Canadian TC 2’s subsidiaries, and employees of Foreign Spinco 2 in respect of shares of Foreign Spinco 2 (or rights in respect of such shares), since such employees of Spin Business 2 of the DC Group and of the Pubco Group currently have plans of this nature with respect to Foreign Pubco shares, as described in Paragraph 21. It is also expected that post-retirement benefit plans (other than defined benefit plans) will be established for employees of Canadian TC 2 and employees of Canadian TC 2’s subsidiaries.

Upstream Distribution of Non-Canadian DC 1

110.1 Forco 3 will distribute the shares of Non-Canadian DC 1 to Forco 2 pursuant to a return of share premium payment under the laws of Country B.

110.2 Forco 2 will distribute the shares of Non-Canadian DC 1 to Forco 1 pursuant to a return of share premium payment under the laws of Country B.

110.3 Forco 1 will distribute the shares of Non-Canadian DC 1 to Foreign Pubco pursuant to a return of share capital payment under Country A law.

Spinout to Foreign Spinco 1

110.4 Pursuant to a three-party transfer agreement between Foreign Pubco, Foreign Spinco 1, and Foreign Spinco1-Sub (the “Three-Party Share Exchange 3”), Foreign Pubco will transfer the Non-Canadian DC 1 Common Shares to Foreign Spinco1-Sub for a purchase price equal to the aggregate FMV of such Non-Canadian DC 1 Common Shares in the following manner:

(a) Foreign Spinco1-Sub will agree to pay the purchase price for the Non-Canadian DC 1 Common Shares transferred to it by Foreign Pubco by issuing the Foreign Spinco1-Sub Common Shares to Foreign Spinco 1 having an aggregate FMV at the time of the transfer equal to the aggregate FMV of the Non-Canadian DC 1 Common Shares so transferred to it by Foreign Pubco, and Foreign Spinco1-Sub, Foreign Spinco 1, and Foreign Pubco will agree that the Foreign Spinco1-Sub Common Shares will be issued to Foreign Spinco 1 in respect of and by virtue of the disposition by Foreign Pubco of the Non-Canadian DC 1 Common Shares to Foreign Spinco1-Sub;

(b) Foreign Pubco will agree to pay the purchase price for the Foreign Spinco 1 Common Shares issued to it as described in Paragraph 110.4(c) by transferring all of the Non-Canadian DC 1 Common Shares to Foreign Spinco1-Sub; and

(c) Foreign Spinco 1 will agree to pay the purchase price for the Foreign Spinco1-Sub Common Shares issued to it as described in Paragraph 110.4(a) by issuing common shares to Foreign Pubco having an aggregate FMV at that time equal to the aggregate FMV of the Foreign Spinco1-Sub Common Shares issued to it, which will be equal to the aggregate FMV of the Non-Canadian DC 1 Common Shares.

For greater certainty, at no time will Foreign Spinco 1 directly hold the Non-Canadian DC 1 Common Shares.

110.5 The aggregate FMV, immediately before the transfer of property by Non-Canadian DC 1 to Foreign Spinco1-Sub described in Paragraph 110.6, of the Non-Canadian DC 1 Common Shares owned by Foreign Pubco will be equal to or approximate the amount determined by the formula:

    (A × B/C) + D

as found in subparagraph (b)(iii) of the definition of “permitted exchange” in subsection 55(1) on the assumption that Foreign Pubco is the participant, Non-Canadian DC 1 is the distributing corporation and Foreign Spinco 1 is the acquiror. For greater certainty, Foreign Pubco will at all relevant times prior to the transfer described in Paragraph 120 own all of the issued and outstanding shares of Foreign Spinco 1.

110.6 Non-Canadian DC 1 will liquidate and dissolve into Foreign Spinco1-Sub under the relevant foreign company law. In the course of the liquidation, Non-Canadian DC 1 will distribute all of its property (including the Canadian TC 1 Common Shares) to Foreign Spinco1-Sub and Foreign Spinco1-Sub will assume all of the liabilities of Non-Canadian DC 1, if any.

Upstream Distribution of Non-Canadian DC 2

111. Forco 3 will distribute the shares of Non-Canadian DC 2 to Forco 2 pursuant to a return of share premium payment under the laws of Country B.

112. Forco 2 will distribute the shares of Non-Canadian DC 2 to Forco 1 pursuant to a return of share premium payment under the laws of Country B.

113. Forco 1 will distribute the shares of Non-Canadian DC 2 to Foreign Pubco pursuant to a return of share capital payment under Country A law.

Spinout to Foreign Spinco 2

114. [Reserved]

115. Pursuant to a three-party transfer agreement between Foreign Pubco, Foreign Spinco 2, and Foreign Spinco2-Sub (the “Three-Party Share Exchange 4”), Foreign Pubco will transfer the Non-Canadian DC 2 Common Shares to Foreign Spinco2-Sub for a purchase price equal to the aggregate FMV of such Non-Canadian DC 2 Common Shares in the following manner:

(a) Foreign Spinco2-Sub will agree to pay the purchase price for the Non-Canadian DC 2 Common Shares transferred to it by Foreign Pubco by issuing the Foreign Spinco2-Sub Common Shares to Foreign Spinco 2 having an aggregate FMV at the time of the transfer equal to the aggregate FMV of the Non-Canadian DC 2 Common Shares so transferred to it by Foreign Pubco, and Foreign Spinco2-Sub, Foreign Spinco 2, and Foreign Pubco will agree that the Foreign Spinco2-Sub Common Shares will be issued to Foreign Spinco 2 in respect of and by virtue of the disposition by Foreign Pubco of the Non-Canadian DC 2 Common Shares to Foreign Spinco2-Sub;

(b) Foreign Pubco will agree to pay the purchase price for the Foreign Spinco 2 shares issued to it as described in Paragraph 115(c) by transferring all of the Non-Canadian DC 2 Common Shares to Foreign Spinco2-Sub; and

(c) Foreign Spinco 2 will agree to pay the purchase price for the Foreign Spinco2-Sub Common Shares issued to it as described in Paragraph 115(a) by issuing common shares to Foreign Pubco having an aggregate FMV at that time equal to the aggregate FMV of the Foreign Spinco2-Sub Common Shares issued to it, which will be equal to the aggregate FMV of the Non-Canadian DC 2 Common Shares.

For greater certainty, at no time will Foreign Spinco 2 directly hold the Non-Canadian DC 2 Common Shares.

116. The aggregate FMV, immediately before the transfer of property by Non-Canadian DC 2 to Foreign Spinco2-Sub described in Paragraph 117, of the Non-Canadian DC 2 Common Shares owned by Foreign Pubco will be equal to or approximate the amount determined by the formula:

    (A × B/C) + D

as found in subparagraph (b)(iii) of the definition of “permitted exchange” in subsection 55(1) on the assumption that Foreign Pubco is the participant, Non-Canadian DC 2 is the distributing corporation and Foreign Spinco 2 is the acquiror. For greater certainty, Foreign Pubco will at all relevant times prior to the transfer described in Paragraph 120 own all of the issued and outstanding shares of Foreign Spinco 2.

117. Non-Canadian DC 2 will liquidate and dissolve into Foreign Spinco2-Sub under the relevant company law. In the course of the liquidation, Non-Canadian DC 2 will distribute all of its property (including the Canadian TC 2 Common Shares) to Foreign Spinco2-Sub and Foreign Spinco2-Sub will assume all of the liabilities of Non-Canadian DC 2, if any.

Post-Butterfly Global Spinout

118. Certain refinancing transactions will occur with arm’s length party lenders. This will not involve Canadian DC, subsidiaries of Canadian DC, corporations within the CanSpin1 Group, or corporations within the CanSpin2 Group.

119. Foreign Spinco 1 and Foreign Spinco 2 will distribute cash and certain intercompany receivables to Foreign Pubco.

Foreign Pubco will distribute the issued and outstanding shares of Foreign Spinco 1 and Foreign Spinco 2 to its public shareholders pro rata based on their shareholdings in Foreign Pubco.

120.1 XXXXXXXXXX.

VII. ADDITIONAL INFORMATION

120. The Proposed Transactions will occur in the order presented unless otherwise indicated, subject to the following exceptions:

(a) [Reserved]

(b) [Reserved]

(c) [Reserved]

(c.1) the Proposed Transactions described in Paragraphs 104 to 109 (the distribution of Spin Business 2) will occur before the transactions described in Paragraphs 84 to 89 (the distribution of Spin Business 1);

(d) the applicable election forms will be filed within the applicable due dates following the completion of the Proposed Transactions;

(e) the filing and issuance of any articles of dissolution or certificate of cancellation may occur after the relevant Proposed Transactions;

(f) the Proposed Transactions described in Paragraph 101 will occur before the Proposed Transactions described in Paragraph 104 and 109, taking into account Paragraph 121(c.1) and 75.1 and may occur contemporaneously with the Proposed Transactions described in Paragraph 76;

(g) the Proposed Transactions described in Paragraph 111 to 113 may occur before the Proposed Transactions described in Paragraphs 110.4 to 110.6; and

(h) the Proposed Transactions described in Paragraph 115 to 116 may occur before the Proposed Transactions described in Paragraphs 110.4 to 110.5.

121. None of Canco 1, Canco 2, Canadian DC, Canadian TC 1, and Canadian TC 2 is, or will be at the time of the Proposed Transactions, a financial intermediary corporation. Each of Canco 1, Canco 2, Canadian DC, Canadian TC 1 and Canadian TC 2 is a specified financial institution pursuant to paragraph (g) of that definition because there are specified financial institutions within the Pubco Group that are outside of the DC Group but are related to each of Canco 1, Canco 2, Canadian DC, Canadian TC 1 and Canadian TC 2 .

121.1 The Canadian DC Class B Preferred Shares, Canadian DC Class C Preferred Shares, Canadian TC 1 Special Shares, and Canadian TC 2 Special Shares will be short-term preferred shares, term preferred shares and taxable preferred shares but will not be taxable RFI shares.

121.2 The Canco 1 Common Shares were not and the Canadian DC Common Shares are not short-term preferred shares, term preferred shares, taxable preferred shares, or taxable RFI shares.

121.3 At all relevant times:  

(a) Canadian DC will have a substantial interest in Canadian TC 1;

(b) Canadian TC 1 will have a substantial interest in Canadian DC;

(c) Canadian DC will have a substantial interest in Canadian TC 2; and

(d) Canadian TC 2 will have a substantial interest in Canadian DC.

121.4 A Foreign Pubco common share is a property 10% or more of the FMV of which was derived from shares of Canco 1 and is derived from shares of Canadian DC.

122. None of the shares of Canco 1, Canco 2, Canadian DC, Canadian TC 1, or Canadian TC 2 has been, or will be, at any time during the implementation of the Proposed Transactions:

(a) the subject of any undertaking that is referred to in subsection 112(2.2) as a “guarantee agreement”;

(b) the subject of a dividend rental arrangement referred to in subsection 112(2.3), as that term is defined in subsection 248(1);

(c) a share that is issued or acquired as part of a transaction, event or series of transactions or events of the type described in subsection 112(2.5);

(d) the subject of any secured undertaking of the type described in paragraph 112(2.4)(a);

(e) acquired in the ordinary course of the business carried on by the holder; or

(f) issued for consideration that is or includes:

(i) an obligation of the type described in subparagraph 112(2.4)(b)(i);

or

(ii) any right of the type described in subparagraph 112(2.4)(b)(ii).

123. Foreign Pubco is not aware of anticipate or expect any transaction to occur as part of the same series of transactions or events as the Proposed Transactions that will result in an acquisition of control of any one or more of Foreign Pubco, Foreign Spinco 1, Foreign Spinco 2, Foreign Spinco1-Sub, Foreign Spinco2-Sub, Canadian DC, Canadian TC 1, Canadian TC 2, Non-Canadian DC 1, or Non-Canadian DC 2.

124. No property has or will become property of the DC Group and no liabilities have been or will be incurred by the DC Group in contemplation of Distribution 1 and Distribution 2 except pursuant to transactions described in subparagraphs 55(3.1)(a)(i) to (iv).

125. As part of the series of transactions or events that includes the Proposed Transactions, there will not be:

(a) a disposition of property in the circumstances described in subparagraph 55(3.1)(b)(i);

(b) an acquisition of control in the circumstances described in subparagraph 55(3.1)(b)(ii); or

(c) an acquisition of shares in the circumstances described in subparagraph 55(3.1)(b)(iii).

126. At no time, during the course of a series of transactions or events that includes the dividends described in Rulings H and N, will:

(a) 10% or more of the FMV of the shares of Foreign Spinco 1 be derived from any of the shares of Canadian DC, Canadian TC 1, or Canadian TC 2; and

(b) 10% or more of the FMV of the shares of Foreign Spinco 2 be derived from any of the shares of Canadian DC, Canadian TC 1, or Canadian TC 2.

(c) [Reserved]

More specifically, at no time during the course of a series of transactions or events that includes the dividends described in Rulings H and N, will:

(d) the aggregate FMV of the Canadian TC 1 Common Shares be expected to be in excess of XXXXXXXXXX;

(e) during the portion of the series of transactions or events commencing immediately prior to the Three-Party Share Exchange 3 and terminating at the end of the series of transactions or events, the aggregate FMV of the Foreign Spinco 1 shares be expected to be less than XXXXXXXXXX;

(f) the aggregate FMV of the Canadian TC 2 Common Shares be expected to be in excess of XXXXXXXXXX;

(g) during the portion of the series of transactions or events commencing immediately prior to the Three-Party Share Exchange 4 and terminating at the end of the series of transactions or events, the aggregate FMV of the Foreign Spinco 2 shares be expected to be less than XXXXXXXXXX; and

(h) the FMV of the shares of Foreign Spinco 1, Foreign Spinco 2, Foreign Spinco1-Sub, and Foreign Spinco2-Sub be derived from shares of Canadian DC.

127.1 At no time, during the course of a series of transactions or events that includes the dividends described in Rulings H and N, will the shares of the capital stock of Canadian DC, Canadian TC 1, Canadian TC 2, Foreign Pubco, Foreign Spinco 1, Foreign Spinco1-Sub, Foreign Spinco 2, Foreign Spinco2-Sub, Non-Canadian DC 1 or Non-Canadian DC 2 be acquired by any person or partnership who was not related to the vendor or, as part of the series, ceased to be related to the vendor, otherwise than as described herein (taking into consideration paragraph 55(3.2)(c), if applicable).

127. For the purposes of Paragraph 127, in determining the portion of the FMV of the shares or debt of a particular corporation which is derived from the shares of another corporation, any indebtedness of the particular corporation that is not a secured debt or a debt related to a particular property will be considered to reduce the FMV of each property of the particular corporation (or indirectly the FMV derived from shares owned by the particular corporation) pro rata in proportion to the relative FMV of all property of the particular corporation.

128. The Canadian DC Common Shares, Canadian DC Class A Common Shares, the Canadian DC Class B Preferred Shares, and the Canadian DC Class C Preferred Shares will not be taxable Canadian property at the time these shares are exchanged by Forco 3 on the Canadian DC Share Exchange. Accordingly, Forco 3 will not apply for a clearance certificate under section 116 in respect of the transfer of such shares, and will not file a Canadian income tax return to report the disposition of these shares.

129.1 The Canadian DC Class B Preferred Shares will not be taxable Canadian property at the time those shares are transferred by Forco 3 to Canadian TC 1 on the Three-Party Share Exchange 1. Accordingly, Forco 3 will not apply for a clearance certificate under section 116 in respect of this transfer, and will not file a Canadian income tax return to report the disposition of these shares.

129.2 The Canadian TC 1 Common Shares will not be taxable Canadian property at the time those shares are transferred by Non-Canadian DC 1 to Foreign Spinco1-Sub as described in Paragraph 110.6. Accordingly, Non-Canadian DC 1 will not apply for a clearance certificate under section 116 in respect of this transfer, and will not file a Canadian income tax return to report the disposition of these shares.

129.3 The Non-Canadian DC 1 Common Shares will not be taxable Canadian property at the time of the transactions described in Paragraphs 110.1 to 110.3, 110.4, and 110.6. Accordingly, Forco 3, Forco 2, Forco 1, Foreign Pubco and Foreign Spinco1-Sub will not apply for a clearance certificate under section 116 in respect of these transfers, and will not file a Canadian income tax return to report the disposition of these shares.

129.4 The Canadian DC Class C Preferred Shares will not be taxable Canadian property at the time those shares are transferred by Forco 3 to Canadian TC 2 on the Three-Party Share Exchange 2. Accordingly, Forco 3 will not apply for a clearance certificate under section 116 in respect of this transfer, and will not file a Canadian income tax return to report the disposition of these shares.

129.5 The Canadian TC 2 Common Shares will not be taxable Canadian property at the time those shares are transferred by Non-Canadian DC 2 to Foreign Spinco2-Sub as described in Paragraph 117. Accordingly, Non-Canadian DC 2 will not apply for a clearance certificate under section 116 in respect of this transfer, and will not file a Canadian income tax return to report the disposition of these shares.

129.6 The Non-Canadian DC 2 Common Shares will not be taxable Canadian property at the time of the transactions described in Paragraphs 111 to 113, 115, and 117. Accordingly, Forco 3, Forco 2, Forco 1, Foreign Pubco and Foreign Spinco2-Sub will not apply for a clearance certificate under section 116 in respect of these transfers, and will not file a Canadian income tax return to report the disposition of these shares.

129. Canco 1, Canco 2, Canadian DC, Canadian TC 1 and Canadian TC 2 will not have any RDTOH at the end of their taxation years which include the Distribution Steps.

130. [Reserved]

131. There will be no loans or indebtedness owed to Canco 2 by its foreign affiliates that are pertinent loans or indebtedness as defined by subsection 212.3(11) that will be repaid in whole or part, or settled, as part of the liquidation and dissolution of FAHoldco 1 as described in Paragraph 50.5. There will be no loans or indebtedness owed to Canco 2 by its foreign affiliates that are pertinent loans or indebtedness as defined by subsection 212.3(11) that will be repaid in whole or part, or settled, as part of the liquidation and dissolution of FAHoldco 2 as described in Paragraph 50.6, the only shares held by FAHoldco 2 are fully participating shares of CanSpin1-Forsub3, CanSpin2-Forsub1, and CanSpin2-Forsub2, each of which is a subsidiary wholly-owned corporation with no issued and outstanding preferred shares. There is no difference in the ownership interests in FAHoldco 2 that are held by FAHoldco 1 and Canco 2 fully participates in the profits and value of FAHoldco 2. Neither FAHoldco 1 nor FAHoldco 2 owes any debt obligations.

131.1 CanSpin1-Forsub2’s own cash and the cash received by CanSpin1-Forsub2 from CanSpin2-Forsub3 that was used by CanSpin1-Forsub2 to pay for the purchase of the shares of CanSpin2-Forsub4 described in Paragraph 50.10(d) would have otherwise been distributed by CanSpin2-Forsub 2 and CanSpin-Forsub3 as part of the annual distributions of cash by the Foreign Pubco Group described in Paragraphs 15 to 17, and, but for such purchase, would have been included in the cash dividends paid by Canco 1 to Forco 3.

131.2 The amount of dividends paid by Canco 1 to Forco 3 in XXXXXXXXXX described in Paragraphs 17 and 50.12 and the amount of dividends paid by CanSpin1-Forsub5 to Forco 4 described in Paragraph 50.9 did not exceed the XXXXXXXXXX of annual distributions provided by the Taxpayers on XXXXXXXXXX.

131.3 Based on current circumstances, it is not expected that the amount paid by CanSpin2-Forsub2 to purchase the shares of CanSpin2-Forsub4 described ion Paragraph 50.10(d) and paid as part of the XXXXXXXXXX annual dividend distributions and as a dividend by CanSpin1-Forsub5 to Forco 4 as described in Paragraphs 50.10(f) and (g) will be returned, by one or more members of the Pubco Group (other than a member of the DC Group) to or for the account or benefit of CanSpin2-Forsub2 or any other member of the DC Group, whether directly or indirectly, in whole or in part, by way of reimbursement, compensation, consideration, proceeds, charge, advance, loan, subscription, contribution, payment (other than a payment in the ordinary course of business), repayment or other transfer of any kind.

131.4 For purposes of the types of property analysis to be done by Canadian DC described in Paragraphs 78 to 81 and 103, Canadian DC is not expected to have information on CanSpin1-Forsub1’s assets and liabilities immediately before Distribution 2. Instead, Canadian DC will use the most current information it has on CanSpin1-Forsub1’s assets and liabilities at that time which is anticipated to be information as of XXXXXXXXXX, but, in the event such information is not available, could be as of XXXXXXXXXX. No material change is expected in CanSpin1-Forsub1’s assets and liabilities between the date for on which Canadian DC has available information and the date of Distribution 2. Notwithstanding the foregoing, the determination of whether Canadian TC 1 and Canadian TC 2 satisfy the condition in Paragraph 85 and 105, as the case may be, will be based on CanSpin1-ForSub1’s actual assets and liabilities immediately before Distribution 2.

VIII. PURPOSE OF THE PROPOSED TRANSACTIONS

132. The purpose of the Proposed Transactions is to facilitate the spin-off of Spin Business 1 and Spin Business 2 to the shareholders of Foreign Pubco. Over the past several years, each of the Business Units have been moving in different directions with little operational overlap. XXXXXXXXXX.

133.1 XXXXXXXXXX.

133.2 The XXXXXXXXXX% shareholding in CanSpin1-Forsub5 that was sold by Forco 4, as described in Paragraph 50.7, was completed solely to satisfy certain shareholding requirements of CanSpin1-Forsub5 for Country A federal income tax purposes XXXXXXXXXX. Qualifying for XXXXXXXXXX treatment XXXXXXXXXX is necessary to complete the spinouts of Foreign Spinco 1 and Foreign Spinco 2 to the shareholders of Foreign Pubco. The sale would have occurred regardless of the manner in which the transactions to separate the Spin Business 1 and the Spin Business 2 from the DC group are completed. The shares of CanSpin1-Forsub5 sold had a FMV of approximately XXXXXXXXXX and the total FMV of the DC Group is estimated to be approximately XXXXXXXXXX. For Canadian tax purposes, the foreign affiliate dumping rules in section 212.3 applied and the applicable amount of withholding tax under paragraph 212.3(2) was withheld and remitted to the CRA. CanSpin1-Forsub5 will continue to be an indirect subsidiary wholly owned corporation of Foreign Pubco throughout the relevant portion of the transactions described herein, including before and after the sale until such time as Foreign Spinco 1 is distributed by Foreign Pubco to its shareholders as described in Paragraph 120.

IX. RULINGS

Provided that the preceding statements constitute a complete and accurate disclosure of all relevant facts, proposed transactions and purposes of the Proposed Transactions, and provided that the Proposed Transactions are completed in the manner described above, we confirm the following:

A. The provisions of subsection 212.3(2) did not apply to the acquisition of the XXXXXXXXXX% interest in FAHoldco 2 by Canco 2 on the liquidation and dissolution of FAHoldco 1 described in Paragraph 50.5.

B. The provisions of subsection 212.3(2) did not apply to the acquisition of shares of CanSpin1-Forsub3, CanSpin2-Forsub1 and CanSpin2-Forsub2 by Canco 2 on the liquidation and dissolution of FAHoldco 2 described in Paragraph 50.6.

C. The provisions of subsection 212.3(22) applied, and the provisions of subsection 212.3(2) did not apply, to the Amalgamation.

D. The provisions of subsection 86(1) will apply, and the provisions of subsection 86(2) will not apply, to the exchange of shares on the Canadian DC Share Exchange.

E. As a result of the Three-Party Share Exchange 1:

(a) the provisions of subsection 84(1) and paragraph 212.1(1.1)(a) will not apply to deem a dividend to be paid by Canadian TC 1, or to be received by Forco 3;

(b) the provisions of paragraph 212.1(1.1)(b) will apply such that the amount added to the PUC of the Canadian TC 1 Common Shares in connection with the Three-Party Share Exchange 1 will not exceed the PUC, immediately before the Three-Party Share Exchange 1, of the Canadian DC Class B Preferred Shares transferred to Canadian TC 1; and

(c) the aggregate cost to Canadian TC 1 of the Canadian DC Class B Preferred Shares that Canadian TC 1 will acquire from Forco 3 in connection with the Three-Party Share Exchange 1 will be equal to the aggregate FMV at that time of such shares.

F. Subject to subsection 69(11), the provisions of subsection 85(1), other than paragraph 85(1)(e.2), will apply to the transfer of the Distribution Property 1 by Canadian DC to Canadian TC 1 as described in Paragraph 84, such that the agreed amount in respect of each transfer of eligible property will be deemed to be Canadian DC’s proceeds of disposition and Canadian TC 1’s cost of such property pursuant to paragraph 85(1)(a).

G. The provisions of subsection 212.3(2) will not apply to the transfer of the Distribution Property 1 by Canadian DC to Canadian TC 1 as described in Paragraph 84.

H. Subsection 84(3) will apply to:

(a) the redemption of the Canadian TC 1 Special Shares held by Canadian DC, as described in Paragraph 87, such that Canadian TC 1 will be deemed to have paid and Canadian DC will be deemed to have received; and

(b) the redemption of the Canadian DC Class B Preferred Shares held by Canadian TC 1, as described in Paragraph 88, such that Canadian DC will be deemed to have paid and Canadian TC 1 will be deemed to have received

a dividend on such shares equal to the amount, if any, by which the aggregate amount paid upon such redemption exceeds the aggregate PUC in respect of such shares immediately before such redemption and any such dividend:

(c) will be included in computing the income, pursuant to subsection 82(1) and paragraph 12(1)(j), of the person deemed to have received such dividend;

(d) will be deductible by the recipient pursuant to subsection 112(1) in computing its taxable income for the year in which such dividend is deemed to have been received, and such deduction will not be prohibited by any of subsections 112(2.1), (2.2), (2.3) or (2.4);

(e) will be excluded in determining the proceeds of disposition to the recipient corporation of the shares which are redeemed pursuant to paragraph (j) of the definition of “proceeds of disposition” in section 54;

(f) will, by virtue of the provisions of subsection 112(3), reduce any loss arising from the redemption to Canadian TC 1 and Canadian DC which would otherwise be determined;

(g) will not be subject to tax under Part IV, except as provided in paragraph 186(1)(b); and

(h) will not be subject to tax under Parts IV.1 and VI.1.

I. By virtue of the provisions of paragraph 55(3)(b), subsection 55(2) will not apply to the taxable dividends described in Ruling H, provided that:

(a) 10% or more of the FMV of any one of the Foreign Spinco 1 Common Shares is not, at any time during the course of the series of transactions or events that includes the taxable dividends described in Ruling H, derived directly or indirectly, from one or more of shares of Canadian TC 1, Canadian TC 2 or Canadian DC; and

(b) as part of the series of transactions or events that includes the dividends described in that Ruling, there is not:

(i) an acquisition of property in the circumstances described in paragraph 55(3.1)(a);

(ii) a disposition of property in the circumstances described in subparagraph 55(3.1)(b)(i);

(iii) an acquisition of control in the circumstances described in subparagraph 55(3.1)(b)(ii); or

(iv) an acquisition of shares of Canadian DC in the circumstances described in subparagraph 55(3.1)(b)(iii).

which has not been described herein, and, for greater certainty, subsection 55(3.1) will not apply to deny the exemption under paragraph 55(3)(b) to any of the dividends described in that Ruling.

J. The set-off and cancellation of the Canadian DC Class B Redemption Note held by Canadian TC 1 and the Canadian TC 1 Redemption Note held by Canadian DC, as described in Paragraph 89, will not give rise to a “forgiven amount” within the meaning of subsections 80(1) or 80.01(1). Neither Canadian TC 1 nor Canadian DC will realize any gain or incur any loss as a result of the set-off and resultant cancellation of the Canadian DC Class B Redemption Note or the Canadian TC 1 Redemption Note.

K. As a result of the Three-Party Share Exchange 2:

(a) the provisions of subsection 84(1) and paragraph 212.1(1.1)(a) will not apply to deem a dividend to be paid by Canadian TC 2, or to be received by Forco 3;

(b) the provisions of paragraph 212.1(1.1)(b) will apply such that the amount added to the PUC of the Canadian TC 2 Common Shares in connection with the Three-Party Share Exchange 2 will not exceed the PUC, immediately before the exchange, of the Canadian DC Class C Preferred Shares transferred to Canadian TC 2; and

(c) the aggregate cost to Canadian TC 2 of the Canadian DC Class C Preferred Shares that Canadian TC 2 acquires from Forco 3 on the exchange will be equal to the aggregate FMV at that time of such shares.

L. Subject to subsection 69(11), the provisions of subsection 85(1), other than paragraph 85(1)(e.2), will apply to the transfer of the Distribution Property 2 by Canadian DC to Canadian TC 2 as described in Paragraph 104, such that the agreed amount in respect of each transfer of eligible property will be deemed to be Canadian DC’s proceeds of disposition and Canadian TC 2’s cost of such property pursuant to paragraph 85(1)(a).

M. The provisions of subsection 212.3(2) will not apply to the transfer of the Distribution Property 2 by Canadian DC to Canadian TC 2 as described in Paragraph 104.

N. Subsection 84(3) will apply to:

(a) the redemption of the Canadian TC 2 Special Shares held by Canadian DC, as described in Paragraph 107, such that Canadian TC 2 will be deemed to have paid and Canadian DC will be deemed to have received; and

(b) the redemption of the Canadian DC Class C Preferred Shares held by Canadian TC 2, as described in Paragraph 108, such that Canadian DC will be deemed to have paid and Canadian TC 2 will be deemed to have received;

a dividend on such shares equal to the amount, if any, by which the aggregate amount paid upon such redemption exceeds the aggregate PUC in respect of such shares immediately before such redemption and any such dividend:

(c) will be included in computing the income, pursuant to subsection 82(1) and paragraph 12(1)(j), of the person deemed to have received such dividend;

(d) will be deductible by the recipient pursuant to subsection 112(1) in computing its taxable income for the year in which such dividend is deemed to have been received, and such deduction will not be prohibited by any of subsections 112(2.1), (2.2), (2.3) or (2.4);

(e) will be excluded in determining the proceeds of disposition to the recipient corporation of the shares which are redeemed pursuant to paragraph (j) of the definition of “proceeds of disposition” in section 54;

(f) will, by virtue of the provisions of subsection 112(3), reduce any loss arising from the redemption to Canadian TC 2 and Canadian DC which would otherwise be determined;

(g) will not be subject to tax under Part IV, except as provided in paragraph 186(1)(b); and

(h) will not be subject to tax under Parts IV.1 and VI.1.

O. By virtue of the provisions of paragraph 55(3)(b), subsection 55(2) will not apply to the dividends described in Ruling N, provided that:

(a) 10% or more of the FMV of any one of the Foreign Spinco 2 Common Shares is not, at any time during the course of the series of transactions or events that includes the taxable dividends described in Ruling N, derived directly or indirectly, from one or more of the shares of Canadian TC 1, Canadian TC 2 or of Canadian DC; and

(b) as part of the series of transactions or events that includes the taxable dividends described in that Ruling, there is not:

(i) an acquisition of property in the circumstances described in paragraph 55(3.1)(a);

(ii) a disposition of property in the circumstances described in subparagraph 55(3.1)(b)(i);

(iii) an acquisition of control in the circumstances described in subparagraph 55(3.1)(b)(ii); or

(iv) an acquisition of shares of Canadian DC in the circumstances described in subparagraph 55(3.1)(b)(iii)

which has not been described herein, and, for greater certainty, subsection 55(3.1) will not apply to deny the exemption under paragraph 55(3)(b) to any of the dividends described in that Ruling.

P. The set-off and cancellation of the Canadian DC Class C Redemption Note held by Canadian TC 2 and the Canadian TC 2 Redemption Note held by Canadian DC, as described in Paragraph 109, will not give rise to a “forgiven amount” within the meaning of subsections 80(1) or 80.01(1). Neither Canadian TC 2 nor Canadian DC will realize any gain or incur any loss as a result of the set-off and resultant cancellation of the Canadian DC Class C Redemption Note or the Canadian TC 2 Redemption Note.

Q. The provisions of subsections 15(1), 56(2), 69(4) and 246(1) will not apply to the Proposed Transactions, in and of themselves.

R. Subsection 245(2) will not apply to the Proposed Transactions, in and of themselves, to redetermine the tax consequences confirmed in the Rulings given above.

These rulings are given subject to the limitations and qualifications set forth in Information Circular 70-6R9 dated April 23, 2019. They are binding on the CRA, provided that the Proposed Transactions are completed before XXXXXXXXXX.

The above rulings are based on the Act in its present form and do not take into account any proposed amendments to the Act, which if enacted, could have an effect on the rulings provided herein.

COMMENTS

Unless otherwise expressively confirmed, nothing in this ruling should be construed as implying that the CRA has confirmed, reviewed, made any determination, or accepted any method for the determination in respect of:

a) the FMV, ACB of any property referred to herein or the stated capital or PUC in respect of any share referred to herein;

b) the balance of the RDTOH, GRIP, non-capital losses, CDA, or any other tax account of any corporation referred to herein;

c) whether subsection 55(2) applies to any of the dividends described in Paragraphs 10, 15, 16, 17, 50.12 and 68.1;

d) the tax consequences of the crystallization transactions described in Paragraph 41;

e) the tax consequences of the transactions described in Paragraphs 50.5 to 50.11;

f) whether any property is taxable Canadian property;

g) whether all applicable tax under Part XIII was withheld and remitted to CRA; and

any provincial tax consequences of the Proposed Transactions or any other tax consequence relating to the facts, Proposed Transactions or any transaction or event taking place either prior to the Proposed Transactions or subsequent to the Proposed Transactions, whether described in this letter or not, other than those specifically described in the rulings given above, including whether any of the Proposed Transactions would also be included in a series of transactions or events that includes other transactions or events that are not described in this letter.

Nothing in this letter should be construed as confirmation, express or implied, that, for the purpose of any of the rulings given above, any adjustment to the FMV of the properties transferred and the redemption amount of the shares issued as consideration, whether pursuant to a price adjustment clause or otherwise, will be effective retroactively to the time of the transfer and issuance of shares. Furthermore, none of the rulings given in this letter are intended to apply to, or in the event of, the operation of a price adjustment clause, since such adjustment will be due to circumstances that do not constitute proposed transactions that are seriously contemplated. The general position of the CRA with respect to price adjustment clauses is stated in Income Tax Folio S4-F3-C1, dated November 26, 2015.

Yours truly,

XXXXXXXXXX
for Division Director
Reorganizations Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch

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