2020-0852951R3 Public Spin-Off Butterfly

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA. Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Principal Issues: Whether the proposed reorganizations meet the requirements of paragraph 55(3)(b).

Position: Yes.

Reasons: In accordance with law and previous positions.

Author: XXXXXXXXXX
Section: 55(3)(b), 55(3.1)

XXXXXXXXXX 2020-085295

XXXXXXXXXX, 2021

RE: Advance Income Tax Ruling
XXXXXXXXXX

This is in reply to your letter dated XXXXXXXXXX in which you requested an advance income tax ruling on behalf of the above-noted taxpayer. We also acknowledge the additional information provided in your letters and in various email correspondence as well as information provided in our numerous telephone conversations (XXXXXXXXXX).

PRELIMINARY MATTERS

To the best of your knowledge, and that of the responsible officers of the above-noted taxpayers, none of the proposed transactions or issues involved in this ruling request are the same as or substantially similar to transactions or issues that are:

(a) in a previously filed tax return of the above-noted taxpayers or a related person and:

i. being considered by the CRA in connection with such return;

ii. under objection by the above-noted taxpayers or a related person; or

iii. the subject of a current or completed court process involving the above-noted taxpayers or a related person; or

(b) the subject of a ruling request previously considered by the Income Tax Rulings Directorate in relation to the taxpayers or a related person.

Unless otherwise stated, all references herein to a part, section, subsection, paragraph, subparagraph, clause or subclause is a reference to the relevant provision of the Income Tax Act, R.S.C. 1985 (5th Suppl.) c.1, as amended (the “Act”), or the Income Tax Regulations, C.R.C., c.945 (the “Regulations”), as appropriate, and all references to monetary amounts are in Canadian dollars.

DEFINITIONS

In this ruling application, unless otherwise specified, the following terms have the meanings specified below:

XXXXXXXXXX;

XXXXXXXXXX Common Share” means a common share of XXXXXXXXXX

XXXXXXXXXX.

“acquiror” has the meaning assigned to the term “acquiror” in the definition of “specified corporation” in subsection 55(1);

“Act1” means the XXXXXXXXXX;

“Act2” means the XXXXXXXXXX;

“Act3” means the XXXXXXXXXX;

“Act4” means the XXXXXXXXXX;

“adjusted cost base” or “ACB” means “adjusted cost base” as defined in section 54 and subsection 248(1);

“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);

“Amalco” means the corporation continuing on the Amalgamation;

“Amalco XXXXXXXXXX Share” means a XXXXXXXXXX common share of Amalco as described in Paragraph 78(c);

“Amalco Shares” means, collectively, the Amalco XXXXXXXXXX Shares and the Amalco XXXXXXXXXX Shares;

“Amalgamation” means the amalgamation of Newco and Newco Sub as described in Paragraph 78;

“approximate that proportion” means, in the context of a distribution, that the discrepancy from the proportion, if any, does not exceed 1%, determined as a percentage of the FMV of the property which is transferred to a transferee corporation or retained by a distributing corporation had it received (or retained) its pro rata share of the FMV of the property;

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

“Arrangement Agreement” means the arrangement agreement entered into by Parent and Newco that will govern the Plan of Arrangement, as further described in Paragraph 51;

“Bank” means XXXXXXXXXX and a wholly-owned subsidiary of Parent;

XXXXXXXXXX;

“XXXXXXXXXX Common Shares” means, collectively, the XXXXXXXXXX common shares and the XXXXXXXXXX common shares of XXXXXXXXXX;

“XXXXXXXXXX-Sub1 Debt” has the meaning assigned in Paragraph 39;

XXXXXXXXXX

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

“XXXXXXXXXX Participant” means a holder of a Parent XXXXXXXXXX share, immediately before the effective time of the Plan of Arrangement, other than a Dissenting Shareholder;

“XXXXXXXXXX Participant” means a holder of a Parent XXXXXXXXXX Share, immediately before the effective time of the Plan of Arrangement, other than a Dissenting Shareholder;

“Canadian-controlled private corporation” or “CCPC” has the meaning assigned to it by subsection 125(7);

“CRA” means Canada Revenue Agency;

XXXXXXXXXX;

“Dissenting Shareholder” means a holder of a Parent XXXXXXXXXX Share or a Parent XXXXXXXXXX Share who exercises its shareholders right to dissent from the Plan of Arrangement;

“distributing corporation” has the meaning assigned in the definition of “distribution” in subsection 55(1);

XXXXXXXXXX;

“DRIP” means Parent’s Dividend Reinvestment Plan;

“DSU” means a right granted by Parent to an eligible executive to receive, on a deferred payment basis, the cash equivalent of a Parent XXXXXXXXXX Share on the terms contained in the DSU Plan;

“DSU Plans” means, collectively, the Parent Executives’ Deferred Share Unit Plan and the Directors’ Deferred Share Unit Plan, each as amended;

“Effective Date” means the effective date of the Plan of Arrangement;

“eligible dividend” has the meaning assigned by subsection 89(14);

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

XXXXXXXXXX;

“Exchange” means the XXXXXXXXXX;

“fair market value” or “FMV” means the highest price available in an open and unrestricted market between informed prudent parties acting at arm’s length and under no compulsion to act, expressed in terms of money or money’s worth;

“FMV Reduction of a Parent XXXXXXXXXX Share” means the reduction in the FMV of a Parent XXXXXXXXXX Share that will arise solely as a result of the Parent Spin-off Butterfly, and which will be calculated by subtracting:

(a) the weighted average trading price of a Parent XXXXXXXXXX Share on the Exchange for a XXXXXXXXXX-day trading period (or such other trading period that is acceptable to the Exchange) beginning on the Effective Date;

from

(b) the weighted average trading price of a Parent XXXXXXXXXX Share on the Exchange for a XXXXXXXXXX-day trading period (or such other trading period that is acceptable to the Exchange) ending immediately before the Effective Date;

XXXXXXXXXX;

“Group” means the XXXXXXXXXX, ultimately controlled by Parent;

“IFRS” means International Financial Reporting Standards;

“In the Money Amount” means, in relation to a particular stock option, the amount by which the FMV of the share that is the subject of the particular option exceeds the exercise price of the option;

XXXXXXXXXX;

XXXXXXXXXX“NCIB” means a normal course issuer bid governed by the rules applicable to such bids set out in the applicable securities law and the rules and bylaws of the Exchange;

terms and conditions, and to be authorized, as described in Paragraph 65(a);

“New Parent XXXXXXXXXX Share” means a new XXXXXXXXXX non-voting common share of Parent with the terms and conditions, and to be authorized, as described in Paragraph 65(c);

“New Stock Options” means the rights to acquire Parent XXXXXXXXXX Shares (the material financial terms and conditions of which will be substantially similar to those of the Stock Options, other than the exercise price) granted under the New Stock Option Plans;

“New Stock Option Plans” means the stock option plan or plans of Parent (the material financial terms and conditions of which will be substantially similar to those of the Stock Option Plans) adopted as of the effective time of the Plan of Arrangement pursuant to which Parent will have discretion to grant New Stock Options to employees of Parent and its affiliates with an exercise price that may not be less than the FMV of a Parent XXXXXXXXXX Share, as determined in accordance with the plan, on the date of grant;

“New Sub1 Common Share” means a Class C common share of Sub1 with the terms and conditions, and to be authorized, as described in Paragraph 50(a);

“Newco” means the new corporation described in Paragraph 46;

“Newco XXXXXXXXXX Share” means a XXXXXXXXXX common share of Newco as described in Paragraph 47(a);

“Newco XXXXXXXXXX Share” means a XXXXXXXXXX common share of Newco as described in Paragraph 47(b);

“Newco Common Shares” means, collectively, the XXXXXXXXXX common shares and XXXXXXXXXX common shares of Newco;

“Newco Redemption Note” means the promissory note, payable on demand, having a principal amount and FMV equal to the aggregate redemption amount of the Newco Special Shares with interest payable only from the date of demand for payment by the holder at a rate equal to the average monthly prime rate of a Canadian chartered bank;

“Newco Special Share” means a special share of Newco as described in Paragraph 47(c);

“Newco Sub” means the new corporation described in Paragraph 48;

“Newco Sub Common Share” means a common share of Newco Sub as described in Paragraph 49(a);

“Newco Sub Redemption Note” means the promissory note, payable on demand, having a principal amount and FMV equal to the aggregate redemption amount of the Newco Sub Special Shares with interest payable only from the date of demand for payment by the holder at a rate equal to the average monthly prime rate of a Canadian chartered bank;

“Newco Sub Special Share” means a special share of Newco Sub as described in Paragraph 49(b);

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

“Paragraph” means a numbered paragraph in this letter;

“Parent” means XXXXXXXXXX, a corporation amalgamated under Act1 and a TCC;

“Parent Capital Reorganization” means the exchanges of Parent XXXXXXXXXX Shares and Parent XXXXXXXXXX Shares as described in Paragraph 66;

“Parent XXXXXXXXXX Share” means a XXXXXXXXXX common share of Parent XXXXXXXXXX. The holders of the Parent XXXXXXXXXX Shares are entitled to receive dividends from any funds of Parent at the time legally available for dividends, if, as and when declared by the board of directors at the rate of up to XXXXXXXXXX cents per share per annum, XXXXXXXXXX;

“Parent XXXXXXXXXX Special Share” means a XXXXXXXXXX special share of Parent with the terms and conditions, and to be authorized, as described in Paragraph 65(b);

“Parent XXXXXXXXXX Special Share” means a XXXXXXXXXX special share of Parent with the terms and conditions, and to be authorized, as described in Paragraph 65(d);

“Parent Disposition” means the transfer by Parent of the Newco Sub Common Shares to Newco as described in Paragraph 74;

“Parent Redemption Note” means the promissory note, payable on demand, having a principal amount and FMV equal to the aggregate redemption amount of the Parent Special Shares with interest payable only from the date of demand for payment by the holder at a rate equal to the average monthly prime rate of a Canadian chartered bank;

“Parent Special Shares” means, collectively, the Parent XXXXXXXXXX Special Shares and the Parent XXXXXXXXXX Special Shares;

“Parent Spin-off Butterfly” means the transactions described in Paragraphs 65 to 77;

“Parent Spin-off Proportion” means the fraction A/B, where:

“A” is the net FMV of all of the issued and outstanding Newco Sub Common Shares to be transferred by Parent to Newco on the Parent Disposition; and

“B” is the net FMV of all of the property owned by Parent;

determined, in each case, immediately before the Parent Disposition;

“Participants” means collectively, the XXXXXXXXXX Participants and the XXXXXXXXXX Participants;

XXXXXXXXXX;

“Plan of Arrangement” means the proposed plan of arrangement under section 288 of Act1 to effect the transactions described in Paragraphs 54 to 83;

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

“proceeds of disposition” or “POD” means “proceeds of disposition as defined in section 54;

“Proposed Transactions” means the proposed transactions described in Paragraphs 43 to 88;

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

XXXXXXXXXX;

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

XXXXXXXXXX;

“RSU” means a right granted to a participant to receive, on the basis set out in the RSU Plan, a Parent XXXXXXXXXX Share, the cash equivalent of a Parent XXXXXXXXXX Share or a combination thereof;

“RSU Plan” means the XXXXXXXXXX Restricted Share Unit Plan, as amended;

“SARs” means the share appreciation rights described in Paragraph 15;

XXXXXXXXXX;

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

XXXXXXXXXX;

“specified shareholder” has the meaning assigned by subsection 248(1), as modified by subsections 55(3.2) and (3.3);

“Stock Options” means the rights to acquire Parent XXXXXXXXXX Shares granted under the Stock Option Plans;

“Stock Option Plans” means, collectively (and each, as amended):

XXXXXXXXXX.

“Sub1” means XXXXXXXXXX., a corporation incorporated under Act3 and a TCC;

“Sub1 Capital Reorganization” means the exchange of Sub1 XXXXXXXXXX Shares described in Paragraph 57;

“Sub1 XXXXXXXXXX Share” means a XXXXXXXXXX common share of Sub1 which is a fully participating voting common share with the holder thereof entitled to one vote per share at a meeting of shareholders of Sub1;

“Sub1 Disposition” means the transfer by Sub1 of the XXXXXXXXXX Common Shares described in Paragraph 60;

“Sub1-Parent Debt” has the meaning assigned by Paragraph 36;

“Sub1 Preferred Shares” means, collectively, all of the issued and outstanding Second Preferred Shares, Third Preferred Shares, Fourth Preferred Shares, and Sixth Preferred Shares of Sub1;

“Sub1 Redemption Note” means the promissory note, payable on demand, having a principal amount and FMV equal to the aggregate redemption amount of the Sub1 Special Shares with interest payable only from the date of demand for payment by the holder at a rate equal to the average monthly prime rate of a Canadian chartered bank;

“Sub1 Special Share” means a special share of Sub1 with the terms and conditions, and to be authorized, as described in Paragraph 50(b);

“Sub1 Spin-off Butterfly” means the transactions described in Paragraphs 55 to 63;

“Sub1 Spin-off Proportion” means the fraction A/B, where:

“A” is the net FMV of all of the issued and outstanding XXXXXXXXXX Common Shares to be transferred by Sub1 to Newco Sub on the Sub1 Disposition; and

“B” is the net FMV of all of the property owned by Sub1;

determined, in each case, immediately before the Sub1 Disposition;

“taxable Canadian corporation” or “TCC” means “taxable Canadian corporation” as defined in subsection 89(1);

“taxation year” has the meaning assigned by subsection 249(1);

XXXXXXXXXX;

“transferee corporation” has the meaning assigned in the definition of “distribution” in subsection 55(1);

XXXXXXXXXX.

FACTS

Parent and Group Business

1. Parent is the parent company of the Group and is a public corporation. Parent’s head office is at XXXXXXXXXX. Parent’s tax services office is the XXXXXXXXXX and Parent files its tax returns at the XXXXXXXXXX. Parent’s taxation year is the calendar year and Parent has not made an election under section 261.

2. Group includes XXXXXXXXXX, Sub1 and XXXXXXXXXX and each of these corporations is a direct wholly-owned subsidiary of Parent. Group is XXXXXXXXXX.

3. XXXXXXXXXX.

4. Substantially all of Group’s operations and sales XXXXXXXXXX. Group has a XXXXXXXXXX. Substantially all of Group’s employees XXXXXXXXXX.

5. XXXXXXXXXX.

6. XXXXXXXXXX operates substantially all of Parent’s XXXXXXXXXX which includes:

(a) XXXXXXXXXX.

(b) XXXXXXXXXX.

7. Sub1 operates the XXXXXXXXXXt that consists of assets that XXXXXXXXXX including:

(a) XXXXXXXXXX;

(b) XXXXXXXXXX;

(d) XXXXXXXXXX.

8. XXXXXXXXXX.

Parent

9. The authorized share capital of Parent includes the Parent XXXXXXXXXX Shares and the Parent XXXXXXXXXX Shares. The Parent XXXXXXXXXX Shares are publicly traded on the Exchange, whereas the Parent XXXXXXXXXX Shares are publicly traded on XXXXXXXXXX and the Exchange. Parent does not have any issued and outstanding shares other than Parent XXXXXXXXXX Shares and Parent XXXXXXXXXX Shares.

10. As at XXXXXXXXXX, Parent had XXXXXXXXXX Parent XXXXXXXXXX Shares issued and outstanding, XXXXXXXXXX, and XXXXXXXXXX Parent XXXXXXXXXX Shares issued and outstanding.

11. Parent reasonably expects that the PUC per share of a Parent XXXXXXXXXX Share and a Parent XXXXXXXXXX Share is less than the ACB of such shares to most holders thereof.

12. Parent has a long-standing practice of declaring and paying XXXXXXXXXX cash dividends, in equal amounts, on the Parent XXXXXXXXXX Shares and the Parent XXXXXXXXXX Shares.

13. Parent instituted an NCIB program in XXXXXXXXXX which is renewed periodically. Most recently, in XXXXXXXXXX, the Exchange accepted Parent’s notice of intention to renew its NCIB for a XXXXXXXXXX-month period commencing XXXXXXXXXX and ending XXXXXXXXXX. Pursuant to the renewed NCIB, Parent may repurchase the lesser of XXXXXXXXXX Parent XXXXXXXXXX Shares (representing approximately XXXXXXXXXX% of the public float (which excludes shares held by “insiders”) of the Parent XXXXXXXXXX Shares) and that number of Parent XXXXXXXXXX Shares that can be purchased under the NCIB for an aggregate purchase price of $XXXXXXXXXX. All Parent XXXXXXXXXX Shares purchased by Parent under the NCIB are cancelled. Under the Exchange rules, Parent is precluded under the NCIB from purchasing Parent XXXXXXXXXX Shares from XXXXXXXXXX. In XXXXXXXXXX, Parent purchased approximately XXXXXXXXXX Parent XXXXXXXXXX Shares under its NCIB programs. No purchases have been made by Parent in XXXXXXXXXX. Decisions to make purchases under the NCIB rest with Parent’s treasury department and are based on a variety of financial and market factors. The Parent NCIB and any share purchases made thereunder were not completed in contemplation of the Proposed Transactions and would have occurred regardless of whether the Proposed Transactions occur, and vice versa. The Parent NCIB was not renewed after XXXXXXXXXX.

14. Parent has a DRIP that allows eligible holders of Parent XXXXXXXXXX Shares and/or Parent XXXXXXXXXX Shares to acquire additional Parent XXXXXXXXXX Shares through reinvestment of the cash dividends paid on their respective shareholdings. The Parent XXXXXXXXXX Shares will be purchased in the Canadian open market or will be issued by Parent, as determined by Parent. The DRIP allows shareholders to easily and conveniently increase their investment in Parent XXXXXXXXXX Shares by automatically reinvesting dividends instead of receiving cash payments. All registered holders of Parent XXXXXXXXXX Shares and/or Parent XXXXXXXXXX Shares that are a resident of Canada or the United States may participate in DRIP. All dividends on Parent XXXXXXXXXX Shares and Parent XXXXXXXXXX Shares enrolled in the DRIP and on Parent XXXXXXXXXX Shares (including any fraction of a Parent XXXXXXXXXX Share) held in the DRIP account as a result of reinvestment under the DRIP will be reinvested into Parent XXXXXXXXXX Shares. XXXXXXXXXX.

15. Parent delivers a long-term incentive plan in the form of its Parent Stock Option Plans and RSU Plan. Pursuant to the Parent Stock Option Plans, which are plans governed by section 7, Parent’s Chief Executive Officer, directors and other senior executive officers are granted Stock Options with tandem SARS. A SAR is a right to surrender an option for a payment equal to the fair market value of a Parent XXXXXXXXXX Share minus the option exercise price. Each Stock Option entitles the holder, upon exercise, to acquire one Parent XXXXXXXXXX Share at the option exercise price as set out in the terms of the award. Where a Parent XXXXXXXXXX Share is issued in connection with the exercise of an option by an employee of Sub1, Sub1 reimburses Parent for the cost of the option (the intrinsic value) by adjusting the intercompany amount owing by Sub1 to Parent. Sub1 has elected to forgo the deduction in respect of SARs payments made to employees dealing at arm’s length with Sub1. Sub1 deducts an amount in respect of SARs payments made to persons not dealing at arm’s length with Sub1. As of XXXXXXXXXX, there were approximately XXXXXXXXXX Stock Options outstanding.

16. RSUs are granted to eligible employees and officers for their employment services. Although RSUs may be settled in cash or in Parent XXXXXXXXXX Shares, XXXXXXXXXX. An RSU liability is measured at fair value. For tax purposes, a deduction is claimed when the cash settlement amounts are paid. As of XXXXXXXXXX, there were approximately XXXXXXXXXX RSUs outstanding to the credit of participants in the RSU Plan.

17. Pursuant to the DSU Plans, the board of directors and certain key executives may elect to receive certain types of remuneration in DSUs. DSUs are only exercisable upon death or retirement of the participant. DSUs are settled through cash payments. A DSU liability is measured at fair value. For tax purposes, a deduction is claimed when the cash settlement amounts are paid. As of XXXXXXXXXX, there were approximately XXXXXXXXXX DSUs outstanding to the credit of participants in the DSU Plans.

18. Parent also has two other compensation arrangements:

(a) XXXXXXXXXX.

(b) XXXXXXXXXX.

Pursuant to the terms of XXXXXXXXXX, Parent XXXXXXXXXX Shares purchased on behalf of participants are held in an account for the benefit of the participant and dividends paid on such Parent XXXXXXXXXX Shares are automatically reinvested in Parent XXXXXXXXXX Shares which will, at the discretion of Parent, be purchased in the open market or issued by Parent.

19. As at XXXXXXXXXX, Parent had outstanding long-term third party debt issued in various series with various terms to maturity with an aggregate principal amount of approximately $XXXXXXXXXX. None of the foregoing third party debt is convertible into shares of Parent.

Parent Shareholders

20. As of XXXXXXXXXX, held approximately XXXXXXXXXX% of the issued and outstanding Parent XXXXXXXXXX Shares and approximately XXXXXXXXXX% of the issued and outstanding Parent XXXXXXXXXX Shares. As a result, XXXXXXXXXX are specified shareholders of Parent, and thus also of Sub 1. Other XXXXXXXXXX, trusts and persons not dealing at arm’s length with such shareholders (including XXXXXXXXXX), are also specified shareholders of Parent, and thus also of Sub 1.

21. To the best of Parent’s knowledge, there is no person, or group of related persons, that beneficially owns, directly or indirectly, XXXXXXXXXX% or more of the Parent XXXXXXXXXX Shares.

22. Each of the XXXXXXXXXX, with the exception of XXXXXXXXXX, is a CCPC and a TCC. XXXXXXXXXX is a XXXXXXXXXX corporation.

23. As described in Paragraphs 25 to 27, XXXXXXXXXX acquire and/or dispose of Parent XXXXXXXXXX Shares and/or Parent XXXXXXXXXX Shares as part of XXXXXXXXXX.

24. [Reserved]

25. XXXXXXXXXX.

25.1 XXXXXXXXXX.

25.2 XXXXXXXXXX.

26. XXXXXXXXXX.

27. XXXXXXXXXX holds Parent shares as its core long term investment. XXXXXXXXXX very rarely disposes of Parent shares outside of the related group and has, in the past, acquired additional Parent shares from third parties. XXXXXXXXXX:

(a) XXXXXXXXXX.

(b) XXXXXXXXXX.

Sub1

28. Sub1’s head office is at XXXXXXXXXX. Sub1’s tax services office is the XXXXXXXXXX and Sub1 files its tax returns at the XXXXXXXXXX. Sub1’s taxation year is the calendar year and Sub1 has not made an election under section 261.

29. Sub1 was formed by the amalgamation of XXXXXXXXXX. These amalgamation transactions were not completed in contemplation of the Proposed Transactions and would have occurred regardless of whether the Proposed Transactions occur and vice versa.

30. Sub1’s authorized share capital consists of XXXXXXXXXX of common shares (XXXXXXXXXX) and XXXXXXXXXX series of preferred shares (i.e., the Sub1 Preferred Shares). Parent holds all of the issued and outstanding shares of Sub1 and these shares are capital property to Parent. As at XXXXXXXXXX, the following shares of Sub1 were issued and outstanding with ACB and PUC as follows:

Number of Shares Class of Shares ACB PUC
XXXXXX XXXXXX XXXXXX XXXXXX

31. The aggregate fair market value of each class of shares of Sub1, namely, the Sub1 XXXXXXXXXX Shares, the Sub 1 XXXXXXXXXX Shares, and each class of the Sub1 Preferred Shares, will, immediately before the Effective Date, be equal to or exceed the adjusted cost base to Parent of such shares and the PUC of such shares.

32. Sub1 does not have any equity based compensation plans or any convertible securities.

33. As of XXXXXXXXXX, Sub1 had total assets of approximately $XXXXXXXXXX (as reflected on its financial statements prepared in accordance with IFRS), which include:

(a) cash and equivalents of $XXXXXXXXXX;

(b) amounts due from related parties of $XXXXXXXXXX;

(d) XXXXXXXXXX.

34. As of XXXXXXXXXX, Sub1 had total booked liabilities and shareholders’ equity of approximately $XXXXXXXXXX (as reflected on its financial statements prepared in accordance with IFRS), which include:

(a) amounts due to Parent and related parties of $XXXXXXXXXX;

(b) unearned revenue of $XXXXXXXXXX;

(d) other liabilities of $XXXXXXXXXX mainly relating to liabilities associated with program rights and deferred tax; and

(e) shareholders’ equity of $XXXXXXXXXX.

35. XXXXXXXXXX is a wholly-owned direct subsidiary of Sub1 and XXXXXXXXXX does not have any issued and outstanding shares other than the XXXXXXXXXX Common Shares. XXXXXXXXXX owns, indirectly, through XXXXXXXXXX.

Intercompany Indebtedness

36. Pursuant to a series of demand non-interest bearing promissory notes issued by Sub1 in favour of Parent, Sub1 owes Parent an aggregate amount of approximately $XXXXXXXXXX (the “Sub1-Parent Debt”).

37. Pursuant to a series of demand promissory notes, bearing varied rates of interest, issued by XXXXXXXXXX in favour of Sub1, XXXXXXXXXX owes Sub1 an aggregate amount of approximately $XXXXXXXXXX, plus all accrued and outstanding interest (the “XXXXXXXXXX-Sub1 Debt”).

38. Pursuant to a series of demand promissory notes, bearing varied rates of interest, issued by XXXXXXXXXX in favour of XXXXXXXXXX an aggregate amount of approximately $XXXXXXXXXX, plus all accrued and outstanding interest (the “XXXXXXXXXX Debt”).

39. Pursuant to a series of demand non-interest bearing promissory notes issued by XXXXXXXXXX in favour of Sub1, XXXXXXXXXX owes Sub1 an aggregate amount of approximately $XXXXXXXXXX (the “XXXXXXXXXX-Sub1 Debt”).

Recent Group Activities

40. On XXXXXXXXXX, the XXXXXXXXXX division of Sub1 was sold to XXXXXXXXXX, an unrelated third party, in which XXXXXXXXXX acquired Sub1’s XXXXXXXXXX including certain assets related to Sub1’s business of XXXXXXXXXX, deferred revenue and the assumption of certain liabilities. XXXXXXXXXX. This transaction was not completed in contemplation of the Proposed Transactions and would have occurred regardless of whether the Proposed Transactions occur and vice versa.

41. Parent has entered into an agreement with a third party to explore options for a XXXXXXXXXX. Parent commenced confidential consultations with XXXXXXXXXX and various other stakeholders, to assess the viability of the proposal. XXXXXXXXXX. The XXXXXXXXXX would ultimately become an asset of Amalco. The project would be funded through Amalco through a variety of debt structures. This transaction is not being contemplated in connection with the Proposed Transactions and whether or not it proceeds will not be reliant on whether the Proposed Transactions occur and vice versa.

42. In order to provide cash for operations to XXXXXXXXXX necessitated by the recent global pandemic, the following transactions have been undertaken:

(a) XXXXXXXXXX.

(b) XXXXXXXXXX.

42.1 On XXXXXXXXXX, Parent XXXXXXXXXX entered into the XXXXXXXXXX pursuant to which Parent has agreed to acquire XXXXXXXXXX% of the issued and outstanding XXXXXXXXXX Shares and XXXXXXXXXX Shares for a total price of $XXXXXXXXXX. Under the XXXXXXXXXX, shareholders of XXXXXXXXXX will receive the XXXXXXXXXX Purchase Price in cash. However, XXXXXXXXXX will receive XXXXXXXXXX% of the XXXXXXXXXX Purchase Price in the form of Parent XXXXXXXXXX Shares in the capital of Parent on the basis of the volume-weighted average trading price for the Parent XXXXXXXXXX Shares for the XXXXXXXXXX trading days ending XXXXXXXXXX, and the balance in cash. It is estimated that upon completion of the XXXXXXXXXX, the XXXXXXXXXX will own up to XXXXXXXXXX% of the outstanding Parent XXXXXXXXXX Shares and up to XXXXXXXXXX% of Parent’s total equity value. The XXXXXXXXXX shall at no time hold XXXXXXXXXX% or more of the Parent XXXXXXXXXX Shares.

The XXXXXXXXXX obtained shareholder approval on XXXXXXXXXX but is also subject to customary closing conditions, including court and regulatory approval. If all requisite approvals are obtained, it is anticipated that the XXXXXXXXXX will be completed in the XXXXXXXXXX, after the Proposed Transactions. The XXXXXXXXXX is not being contemplated in connection with the Proposed Transactions and whether the XXXXXXXXXX proceeds is not reliant on whether the Proposed Transactions occur and vice versa.

PROPOSED TRANSACTIONS

Pre-Plan of Arrangement Transactions

Repayment of XXXXXXXXXX Intercompany Indebtedness

43. XXXXXXXXXX will use cash on hand to repay to XXXXXXXXXX any accrued and unpaid interest on the XXXXXXXXXX Debt.

44. XXXXXXXXXX will repay a portion of the principal amount of the XXXXXXXXXX-Sub1 Debt by transferring the XXXXXXXXXX Debt, as well as the cash received in Paragraph 43, to Sub1, which will be accepted by Sub1 as partial payment of XXXXXXXXXX obligation.

45. Sub1 will repay a portion of the principal amount of the Sub1-Parent Debt by transferring the remaining portion of the XXXXXXXXXX-Sub1 Debt to Parent, which will be accepted by Parent as partial repayment of Sub1’s obligation.

Incorporation of Newco

46. At any time prior to the transaction described in Paragraph 51, Parent will incorporate Newco under Act1 and Newco will be a TCC. Prior to the transactions relating hereto, Newco will not have any assets or liabilities or have issued any shares.

47. Newco’s Articles of Incorporation will provide that its authorized capital will include:

(a) an unlimited number of Newco XXXXXXXXXX Shares, each of which will be a fully participating XXXXXXXXXX common share XXXXXXXXXX and otherwise having terms which parallel the Parent XXXXXXXXXX Shares;

(b) an unlimited number of Newco XXXXXXXXXX Shares, each of which will be a fully participating XXXXXXXXXX common share and otherwise having terms which parallel the Parent XXXXXXXXXX Shares; and

(i) non-voting and limited to a single issuance;

(ii) no par value;

(iii) entitlement to receive, as and when declared by the board of directors, a fixed dividend at a rate per annum equal to the prime rate payable annually and in preference to payment of dividends on the Newco XXXXXXXXXX Shares and the Newco XXXXXXXXXX Shares; and

(iv) redeemable and retractable at any time on payment for each such share to be redeemed or retracted for an amount equal to the aggregate FMV of the consideration paid to Newco on issuance thereof, together with an amount equal to all declared and unpaid dividends thereon up to the date of redemption or retraction.

Incorporation of Newco Sub

48. At any time prior to the Effective Date, Parent will incorporate Newco Sub under Act1 and Newco Sub will be a TCC. Prior to the transactions relating hereto, Newco Sub will not have any assets or liabilities or have issued any shares.

49. Newco Sub’s Articles of Incorporation will provide that its authorized capital will include:

(a) an unlimited number of Newco Sub Common Shares, each of which will be a fully participating voting common share with the holder thereof entitled to one vote per share at meetings of the shareholders of Newco Sub; and

(b) an unlimited number of Newco Sub Special Shares having the following attributes:

(i) non-voting and limited to a single issuance;

(ii) no par value;

(iv) redeemable and retractable at any time on payment for each such share to be redeemed or retracted for an amount equal to the aggregate FMV of the consideration paid to Newco Sub on issuance thereof, together with an amount equal to all declared and unpaid dividends thereon up to the date of redemption or retraction.

Sub1 Articles of Amendment

50. At any time prior to the Effective Date, Sub1 will file Articles of Amendment to create and authorize the issuance (in addition to the shares that Sub1 is authorized to issue immediately before such amendment) of the following:

(a) an unlimited number of New Sub1 Common Shares, each of which will be a fully participating voting common share with the holder thereof entitled to XXXXXXXXXX votes per share at meetings of the shareholders of Sub1; and

(b) an unlimited number of Sub1 Special Shares having the following attributes:

(i) non-voting and limited to a single issuance;

(ii) entitlement to receive, as and when declared by the board of directors, a fixed dividend at a rate per annum equal to the prime rate payable annually and in preference to payment of dividends on other classes of shares ranking junior to the Sub1 Special Shares; and

(iii) redeemable and retractable at any time on payment for each such share to be redeemed or retracted for an amount equal to the FMV of all of Sub1’s issued and outstanding Sub1 XXXXXXXXXX Shares, determined immediately before the Sub1 Capital Reorganization, multiplied by the Sub1 Spin-off Proportion, then divided by the number of Sub1 Special Shares issued on the Sub1 Capital Reorganization, together with an amount equal to all declared and unpaid dividends thereon up to the date of redemption or retraction.

Arrangement Agreement

51. Parent and Newco will enter into an Arrangement Agreement. The Arrangement Agreement will include customary terms and conditions, and will permit holders of Parent XXXXXXXXXX Shares and Parent XXXXXXXXXX Shares to dissent from the Plan of Arrangement, and Parent and Newco will:

(a) covenant and agree with and in favour of each other that for a period of time after the Effective Date to be agreed upon, it will not (and it will ensure its subsidiaries will not) take any action or enter into any transaction that could cause the transactions contemplated in the Plan of Arrangement or by the Arrangement Agreement to be taxed in a manner that is inconsistent with the rulings provided in this letter without obtaining another tax ruling or an opinion of a nationally recognized accounting firm or law firm that such action or transaction will not have such effect; and

(b) agree to indemnify each other for losses suffered or incurred as a result of or in connection with a breach or non-compliance with the covenant described in item (a) above.

52. Parent will prepare a Management Information Circular that will be mailed to all holders of Parent XXXXXXXXXX Shares and Parent XXXXXXXXXX Shares in contemplation of a meeting of those shareholders to approve the Plan of Arrangement.

Plan of Arrangement Transactions

53. Subject to the appropriate shareholder and court approvals, the Proposed Transactions described in Paragraphs 54 to 83 generally will be undertaken pursuant to the Plan of Arrangement. With the exception of the actual filing of elections under the Act, the transactions involving stock options, and the public listing of shares, the Proposed Transactions described in Paragraphs 54 to 83 will occur pursuant to the Plan of Arrangement and will be designated in the Plan of Arrangement to occur on the Effective Date in the order set out below (except as otherwise noted) XXXXXXXXXX commencing at a specific time to be set out in the Plan of Arrangement.

Dissenting Shareholders

54. Each Dissenting Shareholder who ultimately is entitled to be paid fair value for the Parent XXXXXXXXXX Shares or Parent XXXXXXXXXX Shares held by a Dissenting Shareholder will be deemed to transfer such shares to Parent and such shares will be cancelled by Parent.

Sub1 Spin-off Butterfly

55. Parent will exchange all of the Sub1 XXXXXXXXXX Shares and all of the Sub1 Preferred Shares that it holds with Sub1 for a number of Sub1 XXXXXXXXXX Shares having an aggregate fair market value equal to the aggregate fair market value of the shares so exchanged, and the Sub1 XXXXXXXXXX Shares and the Sub1 Preferred Shares so exchanged will be cancelled.

56. The addition to the stated capital of the Sub1 XXXXXXXXXX Shares will not exceed the aggregate PUC of the Sub1 XXXXXXXXXX Shares and the Sub1 Preferred Shares immediately prior to the share exchange described in Paragraph 55.

57. Parent will exchange each Sub1 XXXXXXXXXX Share that it holds with Sub1 for one New Sub1 Common Share and one Sub1 Special Share and the Sub1 XXXXXXXXXX Shares so exchanged will be cancelled (the “Sub1 Capital Reorganization”).

58. The additions to the stated capital of the New Sub1 Common Shares and the Sub1 Special Shares will reflect the relative aggregate FMVs of such shares and, in the aggregate, will not exceed the aggregate PUC of the Sub1 XXXXXXXXXX Shares immediately prior to the Sub1 Capital Reorganization.

59. Parent will transfer all of the Sub1 Special Shares that it holds to Newco Sub in consideration for XXXXXXXXXX Newco Sub Common Shares. Parent and Newco Sub will jointly elect under subsection 85(1) in prescribed form and manner and within the time limits referred to in subsection 85(6) with respect to transfer of the Sub1 Special Shares. The agreed amount in respect of the disposition of the Sub1 Special Shares will be an amount equal to the adjusted cost base of such shares to Parent at the time of the disposition. The amount added to the stated capital of the Newco Sub Common Shares so issued will be equal to such agreed amount.

60. Sub1 will transfer all of the XXXXXXXXXX Common Shares that it holds to Newco Sub in consideration for XXXXXXXXXX Newco Sub Special Shares (the “Sub1 Disposition”). The net FMV of the XXXXXXXXXX Common Shares received by Newco Sub will be equal to or approximate that proportion of the net FMV of all property owned by Sub1 immediately before the Sub1 Disposition that:

(a) the aggregate FMV of the Sub1 Special Shares owned by Newco Sub immediately before the Sub1 Disposition;

is of

(b) the aggregate FMV of all of the issued and outstanding shares in the capital of Sub1 immediately before the Sub1 Disposition.

Sub1 and Newco Sub will jointly elect under subsection 85(1) in prescribed form and manner and within the time limits referred to in subsection 85(6) with respect to the Sub1 Disposition. The agreed amount in respect of the disposition of the XXXXXXXXXX Common Shares will be an amount equal to the adjusted cost base of such shares to Sub1 at the time of the Sub1 Disposition. The amount added to the stated capital of the Newco Sub Special Shares issued on the Sub1 Disposition will be equal to such agreed amount.

61. Sub1 will redeem from Newco Sub all of the Sub1 Special Shares for an amount equal to the aggregate of the redemption amounts and fair market value of the shares so redeemed, and will issue to Newco Sub in consideration therefor the Sub1 Redemption Note. Newco Sub will accept the Sub1 Redemption Note as full and absolute payment of the redemption amounts in respect of all such redeemed shares, with the risk of the note being dishonoured. The amount of any deemed dividend resulting from the application of subsection 84(3) to the redemption of all of the Sub1 Special Shares will be designated by Sub1 pursuant to subsection 89(14), to the extent permitted under the Act, to be treated as an eligible dividend by notifying Newco Sub in writing within the time limit prescribed in subsection 89(14), that all or a portion of such dividend is an eligible dividend.

62. Newco Sub will redeem from Sub1 all of the Newco Sub Special Shares for an amount equal to the aggregate redemption amounts and fair market value of the shares so redeemed, and will issue to Sub1 in consideration therefor the Newco Sub Redemption Note. Sub1 will accept the Newco Sub Redemption Note as full and absolute payment of the redemption amounts in respect of all such redeemed shares, with the risk of the note being dishonoured. The amount of any deemed dividend resulting from the application of subsection 84(3) to the redemption of all of the Newco Sub Special Shares will be designated by Newco Sub pursuant to subsection 89(14), to the extent permitted under the Act, to be treated as an eligible dividend by notifying Sub1 in writing, within the time limit prescribed in subsection 89(14) that all or a portion of such dividend is an eligible dividend.

63. In order to settle the promissory notes issued by Sub1 and Newco Sub, the following transactions will occur simultaneously:

(a) Sub1 will satisfy its obligations under the Sub1 Redemption Note by transferring the Newco Sub Redemption Note to Newco Sub, and Newco Sub will accept the Newco Sub Redemption Note in full satisfaction of Sub1’s obligations under the Sub1 Redemption Note; and

(b) Newco Sub will satisfy its obligations under the Newco Sub Redemption Note by transferring the Sub1 Redemption Note to Sub1 and Sub1 will accept the Sub1 Redemption Note in full satisfaction of Newco Sub’s obligations under the Newco Sub Redemption Note.

The Sub1 Redemption Note and Newco Sub Redemption Note will both be marked paid in full and cancelled.

Transfer of Parent’s XXXXXXXXXX Interest to Newco Sub

64. Parent will transfer to Newco Sub:

(a) the XXXXXXXXXX-Sub1 Debt by way of a capital contribution;

(b) cash in consideration for a number of additional Newco Sub Common Shares; and

(c) all of the XXXXXXXXXX Common Shares that it holds in consideration for a number of additional Newco Sub Common Shares.

Parent and Newco Sub will jointly elect under subsection 85(1) in prescribed form and manner and within the time referred to in subsection 85(6) with respect to the transfer of the XXXXXXXXXX Common Shares. The agreed amount will be an amount equal to the adjusted cost base of such shares to Parent at the time of transfer. The amount added to the stated capital of the Newco Sub Common Shares issued on the transfer will be equal to such agreed amount.

Parent Spin-Off Butterfly

65. The Articles of Amalgamation of Parent will be amended to create and authorize the issuance (in addition to the shares that Parent is authorized to issue immediately before such amendment) of the following:

(a) an unlimited number of New Parent XXXXXXXXXX Shares, with terms and conditions identical to the Parent XXXXXXXXXX Shares, except that each New Parent XXXXXXXXXX Share will (i) reference XXXXXXXXXX cents per share instead of XXXXXXXXXX cents per share, and (ii) be convertible at the option of the holder into Parent XXXXXXXXXX Shares on a 1:1 basis;

(b) an unlimited number of Parent XXXXXXXXXX Special Shares, with the following attributes:

(i) non-voting and limited to a single issuance;

(ii) no par value;

(iii) entitlement to receive, as and when declared by the board of directors, a fixed dividend at a rate per annum equal to the prime rate payable annually and in preference to payment of dividends on other classes of shares ranking junior to the Parent XXXXXXXXXX Special Shares; and

(iv) redeemable and retractable at any time on payment for each such share to be redeemed or retracted for an amount equal to the FMV of all of Parent’s issued and outstanding Parent XXXXXXXXXX Shares, determined immediately before the Parent Capital Reorganization, multiplied by the Parent Spin-off Proportion, then divided by the number of Parent XXXXXXXXXX Special Shares issued on the Parent Capital Reorganization, together with an amount equal to all declared and unpaid dividends thereon up to the date of redemption or retraction;

(c) an unlimited number of New Parent XXXXXXXXXX Shares, with terms and conditions identical to the Parent XXXXXXXXXX Shares, except that each New Parent XXXXXXXXXX Share will (i) reference XXXXXXXXXX cents per share instead of XXXXXXXXXX cents per share, and (ii) be convertible at the option of the holder into Parent XXXXXXXXXX Shares on a 1:1 basis; and

(d) an unlimited number of Parent XXXXXXXXXX Special Shares, with the following attributes:

(i) non-voting and limited to a single issuance;

(ii) no par value;

(iii) entitlement to receive, as and when declared by the board of directors, a fixed dividend at a rate per annum equal to the prime rate payable annually and in preference to payment of dividends on other classes of shares ranking junior to the Parent XXXXXXXXXX Special Shares; and

66. Each:

(a) XXXXXXXXXX Participant will exchange each Parent XXXXXXXXXX Share that it holds with Parent for one New Parent XXXXXXXXXX Share and one Parent XXXXXXXXXX Special Share and the Parent XXXXXXXXXX Shares so exchanged will be cancelled; and

(b) XXXXXXXXXX Participant will exchange each Parent XXXXXXXXXX Share that it holds with Parent for one New Parent XXXXXXXXXX Share and one Parent XXXXXXXXXX Special Share and the Parent XXXXXXXXXX Shares so exchanged will be cancelled (such share exchanges in item (a) and this item (b), collectively, the “Parent Capital Reorganization”).

67. Concurrent with the Parent Capital Reorganization, the New Parent XXXXXXXXXX Shares, the Parent XXXXXXXXXX Special Shares, the New Parent XXXXXXXXXX Shares and the Parent XXXXXXXXXX Special Shares will, outside of the Plan of Arrangement, be listed for trading on the Exchange (subject to standard listing conditions imposed by the Exchange in similar circumstances), and for greater certainty, such listing will be effective before the Parent Disposition.

68. In connection with the Parent Capital Reorganization:

(a) Parent will not make a joint election under the provisions of section 85 with any holder of Parent XXXXXXXXXX Share or Parent XXXXXXXXXX Share;

(b) the aggregate amount to be added by Parent, pursuant to the provisions of the applicable corporate law, to the stated capital of the New Parent XXXXXXXXXX Shares and the Parent XXXXXXXXXX Special Shares will be an amount equal to the aggregate PUC of the Parent XXXXXXXXXX Shares immediately prior to the Parent Capital Reorganization, and such PUC will be allocated between the New Parent XXXXXXXXXX Shares and Parent XXXXXXXXXX Special Shares based on the proportion that the FMV of the New Parent XXXXXXXXXX Shares and the Parent XXXXXXXXXX Special Shares, as the case may be, is of the aggregate FMV of all of the New Parent XXXXXXXXXX Shares and Parent XXXXXXXXXX Special Shares issued on the Parent Capital Reorganization; and

(c) the aggregate amount to be added by Parent, pursuant to the provisions of the applicable corporation law, to the stated capital of the New Parent XXXXXXXXXX Shares and the Parent XXXXXXXXXX Special Shares will be an amount equal to the aggregate PUC of the Parent XXXXXXXXXX Shares immediately prior to the Parent Capital Reorganization, and such PUC will be allocated between the New Parent XXXXXXXXXX Shares and Parent XXXXXXXXXX Special Shares based on the proportion that the FMV of the New Parent XXXXXXXXXX Shares and the Parent XXXXXXXXXX Special Shares, as the case may be, is of the aggregate FMV of all of the New Parent XXXXXXXXXX Shares and Parent XXXXXXXXXX Special Shares issued on the Parent Capital Reorganization.

69. Concurrent with the Parent Capital Reorganization, each holder of Stock Options will exchange all of such holder’s outstanding Stock Options for New Stock Options granting each respective holder the right to acquire an identical number of Parent XXXXXXXXXX Shares for an exercise price that when compared to the exercise price under the holder’s Stock Options, will reflect the FMV Reduction of a Parent XXXXXXXXXX Share, and the Stock Options so exchanged will be cancelled. None of the New Stock Options will be exercisable until after the completion of the Plan of Arrangement.

For greater certainty, the aggregate In The Money Amount of a holder’s New Stock Options will not exceed the aggregate In the Money Amount of such holder’s Stock Options, and for this purpose:

(a) the FMV of a Parent XXXXXXXXXX Share issuable under a Stock Option will be determined based on the weighted average trading price of a Parent XXXXXXXXXX Share on the Exchange for a XXXXXXXXXX-day trading period (or such other trading period that is acceptable to the Exchange) ending immediately before the Effective Date; and

(b) the FMV of a Parent XXXXXXXXXX Share issuable under a New Stock Option will be determined based on the weighted average trading price of a Parent XXXXXXXXXX Share on the Exchange for a XXXXXXXXXX-day trading period (or such other trading period that is acceptable to the Exchange) beginning on the Effective Date.

70. Concurrent with the Parent Capital Reorganization, the number of RSUs and DSUs recorded in the account of each participant in the RSU Plan and DSU Plans, respectively, will be proportionately increased to reflect the FMV Reduction of a Parent XXXXXXXXXX Share.

71. Each:

(a) XXXXXXXXXX Participant will transfer each Parent XXXXXXXXXX Special Share that it holds to Newco in consideration for one Newco XXXXXXXXXX Share; and

(b) XXXXXXXXXX Participant will transfer each Parent XXXXXXXXXX Special Share that it holds to Newco in consideration for one Newco XXXXXXXXXX Share.

If requested by a particular Participant, Newco will execute a joint election under subsection 85(1) in respect of the disposition by that Participant of Parent XXXXXXXXXX Special Shares or Parent XXXXXXXXXX Special Shares, as the case may be, for Newco XXXXXXXXXX Shares and Newco XXXXXXXXXX Shares, respectively. It is anticipated that XXXXXXXXXX that is a Participant will execute and file a valid subsection 85(1) joint election with Newco in respect of the dispositions of the Parent XXXXXXXXXX Special Shares or Parent XXXXXXXXXX Special Shares, as applicable. For greater certainty, the agreed amounts in any such election will not be lesser than the lesser of the amounts described in subparagraphs 85(1)(c.1)(i) and (ii), nor will such agreed amounts exceed the FMV of Parent XXXXXXXXXX Special Shares or Parent XXXXXXXXXX Special Shares so transferred.

72. Concurrent with the issuance of the Newco XXXXXXXXXX Shares and the Newco XXXXXXXXXX Shares on the share transfers described in Paragraph 71, the Newco XXXXXXXXXX Shares and the Newco XXXXXXXXXX Shares will, outside of the Plan of Arrangement, be listed for trading on the Exchange (subject to standard listing conditions imposed by the Exchange in similar circumstances), and for greater certainty, such listing will be effective before the Parent Disposition.

73. The addition to the stated capital of Newco in respect of the issuance of the Newco XXXXXXXXXX Shares and the Newco XXXXXXXXXX Shares will not exceed the aggregate PUC of the Parent XXXXXXXXXX Special Shares and Parent XXXXXXXXXX Special Shares, respectively, transferred to Newco, less the amount, if any, by which the aggregate PUC of the Parent XXXXXXXXXX Special Shares and the Parent XXXXXXXXXX Special Shares, respectively, that are subject to an election under subsection 85(1) exceeds the aggregate agreed amounts in such elections.

74. Parent will transfer all of the Newco Sub Common Shares that is holds to Newco in consideration for XXXXXXXXXX Newco Special Shares (the “Parent Disposition”). The net FMV of the Newco Sub Common Shares received by Newco will be equal to or approximate that proportion of the net FMV of all property owned by Parent immediately before the Parent Disposition that:

(a) the aggregate FMV of the Parent Special Shares owned by Newco immediately before the Parent Disposition;

is of

(b) the aggregate FMV of all of the issued and outstanding shares in the capital of Parent immediately before the Parent Disposition.

Parent and Newco will jointly elect under subsection 85(1) in prescribed form and manner and within the time limits referred to in subsection 85(6) with respect to Parent Disposition. The agreed amount in respect of the disposition of the Newco Sub Common Shares will be an amount equal to the aggregate ACB of the Newco Sub Common Shares to Parent at the time of the Parent Disposition. The amount added to the stated capital of the Newco Special Shares issued on the Parent Disposition will be equal to such agreed amount.

75. Newco will redeem from Parent all of the Newco Special Shares for an amount equal to the aggregate redemption amounts and fair market value of the shares so redeemed, and will issue to Parent in consideration therefor the Newco Redemption Note. Parent will accept the Newco Redemption Note as full and absolute payment of the redemption amounts in respect of all such redeemed shares, with the risk of the note being dishonoured. The amount of any deemed dividend resulting from the application of subsection 84(3) to the redemption of all of the Newco Special Shares will be designated by Newco pursuant to subsection 89(14), to the extent permitted under the Act, to be treated as an eligible dividend by notifying Parent in writing, within the time limit prescribed in subsection 89(14), that all or a portion of such dividend is an eligible dividend.

76. Parent will redeem from Newco all of the Parent Special Shares for an amount equal to the aggregate of the redemption amounts and fair market value of the shares so redeemed, and will issue to Newco in consideration therefor the Parent Redemption Note. Newco will accept the Parent Redemption Note as full and absolute payment of the redemption amounts in respect of all such redeemed shares, with the risk of the note being dishonoured. The amount of any deemed dividend resulting from the application of subsection 84(3) to the redemption of all of the Parent Special Shares will be designated by Parent pursuant to subsection 89(14), to the extent permitted under the Act, to be treated as an eligible dividend by notifying Newco in writing, within the time limit prescribed in subsection 89(14), that all or a portion of such dividend is an eligible dividend.

77. In order to settle the promissory notes issued by Parent and Newco, the following transactions will occur simultaneously:

(a) Parent will satisfy its obligations under the Parent Redemption Note by transferring the Newco Redemption Note to Newco, and Newco will accept the Newco Redemption Note in full satisfaction of Parent’s obligations under the Parent Redemption Note; and

(b) Newco will satisfy its obligation under the Newco Redemption Note by transferring the Parent Redemption Note to Parent, and Parent will accept the Parent Redemption Note in full satisfaction of Newco’s obligations under the Newco Redemption Note.

The Parent Redemption Note and Newco Redemption Note will both be marked paid in full and cancelled.

Amalgamation of Newco and Newco Sub

78. Newco and Newco Sub (referred to in this Paragraph as “predecessor corporations”) will amalgamate to form Amalco in such manner that:

(a) all of the property (except amounts receivable from any predecessor corporation or shares of any predecessor corporation) of the predecessor corporations immediately before the Amalgamation will become property of Amalco by virtue of the Amalgamation;

(b) all of the liabilities (except any amounts payable to any predecessor corporation) of the predecessor corporations immediately before the Amalgamation will become liabilities of Amalco by virtue of the Amalgamation; and

(c) no securities or other property will be issued on the Amalgamation and the Newco XXXXXXXXXX Shares and the Newco XXXXXXXXXX Shares will survive and continue as Amalco XXXXXXXXXX Shares and Amalco XXXXXXXXXX Shares, respectively, and with stated capital equal to the PUC of the Newco XXXXXXXXXX Shares and Newco XXXXXXXXXX Shares, respectively.

79. Concurrent with the continuance of shares on the Amalgamation, the Amalco XXXXXXXXXX Shares and the Amalco XXXXXXXXXX Shares will, outside of the Plan of Arrangement, be listed on the Exchange (subject to standard listing conditions imposed by the Exchange in similar circumstances).

Conversion of Parent Shares

80. Each:

(a) holder of New Parent XXXXXXXXXX Shares will exercise their conversion rights on such shares and each New Parent XXXXXXXXXX Share will be converted into one Parent XXXXXXXXXX Share; and

(b) holder of New Parent XXXXXXXXXX Shares will exercise their conversion rights on such shares and each New Parent XXXXXXXXXX Share will be converted into one Parent XXXXXXXXXX Share.

81. Concurrent with the conversion of the New Parent XXXXXXXXXX Shares and the New Parent XXXXXXXXXX Shares into Parent XXXXXXXXXX Shares and Parent XXXXXXXXXX Shares, respectively, as described in Paragraph 80, the Parent XXXXXXXXXX Shares and the Parent XXXXXXXXXX Shares will, outside of the Plan of Arrangement, be listed on the Exchange (subject to standard listing conditions imposed by the Exchange in similar circumstances).

82. In connection with the share conversions in Paragraph 80:

(a) an amount equal to the stated capital of the New Parent XXXXXXXXXX Shares will be deducted from the stated capital of those shares and will be added to the stated capital of the Parent XXXXXXXXXX Shares; and

(b) an amount equal to the stated capital of the New Parent XXXXXXXXXX Shares will be deducted from the stated capital of those shares and will be added to the stated capital of the Parent XXXXXXXXXX Shares.

Amendment to Articles of Parent

83. The Articles of Amalgamation, as amended pursuant to Paragraph 65, of Parent will be further amended by deleting the New Parent XXXXXXXXXX Shares, the Parent XXXXXXXXXX Special Shares, the New Parent XXXXXXXXXX Shares and the Parent XXXXXXXXXX Special Shares as shares which Parent is authorized to issue.

Post-Plan of Arrangement Transactions

84. Pursuant to the post-amble in the definition of “public corporation” in subsection 89(1), Newco will elect in its return of income for its first taxation year to have been a public corporation from the beginning of such year.

85. Amalco will file articles of continuance under Act3 to continue its existence out of XXXXXXXXXX and into XXXXXXXXXX jurisdiction. In connection with the continuance, the corporate existence of Amalco will be preserved, and no new corporation will be formed, and the assets, liabilities and shares, and the stated capital of the shares, of Amalco prior to the continuance will continue to be the assets, the liabilities and the shares, and the stated capital of the shares, of Amalco after the continuance.

86. Amalco will implement various stock-based compensation plans, including a stock option plan, a restricted share unit plan and one or more deferred share unit plans.

87. Parent and Newco (or Amalco) will agree to provide each other, on a transitional basis, certain services in order to facilitate the orderly transfer of the XXXXXXXXXX assets to Newco.

88. Amalco expects to conclude a credit facility with one or more financial institutions on or shortly after the completion of the Proposed Transactions.

PURPOSE OF THE PROPOSED TRANSACTIONS

89. Parent wishes to complete the Proposed Transactions because its executives and board of directors believe that it is in the best interests of the Parent shareholders that Parent “spin-off” its XXXXXXXXXX assets for the following reasons:

(a) the creation of Amalco as a separate public corporation should increase shareholder value because the XXXXXXXXXX assets, including Parent’s equity investment in XXXXXXXXXX, will achieve a higher valuation as a stand-alone business; and

(b) the separation of the XXXXXXXXXX assets from Parent’s XXXXXXXXXX businesses into Newco/Amalco will enhance the ability for each Amalco and Parent to pursue its independent corporate objectives and strategies.

ADDITIONAL INFORMATION

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

(a) the debt repayment steps described in Paragraphs 43 to 45 will occur in the order presented, and these transactions will collectively occur at any time before the Effective Date; and

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

91. Newco (or Amalco) may list the Newco XXXXXXXXXX Shares and/or the Newco XXXXXXXXXX Shares (or the Amalco XXXXXXXXXX Shares and/or the Amalco XXXXXXXXXX Shares) on the New York Stock Exchange.

92. Each of the corporations described in this letter is (or will be, once incorporated) a XXXXXXXXXX under paragraph XXXXXXXXXX of that definition in subsection 248(1) by virtue of XXXXXXXXXX being a wholly-owned subsidiary of Parent and the extended meaning of “control” for the purpose of that paragraph.

93. The transactions described in the XXXXXXXXXX were undertaken to simplify the corporate structure of Group and were not completed in contemplation of the Proposed Transactions described herein. For greater certainty, the transactions described in the XXXXXXXXXX would have occurred whether or not the Proposed Transactions occur, and vice versa.

94. Parent and Sub1 are not, and Newco and Newco Sub will not be, a “mortgage investment corporation” as defined in subsection 130.1(6).

95. Except as described herein:

(a) no specified shareholder of Sub1 or Newco Sub/Amalco will dispose of shares of Sub1 or Newco Sub, or any property 10% or more of the FMV of which is, at any time during the series, derived from shares of Sub1 or Newco Sub/Amalco, as part of the series of transactions or events that include the Proposed Transactions, to an unrelated person, a partnership, or a person who will cease to be related to the transferor as part of the series of transactions or events that include the Proposed Transactions; and

(b) no specified shareholder of Parent or Newco/Amalco will dispose of shares of Parent or Newco/Amalco, or any property 10% or more of the FMV of which is, at any time during the series, derived from shares of Parent or Newco/Amalco, as part of the series of transactions or events that include the Proposed Transactions, to an unrelated person, a partnership, or a person who will cease to be related to the transferor as part of the series of transactions or events that include the Proposed Transactions.

95.1 Except as described herein, members of the XXXXXXXXXX and XXXXXXXXXX will not acquire any shares in the capital of either Sub1 or Parent in contemplation of the applicable distribution by Sub1 or Parent as part of the Proposed Transactions, except as permitted by subparagraph 55(3.1)(b)(iii).

95.2 There is no anticipated or expected acquisition of control of Parent or Newco/Amalco (or any successor) either through a direct or indirect acquisition of shares.

96. The acquisition of:

(a) Newco Sub Special Shares by Sub1 will occur outside the ordinary course of Sub1’s businesses;

(b) Sub1 Special Shares by Newco Sub will occur outside the ordinary course of Newco Sub’s businesses;

(d) Parent Special Shares by Newco will occur outside the ordinary course of Newco’s businesses

as that phrase is interpreted for the purposes of subsection 112(2.1).

97. The Parent Special Shares, the Newco Special Shares, the Sub1 Special Shares and the Newco Sub Special Shares are not, and will not be, at any time during a series of transactions or events that includes 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);

(d) issued for consideration that is or includes:

(i) an obligation of the type described in subparagraph 112(2.4)(b)(i), other than an obligation of a corporation that is related (otherwise than by reason of a right referred to in paragraph 251(5)(b)); or

(ii) any right of the type described in paragraph 112(2.4)(b)(ii); or

(e) issued or acquired as part of a transaction or event or series of transactions or events of the type described in subsection 112(2.5).

98. Holders of Stock Options (XXXXXXXXXX) which have vested are free to exercise their options from time to time, and it is possible that holders of Stock Options may, based on individual investment considerations, exercise options and acquire Parent XXXXXXXXXX Shares prior to the Parent Spin-Off Butterfly.

99. Parent, XXXXXXXXXX are and will continue to deal with the XXXXXXXXXX at “arm’s length” for the purposes of section 55.

RULINGS GIVEN

Provided that the above statements of Facts, Proposed Transactions, Purpose of the Proposed Transactions and Additional Information are accurate and constitute a complete disclosure of all relevant information, that there are no other transactions which may be relevant to the rulings requested, and provided that the Proposed Transactions are completed in the manner described above, our rulings are as follows:

A. With regard to the purchase by Parent of Parent XXXXXXXXXX Shares or Parent XXXXXXXXXX Shares held by a Dissenting Shareholder as described in Paragraph 54:

a. subject to the application of subsection 55(2), Parent will be deemed by paragraph 84(3)(a) and each Dissenting Shareholder will be deemed by paragraph 84(3)(b) to have received a dividend equal to the amount by which any payment from Parent to the Dissenting Shareholder in respect of the purchase of such person’s shares exceeds the amount of PUC attributable to such shares immediately prior to their purchase; and

b. paragraph (j) of the definition of “proceeds of disposition” in section 54 will apply to exclude the amount of such deemed dividend from the proceeds of disposition of the Parent XXXXXXXXXX Shares or Parent XXXXXXXXXX Shares recognized by the Dissenting Shareholder as a result of the purchase of such shares by Parent.

B. On the exchange of the Parent XXXXXXXXXX Shares for New Parent XXXXXXXXXX Shares and Parent XXXXXXXXXX Special Shares, and the exchange of the Parent XXXXXXXXXX Shares for New Parent XXXXXXXXXX Shares and Parent XXXXXXXXXX Special Shares, as described in Paragraph 66, the provisions of subsection 86(1) will apply, and the provisions of subsection 86(2) will not apply, to the disposition of each Parent XXXXXXXXXX Share for one New Parent XXXXXXXXXX Share and one Parent XXXXXXXXXX Special Share and each Parent XXXXXXXXXX Share for one New Parent XXXXXXXXXX Share and one Parent XXXXXXXXXX Special Share, as the case may be, provided that:

a. the particular Participant holds the Parent XXXXXXXXXX Share or the Parent XXXXXXXXXX Share, as applicable, as capital property; and

b. the Participant and Parent do not file an election under subsection 85(1) in respect of the particular share exchange,

such that:

c. the cost of the New Parent XXXXXXXXXX Shares and the Parent XXXXXXXXXX Special Shares received on the exchange by each particular XXXXXXXXXX Participant will be deemed by paragraph 86(1)(b) to be an amount equal to that proportion of the aggregate ACB to the particular XXXXXXXXXX Participant, immediately before the exchange, of the Parent XXXXXXXXXX Shares held that:

i. the FMV, immediately after the exchange, of the New Parent XXXXXXXXXX Shares or the Parent XXXXXXXXXX Special Shares, as the case may be, received by the particular XXXXXXXXXX Participant

is of

ii. the FMV, immediately after the exchange, of all of the shares of Parent received by the particular XXXXXXXXXX Participant for the Parent XXXXXXXXXX Shares; and

d. the cost of the New Parent XXXXXXXXXX Shares and the Parent XXXXXXXXXX Special Shares received on the exchange by each particular XXXXXXXXXX Participant will be deemed by paragraph 86(1)(b) to be an amount equal to that proportion of the aggregate ACB to the particular XXXXXXXXXX Participant, immediately before the exchange, of the Parent XXXXXXXXXX Shares held that:

i. the FMV, immediately after the exchange, of the New Parent XXXXXXXXXX Shares or the Parent XXXXXXXXXX Special Shares, as the case may be, received by the particular XXXXXXXXXX Participant

is of

ii. the FMV, immediately after the exchange, of all of the shares of Parent received by the particular XXXXXXXXXX Participant for the Parent XXXXXXXXXX Shares; and

e. pursuant to paragraph 86(1)(c), such XXXXXXXXXX Participant and XXXXXXXXXX Participant will be deemed to have disposed of its Parent XXXXXXXXXX Shares and Parent XXXXXXXXXX Shares, respectively, for aggregate proceeds of disposition equal to the aggregate cost to the XXXXXXXXXX Participant and the XXXXXXXXXX Participant of the shares received by it as determined in item (c) and (d) above, respectively; and

f. pursuant to subsection 86(2.1):

i. the aggregate PUC of the New Parent XXXXXXXXXX Shares and Parent XXXXXXXXXX Special Shares will be equal to the aggregate PUC of the Parent XXXXXXXXXX Shares which were exchanged for the New Parent XXXXXXXXXX Shares and Parent XXXXXXXXXX Special Shares; and

ii. the aggregate PUC of the New Parent XXXXXXXXXX Shares and Parent XXXXXXXXXX Special Shares will be equal to the aggregate PUC of the Parent XXXXXXXXXX Shares which were exchanged for the New Parent XXXXXXXXXX Shares and Parent XXXXXXXXXX Special Shares.

C. Provided that a particular Participant who, immediately before the transfer of Parent XXXXXXXXXX Special Shares and Parent XXXXXXXXXX Special Shares to Newco for an identical number of Newco XXXXXXXXXX Shares and Newco XXXXXXXXXX Shares, respectively:

a. holds the relevant Parent Special Shares as capital property;

b. does not receive any consideration from the Parent on the transfer of Parent Special Shares to Newco other than Newco Common Shares;

c. deals at arm’s length with Newco immediately before the exchange;

d. does not file an election under subsection 85(1) with respect to the exchange; and

e. does not include any portion of the gain or loss otherwise determined in computing the holder’s income for that year,

and further provided that immediately after the exchange

f. no such Participant or such person or persons with whom the Participant does not deal at arm’s length, or no such holder together with any person or persons with whom the Participant does not deal at arm’s length will

i. control Newco, or

ii. beneficially own shares of Newco having a FMV of more than 50% of the FMV of all the outstanding shares of Newco,

then pursuant to paragraph 85.1(1)(a) such Participant will be deemed:

g. to have disposed of such Parent XXXXXXXXXX Special Shares or Parent XXXXXXXXXX Special Shares, as the case may be, for proceeds of disposition equal to the ACB to such Participant of those shares immediately before the exchange;

h. to have acquired the Newco XXXXXXXXXX Shares or Newco XXXXXXXXXX Shares, as the case may be, at a cost to such person equal to the ACB to such Participant of such Parent XXXXXXXXXX Special Shares or XXXXXXXXXX Special Shares, respectively, immediately before the exchange; and

i. pursuant to paragraph 85.1(1)(b), the cost to Newco of each Parent XXXXXXXXXX Special Share or Parent XXXXXXXXXX Special Share, as the case may be, acquired from each such Participant will be deemed to be the lesser of its FMV immediately before the exchange and the PUC of the relevant Parent Special Share immediately before the exchange.

D. Provided that the requisite section 85 elections are made in the prescribed form and manner within the time limit specified in subsection 85(6), and provided that the Parent XXXXXXXXXX Special Share or Parent XXXXXXXXXX Special Share transferred is an eligible property in respect of which shares have been issued as full or partial consideration therefor, the provisions of subsection 85(1) will apply to the transfer by any holder of such Parent Special Shares (including XXXXXXXXXX that is a Participant) to Newco as described in Paragraph 71, such that the agreed amount in respect of such transfer will be deemed pursuant to paragraph 85(1)(a) to be the proceeds of disposition for the particular transferred property of each transferor and the cost to each transferee for the particular transferred property. For greater certainty, paragraph 85(1)(e.2) will not apply to the transfers.

E. Subsection 84(3) will apply to:

a. with respect to the Sub1 Spin-off Butterfly:

i. the redemption of the Newco Sub Special Shares held by Sub1, such that Newco Sub will be deemed to paid and Sub1 will be deemed to have received; and

ii. the redemption of the Sub1 Special Shares held by Newco Sub, such that Sub1 will be deemed to have paid and Newco Sub will be deemed to have received; and

b. with respect to the Parent Spin-off Butterfly:

i. the redemption of the Newco Special Shares held by Parent, such that Newco will be deemed to paid and Parent will be deemed to have received; and

ii. the redemption of the Parent Special Shares held by Newco, such that Parent will be deemed to have paid and Newco will be deemed to have received;

a dividend on the Newco Sub Special Shares, the Sub1 Special Shares, the Newco Special Shares and the Parent Special Shares, respectively, equal to the amount, if any, by which the aggregate amount paid upon such redemption exceeds the aggregate PUC, in respect of such shares redeemed, immediately before such redemption, and any such dividend will:

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

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

e. will, by virtue of paragraph (j) of the definition of “proceeds of disposition” in section 54, be excluded from the proceeds of disposition of the recipient in respect of the shares so redeemed; and

f. reduce, by virtue of subsection 112(3), the loss, if any, in respect of the redemption of the shares on which the particular dividend is deemed to be received.

F. Provided that:

a. with respect to the Sub1 Spin-off Butterfly there is not:

i. a distribution by Sub1 to a corporation that is not an acquiror before the day that is three years after the Effective Date; and

ii. a distribution by Amalco (as the successor of Newco Sub) or any acquiror in relation to Sub1 and the Sub1 Spin-off Butterfly before the day that is three years after the Effective Date; and

b. with respect to the Parent Spin-off Butterfly there is not:

i. a distribution by Parent to a corporation that is not an acquiror before the day that is three years after the Effective Date; and

ii. a distribution by Amalco (as the successor of Newco) or any acquiror in relation to Parent and the Parent Spin-off Butterfly before the day that is three years after the Effective Date;

and as part of the series of transactions or events that includes the taxable dividends described in Ruling E there is not

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

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

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

which has not been described in this letter, then by virtue of paragraph 55(3)(b), subsection 55(2) will not apply to the taxable dividends referred to in Ruling E, and for greater certainty, subsection 55(3.1) will not apply to deny the exemption under paragraph 55(3)(b).

G. The provisions of subsection 80(1) will not apply to the settlements and cancellation of:

a. the obligations under the Newco Sub Redemption Note and the Sub1 Redemption Note, which may not have the same principal amounts, described in Paragraph 63; and

b. the obligations under the Newco Redemption Note and the Parent Redemption Note, which may not have the same principal amounts, described in Paragraph 77;

and none of the parties to the foregoing notes will realize a gain or incur a loss as a result of the repayment and cancellation of such notes.

H. Pursuant to clause 256(7)(a)(i)(E), control of Newco Sub, XXXXXXXXXX will be deemed not to have been acquired as a result of the transfer by Parent of the Newco Sub Common Shares to Newco on the Parent Disposition.

I. As a result of the Amalgamation described in Paragraph 78:

a. the provisions of section 87 will apply in respect of Newco, Newco Sub and Amalco;

b. provided that the Newco XXXXXXXXXX Shares or Newco XXXXXXXXXX Shares, as the case may be, are held by a particular holder thereof as capital property, the provisions of subsection 87(4) (excluding paragraphs 87(4)(c) to (e)) will apply to such holder, such that the holder will be considered to have received Amalco XXXXXXXXXX Shares or Amalco XXXXXXXXXX Shares, as the case may be, in consideration for the disposition by such holder of the Newco XXXXXXXXXX Shares or Newco XXXXXXXXXX Shares, as the case may be, and will be deemed to have disposed of such Newco XXXXXXXXXX Shares and Newco XXXXXXXXXX Shares, as the case may be, for proceeds of disposition equal to, and to have acquired the Amalco XXXXXXXXXX Shares and Amalco XXXXXXXXXX Shares at a cost equal to, the ACB to the holder of such Newco XXXXXXXXXX Shares or Newco XXXXXXXXXX Shares, respectively, immediately before the Amalgamation; and

c. Amalco will be deemed to be a public corporation at the commencement of its first taxation year pursuant to paragraph 87(2)(ii).

J. The provisions of subsection 51(1) will apply, and the provisions of subsection 51(2) will not apply, to the conversion by the holders of New Parent XXXXXXXXXX Shares and New Parent XXXXXXXXXX Shares of such shares as described in Paragraph 80.

K. Provided that Newco makes the election to be a public corporation as described in Paragraph 84, the New Parent XXXXXXXXXX Shares, the New Parent XXXXXXXXXX Shares, the Parent Special Shares, the Parent XXXXXXXXXX Shares and Parent XXXXXXXXXX Shares issued on the conversions described in Paragraph 80, the Newco XXXXXXXXXX Shares, the Newco XXXXXXXXXX Shares, the Amalco XXXXXXXXXX Shares and the Amalco XXXXXXXXXX Shares will be “qualified investments”:

a. for a deferred profit sharing plan by virtue of paragraph (h) of the definition “qualified investment” in section 204 and paragraph 4900(1)(b) of the Regulations;

b. for a registered disability savings plan by virtue of paragraph (d) of the definition “qualified investment” in subsection 146.4(1) and paragraph 4900(1)(b) of the Regulations;

c. for a registered education savings plan by virtue of paragraph (e) of the definition “qualified investment” in subsection 146.1(1) and paragraph 4900(1)(b) of the Regulations;

d. for a registered retirement income fund by virtue of paragraph (c) of the definition “qualified investment” in subsection 146.3(1) and paragraph 4900(1)(b) of the Regulations;

e. for a registered retirement savings plan by virtue of paragraph (d) of the definition “qualified investment” in subsection 146(1) and paragraph 4900(1)(b) of the Regulations; and

f. for a tax-free savings account by virtue of paragraph (c) of the definition “qualified investment” in subsection 207.01(1) and paragraph 4900(1)(b) of the Regulations.

L. The provisions of subsection 7(1.4) will apply with respect to the exchange by a holder of their Stock Options, that are subject to the provision of subsection 7(1), for New Stock Options as described in Paragraph 69, provided that the aggregate In the Money Amount of the New Stock Options received by the holder on the disposition does not exceed the aggregate In The Money Amount of the Stock Options that were so disposed of by the holder, with the result that for the purposes of section 7:

a. such holder will be deemed not to have disposed of such holder’s Stock Options and not to have acquired such holder’s New Stock Options; and

b. the New Stock Options will be deemed to be the same as, and a continuation of, the corresponding Stock Options.

M. New Stock Options issued by Parent in exchange for Stock Options issues by Parent prior to July 1, 2021, and in an exchange where Ruling L applies, will not be subject to subsections 110(1.3) or (1.31).

N. The adjustment to the number of DSUs credited to a participant’s account, as described in Paragraph 70, will not, in and by itself, cause the DSU Plans to not be prescribed plans as described under paragraph 6801(d) of the Regulations.

O. The Proposed Transactions, in and of themselves, will not result in the application of subsections 15(1), 56(2), 56(4) or 246(1).

P. Subsection 245(2) will not be applied, as a result of the Proposed Transactions in and of themselves, to redetermine the tax consequences described in the rulings given above.

These rulings are subject to the limitations and qualifications set out in Information Circular IC 70-6R11 dated April 1, 2021 and are binding on the CRA provided that the Proposed Transactions are completed no later than six months after the date of this letter. The above rulings are based on the law as it reads at the date of this letter and do not take into account any proposed amendments to the Act and the Regulations which, if enacted into law, could have an effect on the rulings provided herein.

OTHER COMMENTS

Unless otherwise confirmed in the above rulings, nothing in this letter should be construed as implying that the CRA has confirmed, reviewed or has made any determination in respect of:

(a) The PUC of any share or the ACB or FMV of any property referred to herein;

(b) The balance of the “general rate income pool” as defined in subsection 89(1) and the “low rate income pool” as defined in subsection 89(1); and

(c) 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 purposes of any of the rulings given above, any adjustment to the FMV of the properties transferred or 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 Price Adjustment Clauses.

An invoice for our fees in connection with this ruling request will be forwarded to you under separate cover.

Yours Truly,

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

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Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistribuer de l'information, sous quelque forme ou par quelque moyen que ce soit, de façon électronique, mécanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.

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