2010 Ruling 2009-0311941R3 - Amendment to a RSU and Employee Stock Option

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: Will paragraph 7(1)(b) apply where a participant elects to receive cash following the modification of an existing RSU/ESOP Plan to add a cash-out right.

Position: Yes.

Reasons: Previous positions and the Act.

XXXXXXXXXX 									2009-031194

XXXXXXXXXX , 2010

Dear XXXXXXXXXX :

Re: Advance Income Tax Ruling
XXXXXXXXXX

This is in reply to your letters of XXXXXXXXXX in respect of your request for an advance income tax ruling on behalf of the above noted-taxpayers. We also acknowledge the information provided in your electronic correspondence until XXXXXXXXXX .

This letter is based solely on the facts and proposed transactions described below. Any documentation submitted in respect of your request does not form part of the facts and proposed transactions and any references thereto are provided solely for the convenience of the reader.

Definitions

1. All terms used herein that are defined in the Act have the meaning given in such definitions unless otherwise indicated.

2. Unless otherwise stated the following terms and expressions have the meanings specified below:

(a) The "Act" means the Income Tax Act, R.S.C. 1985, c. l (5th Supp.), as amended;

(b) "ADS" means a XXXXXXXXXX American Depositary Share, each of which represents one ordinary share of The Parent;

(c) "Award" means, individually or collectively, an award, other than an Excluded Award, of Tradable Options and Restricted Stock Units, made by a Canadian Subsidiary in the manner described in this ruling;

(d) "Board" means the Board of Directors of the Company;

(e) "Canadian Participant" means an employee, director or officer of a corporate member of the Group who holds or will receive a Tradable Option or a Restricted Stock Unit granted by a Canadian Subsidiary;

(f) "CRA" means the Canada Revenue Agency;

(g) "Canadian Subsidiary" means a corporation that (i) does not deal at arm's length with the Parent or the Company, (ii) was formed pursuant to the laws of Canada, and (iii) is resident in Canada, and includes:

(i) XXXXXXXXXX which:

(A) has the business number XXXXXXXXXX ,
(B) has its head office located in the province of XXXXXXXXXX , Canada,
(C) has a mailing address of XXXXXXXXXX , and
(D) is served by the XXXXXXXXXX Tax Services Office and the XXXXXXXXXX Taxation Centre;

(ii) XXXXXXXXXX which:

(A) has the business number XXXXXXXXXX ,
(B) has its head office located in the province of XXXXXXXXXX ,
(C) has a mailing address of XXXXXXXXXX , and
(D) is served by the XXXXXXXXXX Tax Services Office and the XXXXXXXXXX Taxation Centre;

(iii) XXXXXXXXXX which:

(A) has the business number XXXXXXXXXX ,
(B) has its head office located in the province of XXXXXXXXXX , Canada,
(C) has a mailing address of XXXXXXXXXX , and
(D) is served by the XXXXXXXXXX Tax Services Office and the XXXXXXXXXX Taxation Centre;

(iv) XXXXXXXXXX which:

(A) has the business number XXXXXXXXXX ,
(B) has its head office located in the province of XXXXXXXXXX , Canada,
(C) has a mailing address of XXXXXXXXXX , and
(D) is served by the XXXXXXXXXX Tax Services Office and the XXXXXXXXXX Taxation Centre;

(v) XXXXXXXXXX which:

(A) has the business number XXXXXXXXXX ,
(B) has its head office located in the province of XXXXXXXXXX , Canada,
(C) has a mailing address of XXXXXXXXXX , and
(D) is served by the XXXXXXXXXX Tax Services Office and the XXXXXXXXXX Taxation Centre;

(h) "Cash-Out Right" has the meaning ascribed thereto in Paragraphs 39 and 40;

(i) "Change in Control" shall occur, unless a particular Written Award Agreement states otherwise in respect of a particular Award, when:

(i) the Parent enters into any agreement to engage in a transaction, the consummation of which would result in any "person," as such term is used in Sections 13(d) and 14(d) of the United States Securities Exchange Act (other than (A) the Parent itself, or any other member of the Group, (B) any trustee or other fiduciary holding securities under an employee benefit plan of the Parent or any other member of the Group or (C) any combination of persons described in the foregoing clauses (A) and (B)) becoming the "beneficial owner" (as defined in Rule 13d-3 under the United States Securities Exchange Act), directly or indirectly, of securities of the Parent representing thirty-three and one-third percent (33-1/3%) or more of the combined voting power of the then outstanding securities of the Parent, provided that such transaction actually does occur;

(ii) the corporation, partnership, limited liability company or other business organization by which a Participant is employed ceases to be a member of the Group (whether by reason of sale, spin-off; public offering or otherwise), provided that in such event, should the Participant be offered continued employment by the business organization for a period of at least XXXXXXXXXX months following the date the employer ceased being a member of the Group (the "Transition Employment Period") with compensation and benefits equal to or greater than the Participant's compensation and benefits immediately before the employer ceased being a member of the Group, no Change in Control (as herein defined) shall be deemed to have occurred with respect to such Participant unless he or she remains employed throughout the Transition Employment Period or unless the Participant's employment earlier terminates due to retirement, death or disability or is involuntarily terminated for reasons other than for cause;

(iii) individuals who constitute the Board of Directors of the Parent (the "Parent Board"), and any new director (other than a director designated by a person who has entered into an agreement with the Parent to effect a transaction described in clause (i), (iv) or (v) of this definition) whose election by the Parent Board or nomination for election by the shareholders of the Parent was approved by a vote of at least XXXXXXXXXX of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved (unless the approval of the election or nomination for election of such new directors was in connection with an actual or threatened election or proxy contest), cease for any reason to constitute at least a majority thereof;

(iv) the Parent enters into any agreement to engage in a transaction, the consummation of which would result in, or the shareholders of the Parent approve, a merger or consolidation of the Parent with any other corporation, and such merger or consolidation actually does occur other than

(a) a merger or consolidation which would result in the voting securities of the Parent outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by conversion into voting securities of the surviving entity) more than fifty percent (50%) of the combined voting power of the voting securities of the Parent or such surviving entity outstanding immediately after such merger or consolidation, or

(b) a merger or consolidation effected to implement a recapitalization of the Parent (or similar transaction) in which no "person" (as defined in (i) above, including the exemptions thereto) acquires fifty percent (50%) or more of the combined voting power of the Parent's then outstanding securities; or

(v) the Parent enters into any agreement to engage in a transaction, the consummation of which would result in, or the shareholders of the Parent approve, a complete liquidation of the Parent or the sale or disposition by the Parent of all or substantially all of the assets of the Parent or any transaction having a similar effect provided that such liquidation, sale or disposition actually does occur;

(j) "Committee" means the XXXXXXXXXX or such other committee appointed by the Board to administer the Plan;

(k) "Company" means XXXXXXXXXX , a corporation formed pursuant to the laws of the State of XXXXXXXXXX that does not deal at arm's length with the Parent;

(l) "Date of Grant" means the date a Canadian Subsidiary grants a Tradable Option or Restricted Stock Unit to a Canadian Participant in accordance with the terms of the Plan;

(m) "Date of Grant Authorization" means the date on which the granting of an Award is authorized by the Committee or such other date as may be specified in such authorization;

(n) "Excluded Award" means an Award that has or is amended in any manner to have terms and conditions that are not consistent with the terms described herein;

(o) "Fair Market Value"

a. of a Share on a given date means:

(i) if the Share is listed on a national securities exchange in the United States, the closing sale price reported as having occurred on the primary exchange with which the Share is listed and traded (currently the XXXXXXXXXX Stock Exchange) on such date, or, if there is no such sale on that date, then on the last preceding date on which such a sale was reported;

(ii) if the Share is not listed on any national securities exchange but is quoted in the National Market System of the National Association of Securities Dealers Automated Quotation System the trade price of the last sale reported on such date, or, if there is no such sale on that date, then on the last preceding date on which a sale was reported; or

(iii) if the Share is not listed on a national securities exchange nor quoted in the National Market System of the National Association of Securities Dealers Automated Quotation System on a last sale basis, the amount determined by the Committee to be the fair market value based upon a good faith attempt to value the Share accurately; and

b. of a Tradable Option on a given date means the closing sale price on such date, or, if there is no such sale on that date, then on the last preceding date on which such a sale was reported, as determined by the Market Maker;

(p) "Group" means the Parent and each corporation, partnership, limited liability company or other business organization (each a "Business Entity") more 'than 50% of the voting power of which is owned by the Parent either directly or indirectly through one or more intermediate Business Entities more than 50% of the voting power of each of which is owned either directly by the Parent or by another such intermediate Business Entity;

(q) "Holder" means a Canadian Participant who has been granted a Tradable Option or a Restricted Stock Unit and any person to whom a Tradable Option or Restricted Share Unit has been transferred as described in 32 and 34 below;

(r) "Market Maker" means XXXXXXXXXX , or any other entity identified from time to time by the Committee;

(s) "Option Period" means the period described in Paragraph 18(c);

(t) "Option Exercise Price" means the exercise price of an Option as described in Paragraph 18(b);

(u) "Paragraph" refers to a numbered paragraph in this advance income tax ruling;

(v) "Parent" means XXXXXXXXXX ;

(w) "Plan" means the terms of the XXXXXXXXXX that apply with respect to the grant of Awards by a Canadian Subsidiary;

(x) "Proposed Amendments" means the proposed amendments described in Paragraph 40;

(y) "Regulations" means the Income Tax Act Regulations promulgated under the Act;

(z) "Restricted Period" means, with respect to any Restricted Stock Unit, the period of time determined by the Committee during which the Restricted Stock Unit, is subject to the restrictions set forth in Paragraph 22;

(aa) "Restricted Stock Unit" means a restricted stock unit, as described in Paragraphs 20 through 23, that is not an Excluded Award;

(bb) "Share" means an ADS or such other authorized share of stock of the Parent as may be authorized for use under the Plan from time to time;

(cc) "Subco" means XXXXXXXXXX ;

(dd) "Tradable Option" means a tradable option, as described in Paragraphs 18 and 19, that is not an Excluded Award; and

(ee) "Written Award Agreement" means the electronic or paper award notice or agreement, if any, between a Canadian Subsidiary and a Canadian Participant of the Canadian Subsidiary who has been granted a Tradable Option or a Restricted Stock Unit.

Facts

3. The Parent is a corporation incorporated under the laws of XXXXXXXXXX .

4. The Parent is a publicly-held corporation whose shares are listed in XXXXXXXXXX

5. A Share of the Parent is traded on the XXXXXXXXXX Stock Exchange.

6. The Company is a subsidiary of the Parent and is a resident of the United States.

7. The Canadian Subsidiaries grant Tradable Options and Restricted Stock Units to Canadian Participants in accordance with the terms of the Plan and the Written Award Agreements entered into with respect of the Awards as described in Paragraphs 10 through 38.

8. A number of the Awards granted to Canadian Participants remains outstanding and a number of these has vested as provided in the Plan.

9. The Market Maker deals with each member of the Group at arm's length.

The Plan

10. The Plan was originally established by the Company, effective as of XXXXXXXXXX , and has subsequently been amended from time to time. The Plan, as amended and restated is effective as of XXXXXXXXXX .

11. The expiration date of the Plan is XXXXXXXXXX . After that date, no Awards may be granted, however, the administration of the Plan will continue in effect until all matters relating to the payment of any Awards previously granted have been settled.

Administration

12. The Plan is administered by the Committee.

13. Subject to the terms set out in Paragraphs 14 through 38, the Committee, in its sole discretion, has exclusive power to:

(a) select the persons who will be permitted to participate in the Plan;

(b) determine the nature and extent of any Award to be made to a Canadian Participant;

(c) determine the time or times when an Award will be made to a Canadian Participant;

(d) determine the duration of any Restricted Period;

(e) determine the conditions to which the payment of an Award may be subject;

(f) prescribe the form of Written Award Agreement, if any, or other form or forms evidencing the Awards; and

(g) modify existing Awards as it determines to be appropriate and consistent with the Plan and any applicable law.

14. The Committee has the authority, subject to the provisions of the Plan as described herein, to establish, adopt, or revise any rules and regulations and to make any determinations relating to the Plan as it may deem necessary or advisable for the administration of the Plan. The Committee's interpretation of the Plan or any documents evidencing Awards granted and all decisions and determinations by the Committee with respect to the Plan are final, binding, and conclusive on all parties unless otherwise determined by the Board.

15. The Committee may from time to time, grant Awards provided that the Shares to be delivered by the Company in settlement of any Award are:

(a) authorized and unissued Shares,

(b) Shares held in the treasury of the Parent,

(c) Shares held by another member of the Group,

(d) Shares purchased on the open market, or

(e) Shares purchased by private purchase.

Tradable Options

16. An award of a Tradable Option permits a Canadian Participant to acquire a Share upon payment of the Option Exercise Price, subject to any terms attached to the Tradable Option as described in Paragraphs 18, 19 and the general provisions described in Paragraphs 24 through 38 as applicable, or set out in a Written Award Agreement that is entered into with respect to the Award.

17. Any term of a Tradable Option contained in a Written Award Agreement will be consistent with the terms described in Paragraphs 18, 19 and the general provisions described in Paragraphs 24 through 38 as applicable.

18. The salient terms of the Plan in respect to Tradable Options granted to Canadian Participants are as follow:

(a) The Committee may grant one or more Tradable Options to Canadian Participants.

(b) The Option Exercise Price per Share is set by the Committee at the time of the Award and may be more or less than the Fair Market Value of a Share at the Date of Grant. It is intended for the Option Exercise Price per Share in respect of Canadian Participants to be no less than the Fair Market Value of a Share at the Date of Grant.

(c) Tradable Options vest and become exercisable on the dates determined by the Committee in accordance with the terms of the Plan as described in this letter. According to the Written Option Agreement, each Tradable Option will vest and becomes exercisable by a Canadian Participant in accordance with the vesting schedule established by the Committee and set forth in the Written Award Agreement.

(d) Vesting generally takes place no sooner than XXXXXXXXXX years after the Date of Grant Authorization, unless a shorter period of time is designated. The Option Period is normally XXXXXXXXXX years unless the Committee specifies a longer period depending on the national tax law, other than U.S. law, concerning the valuation of a particular Tradable Option at the time of the grant and on the resulting tax liability of the Participant. Tradable Options expire immediately after the end of the Option Period. Unless otherwise stated in the applicable Written Award Agreement or unless otherwise extended in the exercise of its discretion by the Committee, a Tradable Option shall expire earlier than the end of the Option Period in the following circumstances:

(i) if prior to the end of the Option Period, the Canadian Participant undergoes a normal termination of employment, the Tradable Option shall expire on the earlier of the last day of the Option Period or the date that is XXXXXXXXXX days after the date of the termination. In this event, the Tradable Option will remain exercisable by the Canadian Participant until its expiration, only to the extent the Option was exercisable at the time of the termination.

(ii) Abrogated.

(iii) If the Holder ceases employment or service with all members of the XXXXXXXXXX Group for reasons other than normal termination, death, disability or retirement, a Tradable Option shall expire immediately upon such cessation of employment or service.

(iv) Notwithstanding anything in the Plan to the contrary, for Tradable Options granted on or after XXXXXXXXXX , if a Canadian Participant's employment with all members of the Group is terminated by reason of death, disability or retirement (as approved by the Committee for Tradable Options granted on or after XXXXXXXXXX ) prior to the end of the Option Period, the Tradable Option shall become XXXXXXXXXX % vested and non-forfeitable and shall expire on XXXXXXXXXX of the Option Period.

(v) Notwithstanding anything in the Plan to the contrary, for Tradable Options granted on or after XXXXXXXXXX , if a Canadian Participant's employment with all members of the Group is terminated by reason of normal termination, and within XXXXXXXXXX days of such normal termination the Canadian Participant becomes disabled, the Tradable Options shall become XXXXXXXXXX % vested and non-forfeitable and shall expire on the last day of the Option Period.

(e) Subject to Paragraph 18(f), Tradable Options may be exercised by delivery of a notice of exercise to the Committee or its designee, accompanied by payment of the Option Exercise Price. The Option Exercise Price may be paid by:

(i) bank draft or certified personal check;

(ii) the transfer of Shares valued at the Fair Market Value at the time the Tradable Option is exercised (provided that such Shares have been held by the Participant for at least six months),

(iii) at the discretion of the Committee, by transfer of other property having a fair market value on the date of exercise equal to the Option Exercise Price, or

(iv) by delivering to the Committee a copy of irrevocable instructions to a stockbroker to deliver promptly to the Company an amount of sale or loan proceeds sufficient to pay the Option Exercise Price.

(f) Notwithstanding Paragraph 18(e)(ii), a Canadian Participant cannot pay the Option Exercise Price by delivery or tender of Shares previously acquired under the terms of the Plan or under the terms of any other plan of a member of the Group.

(g) Each Tradable Option or portion thereof that is exercisable will be exercisable for the full amount or for any part thereof, subject to any limitations that may be imposed on the partial exercise in the discretion of the Committee to reflect the need for administrative convenience.

(h) Each Tradable Option will cease to be exercisable, as to any Share, when the Canadian Participant purchases the Share or allows the Tradable Option to expire.

(i) Subject to Paragraph 18(j), Tradable Options are not transferable by a Canadian Participant except as otherwise permitted by the Committee or by will or any applicable laws of descent and distribution. Tradable Options are only exercisable by a Canadian Participant during the Canadian Participant's lifetime.

(j) Tradable Options may permit the Holder to sell the Tradable Options to the Market Maker in accordance with procedures established from time to time by the Committee and the Market Maker on or after the date the Tradable Options become vested. Notwithstanding any other provision of this Plan to the contrary, Tradable Options that are sold by a Participant to the Market Maker, do not expire until XXXXXXXXXX of the Option Period for the Tradable Option.

(k) A Tradable Option awarded to a Canadian Participant may not have any stock appreciation right attached to it.

(l) The Committee may permit a voluntary surrender of all or any portion of any Tradable Option by a Canadian Participant, conditionally upon the granting to the Holder of a new Tradable Option for the same or a different number of shares as the Tradable Option that is surrendered.

(m) The Committee may require a voluntary surrender of any Tradable Option as a condition precedent to a grant of a new Tradable Option to a Canadian Participant.

(n) Where Paragraph 18(l) or (m) is applicable, any new Tradable Option will be exercisable at an Option Price, during an Option Period, and in accordance with any other terms or conditions specified by the Committee at the time the new Tradable Option is granted, all determined in accordance with the provisions of the Plan as described in this letter without regard to the Option Price, Option Period, or any other terms and conditions of the Tradable Option surrendered.

19. For greater certainty it is understood that although the Plan provides for amendment of the vesting dates, and the Option Period of any particular option granted to participants, such provisions have not and will not apply with respect to any Tradable Option granted to Canadian Participants, except in the event of a Change in Control;

Restricted Stock Units

20. A Restricted Stock Unit permits a Canadian Participant to receive a Share, subject to any terms attached to the Restricted Stock Unit as described in Paragraphs 22 and 23 and the general provisions described in Paragraphs 24 through 38 as applicable or as set out in any Written Award Agreement that is entered into with respect to the Award.

21. Any terms of a Restricted Stock Unit contained in a Written Award Agreement will be consistent with the terms described in Paragraphs 22 and 23 and the general provisions described in Paragraphs 24 through 38 as applicable.

22. The salient terms of the Plan in respect to Restricted Stock Units are as follow:

(a) The Committee has the discretion and authority to grant and transfer Restricted Stock Units to Canadian Participants, and to establish the terms, conditions and restrictions applicable to such Restricted Stock Units including the Restricted Period, which may differ with respect to each grantee, the time or times at which Restricted Stock Units may be granted or become vested, the number of Restricted Stock Units to be covered by a grant and the consideration, if any, required to be paid by a Canadian Participant for an award of the Restricted Stock Units.

(b) Abrogated.

(c) Canadian Participants that have been granted Restricted Stock Units are not entitled to receive dividends, dividend equivalents or stock dividends in respect of the Restricted Stock Units.

(d) For greater certainty it is understood that no Shares or other assets will be held in a Trust prior to vesting for the benefit of a Canadian Participant.

(e) The Restricted Period of a Restricted Stock Unit commences on the Date of Grant Authorization and shall expire from time to time (as determined by the Committee in accordance with Paragraph 22(a)) as to that part of the Restricted Stock Units indicated in a schedule established by the Committee and set forth in any Written Award Agreement. It is intended that the Restricted Period of the Restricted Stock Units of Canadian Participants shall expire within XXXXXXXXXX years following the end of the year in which it was granted.

(f) Restricted Stock Units awarded to Canadian Participants shall be subject until the expiration of the Restricted Period to forfeiture to the extent provided in Paragraphs 22 (g) and (h). However, the Committee shall have the authority to remove any or all such restrictions on the Restricted Stock Units whenever it may determine that, by reason of a change in any applicable laws or other changes in circumstances arising after the date of the Restricted Stock Unit Award, such action is appropriate.

(g) If a Canadian Participant's employment with all of the members of the Group is terminated by reason of death, disability or retirement (as approved by the Committee), all restrictions on a Restricted Stock Unit will expire.

(h) Except to the extent determined by the Committee and reflected in the Written Award Agreement, in the event a Canadian Participant's employment with a member of the Group is terminated (either by the Canadian Participant or by the Company) during a Restricted Period for any reason other than death, disability or retirement, that portion of a Restricted Stock Award with respect to which restrictions have not expired shall be forfeited.

(i) Upon the expiration of the Restricted Period with respect to any Restricted Stock Units the restrictions described in Paragraphs 22(g) and (h) and in any Written Award Agreement shall be of no further force or effect with respect to any Restricted Stock Units which have not been forfeited.

(j) Subject to Paragraphs 21(j) and (k), upon the expiration of the Restricted Period with respect to a Restricted Stock Unit, the Company shall credit (net of any tax withholding) Shares reflecting the number of Restricted Stock Units which have not been forfeited to an account in the name of the Canadian Participant or his beneficiary (as the case may be), or hold such shares in such other form as the Committee determines to be appropriate, until the Canadian Participant or his beneficiary (as the case may be) provides direction regarding the delivery of such Shares.

(k) Abrogated.

(l) To the extent permitted under the terms of a "nonqualified deferred compensation plan" (as defined under the United States Internal Revenue Code) that is maintained by the Company or a Subsidiary, for Restricted Stock Units granted on or after XXXXXXXXXX , the Participant may defer the proceeds of any transfer of such Restricted Stock Units under such nonqualified plan. The Plan is administered such that Canadian Participants are not entitled to request such a deferral and therefore, to date, there have been no such deferrals requested by Canadian Participants.

23 For greater certainty, it is understood that while the plan provides for amendment of the vesting dates or Restricted Period of any particular Restricted Stock Units granted to participants, such provisions have not and will not apply with respect to any Restricted Stock Units granted to Canadian Participants, except in the event of a Change in Control.

General Terms

24. Abrogated.

25. When a Canadian Participant exercises a Tradable Option the Canadian Participant must remit an amount equal to the Option Exercise Price to the Company, or its delegate as described in Paragraphs 18(e) and (f). Pursuant to an XXXXXXXXXX , (the "Agreement") which was entered into between each Canadian Subsidiary and Subco, the Canadian Subsidiary that employs the Canadian Participant must also send a purchase notice to Subco for the purchase of the required number of Shares necessary for the Canadian Subsidiary to fulfil its obligation under a Tradable Option. The Canadian Subsidiary then pays an amount to Subco equal to the benefit deemed to have been received by the Canadian Participant under section 7 of the Act. This amount would normally be the amount by which the Fair Market Value of a Share at the time of exercise exceeds the amount paid by the Canadian Participant to acquire the Share and, in the case of a Tradable Option, the Fair Market Value of the Tradable Option.

26. When a Canadian Subsidiary must fulfil its obligations under a Restricted Stock Unit through the distribution of Shares, the Canadian Subsidiary must send a purchase notice to Subco for the purchase of the required number of Shares necessary for the Canadian Subsidiary to fulfil its obligation pursuant to the Agreement. The Canadian Subsidiary then pays an amount to Subco equal to the amount determined by the Canadian Subsidiary to be the benefit deemed to have been received by the Canadian Participant under section 7 of the Act. This amount would normally be the amount by which the Fair Market Value of a Share at the time of exercise exceeds the amount, if any, paid by the Canadian Participant to acquire the Restricted Stock Unit.

27. Abrogated.

28. Neither the Canadian Subsidiary nor the Company can unilaterally decide to pay cash to a Canadian Participant to settle a Tradable Option or a Restricted Stock Unit in lieu of the issue of Shares in accordance with the terms of the Plan as described above and must at all times agree to deliver Shares to such a Participant.

29. Awards made under the Plan to Canadian Participants may be subject to such other provisions (whether or not applicable to any other award made to any other Canadian Participant) as the Committee determines appropriate:

(a) Abrogated,

(b) for the forfeiture of a Tradable Option or a Restricted Stock Unit,

(c) for restrictions on resale or other disposition of Shares acquired under a Tradable Option or a Restricted Stock Unit, and

(d) giving the Company the right to repurchase the Shares acquired under an Award in the event a Canadian Participant elects to dispose of the Shares.

Any such provisions will be reflected in a Written Award Agreement applicable to an Award.

30. No person shall be entitled to the privileges of share ownership in respect of Shares which are subject to any Tradable Option or a Restricted Stock Unit until such Shares have been issued to that person.

31. The obligation of the Company to make payment of a Tradable Option or a Restricted Stock Unit in Shares or otherwise, is subject to all applicable laws, rules, and regulations, and to such approvals, by governmental agencies as may be required.

32. A Canadian Participant may file with the Committee a designation of one or more persons as the beneficiary who shall be entitled to receive the rights or amounts payable with respect to an Award due under the Plan upon the Canadian Participant's death. If no beneficiary designation is filed by the Canadian Participant, the beneficiary shall be deemed to be the Canadian Participant's spouse or, if the Canadian Participant is unmarried at the time of death, the Canadian Participant estate.

33. No provision of the Plan requires the Company, a Canadian Subsidiary or any member of the Group, for the purpose of satisfying any obligations under the Plan, to purchase assets or place any assets in a trust or other entity to which contributions are made or otherwise to segregate any assets, nor shall the Company maintain separate bank accounts, books, records or other evidence of the existence of a segregated or separately maintained or administered fund for such purposes.

34. A Canadian Participant's or any other person's rights and interest under the Plan, including amounts payable, may not be sold, assigned, donated, or transferred or otherwise disposed or mortgaged, pledged or encumbered (including, but not limited to, pursuant to a "domestic relations order" (as that term is defined in Section 414Q5)(l)(B) of the American Internal Revenue Code)) except, in the event of a Canadian Participant's death, to a designated beneficiary to the extent permitted by the Plan, or in the absence of such designation, by will or the laws of descent and distribution; provided the Committee may, in its sole discretion, allow in a Written Award Agreement for transfer of Tradable Option or a Restricted Stock Unit to other persons or entities as long as such transferability does not adversely impact the 'ability of the Parent to register the Shares underlying the Tradable Option or the Restricted Stock Unit pursuant to the Securities Act.

35. Any Tradable Options or Restricted Stock Units granted under the Plan and the terms of any Written Award Agreements shall be subject to equitable adjustment or substitution, as determined by the Committee in its sole discretion, as to the number, price or kind of a share of stock or other consideration subject to such Tradable Option or a Restricted Stock Unit

(a) in the event of changes in the outstanding Shares or in the capital structure of the Parent by reason of any stock dividends, stock splits, reverse stock splits, recapitalizations, reorganizations, mergers, consolidations, combinations, exchanges, or other relevant changes in capitalization occurring after the Date of Grant of a Tradable Option or a Restricted Stock Unit;

(b) in the event of any change in applicable laws or any change in circumstances which results in or would result in any substantial dilution or enlargement of the rights granted to, or available for, Canadian Participants in the Plan; or

(c) upon the occurrence of any other event which otherwise warrants equitable adjustment because it interferes with the intended operation of the Plan.

36. Notwithstanding Paragraph 35, in the event:

(a) the Parent is merged or consolidated with another corporation or entity and, in connection therewith, consideration is received by shareholders of the Parent in a form other than stock or other equity interests of the surviving entity;

(b) all or substantially all of the assets of the Parent are acquired by another person; or

(c) the reorganization or liquidation of the Parent or the execution by the Parent of a written agreement to undergo an event described in Paragraphs 35(a), (b) or (c),

then the Committee may, in its sole discretion, cancel any outstanding Tradable Option or Restricted Stock Unit and pay to the Canadian Participant holding such Tradable Option or Restricted Stock Unit, in cash, the value of such Tradable Option or Restricted Stock Unit based upon the price per share of Shares received or to be received by other shareholders of the Parent in the event, except that the terms of this provision may be varied by the Committee in any particular Written Award Agreement.

37. Except to the extent stated otherwise in any Written Award Agreement, or except as otherwise provided in the exercise of discretion by the compensation committee of the Parent upon the occurrence of a Change in Control

(a) all outstanding Tradable Options shall become immediately exercisable in full, and

(b) all restrictions with respect to all outstanding Restricted Stock Units shall lapse.

38. The Board or the Committee may, at any time, or from time to time, amend, terminate or suspend and, if suspended, reinstate, the Plan in whole or in part in its sole discretion; provided that any such amendment shall be contingent on obtaining
the approval of the shareholders of the Company or the Parent if the Committee determines that such approval is necessary to comply with any requirement of law or rule of any stock exchange on which the equity securities of the Parent are traded. The Board or the Committee may not cancel, reduce or otherwise alter outstanding vested Awards in a manner adverse to a Canadian Participant unless it obtains the express written consent of the affected individual Canadian Participant.

Proposed Transactions

39. Pursuant to the provisions of the Plan as described in Paragraph 38, the Company:

(a) added the Proposed Amendments as described in Paragraph 40 to the Plan in order to provide a Cash-Out Right effective on XXXXXXXXXX with application to any Tradable Options or Restricted Stock Units issued thereafter and,

(b) will add a Cash-Out Right, as described in Paragraph 40, to previously granted Tradable Options and Restricted Stock Units awarded to Canadian Participants that are outstanding under the Plan on the effective date, through the issue of amended Written Award Agreements that confirm the addition of the Cash-Out Right, provided that the Participant consents to the addition of the Cash-Out Right as of the date of the amended Written Award Agreement within a specified number of business days after the date on which the amended Written Award Agreement is transmitted to the Canadian Participants.

Proposed Amendments

40. The Proposed Amendments to the Plan will provide as follows:

(a) in respect of a Tradable Option:

(i) At the time a Tradable Option, that is subject to sale to a Market Maker pursuant to Paragraph 18(j), would otherwise be exercisable pursuant to the Plan, a Canadian Participant may elect to receive cash in lieu of a Share where the amount of cash paid would be equal to the Fair Market Value of the Tradable Option; and

(ii) where the payment is made to a Canadian Participant, such payment shall be made by the Canadian Subsidiary that is organized in Canada and in respect of which the Canadian Participant is an employee or director; and

(b) in respect of Restricted Stock Units,

(i) the Canadian Participant may, at the end of a Restricted Period, elect to receive cash in lieu of Shares where the amount of cash paid would be equal to the amount obtained by multiplying the Fair Market Value of one Share by the number of Shares to which the Canadian Participant is entitled pursuant to the Restricted Stock Unit; and

(ii) such payment shall be made by the Canadian Subsidiary that is organized in Canada and in respect of which the Canadian Participant is an employee or director.

Purpose of Proposed Transactions

41. The Proposed Amendments will permit Participants to elect to receive cash instead of Shares in respect of their Tradable Options and Restricted Stock Units through the exercise of Cash-Out Rights.

Additional Information

42. To the best of your knowledge and that of the parties identified above, none of the issues raised in this ruling request are

(a) in an earlier return of any of a Canadian Subsidiary or a related person,

(b) being considered by a tax services office or taxation centre in connection with a previously filed tax return of any of a Canadian Subsidiary or a related person,

(c) under objection by any of a Canadian Subsidiary or a related person,

(d) before the courts or, if a judgment has been issued, the time limit for appeal to a higher court has expired, or

(e) the subject of a ruling previously issued to any of a Canadian Subsidiary or a related person by the Income Tax Rulings Directorate of the CRA.

Rulings Given

Provided that the preceding statements constitute a complete and accurate disclosure of all relevant facts, definitions, the Plan, the Proposed Transactions and Proposed Amendments and the purpose of the Proposed Transactions, that the transactions are legally effective and provided that the transactions are completed as proposed, we rule as follows:

A. Neither the implementation of the Proposed Amendments nor the addition of a Cash-Out Right to an existing Tradable Option or Restricted Stock Unit held by a Canadian Participant at the effective date of the Proposed Amendments will result in a disposition by a Canadian Participant of rights or other property under the Plan or the existing Tradable Option or Restricted Stock Unit for the purposes of paragraph 7(1)(b) of the Act or under the definition of "disposition" in subsection 248(1) of the Act.

B. No amount will be included in the income of any Canadian Participant under section 5, 6 or 7 of the Act as a result of the implementation of the Proposed Amendments or the addition of a Cash-Out Right to an existing Tradable Option or Restricted Stock Unit held by a Canadian Participant at the effective date of the Proposed Amendments.

C. The Cash-Out Rights that may be provided to Canadian Participants in regards to a Tradable Option under the Proposed Amendments will not constitute a salary deferral arrangement as defined in subsection 248(1) of the Act.

D. Upon the exercise of a Cash-Out Right by a Canadian Participant who is a resident of Canada, there will be included in such Canadian Participant's income for the taxation year in which the Canadian Participant's rights under the Written Award Agreement are disposed of, as a benefit from employment pursuant to section 6 of the Act, the amount determined in accordance with paragraph 7(1)(b) of the Act. Specifically, the amount to be included will be the amount of the cash payment paid to such Canadian Participant including any amount withheld in respect of taxes and other source deductions.

E. Upon the exercise of a Cash-Out Right by a Canadian Participant who is no longer a resident of Canada, there will be included in such Canadian Participant's income for the taxation year in which the Canadian Participant's rights under the Written Award Agreement are disposed of, as a benefit from employment pursuant to section 6 and subparagraph 115(1)(a)(i) of the Act, the amount determined in accordance with paragraph 7(1)(b) of the Act to the extent that such benefit relates to services rendered by the Canadian Participant in Canada. Specifically, the amount to be included will be the amount of the cash payment paid to such Canadian Participant including amounts withheld on account of taxes and other source deductions.

F. Provided that the conditions of paragraph 110(1)(d) of the Act are satisfied with respect to a Tradable Option that includes a Cash-Out Right described in Paragraph 39(a), such that the Canadian Participant who holds the Tradable Option would be eligible for the deduction under paragraph 110(1)(d) if the Canadian Participant exercised the Tradable Option and received Shares, such Canadian Participant will be eligible, pursuant to paragraph 110(1)(d) of the Act, to deduct 50% of the benefit calculated pursuant to paragraph 7(1)(b) of the Act.

G. Subject to section 67 and paragraph 18(1)(a) of the Act, each Canadian Subsidiary will be entitled to deduct the gross amount of a cash payment made to a Canadian Participant pursuant to the Proposed Amendments in respect of the Canadian Participant's exercise of a Cash-Out Right , including any amount withheld in respect of taxes and other source deductions, in calculating its income in respect of the taxation year in which the cash payment was made, in accordance with section 9 of the Act. For greater certainty, paragraph 7(3)(b) of the Act will not apply to deny the deduction for the amount paid by the Canadian Subsidiary to a Canadian Participant in respect of the exercise of a Cash-Out Right by the Canadian Participant.

The above rulings are based on the Act in its present form and do not take into account any proposed amendments thereto, are given subject to the general limitations and qualifications set out in Information Circular 70-6R5 dated May 17, 2002, and are binding on the CRA provided that the Proposed Transactions and the Proposed Amendments are implemented by XXXXXXXXXX .

This letter is based solely on the facts, Proposed Transactions and Proposed Amendments described above. The documentation submitted does not form part of the Facts, Proposed Transactions and Proposed Amendments, and any references thereto are provided solely for the convenience of the reader.

Comments

1. Nothing in this letter should be construed as implying that the CRA has confirmed, reviewed or has made any determination in respect of any other tax consequences relating to the Facts, the Plan, Proposed Transactions, Proposed Amendments or any transaction or event taking place either prior to the implementation of the Proposed Transactions and Proposed Amendments or subsequent to the implementation of the Proposed Transactions and , whether described in this letter or not, other than those specifically described in the rulings given above. In particular, we express no opinion in ruling F or in the other rulings with respect to whether a particular Canadian Participant for which the Company would exercise the discretionary Cash-Out Right described in Paragraph 39(b) of the Proposed Transactions is entitled to a deduction under paragraph 110(1)(d) of the Act.

2. It is understood that certain persons have received awards under the terms of the Plan that were not granted by the Canadian Subsidiaries. The above rulings do not apply to such awards such that additional tax consequences may arise as a result of the issue and disposition of these awards.

3. The Fair Market Value of a Share or a Tradable Option, at any particular time, is a question of fact and nothing in this ruling should be construed as implying our acceptance of any method for the determination of the Fair Market Value of a Share and a Tradable Option for the purposes of the Plan or the Proposed Transactions and Proposed Amendments.

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

Yours truly,

XXXXXXXXXX
Manager
for Director
Financial Sector and Exempt Entities Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch