2012 Ruling 2011-0431101R3 - Cross-border 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: Spin-off butterfly of assets from a corporation to another.

Position: Favourable rulings given.

Reasons: In compliance with the law and previous positions.

XXXXXXXXXX
2011-043110
XXXXXXXXXX

XXXXXXXXXX, 2012

Dear Sir:

Re: Advance Income Tax Rulings
XXXXXXXXXX

This is in reply to your letter of XXXXXXXXXX in which you requested an advance income tax ruling on behalf of the above-noted taxpayer. We also acknowledge the information provided in your numerous emails.

We understand that to the best of your knowledge and that of the taxpayer involved, none of the issues described herein is:

(i) dealt with in an earlier return of DC or a related person;

(ii) being considered by a tax services office or a taxation centre in connection with a previously filed return of DC or a related person;

(iii) under objection by DC or a related person;

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

(v) the subject of a ruling previously issued by the Income Tax Rulings Directorate.

Unless otherwise noted, all references herein to sections or components thereof are references to the Income Tax Act, R.S.C. 1985, c.1 (5th Supp.), as amended, or the Income Tax Regulations, C.R.C., c. 945, as appropriate.

Unless otherwise noted, all references to monetary amounts are in Canadian dollars and all references to Paragraphs are references to the numbered paragraphs in this Ruling.

Throughout this letter, the corporations mentioned in this letter will be referred to as follows:

“Foreign PubCo” refers to XXXXXXXXXX;

“Foreign SpinCo 1” refers to XXXXXXXXXX;
“Foreign SpinCo 2” refers to XXXXXXXXXX;
“Foreign Sub 1” refers to XXXXXXXXXX;
“Foreign Sub 2” refers to XXXXXXXXXX;
“Foreign Sub 2 Branch” refers to XXXXXXXXXX;
“Foreign Sub 3” refers to XXXXXXXXXX;
“Foreign Sub 4” refers to XXXXXXXXXX;
“Foreign Sub 5” refers to XXXXXXXXXX;
“Foreign Sub 6” refers to XXXXXXXXXX;
“Foreign Sub 7” refers to XXXXXXXXXX;
“Foreign Sub 8” refers to XXXXXXXXXX;
“Foreign Sub 9” refers to XXXXXXXXXX;
“Foreign Sub 10” refers to XXXXXXXXXX;
“Foreign Sub 11” refers to XXXXXXXXXX;
“Foreign Sub 12” refers to XXXXXXXXXX;
“Foreign Sub 13” refers to XXXXXXXXXX;
“Foreign Sub 14” refers to XXXXXXXXXX;
“Foreign Sub 15” refers to XXXXXXXXXX;
“Foreign Sub 16” refers to XXXXXXXXXX.;
“Foreign Sub 17” refers to XXXXXXXXXX;
“Foreign Sub 18” refers to XXXXXXXXXX;
“Direct Sub 1” refers to XXXXXXXXXX;
“Direct Sub 2” refers to XXXXXXXXXX;
“Direct Sub 3” refers to XXXXXXXXXX;
“Direct Sub 4” refers to XXXXXXXXXX;
“Direct Sub 5” refers to XXXXXXXXXX;
“Direct Sub 6” refers to XXXXXXXXXX;
“Direct Sub 7” refers to XXXXXXXXXX;
“Direct Sub 8” refers to XXXXXXXXXX;
“Direct Sub 9” refers to XXXXXXXXXX;
“Direct Sub 10” refers to XXXXXXXXXX;
“Direct Sub 11” refers to XXXXXXXXXX;
“Direct Sub 12” refers to XXXXXXXXXX;
“Direct Sub 13” refers to XXXXXXXXXX;
“Direct Sub 14” refers to XXXXXXXXXX;
“Direct Sub 15” refers to XXXXXXXXXX;
“Shareholder A” refers to XXXXXXXXXX;
“Shareholder B” refers to XXXXXXXXXX;
“Shareholder C” refers to XXXXXXXXXX;
“DC” refers to XXXXXXXXXX;
“TC” refers to XXXXXXXXXX;
“KeepCo 1” refers to XXXXXXXXXX;
“KeepCo 2” refers to XXXXXXXXXX;
“KeepCo 3” refers to XXXXXXXXXX (footnote 1) ;
“KeepCo 4” refers to XXXXXXXXXX;
“KeepCo 5” refers to XXXXXXXXXX;
“KeepCo 6” refers to XXXXXXXXXX;
“KeepCo 7” refers to XXXXXXXXXX;
“KeepCo 8” refers to XXXXXXXXXX;
“KeepCo 9” refers to XXXXXXXXXX;
“KeepCo 10” refers to XXXXXXXXXX;
“Canco 1” refers to XXXXXXXXXX;
“Canco 2” refers to XXXXXXXXXX;
“Canco 3” refers to XXXXXXXXXX;
“Canco 4” refers to XXXXXXXXXX;
“Canco 5” refers to XXXXXXXXXX;
“Canco 6” refers to XXXXXXXXXX;
“Canco 7” refers to XXXXXXXXXX;
“Canco 8” refers to XXXXXXXXXX;
“Canco 9” refers to XXXXXXXXXX;
“Canco 10” refers to XXXXXXXXXX;
“Canco 11” refers to XXXXXXXXXX;
“Canco 12” refers to XXXXXXXXXX;
“A Co” refers to XXXXXXXXXX;
“B Co” refers to XXXXXXXXXX;
“C Co” refers to XXXXXXXXXX;
“D Co” refers to XXXXXXXXXX;
“E Co” refers to XXXXXXXXXX;
“F Co” refers to XXXXXXXXXX;
“G Co” refers to XXXXXXXXXX;
“H Co” refers to XXXXXXXXXX;
“Business Segment 1” refers to XXXXXXXXXX;
“Business Segment 2” refers to XXXXXXXXXX;
“Business Segment 3” refers to XXXXXXXXXX;
“Foreign Spin Business” refers to XXXXXXXXXX;
“Foreign Keep Business” refers to XXXXXXXXXX;
“DC Spin Business” refers to XXXXXXXXXX;
“DC Keep Business” refers to XXXXXXXXXX;
“Foreign Spin Business 2” refers to XXXXXXXXXX;
“B Co Cash Pool” refers to XXXXXXXXXX;
“B Co Cash Pool Bank Account” refers to XXXXXXXXXX;
“B Co Pool Participants” refers to XXXXXXXXXX;
“Foreign Subsidiaries” refers to XXXXXXXXXX;
“Canco 1 Cash Pool” refers to XXXXXXXXXX;
“SpinCo 2 Subs” refers to XXXXXXXXXX.

DEFINITIONS

Unless otherwise noted, the following terms have the meanings ascribed to them below:

(a) “A Co” is more particularly described in Paragraph 43;

(b) “A Co Group” means, collectively, A Co, B Co, C Co and D Co;

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

(d) “Accumulated Profits” at any time means accumulated profits determined at that time as that term is described in paragraph 23 of Interpretation Bulletin IT-533, entitled “Interest Deductibility and Related Issues” and for greater certainty, no amounts are included in the Accumulated Profits of a corporation as the result of dividends received unless such dividends were paid out of the payer’s Accumulated Profits;

(e) “Act” means the Income Tax Act, R.S.C. 1985, c.1 (5th Supp.), as amended to the date of the Ruling;

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

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

(h) “B Co” is more particularly described in Paragraph 44;

(i) “B Co Cash Pool” means the cash management arrangement described in Paragraph 61;

(j) “B Co Cash Pool Bank Account” means the bank account of B Co dedicated for the deposit and withdrawal of funds under the B Co Cash Pool;

(k) “B Co Pool Participants” means the XXXXXXXXXX entities that have joined the B Co Cash Pool as described in Paragraph 61;

(l) “XXXXXXXXXX Lease” means DC’s leasehold interest in the property located at XXXXXXXXXX;

(m) “Business Segment 1” means the business segment described in Paragraph 8(a);

(n) “Business Segment 2” means the business segment described in Paragraph 8(b);

(o) “Business Segment 3” means the business segment described in Paragraph 8(c);

(p) “Butterfly Percentage” means the proportion, expressed as a percentage, that the net FMV of the business property owned (directly and indirectly) by DC that relates to the DC Keep Business is of the net FMV of all the business property of DC, determined (i) immediately before the transfer of property by DC to TC described in Paragraph 136, and (ii) using the principles set out in Paragraphs 132 and 134;

(q) “C Co” is more particularly described in Paragraph 45;

(r) “Canada Group” means, collectively, DC and the Foreign Subsidiaries;

(s) “Canco 1 Cash Pool” means the cash management arrangement described in Paragraph 79;

(t) “Capital of the DC Special Shares” at any time means the aggregate of the Contributed Capital of the DC Special Shares and the Accumulated Profits of DC determined at that time;

(u) “capital property” has the meaning assigned by section 54;

(v) “Capital Reorganization” has the meaning set out in Paragraph 122;

(w) “CBCA” means Canada Business Corporations Act, R.S.C. 1985, c. C-44;

(x) “CDA” means capital dividend account, within the meaning of subsection 89(1);

(y) “Closing Date” means the closing date of the Spin-Off transactions described in this application;

(z) “XXXXXXXXXX Canadian Subs” means, collectively, KeepCo 1, KeepCo 2, KeepCo 3, KeepCo 4, KeepCo 5, KeepCo 6, KeepCo 7, KeepCo 8, KeepCo 9 and KeepCo 10;

(aa) “XXXXXXXXXX Cash Pool” means the cash management arrangement described in Paragraph 80;

(bb) “connected” has the meaning assigned by subsection 186(4);

(cc) “Contributed Capital” at any time means contributed capital determined at that time as that term is described in paragraph 23 of Interpretation Bulletin IT-533, entitled “Interest Deductibility and Related Issues”;

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

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

(ff) “CRA” means the Canada Revenue Agency;

(gg) “D Co” is more particularly described in Paragraph 46;

(hh) “DC” is more particularly described in Paragraph 1;

(ii) “DC Cash Pool” means the cash management arrangement described in Paragraph 56;

(jj) “DC Cash Pool Bank Account” means the bank account of DC dedicated for the deposit and withdrawal of funds under the DC Cash Pool;

(kk) “DC Pool Participants” means the Canadian entities that have joined the DC Cash Pool and consists of KeepCo 3, KeepCo 5, KeepCo 7, KeepCo 8, KeepCo 9, KeepCo 10, Canco 2, Canco 5, Canco 6, Canco 8, Canco 9 and Canco 10 ;

(ll) “DC Predecessor 1” refers to a corporation acquired from XXXXXXXXXX, an arm’s length party, on XXXXXXXXXX;

(mm) “DC Predecessor 2” refers to XXXXXXXXXX formed on the XXXXXXXXXX amalgamation (as explained in Paragraph 1);

(nn) “DC Keep Business” has the meaning set out in Paragraph 32;

(oo) “DC Common Shares” means the common shares which DC is currently authorized to issue, as described in Paragraph 2;

(pp) “DC New Common Shares” means the common shares which DC will be authorized to issue, as described in Paragraph 122;

(qq) “DC Redemption Amount” has the meaning set out in Paragraph 122(b)(i);

(rr) “DC Redemption Note” means the demand promissory note in the principal amount of the aggregate DC Redemption Amount issued by DC in favour of TC, as described in Paragraph 140(b);

(ss) “DC Spin Business” has the meaning set out in Paragraph 32;

(tt) “DC Shares” means the DC New Common Shares and the DC Special Shares as described in Paragraph 122;

(uu) “DC Special Shares” means the special shares which DC will be authorized to issue, as described in Paragraph 122;

(vv) XXXXXXXXXX;

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

(xx) “Distribution Property” has the meaning set out in Paragraph 136;

(yy) XXXXXXXXXX;

(zz) “E Co” is more particularly described in Paragraph 47;

(aaa) “E Co Group” means, collectively, E Co, F Co, G Co and H Co;

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

(ccc) XXXXXXXXXX;

(ddd) “exempt deficit” has the meaning assigned by subsection 5907(1) of the Regulations;

(eee) “exempt surplus” has the meaning assigned by subsection 5907(1) of the Regulations;

(fff) “F Co” is more particularly described in Paragraph 48;

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

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

(iii) “Foreign Keep Business” means the business as described in Paragraph 28;

(jjj) “Foreign PubCo” is more particularly described in Paragraph 6;

(kkk) “Foreign PubCo’s XXXXXXXXXX Stock and Incentive Plan” means the stock and incentive plan as described in Paragraph 9;

(lll) “Foreign PubCo Group” means Foreign PubCo and the direct and indirect subsidiaries that are controlled by Foreign PubCo;

(mmm) XXXXXXXXXX;

(nnn) XXXXXXXXXX;

(ooo) “Foreign Spin Business” means the business as described in Paragraph 28;

(ppp) “Foreign Spin Business 2” means the business described in Paragraph 31;

(qqq) “Foreign SpinCo 1” means the corporation described in Paragraph 89;

(rrr) “Foreign SpinCo 1 Common Shares” means the common shares Foreign SpinCo 1 will be authorized to issue, as described in Paragraph 89;

(sss) “Foreign SpinCo 2” means the corporation described in Paragraph 99(b);

(ttt) “Foreign Sub 2 Branch” means the branch of Foreign Sub 2 located in XXXXXXXXXX;

(uuu) “Foreign Sub 3” is a company formed under the laws of XXXXXXXXXX and a wholly-owned subsidiary of Foreign Sub 1;

(vvv) “Foreign Sub 11” means the corporation described in Paragraph 90;

(www) “Foreign Sub 12” means the corporation described in Paragraph 90;

(xxx) “Foreign Sub 12 Common Shares” means the common shares of Foreign Sub 12, as described in Paragraph 111;

(yyy) “Foreign Sub 13” means the new XXXXXXXXXX formed by Foreign Sub 9, as described in Paragraph 91;

(zzz) “Foreign Sub 15” means the corporation described in Paragraph 93;

(aaaa) “Foreign Sub 16” means the new corporation formed under the laws of XXXXXXXXXX by Foreign Sub 10, as described in Paragraph 94;

(bbbb) “Foreign Subsidiaries” means, collectively, A Co, B Co, C Co, D Co, E Co, F Co, G Co and H Co;

(cccc) “forgiven amount” has the meaning assigned by subsections 80(1) and 80.01(1);

(dddd) “G Co” is more particularly described in Paragraph 49;

(eeee) “guarantee agreement” has the meaning assigned by subsection 112(2.2);

(ffff) “H Co” is more particularly described in Paragraph 50;

(gggg) “inventory” has the meaning assigned by subsection 248(1);

(hhhh) “ITAR” means the Income Tax Application Rules, R.S.C. 1985, c. 2 (5th Supp.);

(iiii) “legal capital” in respect of a share of an unlimited liability company means the capital of the company for the purposes of the statute by which the corporation is governed;

(jjjj) “LLC” means a limited liability company;

(kkkk) “LLP” means a limited liability partnership;

(llll) “XXXXXXXXXX Property” means real property of DC situated at XXXXXXXXXX;

(mmmm) XXXXXXXXXX;

(nnnn) “Paragraph” refers to a numbered paragraph in this Ruling Request;

(oooo) “prepaid expenses” means the rights arising out of the prepayment of expenses;

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

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

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

(ssss) “Proposed Transactions” means the transactions described in Paragraphs 102 through 146, inclusive;

(tttt) “XXXXXXXXXX;

(uuuu) “PUC” means “paid-up capital” which has the meaning assigned by subsection 89(1);

(vvvv) “RDTOH” means refundable dividend tax on hand, within the meaning of subsection 129(3);

(wwww) “Regulations” means the Income Tax Regulations, C.R.C., c. 945, promulgated under the Act;

(xxxx) “related person” means, in relation to a particular person, another person who is related to the particular person by virtue of subsection 251(2), as modified, for the purposes of section 55, by paragraph 55(5)(e);

(yyyy) “Replaced Assumed TC Demand Note” means certain liabilities of TC as described in Paragraph 143;

(zzzz) “Replaced Assumed TC Term Loan” means certain liabilities of TC as described in Paragraph 143;

(aaaaa) “Replaced Retained Commercial Debt” means that portion of the Replaced Retained DC Debt that relates to borrowed money which was used to repay or otherwise refinance the Retained Commercial Debt;

(bbbbb) “Replaced Retained DC Debt” means certain liabilities of DC as described in Paragraph 142;

(ccccc) “Replaced Retained DC Demand Note” means certain liabilities of DC as described in Paragraph 142;

(ddddd) “Replaced Retained DC Term Loan” means certain liabilities of DC as described in Paragraph 142;

(eeeee) XXXXXXXXXX;

(fffff) “Retained Commercial Debt” means that portion of the Retained DC Debt that relates to borrowed money which was originally used by DC to acquire property related to DC’s commercial business and which will be transferred to TC as part of the Distribution Property described in Paragraph 136;

(ggggg) “Retained DC Debt” means certain liabilities of DC as described in Paragraph 142;

(hhhhh) “Retained Earnings” at any time means the unconsolidated retained earnings of DC determined at that time with investments accounted for on the cost basis. For greater certainty, the Retained Earnings of DC reflect income/losses from DC’s business operations and income/losses from DC’s investments, (including (i) gains and losses from the sale of investments and assets, and (ii) dividend income received on DC’s investments). There are no amounts included in DC’s Retained Earnings that relate to an appraisal surplus or that arose as a consequence of any transaction undertaken to transform an appraisal surplus into Retained Earnings. There are no amounts included in DC’s Retained Earnings that resulted from profits or gains from transactions between DC and non-arm’s length parties;

(iiiii) “SAB 101” refers to the U.S. Securities and Exchange Commission Staff Accounting Bulletin 101, Revenue Recognition in Financial Statements, December 3, 1999;

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

(kkkkk) “significant influence” has the meaning assigned by section 3051.04 of the Accounting Standards for Private Enterprises or by IAS 28 of the International Financial Reporting Standards.;

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

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

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

(ooooo) “Spin-Out” means the distribution of the shares of Foreign SpinCo 1 and Foreign SpinCo 2 as a stock dividend to the shareholders of Foreign PubCo, as described in Paragraphs 100 and 146;

(ppppp) “SpinCo 2 Subs” means, collectively, Canco 1, Canco 2, Canco 3, Canco 4, Canco 5, Canco 6, Canco 7, Canco 8, Canco 9 and Canco 10;

(qqqqq) “stated capital” in respect of the share capital of a corporation has the meaning assigned by the statute by which the corporation is governed;

(rrrrr) “substantial interest” has the meaning assigned by subsection 191(2);

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

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

(uuuuu) “taxable deficit” has the meaning assigned by subsection 5907(1) of the Regulations;

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

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

(xxxxx) “taxable surplus” has the meaning assigned by subsection 5907(1) of the Regulations;

(yyyyy) “TC” is described in Paragraph 3;

(zzzzz) “TC Common Shares” means the common shares which TC will be authorized to issue, as described in Paragraph 4(a);

(aaaaaa) “TC Preferred Shares” means the preferred shares which TC will be authorized to issue, as described in Paragraph 4(b);

(bbbbbb) “TC Redemption Amount” has the meaning set out in Paragraph 4(b)(i);

(cccccc) “TC Redemption Note” means the demand promissory note in the principal amount of the aggregate TC Redemption Amount issued by TC in favour of DC, as described in Paragraph 140(a);

(dddddd) “TC Shares” means, collectively, the TC Common Shares and TC Preferred Shares;

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

(ffffff) “Three-Party Share Exchange” has the meaning described in Paragraph 128;

(gggggg) “underlying foreign tax” has the meaning assigned by subsection 5907(1) of the Regulations;

(hhhhhh) “ULC” means an unlimited liability company;

(iiiiii) XXXXXXXXXX;

(jjjjjj) XXXXXXXXXX

FACTS

DC

1. DC is a corporation amalgamated pursuant to the laws of XXXXXXXXXX and is and will be, at any relevant time and for all purposes of the Act, a private corporation and a taxable Canadian corporation. The amalgamation took place on XXXXXXXXXX among XXXXXXXXXX and DC Predecessor 2. Both predecessor corporations were wholly-owned subsidiaries of Foreign Sub 2 at the time of the amalgamation. DC Predecessor 2 was the successor corporation resulting from the amalgamation of XXXXXXXXXX and DC Predecessor 1 on XXXXXXXXXX. The amalgamations referred to above were not entered into in contemplation of and before the distribution described in Paragraph 136.

DC’s business number is XXXXXXXXXX. DC files its annual corporate income tax return at the XXXXXXXXXX Taxation Centre and is serviced by the XXXXXXXXXX Tax Services Office. DC’s year end for tax reporting purposes is XXXXXXXXXX, as it is for all of the Canada Group entities, the Commercial Canadian Subs and the SpinCo 2 Subs.

2. The authorized share capital of DC consists of an unlimited number of DC Common Shares. Currently, there are XXXXXXXXXX DC Common Shares issued and outstanding, each of which is entitled to one vote per share. All of the issued and outstanding DC Common Shares are owned by Foreign Sub 2.

TC

3. TC was incorporated on XXXXXXXXXX pursuant to the XXXXXXXXXX. TC is and will be, at any relevant time and for all purposes of the Act, a taxable Canadian corporation and a private corporation.

On XXXXXXXXXX, TC filed Articles of Amendment to change its name to XXXXXXXXXX.

4. TC is authorized to issue:

(a) an unlimited number of common shares (the “TC Common Shares”), each of which is a fully participating voting common share with the holder being entitled to one vote at each meeting of the shareholders of TC; and

(b) XXXXXXXXXX preferred shares (the “TC Preferred Shares”) having the following attributes:

(i) each TC Preferred Share will be redeemable, subject to applicable law, at any time, at the option of TC and at a redemption amount (the “TC Redemption Amount”) equal to the amount by which the aggregate FMV of the Distribution Property at the time of its transfer to TC, as described in Paragraph136, exceeds the FMV of the non-share consideration to be provided by TC in exchange for the Distribution Property, divided by the number of TC Preferred Shares issued as consideration for such transfer, plus the amount of all declared unpaid dividends thereon;

(ii) each TC Preferred Share is retractable, subject to applicable law, at any time at the option of the holder thereof for an amount equal to the TC Redemption Amount;

(iii) the holder of each TC Preferred Share is entitled to a non-cumulative cash dividend as and when declared by the directors of TC from time to time, which dividend need not also be declared on any other class of shares of TC;

(iv) there will be a provision restricting the payment of dividends on other classes of shares so that no such dividends may be paid on any other class of shares of TC if the resulting realizable value of the net assets of TC after payment of the dividends would be less than the aggregate TC Redemption Amount of all of the TC Preferred Shares then outstanding;

(v) the holder of each TC Preferred Share is entitled, upon the liquidation, dissolution or winding-up of TC, to a payment in priority to all other classes of shares of TC of an amount equal to the TC Redemption Amount thereon to the extent of the amount of value of property available under applicable law for the payment to the shareholders of TC upon liquidation, dissolution or winding-up, but will be entitled to no more than the amount of that payment; and

(vi) the holder of each TC Preferred Share is not entitled to vote at any meeting of the shareholders of TC, other than as provided under the statute by which TC will be governed.

5. On or shortly after the incorporation of TC, Foreign Sub 1 will subscribe for common shares of the capital stock of TC for consideration sufficient to provide TC with funds to pay set-up expenses including, incorporation costs, the costs of obtaining licenses and permits and professional fees.

Foreign PubCo

6. Foreign PubCo is a corporation formed under the laws of XXXXXXXXXX. The outstanding common stock of the capital stock of Foreign PubCo is publicly traded and listed on XXXXXXXXXX. Currently, there are in excess of XXXXXXXXXX common shares of the capital stock of Foreign PubCo issued and outstanding. As of the close of business on XXXXXXXXXX, the market capitalization of Foreign PubCo was approximately XXXXXXXXXX. Foreign PubCo is widely held, and, to the best of Foreign PubCo’s knowledge, at XXXXXXXXXX the only shareholders owning more than XXXXXXXXXX% of the common shares of the capital stock of Foreign PubCo are:

(a) Shareholder A – XXXXXXXXXX;

(b) Shareholder B – XXXXXXXXXX; and

(c) Shareholder C – XXXXXXXXXX.

To the best of DC’s knowledge, there is no one shareholder or group of related shareholders of Foreign PubCo which owns 10% or more of the common shares of the capital stock of Foreign PubCo.

7. Foreign PubCo has a XXXXXXXXXX fiscal year that ends on XXXXXXXXXX. XXXXXXXXXX.

Foreign PubCo’s Business

8. Foreign PubCo, through its subsidiaries, has more than XXXXXXXXXX employees worldwide and carries on business in more than XXXXXXXXXX countries. Foreign PubCo has organized its businesses into the following business segments:

(a) Business Segment 1. This business segment XXXXXXXXXX. XXXXXXXXXX are designed and manufactured by Foreign PubCo entities in this segment. Leading trade names of components include XXXXXXXXXX. For the fiscal year ended XXXXXXXXXX, the net sales for this business segment amounted to $XXXXXXXXXX and represented XXXXXXXXXX% of Foreign PubCo’s consolidated net sales.

(b) Business Segment 2. This business segment XXXXXXXXXX. XXXXXXXXXX. For the fiscal year ended XXXXXXXXXX, the net sales in this business segment amounted to $XXXXXXXXXX and represented XXXXXXXXXX% of Foreign PubCo’s consolidated net sales.

(c) Business Segment 3. This business segment XXXXXXXXXX. XXXXXXXXXX. For the fiscal year ended XXXXXXXXXX, the net sales in the business segment amounted to $XXXXXXXXXX and represented XXXXXXXXXX% of Foreign PubCo’s consolidated net sales.

Foreign PubCo Group Incentive Plans

9. Under Foreign PubCo’s XXXXXXXXXX Stock and Incentive Plan, eligible employees of Foreign PubCo Group may be granted XXXXXXXXXX.

10. XXXXXXXXXX

11. XXXXXXXXXX

12. XXXXXXXXXX

13. XXXXXXXXXX

14. XXXXXXXXXX

(i) XXXXXXXXXX;

(ii) XXXXXXXXXX;

(iii) XXXXXXXXXX

(iv) XXXXXXXXXX

15. XXXXXXXXXX

16. XXXXXXXXXX

17. XXXXXXXXXX

Foreign Sub 1

18. Foreign Sub 1 is a company incorporated under the laws of XXXXXXXXXX and is a wholly-owned subsidiary of Foreign PubCo. XXXXXXXXXX.

Foreign Sub 3

19. Foreign Sub 3 is a company incorporated under the laws of XXXXXXXXXX and is a wholly-owned subsidiary of Foreign Sub 1.

Foreign Sub 14

20. Foreign Sub 14 is a company incorporated under the laws of XXXXXXXXXX and is a wholly-owned subsidiary of Foreign Sub 1.

Foreign Sub 6

21. Foreign Sub 6 is a company incorporated under the laws of XXXXXXXXXX. This company XXXXXXXXXX.

Foreign Sub 2

22. Foreign Sub 2 is a company incorporated under the laws of XXXXXXXXXX and is a wholly-owned subsidiary of Foreign Sub 1. XXXXXXXXXX.

Foreign Sub 4

23. Foreign Sub 4 is a company incorporated under the laws of XXXXXXXXXX and wholly owned by Foreign Sub 2.

Foreign Sub 5

24. Foreign Sub 5 is a company incorporated under the laws of XXXXXXXXXX and wholly owned by Foreign Sub 4. XXXXXXXXXX.

Foreign Sub 7

25. Foreign Sub 7 is a company incorporated under the laws of XXXXXXXXXX. All of the issued and outstanding preferred shares of the capital stock of Foreign Sub 7 are owned by Foreign Sub 5. The common shares of the capital stock of Foreign Sub 7 are owned as follows:

XXXXXXXXXX% by Foreign Sub 2;
XXXXXXXXXX% by Foreign Sub 4; and
XXXXXXXXXX% by Foreign Sub 5.

Foreign Sub 8

26. Foreign Sub 8 is a company incorporated under the laws of XXXXXXXXXX and is a wholly-owned subsidiary of Foreign Sub 7.

27. Foreign Sub 8 owns 100% of the issued and outstanding shares of the capital stock of Foreign Sub 9, a company incorporated under the laws of XXXXXXXXXX, and 100% of the issued and outstanding shares of the capital stock of XXXXXXXXXX, a company incorporated under the laws of XXXXXXXXXX.

Foreign Sub 9

28. Foreign Sub 9, a company incorporated under the laws of XXXXXXXXXX. The portion of these activities that are rendered in the XXXXXXXXXX (“Foreign Spin Business”) are to be owned by Foreign SpinCo 1 at the time of the Spin-Out. All other activities directly carried on in XXXXXXXXXX and the businesses carried on through its subsidiaries are to be retained by Foreign PubCo (“Foreign Keep Businesses”).

29. The direct subsidiaries of Foreign Sub 9 are:

(a) Direct Sub 1, a company incorporated under the laws of XXXXXXXXXX;

(b) Direct Sub 2, a company incorporated under the laws of XXXXXXXXXX;

(c) Direct Sub 3, a company incorporated under the laws of XXXXXXXXXX;

(d) Direct Sub 4, a company incorporated under the laws of XXXXXXXXXX;

(e) Direct Sub 5, a company incorporated under the laws of XXXXXXXXXX;

(f) Direct Sub 6, a company incorporated under the laws of XXXXXXXXXX;

(g) Direct Sub 7, a company incorporated under the laws of XXXXXXXXXX;

(h) Direct Sub 8, a company incorporated under the laws of XXXXXXXXXX;

(i) Direct Sub 9, a company incorporated under the laws of XXXXXXXXXX;

(j) Direct Sub 10, a company incorporated under the laws of XXXXXXXXXX;

(k) Direct Sub 11, a company incorporated under the laws of XXXXXXXXXX;

(l) Direct Sub 12, a company incorporated under the laws of XXXXXXXXXX;

(m) Direct Sub 13, a company incorporated under the XXXXXXXXXX;

(n) Direct Sub 14, a company incorporated under the laws of XXXXXXXXXX; and

(o) Direct Sub 15, a company incorporated under the laws of XXXXXXXXXX.

Each of the entities listed in (a) to (i) above is an inactive company. In order to simplify the corporate structure and reduce administration costs, consideration is being given to merging each of the entities listed in (a) through (i) above with Foreign Sub 9 (and with Foreign Sub 9 being the surviving corporation). The merger, if implemented, would take place prior to the separation of the Foreign Spin Business from the Foreign Keep Business as described in Paragraphs 102 through 112.

Foreign Sub 10

30. Foreign Sub 10 is a company incorporated under the laws of XXXXXXXXXX and is a wholly-owned subsidiary of Foreign Sub 2.

31. Foreign Sub 10 carries on business in XXXXXXXXXX which involves XXXXXXXXXX. The portion of these activities that involve XXXXXXXXXX (the “Foreign Spin Business 2”) may be segregated in a separate legal entity that is owned indirectly by Foreign SpinCo 1 at the time of the Spin-Out.

Management is currently evaluating the value of the Foreign Spin Business 2 as a percentage of the value of Foreign Sub 10. If the percentage is high, management may decide to simply transfer the shares of Foreign Sub 10 to Foreign SpinCo 1 and not segregate the Foreign Spin Business 2 in Foreign Sub 16.

DC Business

32. DC directly carries on business activities in Canada that involve XXXXXXXXXX. The portion of these activities that XXXXXXXXXX (“DC Spin Business”) are to be segregated in an indirect subsidiary of Foreign SpinCo 1 in preparation for the Spin-Out. All other activities directly carried on in Canada and the businesses carried on in the Foreign Subsidiaries will be referred to as the “DC Keep Business” and are to be retained by a Canadian subsidiary of Foreign PubCo after the Spin-Out.

33. In the taxation year ended on XXXXXXXXXX, DC’s revenues totalled $XXXXXXXXXX, with XXXXXXXXXX% of the revenue attributable to the DC Spin Business and XXXXXXXXXX% to the DC Keep Business. In the same period, DC had a significant presence in the provinces of XXXXXXXXXX. DC had some presence in all of the remaining Canadian provinces except for XXXXXXXXXX.

34. DC is the sponsor of one registered pension plan (CRA registration XXXXXXXXXX). XXXXXXXXXX.

35. DC also contributes to XXXXXXXXXX different pension plans XXXXXXXXXX.

36. XXXXXXXXXX.

37. XXXXXXXXXX.

Intercompany Balances of DC

38. DC has the following intercompany balances as at XXXXXXXXXX (excluding those arising from the DC Cash Pool arrangement and routine trade accounts receivable and payable) which are all denominated in Canadian dollars:

(a) $XXXXXXXXXX payable to Foreign Sub 2 Branch. The loan has a term of XXXXXXXXXX and matures on XXXXXXXXXX. The balance was obtained for the purpose of consolidating XXXXXXXXXX separate amounts previously payable by DC to Foreign Sub 2 Branch. The purpose of each of the separate balances varied and included acquisition of property and payment of dividends, on account of DC Keep Business and DC Spin Business.

(b) $XXXXXXXXXX payable to Foreign Sub 2 Branch. The loan has a term of XXXXXXXXXX and matures on XXXXXXXXXX. The balance was originally obtained by XXXXXXXXXX, a predecessor corporation of DC, to partially fund the acquisition of property, on account of DC Keep Business.

(c) $XXXXXXXXXX payable to Foreign Sub 2 Branch. The loan has a term of XXXXXXXXXX and matures on XXXXXXXXXX. The balance was obtained for the purpose of subscribing for shares of the capital stock of A Co, on account of DC Keep Business.

(d) $XXXXXXXXXX payable to Foreign Sub 2 Branch. The loan has a term of XXXXXXXXXX and matures on XXXXXXXXXX. The balance was obtained for the purpose of subscribing for shares of the capital stock of E Co, on account of DC Keep Business.

(e) $XXXXXXXXXX payable to KeepCo 7. The loan has a term of XXXXXXXXXX and matures on XXXXXXXXXX. The balance was obtained for the purpose of subscribing for shares of the capital stock of E Co, on account of DC Keep Business.

(f) $XXXXXXXXXX payable to KeepCo 5. The loan has a term of XXXXXXXXXX and matures on XXXXXXXXXX. The balance was obtained for the purpose of subscribing for shares of the capital stock of E Co, on account of DC Keep Business.

(g) $XXXXXXXXXX payable to KeepCo 9. The loan balance has a term of XXXXXXXXXX and matures on XXXXXXXXXX. The balance was obtained for the purpose of subscribing for shares of the capital stock of E Co, on account of DC Keep Business.

(h) $XXXXXXXXXX payable to KeepCo 3. The loan has a term of XXXXXXXXXX and matures on XXXXXXXXXX. The balance was originally obtained by XXXXXXXXXX, a predecessor of DC, for the purpose of purchasing property, on account of DC Keep Business.

(i) $XXXXXXXXXX payable to KeepCo 6. The balance is payable XXXXXXXXXX. Of the principal owing, some $XXXXXXXXXX relates to purchase proceeds on an asset purchase by DC from KeepCo 6 (XXXXXXXXXX), on account of DC Keep Business. The remainder represents other amounts payable by DC to KeepCo 6.

(j) $XXXXXXXXXX payable to KeepCo 2 The balance had a term of XXXXXXXXXX and matured on XXXXXXXXXX. The term is in the process of being renegotiated into a demand promissory note.

(k) $XXXXXXXXXX receivable from KeepCo 3. The loan balance has a term of XXXXXXXXXX and matures on XXXXXXXXXX. The balance represented proceeds of sale of property, on account of DC Keep Business.

39. As per the applicable intercompany agreements governing the above payables of DC, at the option of the creditor, the balances become due and payable by DC upon DC ceasing to be a direct or indirect wholly-owned subsidiary of Foreign PubCo. Each of the creditors, in respect of the above balances, will exercise this option such that the balance becomes due and payable. The following is an example of the relevant provision found in a legal agreement governing one of the payables listed above:

XXXXXXXXXX

Unsolicited Offer to Acquire Property of DC

40. In XXXXXXXXXX, DC was approached by an unrelated real estate developer who was interested in acquiring the XXXXXXXXXX Property. The developer had previously purchased property contiguous to the property owned by DC. An unsolicited offer of approximately $XXXXXXXXXX was presented to DC. Although no formal decision has been made in respect of the offer, the estimated costs to relocate the facility located on the property significantly exceed the offer amount. Therefore, the XXXXXXXXXX Property is expected to continue to be owned by DC and operational at the time of completion of the Proposed Transactions.

CRA Audit

41. In XXXXXXXXXX, the CRA commenced both a domestic and an international audit of the XXXXXXXXXX tax years of DC. The domestic audit was completed and the final notice of reassessment was issued on XXXXXXXXXX. The company decided not to pursue the matter to Tax Court of Canada.

The international audit is ongoing and no proposed adjustments have been presented. DC understands that the auditors are satisfied with the level of royalties being paid by DC to Foreign Sub 6 and no reassessments are anticipated to be raised in respect of that topic. The expected completion date of the audit is not currently known.

Foreign Subsidiaries

42. DC owns all of the issued and outstanding cumulative mandatory redeemable preference shares and ordinary shares of the capital stock of two XXXXXXXXXX entities: A Co and E Co.

A Co Group

43. A Co was acquired by DC from Foreign Sub 2 on XXXXXXXXXX and it, together with its three subsidiary companies (B Co, C Co and D Co), became a controlled foreign affiliate of DC on that date. A Co does not directly carry on any business activities. A Co owns all of the issued and outstanding shares of the capital stock of B Co, a company formed under the laws of XXXXXXXXXX.

At the time DC acquired the shares of the capital stock of A Co, the directors and officers of DC had no knowledge or expectation of the Spin-out announced on XXXXXXXXXX. The acquisition of the A Co Group was not entered into in contemplation of and before the distribution described in paragraph 136. The acquisition of the A Co Group would have taken place regardless of whether the Proposed Transactions were undertaken. The Proposed Transactions would have been undertaken regardless of whether the acquisition of the A Co Group occurred.

44. B Co carries on the XXXXXXXXXX primarily under the XXXXXXXXXX. B Co also carries on the business which involves XXXXXXXXXX. For the year ended XXXXXXXXXX, B Co had net sales of $XXXXXXXXXX. B Co owns all of the issued and outstanding shares of the capital stock of C Co.

45. C Co, a corporation formed under the laws of XXXXXXXXXX, carries on an active business in XXXXXXXXXX. This entity is XXXXXXXXXX. It also XXXXXXXXXX. For the year ended XXXXXXXXXX, this entity had net sales of $XXXXXXXXXX. C Co Limited owns all of the issued and outstanding shares of the capital stock of D Co.

46. D Co, a company formed under the laws of XXXXXXXXXX, provides a XXXXXXXXXX. D Co is the XXXXXXXXXX. For the year ended XXXXXXXXXX, this entity had net sales of $XXXXXXXXXX.

E Co Group

47. E Co was incorporated under the laws of XXXXXXXXXX on XXXXXXXXXX by Foreign Sub 2. It was transferred to DC on XXXXXXXXXX for a nominal value and E Co became a controlled foreign affiliate of DC at that time. On XXXXXXXXXX, DC subscribed for XXXXXXXXXX, respectively. On or about that same date, B Co loaned XXXXXXXXXX to E Co. The proceeds from the issuance of the shares and the loan from B Co were used by E Co to fund the purchase of F Co on XXXXXXXXXX in an arm’s length transaction and were not received in contemplation of and before the transfer described in Paragraph136. E Co does not directly carry on any business activities.

48. F Co is a company formed under the laws of XXXXXXXXXX. It became a wholly-owned subsidiary of E Co and a controlled foreign affiliate of DC on XXXXXXXXXX. F Co is a holding company and does not carry on any business activities.

49. G Co, a company formed under the laws of XXXXXXXXXX, is a wholly-owned subsidiary of F Co. It became a controlled foreign affiliate of DC on XXXXXXXXXX. G Co does not directly carry on any business activities.

50. H Co, a company formed under the laws of XXXXXXXXXX, is wholly owned by G Co. It carries on an active business in XXXXXXXXXX through more than XXXXXXXXXX employees. Business activities involve XXXXXXXXXX. It became a controlled foreign affiliate of DC on XXXXXXXXXX.

51. Each of F Co, G Co and H Co had a fiscal year of XXXXXXXXXX at the time of acquisition. Effective XXXXXXXXXX, each has converted its fiscal year end to be consistent with that of Foreign PubCo.

52. Each of the Foreign Subsidiaries is designated as a XXXXXXXXXX and will be retained by Foreign PubCo.

53. The acquisition of any of the Foreign Subsidiaries was not entered into in contemplation of and before the transfer described in Paragraph 136. The Spin-out to which the distribution relates was not announced until XXXXXXXXXX which was well after the time that the E Co Group had been identified as a strategic fit (the first attempt to acquire that group being in XXXXXXXXXX). Moreover, at the time DC acquired the shares of the capital stock of E Co, the directors and officers of DC had no knowledge or expectation of the Spin-out announced on XXXXXXXXXX. The acquisition of any of the Foreign Subsidiaries would have taken place regardless of whether the Proposed Transactions were undertaken. The Proposed Transactions would have been undertaken regardless of whether the acquisition of any of the Foreign Subsidiaries occurred.

54. With the exception of a term loan (with a term of XXXXXXXXXX) owing by F Co to E Co, all amounts owing by the Foreign Subsidiaries to related persons are due on demand.

Taxable Canadian Property

55. No share or membership interest of Foreign PubCo Group (including (i) the issued and outstanding shares of the capital stock of DC, and (ii) the shares of the capital stock of DC, the shares of the capital stock of TC, the membership interests of Foreign Sub 15, and the shares of the capital stock of Foreign SpinCo 1 that will be issued as part of the Proposed Transactions) will constitute taxable Canadian property. For greater certainty, at no time during the Proposed Transactions will there be a disposition of shares or membership interests that constitutes taxable Canadian property.

Canadian Cash Pool Arrangement

56. XXXXXXXXXX.

57. XXXXXXXXXX.

58. XXXXXXXXXX.

59. XXXXXXXXXX.

60. XXXXXXXXXX.

B Co Cash Pool Arrangement

61. XXXXXXXXXX.

62. XXXXXXXXXX.

63. XXXXXXXXXX.

64. XXXXXXXXXX.

65. XXXXXXXXXX.

Canadian Distribution

66. XXXXXXXXXX

The transactions proposed above were not concluded prior to the announcement of the Spin-Out on XXXXXXXXXX and have been deferred pending further consideration of repatriation alternatives and strategies. Paragraph 77 outlines the repatriation transactions that are expected to occur prior to the Proposed Transactions.

XXXXXXXXXX Acquisition

67. On XXXXXXXXXX Foreign PubCo announced a definitive agreement to acquire Foreign Sub 17, XXXXXXXXXX publicly-traded company. Foreign Sub 17 operated as XXXXXXXXXX through a XXXXXXXXXX operating subsidiary, Foreign Sub 18 and a wholly-owned Canadian operating subsidiary, Canco 11. Canco 11 had an inactive wholly-owned subsidiary Canco 12. The announcement below describes the rationale for the acquisition.

XXXXXXXXXX

68. The acquisition received the necessary approvals and closed on XXXXXXXXXX. Subsequent to the acquisition, Foreign Sub 17 and Foreign Sub 18 were merged into Foreign Sub 9. After those mergers, the shares of the capital stock of Canco 11 were wholly-owned by Foreign Sub 9.

69. On XXXXXXXXXX, all of the issued and outstanding shares of the capital stock of Canco 11 were sold at fair market value from Foreign Sub 9 to DC. The consideration for the sale was cash in the amount of $XXXXXXXXXX (Canadian dollar equivalent of $XXXXXXXXXX as the sales price was denominated in XXXXXXXXXX).

70. On XXXXXXXXXX, Canco 11 was wound-up into DC with the business assets transferring to DC and the liabilities being assumed by DC. The provisions of subsection 88(1) were applicable to this winding-up.

71. On XXXXXXXXXX, Canco 12 was wound-up into DC. As Canco 12 was an inactive company, there were no assets that were transferred or liabilities assumed on the wind-up. The provisions of subsection 88(1) were applicable to this winding-up.

72. The acquisition and subsequent winding-up of Canco 11 was not entered into in contemplation of and before the transfer described in Paragraph 136. The acquisition and subsequent winding-up of Canco 11 would have taken place regardless of whether the Proposed Transactions were undertaken. The Proposed Transactions would have been undertaken regardless of whether the acquisition and subsequent winding-up of Canco 11 occurred. The Spin-out to which the distribution in Paragraph 136 related was not announced until XXXXXXXXXX. At the time DC decided to integrate the Canco 11 business and at the time of the liquidation of that corporation, the directors and officers of DC had no knowledge or expectation of the Spin-out announced on XXXXXXXXXX.

The XXXXXXXXXX Lease

73. At the time DC acquired Canco 11 (as described in Paragraph 69), Canco 11 had a leasehold interest in a premises located in XXXXXXXXXX where it conducted its business (the “XXXXXXXXXX Lease”). On the wind-up of Canco 11 into DC on XXXXXXXXXX, the XXXXXXXXXX Lease was transferred to DC (as described in Paragraph 70). Subsequent to wind-up, the personnel at the XXXXXXXXXX Lease location were relocated to another leased premises of DC located in XXXXXXXXXX. Subsequent to the relocation, the XXXXXXXXXX Lease premises was subleased to an arm’s length party for the duration of the lease, which is to end on XXXXXXXXXX (a date that is subsequent to the Proposed Transactions).

The entering into of the sublease was motivated entirely by DC’s desire to reduce to the extent possible, the cost of the lease obligation assumed on the liquidation of Canco 11. Controlling lease costs is a normal business transaction for DC as that entity has approximately XXXXXXXXXX leases for various premises across Canada and routinely reviews its leased space and costs. Also, at the time of entering into the sublease, the directors and officers of DC had no knowledge or expectation of the Spin-out announced on XXXXXXXXXX. The sublease was not entered into in contemplation of and before the distribution described in paragraph 136. It would have taken place regardless of whether the Proposed Transactions were undertaken and the Proposed Transactions would have been undertaken regardless of whether the sublease was entered into.

74. Under the XXXXXXXXXX Lease arrangement between DC and the landlord, DC has a base rent payable to the landlord of $XXXXXXXXXX per month. Under the XXXXXXXXXX Lease sublease arrangement between DC and the sub-lessee, DC receives a base rent of $XXXXXXXXXX per month. There is no bargain purchase option in the terms of the lease.

75. DC pays common area expenses and property tax under the XXXXXXXXXX Lease arrangement between DC and the landlord. DC also receives common area expenses and property tax from the XXXXXXXXXX Lease sublease arrangement between DC and the sub-lessee equal to what is paid by DC to the landlord.

Based on the terms and conditions of the XXXXXXXXXX Lease arrangement between DC and the landlord and between DC and the sub-lessee, the FMV of the XXXXXXXXXX Lease is, and is expected to be nil at the time of the Proposed Transactions.

PRE PROPOSED TRANSACTIONS

Dividends from XXXXXXXXXX to DC

76. In each of XXXXXXXXXX and XXXXXXXXXX, DC is expecting to receive a $XXXXXXXXXX dividend with respect to its investment in preferred shares of the capital stock of A Co and a $XXXXXXXXXX dividend with respect to its investment in preferred shares of the capital stock of E Co. The terms of the preferred shares of the capital stock of both companies require the payment of dividends on a semi-annual basis. DC may also receive dividends on the ordinary shares of the capital stock of A Co and E Co prior to the Proposed Transactions. All such dividends are anticipated to be deductible to DC under section 113.

Cash Repatriation

77. Steps (b) through (e), as listed at Paragraph 66, were completed on XXXXXXXXXX. Step (a) involving a return of capital by DC will not occur prior to the Proposed Transactions. There was no impact on DC on implementing steps (b) through (e).

Unwind of DC Cash Pool

78. XXXXXXXXXX

79. XXXXXXXXXX

80. XXXXXXXXXX

81. XXXXXXXXXX

82. XXXXXXXXXX

83. XXXXXXXXXX

84. XXXXXXXXXX

85. XXXXXXXXXX

86. XXXXXXXXXX

87. XXXXXXXXXX

88. XXXXXXXXXX

Formation of New Entities

89. Foreign Sub 2 incorporated XXXXXXXXXX under the laws of XXXXXXXXXX on XXXXXXXXXX. XXXXXXXXXX changed its name to XXXXXXXXXX (“Foreign SpinCo 1”) on XXXXXXXXXX. Foreign SpinCo 1 is authorized to issue common shares (the “Foreign SpinCo 1 Common Shares”) each of which is a fully participating voting common share with the holder being entitled to one vote at each meeting of the shareholders of Foreign SpinCo 1.

90. On XXXXXXXXXX, Foreign Sub 7 incorporated Foreign Sub 11 and Foreign Sub 12 both under the laws of XXXXXXXXXX.

91. On XXXXXXXXXX, Foreign Sub 9 formed Foreign Sub 13 under the laws of XXXXXXXXXX.

92. On XXXXXXXXXX, Foreign Sub 1 incorporated TC under the XXXXXXXXXX.

93. On XXXXXXXXXX, Foreign SpinCo 1 incorporated Foreign Sub 15 under the laws of XXXXXXXXXX.

94 On XXXXXXXXXX, Foreign Sub 10 incorporated Foreign Sub 16 under the laws of XXXXXXXXXX.

95. Foreign Sub 10 will transfer the assets associated with the Foreign Spin Business 2 to Foreign Sub 16 in exchange for shares of the capital stock of Foreign Sub 16 and the assumption by Foreign Sub 16 of the liabilities associated with the Foreign Spin Business 2.

96. Foreign Sub 10 will distribute all of the issued and outstanding shares of the capital stock of Foreign Sub 16 to Foreign Sub 2.

97. Foreign Sub 2 will transfer all of the issued and outstanding shares of the capital stock of Foreign Sub 16 to Foreign SpinCo 1 in exchange for Foreign SpinCo 1 Common Shares.

98. Foreign Sub 6 will transfer the legal rights to the XXXXXXXXXX to Foreign Sub 14.

In order to facilitate the implementation of the Spin-Out, the formation of entities listed in Paragraphs 89 through 98 above, has taken place prior to the Proposed Transactions. Activities of the companies prior to the Proposed Transactions will be limited to initial set up activities such as incorporation, appointment of directors and officers, creation of general ledger and other accounting records, opening bank accounts, opening accounts with various federal and provincial tax authorities, initiating discussions with landlords where the assignment of leases is anticipated, initiating discussions with unions where employees covered by a collective bargaining agreement are to be transferred to a new employer, initiating discussions with bonding agencies, and initiating discussions with clients where contracts may need to be assigned. For greater certainty, activities would not include any of the Proposed Transactions described in the Paragraphs that follow.

OVERVIEW OF PROPOSED TRANSACTIONS

99. On XXXXXXXXXX, Foreign PubCo announced that its Board of Directors had unanimously approved a plan to separate the existing company into three independent, publicly-traded companies (the “Spin-Out”) as follows:

(a) the business operations in the Business Segment 1 that involve XXXXXXXXXX will be transferred to a new corporation (“Foreign SpinCo 1”) to be incorporated under the laws of XXXXXXXXXX;

(b) the Business Segment 2 of Foreign PubCo will be transferred to a corporation (“Foreign SpinCo 2”) to be incorporated under the laws of XXXXXXXXXX; and

(c) Foreign PubCo will retain the current Business Segment 3 and the commercial portion of the current Business Segment 1, XXXXXXXXXX.

100. Foreign PubCo plans to accomplish the Spin-Out by issuing stock dividends of Foreign SpinCo 1 and Foreign SpinCo 2 to Foreign PubCo shareholders, immediately after which, Foreign PubCo shareholders will own 100% of the equity in each of the three publicly-traded companies.

Foreign PubCo has determined that it will not distribute fractional shares of the capital stock of Foreign SpinCo 1 or Foreign SpinCo 2. Instead, the distribution agent will aggregate fractional shares into whole shares, sell the whole shares in the open market at prevailing market prices, and distribute the aggregate net cash proceeds of the sales pro rata to each shareholder who otherwise would have been entitled to receive a fractional share.

101. Completion of the proposed Spin-Out is subject to a number of conditions, including final approval by the Foreign PubCo Board of Directors, receipt of tax opinion from counsel, XXXXXXXXXX, and approval by Foreign PubCo shareholders.

PROPOSED TRANSACTIONS

Separation of the Foreign Spin Business from the Foreign Keep Business

The separation of the Foreign Spin Business from the Foreign Keep Business will take place prior to the separation of the DC Spin Business from the DC Keep Business as outlined in Paragraphs 122 through 141.

102. Foreign Sub 8 will merge into Foreign Sub 7, with Foreign Sub 7 surviving, pursuant to the laws of XXXXXXXXXX.

103. Foreign Sub 5 will distribute all of its interest in the common and preferred shares of the capital stock of Foreign Sub 7 to Foreign Sub 5’s sole shareholder, Foreign Sub 4.

104. Foreign Sub 4 will distribute all of its interest in the common and preferred shares of the capital stock of Foreign Sub 7 to Foreign Sub 4’s sole shareholder, Foreign Sub 2. After this transfer, Foreign Sub 7 will be a wholly-owned subsidiary of Foreign Sub 2.

105. Foreign Sub 2 will distribute all of its interest in the common and preferred shares of the capital stock of Foreign Sub 7 to Foreign Sub 2’s sole shareholder, Foreign Sub 1.

106. Foreign Sub 9 will transfer the assets and liabilities of the Foreign Spin Business to Foreign Sub 13 in exchange for membership interests in Foreign Sub 13.

107. Foreign Sub 7 will transfer all of the issued and outstanding shares of the capital stock of Foreign Sub 9 to Foreign Sub 11.

108. Foreign Sub 9 will convert to a limited liability company.

109. Foreign Sub 9 will distribute all of the issued and outstanding membership interests in Foreign Sub 13 to Foreign Sub 11.

110. Foreign Sub 11 will distribute all of the issued and outstanding membership interests in Foreign Sub 9 to Foreign Sub 7 for shares of the capital stock of Foreign Sub 7 representing at least XXXXXXXXXX percent of the votes of all classes of Foreign Sub 7 shares entitled to vote.

111. Foreign Sub 7 will contribute all of the issued and outstanding shares of the capital stock of XXXXXXXXXX and all of the issued and outstanding membership interests in Foreign Sub 9 to Foreign Sub 12 in exchange for common shares of the capital stock of Foreign Sub 12 (the “Foreign Sub 12 Common Shares”).

112. Foreign Sub 7 will distribute the Foreign Sub 12 Common Shares to Foreign Sub 1 in redemption of shares of the capital stock of Foreign Sub 7.

Foreign SpinCo 1 – Acquisition of Foreign Spin Businesses

113. Foreign Sub 5 will transfer to Foreign SpinCo 1 any assets, including receivables, associated with the Foreign Spin Business in exchange for Foreign SpinCo 1 Common Shares and the assumption of any liabilities associated therewith.

114. Foreign Sub 5 will distribute all of its interest in Foreign SpinCo 1 Common Shares to its sole shareholder, Foreign Sub 4.

115. Foreign Sub 4 will transfer to Foreign SpinCo 1 any assets associated with the Foreign Spin Business in exchange for Foreign SpinCo 1 Common Shares and the assumption of any liabilities associated therewith.

116. Foreign Sub 4 will distribute all of its Foreign SpinCo 1 Common Shares to its sole shareholder, Foreign Sub 2.

117. Foreign Sub 2 will transfer to Foreign SpinCo 1 any assets associated with the Foreign Spin Business in exchange for Foreign SpinCo 1 Common Shares and the assumption of any liabilities associated therewith.

118. Foreign Sub 2 will distribute all of the issued and outstanding Foreign SpinCo 1 Common Shares and all of the issued and outstanding common shares of the capital stock of DC to its sole shareholder, Foreign Sub 1.

119. Foreign Sub 1 will transfer all of the issued and outstanding shares of the capital stock of Foreign Sub 7 to Foreign SpinCo 1 in exchange for Foreign SpinCo 1 Common Shares and the assumption of any liabilities associated therewith.

Foreign Sub 13 – Acquisition of XXXXXXXXXX

120. Foreign Sub 14 will transfer the legal rights to the XXXXXXXXXX to Foreign Sub 2.

121. Foreign Sub 2 will sell the legal rights to the XXXXXXXXXX to Foreign Sub 13.

Canadian “Butterfly” Restructuring

122. Pursuant to the XXXXXXXXXX, DC will reorganize its capital (the “Capital Reorganization”) by amending its articles of incorporation to create a new class of common shares (the “DC New Common Shares”) and a new class of special shares (the “DC Special Shares”) (collectively referred to as the “DC Shares”) and will change the issued and outstanding DC Common Shares into an equivalent number of DC New Common Shares and XXXXXXXXXX DC Special Shares. The new shares will have the rights and conditions as described below:

(a) each of the DC New Common Shares will be a fully participating voting common share with the holder thereof entitled to XXXXXXXXXX per share at each meeting of the shareholders of DC; and

(b) the DC Special Shares will have the following attributes:

(i) each DC Special Share will be redeemable, subject to applicable law, at any time at the option to DC at an amount equal to the amount (such amount being the “DC Redemption Amount”) obtained by multiplying the aggregate fair market value of the outstanding DC Common Shares immediately prior to the Capital Reorganization by the Butterfly Percentage and then dividing such product by the number of DC Special Shares issued on the Capital Reorganization, plus the amount of all declared but unpaid dividends thereon;

(ii) each DC Special Share will be retractable, subject to applicable law, at any time at the option of the holder thereof for an amount equal to the DC Redemption Amount;

(iii) the holder of each DC Special Share will be entitled to a non-cumulative cash dividend as and when declared by the directors of DC from time to time, which dividend need not also be declared on any other class of shares of DC;

(iv) there will be a provision restricting the payment of dividends on other classes of shares so that no such dividends may be paid on any other class of shares of DC if the resulting realizable value of the net assets of DC after payment of the dividends would be less than the aggregate DC Redemption Amount of all of the DC Special Shares then outstanding;

(v) the holder of each DC Special Share will be entitled, upon the liquidation, dissolution or winding-up of DC, to a payment in priority to all other classes of shares of DC of an amount equal to the DC Redemption Amount thereon to the extent of the amount of value of property available under applicable law for the payments to the shareholders of DC upon liquidation, dissolution or winding-up, but will be entitled to no more that the amount of that payment; and

(vi) the holder of each DC Special Share will not be entitled to vote at any meeting of the shareholders of DC, other than as provided under the statute by which DC is governed.

123. The aggregate FMV of the DC Shares immediately following the Capital Reorganization will be equal to the aggregate FMV of the DC Common Shares immediately before the Capital Reorganization.

124. Foreign Sub 1 will hold the DC New Common Shares as capital property. No election under subsection 85(1) will be filed in respect of the Capital Reorganization.

125. The aggregate addition to the stated capital in respect of the DC Shares issued by DC on the Capital Reorganization will not exceed the aggregate PUC of the DC Common Shares at the time of the Capital Reorganization of approximately $XXXXXXXXXX. Such aggregate stated capital will be apportioned between the DC New Common Shares and the DC Special Shares in proportion to the relative aggregate FMV of such shares.

126. Foreign Sub 1 will concurrently:

(a) transfer all of the issued and outstanding DC Special Shares to TC;

and

(b) transfer all of the DC New Common Shares to Foreign Sub 15.

127. In consideration for the transfer in Paragraph 126(a) above, TC will issue TC Common Shares having an aggregate FMV at that time equal to the aggregate FMV of such DC Special Shares so transferred by Foreign Sub 1 to TC.

Pursuant to the statute by which TC will be governed, the stated capital of the TC Common Shares will be increased by an amount equal to the aggregate FMV of the DC Special Shares at the time they are transferred by Foreign Sub 1 to TC.

128. As part of the transfer in Paragraph 126(b) above, Foreign Sub 1, Foreign Sub 15, and Foreign SpinCo 1 will enter into a three-party agreement (the “Three-Party Share Exchange”), whereby:

(a) Foreign Sub 15 will agree to pay the purchase price for the DC Common Shares transferred to it by Foreign Sub 1 by issuing membership interests in the capital of Foreign Sub 15 to Foreign SpinCo 1 having an aggregate FMV at that time equal to the aggregate FMV of the DC Common Shares so transferred to it by Foreign Sub 1 as described in Paragraph 128(b). Foreign Sub 15 and Foreign SpinCo 1 both will agree that the membership interests in Foreign Sub 15 will be issued to Foreign SpinCo 1 in respect of and by virtue of the disposition by Foreign Sub 1 of the DC Common Shares to Foreign Sub 15;

(b) Foreign Sub 1 will pay the purchase price for the Foreign SpinCo 1 Common Shares issued to it by Foreign SpinCo 1 as described in Paragraph 128(c), by transferring all of the DC Common Shares to Foreign Sub 15; and

(c) Foreign SpinCo 1 will agree to pay the purchase price for the membership interests in Foreign Sub 15 by issuing common shares to Foreign Sub 1 having an aggregate FMV at that time equal to the aggregate FMV of the membership interests in Foreign Sub 15 so issued by Foreign Sub 15 to Foreign SpinCo 1 described in Paragraph 128(a).

129. As stated in Paragraph 55, the DC Special Shares and the DC Common Shares will not constitute taxable Canadian property. Therefore, in respect of the transfers described in Paragraph 126(a) and Paragraph 126(b), Foreign Sub 1 will (i) not apply for a clearance certificate under section 116, and (ii) not file a Canadian corporate income tax return to report the disposition of those shares.

130. The aggregate FMV, immediately before the transfer of property by DC to TC described in Paragraph 136, of the common shares of the capital stock of TC owned by Foreign Sub 1 will be equal to or approximate the amount determined by the formula, on the assumption that Foreign Sub 1 is the participant, DC is the distributing corporation and TC is the acquiror,

(A × B/C) + D

as found in subparagraph (b)(iii) of the definition of “permitted exchange” in subsection 55(1).

131. The aggregate FMV, immediately before the transfer of property by DC to TC described in Paragraph 136, of the common shares of the capital stock of Foreign SpinCo 1 owned by Foreign Sub 1 will be equal to or approximate the amount determined by the formula, on the assumption that Foreign Sub 1 is the participant, DC is the distributing corporation and Foreign SpinCo 1 is the acquiror,

(A × B/C) + D

as found in subparagraph (b)(iii) of the definition of “permitted exchange” in subsection 55(1).

132. Immediately before the transfer of property from DC to TC described at Paragraph 136, the property of DC will be determined on a consolidated look-through basis by including the appropriate pro rata share of the assets of any corporation over which DC has the ability to exercise significant influence (being the Foreign Subsidiaries). This look-through approach will be applied to every tier of corporations in the Canada Group as long as “significant influence” is being exercised. The assets of DC, determined on a consolidated basis as described herein, will be classified into the following three types of property for the purposes of the definition of “distribution” in subsection 55(1), as follows:

(a) cash or near-cash property, comprising all of the current assets of the Canada Group, including cash, marketable securities, accounts receivable, trade receivables, inventory and prepaid expenses;

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

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

For greater certainty, for purposes of this distribution:

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

(e) advances to related persons (other than as described in (g) below) will be considered cash or near-cash property;

(f) DC will be considered to have significant influence over a corporation if it has significant influence over that corporation or over any other corporation that has significant influence over that corporation, or if DC in combination with corporations over which it has significant influence have significant influence over that corporation, and for greater certainty the following corporations have significant influence over the other:

i) DC will be considered to have significant influence over all of the entities of the A Co Group and E Co Group;

ii) A Co will be considered to have significant influence over B Co, C Co and D Co;

iii) B Co will be considered to have significant influence over C Co and D Co;

iv) C Co will be considered to have significant influence over D Co;

v) E Co will be considered to have significant influence over F Co, G Co and H Co;

vi) F Co will be considered to have significant influence over G Co and H Co;

vii) G Co will be considered to have significant influence over H Co;

viii) Each entity of the A Co Group will be considered to have significant influence over each entity of the E Co Group; and

ix) Each entity of the E Co Group will be considered to have significant influence over each entity of the A Co Group;

(g) for the purposes of determining the FMV of each type of property of DC, the FMV of the shares of the capital stock of any corporation over which any of the above mentioned corporations has the ability to exercise significant influence and of any indebtedness receivable by any such corporation from a corporation over which it has significant influence will be allocated among the three types of property described above, by multiplying the FMV of the shares of the particular corporation or amount receivable from the particular corporation, as the case may be, by the proportion that the net fair market value of each type of property owned by the particular corporation (as determined in accordance with the methodologies described herein) is of the aggregate net fair market value of all the property owned by such corporation (as determined in accordance with the methodologies described herein);

(h) the XXXXXXXXXX Property will be considered to be a business property;

(i) the XXXXXXXXXX Lease referred to in Paragraph 73 will be considered to be a business property where the FMV of the XXXXXXXXXX Lease is positive at the time of the Proposed Transactions; and

(j) amounts paid in respect of costs capitalized under SAB 101 will not be considered a property as there is no legal right to recover the amount or receive further services.

133. The Canada Group is currently reviewing its properties. At present, to the best of its knowledge, the Canada Group has no property (other than cash and near-cash property) the income from which would be considered income from property, nor does the Canada Group carry on any specified investment business. Accordingly, the Canada Group is not expected to have any investment property for the purposes of this distribution.

134. In determining, on a consolidated basis, the net FMV of each of the three types of property of the Canada Group immediately before the transfer of property by DC to TC described in Paragraph 136, the liabilities of DC and any corporation over which DC exercises significant influence will be allocated to, and will be deducted in the calculation of the net FMV of, each type of property of DC or such corporation, as the case may be, in the following manner:

(a) in determining the net FMV of each type of property of a corporation over which DC exercises significant influence immediately before the transfer of property by DC to TC described in Paragraph 136, the liabilities of that corporation (other than any amount owing by such corporation to another corporation that has significant influence over the debtor corporation) will be allocated to, and deducted in the calculation of, the net FMV of each type of property of that particular corporation as follows:

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

(ii) following the allocation of current liabilities to cash or near-cash property as described in Paragraph 134(a)(i), provided that the net FMV of the cash or near-cash property of such corporation is positive, any remaining net FMV of any accounts receivable, trade receivables, inventories and prepaid expenses of such corporation will be reclassified as business property of such corporation and excluded from the net FMV of the cash or near-cash property, to the extent that such property will be collected, sold, used or consumed in the ordinary course of business to which such property relates;

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

(iv) if any liabilities remain after the allocations described above are made, such excess unallocated liabilities will then be allocated to the cash or near-cash property, investment property and business property of such corporation, based on the relative net FMV of each type of property prior to the allocation of such excess unallocated liabilities. However, where a corporation is considered to have a negative amount of a type of property because of Paragraph 134(a)(i) or (iii), for the purposes of allocating those remaining liabilities, the net FMV of that type of property will be deemed to be nil resulting in none of those remaining liabilities being allocated to that type of property.

(b) in determining, on a consolidated basis, the net FMV of each type of property of DC immediately before the transfer of property by DC to TC described in Paragraph 136, DC will include the appropriate pro rata share of the net FMV of each type of property of any corporation over which DC exercises significant influence and, for greater certainty, the appropriate negative amount of such type of property of any such entity, as determined in accordance with (a) above, and any liabilities of DC will be allocated to, and be deducted in the calculation of, the net FMV of each type of property of DC in the following manner:

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

(ii) following the allocation of current liabilities to each cash or near-cash property in Paragraph 134(b)(i), any remaining net FMV of any accounts receivable, trade receivables, inventories and prepaid expenses of DC will be reclassified as business property and excluded from the cash or near-cash property, to the extent that such property will be collected, sold or used in the ordinary course of the business to which such property relates;

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

(iv) if any liabilities remain after the allocations described in Paragraph 134(b)(i) and (iii) are made, such excess unallocated liabilities will then be allocated to the cash or near-cash property, investment property and business property of DC, on the basis of the relative net FMV of each type of property prior to the allocation of such excess, but after the allocation of the liabilities described in Paragraph 134(b)(i) and (iii).

(c) For greater certainty, for purposes of this distribution:

(i) the amount of any deferred income tax will not be considered a liability for the purposes of the Proposed Transactions described herein because such amount does not represent a legal obligation;

(ii) income and other taxes due and payable within a year will be classified as current liabilities;

(iii) amounts owing by (i) DC to DC Pool Participants under the DC Cash Pool, and (ii) B Co to B Co Pool Participants under the B Co Cash Pool, will be considered current liabilities allocable solely to cash property. As these liabilities effectively represent bank indebtedness that is due on demand, they should be considered to be a negative or contra balance that offsets directly against the cash balance of DC and B Co, respectively;

(iv) amounts owing by DC to related persons as described in Paragraph 38 that will, as described in Paragraph 142 and Paragraph 143, be repaid or refinanced prior to the Spin-out with the Replaced Retained DC Demand Note or the Replaced Assumed TC Demand Note, respectively, will be considered current liabilities. The amounts owing by DC to related persons as described in Paragraph 38 (other that any amount payable on demand) that will not be repaid or refinanced prior to the Spin-out or that will be repaid or refinanced with the Replaced Retained DC Term Loan or the Replaced Assumed TC Term Loan will be considered long-term liabilities.

(v) current liabilities will include amounts normally classified as current liabilities, including accounts payable, bonuses payable, and the current portion of any long term debt;

(vi) XXXXXXXXXX;

(vii) any current liabilities in respect of the employee incentive plans, as described in Paragraph 9 through 17, will be allocated to cash or near-cash property, and any non-current liabilities in respect of the employee incentive plans, as described in Paragraph 9 through 17, will be allocated to business property;

(viii) any amounts collected from customers and set up as deferred revenue under SAB 101 will not be considered a liability as there is no legal obligation to repay the amount or provide further services;

(ix) in respect of the CRA audit described in Paragraph 41, if the CRA does not issue a reassessment prior to the completion of the Proposed Transactions, any potential tax liability, including interest and penalties, arising from the CRA Audit will be considered to be a deferred income tax as referred to in Paragraph 134(c)(i); however, if the CRA issues a reassessment prior to the completion of the Proposed Transactions, any obligation resulting from the reassessment will be considered to be a current liability allocable to cash or near-cash property;

(x) the XXXXXXXXXX Lease referred to in Paragraph 73 will be considered to be a liability allocated to business property where the FMV of the XXXXXXXXXX Lease is negative at the time of the Proposed Transactions;

(xi) amounts owing by the Foreign Subsidiaries to related persons, other than those amounts described in Paragraph 134(c)(iii) and any amounts owing by a corporation to another corporation that has significant influence over the debtor corporation, will be considered current liabilities; and

(xii) no amount will be considered to be a liability of DC or of the Foreign Subsidiaries unless it represents a true legal liability which is capable of quantification. For greater certainty, any contingent obligations of DC or the Foreign Subsidiaries will not be considered a liability. For the purpose of Paragraph 134, the amounts described in Paragraph 134(c)(vi) will be considered a true legal liability which is capable of quantification, and not a contingent liability.

135. Based on the methodologies described above, it is anticipated that DC will only have business property at the time of the transfer of property described in Paragraph 136.

136. DC will transfer a percentage of each type of its property (as described in Paragraph 132) to TC (the “Distribution Property”) such that, immediately following such transfer, the net FMV of each type of property so transferred to TC will approximate that proportion of the net FMV of all property of the Canada Group of that type (after allocating, in the manner described in Paragraph 134, the amount of the liabilities assumed by TC described in Paragraphs 137(a)), determined immediately before such transfer that:

(a) the aggregate FMV, immediately before the transfer, of all the DC Special Shares owned by TC at that time

is of

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

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

In the event that DC has cash and near-cash property at the time of transfer, the transfer of any cash and near-cash property by DC to TC in this step will occur no later than XXXXXXXXXX after the date of the transfer of all other property by DC to TC as described in this step, but will nonetheless be considered to have been Distribution Property transferred to TC as part of the transfer of property as described in this step for purposes of section 55.

The property transferred by DC to TC described above, will include all of the issued and outstanding shares of the capital stock of A Co and E Co. No election under subsection 93(1) will be made by DC in respect of any share of the capital stock of A Co or E Co transferred to TC.

137. As consideration for the Distribution Property, TC will:

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

(b) issue TC Preferred Shares to DC having an aggregate FMV at that time equal to the amount by which the aggregate FMV of the Distribution Property transferred to TC exceeds the amount of the liabilities assumed by TC in (a) above.

138. TC will jointly elect with DC, in prescribed form and within the time limits referred to in subsection 85(6), to have the rules in subsection 85(1) apply to each transfer of eligible property to TC and in respect of which the TC Preferred Shares have been issued as full or partial consideration for the transfer of the Distribution Property as described in Paragraph 136. The agreed amount in each election will be as follows:

(a) in the case of capital property (other than depreciable property of a prescribed class) and inventory, an amount not less than the lesser of the amounts described in subparagraphs 85(1)(c.1)(i) and (ii);

(b) in the case of depreciable property of a prescribed class, an amount not less than the least of the amounts described in subparagraphs 85(1)(e)(i), (ii) and (iii); and

(c) in the case of eligible capital property, an amount not less than the least of the amounts described in subparagraphs 85(1)(d)(i), (ii) and (iii).

In addition, in each case, the agreed amount will not exceed the FMV of the property transferred, nor will it be less than the amount permitted under paragraph 85(1)(b). The amount of any liabilities assumed by TC which are allocated to a particular property that is the subject of an election under subsection 85(1) as described herein will not exceed the agreed amount for that particular property.

The property for which an election will be filed under subsection 85(1) as described above will include the shares of the capital stock of A Co and E Co and the elected amount in respect of those shares will be their ACB to DC immediately before the transfer.

The amount that will be added under the XXXXXXXXXX to the stated capital of the TC Preferred Shares issued by TC as described in Paragraph 137(b) will not exceed the amount by which the aggregate of the cost amounts of the property transferred by DC to TC (determined pursuant to subsection 85(1), where applicable) exceed the amount of the liabilities assumed by TC as described in Paragraph 137(a).

TC will also jointly elect with DC, in prescribed form and within the time limits referred to in section 22, to have the rules in section 22 apply to the transfer by DC of its accounts receivable to TC described in Paragraph 136.

DC will make payments to TC in consideration for TC assuming undertakings of DC to which paragraph 12(1)(a) applies. Any such payments made by DC to TC will be considered to be part of the distribution, as described in paragraph 136, made by DC to TC. For purposes of paragraph 20(24)(b), TC will receive the amounts in the course of the business and will include the amount in income under paragraph 12(1)(a). TC and DC will elect, jointly and in prescribed form within the time referred to in subsection 20(25), to have the rules in subsection 20(24) apply.

139. For the purposes of the joint elections described in Paragraph 138, the reference in subparagraph 85(1)(e)(i) to the “undepreciated capital cost to the taxpayer of all property of that class immediately before the disposition” shall be interpreted to mean that proportion of the undepreciated capital cost to DC of all of the property of that class immediately before the disposition that the FMV at that time of the asset that is transferred is of the FMV at that time of all property of that class.

140. Immediately following the transfer of the Distribution Property described in Paragraph 136, the following transactions will occur in the following order:

(a) TC will redeem all the TC Preferred Shares owned by DC for an amount equal to their aggregate TC Redemption Amount. In satisfaction of the TC Redemption Amount for such shares, TC will issue a promissory note, payable to DC on demand without interest or fixed terms of repayment, having a principal amount and FMV equal to the aggregate TC Redemption Amount of the TC Preferred Shares so redeemed (the “TC Redemption Note”). DC will accept the TC Redemption Note in full payment of the redemption price of the TC Preferred Shares; and

(b) DC will redeem all the DC Special Shares owned by TC for an amount equal to their aggregate DC Redemption Amount. In satisfaction of the DC Redemption Amount for such shares, DC will issue a promissory note, payable to TC on demand without interest or fixed terms of repayment, having a principal amount and FMV equal to the aggregate DC Redemption Amount of the DC Special Shares so redeemed (the “DC Redemption Note”). TC will accept the DC Redemption Note in full payment of the redemption price of the TC Preferred Shares.

141. Immediately following the transactions described in Paragraph 140, the principal amount owing by TC under the TC Redemption Note and the principal amount owing by DC under the DC Redemption Note will be set off in full against each other and each such note will be marked paid in full and cancelled.

Intercompany Liabilities of DC

142. Subsequent to the transaction described in Paragraph 141 but prior to the Spin-Out, the amounts owing by DC to related persons as described in Paragraph 38 that were not assumed by TC as described in Paragraph 137(a) (the “Retained DC Debt”) will be repaid or otherwise refinanced (the “Replaced Retained DC Debt”).

The Replaced Retained DC Debt issued will consist of one or more demand notes and/or one or more term loans with a term not to exceed XXXXXXXXXX months (collectively referred to as the “Replaced Retained DC Demand Note”) and one or more term loans with a term of XXXXXXXXXX years (referred to as “the Replaced Retained DC Term Loan”). XXXXXXXXXX.

The terms and conditions of the Replaced Retained DC Demand Note will not provide for a refinancing of that debt. Furthermore, DC does not expect to refinance the Replaced Retained DC Demand Note with long-term debt.

143. Subsequent to the transaction described in Paragraph 141 but prior to the Spin-Out, the amounts that were owing by DC to related persons as described in Paragraph 38 and assumed by TC as described in Paragraph 137(a) (the “Assumed TC Debt”) may be repaid or otherwise refinanced (the “Replaced Assumed TC Debt”).

The Replaced Assumed TC Debt issued may consist of one or more demand notes and/or one or more term loans with a term not to exceed XXXXXXXXXX months (collectively referred to as the “Replaced Assumed TC Demand Note”) and one or more term loans with a term of XXXXXXXXXX years (referred to as “the Replaced Assumed TC Term Loan”). XXXXXXXXXX.

The terms and conditions of the Replaced Assumed TC Demand Note will not provide for a refinancing of that debt. Furthermore, TC does not expect to refinance the Replaced Assumed TC Demand Note with long-term debt.

Spin-Out

144. Subsequent to the transaction described in Paragraph 143, Foreign Sub 1 will contribute all of its issued and outstanding shares of the capital stock of Foreign Sub 3 to Foreign SpinCo 1.

145. Foreign Sub 1 will distribute all of the shares of the capital stock of Foreign SpinCo 1 to Foreign Pubco.

146. Foreign PubCo will distribute all of its Foreign SpinCo 1 Common Shares and Foreign SpinCo 2 Common Shares pro rata to its shareholders as a dividend-in-kind.

ADDITIONAL INFORMATION

147. No property has or will become property of DC or its subsidiaries, and no liabilities have been or will be incurred by DC or its subsidiaries, in contemplation of and before the transfer described in Paragraph 136, otherwise than as described herein.

148. None of the shares of the capital stock of DC or TC has been or will be, at any time prior to the completion of the Proposed Transactions described herein:

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

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

(c) the subject of a dividend rental arrangement.

149. Each of DC (and its subsidiaries) and TC will be a specified financial institution. None of these corporations is a “financial intermediary corporation”. The DC Special Shares and the TC Preferred Shares are not taxable RFI shares.

150. Each of DC and TC will have the financial capacity to honour, upon presentation for payment, the amount payable under the promissory note issued or assumed by it as part of the Proposed Transactions.

151. The aggregate PUC of the DC Common Shares at the time of the Capital Reorganization is approximately $XXXXXXXXXX and is comprised only of funds provided by the shareholders of DC to commence, or otherwise further, the carrying on of the business of DC.

152. The Retained Earnings of DC, excluding the deemed dividend that will arise on the redemption of the TC Preferred Shares as described in Paragraph 140(a), are expected to be approximately $XXXXXXXXXX immediately before the proposed redemption of the DC Special Shares as described in Paragraph 140(b).

153. The aggregate principal amount of the Retained Commercial Debt and the Replaced Retained Commercial Debt is not expected to exceed the Capital of the DC Special Shares that, immediately before the proposed redemption of the DC Special Shares as described in Paragraph 140(b), was being used for purposes that would have qualified for interest deductibility had the Capital of the DC Special Shares been borrowed money.

154. 10% or more of the FMV of the Foreign SpinCo 1 Common Shares will not be, at any time, during the course of the series of transactions or events that includes the dividends described in Ruling D, derived from the DC New Common Shares. For that purpose, any indebtedness that is not a secured debt and that is not a debt related to a particular property, will be considered to reduce the FMV of each property of Foreign SpinCo 1 (or indirectly the FMV derived from DC Common Shares owned by Foreign Sub 15) pro rata in proportion to the relative FMV of all property of Foreign SpinCo 1.

155. 10% or more of the FMV of the Foreign SpinCo 1 Common Shares will not be, at any time, during the course of the series of transactions or events that includes the dividends described in Ruling D, derived from the membership interest in Foreign Sub 15. For that purpose, any indebtedness that is not a secured debt and that is not a debt related to a particular property, will be considered to reduce the FMV of each property of Foreign SpinCo 1 pro rata in proportion to the relative FMV of all property of Foreign SpinCo 1.

156. As part of the transactions or events described in Paragraphs 9 to 17, no specified shareholder of DC, TC, Foreign Sub 1, Foreign Sub 2 and Foreign Sub 15 will dispose of Foreign PubCo shares or of property issued or granted under Foreign PubCo incentive plans explained in Paragraphs 9 to 17 and that are described in clauses 55(3.1)(b)(i)(A) and (C).

157. It is expected that all Foreign SpinCo 1’s debt will be unsecured and will not be related to a particular property.

158. As part of the series of transactions or events that includes the Proposed Transactions, Foreign SpinCo 1, Foreign Sub 15 and the Foreign PubCo Group do not intend to cause:

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

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

PURPOSES OF THE PROPOSED TRANSACTIONS

159. Foreign PubCo has made the strategic decision to separate its three business segments. The Board of Directors of the Foreign PubCo Group concluded that creating three independent, public companies will provide, among other things, financial, operational and managerial benefits to each of the companies and its shareholders, including but not limited to the following expected benefits:

XXXXXXXXXX

POST-PROPOSED TRANSACTIONS

160. Subsequent to the Proposed Transactions, TC may amalgamate with KeepCo 8 in order to legally integrate the XXXXXXXXXX business with the XXXXXXXXXX business. The amalgamation would be expected to be governed by subsection 87(1).

RULINGS GIVEN

Provided that the preceding statements constitute complete and accurate disclosure of all of the relevant Facts, Proposed Transactions, Additional Information and the Purposes of the Proposed Transactions, and provided that the Proposed Transactions are completed in the manner described above, our rulings are as follows:

A.

(a) The provisions of paragraph 212.1(1)(a) or subsection 84(1) will not apply to deem a dividend to be paid by TC or to be received by Foreign Sub 1 as a result of the exchange described in Paragraph 126(a);

(b) the provisions of paragraph 212.1(1)(b) will apply to reduce the PUC of the common shares of the capital stock of TC that TC issued to Foreign Sub 1 to an amount equal to the PUC, immediately before the transfer, of the DC Special Shares that Foreign Sub 1 transferred to TC described in Paragraph 126(a);

(c) the aggregate ACB to TC of the DC Special Shares that TC acquired from Foreign Sub 1 on the exchange described in Paragraph 126(a) will be equal to the aggregate FMV at that time of the DC Special Shares that TC acquired from Foreign Sub 1; and

(d) the aggregate ACB to Foreign Sub 15 of the DC New Common Shares that Foreign Sub 15 acquired from Foreign Sub 1 on the exchange described in Paragraph 126(b) will be equal to the aggregate FMV at that time of the DC New Common Shares that Foreign Sub 15 acquired from Foreign Sub 1.

B. The provisions of subsection 85(1) will apply to the transfer by DC of eligible property to TC described in Paragraph 136 such that the agreed amount in respect of each transfer of eligible property will be deemed to be the transferor’s proceeds of disposition and the transferee’s cost thereof by virtue of paragraph 85(1)(a). In respect of depreciable property, to the extent that the transferor’s capital cost exceeds the transferor’s proceeds of disposition of the property, the transferee’s capital cost of each such property will be determined in accordance with subsection 85(5).

For greater certainty, the provisions of paragraph 85(1)(e.2) will not apply to the transfers of property as described in Paragraph 136.

For the purposes of the transfer described above, the reference in subparagraph 85(1)(e)(i) to the “undepreciated capital cost to the taxpayer of all property of that class immediately before the disposition” shall be interpreted to mean that proportion of the undepreciated capital cost to DC of all property of that class immediately before the transfer that the fair market value of the assets of that class transferred to TC is of the fair market value of all assets of that class.

C. By virtue of subsection 20(24), DC will be entitled to deduct in computing its income for the taxation year in which the assumption occurs, the amount paid to TC in respect of the undertakings of DC to which paragraph 12(1)(a) applies and that are assumed by TC, as described in paragraph 138 and which are the subject of an election described in paragraph 138, to the extent that the payments are reasonable, and the amount so assumed will be deemed to be an amount described in paragraph 12(1)(a) in respect of TC.

D. Subsection 84(3) will apply:

(a) on the redemption, as described in Paragraph 140(a), of the TC Preferred Shares owned by DC, to deem TC to have paid, and DC to have received; and

(b) on the redemption, as described in Paragraph 140(b), of the DC Special Shares owned by TC, to deem DC to have paid, and TC to have received

a dividend on the TC Preferred Shares and the DC Special Shares, respectively, equal to the amount, if any, by which the aggregate amount paid upon redemption exceeds the aggregate PUC in respect of the shares redeemed, immediately before such redemption and such dividend:

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

(d) will be deductible, pursuant to subsection 112(1), by the corporation deemed to have received such dividend;

(e) will not be a dividend to which any of subsections 112(2.1), (2.2), (2.3) or (2.4) apply to deny the subsection 112(1) deduction described in (d) above;

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

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

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

E. The provisions of subsection 112(3) will apply to reduce any loss which would otherwise be determined for the particular holder as a result of the redemption of the TC Preferred Shares and the redemption of the DC Special Shares described in Ruling D.

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

(I) 10% or more of the FMV of the Foreign SpinCo 1 Common Shares was not, at any time, during the course of the series of transactions or events that includes the dividends described in Ruling D, derived from the DC New Common Shares or derived from the membership interest in Foreign Sub 15;

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

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

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

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

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

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

For the purposes of subclause 55(3.1)(b)(i)(A)(II), in determining whether 10% or more of the FMV of the common shares of Foreign SpinCo 1 was derived from the DC New Common Shares that Foreign Sub 15 owns or derived from the membership interest in Foreign Sub 15 that Foreign SpinCo 1 owns, as described in Ruling F(I) above, any indebtedness of Foreign SpinCo 1, that is not a secured debt and that is not a debt related to a particular property, will be considered to reduce the FMV of each property of Foreign SpinCo 1 (or indirectly the FMV derived from DC Common Shares owned by Foreign Sub 15) pro rata in proportion to the relative FMV of all property of Foreign SpinCo 1.

G. The set-off and cancellation of the TC Redemption Note held by DC and the DC Redemption Note held by TC, as described in Paragraph 141, will not give rise to a forgiven amount and neither TC nor DC will realize any gain or incur any loss therefrom.

H. By virtue of subsection 1102(14) of the Regulations, each property which immediately before the transfer described in Paragraph 136, is depreciable property of a prescribed class or separate prescribed class of DC and which is acquired by TC on the transfer described in Paragraph 136, will be deemed to be depreciable property of the same prescribed class or separate prescribed class of TC.

I. Provided that the condition specified in paragraph 1100(2.2)(f) or (g) of the Regulations is satisfied, paragraph 1100(2.2)(h) of the Regulations will apply so that no amount will be included by TC under paragraph 1100(2)(a) of the Regulations in respect of depreciable property of a prescribed class that is property acquired by TC from DC, on the transfer described in Paragraph 136.

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

K. Provided that DC has a legal obligation to pay interest on the Retained Commercial Debt and the Replaced Retained Commercial Debt, and to the extent the aggregate of the Retained Commercial Debt and the Replaced Retained Commercial Debt does not exceed the Capital of the DC Special Shares, determined immediately before the redemption described in Paragraph 140(b), that are redeemed in Paragraph 140(b), and provided that the capital so redeemed was being used for purposes that would have qualified for interest deductibility had that capital been borrowed money, in computing its income for a taxation year, DC will be entitled to deduct, pursuant to paragraph 20(1)(c) and subsection 20(3), the lesser of (i) the interest on the Retained Commercial Debt and Replaced Retained Commercial Debt paid in the year or payable in respect of the year (depending on the method regularly followed by DC in computing its income for the purposes of the Act) or (ii) a reasonable amount in respect thereof.

L. For the purposes of subsection 5905(5) of the Regulations, DC will be a “predecessor corporation” as that term is used in paragraph 5905(5)(a) of the Regulations and TC will be the “acquiring corporation” as that term is used in paragraph 5905(5)(a) of the Regulations. As a result, paragraphs 5905(5)(d) through (h) of the Regulations will apply to determine in respect of TC, the balances, if any, of opening exempt surplus, opening exempt deficit, opening taxable surplus, opening taxable deficit, and underlying foreign tax of the Foreign Subsidiaries. The provisions of subsection 5905(6) of the Regulations will not apply to the determinations in paragraphs 5905(5)(d) through (h) of the Regulations.

M. The provisions of subsection 245(2) will not be applied as a result of the Proposed Transactions, in and of themselves, to redetermine the tax consequences confirmed in the rulings given above.

The above rulings are given subject to the 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 are completed before XXXXXXXXXX.

The above rulings are based on the law as it presently reads and do not take into account any proposed amendments to the Act and the Regulations which, if enacted, could have an effect on the rulings provided herein.

OPINIONS

It is our opinion that proposed section 212.3, if enacted as currently worded in the Notice of Ways and Means Motion accompanying the March 29, 2012 Canadian Federal Budget, could apply to the acquisition of the shares of the capital stock of A Co and E Co by TC from DC as described in Paragraphs 136 to 138 above. However, we understand that the Department of Finance issued a letter dated XXXXXXXXXX, 2012 addressed to DC (the “Comfort Letter”), indicating that it was prepared to recommend to the Minister of Finance that the legislation be formulated in a manner such that proposed subsection 212.3(2) would not apply to TC’s acquisition of the shares of the capital stock of A Co and E Co as described in Paragraphs 136 to 138 above.

It is our opinion that DC will be the “disposing corporation” and TC will be the “acquiring corporation” as the terms are used in proposed subsection 5905(5) of the August 27, 2010 and the August 19, 2011 draft legislation. As a result, provided that proposed subsection 5905(5) of the Regulations is enacted in the same form as proposed in the August 27, 2010 draft legislation and the August 19, 2011 draft legislation, proposed paragraph 5905(5)(a) will apply to determine in respect of TC, the balances, if any, of opening exempt surplus, opening exempt deficit, opening hybrid surplus, opening hybrid deficit, opening hybrid underlying tax, opening taxable surplus, opening taxable deficit, and opening underlying foreign tax of the Foreign Subsidiaries. Proposed paragraphs 5905(5)(b) and (c) as proposed in the August 27, 2010 draft legislation and the August 19, 2011 draft legislation will not apply to adjust the balances determined in proposed paragraph 5905(5)(a) of the Regulations.

COMMENTS

1. We make no comments as to whether any share of the capital stock or any membership interest of any entity of the Foreign PubCo Group (including (i) the issued and outstanding shares of the capital stock of DC, and (ii) the shares of the capital stock of DC, the shares of the capital stock of TC, the membership interests of Foreign Sub 15, and the shares of the capital stock of Foreign SpinCo 1 that will be issued as part of the Proposed Transactions) would or would not constitute taxable Canadian property.

2. We make no comments on the tax treatment of the participants of the Foreign PubCo Group Incentive Plans.

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

a. the PUC of any share or the ACB or FMV of any property referred to herein;

b. the balances, if any, of opening exempt surplus, opening exempt deficit, opening taxable surplus, opening taxable deficit, and, opening underlying foreign tax; or

c. any other tax consequences 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.

Nothing in this letter should be construed as confirmation, express or implied, that, for the purpose of any of the rulings given above, any adjustment to the FMV of the properties transferred 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 Interpretation Bulletin IT-169.

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

Yours truly,

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

FOOTNOTES

Note to reader: Because of our system requirements, the footnotes contained in the original document are shown below instead:

1 XXXXXXXXXX