Continuances/Migrations

Overview

The acquisition of Polycom, a NASDAQ-listed U.S. corporation by Mitel (a TSX and NASDAQ-listed Canadian corporation) in a Delaware merger (in which an indirect Delaware sub of Mitel (“Merger Sub”) is merged into Polycom, with Polycom as the survivor) is structured so that it will be treated for accounting purposes as a purchase by Mitel and as not causing Mitel to be deemed to be a U.S. corporation under Code s. 7874 – even though the market cap of Polycom is almost 50% greater than that of Mitel. This is being accomplished by a portion of the cash consideration for the public’s shares of Polycom being paid in cash (with much of the cash coming from Polycom itself.) Mitel and Polycom intend to treat the merger as divided for Code purposes into two transactions: (1) the redemption of a portion of the shares of Polycom stock held by each Polycom stockholder for the portion of the cash consideration that is funded by Polycom (including any borrowing by Merger Sub and Polycom and any cash distributions from subsidiaries of Polycom (collectively, the "redemption cash")), and (2) the exchange of a portion of the shares of Polycom stock held by each Polycom stockholder for Mitel common shares and the cash which is funded by Mitel (the "merger cash.") The shares of Polycom stock held by each Polycom stockholder will be divided between these transactions based on the relative fair market values of these two merger consideration categories. The payment of the redemption cash will be treated as a distribution in redemption of shares of Polycom stock. The receipt of the merger cash (but not the Mitel common shares) by U.S. Polycom shareholders is expected to be subject to Code s. 304 so that the Polycom stockholders will be treated as if they received additional Mitel common shares in the merger equal in value to the merger cash, and then Mitel redeemed such shares for such merger cash. The merger agreement provides for the issuance, on the merger, of shares by Polycom to Mitel (or Merger Sub’s immediate Delaware parent) in consideration for Mitel's payment of the aggregate consideration to the Polycom shareholders.

See detailed summary under Mergers & Acquisitions – Cross-Border Acquisitions – Outbound – Delaware Mergers.

Overview

Tribute is proposing an inversion transaction (targeted to be completed in Q4, 2015) with Pozen, a Delaware public company, which would result in both companies being held through an Irish holding company (Parent) with Pozen and Tribute shareholders holding approximately 63% and 37% of the shares of Parent, respectively, before giving effect to a subsequent financing. To achieve this structure, Pozen will cause Parent to be incorporated, “Ltd2” (an Irish private limited company) would be incorporated as a direct, wholly-owned subsidiary of Parent, and each of US Merger Sub and Can Merger Sub would be incorporated as sister corporations and subsequently transferred to become direct, wholly-owned subsidiaries of Ltd2. Can Merger Sub would acquire all of the outstanding "Tribute Common Shares" under the (OBCA) “Arrangement” in exchange for delivering Parent shares, and US Merger Sub would be merged with and into Pozen under a Delaware merger, with Pozen as the survivor (the “Merger”). The Merger and Arrangement (collectively, the "Transaction") are conditional on an opinion from Pozen's special tax counsel to the effect that Code s. 7874, existing regulations promulgated thereunder, and official interpretation thereof should not apply so as to cause Parent to be treated as a U.S. corporation for Code purposes - – and a U.S.$3.5M termination fee is payable to Tribute if this opinion cannot be delivered.

Tribute

An Ontario specialty pharmaceutical company with a primary focus on the acquisition, licensing, development and promotion of healthcare products in Canada and the U.S. markets whose shares trade on the TSX and OTCQX.

Parent

A private limited company formed on May 12, 2015 under the laws of Ireland which has not conducted any material activities other than in connection with the proposed transactions. It is expected that Parent Shares will be listed on NASDAQ, and a listing application has been made to the TSX.

US Merger Sub

A Delaware corporation initially incorporated on August 13, 2015 as a sister company to Parent and as at the transactions closing date will be an indirect subsidiary of Parent.

Can Merger Sub

An Onario corporation incorporated on June 5, 2015 and a wholly-owned indirect subsidiary of Parent.

Pozen

Pozen is a specialty pharmaceutical Delaware company that to date has historically focused on developing novel therapeutics for unmet medical needs and licensing those products to other pharmaceutical companies for commercialization. Pozen Common Stock is currently listed on NASDAQ.

Ltd2

Aralez Pharmaceuticals Holdings Limited, an Irish private limited company which is a direct, wholly-owned subsidiary of Parent

Plan of Arrangement

1. Tribute Common Shares held by dissenting shareholders will be deemed to have been transferred to Can Merger Sub.
2. If a Tribute Optionholder provides to Tribute a duly completed Optionholder Election Form, its “Exchange Options” will be deemed to be surrendered to Tribute in exchange for Tribute Common Shares. If a Tribute Optionholder does not deliver an Optionholder Election Form, its Tribute Options shall be deemed to be (A) Exchange Options in the event they are in the money; or (B) surrendered to Tribute in exchange for a cash payment of C$0.0001 from Tribute per applicable Tribute Option in the event they are not in the money.
3. Tribute Warrants will entitle their holder to purchase Parent Shares.
4. After the Arrangement Effective Time, Tribute Compensation Options will entitle their holders to purchase Parent Shares and Tribute Indenture Warrants for no additional consideration beyond that set out in the related certificates (as adjusted for the Arrangement Exchange Ratio).
5. The Tribute Common Shares will be transferred to Can Merger Sub in exchange for Parent Shares (delivered directly by Parent or on its behalf by the Arrangement Depositary on behalf of Parent) based on the Arrangement Exchange Ratio of 0.1455 Parent Shares per Tribute Common Share.
6. Rollover Options (i.e., options elected by the holder to be such) will be assumed by Parent and converted into Parent Options.

Final structure

Upon completion of the Transaction, Parent will be the public holding company and each of Pozen and Tribute will be an indirect wholly-owned subsidiary. To effect this structure, Pozen caused Parent to be incorporated, Ltd2 to be incorporated as a direct, wholly-owned subsidiary of Parent, and each of US Merger Sub and Can Merger Sub to be incorporated as sister corporations and subsequently transferred to become direct, wholly-owned subsidiaries of Ltd2. Each of Ltd2, US Merger Sub and Can Merger Sub currently has a nominal amount of stock outstanding. Upon completion of the Transaction (excluding "Parent Financing"), Parent expects that the Parent Shares shown below in the 2nd column will be outstanding based on the securities of Pozen and Tribute outstanding as at October 26, 2015 (calculated on a fully diluted basis) shown in the 1st column:

Creation of distributable reserve

Under Irish law, dividends may be paid (and share repurchases and redemptions must generally be funded) only out of "distributable reserves", which Parent will not have immediately following the completion of the Transaction. Distributable reserves generally means accumulated realized profits less accumulated realized losses and includes reserves created by way of capital reduction. Shareholders are therefore being asked to approve the creation of distributable reserves of Parent (through the reduction of the share premium account of Parent) in order to facilitate Parent's ability to pay dividends (and repurchase or redeem shares) after the Transaction.

Canadian tax consequences

Exchange will occur on a taxable basis for Canadian residents.

U.S. tax consequences

Reorganization

The Arrangement is intended to qualify as a "reorganization" within the meaning of Code s. 368(a), so that a U.S. holder of Tribute Common Shares will not recognize income, gain or loss upon the U.S. holder's receipt of Parent Shares in exchange for the U.S. holder's Tribute Common Shares in the Arrangement. However, a U.S. holder who is a five-percent transferee shareholder, as defined in the applicable Treasury regulations under s. 367(a), with respect to Parent immediately after the Arrangement will qualify for non-recognition treatment only if such U.S. holder files a "gain recognition agreement," as defined in the regulations, with the IRS.

Inversion rules. Under Section 7874 of the Code, Parent would be treated as a foreign corporation for Code purposes if the former stockholders of Pozen own (within the meaning of s. 7874) less than 80% (by both vote and value) of Parent Shares by reason of holding shares in Pozen (the "ownership test"). The Pozen Stockholders are expected to satisfy this test.. As a result, under current law, Parent is expected to be treated as a foreign corporation. Tribute's obligation to complete the transactions is conditional upon its receipt of a s. 7874 opinion from Pozen's special tax counsel, dated as of the Closing Date (subject to certain qualifications and limitations) to the effect that s. 7874, existing regulations promulgated thereunder, and official interpretation thereof should not apply so as to cause Parent to be treated as a U.S. corporation for Code purposes.

Termination fee

Under the Transaction Agreement, Pozen will be required to pay Tribute a Termination Fee of US$3,500,000 if Pozen's special tax counsel is unable to deliver the above opinion.

Termination for inversion rule changes

Pozen and/or Tribute are permitted to terminate the Transaction Agreement if, prior to the Closing Date, there is (i) a change in U.S. federal tax law (whether or not such change in law is yet effective) or any official interpretations thereof as set forth in published guidance by the U.S. Treasury Department or the IRS (other than IRS news releases) (whether or not such change in official interpretation is yet effective) or (ii) a bill that would implement such a change that has been passed by the United States House of Representatives and the United States Senate and for which the time period for the President of the United States to sign or veto such bill has not yet elapsed, in any such case, that, as a result of consummating the Transaction contemplated by the Transaction Agreement, in the opinion of nationally recognized U.S. tax counsel, would have a material adverse effect, including causing Parent to be treated as a United States domestic corporation for Code purposes, as further specified in the Transaction Agreement.

PFIC rules

Tribute believes that it is not treated as a passive foreign investment company.

Irish tax consequences

Irish domestic law provides that a non-Irish resident shareholder is not subject to dividend withholding tax on distributions received from Parent if such shareholder is beneficially entitled to the distributions and is either:

• a person (not being a company) resident for tax purposes in a "relevant territory" (including the U.S. and Canada) and is neither resident nor ordinarily resident in Ireland (for a list of "relevant territories" for DWT purposes see Appendix J to this Circular);
• a company resident for tax purposes in a "relevant territory," provided such company is not under the control, directly or indirectly, of a person or persons who is or are resident in Ireland;
• a company, wherever resident, that is controlled, directly or indirectly, by a person or persons resident in a "relevant territory" and who is or are (as the case may be) not controlled, directly or indirectly, by a person or persons who is or are not resident in a "relevant territory";
• a company, wherever resident, whose principal class of shares (or those of its 75% direct or indirect parent) is substantially and regularly traded on a stock exchange in Ireland, on a recognized stock exchange in a "relevant territory" or on such other stock exchange approved by the Irish Minister for Finance; or
• a company, wherever resident, that is wholly owned, directly or indirectly, by two or more companies where the principal class of shares of each of such companies is substantially and regularly traded on a stock exchange in Ireland, on a recognized stock exchange in a "relevant territory" or on such other stock exchange approved by the Irish Minister for Finance;

and provided, in all cases noted above, Parent or, in respect of shares held through DTC or CDS, any qualifying intermediary appointed by Parent, has received from the shareholder, where required, the relevant Irish Revenue Commissioners forms.

Overview

It is proposed that Waste Connections, a NYSE-listed Delaware corporation, will effect a reverse takeover of Progressive, a TSX and NYSE-listed OBCA corporation, through a merger of Waste Connections with a Delaware shell sub of Progressive, with Waste Connections as the survivor and with Waste Connections’ shareholders receiving common shares of Progressive so as to end up holding 70% of Progressive. The shares of Progressive will then be consolidated (so that the Waste Connections shareholders have the same number of shares as before) – and Progressive will be renamed Waste Connections by means of amalgamation with a shell Ontario subsidiary with that name. The obligation to effect the merger is conditional upon receipt of opinions that Code s. 7874 should not cause Progressive to be treated as a U.S. corporation. The disclosure estimates that the April 4, 2016 U.S. Treasury Department and IRS proposals, that could cause intercompany debt if it were to exceed the currently outstanding debt of Waste Connections to be treated as equity, would reduce the adjusted free cash flow expected in the first year following the Merger by less than 3%.

Progressive

A TSX and NYSE-listed OBCA corporation which is one of North America's largest full-service waste management companies, providing waste collection, recycling and disposal services to commercial, industrial, municipal and residential customers in 14 U.S. states, the District of Columbia and in six Canadian provinces.

Waste Connections

A Delaware NYSE-listed integrated municipal solid waste services company that provides solid waste collection, transfer, disposal and recycling services primarily in exclusive and secondary markets in the U.S. and a leading provider of non-hazardous exploration and production waste treatment, recovery and disposal services in several of the most active natural resource producing areas of the U.S.

Merger Sub

A Delaware limited liability company and currently a wholly-owned subsidiary of Progressive. Merger Sub was incorporated on January 14, 2016 for the purposes of effecting the Merger….

Merger

Merger Sub will merge with and into Waste Connections (the ''Merger''), with Waste Connections continuing as the surviving corporation and a subsidiary of Progressive. On the Merger, Waste Connections stockholders will receive newly issued Progressive common shares as consideration under the Merger at an exchange ratio of 2.076843 Progressive common shares for every one common share of Waste Connections common stock, so that Progressive and Waste Connections stockholders will hold approximately 30% and 70%, respectively, of post-Merger Progressive common shares. The Merger is expected to close in the second quarter of 2016.

Consolidation

Every 2.076843 pre-Consolidation Progressive common shares will be consolidated into one post-Consolidation Progressive common share. All fractional Progressive common shares will be aggregated and sold in the open market and each common shareholder who would otherwise have been entitled to receive a fraction of a Progressive common share will receive, in lieu thereof, cash, without interest.

Amalgamation name change

Progressive intends to change its name to ''Waste Connections, Inc.'' (i.e., the Name Change) by amalgamating with its newly-formed direct wholly-owned subsidiary, Waste Connections, Inc., which was incorporated under the OBCA solely for the purpose of effecting the Name Change.

U.S. Securities laws

Progressive is currently a "foreign private issuer" within the meaning of Rule 3b-4.

U.S. tax considerations

Code s. 7874 opinions

The obligation to effect the Merger is conditional upon Progressive's and Waste Connections' receipt of Code s. 7874 opinions from Weil, Gotshal & Manges LLP and Locke Lord LLP, respectively, dated as of the closing date and subject to certain qualifications and limitations, to the effect that s. 7874 and the Treasury Regulations promulgated thereunder should not apply in such a manner so as to cause Progressive to be treated as a U.S. corporation for U.S. federal income tax purposes from and after the closing date of the Merger.

Consolidation

Progressive intends for the Consolidation to qualify as a ''recapitalization'' within the meaning of Code s. 368(a). On this basis, Progressive shareholders whose pre-Consolidation Progressive common shares are exchanged in the Consolidation will not recognize gain or loss for U.S. federal income tax purposes, except to the extent of cash, if any, received in lieu of a fractional Progressive common share (which fractional share will be treated as received and then exchanged for such cash).

Debt recharacterization proposals

On April 4, 2016, the U.S. Treasury Department and the IRS issued proposed Treasury Regulations under Code s. 385 that would treat certain intercompany debt as equity for Code purposes, which when finalized would be retroactive to April 4, 2016. At the time the Merger Agreement was signed, Waste Connections and Progressive indicated that adjusted free cash flow for the combined company in the first year following the Merger was expected to exceed $625 million. Waste Connections and Progressive have considered the effect of the proposed Treasury Regulations on the combined company and believe that, if adopted in the form proposed, the proposed Treasury Regulations could cause intercompany debt if it were to exceed the currently outstanding debt of Waste Connections to be treated as equity, reducing the amount of deductible interest expense available to the combined company, which could reduce the adjusted free cash flow expected in the first year following the Merger by less than 3%.

Canadian tax considerations

Consolidation

Subject to the treatment of fractional shares, the Consolidation will result in all of the Progressive common shares being replaced by a lesser number of Progressive common shares in the same proportion for all Progressive shareholders, in circumstances where there is no change in the total capital represented by the issue, there is no change in the interest, rights or privileges of the shareholders and there are no concurrent changes in the capital structure of Progressive. On that basis, subject to the paragraph below, the Consolidation will not result in any disposition or acquisition of Progressive common shares.

Cash in lieu

A Resident Holder who receives cash in lieu of a fractional Progressive common share on the Consolidation will realize a capital gain (or capital loss) equal to the amount, if any, by which the cash proceeds received, net of reasonable costs of disposition, exceed (or are less than) the adjusted cost base to the Resident Holder of the fractional Progressive common share so disposed of.

Overview

Burger King Worldwide and Tim Hortons will effectively combine so that they will be held indirectly by a TSX-listed Ontario partnership (Partnership) of which a TSX and NYSE listed CBCA holding company (Holdings - formerly a B.C. ULC) held by former Tim Hortons and Burger King Worldwide shareholders will be general partner and the remainder of Burger King Worldwide shareholders will be limited partners. In the first set of transactions (mostly under a CBCA arrangement), a Partnership indirect Canadian subsidiary (Amalgamation Sub) will acquire Tim Hortons, resulting in Tim Hortons becoming an indirect subsidiary of both Holdings and Partnership and with cash being paid to Tim Hortons shareholders who elect cash (based on their election and subject to an aggregate cap of U.S.$8B) - and with those U.S. shareholders receiving Holdings shares benefiting from Code s. 351 reorg treatment. In the second principal step (the merger), Merger Sub (an indirect Delaware sub of Partnership) will merge into Burger King Worldwide, with Burger King Worldwide as the survivor, so that Burger King Worldwide becomes an indirect subsidiary of both Holdings and Partnership. On this merger, Burger King Worldwide stockholders can elect to receive exchangeable LP units of Holdings (so as to access Code s. 721 rollover treatment) rather than mostly shares of Holdings. In a preliminary step, Berkshire Hathaway Inc. ("Berkshire") will provide $3B of voting preferred share financing of Holdings together with an equity kicker (the warrant). Based on Holdings holding more than 50% in vote and value of Partnership interests and ex-Burger King Worldwide shareholders owning less than 80% of the Holdings and Partnership equity, as well as on substantial post-merger Canadian business activity, the Code s. 7874 rule should not deem Holdings or Partnership to be a U.S. corporation.

Burger King Worldwide

A NYSE-listed Delaware corporation formed which is the indirect parent of Burger King Corporation, a Florida corporation that franchises and operates fast food hamburger restaurants.

Tim Hortons

A TSX-listed Canadian corporation operating quick service restaurant chains in North America.

Holdings

A B.C. corporation which prior to the reorganization will be continued under the CBCA. After the reorganization, it will become a TSX and NYSE listed holding company headquartered in Canada which through Partnership will hold Burger King Worldwide and Tim Hortons.

Partnership

An Ontario LP (initially formed as a general partnership between Holdings and a wholly-owned subsidiary) which following the reorganization will be held by Holdings (as general partner) and by some of the former Burger King Worldwide shareholders as limited partners.

Amalgamation Sub

A wholly owned subsidiary of Partnership which was incorporated under the CBCA solely to effect the transactions, and which under the arrangement agreement will acquire Tim Hortons.

Merger Sub

An indirect Delaware wholly-owned subsidiary of Partnership which was formed solely to effect the transactions and pursuant to the arrangement agreement will merge with and into Burger King Worldwide, with Burger King Worldwide as the surviving corporation.

3G/3G Capital

3GSpecial Situations Fund II, L.P, which is controlled by a New York private equity firm, holds approximately 69% of the Burger King Worldwide common shares.

Tim Hortons Plan of Arrangement consideration

Each holder of a Tim Hortons common share will be entitled to receive in exchange therefor C$65.50 in cash and 0.8025 newly issued Holdings common shares (the "arrangement mixed consideration") other than shareholders who elect to receive cash of C$88.50 per share (the "arrangement cash consideration") or 3.0879 newly issued Holdings common shares (the "arrangement share consideration") in exchange therefor. However, the overall cash and Holdings common shares available for all Tim Hortons shareholders will be fixed at the aggregate amount of cash and shares that would have been issued if all Tim Hortons common shareholders elected for the arrangement mixed consideration. In addition cash will be paid in lieu of any entitlement to receive a fractional share or unit.

Tim Hortons Preliminary Steps and Plan of Arrangement

1. the shareholders rights plan of Tim Hortons will be terminated;
2. Berkshire will purchase for U.S.$3 billion (a) U.S.$3 billion, Class A 9% cumulative compounding perpetual voting preferred shares of Holdings ("preferred shares") and (b) a warrant to purchase common shares (the "warrant"), which will represent 1.75% of the fully diluted common shares of Holdings as of the completion of the transactions, at an exercise price per Holdings common share of $0.01;
3. transactions will result in the Berkshire subscription proceeds being contributed to Amalgamation Sub;
4. each Tim Hortons common share held by a dissenting shareholder will be transferred to Amalgamation Sub by the holder thereof;
5. Tim Hortons deferred stock units will be cash settled and performance stock units and restricted stock units will be settled through issuances of Tim Hortons common shares;
6. each outstanding Tim Hortons common share (not held by Amalgamation Sub) will be transferred to Amalgamation Sub in exchange for, (i) the arrangement cash consideration, (ii) the arrangement mixed consideration or (iii) the arrangement shares consideration, as elected (with the arrangement mixed consideration being applicable if no election is made) subject to applicable proration and fractional share settlement in cash – with the consideration to Holdings for delivering, on behalf of Amalgamation Sub, Holdings common shares directly to Tim Hortons shareholders, being the issuance to it of Amalgamation Sub common shares (the "AS delivered common shares");
7. each Tim Hortons option (and its tandem stock appreciation right) other than the options surrendered in 5 above will be exchanged for a Holdings option (with a tandem stock appreciation right) to acquire Holdings common shares;
8. transfer agreements will result in all AS delivered common shares (see 6) being contributed to an indirect wholly-owned Delaware LLC subsidiary of Holdings;
9. Holdings, Partnership and the Trustee will execute the voting trust agreement, Holdings will issue the special voting share to the Trustee and the stated capital of the Tim Hortons common shares will be reduced to $1.00; and
10. at 5:00 p.m., Toronto time, on the first business day following the date of the arrangement, Amalgamation Sub and Tim Hortons will amalgamate to form a new amalgamated company (also, the "Amalgamation Sub"), so that the separate legal existence of Amalgamation Sub will cease without Amalgamation Sub being liquidated or wound up, and Amalgamation Sub and Tim Hortons will continue as one company.

Burger King Worldwide merger

On the merger:

1. Merger Sub will be merged with and into Burger King Worldwide, with Burger King Worldwide as the "Surviving Company;"
2. each share of Merger Sub held by Holdings and Partnership will be converted into one share of the Surviving Company and Surviving Company will further issue its shares to Holdings and to Partnership in consideration of Holdings' issuing the Holdings consideration in (c) below and Partnership issuing the exchangeable consideration in (d) below [see also 2001-0068223];
3. except as noted in (d) below, each common share of Burger King Worldwide will be converted into the right to receive 0.99 newly issued Holdings common shares and 0.01 newly issued exchangeable units of Partnership (the "Holdings consideration") (plus cash in lieu of any fractional share); and
4. if the BKW stockholder has made an "exchangeable election" in respect of the BKW share, it instead will be converted into the right to receive one exchangeable unit of Partnership (the "exchangeable consideration"); however, the maximum number of Partnership exchangeable units to be issued will be limited to ensure that Holdings' interest in Partnership is at least 50.1% of the fair market value of all equity interests in Partnership – so that proration may apply.

Exchangeable units

Each exchangeable unit of Partnership will be entitled to distributions from Partnership equal to any dividends or distributions that are declared on a common share of Holdings. From and after the one-year anniversary of the closing date of the transactions, each holder of an exchangeable unit will have the right to require Partnership to exchange all or any portion of such holder's exchangeable units for, at the election of Holdings, in its capacity as General Partner of Partnership, (1) cash (in an amount determined in accordance with the terms of the partnership agreement) or (2) common shares of Holdings, at a ratio of one common share of Holdings for each one exchangeable unit.

Voting trust agreement

Pursuant to the "voting trust agreement" among Partnership, Holdings and a trustee as agreed between Burger King Worldwide and Holdings (the "Trustee"), the Trustee will hold a special voting share in Holdings that entitles the Trustee to a number of votes equal to the number of exchangeable units of Partnership outstanding. The exchangeable unitholders can direct the Trustee, as their proxy, to vote on their behalf with respect to substantially all matters to be voted upon by Holdings common shareholders.

Conditions of closing

Do not include a condition re no change to U.S. inversion rules. If requested by Burger King Worldwide, Tim Hortons US shall have been liquidated through distribution of The TDL Group Co.

Debt financing

Burger King Worldwide and Holdings have entered into the "debt commitment letter", pursuant to which JPMorgan Chase Bank, N.A. and Wells Fargo Bank, National Association have agreed to provide:

• a senior secured term loan facility in an aggregate principal amount of $6,750 million;
• a senior secured revolving credit facility in an aggregate principal amount of $500 million; and
• a senior secured second lien bridge facility in an aggregate principal amount of up to $2,250 million (less the gross proceeds of any senior secured second-lien notes).

Post-merger structure

Holdings will own common units of Partnership equal to the number of outstanding Holdings common shares and preferred units of Partnership equal to the number of outstanding Holdings preferred shares. After taking into account the voting power attributed to the preferred shares of Berkshire, former Tim Hortons shareholders will own shares of Holdings representing an estimated 21% of the voting power and former Burger King Worldwide stockholders will own Holdings shares or Partnership exchangeable units representing approximately 69% of the voting power (and 3G Capital will beneficially own 51% of the Holdings common shares on a fully diluted and exchanged basis, representing an aggregate of 48% of the voting power of Holdings.) Three of the 11 board members of Holdings will be designated by Tim Hortons prior to closing and the other eight will be current Burger King Worldwide directors.

Canadian tax consequences

Share/unit exchanges. The exchanges of Tim Hortons shares for Holdings shares, and of Burger King Worldwide shares for Holdings shares or Partnership exchangeable units, will occur on a taxable basis, as will a redemption of exchangeable units.

SIFT tax

Although Partnership (which is assumed will be recognized as a partnership for Canadian taxation purposes) will be a SIFT partnership, its only anticipated source of income is dividends from a Canadian subsidiary, so that it is not expected to be subject to SIFT tax.

Non-resident taxation

Any such dividends will be subject to Part XIII tax based on Partnership's non-resident ownership. A non-resident partner of Partnership will not be subject to Part XIII tax on its share of income of Partnership if (as appears likely and with the assistance of s. 115.2) it is not carrying on business.

U.S. tax consequences

Inversion rules. Partnership (by virtue of trading on the TSX) should be treated as a publicly traded partnership for purposes of Code s. 7874 and as a member of Holdings' expanded affiliated group by virtue of Holdings holding more than 50% in vote and value of Partnership interests. Holdings and Partnership should be treated as indirectly acquiring all of the assets of Burger King Worldwide and the stockholders of Burger King Worldwide should own less than 80% of the Holdings common shares and Partnership units. Accordingly, Holdings and Partnership are expected to be treated as foreign entities for U.S. federal income tax purposes because the transactions should meet the 80% test under Code s. 7874. In addition, the Holdings and Partnership expanded affiliated group, including, after the closing of the mergers, Burger King Worldwide and Tim Hortons and each of their respective greater-than-50% owned subsidiaries, should be treated as having substantial business activities in Canada (Holdings' and Partnership's country of formation.) The balance of the disclosure assumes that Holdings and Partnership will be treated as Canadian corporations for Code s. 7874 purposes. Furthermore, although former BKW stockholders should be treated as owning at least 60% by vote and value of the aggregate Holdings stock, as Holdings and Partnership are expected to meet the substantial business activities test referred to above, restrictions on the use of BKW tax attributes under s. 7874 are not expected to apply.

S. 351 exchange for Tim Hortons shareholders

The arrangement, taken together with the merger, is intended to qualify as an exchange under Code s. 351. If this is correct, a U.S. holder will recognize gain equal to the lesser of: (i) the amount, if any, by which the sum of the cash and fair market value of the Holdings shares received by it exceeds the adjusted tax basis in its Tim Hortons shares; and (ii) the cash received by it. However, a U.S. holder of Tim Hortons common shares who is a "five percent transferee shareholder" of Holdings after the transactions will qualify for such treatment only if it timely files a gain recognition agreement with the IRS.

Merger exchange for Partnership units

The merger is intended to qualify as a transfer of Burger King Worldwide stock in whole or in part (as to at least 1%) in exchange for Partnership units, so that the receipt of Partnership exchangeable units pursuant to the merger qualifies as an exchange under Code s. 721. Furthermore, Partnership exchangeable units are expected to be treated as an interest in Partnership rather than as Holdings stock given that Partnership units cannot be exchanged during the first year and an exchange request can be satisfied in cash. On this basis, the receipt of Partnership units is not expected to give rise to gain except based on the (likely nominal) value of the Holdings voting shares also received.

Merger exchange for Holdings shares

When, as here, the transaction involves the transfer of stock of a U.S. corporation to a foreign corporation, s. 367 can apply to all U.S. holders rather than solely 5% transferee shareholders. Furthermore, the Burger King Worldwide stockholders will receive more than 50% of the Holdings common shares (taking into account option attribution rules for Partnership exchangeable units for purposes of s. 367). Consequently, they will be required to recognize gain (but not loss) on their exchange of Burger King Worldwide stock for Holdings common shares in the merger equaling any excess of the fair market value of Holdings common shares received over the U.S. holder's adjusted tax basis in the exchanged Burger King Worldwide stock. Such gain must be determined separately for separate blocks of stock.

Post-merger treatment of Partnership and Partnership units

Partnership's taxation as a partnership - that is not a publicly traded partnership taxable as a corporation (provided s. 7874 does not apply) - will depend on its ability to meet through operating results, the "qualifying income exception" under s. 7704. (if it fails to satisfy the qualifying income exception, it generally will be treated as transferring all its assets to a newly-formed corporation.) In light of the intended financing structure, Partnership may derive income that constitutes "unrelated business taxable income," or "UBTI." Partnership currently intends to make the s. 754 election. In order to maintain the fungibility of Partnership units, Partnership will seek to achieve the uniformity of U.S. tax treatment for all purchasers of Partnership units which are acquired at the same time and price (irrespective of the identity of the particular seller of Partnership units or the time when Partnership units are issued by Partnership), through the application of certain tax accounting principles that are believed to be reasonable.

Overview

To effect the combination of Auxilium and QLT, AcquireCo, an indirect wholly owned subsidiary of QLT, will be merged with and into Auxilium (the "merger"). Auxilium will be the surviving corporation and, through the merger, will become an indirect wholly owned subsidiary of QLT ("New Auxilium"). Auxilium stockholders will receive a fixed ratio of 3.1359 QLT common shares for each Auxilium common share. The equity exchange ratio may be increased by up to 0.0962 QLT common shares depending on the aggregate cash consideration (if any) received by QLT or its subsidiary at or immediately after the merger effective time in respect of any sale or licence of QLT's synthetic retinoid product in development. QLT shareholders will continue to own their existing QLT common shares after the merger. Upon the closing, current QLT shareholders and former Auxilium stockholders will own approximately 24% and 76% of the combined company on a fully diluted basis, so that it is anticipated that Code s. 7874 will not deem New Auxilium to be a U.S. corporation.

See full summary under Mergers & Acquisitions – Cross-Border Acquisitions – Inbound – Reverse Takeovers.

It is proposed that a newly-formed Irish company (New Endo) will become the publicly-traded holding company for two public companies: Endo (a US public company) and Paladin (a Canadian pubic company). This is anticipated to avoid the U.S. anti-inversion rules in Code s. 7874 by virtue inter alia of the former Paladin shareholders holding more than 20% of the shares of New Endo (i.e., approximately 22.6%, corresponding to 35.4M ordinary shares). Under the terms of the Arrangement Agreement, (a) New Endo will cause it indirect newly-formed Canadian subsidiary (CanCo 1) to acquire the common shares of Paladin (the "Paladin Shares") pursuant to a CBCA Plan of Arrangement and (b) an indirect LLC subsidiary of Endo (Merger Sub) will merge with and into Endo, with Endo as the surviving corporation in the Merger. At the Merger Effective Time, each Endo Share will be converted into the right to receive one New Endo Share. As an alternative to selling their Paladin Shares directly, resident shareholders generally have the option of transferring their Paladin Shares to a respective newly-incorporated Canadian holding company (a Qualifying Holdco) solely in consideration for common shares, with the shareholders (presumably after engaging in a safe income strip) then transferring their Qualifying Holdco shares to CanCo 1. As a result of the above transactions, both Endo and Paladin will become indirect wholly-owned subsidiaries of New Endo. The Arrangement also includes the spin-off to Paladin Shareholders of a new Canadian public company (Knight Therapeutics) that intends to become a specialty pharmaceutical company.

See full summary under Mergers & Acquisitions - Cross-Border Acquisitions - Inbound - New Non-Resident Holdco.

Overview

In connection with regulatory approval of its acquisition of DigitalGlobe, Maxar Technologies Ltd. (“Maxar Canada”) committed that the Maxar group would restructure so that, by the end of 2019, the ultimate parent would be a U.S.-incorporated corporation. This was accomplished on January 1, 2019 pursuant to a B.C. Plan of Arrangement. There was a three-party exchange under which

1. the Maxar Canada shareholders transferred their shares to a newly-formed B.C. unlimited liability company subsidiary of Maxar Canada (“AcquisitionCo”);
2. a newly-formed Delaware subsidiary of Maxar Canada (“Maxar U.S.”) issued shares to the former Maxar Canada shareholders in consideration for the transfer to it of Maxar Canada in 1 ; and,
3. AcquisitionCo issued common shares to Maxar U.S. in consideration for the issuance by Maxar U.S. in 2.

The incorporator’s share of Maxar U.S. held by Maxar Canada then was cancelled; and AcquisitionCo and Maxar Canada amalgamated so that Amalco was now a wholly-owned subsidiary of Maxar U.S.

The exchange by the Maxar Canada shareholders occurred on a taxable basis for ITA purposes. Although for Code purposes, the reorganization was expected to qualify as an “F” reorg, Code s. 367 resulted in most taxable U.S. residents, who owned Maxar Canada shares with a fair market value of U.S.$50,000 or more, recognizing a gain (if any), but not a loss, for Code purposes.

Maxar Canada

Maxar Canada is a leading global provider of advanced space technology solutions for commercial and government markets, including satellites, Earth imagery, geospatial data and analytics. It is a public company incorporated under the laws of B.C. whose shares are listed on the TSX and NYSE.

Maxar U.S.

A wholly-owned subsidiary of the Company to be incorporated as a corporation under the Delaware General Corporation Law prior to the “Effective Time” of the Arrangement (January 1, 2019).

AcquisitionCo

1182060 B.C. Unlimited Liability Company, a B.C. unlimited liability company and, immediately before the Effective Time, an indirect wholly-owned subsidiary of the Company.

Reasons for Domestication

In connection with regulatory approval of its acquisition of DigitalGlobe, the U.S.-based global leader in Earth imagery, the Company committed to the further reorganization of the combined Company’s structure to ensure that the ultimate parent of DigitalGlobe is incorporated in the U.S. by the end of 2019, subject to customary approvals. Maxar Canada’s ability to win new U.S. government contracts to provide space systems, imagery and services under classified space and defense programs at the U.S. Department of Defense, NASA and various U.S. intelligence agencies will be enhanced by the U.S. Domestication….

Plan of Arrangement

1. Maxar Canada Shares held by dissenting holders shall be transferred to the Company.
2. Each Maxar Canada Share shall be transferred by the holder thereof to AcqusitionCo in exchange for the “Consideration,” being one share of Maxar U.S. Common Stock per Company Share.
3. Simultaneously with 2, Maxar U.S. will issue the Consideration to the transferring holders in 2;
4. Simultaneously with 2, AcquisitionCo will issue common shares to Maxar U.S. in consideration for the issuance of the Consideration.
5. All Maxar U.S. Shares held by the Company shall be redeemed in consideration for U.S.$1.00 in cash.
6. Each outstanding LTIP Unit shall be exchanged for a Maxar U.S. share appreciation right. In particular, in respect of each LTIP Unit governed by s. 7 of the ITA or s. 409A of the Code, each LTIP Unit outstanding shall be exchanged for a Replacement LTIP Unit (i) to purchase one Maxar U.S. Share (or, in the case of a U.S. taxpayer, to purchase one Maxar U.S. Share or receive its cash equivalent, as applicable), and (ii) at a strike price or base price, as applicable, per Maxar U.S. Share in U.S. dollars equal to the greater of (i) the exercise price (in Canadian dollars converted into U.S. dollars using the rate of exchange quoted by the Bank of Canada for the closest preceding Business Day prior to the Effective Date) per Maxar Canada Share subject to such LTIP Unit immediately prior to the Effective Time, and (ii) such minimum amount that meets the requirements of paragraph 7(1.4)(c) of the Canadian Tax Act or U.S. Treasury Regulations Section 1.409A-1(b)(5)(v)(D), as applicable.
7. The Company and AcquisitionCo shall be amalgamated to form one unlimited liability company (“Amalco”) with the same effect as if they had amalgamated under s. 273 of the BCBCA. Maxar U.S. will receive one common share of Amalco for each common share it held of AcquisitionCo.

The TSX and the NYSE have each conditionally approved the listing of the Maxar U.S. Shares.

Canadian tax consequences

The Company expects that the U.S. Domestication will be a taxable transaction for Canadian tax purposes.

U.S. tax consequences

F Reorg

It is intended that the exchange of Maxar Canada Shares for Maxar U.S. Shares, taken together with the Amalgamation, qualify as a “reorganization” within the meaning of s. 368(a)(1)(F) of the Code. Assuming that (i) the exchange of Maxar Canada Shares for Maxar U.S. Shares, taken together with the Amalgamation, qualifies as an F Reorganization, and (ii) Maxar Canada is not and has not been a passive foreign investment company (“PFIC”) during the applicable holding period a U.S. Holder that exchanges Maxar Canada Shares for Maxar U.S. Shares pursuant to the Arrangement generally will not recognize taxable gain or loss upon such exchange for U.S. federal income tax purposes except as described below in relation to s. 367 of the Code.

Whether gain under s. 367

Code s. 367 applies to certain non-recognition transactions involving foreign corporations and has the effect of imposing income tax on certain U.S. persons in connection with transactions that would otherwise be tax-free. S. 367 would apply to the Arrangement if it otherwise qualified as an F Reorganization. A U.S. Holder who, at the time of the Arrangement, beneficially owns Maxar Canada Shares with a fair market value of less than $50,000 should not be required to recognize any gain or loss under s. 367(b) or include any part of the “all earnings and profits amount” in income. Other U.S. Holders (other than a 10% U.S. Holder, as described below) must either recognize a gain (if any), but not a loss, with respect to the Arrangement or, in the alternative, may elect to recognize the “all earnings and profits amount” attributable to such holder.

10% Holders

A U.S. Holder who, at the time of the Arrangement, beneficially owns (directly, indirectly or constructively) 10% or more of the total combined voting power of all classes of Maxar Canada Shares entitled to vote or 10% or more of the total value of Maxar Canada Shares (a “10% U.S. Holder”) is subject to special rules that generally require such 10% U.S. Holder to include in income as a dividend the “all earnings and profits amount” (within the meaning of Treasury Regulations Section 1.367(b)-2(d)) attributable to the Maxar Canada Shares owned directly by such U.S. Holder unless an exclusion applies.

PFIC status

Maxar Canada believes that it was not a PFIC (generally, a foreign corporation that has a specified percentage of “passive” income or assets in a taxable year, after the application of certain “look-through” rules) for U.S. federal income tax purposes for its 2017 taxable year or any prior taxable year and does not expect to be a PFIC for its 2018 taxable year….

Non-U.S. Holders

Non-U.S. Holders generally should not recognize a gain or loss for Code purposes as a result of the Arrangement.

Overview

Bacanora Canada, whose key assets are Mexican subsidiaries holding lithium properties, is listed on the TSX, but its shares mostly trade on the AIM. It will effectively migrate to the UK under an Alberta Plan of Arrangement under which there will be a triangular exchange of shares with a newly-formed UK company (Bacanora UK) and a wholly-owned Alberta sub of Bacanora UK (Acquireco), so that the Bacanora Canada shareholders transfer their shares to Acquireco, Acquireco issues shares to Bacanora UK and Bacanora UK issues shares to the Bacanora Canada shareholders – with Bacanora Canada and Acquireco then amalgamating.

This exchange will occur on a taxable basis for Canadian purposes – and the AIM qualifies as a designated exchange for RRSP eligibility purposes. The U.S. tax disclosure indicates that there is substantial uncertainty as to whether the transaction qualifies as a s. 351 reorg given that there is a plan for Bacanora UK to do a substantial equity raise.

Bacanora Canada

An Alberta corporation listed on the TSXV and AIM whose head office and registered office is located in Calgary, Canada. Its principal assets are the Sonora Lithium and Magdalena properties in Mexico held in direct or indirect Mexican subsidiaries (with Cadence, another resource company, as a minority shareholder).

Bacanora UK

Bacanora Lithium Plc, a company incorporated under the UK Companies Act.

Acquireco

1976844 Alberta Ltd., a wholly-owned Alberta subsidiary of Bacanora UK Following the Arrangement, the amalgamated corporation resulting from its amalgamation with Bacanora Canada will be a wholly-owned subsidiary of Bacanora UK.

Bacanora Canada shareholders

The only two shareholders holding more than 10% of its shares are M&G Investments Fund ( an investment fund that is part of the Prudential Plc group of companies and is headquartered in London, UK) holding 10.04%) and 11.8% held by Igneous Capital Limited, a private corporation incorporated under the laws of the British Virgin Islands that is controlled by and ultimately beneficially owned by Mr. Edwards and a D&A Income Limited, which is in turn owned by a trust, of which Mr. Edwards is one of the potential beneficiaries.

Proposed financing

Having successfully completed the Feasibility Study on the Sonora Lithium Project, the Board intends to embark on a fund raising exercise in order to secure the US$419 million capital expenditure requirement to develop phase 1 of the Sonora Lithium Project and finance further work on the Zinnwald Lithium Project, irrespective of the approval of the Re-Domicile. It is intended that a substantial proportion of the funding will be raised through equity finance….

Reasons for transaction

Bacanora Canada currently incurs high costs associated with having a dual listing in AIM and on TSXV, yet Canadian shareholdings are estimated at less than 10% of Bacanora Canada’s shareholder base. Bacanora Canada now intends to raise a significant amount of new debt and equity financing to fund its growth as an international lithium company with new projects in Mexico and Germany and believes that a UK domiciled company with its primary listing on AIM is the best way to achieve this.

Plan of Arrangement steps

1. Simultaneously with 2 and 3 below, each holder of a Bacanora Canada Share outstanding at the Effective Time, will transfer its Bacanora Canada Shares to AcquireCo in exchange for Bacanora UK Shares on the basis of one Bacanora Canada Share for one Bacanora UK Share;
2. AcquireCo will issue that number of common shares of AcquireCo to Bacanora UK at a deemed value of $1.00 per common share of AcquireCo equal in value to the total number of Bacanora UK Shares issued by Bacanora UK to each Bacanora Canada Shareholder;
3. In consideration of AcquireCo issuing its common shares to Bacanora UK, Bacanora UK will issue Bacanora UK Shares to each Bacanora Canada Shareholder in exchange for such Bacanora Canada Shareholder tendering its Bacanora Canada Shares to AcquireCo, on a one for one basis;
4. The stated capital of the Bacanora Canada Shares shall be reduced, in the aggregate to $1.00;
5. Bacanora Canada and AcquireCo shall be amalgamated as one corporation. The aggregate stated capital of the issued Amalco common shares will be an amount equal to the aggregate stated capital of the issued AcquireCo common shares immediately before this step.

Post-Arrangement steps

Following the completion of the Arrangement: (a) the outstanding options of Bacanora Canada under the option plan of Bacanora Canada, when exercised, will be exercised into Bacanora UK Shares, in accordance with the terms of the Bacanora Option Plan; and the restricted share units of Bacanora Canada under the RSU plan of Bacanora Canada when exercised, will be exercised into Bacanora UK Shares, in accordance with the terms of the Bacanora RSU Plan.

An application will be made to the London Stock Exchange plc for admission to trading of the Bacanora UK Shares on AIM.

Canadian tax consequences

Canadian resident non-exempts

A holder of Bacanora Canada Shares who is a Canadian resident and who receives Bacanora UK Shares pursuant to the Arrangement will realize a capital gain or capital loss on his Bacanora Canada Shares to the extent that the fair market value of such Bacanora UK Shares on the Effective Date exceeds (or is less than) the aggregate of the adjusted cost base to the holder of their Bacanora Canada Shares and reasonable costs of disposition.

RRSPs etc.

Provided the Bacanora UK Shares are listed on a designated stock exchange (which currently includes AIM), the Bacanora UK Shares will be qualified investments for Deferred Income Plans.

UK tax consequences

Disposal consequences

A Bacanora Canada Shareholder who, together with persons connected with him, does not hold more than 5% of shares in Bacanora Canada should not be treated as having made a disposal of his Bacanora Canada Shares for the purposes of UK taxation of chargeable gains to the extent that he receives Bacanora UK Shares in exchange for his Bacanora Canada Shares under the Arrangement. Instead, the Bacanora UK Shares will be treated as the same asset as his Bacanora Canada Shares, acquired at the same time as his Bacanora Canada Shares. Any Bacanora Canada Shareholder who, either alone or together with persons connected with him, holds more than 5% of Bacanora Canada Shares is advised that clearance has been sought from HM Revenue & Customs under section 138 of the Taxation of Chargeable Gains Act 1992 in respect of the Arrangement.

On-going treatment

The corporation tax rate applicable to Bacanora UK’s taxable profits is currently 19% and from 1 April 2020 the rate will reduce to 17%. For gains for an individual Bacanora UK Shareholder, the rate of capital gains tax on disposal of Bacanora UK Shares by basic rate taxpayers will be 10% and, for upper rate and additional rate taxpayers, the rate will be 20%.

US tax consequences

Qualification or not as s. 351 reorg

In order for the Arrangement to qualify as a s. 351 transaction, among other requirements, Bacanora Canada Shareholders who exchange Bacanora Canada Shares for Bacanora UK Shares under the Arrangement must acquire “control” of Bacanora UK as determined under s. 351 and the regulations issued thereunder. For this purpose, “control” is defined as the ownership of stock of Bacanora UK possessing (a) at 80% of the total combined voting power of all classes of stock of Bacanora UK entitled to vote and (b) at least 80% of the total number of shares of each other class of stock of Bacanora UK. In addition to other events, a financing by Bacanora UK under which Jersey shares are issued to investors, on, before or after the Effective Date, may prevent Bacanora Canada Shareholders who exchange Bacanora Canada Shares for Bacanora UK Shares under the Arrangement from acquiring “control” of Bacanora UK under s. 351. If the Exchange fails to qualify as a s. 351 transaction, then the Exchange would constitute a taxable disposition of Bacanora Canada Shares by a U.S. Holder.

PFIC rules

If Bacanora Canada were classified as a PFIC for any taxable year during which a U.S. Holder holds or held Bacanora Canada Shares, and if Bacanora UK also qualifies a PFIC for the taxable year that includes the day after the Effective Date of the Arrangement, then proposed Treasury Regulations generally would provide for the nonrecognition treatment of a s. 351 transaction to apply to such U.S. Holder’s exchange of Bacanora Canada Shares for Bacanora UK Shares pursuant to the Arrangement provided the Exchange otherwise qualifies as a s. 351 transaction. Based on current business plans and financial projections of the income and assets of Bacanora Canada and Bacanora UK, Bacanora Canada believes that there is a significant likelihood that Bacanora UK will be a PFIC for its current taxable year and Bacanora UK may constitute a PFIC in future taxable years.

Overview

Intertain, which is an OBCA holding company listed on the TSX, holds most of its assets in non-resident subsidiaries and generates substantially all of its (on-line gaming) revenues in Europe through such subsidiaries. In order to effectively move its residence to the U.K., it has caused the formation of a U.K. plc (“Jackpotjoy”) which (except for those Canadian shareholders who have elected for rollover treatment) will issue its shares to the Intertain shareholders under an OBCA Plan of Arrangement in consideration for the transferring all but one of their shares to a grandchild Canadian subsidiary of Jackpotjoy (“ExchangeCo”) and for transferring the remaining common share to Jackpotjoy, for contribution down the chain to ExchangeCo. Those electing for rollover treatment instead will have their Intertain shares exchanged for Class B shares of the amalgamated corporation resulting from the amalgamation of ExchangeCo and Intertain (“AmalCo”), and then exchange those Class B shares under a s. 86 reorg for exchangeable shares. On the issuance of these exchangeable shares, Jackpotjoy will issue a corresponding number of shares to a Jersey company owned by a charitable trust, with the voting rights on those shares thereafter exercised as directed collectively by the exchangeable shareholders. When an exchangeable shareholder retracts (or AmalCo gives notice of redemption), the immediate parent of AmalCo (“CallCo”) will exercise its overriding call right, so that the exchangeable shareholder will transfer its exchangeable shares to CallCo, CallCo will issue shares to Jackpotjoy and in consideration therefor Jackpotjoy will direct the Jersey company to deliver the relevant number of Jackpotjoy Shares to the former exchangeable shareholder. The exchangeable shares are slated to mature no later than the 5th anniversary of their issuance and, in the meantime, are expected to be listed on the TSX.

See full summary under Cross-Border Acquisitions - Inbound - Exchangeable Share Acquisitions.

Overview

The common shareholders of Continental Gold (to be renamed CGL Buritica), which is a Bermuda corporation with central management and control in Canada, will transfer all their shares to Continental Holdco (a newly incorporated Ontario corporation) under a Bermujda Scheme of Arrangement for the same number of common shares of Continental Holdco. Taxable resident shareholders can elect under s. 85 to achieve rollover treatment. The transaction fits under the description of a "B" (share-for-share) reorg or a Code s. 351 contribution. However, U.S. shareholders who acquired their shares before 2014 (when Continental Gold ceased to be a PFIC) generally will not be eligible for tax-free exchange treatment unless they made a timely election to hold their Continental Gold shares on a mark-to-market basis or made a "purging election" to recognize gain (and pay U.S. tax) on a deemed sale of their shares at the end of 2013.

Continental Gold

A TSX-listed Bermuda company with a branch office and advanced gold project in Columbia.

Continental Holdco

A wholly-owned subsidiary of Continental Gold, named Continental Gold Inc. It was incorporated on April 27, 2015 under the OBCA in order to participate in the Scheme, and has no assets.

Scheme of Arrangement

1. Each Common Share of Continental Gold will be exchanged for one common share (a "Replacement Share") of Continental Holdco;
2. Continental Gold options will be exchanged for a replacement options issued by Continental Holdco entitling the holder to purchase the same number of Holdco Shares for the same exercise price;
3. Continental Gold will surrender to Continental Holdco for cancellation the initial Holdco common shares that were issued to Continental Gold upon incorporation of Continental Holdco;
4. The name of Continental Gold will be changed from "Continental Gold Limited" to "CGL Buritica Limited."

Canadian tax consequences

Residence. Although the Company is a Bermuda company, the Company has taken the position that it is resident in Canada for purposes of the Tax Act because, under the common law test of corporate residency, its central management and control are located in Canada.

S.85 rollover

An "Eligible Holder" (a resident, a non-resident who is not exempt from Canadian tax in respect of any gain realized on a disposition of the Continental Gold Common Shares or a partnership having such a member) may elect with Continental Holdco under s. 85 respecting the transfer in 1 above by providing completed tax election forms to Continental Holdco within 90 days following the Effective Date and return them to the Eligible Holder within 90 days of receipt thereof. Otherwise, the exchange in 1 occurs on a taxable basis.

U.S. tax consequences

B reorg or s. 351 contribution. If all Common Shares are exchanged for Replacement Shares and no other consideration is paid for the Common Shares and certain other requirements are met, the Scheme would be a transaction described in Code section 368(a)(1)(B) (a "B reorganization"), Code section 351 (a "351 contribution"), or both. Although a B reorganization or a 351 contribution is generally a tax-free exchange for U.S. tax purposes, there are two important exceptions: exchanges of shares in a passive foreign investment company (a "PFIC"); and exchanges of shares by U.S. persons that would own 5% or more of Continental Holdco following the exchange.

PFIC exception and safe harbours

Because Continental was treated as a PFIC in 2013 and earlier taxable years, any U.S. Holder who participates in the Scheme and who held Common Shares while Continental was a PFIC may be subject to U.S. tax, under the PFIC rules, on the Scheme. This is because the tax-free exchange treatment that would otherwise be available under a B reorganization or 351 exchange is generally not eligible upon exchange of PFIC shares due to the "once a PFIC, always a PFIC" rule of Code s. 1298(b)(1). Under this rule, a PFIC shareholder continues to be subject to the PFIC rules even when Continental Gold ceases to meet the PFIC income test or asset test, unless the shareholder has made one of three elections. The first election is to treat the PFIC as a Qualified Electing Fund ("QEF") effective for the first taxable year in which the shareholder holds the PFIC shares. Because the Company has not been providing the information needed to make QEF elections, this exception likely is not available. The second exception is if a shareholder has made a mark-to-market election, in which case there is authority for the "once a PFIC, always a PFIC rule" not to apply to the Scheme as long as the mark-to-market election continues to apply to PFIC. Finally, if a foreign corporation ceases to meet the definition of a PFIC, the shareholder can make a PFIC "purging" election in which the shareholder recognizes gain on a deemed sale of the shares as of the last day of the last taxable year for which the corporation was a PFIC and recognizes the resulting U.S. tax consequences of that election.

Consequences if no PFIC safe harbour

Unless one of these three elections have been made by the shareholder, a shareholder that held Common Shares while it was a PFIC will be treated as exchanging shares in a PFIC for Replacement Shares. In such case, if Continental Holdco is not also a PFIC, then the U.S. Holder will not be eligible for tax-free exchange treatment even if the Scheme otherwise qualifies as a B reorganization or a 351 transfer. Instead, the U.S. Holder is generally subject to the same US tax treatment as if it disposed of the Common Shares subject to the PFIC rules.

5% shareholder exception

Even if the Scheme qualifies as a B reorganization or 351 transfer, a U.S. Holder that would own 5% or more of Continental Holdco following the Scheme must recognize gain (although not loss) on the exchange of Common Shares unless the U.S. Holder enters into a five-year gain recognition agreement with respect to the transferred stock.

Overview

It is proposed that Encana effectively be converted from a CBCA public corporation to a Delaware public corporation. This would occur in three stages (collectively, the “Reorganization”).

• First, there would be a “somersault” Plan of Arrangement under which Encana would distribute common shares, having a nominal value, of a newly-incorporated CBCA corporation (“Ovintiv”) to its shareholders and they then would exchange their Encana shares ("Common Shares") for shares of Ovintiv – except that, in the somewhat unlikely event that the Encana Common Shares had traded up to above U.S.$6.30 a share (presumably corresponding to an estimate of the paid-up capital of the Encana shares), the shareholders would also receive $0.25 per Encana Common Share of an Ovintiv note, so that the exchange would occur on a non-rollover basis unless they elected with Ovintiv under ITA s. 85.
• Second, a U.S. subsidiary of Encana (Alenco) would be distributed out of Encana in consideration for the assumption of debt and as Encana-share redemption proceeds, and Ovintiv would then drop Encana (which previously had been converted into a B.C. ULC) into a new CBCA subsidiary of Ovintiv (HoldCo).
• Third, Ovintiv would be continued to Delaware. The Circular does not anticipate that this would generate tax under ITA s. 128.1(4) or 219.1 except potentially in the unlikely event that quite a number of Encana shareholders elected under s. 85. This continuance (the “U.S. Domestication” from a U.S. perspective) would be an “F” reorg, meaning that it would generally not occur on a rollover basis to U.S. shareholders.

Encana

Encana is a leading North American energy producer trading on the NYSE and TSX and incorporated under the CBCA. On February 13, 2019, Encana completed a business combination with Newfield (a U.S. producer), pursuant to an Agreement and Plan of Merger with Newfield.

Ovintiv

Prior to the completion of the Reorganization, Ovintiv will be formed as a CBCA corporation pursuant to the amalgamation of two wholly-owned subsidiaries of Encana. Following completion of the Reorganization, including the U.S. Domestication, Ovintiv will be a Delaware corporation. The common shares of Ovintiv will be listed on the NYSE and TSX.

Alenco

A wholly-owned Delaware subsidiary of Encana carrying on business in the U.S.

HoldCo

A newly-incorporated CBCA subsidiary of Encana.

Reason for Reorganization

The Encana Board believes the Encana valuation continues to be disconnected from its U.S. peers due, in part, to its inability to access certain pools of capital in the U.S. that are limited in investing in securities of foreign companies.

Plan of Arrangement Steps

1. The Encana Rights Plan and DRIP shall terminate.
2. The Encana Common Shares of Dissenting Shareholders shall be transferred to Encana.
3. The Encana Common Shares shall be consolidated on a 5-for-1 basis.
4. Encana shall declare a dividend and pay it by distributing pro rata to each common shareholder a fraction of an Initial Ovintiv Common Share (being 1,000 Ovintiv common shares in total) such that all the Initial Ovintiv Common Shares are distributed to the Encana Shareholders.
5. Each Encana Common Share shall be transferred to Ovintiv in exchange for (i) if the Trading Price exceeds U.S.$6.30, the issuance by Ovintiv to such Encana Shareholder of a fraction of a common share of Ovintiv and an unsecured, non-interest bearing, demand promissory note of Ovintiv with a principal amount equal to $0.25 and repayable at the option of Ovintiv by issuing a fixed number of common shares of Ovintiv (an “Ovintiv Purchase Note”), or (ii) if the Trading Price is equal to or less than U.S.$6.30, the issuance by Ovintiv to such shareholder only of Ovintiv common shares (the foregoing transactions, collectively “Share Exchange”); and as a result thereof an amount will be added to the stated capital account for the Ovintiv common shares equal to the aggregate fair market value of the consideration received by Ovintiv in exchange therefor.
6. Ovintiv shall assume all of Encana's rights and obligations under the Encana Incentive Plans.
7. Each Encana Incentive Award shall be exchanged for an Ovintiv Incentive Award (with exchanges of stock options meeting the conditions of ITA s. 7(1.4).)

Post-Arrangement Reorganization Transactions

1. Encana will continue from a CBCA corporation to a limited liability corporation under the BCBCA.
2. Encana will convert from a limited liability corporation to an unlimited liability corporation under the BCBCA and will change its name to "Ovintiv Canada ULC";
3. The following matters shall occur concurrently:
   1. Ovintiv shall assume from Encana all of the Encana Debt;
   2. in exchange, Encana shall transfer to Ovintiv all of Encana’s rights to the debt owed by Alenco Inc. (“Alenco”);
   3. also in exchange, Encana shall transfer to Ovintiv the common shares of Alenco having a fair market value equal to the principal amount of the Encana Debt less the fair market value of the Alenco debt.
4. Encana shall concurrently
   1. repurchase Encana Common Shares held by Ovintiv having an aggregate fair market value equal to the aggregate fair market value of the remaining Alenco Shares held by Encana and the fair market value of the Holdco Common Shares held by Encana, and
   2. distribute the remaining Alenco Shares held by Encana and the HoldCo Common Shares held by Encana referenced in (1) above to Ovintiv as full payment therefor.
5. Ovintiv shall assume the Dissenting Shareholder Obligation as a contribution to the capital of the Encana Common Shares.
6. Ovintiv shall contribute the Encana Common Shares to HoldCo in exchange for the issuance by HoldCo to Ovintiv of additional HoldCo Common Shares.
7. Ovintiv shall be continued from a CBCA corporation and shall be domesticated as a Delaware corporation under the Delaware General Corporation Law.

Canadian tax consequences

Taxable, or s. 85 rollover, where both Ovintiv Purchase Note and Ovintiv shares received on exchange

An Encana Shareholder who (i) is a resident of Canada, (ii) is not exempt from Canadian income tax, (iii) receives both a fraction of an Ovintiv common share and an Ovintiv Purchase Note in exchange for each Encana Common Share, and (iv) would otherwise realize a capital gain on the disposition of the Encana Common Shares, will be entitled to become an "Electing Shareholder." Any issuance of Ovintiv Purchase Notes should cause the Share Exchange to be a taxable transaction to a Canadian Holder unless such shareholder become an Electing Shareholder by making and filing a valid joint s. 85 election with Ovintiv to have the exchange occur on a partially or fully tax-deferred basis. A Canadian Holder can choose to be an Electing Shareholder by completing the appropriate election form to be located on Ovintiv’s website under the heading “Investors” at www.ovintiv.com and sending such completed election form to the address specified on the website. The completed form must be received within 60 days following the Effective Date of the Reorganization in accordance with the procedures to be noted on Ovintiv’s website for an Encana Shareholder to be an Electing Shareholder. Thereafter, subject to the form(s) complying with the provisions of the Canadian Tax Act (and any provincial tax legislation, as applicable), Ovintiv will sign the form(s) and return them to the Electing Shareholder. It will be the responsibility of the Electing Shareholder to ultimately file the form(s) with the CRA (and any provincial tax authorities, as applicable).

S. 85.1 rollover if no Ovintiv Purchase Note

Generally, an Encana Shareholder who (i) is, or is deemed to be, resident in Canada, (ii) deals at arm’s length with Encana and Ovintiv, (iii) is not affiliated with Encana or Ovintiv, (iv) is not connected with Encana or Ovintiv, (v) holds the Encana Common Shares as capital property, and (vi) sells such shares to Ovintiv under the Reorganization in exchange for only shares of Common Stock of Ovintiv (or fractions thereof) should be entitled to an automatic rollover under s. 85.1(1).

Deemed dispositions under ss. 128.1(4)

As a consequence of the U.S. Domestication, Ovintiv will cease to be resident in Canada and will be deemed to have a taxation year end for Canadian federal income tax purposes immediately before the U.S. Domestication. Ovintiv also will be deemed to have disposed of each of its properties immediately before the deemed taxation year end for proceeds of disposition equal to the fair market value of such properties and to have reacquired such properties immediately thereafter at a cost amount equal to their fair market value.

S. 219.1 exit tax

Ovintiv also will be subject to an additional “emigration tax” on the amount, if any, by which the fair market value, immediately before its deemed taxation year end resulting from the U.S. Domestication, of all the property owned by Ovintiv, exceeds the total of certain of its liabilities and the paid-up capital of all Ovintiv common shares immediately before the deemed taxation year end.

Potential exit tax to Ovintiv

If a sufficient number of Encana shareholders make valid s. 85 elections, the adjusted cost base to Ovintiv of its properties and the aggregate paid-up capital of its shares and its liabilities could be such as to result in a material tax liability to it. Furthermore, CRA could challenge Ovintiv’s estimate of the fair market value of its asserts.

US tax consequences

Share Consolidation

The Share Consolidation is intended to qualify as a “recapitalization” under Code s. 368(a)(1)(E) and/or a tax deferred exchange under Code s. 1036(a), so that a U.S. Holder generally should not recognize resulting gain or loss.

Share Exchange

The Share Exchange, together with the conversion of Encana to an unlimited liability corporation pursuant to the Reorganization, should qualify as a Tax Reorganization so that a U.S. Holder should not recognize resulting gain or loss.

U.S. Domestication

Pursuant to the U.S. Domestication, Ovintiv will change its jurisdiction of incorporation from the CBCA to Delaware. The U.S. Domestication should qualify as an F Reorganization, so that the tax treatment of a U.S. Holder in that regard should be as follows:

U.S. Holders that own shares of Common Stock of Ovintiv with a fair market value of less than $50,000 at the time of the U.S. Domestication should not recognize gain or loss.

A U.S. Holder that owns shares of Common Stock of Ovintiv with a fair market value of $50,000 or more (but who is not a 10% U.S. Holder) at the time of the U.S. Domestication should, unless such holder validly makes the “all earnings and profits” election described below, be required to recognize gain, but not a loss, with respect to their shares of Common Stock of Ovintiv in connection with the U.S. Domestication. In lieu of recognizing such taxable gain, a U.S. Holder that validly makes the “all earnings and profits” election will be required to include in income, as a deemed dividend, the “all earnings and profits amount” (as defined under applicable Treasury Regulations) that is attributable, under U.S. tax principles, to such holder’s shares of Common Stock of Ovintiv. In general, the “all earnings and profits amount” attributable to shares of Common Stock of Ovintiv held by a U.S. Holder should depend on Encana’s accumulated earnings and profits (as determined under U.S. federal income tax principles) from the date that Encana Common Shares were acquired by such U.S. Holder through the Effective Date. A U.S. Holder that wishes to make an “all earnings and profits” election must comply with strict conditions for making this election under applicable Treasury Regulations. Ovintiv is preparing an estimate of such earnings amount and will post it on its website.

Tax consequences to Ovintiv

The Reorganization is not expected to give rise to material corporate-level federal income tax to Encana or Ovintiv. However, Ovintiv could be subject to such tax in the event that at the time of the U.S. Domestication, the aggregate fair market value of its common shares exceeded the US tax basis in its assets.

PFIC rules

Encana believes that the Encana Common Shares should not currently be, and it does not believe that they should have ever been treated as, stock of a PFIC for U.S. federal income tax purpose.

Overview

Epsilon is an Alberta corporation holding, through US subsidiaries, a profitable U.S. oil and gas business. It is proposing to continue out of Canada and be "domesticated" as a Delaware corporation pursuant to the continuance “export” provisions in the ABCA and the domestication provisions in the Delaware General Corporation Law. Although this will result in a deemed disposition of all its property (s. 128.1(4)(b)) and an exit tax calculated at 5% of NAV minus PUC (s. 219.1), management does not anticipate any material Canadian income tax under these rules based on current values and Canadian tax attributes including significant loss carryforwards and (it would appear) significant paid-up capital for its shares.

U.S. shareholders holding less than 10% of its shares can elect, in lieu of recognizing gain, based on the FMV of their shares, to include in income as a deemed dividend the “all earnings and profits amount” attributable to their shares, which management estimates to be nil.

As discussed in a post on the continuance of Gastar Exploration (with a U.S. natural gas business) from Alberta to Delaware, that continuance was regarded from a U.S. tax perspective as entailing a transfer by Gastar of all its assets to the new Delaware corporation (Gastar Delaware), followed by a distribution by Gastar of Gastar Delaware to its shareholders. This distribution step was problematic as Gastar Delaware was a United States real property holding company for FIRPTA purposes. Notwithstanding that essentially the only properties of Epsilon are its U.S. oil and gas interests, its disclosure indicates that the domesticated Epsilon is not anticipated to be a USRPHC.

Epsilon

Epsilon, which was incorporated under the Alberta Business Corporations Act (“ABCA”) on March 14, 2005 and whose common shares trade on the TSX, is a North American on-shore focused independent oil and gas company whose primary areas of operation are Pennsylvania and Oklahoma and which conducts operations in the U.S. through wholly-owned subsidiaries.

Domestication (continuance)

Epsilon's Board is proposing to change its jurisdiction of incorporation from Alberta to Delaware through a continuance under s. 189 of the ABCA and a domestication under s. 388 of the Delaware General Corporation Law (“DGCL”). Under the DGCL, a corporation becomes domesticated in the State of Delaware by filing a certificate of corporate domestication and a certificate of incorporation with the Secretary of State of the State of Delaware. The domesticated corporation, which will be called Epsilon Energy, Inc., will become subject to the DGCL on the date of its domestication, but will be deemed for purposes of the DGCL to have commenced its existence in Delaware on the date it originally commenced existence in Canada. Upon listing on the Nasdaq Capital Market, Epsilon intends to apply to delist its common shares from the Toronto Stock Exchange.

Reasons for domestication

The domestication is intended to enhance shareholder value over the long-term by, among other things, improving its ability and flexibility to meet future equity and debt financing needs. In addition, its corporate offices and operations are located in the U.S. and a large percentage of its shareholders are located there.

Canadian tax consequences

S. 128.1(4)(b)

Upon the domestication, the Corporation will cease to be Canadian-resident corporation and its taxation year will be deemed to end immediately before that time. In addition, each property owned by the Corporation immediately before the deemed year end will be deemed to have been disposed of under s. 128.1(4)(b) for proceeds of disposition equal to its fair market value.

S. 219.1

The Corporation will also be subject to an additional tax under Part XIV on the amount by which the fair market value, immediately before its deemed year end resulting from the domestication, of all of the property owned by the Corporation exceeds the total of its liabilities and the paid-up capital of all the issued and outstanding shares of the Corporation immediately before the deemed year end. This additional tax is generally payable at the rate of 25%, but will be reduced to 5% under the Canada-U,S. Treaty unless it can reasonably be concluded that one of the main reasons for the Corporation becoming resident in the United States was to reduce the amount of such additional tax or Canadian withholding tax.

No expectation of exit tax

Management has advised that based upon the current fair market value of the properties of the Corporation, the tax costs of such properties, the aggregate of the paid-up capital of the shares and the liabilities of the Corporation, and the Corporation’s available capital and non-capital loss carryforwards, the domestication should result in no tax payment by the Corporation.

Epsilon shareholders

A Resident Shareholder will not be considered to have disposed of his or her common shares or to have realized a taxable capital gain or loss by reason only of the domestication. The domestication will not result in a disposition of a shareholder’s shares. Following the domestication, any dividends received by a Resident Shareholder on stock of Epsilon Energy, Inc. will be included in computing the shareholder’s income as U.S. source non-business income.

Dissenting shareholders

Based upon the limited guidance available in respect of the Canadian federal tax treatment of a dissenting Resident Shareholder who receives cash for shares following the domestication, the Canadian tax treatment of such a shareholder in such circumstances is not without doubt. However, it is expected that such amounts will constitute proceeds of disposition of stock of Epsilon Energy, Inc. of such a Resident Shareholder….

U.S. tax consequences

F or D reorg

The domestication will constitute a reorganization under s. 368(a)(1)(F), and generally will not represent a taxable transaction to the Corporation for U.S. federal income tax purposes, provided that holders of not more than 1% of the Corporation’s common shares entitled to vote on the transaction elect to exercise their dissenters’ rights. If the domestication does not qualify as an F reorganization for the reason stated above, it will qualify as a tax-free transaction under s. 368(a)(1)(D), unless the Corporation is required to use an amount of its assets to satisfy claims of dissenting shareholders which would prevent the Corporation from transferring substantially all of its assets to Epsilon Energy, Inc., the Delaware corporation.

S. 367 for 10% shareholders

Pursuant to the Treasury Regulations under Code s. 367, any U.S. shareholder that owns, directly or through attribution, 10% or more of the combined voting power of all classes of Epsilon’s stock of 10% or more of the total value of shares of all classes of its stock at the time of the domestication (a “10% shareholder”) will have to recognize a deemed dividend on the domestication equal to the “all earnings and profits amount”, within the meaning of Treasury Regulations s. 1.367(b)-2, attributable to such shareholder’s shares in the Corporation.

S. 367 for non-10% shareholders

Any U.S. shareholder that is not a 10% Shareholder but whose shares have a fair market value of less than $50,000 on the date of domestication, will recognize no gain or loss as a result of the domestication. A U.S. shareholder that is not a 10% Shareholder but whose shares have a fair market value of at least $50,000 on the date of the domestication must generally recognize gain (but not loss) on the domestication equal to the difference between the fair market value of the Epsilon Energy, Inc. common stock received at the time of the domestication over the shareholder’s tax basis in our shares. Such a shareholder, however, instead of recognizing gain, may elect to include in income as a deemed dividend the “all earnings and profits amount” attributable to its shares in the Corporation. Management believes that no U.S. shareholder of the Corporation should have a positive “all earnings and profits amount” attributable to such shareholder’s shares in the Corporation.

PFIC rules

The Corporation believes that it is not and has never been a PFIC. Accordingly, the domestication should not be a taxable event for any U.S. Holder based on an application of the PFIC rules.

Non-USRPHC status

Epsilon does not consider itself to be a USRPHC, i.e, it does not consider that the fair market value of its U.S. real property interest equals or exceeds 50% of the sum of the fair market value of its worldwide real estate real property interests and its other assets used or held for use in a trade or business.

Overview

Shareholders of Revett Minerals are being asked to approve an application under s. 188 of the Canada Business Corporations Act (the "CBCA") to change the jurisdiction of incorporation of Revett Minerals from the federal jurisdiction of Canada to the State of Delaware by way of continuance, and to approve the certificate of incorporation of Revett Minerals, to be effective as of the date of its domestication under s. 388 of the Delaware General Corporation Law ("DGCL"). The domesticated corporation (Revett Mining Company, Inc.) will be deemed for purposes of the DGCL to have commenced its existence in Delaware on the date of original incorporation under the CBCA. Upon domestication, the CBCA director will be asked to issue a certificate of discontinuance bearing the same date as the date of effectiveness of the certificate of corporate domestication. Eventually, Revett Silver Company will be merged with and into Revett Mining Company, Inc.

Revett Minerals

Revett Minerals is a CBCA corporation which is headquartered in Washington state, which holds shares of a Montana corporation ("Revett Silver Company") as essentially its sole asset. Revett Silver Company through subsidiaries holds a Montana copper and silver mine (whose operations were suspended at the end of 2012 and will not resume until construction of a deeper decline is finished on or after November 2014), and a development-stage silver and copper deposit, also in Montana. It is listed on the NYSE Markets Division and the Frankfurt exchange (as well as on the TSX).

Canadian tax consequences

Continuance. Upon the continuance, Revett Minerals will be deemed (by s. 128.1(4)(b)) to have disposed of each of its properties for their fair market value, which could cause Revett Minerals to incur a Canadian income tax liability. Furthermore, an emigration tax will be imposed (under s. 219.1) on the amount by which the fair market value of all of the properties of Revett Minerals exceeds the aggregate of the paid-up capital of its shares and its liabilities. Tax will be so imposed at a 5% rate "unless it can reasonably be concluded that one of the main reasons for the Corporation becoming resident in the United States was to reduce the amount of such additional tax or Canadian withholding tax," in which case the rate will be 25% (s. 219.3). Management is of the view that there should be no material Canadian taxable income or liability arising as a consequence of the domestication. In particular, "if the market price of our common shares does not exceed $2.25 per share and the exchange rate….remains relatively constant…then we should not incur Canadian income taxation arising on the domestication" (p. 7). In 2013, the TSX trading price ranged from $1.44 to $2.72, and ranged as high as $5.10 in 2012.

Shareholders

A Canadian resident holder (as well as a non-resident shareholder) should not be deemed to have disposed of its Revett Minerals shares as consequence only of the domestication. Standard disclosure re dissenters.

U.S. tax consequences

For Revett Minerals. The change in its jurisdiction of incorporation is expected to be a tax-free reorganization under Code. S. 368(a)(F) or (D) (based on substantial corporate assets not being distributed to any shareholders who dissent). "However, to the extent the Corporation owns any United States real property interests…the Corporation will recognize gain to the extent consideration received by the Corporation for such interest exceeds the Corporation's adjusted tax basis in such interest, regardless of whether the transaction qualifies as an F Reorganization or a D Reorganization."

U.S. Holders – s. 367

U.S. holders of Revett Minerals shares generally will not recognize any gain or loss for Code purposes upon the exchange of their Revett Minerals shares for shares of New Revett Minerals pursuant to the continuance unless the Code s. 367 rules or PFIC rules apply. A U.S. holder that owns, directly or indirectly (under constructive ownership rules) less than 10% of the combined voting power of all classes of stock of Revett Minerals and owns shares of Revett Minerals with a fair market value of less than $50,000 is not subject to the s. 367 rules. A 10% Shareholder will be required to recognize as dividend income its proportionate share of Revett Minerals's "all earnings and profits amount", with a corresponding increase in its tax basis. A U.S. holder that is not a 10% Shareholder but whose shares have a fair market value of at least $50,000 generally will recognize gain (but not loss) upon the domestication equal to the difference between the fair market value of the Revett Mining Company, Inc. common stock received at the time of the domestication over the shareholder's tax basis in the shares of Revett Minerals. However, it will not be required to recognize any gain if it instead elects to include as a deemed dividend the "all earnings and profits amount" with respect to its Revett Minerals stock. Revett Minerals believes that no U.S. shareholder of Revett Minerals should have a positive "all earnings and profits amount" attributable to its shares (and that it is not a PFIC), so that no US shareholder should be subject to tax on the domestication.

U.S. Holders – PFIC

Revett Minerals believes that it is not and never has been a PFIC. Accordingly, the continuance should not be a taxable event for any U.S. holder under the PFIC rules.

Non- U.S. Holders

The exchange of shares of Revett Minerals for shares of Revett Mining Company, Inc. by a non-U.S. holder generally will not be a taxable transaction. Revett Minerals does not anticipate that Revett Mining Company, Inc. will become a USRPHC.

Overview

Pursuant to a Plan of Arrangement under s. 193 of the ABCA, the jurisdiction of incorporation of Gastar will be changed from Alberta to Delaware by way of a domestication under s. 388 of the Delaware General Corporation Law ("DGCL") – so that its existence as a corporation will be deemed to have commenced on December 22, 2005, the date of original incorporation under the ABCA. Gastar will delist from the TSX.

Gastar

Gastar is a Houston-based corporation with a market cap of $173M engaged in the exploration and production of natural gas and oil, with a focus on the Marcellus Shale play in Appalachia. It is listed on the NYSE Amex (as well as on the TSX). Its share price has declined from around $25 shortly after its incorporation at the end of 2005 to $2.50 currently.

Plan of Arrangement

Under the Plan of Arrangement:

• dissenters will be deemed to have transferred their Gastar shares to Gastar for cancellation and will cease to have any rights other than to be paid the fair value of their shares
• Gastar shall continue under the DGCL as Gastar Delaware so that inter alia each outstanding Gastar share shall be exchanged for one share of Gastar Delaware , the property of Gastar shall continue to be property of Gastar Delaware, and Gastar Delaware will continue to be liable for obligations of Gastar

U.S. securities laws

The shares of Gastar Delaware to be issued will not be registered in reliance on the s. 3(a)(10) exemption.

Canadian tax consequences

Continuance. Upon the continuance, Gastar will be deemed (by s. 128.1(4)(b)) to have disposed of each of its properties for their fair market value, which could cause Gastar to incur a Canadian income tax liability. Furthermore, an emigration tax will be imposed (under s. 219.1) on the amount by which the fair market value of all of the properties of Gastar exceeds the aggregate of the paid-up capital of its shares and its liabilities. Tax will be so imposed at a 5% rate "unless one of the main reasons for our Company changing its residence to the United States was to reduce the amount of this corporate emigration tax or the amount of Canadian withholding tax paid by our Company, in which case the rate will be 25%" (s. 219.3). Management is of the view that there should be no material Canadian tax arising as a consequence of the continuance.

Shareholders

A Canadian resident holder (as well as a non-resident shareholder) should not be deemed to have disposed of its Gastar shares as consequence only of the continuance. Standard disclosure re dissenters.

U.S. tax consequences

Potential FIRPTA tax. As a result of the continuance, Gastar will be treated as (i) transferring all of its assets and liabilities to Gastar Delaware in exchange for stock of Gastar Delaware , and (ii) distributing to its shareholders the stock of Gastar Delaware in redemption of the shareholders' stock in Gastar. As Gastar Delaware will be a United States real property holding company (USRPC) within the meaning of Code s. 897, in the absence of an applicable exception, Gastar would be required to recognize any gain realized on its constructive distribution in (ii).

Private letter ruling/toll charge

In a private letter ruling, the IRS ruled that Gastar would qualify for an exception (and thus not realize gain in (ii)) provided that the reorganization qualified as a s. 368(a) reorganization and Gastar paid a "toll charge" equal to the taxes that would have been imposed under s. 897 on all persons who disposed of Gastar stock within the 10 years preceding the continuance if Gastar had been a domestic corporation, plus interest thereon. Gastar expects this toll charge to be approximately $500,000.

S 368(a) reorg

Although the ruling did not address the status of the continuance as a s. 368(a) reorganization, a condition to the completion of the reorganization will be an opinion of Bingham McCutchen that it so qualifies.

U.S. Holders – s. 367

If the continuance qualifies as a Code s. 368(a) reorganization, U.S. holders of Gastar shares generally will not recognize any gain or loss for Code purposes upon the exchange of their Gastar shares for shares of New Gastar pursuant to the continuance unless the Code s. 367 rules or PFIC rules apply. A U.S. holder that owns, directly or indirectly (under constructive ownership rules) less than 10% of the combined voting power of all classes of stock of Gastar and owns shares of Gastar with a fair market value of less than $50,000 is not subject to the s. 367 rules. A 10% Shareholder will be required to recognize as dividend income its proportionate share of Gastar's "all earnings and profits amount", with a corresponding increase in its tax basis. A U.S. holder that is not a 10% Shareholder but whose shares have a fair market value of at least $50,000 generally will recognize gain (but not loss) upon the exchange of its Gastar stock for Gastar Delaware stock. However, it will not be required to recognize any gain if it instead elects to include as a deemed dividend the "all earnings and profits amount" with respect to its Gastar stock if inter alia Gastar provides sufficient information to compute the "all earnings and profits amount" with respect to its stock. Gastar believes that it has incurred deficits in earnings and profits in each tax year beginning after 2005 except for the 2009 tax year. It will post information regarding its earnings and profits (or deficits) on its website.

U.S. Holders – PFIC

Gastar believes that it is not and never has been a PFIC. Accordingly, the continuance should not be a taxable event for any U.S. holder under the PFIC rules.

Non- U.S. Holders

The exchange of shares of Gastar for shares of Gastar Delaware by a non-U.S. holder on the continuance generally will not be a taxable transaction.

Overview

In order to merge the car rental business of Adreca, a private Delaware corporation, with the car rental business of FSNA, a TSXV-listed CBCA corporation, Adreca will be merged into a subsidiary of FSNA with Adreca as the survivor, and FSNA, following its continuance from Canada to Delaware ("New FSNA"), will then be merged with Adreca, with New FSNA as the survivor.

For a more detailed summary, see under Cross-Border Mergers - Outbound - Continuance and Merger.

Overview. The sole asset of GWRC is a 48% equity interest in GWRI. In order to take advantage of a term of bonds previously issued by GWRI, which permits their refinancing if GWRI engages in a public offering, it is proposed that GWRC be merged into GWRI under the Delaware corporate law (but as authorized under a B.C. Plan of Arrangement), with GWRI as the survivor – following which a public offering by GWRI would be completed. In light of s. 128.2(2), the merger is expected to trigger asset dispositions under s. 128.1(4)(b) and potential emigration tax (at a 5% rather than 25% rate) under s. 219.1, although no significant tax is anticipated. Canadian shareholders will be eligible for rollover treatment given qualification of the merger under s. 87(8). GWRC will be treated for Code purposes as (i) transferring all of its assets and liabilities to GWRI, in exchange for common shares of GWRI, and (ii) distributing those GWRI shares (a FIRPTA asset) to its shareholders. GWRI is anticipated to have no significant "all earnings and profits amount."

GWRC. A TSX-listed B.C. company which completed its initial public offering in Canada on the TSX on December 30, 2010. Its sole asset is an approximate 47.8% equity interest in GWRI.

GWRI. GWRI operates in the Western U.S. as a water resource management company that owns and operates regulated water, wastewater and recycled water utilities, principally in metropolitan Phoenix, Arizona.

Bond Refinancing. Concurrent with the announcement of the Arrangement, GWRI announced that it has filed a registration statement on Form S-1 with the SEC for a proposed primary offering of its shares of common stock (the "U.S. IPO"). Following the U.S. IPO, GWRI plans to refinance all of its tax-exempt bonds (with a principal of U.S.$106.7 million) issued through The Industrial Development Authority of the County of Pima. The loan agreements relating to such bonds provide a redemption option exercisable by GWRI at a price of 103% of the principal amount redeemed, plus interest accrued up to the redemption date, in the event of a "public offering" of ownership interests in GWRI. The U.S. IPO, once completed, will constitute such a public offering. GWRI believes it can reduce the effective interest rate on the outstanding balance of such debt by approximately 75 to 150 basis points.

Securities laws. Pursuant to an order of the Ontario Securities Commission and the Autorité des marches financiers dated January 27, 2016, GWRC obtained exemptive relief from the formal valuation requirement in MI 61-101 on the basis that the value of the shares of common stock of GWRI will be, in all material respects, economically equivalent to the value of the Common Shares.

Arrangement/Merger.

The Plan of Arrangement is stated to be binding at and after its Effective Time on GWRC, GWRI and the GWRC security holders, and the following would occur thereunder:

1. GWRC will be authorized to merge with and into GWRI, which merger shall be effected under the General Corporation Law of Delaware to form one corporate entity, with the same effect as if GWRC had been authorized to amalgamate with GWRI under s. 284 of the BCBCA, and whereby pursuant to such merger and the General Corporation Law the separate legal existence of GWRI will not cease and GWRI will be the surviving entity;
2. each outstanding Option will be exchanged for a Replacement Option;
3. each outstanding SAR will be exchanged for a Replacement SAR granted by GWRI;
4. each outstanding DPU and PSU will be continued;
5. each Common Share in respect of which Dissent Rights have been validly exercised and not withdrawn shall be cancelled and become an entitlement to be paid the fair value of such Common Share; and
6. each issued and outstanding Common Share shall be exchanged for one share of common stock of GWRI.

Dividends. Following the completion of the Arrangement, GWRI intends to pay a regular monthly dividend on the shares of common stock of GWRI of U.S.$0.021 per share (U.S$0.25 per share annually), or an aggregate of approximately U.S.$4.85 million on an annual basis, which is the U.S.$ equivalent of the current C$0.0283 monthly dividend of GWRC.

Canadian tax consequences. Deemed emigration (governed by s. 128.1(4)) under s. 128.2. Immediately before the merger, GWRC will be deemed to have ceased to be a resident of Canada, its taxation year will be deemed to have ended immediately before that time, and it will be deemed to have sold all of its property (consisting almost exclusively of its shares of GWRI) and received fair market value proceeds therefor.

S. 219.1 emigration tax. Emigration tax will be imposed on the amount by which the fair market value of all of the properties of GWRC immediately before the end of the of its Deemed Taxation Year exceeds the aggregate of (i) the paid-up capital of the Common Shares immediately before the end of the deemed taxation year, and (ii) the amount of all debts owing by GWRC (other than amounts payable in respect of dividends and this emigration tax), as of the end of the deemed taxation year. The emigration tax must be paid on or before the day on which GWRC is required to file its income tax return for the deemed taxation year and cannot be offset by any losses of GWRC. The emigration tax will be imposed at a rate of 5%, unless it can reasonably be concluded that one of the main reasons that GWRC became resident in the U.S. was to reduce the emigration tax or Canadian withholding tax payable by GWRC, in which case the rate of emigration tax would be 25%. GWRC is of the view that it would not be reasonable to so conclude. Based on its current and expected circumstances, GWRC does not expect to be subject to material Canadian taxation as a result of either the deemed disposition of the property of GWRC or the imposition of the corporate emigration tax.

Application of foreign merger rules to shareholders. It is expected that the merger will be a "foreign merger" for purposes of the Tax Act. Except where a particular Resident Holder chooses to recognize a capital gain (or capital loss) on the merger (as discussed below), pursuant to subsection 87(8) of the Tax Act, Resident Holders will be deemed to have disposed of Common Shares for proceeds of disposition equal to the aggregate adjusted cost base of such shares immediately before the Merger and will be deemed to have acquired the shares of common stock of GWRI received on the merger at a cost equal to the same amount. It is not possible for a Resident Holder to elect to recognize only a portion of the capital gain or capital loss otherwise realized on a disposition of Common Shares.

Dissenting shareholders. Although the treatment of a dissenting Resident Holder who receives cash for his or her Common Shares following the merger is not without doubt, it is expected that such amounts will constitute proceeds of disposition of the Common Shares.

U.S. tax consequences. Merger. The Merger is intended to qualify as a tax-deferred reorganization within the meaning of Code s. 368(a). As a result of the merger, GWRC will be treated for Code purposes as (i) transferring all of its assets and liabilities to GWRI, in exchange for shares of common stock of GWRI, and (ii) distributing the shares of common stock of GWRI to its Shareholders pursuant to a Reorganization.

FIRPTA. GWRC and GWRI believe that GWRI is and will be a "United States real property holding corporation." On this basis, GWRC will be required to recognize gain (if any), but not loss, upon the deemed distribution of shares of common stock of GWRI to its Shareholders pursuant to the merger. The amount of gain subject to U.S. federal income taxation will be the amount, if any, by which the fair market value of the shares of common stock of GWRI held by GWRC exceeds GWRC's adjusted basis in such shares. GWRC does not expect to be subject to material U.S. federal income taxation upon the deemed distribution of shares of common stock of GWRI to its Shareholders pursuant to the Merger.

S. 367(b) gain. Assuming the merger qualifies as a U.S. tax-deferred reorganization, a U.S. Holder who owns (actually or constructively) U.S.$50,000 or more of Common Shares, but less than 10% of the voting power of all Common Shares entitled to vote, generally will be required to recognize gain (but not loss) with respect to the deemed receipt of shares of common stock of GWRI in the merger under Code s. 367(b), even if such holder continues to hold such shares of common stock of GWRI and receives no cash as a result of the merger. As an alternative to recognizing gain, however, such U.S. Holder may elect to include in income as a dividend the "all earnings and profits amount" attributable to its Common Shares. GWRC intends to provide each U.S. Holder eligible to make the election with information regarding its earnings and profits upon request, which it does not expect to be materially greater than zero through the date of the merger. Pursuant to s. 367(b), a U.S. Holder who owns (actually or constructively) 10% or more of the voting power of all Common Shares entitled to vote generally will be required to recognize as a dividend the "all earnings and profits amount" attributable to such holder's Common Shares. The foregoing consequences under s. 367(b) should not apply to a U.S. Holder who owns Common Shares with a fair market value of less than U.S.$50,000 on the date of the merger.

PFIC rules. GWRC does not believe that it will be a PFIC for the current taxable year, nor does it believe that it was a PFIC in prior taxable years.