Certain Canadian Federal Income Tax Considerations

Transcription

1 The following summary is intended to provide information that may be of assistance to a beneficial owner of a Trust Unit or a Maple Leaf Share, as the case may be, who disposes, or is deemed to have disposed, of Trust Units or Maple Leaf Shares, as applicable, pursuant to the court-approved Plan of Arrangement implemented on January 27, 2016 (the "Arrangement"). Except as noted below, the following discussion is a reproduction of the section entitled "Certain Canadian Federal Income Tax Considerations" in the Information Circular on the Arrangement dated December 15, 2015 (the "Circular"). All capitalized terms which are not defined herein have the meanings ascribed thereto in the Circular. Based on Bill C-2, An Act to amend the Income Tax Act, which received first reading on December 9, 2015, the references to the rates of investment income surtax, Part IV tax and refundable tax applicable to certain Holders who are "private corporations", "subject corporations", or "Canadian-controlled private corporations" for the purposes of the Tax Act have been updated from the version originally contained in the Circular. This summary is general information only and Unitholders and Maple Leaf Shareholders are urged to consult their tax advisors concerning the tax consequences of the Arrangement to them. Certain Canadian Federal Income Tax Considerations The following is a summary of the principal Canadian federal income tax considerations generally applicable under the Tax Act to a beneficial owner of a Trust Unit or a Maple Leaf Share, as the case may be, who disposes, or is deemed to have disposed, of Trust Units or Maple Leaf Shares, as applicable, pursuant to the Arrangement and who, for the purposes of the Tax Act and at all relevant times, (i) deals at arm's length with and is not affiliated with Eagle, Maple Leaf, NewCo, or New Eagle; (ii) holds all Trust Units and Maple Leaf shares, as applicable, and will hold all NewCo Shares and New Eagle Shares acquired under the Arrangement (collectively, the "Securities") as capital property; and (iii) will not alone, or together with person not dealing at arm's length with the beneficial owner for the purposes of the Tax Act, beneficially own shares of the capital stock of NewCo having a fair market value of more than 50% of the fair market value of all of the outstanding shares of the capital stock of NewCo immediately after the exchange of Maple Leaf Shares for NewCo Shares pursuant to the Arrangement (each, a "Holder"). The Canadian federal income tax discussion herein, as described under the headings "Part II The Arrangement Certain Canadian Federal Income Tax Considerations Holders Resident in Canada Exchange of Maple Leaf Shares for NewCo Shares under the Arrangement", "Part II The Arrangement Certain Canadian Federal Income Tax Considerations Holders Not Resident in Canada Exchange of Maple Leaf Shares for NewCo Shares under the Arrangement" and "Part II The Arrangement Certain Canadian Federal Income Tax Considerations Arrangement Dissent Rights Dissenting Maple Leaf Shareholders" is in the opinion of DLA Piper (Canada) LLP, counsel to Maple Leaf, and the remaining Canadian federal tax discussion herein is in the opinion of Bennett Jones LLP, counsel to Eagle and NewCo (collectively "Counsel"). The Securities will generally be considered to be capital property to a person for the purposes of the Tax Act provided that the person does not use or hold those Securities in the course of carrying on a business and has not acquired such Securities in one or more transactions considered to be an adventure or concern in the nature of trade. This summary is not applicable to a Holder: (i) that is a "financial institution" for purposes of the "mark-to-market property" rules; (ii) that is a "specified financial institution"; (iii) that is a partnership; (iv) an interest in which would be a "tax shelter investment"; (v) that has elected to determine its Canadian tax results in a foreign currency pursuant to the functional currency reporting rules; (vi) that has entered or will enter into, in respect of the Trust Units, Maple Leaf Shares, NewCo Shares or New Eagle Shares, as the case may be, a "synthetic disposition arrangement" or a "derivative forward agreement"; (vii) that is a "foreign affiliate" of a taxpayer resident in Canada; or (viii) that is a corporation resident in Canada that is, or becomes, controlled by a non-resident corporation for the purposes of the

2 "foreign affiliate dumping" rules, all within the meaning of the Tax Act. Any such Holders should consult their own tax advisors to determine the particular Canadian federal income tax consequences to them of the Arrangement. This summary does not address any tax considerations to holders of Eagle Options, Maple Leaf Options, or Maple Leaf Warrants arising from the implementation of the Arrangement and related transactions and does not address all issues relevant to Holders who previously acquired Trust Units or Maple Leaf Shares, as the case may be, on the exercise of Eagle Options or Maple Leaf Options, as the case may be, or other employment benefit plan. Any such Holders should consult their own tax advisors to determine the particular Canadian federal income tax consequences to them of the Arrangement. Counsel has been advised by Eagle, and has assumed for the purposes of the tax considerations that follow, that, at all relevant times prior to the exchange of Trust Units for NewCo Shares pursuant to the Arrangement, Eagle meets all of the factual conditions to be a "mutual fund trust" for the purposes of the Tax Act. Counsel has been advised by Maple Leaf, and has assumed for the purposes of the tax considerations which follow that, at all relevant times prior to the exchange of Maple Leaf Shares for NewCo Shares pursuant to the Arrangement, the Maple Leaf Shares will be listed on a "designated stock exchange" and on a "recognized stock exchange", each within the meaning of the Tax Act (which currently includes the TSXV)). This summary also assumes that the NewCo Shares and the New Eagle Shares will be listed on a "designated stock exchange" within the meaning of the Act (which currently includes the TSX) when issued and at all relevant times thereafter. This summary is based on the facts set out in the Circular, the assumptions set out herein, the current provisions of the Tax Act and the regulations thereto in force as at the date of the Circular, and Counsels' understanding of the current administrative and assessing practices and policies of the CRA published in writing prior to the date hereof. This summary takes into account all specific proposals to amend the Tax Act publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof (the "Proposed Amendments") and assumes that all Proposed Amendments will be enacted in the form proposed; however, no assurances can be given that the Proposed Amendments will be enacted as proposed, or at all. This summary does not otherwise take into account or anticipate any changes in law or administrative or assessing practice whether by legislative, regulatory, administrative or judicial action nor does it take into account tax legislation or considerations of any province, territory or foreign jurisdiction, which may be different from those discussed herein. This summary is of a general nature only and is not exhaustive of all possible Canadian federal income tax considerations applicable to the Arrangement. The income and other tax consequences of acquiring, holding or disposing of securities will vary depending on a Holder's particular status and circumstances, including the country, province or territory in which the Holder resides or carries on business. This summary is not intended to be, nor should it be construed to be, legal or tax advice to any particular Holder. No representations are made with respect to the income tax consequences to any particular Holder. Holders should consult their own tax advisors for advice with respect to the income tax consequences of the Arrangement in their particular circumstances, including the application and effect of the income and other tax laws of any applicable country, province, state or local tax authority. This summary does not discuss any non-canadian income or other tax consequences of the Arrangement. Holders resident or subject to taxation in a jurisdiction other than Canada should be aware that the Arrangement may have tax consequences both in Canada and in such other jurisdiction. Such consequences are not described herein. Holders should consult with their own tax advisors with respect to their particular circumstances and the tax considerations applicable to them. Holders Resident in Canada The following portion of the summary is generally applicable to a Holder who, at all relevant times and for purposes of the Tax Act, is or is deemed to be a resident of Canada and is not exempt from tax under Part I of the Tax Act (a "Resident Holder"). 2

3 Exchange of Trust Units for NewCo Shares under the Arrangement A Resident Holder will recognize a capital gain (or capital loss) in respect of the exchange of Trust Units for NewCo Shares pursuant to the Arrangement equal to the amount, if any, by which the fair market value of the NewCo Shares received exceeds (or is less than) the aggregate of the adjusted cost base of the Trust Units to the Resident Holder, determined immediately before the effective time of the unit-for-share exchange, and any reasonable costs of disposition. For a description of the tax treatment of capital gains and capital losses, see "Part II The Arrangement Certain Canadian Federal Income Tax Considerations Holders Resident in Canada Taxation of Capital Gains and Capital Losses" below. The cost to the Resident Holder of the NewCo Shares acquired on the exchange will be equal to the fair market value thereof. New Eagle intends to post on its website, by no later than 60 days after the implementation of the Arrangement, its position with respect to the aggregate fair market value per NewCo Share as at the effective time of the exchange, based on the trading price of the Trust Units, NewCo Shares and/or New Eagle Shares. This position will not, however, be binding on the CRA and Resident Holders should consult their own tax advisors with respect to the appropriate mechanism of valuing the NewCo Shares received pursuant to the Arrangement. The cost of the NewCo Shares must be averaged with the adjusted cost base of all other common shares of NewCo held by the Resident Holder as capital property to determine the adjusted cost base on a per share basis. Exchange of Maple Leaf Shares for NewCo Shares under the Arrangement Tax-Deferred Rollover In general, a Resident Holder who exchanges Maple Leaf Shares for NewCo Shares pursuant to the Arrangement will be deemed to have disposed of such Maple Leaf Shares under a tax-deferred share-for-share exchange pursuant to section 85.1 of the Tax Act, unless such Resident Holder chooses to recognize a capital gain (or capital loss) as described under the heading "Part II The Arrangement Certain Canadian Federal Income Tax Considerations Holders Resident in Canada Exchange of Maple Leaf Shares for NewCo Shares under the Arrangement No Rollover" below. Except where a Resident Holder chooses to recognize a capital gain (or capital loss), the Resident Holder will be deemed to have disposed of the Maple Leaf Shares for proceeds of disposition equal to the adjusted cost base of the Maple Leaf Shares to such Resident Holder, determined immediately before the effective time of the share exchange, and the Resident Holder will be deemed to have acquired the NewCo Shares at an aggregate cost equal to such adjusted cost base of the Maple Leaf Shares. The cost of the NewCo Shares must be averaged with the adjusted cost base of all other common shares of NewCo held by the Resident Holder as capital property to determine the adjusted cost base on a per share basis. No Rollover A Resident Holder may choose to recognize a capital gain (or capital loss) in respect of the exchange of Maple Leaf Shares for NewCo Shares pursuant to the Arrangement by including the capital gain (or capital loss) in computing its income for the taxation year in which the Arrangement takes place. In such circumstances, the Resident Holder will realize a capital gain (or a capital loss) equal to the amount, if any, by which the fair market value of the NewCo Shares received exceeds (or is less than) the aggregate of the adjusted cost base of the Maple Leaf Shares to the Resident Holder, determined immediately before the effective time of the share exchange, and any reasonable costs of disposition. For a description of the tax treatment of capital gains and capital losses, see "Part II The Arrangement Certain Canadian Federal Income Tax Considerations Holders Resident in Canada Taxation of Capital Gains and Capital Losses" below. In such circumstances, the cost of the NewCo Shares acquired on the exchange will be equal to the fair market value thereof. New Eagle intends to post on its website, by no later than 60 days after the implementation of the Arrangement, its position with respect to the aggregate fair market value per NewCo Share as at the effective time of the exchange, based on the trading price of the Trust Units, NewCo Shares and/or New Eagle Shares. This position will not, however, be binding on the CRA and Resident Holders should consult their own tax advisors with respect to the appropriate mechanism of valuing the NewCo Shares received pursuant to the Arrangement. The cost of the 3

4 NewCo Shares must be averaged with the adjusted cost base of all other common shares of NewCo held by the Resident Holder as capital property to determine the adjusted cost base on a per share basis. Amalgamation of NewCo, certain subsidiaries of NewCo, and Maple under the Arrangement On the amalgamation of NewCo, certain subsidiaries of NewCo, and Maple pursuant to the Arrangement, Resident Holders will not recognize any capital gain (or capital loss) on the continuance of their NewCo Shares as New Eagle Shares and the aggregate adjusted cost base of their NewCo Shares immediately before the amalgamation will become the aggregate adjusted cost base of their New Eagle Shares immediately after the amalgamation. Dividends on New Eagle Shares (Post-Arrangement) A Resident Holder who is an individual (other than certain trusts) will be required to include in income any dividends received or deemed to be received on the New Eagle Shares, and will be subject to the gross-up and dividend tax credit rules applicable to taxable dividends received from taxable Canadian corporations, including the enhanced gross-up and dividend tax credit rules applicable to any dividends designated by New Eagle as "eligible dividends" as defined in the Tax Act. Although there can be no assurance that any dividend paid by New Eagle will be designated as an "eligible dividend", Counsel has been advised by NewCo that future dividends on the New Eagle Shares are expected to be designated as "eligible dividends" for purposes of the Tax Act and that it intends to post notification of such designation on its website following the Arrangement. Dividends received or deemed to be received by an individual and certain trusts may give rise to a liability for alternative minimum tax under the Tax Act. A Resident Holder that is a corporation will be required to include in income any dividend received or deemed to be received on its New Eagle Shares, and generally will be entitled to deduct an equivalent amount in computing its taxable income, subject to certain limitations in the Tax Act. A "private corporation" or a "subject corporation" (each as defined in the Tax Act) may be liable under Part IV of the Tax Act to pay a refundable tax of 38 1/3% on any dividend that it receives or is deemed to receive on its New Eagle Shares to the extent that the dividend is deductible in computing the corporation's taxable income. A holder of New Eagle Shares that is, throughout the year, a "Canadian-controlled private corporation", as defined in the Tax Act, may be subject to an additional refundable tax at a rate of 10 2/3% percent on its "aggregate investment income" which is defined to include dividends that are not deductible in computing taxable income. Subsection 55(2) of the Tax Act provides that, where certain corporate holders of shares receive a dividend or deemed dividend in specified circumstances, all or part of such dividend may be treated as a capital gain from the disposition of capital property and not as a dividend. For a description of the tax treatment of capital gains and capital losses, see "Part II The Arrangement Certain Canadian Federal Income Tax Considerations Holders Resident in Canada Taxation of Capital Gains and Capital Losses" below. Disposition of New Eagle Shares (Post-Arrangement) A Resident Holder that disposes or is deemed to dispose of a New Eagle Share after the Arrangement will recognize a capital gain (or a capital loss) equal to the amount by which the proceeds of disposition of the New Eagle Share exceed (or is less than) the aggregate of the adjusted cost base to the Resident Holder of such New Eagle Share, determined immediately before the disposition, and any reasonable costs of disposition. For a description of the tax treatment of capital gains and capital losses, see "Part II The Arrangement Certain Canadian Federal Income Tax Considerations Holders Resident in Canada Taxation of Capital Gains and Capital Losses" below. Taxation of Capital Gains and Capital Losses Generally, one-half of any capital gain realized by a Resident Holder in a taxation year will be included in computing the Resident Holder's income in that taxation year as a taxable capital gain and, generally, one-half of any capital loss realized in a taxation year (an "allowable capital loss") must be deducted from the taxable capital gains realized by the Resident Holder in the same taxation year, in accordance with the rules contained in the Tax Act. Allowable capital losses in excess of taxable capital gains realized by a Resident Holder in a particular taxation 4

5 year may be carried back and deducted in any of the three preceding taxation years or carried forward and deducted in any subsequent taxation year against net taxable capital gains realized by the Resident Holder in such taxation year, subject to and in accordance with the rules contained in the Tax Act. Capital gains realized by an individual and certain trusts may give rise to a liability for alternative minimum tax under the Tax Act. A Resident Holder that is, throughout the year, a "Canadian-controlled private corporation", as defined in the Tax Act, may be subject to an additional refundable tax at a rate of 10 2/3% percent on its "aggregate investment income" which is defined to include taxable capital gains. The amount of any capital loss realized by a Resident Holder that is a corporation on the disposition of a Maple Leaf Share, NewCo Share, or New Eagle Share, as applicable, may be reduced by the amount of dividends received or deemed to be received by it on such share (or on a share for which the share has been substituted) to the extent and under the circumstances prescribed by the Tax Act. Similar rules may apply where a corporation is a member of a partnership or a beneficiary of a trust that owns shares, directly or indirectly through a partnership or a trust. Resident Shareholders to whom these rules may apply should consult their own tax advisors. Holders Not Resident in Canada The following portion of the summary is generally applicable to a Holder who, at all relevant times and for purposes of the Tax Act, is not, and is not deemed to be, a resident of Canada and does not use or hold, and is not deemed to use or hold, Trust Units or Maple Leaf Shares, as the case may be, and will not use or hold, or be deemed to use or hold, NewCo Shares or New Eagle Shares in connection with carrying on a business in Canada (a "Non-Resident Holder"). This portion of the summary is not generally applicable to a Non-Resident Holder that is: (i) an insurer carrying on an insurance business in Canada and elsewhere; (ii) a "financial institution" (as defined in the Tax Act); or (iii) an "authorized foreign bank" (as defined in the Tax Act). Exchange of Trust Units for NewCo Shares under the Arrangement A Non-Resident Holder who exchanges Trust Units for NewCo Shares pursuant to the Arrangement will not be subject to tax under the Tax Act on any capital gain realized on such exchange unless the Trust Units are "taxable Canadian property" to the Non-Resident Holder at the effective time of the unit-for-share exchange and the Trust Units are not "treaty-protected property", each within the meaning of the Tax Act. Trust Units will not be considered taxable Canadian property to a Non-Resident Holder unless: (i) the Non-Resident Holder holds or uses, or is deemed to hold or use, the Trust Units in the course of carrying on business in Canada; (ii) the Trust Units are "designated insurance property" of the Non-Resident Holder, as defined for the purposes of the Tax Act; (iii) at any time during the 60-month period immediately preceding the disposition of the Trust Units, the Non-Resident Holder or persons with whom the Non-Resident Holder did not deal at arm's length or any combination thereof, held 25% or more of the issued Trust Units; or (iv) Eagle is not "mutual fund trust" for purposes of the Tax Act on the date of disposition. Trust Units may also be deemed to be taxable Canadian property in certain circumstances as set out in the Tax Act. In the event that a Trust Unit is taxable Canadian property to a Non-Resident Holder at the time of disposition, such Non-Resident Holder should consult its own tax advisor as to the Canadian tax consequences of the disposition. The tax consequences described above under "Part II The Arrangement Certain Canadian Federal Income Tax Considerations Holders Resident in Canada Exchange of Trust Units for NewCo Shares under the Arrangement" will generally apply. Exchange of Maple Leaf Shares for NewCo Shares under the Arrangement A Non-Resident Holder who exchanges Maple Leaf Shares for NewCo Shares pursuant to the Arrangement and elects not to have the automatic tax-deferral provisions of section 85.1 of the Tax Act apply will not be subject to tax under the Tax Act on any capital gain realized on such exchange unless the Maple Leaf Shares are "taxable Canadian property" to the Non-Resident Holder at the effective time of the share-for-share exchange and the Maple Leaf Shares are not "treaty-protected property", each within the meaning of the Tax Act. 5

6 Maple Leaf Shares will not be considered taxable Canadian property to a Non-Resident Holder unless: (i) the Non- Resident Holder holds or uses, or is deemed to hold or use, the Maple Leaf Shares in the course of carrying on business in Canada; (ii) the Maple Leaf Shares are "designated insurance property" of the Non-Resident Holder, as defined for the purposes of the Tax Act; (iii) at any time during the 60-month period immediately preceding the disposition of the Maple Leaf Shares, the Non-Resident Holder or persons with whom the Non-Resident Holder did not deal at arm's length or any combination thereof, held 25% or more of the issued shares of any class of Maple Leaf; or (iv) the Maple Leaf Shares are not listed on a "designated stock exchange", within the meaning of the Tax Act (which currently includes the TSXV) on the date of disposition. Maple Leaf Shares may also be deemed to be taxable Canadian property in certain circumstances as set out in the Tax Act. In the event that a Maple Leaf Share is taxable Canadian property to a Non-Resident Holder at the time of disposition, such Non-Resident Holder should consult its own tax advisor as to the Canadian tax consequences of the disposition. The tax consequences described above under "Part II The Arrangement Certain Canadian Federal Income Tax Considerations Holders Resident in Canada Exchange of Maple Leaf Shares for NewCo Shares under the Arrangement" will generally apply. In circumstances where a Non-Resident Holder's Maple Leaf Shares constituted taxable Canadian property and such Maple Leaf Shares were exchanged for NewCo Shares pursuant to the Arrangement in circumstances where the automatic tax-deferral provisions of section 85.1 of the Tax Act apply, the NewCo Shares received by such Non- Resident Holder on the exchange will be deemed to be taxable Canadian property to such Non-Resident Holder at any time that is within 60 months after the exchange. Amalgamation of NewCo, certain subsidiaries of NewCo, and Maple under the Arrangement On the amalgamation of NewCo, certain subsidiaries of NewCo, and Maple pursuant to the Arrangement, Non- Resident Holders will not recognize any capital gain (or capital loss) on the continuance of their NewCo Shares as New Eagle Shares and the aggregate adjusted cost base of their NewCo Shares immediately before the amalgamation will become the aggregate adjusted cost base of their New Eagle Shares immediately after the amalgamation. In circumstances where a Non-Resident Holder's NewCo Shares constituted taxable Canadian property, the New Eagle Shares received by such Non-Resident Holder on the amalgamation will be deemed to be taxable Canadian property to such Non-Resident Holder at any time that is within 60 months after the amalgamation. Dividends on New Eagle Shares (Post-Arrangement) Dividends paid or credited, or deemed to be paid or credited, on New Eagle Shares to a Non-Resident Holder generally will be subject to Canadian withholding tax at a rate of 25% of the gross amount of the dividend, unless the rate is reduced under the provisions of an applicable income tax convention between Canada and the Non- Resident Holder's jurisdiction of residence. For example, the rate of withholding tax under the Canada U.S. Income Tax Convention (1980) (the "U.S. Treaty") applicable to a Non-Resident Holder who is a resident of the United States for the purposes of the U.S. Treaty, is the beneficial owner of the dividend, is entitled to all of the benefits under the U.S. Treaty, and who holds less than 10% of the voting stock of New Eagle generally will be 15%. New Eagle will be required to withhold the required amount of withholding tax from the dividend, and to remit it to CRA for the account of the Non-Resident Holder. Non-Resident Holders who may be eligible for a reduced rate of withholding tax on dividends pursuant to any applicable income tax convention should consult with their own tax advisors with respect to taking all appropriate steps in this regard. Disposition of New Eagle Shares (Post-Arrangement) A Non-Resident Holder that disposes or is deemed to dispose of a New Eagle Share after the Arrangement will not be subject to tax under the Tax Act on any capital gain realized on such disposition unless the New Eagle Shares are "taxable Canadian property" to the Non-Resident Holder at the effective time of the disposition and the New Eagle Shares are not "treaty-protected property", each within the meaning of the Tax Act. 6

7 New Eagle Shares will not be considered taxable Canadian property to a Non-Resident Holder unless: (i) the Non- Resident Holder holds or uses, or is deemed to hold or use, the New Eagle Shares in the course of carrying on business in Canada; (ii) the New Eagle Shares are "designated insurance property" of the Non-Resident Holder, as defined for the purposes of the Tax Act; (iii) at any time during the 60-month period immediately preceding the disposition of the New Eagle Shares, the Non-Resident Holder or persons with whom the Non-Resident Holder did not deal at arm's length or any combination thereof, held 25% or more of the issued shares of any class of New Eagle; (iv) the New Eagle Shares are not listed on a "designated stock exchange", within the meaning of the Tax Act (which currently includes the TSX) on the date of disposition; or (v) the New Eagle Shares are otherwise deemed to be taxable Canadian property under another provision of the Tax Act. In the event that a New Eagle Share is taxable Canadian property to a Non-Resident Holder at the time of disposition, such Non-Resident Holder should consult its own tax advisor as to the Canadian tax consequences of the disposition. The tax consequences described above under "Part II The Arrangement Certain Canadian Federal Income Tax Considerations Holders Resident in Canada Disposition of New Eagle Shares (Post- Arrangement)" will generally apply. Arrangement Dissent Rights Dissenting Unitholders A Dissenting Unitholder is entitled, if the Arrangement becomes effective, to have the NewCo Shares received by such Dissenting Unitholder on the unit-for-share exchange cancelled in exchange for a cash payment from NewCo (or a successor thereto) equal to the fair value of such Dissenting Unitholder's Trust Units (the "NewCo Dissent Payment"). Provided that the amount of the NewCo Dissent Payment does not exceed the paid-up capital ("PUC") of the Dissenting Unitholder's cancelled NewCo Shares as determined for the purposes of the Tax Act, the Dissenting Unitholder will realize a capital gain (or capital loss) equal to the amount by which the NewCo Dissent Payment exceeds (or is less than) the aggregate of the adjusted cost base of the NewCo Shares to such Holder, determined immediately before the cancellation of such shares, and any reasonable costs of disposition, less any portion of the NewCo Dissent Payment that is on account of interest. Whether the foregoing proviso is satisfied is a question of fact that can only be determined after the Effective Time. If the proviso is not satisfied, the Dissenting Unitholder will be deemed to have received a dividend from NewCo equal to the amount by which the NewCo Dissent Payment exceeds the PUC of the Dissenting Unitholder's cancelled NewCo Shares. The Dissenting Unitholder will also realize a capital gain (or capital loss) equal to the amount by which the NewCo Dissent Payment (net of the deemed dividend, reasonable costs of disposition, and any portion of the payment that is on account of interest) exceeds (or is less than) the adjusted cost base of the NewCo Shares to such Dissenting Unitholder, determined immediately before the cancellation of such shares. Dissenting Unitholders should consult their own tax advisors with respect to the tax consequences to them of exercising Dissent Rights. Resident Holders who are Dissenting Unitholders The general tax consequences to a Resident Holder who is a Dissenting Unitholder of realizing a capital gain or capital loss are described above under the heading, "Part II The Arrangement Certain Canadian Federal Income Tax Considerations Holders Resident in Canada Taxation of Capital Gains and Losses". A Resident Holder that is a Dissenting Unitholder will be required to include in income any deemed dividend, the general tax consequences of which are described above under "Part II The Arrangement Certain Canadian Federal Income Tax Considerations Holders Resident in Canada Dividends on New Eagle Shares (Post- Arrangement)". Counsel has been advised that NewCo currently does not intend to designate any such deemed dividend as an "eligible dividend" for the purposes of the enhanced gross-up and dividend tax credit rules in the Tax Act. 7

8 Any interest awarded to a Resident Holder that is a Dissenting Unitholder will be included in such Holder's income for the purposes of the Tax Act. Non-Resident Holders who are Dissenting Unitholders A Non-Resident Holder who is a Dissenting Unitholder will not be subject to tax under the Tax Act on any capital gain realized on the cancellation of such Dissenting Unitholder's NewCo Shares unless the NewCo Shares are "taxable Canadian property" to the Non-Resident Holder at the effective time of the disposition and the NewCo Shares are not "treaty-protected property", each within the meaning of the Tax Act. NewCo Shares will not be considered taxable Canadian property to a Non-Resident Holder unless: (i) the Non- Resident Holder holds or uses, or is deemed to hold or use, the NewCo Shares in the course of carrying on business in Canada; (ii) the NewCo Shares are "designated insurance property" of the Non-Resident Holder, as defined for the purposes of the Tax Act; (iii) at any time during the 60-month period immediately preceding the disposition of the NewCo Shares, the Non-Resident Holder or persons with whom the Non-Resident Holder did not deal at arm's length or any combination thereof, held 25% or more of the issued shares of any class of NewCo; or (iv) the NewCo Shares are not listed on a "designated stock exchange", within the meaning of the Tax Act (which currently includes the TSX) on the date of disposition. NewCo Shares may also be deemed to be taxable Canadian property in certain circumstances as set out in the Tax Act. In the event that a NewCo Share is taxable Canadian property to a Non-Resident Holder who is a Dissenting Unitholder, such Non-Resident Holder should consult its own tax advisor as to the Canadian tax consequences of the disposition. The tax consequences described above under "Part II The Arrangement Certain Canadian Federal Income Tax Considerations Arrangement Dissent Rights Resident Holders who are Dissenting Unitholders" will generally apply. The portion of the NewCo Dissent Payment that is paid to a Non-Resident Holder who is a Dissenting Unitholder will be subject to Canadian withholding tax at a rate of 25% of the gross amount of the dividend, unless the rate is reduced under the provisions of an applicable income tax convention between Canada and the Non-Resident Holder's jurisdiction of residence. NewCo will be required to withhold the required amount of withholding tax from the dividend, and to remit it to CRA for the account of the Non-Resident Holder. Non-Resident Holders who may be eligible for a reduced rate of withholding tax on dividends pursuant to any applicable income tax convention should consult with their own tax advisors with respect to taking all appropriate steps in this regard. A Non-Resident Holder who is a Dissenting Unitholder will not be subject to any Canadian withholding tax on any interest awarded to such Dissenting Unitholder provided that such interest is not "participating debt interest", as that term is defined in the Tax Act. Dissenting Maple Leaf Shareholders A Dissenting Maple Leaf Shareholder is entitled, if the Arrangement becomes effective, to have the Maple Leaf Shares held by the Dissenting Maple Leaf Shareholder cancelled in exchange for a cash payment from Maple Leaf (or a successor thereto) equal to the fair value of such Dissenting Maple Leaf's Shareholder's Maple Leaf Shares (the "Maple Leaf Dissent Payment"). Provided that the amount of the Maple Leaf Dissent Payment does not exceed the PUC of the Dissenting Maple Leaf Shareholder's cancelled Maple Leaf Shares, the Dissenting Maple Leaf Shareholder will realize a capital gain (or capital loss) equal to the amount by which the Maple Leaf Dissent Payment exceeds (or is less than) the aggregate of the adjusted cost base of the Maple Leaf Shares to such Holder, determined immediately before the cancellation of such shares, and any reasonable costs of disposition, less any portion of the Maple Leaf Dissent Payment that is on account of interest. Whether the foregoing proviso is satisfied is a question of fact that can only be determined after the Effective Time. If the proviso is not satisfied, the Dissenting Maple Leaf Shareholder will be deemed to have received a dividend from Maple Leaf equal to the amount by which the Maple Leaf Dissent Payment exceeds the PUC of the Dissenting 8

9 Maple Leaf Shareholder's cancelled Maple Leaf Shares. The Dissenting Maple Leaf Shareholder will also realize a capital gain (or capital loss) equal to the amount by which the Maple Leaf Dissent Payment (net of the deemed dividend, reasonable costs of disposition, and any portion of the payment that is on account of interest) exceeds (or is less than) the adjusted cost base of the Maple Leaf Shares to such Dissenting Maple Leaf Shareholder, determined immediately before the cancellation of such shares. Dissenting Maple Leaf Shareholders should consult their own tax advisors with respect to the tax consequences to them of exercising Dissent Rights. Resident Holders who are Dissenting Maple Leaf Shareholders The general tax consequences to a Resident Holder who is a Dissenting Maple Leaf Shareholder of realizing a capital gain or capital loss are described above under the heading, "Part II The Arrangement Certain Canadian Federal Income Tax Considerations Holders Resident in Canada Taxation of Capital Gains and Losses". A Resident Holder that is a Dissenting Maple Leaf Shareholder will be required to include in income any deemed dividend, the general tax consequences of which are described above under "Part II The Arrangement Certain Canadian Federal Income Tax Considerations Holders Resident in Canada Dividends on New Eagle Shares (Post-Arrangement)". Counsel has been advised that Maple Leaf currently does not intend to designate any such deemed dividend as an "eligible dividend" for the purposes of the enhanced gross-up and dividend tax credit rules in the Tax Act. Any interest awarded to a Resident Holder that is a Dissenting Maple Leaf Shareholder will be included in such Holder's income for the purposes of the Tax Act. Non-Resident Holders who are Dissenting Maple Leaf Shareholders A Non-Resident Holder who is a Dissenting Maple Leaf Shareholder will not be subject to tax under the Tax Act on any capital gain realized on the cancellation of such Dissenting Maple Leaf Shareholder's Maple Leaf Shares unless the Maple Leaf Shares are "taxable Canadian property" to the Non-Resident Holder at the effective time of the disposition and the Maple Leaf Shares are not "treaty-protected property", each within the meaning of the Tax Act. The applicable considerations relating to the status of the Maple Leaf Shares as "taxable Canadian property" are described above under "Part II The Arrangement Certain Canadian Federal Income Tax Considerations Holders Not Resident in Canada Exchange of Maple Leaf Shares for NewCo Shares under the Arrangement". In the event that a Maple Leaf Share is taxable Canadian property to a Non-Resident Holder who is a Dissenting Maple Leaf Shareholder, such Non-Resident Holder should consult its own tax advisor as to the Canadian tax consequences of the disposition. The tax consequences described above under "Part II The Arrangement Certain Canadian Federal Income Tax Considerations Arrangement Dissent Rights Resident Holders who are Dissenting Maple Leaf Shareholders" will generally apply. The portion of the Maple Leaf Dissent Payment that is paid to a Non-Resident Holder who is a Dissenting Maple Leaf Shareholder will be subject to Canadian withholding tax at a rate of 25% of the gross amount of the dividend, unless the rate is reduced under the provisions of an applicable income tax convention between Canada and the Non- Resident Holder's jurisdiction of residence. Maple Leaf will be required to withhold the required amount of withholding tax from the dividend, and to remit it to CRA for the account of the Non-Resident Holder. Non- Resident Holders who may be eligible for a reduced rate of withholding tax on dividends pursuant to any applicable income tax convention should consult with their own tax advisors with respect to taking all appropriate steps in this regard. A Non-Resident Holder who is a Dissenting Maple Leaf Shareholder will not be subject to any Canadian withholding tax on any interest awarded to such Non-Resident Holder provided that such interest is not "participating debt interest", as that term is defined in the Tax Act. 9

10 Other Tax Considerations The Circular does not address any tax considerations of the Arrangement other than certain Canadian federal income tax considerations. Unitholders or Maple Leaf Shareholders who may be subject to tax outside of Canada, including those who are resident in jurisdictions other than Canada, should consult their own tax advisors with respect to the tax implications of the Arrangement, including any associated filing requirements, in such jurisdictions and with respect to tax implications in such jurisdictions of owning NewCo Shares or New Eagle Shares after the Arrangement. Unitholders and Maple Leaf Shareholders should also consult their own tax advisors regarding Canadian federal, provincial or territorial tax considerations of the Arrangement or of holding NewCo Shares or New Eagle Shares. 10