Dispositions of Unit Shares, Warrants and Warrant
Shares
A Non-Resident Holder generally will not
be subject to tax under the Tax Act in respect of a capital gain
realized on the disposition or deemed disposition of a Unit Share,
Warrant or Warrant Share nor will capital losses arising therefrom
be recognized under the Tax Act, unless the Unit Share, Warrant or
Warrant Share constitutes “taxable Canadian property” to the
Non-Resident Holder thereof
for purposes of the Tax Act, and the gain is not exempt from tax
pursuant to the terms of an applicable tax treaty.
Provided the Unit Shares and Warrant Shares are
listed on a “designated stock exchange”, as defined in the Tax Act
(which currently includes the TSX and the NYSE), at the time of
disposition, the Unit Shares, Warrants and Warrant Shares generally
will not constitute taxable Canadian property of a Non-Resident Holder at that time,
unless at any time during the 60-month period immediately preceding
the disposition, the following two conditions are met: (i) 25% or
more of the issued shares of any class or series of the share
capital of the Company were owned by, or belonged to, one or any
combination of (x) the Non-Resident Holder, (y) persons
with whom the Non-Resident
Holder did not deal at arm’s length (within the meaning of the Tax
Act), and (z) partnerships in which the Non-Resident Holder or a person
referred to in (y) holds a membership interest directly or
indirectly through one or more partnerships, and (ii) more
than 50% of the fair market value of the Common Shares, was derived
directly or indirectly from one or any combination of:
(A) real or immovable property situated in Canada,
(B) Canadian resource property (as defined in the Tax Act),
(C) timber resource property (as defined in the Tax Act), and
(D) options in respect of, or interests in, or for civil law
rights in, property described in any of (A) through (C) above,
whether or not such property exists.
A Non-Resident Holder’s capital gain (or
capital loss) in respect of Unit Shares, Warrants or Warrant Shares
that constitute or are deemed to constitute taxable Canadian
property (and are not “treaty-protected property” as defined in the
Tax Act) will generally be computed in the manner described above
under the subheading “Residents of Canada—Dispositions of Unit
Shares, Warrants and Warrant Shares”.
Non-Resident Holders whose Unit Shares,
Warrants or Warrant Shares are taxable Canadian property should
consult their own tax advisors.
CERTAIN U.S. FEDERAL
INCOME TAX CONSIDERATIONS
The following is a general summary of certain
material U.S. federal income tax considerations applicable to a
U.S. Holder (as defined below) arising from and relating to the
acquisition, ownership, and disposition of Unit Shares and Warrants
comprising the Units pursuant to the Offering, and Warrant Shares
upon exercise of the Warrants.
This summary is for general information purposes
only and does not purport to be a complete analysis or listing of
all potential U.S. federal income tax considerations that may apply
to a U.S. Holder arising from and relating to the acquisition,
ownership, and disposition of Unit Shares, Warrants or Warrant
Shares. In addition, this summary does not take into account the
individual facts and circumstances of any particular U.S. Holder
that may affect the U.S. federal income tax consequences to such
U.S. Holder, including, without limitation, specific tax
consequences to a U.S. Holder under an applicable income tax
treaty. Accordingly, this summary is not intended to be, and should
not be construed as, legal or U.S. federal income tax advice with
respect to any U.S. Holder. This summary does not address the U.S.
federal alternative minimum, U.S. federal estate and gift, U.S.
state and local, and non-U.S. tax consequences to U.S.
Holders of the acquisition, ownership, and disposition of Unit
Shares, Warrants or Warrant Shares. In addition, except as
specifically set forth below, this summary does not discuss
applicable tax reporting requirements. Each prospective U.S. Holder
should consult its own tax advisors regarding the U.S. federal,
U.S. federal alternative minimum, U.S. federal estate and gift,
U.S. state and local, and non-U.S. tax consequences relating to
the acquisition, ownership, and disposition of Unit Shares,
Warrants or Warrant Shares.
No legal opinion from U.S. legal counsel or ruling
from the Internal Revenue Service (the “IRS”) has been
requested, or will be obtained, regarding the U.S. federal income
tax consequences of the acquisition, ownership, and disposition of
Unit Shares, Warrants or Warrant Shares. This summary is not
binding on the IRS, and the IRS is not precluded from taking a
position that is different from, and contrary to, the positions
taken in this summary. In addition, because the authorities on
which this summary are based are subject to various
interpretations, the IRS and the U.S. courts could disagree with
one or more of the conclusions described in this summary.
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