Conversion to Corporation

Effective July 2, 2010, Sterling Shoes Income Fund was converted to a corporation named Sterling Shoes Inc. on a one for one basis. The conversion was deemed to be a tax deferred rollover. If a disposition of shares of the corporation involved units purchased as the predecessor income trust, then Canada Revenue Agency will require an ACB calculation if a portion of the distribution received from the trust was deemed to have been return of capital.

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