SECURITIES PURCHASE AGREEMENT
B E T W E E N:
BROOKFIELD ASSET MANAGEMENT INC., a corporation amalgamated under the laws
of the Province of Ontario
(hereinafter called “BAM”)
- and -
BROOKFIELD INFRASTRUCTURE HOLDINGS (CANADA) INC., a corporation incorporated
under the laws of the Province of Ontario
(hereinafter called “CanHoldco”)
| A. | Following the winding-up of Coastal Acquisition Ltd., BAM will own 75 units (the “Securities”) of Brookfield Timberlands Holdings L.P. (“BTH LP”), a limited partnership formed under the laws of Manitoba; |
| B. | BTH LP currently owns indirectly through Island Timberlands Holdings L.P. approximately 49.98% of the limited partnership units of Island Timberlands Limited Partnership, a limited partnership formed under the laws of Manitoba, which currently owns approximately 634,000 acres of freehold timberlands located principally on Vancouver Island; and |
| C. | In connection with the establishment of Brookfield Infrastructure Partners L.P. (“BIP”), a publicly-traded global infrastructure partnership, and the special dividend of units of BIP to holders of its Class A limited voting shares and Class B limited voting shares (the “Spin-off”), BAM wishes to sell and CanHoldco wishes to purchase the Securities. |
NOW THEREFORE in consideration of the mutual covenants and agreements herein contained and other
good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the
parties hereto agree as follows:
1. Purchase and Sale
BAM agrees to sell and CanHoldco agrees to purchase all of BAM’s right, title and interest in
and to the Securities on the terms and conditions contained herein on the date of this agreement
(the “Closing Date”).
2. Purchase Price
The purchase price of the Securities shall be equal to the fair market value of the Securities
at the date hereof (the “Fair Market Value”), which Fair Market Value is US$358,952,000 as agreed
by the parties. The purchase price shall be satisfied by the issuance by CanHoldco to BAM of
351,914 common shares in the capital stock of CanHoldco (the “Consideration”).
3. Tax Elections
The parties intend that the transfer hereunder of the Securities be on a tax-deferred basis to
BAM for purposes of the Income Tax Act (Canada) (the “Act”) and applicable provincial income tax
statutes. BAM and CanHoldco shall jointly execute and file elections in prescribed form within the
prescribed time under section 85 of the Act and the corresponding provisions of applicable
provincial income tax statutes in respect of the transfer hereunder of the Securities in order to
give effect to this intention. The elected amounts (the “Elected Amounts”) for purpose of each
such election will be determined by BAM and CanHoldco in a manner consistent with this intention.
4. Adjustments to Purchase Price, Consideration or Elected Amounts
4.1 If BAM and CanHoldco subsequently mutually determine, or if the Canada Revenue Agency or
any other taxing authority issues, or proposes to issue, assessments or reassessments of
additional liability for taxes or any other subject by reason of asserting that the purchase
price is less than or greater than the aggregate Fair Market Value of the Securities, or
that the Consideration received by BAM is more or less than the Fair Market Value of the
Securities, or that an elected amount is more than the Elected Amount for the Securities as
determined by BAM and CanHoldco, then the purchase price, the Consideration therefor, or the
Elected Amount, as the case may be,
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shall be increased or decreased as necessary but only to the extent that the purchase price
or consideration or elected amount so revised is acceptable to the parties hereto or to both
the particular taxing authority and the parties hereto, as the case may be, or is
established by a court of competent jurisdiction (after all appeal rights have been
exhausted or all time periods for appeal have expired without appeals having been taken) to
be the aggregate Fair Market Value of the Securities (in the case of the purchase price or
consideration) or the Elected Amount, as the case may be.
4.2 If the purchase price or Consideration is varied in the circumstances described in
paragraph 4.1 above, BAM and CanHoldco shall take such steps as may be necessary to reflect
properly an appropriate adjustment to the purchase price and Consideration as varied.
4.3 If an Elected Amount is varied in the circumstances described in paragraph 4.1 above,
BAM and CanHoldco shall file a revised election(s) under the provisions of section 85 of the
Act and corresponding provisions of all applicable provincial legislation to give effect to
their intention that the Elected Amounts be equal to the amounts determined by BAM and
CanHoldco.
5. Representations and Warranties of BAM
BAM represents and warrants to CanHoldco that:
5.1 BAM is duly incorporated and validly existing under the laws of the Province of Ontario;
5.2 BAM has the corporate power and capacity to enter into, and to perform its obligations
under, this Agreement;
5.3 the execution, delivery and performance of this Agreement and all agreements executed in
connection therewith have been duly authorized by all necessary corporate action on the part
of BAM;
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5.4 this Agreement and all agreements executed in connection therewith are valid and binding
obligations of BAM, enforceable in accordance with their terms, subject to the usual
exceptions as to bankruptcy and the availability of equitable remedies; and
5.5 on the Closing Date, BAM will have good and marketable title to the Securities and the
full legal right, power and authority to sell and transfer the Securities to CanHoldco free
and clear of all liens, charges, encumbrances and adverse claims.
6. Representations and Warranties of CanHoldco
CanHoldco represents and warrants to BAM that:
6.1 CanHoldco is duly incorporated and validly existing under the laws of the Province of
Ontario;
6.2 CanHoldco has the corporate power and capacity to enter into, and to perform its
obligations under, this Agreement;
6.3 the execution, delivery and performance of this Agreement and all agreements executed in
connection therewith have been duly authorized by all necessary corporate action on the part
of CanHoldco;
6.4 this Agreement and all agreements executed in connection therewith are valid and binding
obligations of CanHoldco, enforceable in accordance with their terms, subject to the usual
exceptions as to bankruptcy and the availability of equitable remedies; and
6.5 CanHoldco has taken all corporate action to validly issue the Consideration and,
CanHoldco having received the Securities as consideration for the issue thereof, the
Consideration has been validly issued and is outstanding as fully paid and non-assessable
shares.
7. Survival
The representations and warranties of BAM and CanHoldco will survive for a period of 18 months
from the closing of the Spin-off.
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8. Indemnity
BAM shall indemnify and save CanHoldco harmless for and from any loss, damages or deficiencies
suffered by CanHoldco as a result of any breach of any representation or warranty on the part of
BAM contained in this Agreement or in any certificate or document delivered pursuant to or
contemplated by this Agreement, including all claims, demands, costs and expenses, including legal
fees, in respect of the foregoing.
CanHoldco shall indemnify and save BAM harmless for and from any loss, damages or deficiencies
suffered by BAM as a result of any breach of any representation or warranty on the part of
CanHoldco contained in this Agreement or in any certificate or document delivered pursuant to or
contemplated by this Agreement, including all claims, demands, costs and expenses, including legal
fees, in respect of the foregoing.
9. Limitation of Liability
The aggregate maximum liability of BAM under its representations, warranties and indemnities
under this Agreement will be limited, without duplication, to the amount of the Consideration.
10. Conditions to Closing
The completion of the closing of the transactions contemplated herein will be subject to the
satisfaction or waiver by the parties of the following conditions:
10.1 all consents and approvals having been obtained with respect to the transactions
contemplated hereby; and
10.2 all documentation having been entered into in respect of the transactions contemplated
hereby.
11. Closing Procedure
On the Closing Date, BAM shall execute and deliver to CanHoldco all such documents,
certificates and instruments and do all such other acts and things as CanHoldco may consider
necessary or desirable, acting reasonably, to effectively transfer and assign the
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Securities to CanHoldco and to deliver possession thereof to CanHoldco and CanHoldco shall
issue the Consideration to BAM.
12. Further Assurances
Each of the parties hereto shall promptly do, make, execute or deliver, or cause to be done,
made, executed or delivered, all such further acts, documents and things as the other party hereto
may reasonably require from time to time for the purpose of giving effect to this Agreement and
shall use reasonable efforts and take all such steps as may be reasonably within its power to
implement to their full extent the provisions of this Agreement.
13. Successors and Assigns
No party may assign its right or benefits under this Agreement without the prior written
consent of the other party hereto. The provisions of this Agreement shall enure to the benefit of
and be binding on the parties to this Agreement and their respective successors and permitted
assigns.
14. Governing Law
This agreement shall be governed by and construed in accordance with the laws of the Province
of Ontario and the laws of Canada applicable therein.
15. Counterparts
This Agreement may be signed in counterparts and each of such counterparts shall constitute an
original document and such counterparts, taken together, shall constitute one and the same
instrument.
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DATED: November 19, 2007.
| BROOKFIELD ASSET MANAGEMENT INC. |
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| by: | ||||
| Name: | Xxxxxxx Xxxxxxx | |||
| Title: | Managing Partner | |||
| BROOKFIELD INFRASTRUCTURE HOLDINGS (CANADA) INC. |
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| by: | ||||
| Name: | Xxxxxx Xxxxxxx | |||
| Title: | Co-President | |||