BROOKFIELD Corp F-3, filed Dec 8, 2021
BROOKFIELD Corp (BN)
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 7, 2021.
REGISTRATION NO. 333-
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM F-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
| BROOKFIELD ASSET MANAGEMENT INC. (Exact name of registrant as specified in its charter) | ||
| Canada (State or other Jurisdiction of Incorporation or Organization) |
NOT APPLICABLE (I.R.S. Employer Identification Number) | |
|
181 Bay Street, Suite 300, P.O. Box 762 Canada M5J 2T3 (416) 363-9491 | ||
Brookfield Asset Management LLC
Brookfield Place
250 Vesey Street, 15th Floor
New York, NY, 10281
(212) 417-2549
(Name, address (including zip code) and telephone number (including area code) of agent for service in the
United States)
Copies to:
Mile T. Kurta, Esq.
Christopher R. Bornhorst, Esq.
Torys LLP
1114 Avenue of the Americas, 23rd Floor
New York, New York 10036
(212) 880-6000
Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this Registration Statement.
If only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. ¨
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. x
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨
If this Form is a registration statement pursuant to General Instruction I.C. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box. ¨
If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.C. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. ¨
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.
Emerging Growth Company ¨
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 7(a)(2)(B) of the Securities Act. ¨
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
CALCULATION OF REGISTRATION FEE
| Title of Each Class of Securities to be Registered |
Amount to be Registered |
Proposed
maximum offering price per share(3) |
Proposed Maximum Aggregate Offering Price |
Amount of Registration Fee(3) | |||||||
| Class A Limited Voting Shares(1)(2) | 60,000,000 | US$56.29 | US$3,377,400,000 | US$313,084.98 | |||||||
| Total | 60,000,000 | US$56.29 | US$3,377,400,000 | US$313,084.98 | |||||||
(1) Represents Class A Limited Voting Shares of the Registrant (the “Class A Shares”) issuable upon exchange from time to time of outstanding units (“OCGH units”) of Oaktree Capital Group Holdings, L.P. (“OCGH”). The number of Class A Shares issuable in exchange for OCGH units will be based, in part, on a 10-day volume-weighted average price of the Class A Shares on the New York Stock Exchange prior to the date of issuance.
(2) This Registration Statement also relates to indeterminate number of additional Class A Shares to be issued as a result of share splits, share dividends or similar transactions.
(3) Estimated solely for the purpose of calculating the amount of registration fee in accordance with Rule 457(c) under the Securities Act of 1933, as amended (the “Securities Act”), based upon the average high and low sale prices of the Class A Shares on the New York Stock Exchange on December 3, 2021.
The Registrant hereby amends the Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a) of the Securities Act of 1933, as amended, may determine.
The information in this prospectus is not complete and may be changed. We may not issue or sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
BROOKFIELD ASSET MANAGEMENT INC.
60,000,000 CLASS A LIMITED VOTING SHARES
We may issue from time to time up to 60,000,000 Class A Limited Voting Shares (“Class A Shares”) of Brookfield Asset Management Inc., an Ontario corporation, upon exchanges of limited partnership units (“OCGH units”) of Oaktree Capital Group Holdings, L.P., a Delaware limited partnership (“OCGH”).
Pursuant to the terms of the Exchange Agreement (as defined in this prospectus), OCGH units may be exchanged, directly or indirectly, for cash at a price equal to the current equity value (as defined in this prospectus) of the OCGH units; however, we may at our sole discretion elect to satisfy such exchange requests by delivering a number of Class A Shares pursuant to this prospectus that is equal to, together with other forms of consideration that may be deliverable upon exchange, the current equity value of the OCGH units being exchanged divided by the ten (10)-day aggregate volume-weighted average price per Class A Share (as reported on Bloomberg) on the New York Stock Exchange (the “NYSE”) for the ten (10) consecutive trading days ending on the third business day prior to the date of the issuance of Class A Shares as consideration in an exchange. Under the Exchange Agreement, we are required to ensure that all Class A Shares that may be delivered in any exchange be issued in transactions registered under the Securities Act. See “Exchanges of OCGH Units for Class A Shares” in this prospectus.
We do not know when or in what amount we may deliver Class A Shares in connection with the applicable exchanges. This prospectus does not necessarily mean that any of the OCGH units will be exchanged for Class A Shares.
We will not receive cash proceeds from the issuance of our Class A Shares upon an exchange of OCGH units, with the applicable OCGH units being subsequently redeemed or cancelled and our ownership interests in each Oaktree OpCo (as defined herein) increasing commensurately.
Our Class A Shares are listed on the NYSE under the trading symbol “BAM” and the Toronto Stock Exchange (“TSX”) under the symbol “BAM.A.”
Investing in our Class A Shares involves risks. Please see “Risk Factors” beginning on page 4 of this prospectus, and in similarly-captioned sections in the documents incorporated by reference herein, for a discussion of risk factors you should consider before investing in our Class A Shares.
Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
The date of this prospectus is , 2021
TABLE OF CONTENTS
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This prospectus is part of a shelf registration statement on Form F-3 that we filed with the Securities and Exchange Commission (the “SEC”) under the U.S. Securities Act of 1933, as amended (the “Securities Act”). We may deliver to direct or indirect holders of OCGH units, at any time and from time to time Class A Shares in connection with exchanges of OCGH units to the extent that the applicable holder has provided OCGH with a notice to exchange such OCGH units in accordance with the Exchange Agreement. As allowed by the SEC rules, this prospectus does not contain all of the information included in the registration statement. For further information, we refer you to the registration statement, including its exhibits, as well as any documents incorporated by reference herein or therein.
You should read this prospectus together with any documents incorporated by reference herein or therein and any additional information you may need to make your investment decision. You should also read and carefully consider the information in the documents we have referred you to in “Where You Can Find More Information” and “Incorporation by Reference” below. Information incorporated by reference after the date of this prospectus is considered a part of this prospectus and may add, update or change information contained in this prospectus. The information in this prospectus or any document incorporated by reference herein by reference is accurate only as of the date contained on the cover of such documents. Neither the delivery of this prospectus nor any delivery of Class A Shares made under this prospectus will, under any circumstances, imply that the information in this prospectus is correct as of any date after this prospectus. Our business, financial condition and results of operations may have changed since that date. Any information in such subsequent filings that is inconsistent with this prospectus will supersede the information in this prospectus.
You should rely only on the information incorporated by reference or provided in this prospectus. We have not authorized anyone else to provide you with other information. We are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted.
Unless the context suggests otherwise, in this prospectus references to:
“A&R operating agreement” are to the Fifth Amended and Restated Operating Agreement of Oaktree, dated September 30, 2019;
“Annual Report” means Brookfield’s annual report on Form 40-F dated March 23, 2021 for the year ended December 31, 2020 and filed with the SEC on March 24, 2021, as amended by Amendment No. 1 on Form 40-F/A dated March 26, 2021 and filed with the SEC on March 29, 2021;
“Atlas” are to Atlas Holdings, LLC, a Delaware limited liability company and indirect wholly-owned subsidiary of Brookfield;
“Berlin Merger Sub” are to Berlin Merger Sub, LLC;
“Brookfield,” the “Company,” “we,” “us,” or “our,” are to Brookfield Asset Management Inc., or as the context may require, Brookfield Asset Management Inc. and its subsidiaries on a consolidated basis;
“closing date” are to September 30, 2019, which is the closing date of the Mergers;
“DGCL” are to the General Corporation Law of the State of Delaware;
“effective time” are to September 30, 2019 at 8:04 a.m., which was the effective time of the initial merger pursuant to the merger agreement;
“Exchange Act” are to the U.S. Securities Exchange Act of 1934, as amended;
“Exchange Agreement” are to the Third Amended and Restated Exchange Agreement, dated September 30, 2019 and as thereafter amended, by and among Atlas, Atlas OCM Holdings, LLC, Oaktree, OCM Holdings I, LLC, Oaktree New Holdings, LLC, Oaktree AIF Holdings II, LLC, Oaktree Holdings, Ltd., OCGH, Oaktree Capital I, L.P., Oaktree Capital II, L.P., Oaktree Capital Management, L.P., Oaktree Capital Management (Cayman), L.P., Oaktree AIF Investments, L.P., Oaktree Investment Holdings, L.P., OCGH ExchangeCo, L.P., and the limited partners of OCGH, Brookfield (solely for purposes of Section 5.17) and other parties joined thereto from time to time;
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“ExchangeCo” are to a subsidiary of OCGH designated to effect exchanges of OCGH units;
“former Oaktree units” are to any OCGH unit that (a) was converted or exchanged in the Mergers into an OCGH unit from an Oaktree class A unit, (b) immediately prior to such conversion or exchange, was not a vested Oaktree class A unit and (c) immediately prior to the consummation of the Mergers, was unvested;
“initial merger” are to the merger of Berlin Merger Sub with and into Oaktree, with Oaktree surviving such merger;
“initial period” are to the period of time beginning on the closing date and ending no earlier than the third business day following, at Brookfield’s election, the earliest to occur of (a) Howard Marks and Bruce Karsh collectively ceasing to beneficially own at least 42% of the equity in the Oaktree operating group that they beneficially owned immediately after the closing (which amount shall be deemed to include any charitable donations they are permitted to make prior to the closing), (b) Howard Marks and Bruce Karsh both ceasing to be actively and substantially involved in the oversight of the day-to-day affairs of the business of the Oaktree operating group, in each case for a period of at least 90 consecutive days or an aggregate of 180 calendar days in any 360-day period, except as a result of incapacitation, (c) the incapacitation of both Howard Marks and Bruce Karsh, (d) either Howard Marks or Bruce Karsh becoming incapacitated, and the other ceasing to be actively and substantially involved in the oversight of the day-to-day affairs of the business of the Oaktree operating group for a period of at least 90 consecutive days or an aggregate of 180 calendar days in any 360-day period, except as a result of incapacitation and (e) the seventh anniversary of the closing date;
“merger agreement” are to the Agreement and Plan of Merger, dated as of March 13, 2019, as amended from time to time, among Oaktree, Brookfield, SellerCo, Seller MergerCo and Berlin Merger Sub;
“Mergers” are to the initial merger and the subsequent merger;
“Oaktree” are to Oaktree Capital Group, LLC;
“Oaktree class A unit” are to an equity interest in Oaktree that was a common unit designated as a “Class A Unit” pursuant to the terms of the Oaktree operating agreement in effect prior to the Mergers, including the Oaktree restricted units;
“Oaktree OpCo” means an “Oaktree Operating Group Member” as defined in the operating agreement of Oaktree, as it may be amended or modified from time to time;
“Oaktree operating group” are to the upper-most entities in which OCGH or Oaktree have an economic interest and over which Oaktree has control and through which the Oaktree business is conducted or the Oaktree strategy is pursued, including Oaktree Capital I LP, Oaktree Capital II LP, Oaktree Investment Holdings LP, Oaktree Capital Management LP, Oaktree Capital Management (Cayman) LP and Oaktree AIF Investments LP, but excluding Oaktree Holdings, Inc., Oaktree Holdings, LLC, OCM Holdings, LLC, OCM Holdings I, LLC, Oaktree AIF Holdings, Inc. and Oaktree Holdings, Ltd.;
“Oaktree restricted unit” are to an Oaktree class A unit that was outstanding and unvested as of immediately prior to the effective time;
“OBCA” are to the Business Corporations Act (Ontario), as amended;
“OCGH” are to Oaktree Capital Group Holdings, L.P., a Delaware limited partnership;
“OCGH units” are to limited partnership units of OCGH;
“Securities Act” are to the U.S. Securities Act of 1933, as amended;
“SellerCo” are to Oslo Holdings LLC, a Delaware limited liability company;
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“Seller MergerCo” are to Oslo Holdings Merger Sub LLC, a Delaware limited liability company;
“subsequent merger” are to the merger of SellerCo with and into Seller MergerCo, with Seller MergerCo surviving such merger;
“TRA” are to that certain Third Amended and Restated Tax Receivable Agreement, dated as of September 30, 2019 by and among Brookfield, Oaktree Holdings, Inc., Oaktree AIF Holdings, Inc., Oaktree Capital II, L.P., Oaktree Capital Management, L.P., Oaktree Investment Holdings, L.P., Oaktree AIF Investments, L.P., the entities party thereto, OCHG and each of the limited partners of OCGH; and
Certain other defined terms are as defined elsewhere in this prospectus.
The financial information contained in this prospectus, unless otherwise indicated, is presented in U.S. dollars and, unless otherwise indicated, has been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).
CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION
This prospectus and the documents incorporated by reference herein contain forward-looking information and other “forward-looking statements” within the meaning of Canadian and provincial securities laws and “forward looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, including Section 27A of the U.S. Securities Act and Section 21E of the Exchange Act. We may provide such information and make such statements in the Annual Report, in other filings with Canadian regulators or the U.S. Securities and Exchange Commission or in other communications. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, include statements which reflects management’s expectations regarding the operations, business, financial condition, expected financial results, performance, prospects, opportunities, priorities, targets, goals, ongoing objectives, strategies and outlook of the Company and its subsidiaries, as well as the outlook for North American and international economies for the current fiscal year and subsequent periods, and include words such as “expects,” “anticipates,” “plans,” “believes,” “estimates,” “seeks,” “intends,” “targets,” “projects,” “forecasts” or negative versions thereof and other similar expressions, or future or conditional verbs such as “may,” “will,” “should,” “would” and “could.”
Although we believe that our anticipated future results, performance or achievements expressed or implied by the forward-looking statements and information are based upon reasonable assumptions and expectations, the reader should not place undue reliance on forward-looking statements and information contained in this prospectus. The statements and information involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, which may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievement expressed or implied by such forward-looking statements and information.
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Factors that could cause actual results to differ materially from those contemplated or implied by forward-looking statements include, but are not limited to: (i) investment returns that are lower than target; (ii) the impact or unanticipated impact of general economic, political and market factors in the countries in which we do business, including as a result of COVID-19 and the global economic shutdown; (iii) the behavior of financial markets, including fluctuations in interest and foreign exchange rates; (iv) global equity and capital markets and the availability of equity and debt financing and refinancing within these markets; (v) strategic actions including dispositions; (vi) the ability to complete and effectively integrate acquisitions into existing operations and the ability to attain expected benefits; (vii) changes in accounting policies and methods used to report financial condition (including uncertainties associated with critical accounting assumptions and estimates); (viii) the ability to appropriately manage human capital; (ix) the effect of applying future accounting changes; (x) business competition; (xi) operational and reputational risks; (xii) technological change; (xiii) changes in government regulation and legislation within the countries in which we operate; (xiv) governmental investigations; (xv) litigation; (xvi) changes in tax laws; (xvii) ability to collect amounts owed; (xviii) catastrophic events, such as earthquakes, hurricanes, or pandemics/ epidemics; (xix) the possible impact of international conflicts and other developments including terrorist acts and cyberterrorism; (xx) the introduction, withdrawal, success and timing of business initiatives and strategies; (xxi) the failure of effective disclosure controls and procedures and internal controls over financial reporting and other risks; (xxii) health, safety and environmental risks; (xxiii) the maintenance of adequate insurance coverage; (xxiv) the existence of information barriers between certain businesses within our asset management operations; (xxv) risks specific to our business segments, including our real estate, renewable power and transition, infrastructure, private equity, and other alternatives, including credit; and (xxvi) other risks and factors detailed in this prospectus under the heading “Risk Factors” as well as in our Annual Information Form, filed as Exhibit 99.1 to our Annual Report, under the heading “Business Environment and Risks” and our Annual Report under the heading “Part 6 – Business Environment and Risks” as well as in other documents filed by Brookfield from time to time in our documents filed with the SEC on EDGAR, which is available at www.sec.gov.
We caution that the foregoing list of important factors that may affect future results is not exhaustive. Nonetheless, all of the forward-looking statements contained in this prospectus or in documents incorporated by reference herein are qualified by these cautionary statements. When relying on our forward-looking statements, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements or information, whether written or oral, that may need to be updated as a result of new information, future events or otherwise.
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This summary highlights information contained elsewhere in this prospectus. This summary may not contain all of the information that you should consider before deciding to invest in Class A Shares. You should read this entire prospectus carefully, including the “Risk Factors” section and the documents incorporated by reference herein.
Brookfield is a leading global alternative asset manager with approximately US$650 billion in assets under management across real estate, infrastructure, renewable power, private equity and credit. Brookfield owns and operates long-life assets and businesses, many of which form the backbone of the global economy. Utilizing its global reach, access to large-scale capital and operational expertise, Brookfield offers a range of alternative investment products to investors around the world — including public and private pension plans, endowments and foundations, sovereign wealth funds, financial institutions, insurance companies and private wealth investors. The Company’s Class A Shares are listed on the NYSE and the TSX under the symbols “BAM” and “BAM.A,” respectively.
On September 30, 2019, pursuant to the terms of the merger agreement, an indirect wholly-owned subsidiary of Brookfield was merged with and into Oaktree and holders of Oaktree’s class A units received in exchange for each such unit owned by them immediately prior to that date, without interest and subject to any applicable withholding taxes, at the election of the unitholder (subject to certain prorations), (A) $49.00 in cash or (B) 1.0770 Class A Shares. Subsequent thereto, Oslo Holdings LLC, a wholly-owned subsidiary of OCGH was merged with and into Oslo Holdings Merger Sub LLC, a wholly-owned subsidiary of Oaktree, and each unit of equity interest in Oslo Holdings LLC was, at the election of the holder, converted into either (A) $49.00 in cash or (B) 1.0770 Class A Shares.
Exchanges of OCGH Units for Class A Shares
We are registering the issuance from time to time of Class A Shares upon exchange of OCGH units under the Securities Act to satisfy our registration obligations under the Exchange Agreement. Under the Exchange Agreement, we are required to ensure that all Class A Shares that may be delivered in any exchange be issued in transactions registered under the Securities Act. Following the eighth anniversary of the closing date of the Mergers, we can discontinue the exchange rights in the Exchange Agreement on 36-months’ notice. As a result, the earliest the exchange rights can be terminated is the eleventh anniversary of the closing date of the Mergers, or September 30, 2030.
Pursuant to the terms of the Exchange Agreement, OCGH units may be exchanged, directly or indirectly, for cash at a price equal to the current equity value of the OCGH units; however, we may elect to satisfy such exchange request by delivering a number of Class A Shares pursuant to this prospectus that is equal to, together with other forms of consideration that may be deliverable upon exchange, the current equity value of the OCGH units being exchanged divided by the ten (10)-day aggregate volume-weighted average price per Class A Share (as reported on Bloomberg) on the NYSE or NASDAQ or any other U.S. national securities exchange on which shares of the same class are then listed for the ten (10) consecutive trading days ending on the third business day prior to the date of the issuance of Class A Shares as consideration in an exchange.
Brookfield will pay all expenses of effecting the exchanges pursuant to this prospectus.
See “Exchanges of OCGH Units for Class A Shares” for more information.
As of November 12, 2021, we had 1,568,195,791 Class A Shares issued and outstanding.
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The Class A Shares are listed on the NYSE under the symbol “BAM” and on the TSX under the symbol“BAM.A.” The TSX and the NYSE have approved the listing of the additional Class A Shares issuable pursuant to this prospectus.
Brookfield’s board of directors has the sole authority to determine whether Brookfield will make dividends to holders of Class A Shares, and the amount and timing of these distributions.
For information regarding Brookfield’s historical dividends, see “Corporate Dividends” in Brookfield’s interim report for the third quarter of 2021, filed as Exhibit 99.1 to its Form 6-K dated November 15, 2021, and our Annual Report, each incorporated by reference herein.
Tax Consequences of Exchanges and Ownership of Class A Shares
Please see “Certain Canadian Federal Income Tax Considerations” and “Material U.S. Federal Income Tax Consequences” for a summary of certain Canadian and U.S. federal income tax considerations that may be relevant to holders of OCGH units if such holders exchange their OCGH units for Class A Shares in accordance with the terms of the Exchange Agreement. Because the specific tax consequences to such holders will depend upon each of their specific circumstances, holders are strongly urged to consult their own tax advisor(s) regarding any Canadian and/or U.S. federal, state and local tax consequences specific to such holders.
We are subject to a number of risks of which you should be aware. Below please find a summary of the principal risks we face. These risks are discussed more fully in this prospectus under the heading “Risk Factors” and in the section titled “Business Environment and Risks” in our Annual Report, which is incorporated by reference herein.
| · | Risks relating to the volatility in the trading price of the Class A Shares; |
| · | Risks relating to our reputation; |
| · | Risks relating to our asset management business; |
| · | Risks relating to compliance with numerous laws, rules and regulations; |
| · | Risks relating to government investigations and anti-corruption legislation; |
| · | Risks relating to our liquidity; |
| · | Risks relating to foreign exchange and other financial exposure; |
| · | Risks relating to temporary investments; |
| · | Risks relating to interest rates; |
| · | Risks relating to human capital; |
| · | Risks relating to geopolitical and economic conditions; |
| · | Risks relating to catastrophic loss, climate change and terrorism; |
| · | Risks relating to taxation; |
| · | Risks relating to financial reporting and disclosures; |
| · | Risks relating to health, safety and the environment; |
| · | Risks relating to data security, privacy and cyber-terrorism; |
| · | Risks relating to dependence on information technology systems and information barriers; |
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| · | Risks relating to litigation and insurance; |
| · | Risks relating to our counterparties; |
| · | Risks relating to our real estate, renewable power, infrastructure, private equity and credit businesses; and |
| · | Risks relating to our residential developments business. |
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Our activities expose us to a variety of financial risks, including market risk (i.e., commodity price risk, interest rate risk, and foreign currency risk), credit risk and liquidity risk. You should carefully consider the risks described below, under “Part 6 – Business Environment and Risks” of our Annual Report and under “Business Environment and Risks” of our Annual Information Form, filed as Exhibit 99.1 to our Annual Report, and the other information incorporated by reference in this prospectus, as updated by our subsequent reports that are deemed “filed” with the SEC pursuant to Sections 13(a) or 15(d) of the Exchange Act, which are incorporated herein by reference. See “Where You Can Find More Information” and “Incorporation by Reference.”
Risk Related to Exchanging OCGH units for Class A Shares
Your investment may change upon an exchange of OCGH units for Class A Shares.
If you exchange OCGH units pursuant to the terms of the Exchange Agreement, you may receive Class A Shares (or other forms of consideration as described in “Exchanges of OCGH Units for Class A Shares” in this prospectus) in connection with such exchange. To the extent that you receive Class A Shares in any such exchange, you will become a holder of limited voting common shares of a Canadian corporation rather than a holder of limited partnership units of a Delaware limited partnership. Therefore, recipients of Class A Shares following an exchange of OCGH units for Class A Shares will have different rights and obligations, including voting rights, from those that they had prior to the consummation of the exchange as a holder of OCGH units. See “Comparison of Ownership of Class A Shares and OCGH Units.”
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We will not receive cash proceeds from the issuance of our Class A Shares upon an exchange of OCGH units, with the exchanged OCGH units being subsequently redeemed or cancelled and our ownership interests in each Oaktree OpCo increasing commensurately. See “Exchange of OCGH Units for Class A Shares” below.
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The following table sets forth the consolidated capitalization of the Company as at September 30, 2021, but does not reflect any exchanges because the number of Class A Shares issuable pursuant thereto is not yet determinable. For further disclosures in respect of consolidated capitalization, please see the Company’s audited comparative consolidated financial statements and notes thereto for the fiscal years ended December 31, 2020 and 2019 and the unaudited comparative interim consolidated financial statements for the three and nine months ended September 30, 2021 and 2020, which are documents incorporated by reference in this prospectus.
| As at September 30, 2021 | ||||
| (US$ amounts in millions) | ||||
| Corporate borrowings | $ | 10,309 | ||
| Non-recourse borrowings of managed entities | ||||
| Property-specific borrowings | 142,795 | |||
| Subsidiary borrowings | 13,370 | |||
| Accounts payable and other | 52,087 | |||
| Liabilities associated with assets classified as held for sale | 1,773 | |||
| Deferred income tax liabilities | 17,729 | |||
| Subsidiary equity obligations | 3,790 | |||
| Equity | ||||
| Non-controlling interests | 80,618 | |||
| Preferred equity | 4,145 | |||
| Common equity | 38,808 | |||
| Total capitalization | $ | 365,424 | ||
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EXCHANGES OF OCGH UNITS FOR CLASS A SHARES
The following is a summary of the material terms of the Exchange Agreement that provides for, among other things, the rights, duties and obligations of Brookfield, OCGH and the limited partners of OCGH with respect to exchanges of OCGH units for Class A Shares.
This prospectus relates to the issuance of up to 60,000,000 Class A Shares from time to time to upon exchanges of OCGH units for Class A Shares for the open period beginning on January 1, 2022 and subsequent open periods thereafter (as described below).
The Exchange Agreement provides for the ability of the limited partners of OCGH to participate in exchanges of certain vested OCGH units for one of the following forms of consideration, at the election of Brookfield: cash; Class A Shares; notes issued by Atlas; or equity interests in ExchangeCo that will entitle such limited partners to the proceeds from a note (the form of consideration for former Oaktree units exchangeable in 2020 and 2021 was limited to cash). If any notes are issued in an exchange, they will have a three-year maturity and will accrue interest at the then-current 5-year treasury note rate plus 3%. While the form of consideration in an exchange is generally at Brookfield’s discretion, no more than 50% of the consideration in respect of the first $500,000,000 in aggregate value of all OCGH units entitled to receive consideration in an exchange during a particular open period shall take the form of notes or equity interests in ExchangeCo that will entitle the applicable limited partner to the proceeds from a note.
The only units eligible to participate in an exchange are the following, in each case once such units have vested:
| · | Former Oaktree units; |
| · | OCGH units issued and outstanding at closing of the Mergers; and |
| · | OCGH units issued after closing of the Mergers pursuant to certain agreements in effect on March 13, 2019 or that are otherwise approved by Brookfield as eligible units. |
Immediately following the exchange of OCGH units for cash, Class A Shares or notes issued by Atlas, OCGH will redeem each OCGH unit received by Atlas in the exchange and deliver to Atlas a pro rata share of the partnership interests of each Oaktree operating group member, such that the aggregate number of such partnership units is equivalent to the number of units exchanged. In connection with the exchange of OCGH units for equity interests in ExchangeCo, the partnership interests of the Oaktree operating group members will be recapitalized to provide Atlas with the applicable number of partnership interests in the Oaktree operating group members.
Holders of former Oaktree units became eligible to participate in an exchange beginning on January 1, 2020, subject to their vesting schedules; all vested OCGH units will be eligible to participate in an exchange in open periods beginning on January 1, 2022 and in subsequent years thereafter (as described below). In the event that OCGH units are held indirectly through certain investment vehicles then, from time to time, Brookfield may conduct exchanges with such vehicles, with the ultimate effect of those exchanges being the same as if such units were held directly by their original holders. The closing of each including in the event that the valuation of the OCGH units is not yet finalized by the 85th day following the expiration of the applicable open period or, subject to certain limitations, as otherwise required by applicable law or regulation.
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Except as described below, pursuant to the terms of the Exchange Agreement, each OCGH unit will be valued for purposes of exchanges by:
| (i) | applying a 13.5x multiple to the trailing three-year average (or two-year average for exchanges in 2022) of annual fee-related earnings less stock-based compensation at grant value and excluding depreciation and amortization and a 6.75x multiple to the trailing three-year average of annual net incentives created, and |
| (ii) | adding 100% of the value of net cash (defined as cash less the face value of debt and preferred stock, other than certain preferred stock issued in connection with certain exchanges), 100% of the value of corporate investments and 75% of fund-level net accrued incentives, each as of December 31 of the prior year, in each case subject to certain adjustments. |
The value resulting from the above calculation is referred to as the “total equity value.”
Amounts received in respect of each OCGH unit will be calculated as:
| (i) | the per unit amount of the total equity value, |
| (ii) | reduced by the amount of any non-tax related distributions received in the calendar year in which the exchange occurs, and |
| (iii) | increased by a ticking fee on the net amount of the amount described in the preceding clauses (i) and (ii), which ticking fee is equal to an amount accruing daily from January 1 of the year in which such exchange occurs to the date immediately preceding the closing of the exchange at a rate per annum equal to the 5-year treasury note rate plus 3% as of December 31 of the prior year. |
The value resulting from the above calculation is referred to as the “current equity value.”
If Brookfield elects to deliver Class A Shares as consideration for all or a portion of an exchange, the number of Class A Shares that are delivered will equal, together with other forms of consideration that may be deliverable upon exchange, the current equity value of the OCGH units being exchanged divided by the ten (10)-day aggregate volume-weighted average price per Class A Share (as reported on Bloomberg) on the NYSE or NASDAQ or any other U.S. national securities exchange on which shares of the same class are then listed for the ten (10) consecutive trading days ending on the third business day prior to the date of the issuance of Class A Shares as consideration in an exchange; provided that no fractional Class A Shares shall be delivered as consideration and, in lieu thereof, cash in United States Dollars shall be paid at the same valuation as the Class A consideration; provided, further, that all fractional shares to which a single OCGH limited partner participating in a particular exchange would be entitled shall be aggregated.
However, pursuant to the Exchange Agreement, in 2020 and 2021, former Oaktree units were valued at $49.00 per unit, minus the value of any capital distributions received upon vesting. Thereafter, the former Oaktree units participating in an exchange will be valued using the same methodology applied to all other OCGH units.
In addition, the Exchange Agreement provides that, with respect to any completed acquisition or disposition, Oaktree and Brookfield will negotiate in good faith to adjust the total equity value of the OCGH units on a pro forma basis for the preceding three-year period to properly reflect the impact of such acquisition or disposition.
Exchanges of OCGH units, other than former Oaktree units, will be subject to certain annual caps and limitations as follows:
| · | Certain specified senior Oaktree employees can, for the open period beginning in 2022, exchange up to 20% of the OCGH units held by them at closing of the Mergers (or issued pursuant to certain agreements in place at closing of the Mergers). For each year thereafter, they will be able to exchange an additional 20% of such OCGH units (inclusive of any prior exchanges), such that they will be entitled to exchange 100% of their OCGH units beginning during the open period in 2026, subject to maximum yearly amounts (inclusive of any prior exchanges). |
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| · | Certain other employees of Oaktree can, for the open period beginning in 2022, exchange up to 12.5% of the OCGH units held by them at closing of the Mergers (or issued pursuant to certain agreements in place at closing of the Mergers). For each year thereafter, they will be able to exchange an additional 12.5% of such OCGH units (inclusive of any prior exchanges). They will be entitled to exchange 100% of their OCGH units beginning during the open period in 2029, subject to maximum yearly amounts. |
| · | Brookfield is not obligated to permit exchanges that, in the aggregate together with exchanges requested by all other OCGH limited partners, exceed certain maximum amounts per year. These maximum amounts are: 20% of the exchangeable OCGH units in calendar year 2022, 25% in 2023, 30% in 2024, and 35% in 2025 and each year thereafter. |
| · | In the event that OCGH limited partners wish to sell or exchange units in excess of the maximum amount for a given year, OCGH will reallocate the exchangeable units among the OCGH limited partners in its sole discretion so that the amount exchanged does not exceed the maximum amount for such year. |
It is a condition to the participation of an OCGH limited partner in an exchange that such person agree to the terms of the TRA as described in the section “–TRA” below.
Consent Solicitation; Suspension of Exchange Rights
Oaktree is required to use its reasonable best efforts to obtain advance approval under Oaktree’s fund and other investment advisory agreements to a prospective change of control of Oaktree under the A&R operating agreement following the end of the initial period. If, as of the earlier of the expiration of the initial period and December 31, 2023, closed-end funds representing at least 80% of the revenue received by Oaktree and its subsidiaries from closed-end funds (excluding certain incentive income and investment income) as of February 28, 2019, do not approve of such change of control, then the Exchange Agreement provides that the exchange rights under the Exchange Agreement is suspended until such 80% approval threshold is met.
In addition, Oaktree must use its reasonable best efforts to incorporate language into the governing agreements of any new funds providing for (i) advance approval for such prospective change of control and (ii) provisions clarifying that no party will be deemed an affiliate of such fund to the extent an information barrier is in place and there is no coordination or consultation with respect to investment decisions of such fund, or otherwise provide that neither Brookfield nor any of its affiliates will be deemed an affiliate of Oaktree or any member of the Oaktree operating group (including any of their direct and indirect subsidiaries). All such amendments or provisions shall be subject to the review and consent of Brookfield.
Following the eighth anniversary of the closing date of the Mergers, or September 30, 2027, Brookfield can discontinue the exchange rights in the Exchange Agreement on 36-months’ notice. As a result, the earliest the exchange rights can be terminated is the eleventh anniversary of the closing date of the Mergers, or September 30, 2030. Following the delivery of a discontinuation notice, the caps and limits set forth under “—Annual Limits” above will cease to be in effect.
In the case of the acquisition, directly or indirectly, of control of Brookfield by a person that is materially engaged in a core business that is directly and materially competitive with a core Oaktree strategy, or if Brookfield or Atlas files for bankruptcy, then OCGH may require Brookfield to promptly sell to OCGH all of Brookfield’s interests in the Oaktree operating group for the per unit price at which such units were valued based on the year-end prior to the buyback event and pursuant to the valuation mechanism described above. The foregoing will not apply, however, in the case of an acquisition where (i) a majority of the Class B Shares (as defined below) are owned by existing or former officers, directors and employees of Brookfield or their respective related parties and (ii) a majority of the Class B Shares continue to have the right to elect at least 50% of the board of directors of Brookfield.
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Under the TRA and pursuant to the Exchange Agreement, the limited partners of OCGH, which include certain Oaktree directors and executive officers, will be entitled to receive an aggregate of $66 million on each of the first, second and third anniversaries of the closing with respect to tax benefits resulting from exchanges of OCGH units that occur on or after March 13, 2019 and will forgo any right to payment under the TRA related to such exchanges.
DESCRIPTION OF BROOKFIELD’S CAPITAL STRUCTURE
The Company’s authorized share capital consists of (i) an unlimited number of Class A Shares, (ii) 85,120 Class B Limited Voting Shares (“Class B Shares”), (iii) an unlimited number of preference shares designated as Class A Preference Shares (“Class A Preference Shares”), issuable in series, and (iv) an unlimited number of preference shares designated as Class AA Preference Shares (the “Class AA Preference Shares”), issuable in series.
As of November 12, 2021, the Company had 1,568,195,791 Class A Shares; 85,120 Class B Shares; 10,457,685 Class A Preference Shares, Series 2; 3,995,910 Class A Preference Shares, Series 4; 3,321,486 Class A Preference Shares, Series 8; 4,670,680 Class A Preference Shares, Series 9; 9,640,096 Class A Preference Shares, Series 13; 2,000,000 Class A Preference Shares, Series 15; 7,840,204 Class A Preference Shares, Series 17; 7,866,749 Class A Preference Shares, Series 18; 10,808,027 Class A Preference Shares, Series 24; 9,770,928 Class A Preference Shares, Series 26; 9,233,927 Class A Preference Shares, Series 28; 9,787,090 Class A Preference Shares, Series 30; 11,750,299 Class A Preference Shares, Series 32; 9,876,735 Class A Preference Shares, Series 34; 7,842,909 Class A Preference Shares, Series 36; 7,830,091 Class A Preference Shares, Series 37; 7,906,132 Class A Preference Shares, Series 38; 11,841,025 Class A Preference Shares, Series 40; 11,887,500 Class A Preference Shares, Series 42; 9,831,929 Class A Preference Shares, Series 44; 11,740,797 Class A Preference Shares, Series 46; and 11,885,972 Class A Preference Shares, Series 48 issued and outstanding.
Description of Class A Preference Shares
The following description sets forth certain general terms and provisions of the Class A Preference Shares as a class. For a description of the rights, privileges, restrictions and conditions attaching to each series of the Class A Preference Shares, see the information contained under “Description of Capital Structure” in our Annual Information Form filed as Exhibit 99.1 to our Annual Report, which is incorporated by reference herein.
Series
The Class A Preference Shares may be issued from time to time in one or more series. Our board of directors will fix the number of shares in each series and the provisions attached to each series before issue.
Priority
The Class A Preference Shares rank senior to the Class AA Preference Shares, the Class A Shares, the Class B Shares and other shares ranking junior to the Class A Preference Shares with respect to priority in the payment of dividends and in the distribution of assets in the event of the liquidation, dissolution or winding-up of Brookfield, whether voluntary or involuntary, or in the event of any other distribution of assets of Brookfield among its shareholders for the purpose of winding-up its affairs. Each series of Class A Preference Shares ranks on a parity with every other series of Class A Preference Shares with respect to priority in the payment of dividends and in the distribution of assets in the event of the liquidation, dissolution or winding-up of Brookfield, whether voluntary or involuntary, or in the event of any other distribution of assets of Brookfield among its shareholders for the purpose of winding-up its affairs.
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Shareholder Approvals
We will not delete or vary any preference, right, condition, restriction, limitation or prohibition attaching to the Class A Preference Shares as a class or create preference shares ranking in priority to or on parity with the Class A Preference Shares except by special resolution passed by at least 66 2/3% of the votes cast at a meeting of the holders of the Class A Preference Shares duly called for that purpose, in accordance with the provisions of our articles of amalgamation. Each holder of Class A Preference Shares entitled to vote at a class meeting of holders of Class A Preference Shares, or at a joint meeting of the holders of two or more series of Class A Preference Shares, has one vote in respect of each C$25.00 of the issue price of each Class A Preference Share held by such holder.
Description of Class AA Preference Shares
The following description sets forth certain general terms and provisions of the Class AA Preference Shares as a class.
Series
The Class AA Preference Shares may be issued from time to time in one or more series. The Brookfield board will fix the number of shares in each series and the provisions attached to each series before issue.
Priority
The Class AA Preference Shares rank junior to the Class A Preference Shares and senior to the Class A Shares, the Class B Shares and other shares ranking junior to the Class AA Preference Shares with respect to priority in the payment of dividends and in the distribution of assets in the event of the liquidation, dissolution or winding up of Brookfield, whether voluntary or involuntary, or in the event of any other distribution of assets of Brookfield among its shareholders for the purpose of winding up its affairs. Each series of Class AA Preference Shares ranks on a parity with every other series of Class AA Preference Shares with respect to priority in the payment of dividends and in the distribution of assets in the event of the liquidation, dissolution or winding up of Brookfield, whether voluntary or involuntary, or in the event of any other distribution of assets of Brookfield among its shareholders for the purpose of winding up its affairs.
Shareholder Approvals
We will not delete or vary any preference, right, condition, restriction, limitation or prohibition attaching to the Class AA Preference Shares as a class except by special resolution passed by at least 66 2/3% of the votes cast at a meeting of the holders of the Class AA Preference Shares duly called for that purpose, in accordance with the provisions of our articles of amalgamation.
Each holder of Class AA Preference Shares entitled to vote at a class meeting of holders of Class AA Preference Shares, or at a joint meeting of the holders of two or more series of Class AA Preference Shares, has one vote in respect of each C$25.00 of the issue price of each Class AA Preference Share held by such holder.
Description of Class A Shares and Class B Shares
The following description sets forth certain general terms and provisions of the Class A Shares (into which certain series of our Class A Preferred Shares may be converted) and the Class B Shares. The attributes of the Class A Shares and the Class B Shares are substantially equivalent, except for the differing voting rights attached to the two classes of shares.
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The sole holder of the Class B Shares is a party to a trust agreement with Computershare Trust Corporation of Canada (formerly, Montreal Trust Corporation of Canada) (as trustee for the holders of the Class A Shares) dated August 1, 1997. The trust agreement provides, among other things, that the holder has agreed not to sell any Class B Shares, directly or indirectly, pursuant to a takeover bid, unless a concurrent bid is made to all holders of Class A Shares. The concurrent offer must be: (i) for the same percentage of Class A Shares as the percentage of Class B Shares offered to be purchased from the holder; and (ii) the same in all material respects as the offer for the Class B Shares. Among other things, the trust agreement permits: (i) a sale by the sole holder of Class B Shares at a price per share not in excess of 115% of the market price of Class A Shares and as part of a transaction involving not more than five persons in the aggregate; and (ii) a direct or indirect sale of shares of the sole holder of the Class B Shares to a purchaser who is or will become a shareholder of that holder and will not hold more than 20% of that holder’s outstanding shares as a result of the transaction.
Dividend Rights and Rights upon Dissolution or Winding-Up
The Class A Shares rank on parity with the Class B Shares and rank after the Class A Preference Shares, the Class AA Preference Shares and any other senior-ranking shares outstanding from time to time with respect to the payment of dividends (if, as and when declared by the our board of directors) and return of capital on the liquidation, dissolution or winding-up of Brookfield or any other distribution of the assets of Brookfield among its shareholders for the purpose of winding up its affairs.
Except as set out below under “—Election of Directors,” each holder of a Class A Share and Class B Share is entitled to notice of, and to attend and vote at, all meetings of our shareholders (except meetings at which only holders of another specified class or series of shares are entitled to vote) and is entitled to cast one vote per share held. Subject to applicable law and in addition to any other required shareholder approvals, all matters approved by shareholders (other than the election of directors), must be approved by: (i) a majority or, in the case of matters that require approval by a special resolution of shareholders, at least 66 2/3%, of the votes cast by holders of Class A Shares who vote in respect of the resolution or special resolution, as the case may be, and (ii) a majority or, in the case of matters that require approval by a special resolution of shareholders, at least 66 2/3%, of the votes cast by holders of Class B Shares who vote in respect of the resolution or special resolution, as the case may be.
Election of Directors
In the election of directors, holders of Class A Shares, together, in certain circumstances, with the holders of certain series of Class A Preference Shares, are entitled to elect one-half of the our board of directors, provided that if the holders of Class A Preference Shares, Series 2 become entitled to elect two or three directors, as the case may be, the numbers of directors to be elected by holders of Class A Shares, together, in certain circumstances with the holders of certain series of Class A Preference Shares, will be reduced by the number of directors to be elected by holders of Class A Preference Shares, Series 2. Holders of Class B Shares are entitled to elect the other one-half of our board of directors.
Other Provisions Regarding Our Share Capital
Our articles of amalgamation provide that each holder of shares of a class or series of shares of Brookfield entitled to vote in an election of directors has the right to cast a number of votes equal to the number of votes attached to the shares held by the holder multiplied by the number of directors to be elected by the holder and the holders of shares of the classes or series of shares entitled to vote with the holder in the election of directors. A holder may cast all such votes in favor of one candidate or distribute such votes among its candidates in any manner the holder sees fit. Where a holder has voted for more than one candidate without specifying the distribution of votes among such candidates, the holder will be deemed to have divided the holder’s votes equally among the candidates for whom the holder voted.
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COMPARISON OF ONTARIO AND DELAWARE CORPORATE LAW
The rights and privileges of the Class A Shares are governed principally by:
| · | the laws of Ontario, particularly the OBCA; |
| · | Brookfield’s articles of amalgamation; and |
| · | Brookfield’s by-laws. |
The following comparison is a summary of certain rights of holders of Class A Shares and shareholders of a Delaware corporation. The following summary is qualified in its entirety by reference to the relevant provisions of (i) the OBCA, (ii) the articles and by-laws of Brookfield, and (iii) the DGCL.
This section does not include a complete description of all of the differences between the rights of holders of Class A Shares and shareholders of a Delaware corporation, nor does it include a complete description of the specific rights of such holders. Furthermore, the identification of some of the differences in the rights of such holders is not intended to indicate that other differences that may be equally important do not exist. You are urged to read carefully the relevant provisions of Ontario law and Delaware law, as well as the governing documents of Brookfield, each as amended, restated, supplemented or otherwise modified from time to time, copies of which are available, without charge, to any person by following the instructions listed under “Where You Can Find More Information.”
| Brookfield Asset Management Inc. (OBCA) | Delaware General Corporation Law | |
| Form of Organization and Purpose | ||
| Brookfield was formed by articles of amalgamation dated August 1, 1997 and is organized pursuant to articles of amalgamation under the OBCA dated January 1, 2005. Brookfield is permitted to engage in any activity that lawfully may be conducted by a corporation organized under Canadian law and to conduct all lawful activities in furtherance thereof. |
Under the DGCL, unless otherwise specified in the certificate of incorporation, a corporation is permitted to engage in any activity that lawfully may be conducted. | |
| Management | ||
| The power to manage Brookfield is vested in Brookfield’s board of directors. | Delaware corporations are likewise managed by its board of directors. | |
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| Brookfield Asset Management Inc. (OBCA) | Delaware General Corporation Law | |
| Share Issuances | ||
| Brookfield’s articles of amalgamation authorize the issuance of an unlimited number of preference shares designated as Class A Preference Shares, issuable in series, an unlimited number of preference shares designated as Class AA Preference Shares, issuable in series, an unlimited number of Class A Shares, and 85,120 Class B Shares. | Under the DGCL, the certificate of incorporation of a corporation may give the board the right to issue new classes of preferred shares with voting, conversion, and dividend distribution rights. | |
| Dividends | ||
| The Class A Shares rank on parity with Brookfield’s Class B Shares and rank after the Class A Preference Shares, the Class AA Preference Shares and any other senior-ranking shares outstanding from time to time with respect to the payment of dividends (if, as and when declared by the Brookfield board) and return of capital on the liquidation, dissolution or winding-up of Brookfield or any other distribution of the assets of Brookfield among its shareholders for the purpose of winding up its affairs. The declaration and payment of dividends on the Class A Shares and Class B Shares are at the discretion of Brookfield’s board of directors. Dividends on the Class A Shares and Class B Shares are paid quarterly, at the end of March, June, September and December of each year. |
Under the DGCL, a Delaware corporation may pay dividends out of its surplus (the excess of net assets over capital), or in case there is no surplus, out of its net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year (provided that the amount of the capital of the corporation is not less than the aggregate amount of the capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets). In determining the amount of surplus of a Delaware corporation, the assets of the corporation, including stock of subsidiaries owned by the corporation, must be valued at their fair market value as determined by the board of directors, without regard to their historical book value. | |
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| Brookfield Asset Management Inc. (OBCA) | Delaware General Corporation Law | |
| Fiduciary Duties of Directors | ||
| Under the OBCA, every director and officer of a corporation in exercising his or her powers and discharging his or her duties to the corporation shall (i) act honestly and in good faith with a view to the best interests of the corporation, and (ii) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. Subject to the OBCA’s unanimous shareholder agreement provisions, no provision in a contract, the articles of amalgamation, the by-laws or a resolution relieves a director or officer from the duty to act in accordance with the OBCA and the regulations thereunder or relieves him or her from liability for a breach thereof. | The board of directors bears the ultimate responsibility for managing the business and affairs of a corporation. In discharging this function, directors of a Delaware corporation owe fiduciary duties of care and loyalty to the corporation and to its stockholders. Delaware courts have decided that the directors of a Delaware corporation are required to exercise informed business judgment in the performance of their duties. Informed business judgment means that the directors have informed themselves of all material information reasonably available to them. Delaware courts have also imposed a heightened standard of conduct upon directors of a Delaware corporation who take any action designed to defeat a threatened change in control of the corporation. In addition, under Delaware law, when the board of directors of a Delaware corporation approves the sale or break-up of a corporation, the board of directors may, in certain circumstances, have a duty to obtain the highest value reasonably available to the stockholders. | |
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| Brookfield Asset Management Inc. (OBCA) | Delaware General Corporation Law | |
|
Indemnification | ||
| Under the OBCA, Brookfield may indemnify a present or former director or officer of Brookfield or another individual who acts or acted at Brookfield’s request as a director or officer, or in a similar capacity, of another entity (the “indemnified individual”), against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by the indemnified individual in respect of any civil, criminal, administrative, investigative or other proceeding in which the indemnified individual is involved because of that association with Brookfield or such other entity and provided that the indemnified individual acted honestly and in good faith with a view to the best interests of Brookfield or the other entity, as the case may be, and, in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, such indemnified individual had reasonable grounds for believing that his or her conduct was lawful. Brookfield may, with court approval, indemnify an indemnified individual in respect of an action by or on behalf of Brookfield or such other entity to obtain a judgment in its favor, to which the indemnified individual is made a party because of their association with Brookfield or such other entity. An indemnified individual is entitled to indemnification from Brookfield as a matter of right if such indemnified individual was not judged by a court or other competent authority to have committed any fault or omitted to do anything that the indemnified individual ought to have done and fulfilled the conditions set forth above. In accordance with the OBCA, the board of directors of Brookfield approved a resolution dated August 1, 1997 providing for the following: (i) Brookfield shall indemnify a director or officer of Brookfield, a former director or officer of Brookfield or a person who acts or acted at Brookfield’s request as a director or officer of a body corporate of which Brookfield is or was a shareholder or creditor, and his or her heirs and legal representatives, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by him or her in respect of any civil, criminal or administrative action or proceeding to which he or she is made a party by reason of being or having been a director or officer of Brookfield or such body corporate (except in respect of an action by or on behalf of Brookfield or such body corporate to procure a judgment in its favor), if, (a) he or she acted honestly and in good faith with a view to the best interests of Brookfield, and (b) in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, he or she had reasonable grounds for believing that his or her conduct was lawful; (ii) Brookfield shall, with the prior approval of the court having jurisdiction, indemnify a person referred to in (i) above in respect of an action by or on behalf of Brookfield or such body corporate to procure a judgment in its favor, to which he or she is made a party by reason of being or having been a director or an officer of Brookfield or such body corporate, against all costs, charges and expenses reasonably incurred by him or her in connection with such action if he or she fulfils the conditions set out in paragraphs (i)(a) and (b) above; and (iii) notwithstanding anything in (i) and (ii) above, a person referred to in (i) above shall be indemnified by Brookfield in respect of all costs, charges and expenses reasonably incurred by him or her in connection with the defense of any civil, criminal or administrative action or proceeding to which he or she is made a party by reason of being or having been a director or officer of Brookfield or body corporate, if the person seeking indemnity, (a) was substantially successful on the merits in his or her defense of the action or proceeding, and (b) fulfils the conditions set out in paragraphs (i)(a) and (b) above. |
Under the DGCL, subject to specified limitations in the case of derivative suits brought by a corporation’s stockholders in its name, a corporation may indemnify any person who is made a party to any action, suit or proceeding on account of being a director, officer, employee or agent of the corporation (or was serving at the request of the corporation in such capacity for another corporation, partnership, joint venture, trust or other enterprise) against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with the action, suit or proceeding, provided that there is a determination that: (i) the individual acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the corporation; and (ii) in a criminal action or proceeding, the individual had no reasonable cause to believe his or her conduct was unlawful. Without court approval, however, no indemnification may be made in respect of any derivative action in which an individual is adjudged liable to the corporation, except to the extent the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity. The DGCL requires indemnification of directors and officers for expenses (including attorneys’ fees) actually and reasonably relating to a successful defense on the merits or otherwise of a derivative or third-party action. To the extent a director, officer, employee or agent is successful in the defense of such an action, suit or proceeding, the corporation is required by Delaware corporate law to indemnify such person for reasonable expenses incurred. Expenses (including attorneys' fees) incurred by such persons in defending any action, suit or proceeding may be paid in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of that person to repay the amount if it is ultimately determined that that person is not entitled to be so indemnified. |
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| Shareholder Voting Rights | ||
| The share conditions for the Class A Shares and Class B shares provide that, subject to applicable law and in addition to any other required shareholder approvals, all matters to be approved by shareholders (other than the election of directors) must be approved by: (i) a majority or, in the case of matters that require approval by a special resolution of shareholders, at least 66 2/3%, of the votes cast by holders of Class A Shares who vote in respect of the resolution or special resolution, as the case may be, and (ii) a majority or, in the case of matters that require approval by a special resolution of shareholders, at least 66 2/3%, of the votes cast by holders of Class B Shares who vote in respect of the resolution or special resolution, as the case may be. Except as set out above under “Description of Brookfield’s Capital Structure — Description of Class A Shares and Class B Shares — Election of Directors,” each holder of a Class A Share and Class B Share is entitled to notice of, and to attend and vote at, all meetings of shareholders (except meetings at which only holders of another specified class or series of shares are entitled to vote) and is entitled to cast one vote per share held. Cumulative voting in the election of directors is provided for in Brookfield’s articles. As a result, each holder of Class A Shares has the right to cast a number of votes equal to the number of votes attached to the Class A Shares held by the holder, multiplied by the number of directors to be elected by the holder and the holders of shares of the classes or series of shares entitled to vote with the shareholder in the election of directors. Under Brookfield’s bylaws, a quorum for the transaction of business at a meeting of shareholders is two persons present and each entitled to vote at the meeting. |
Under the DGCL, each stockholder is entitled to one vote per share of stock, unless the certificate of incorporation provides otherwise. In addition, the certificate of incorporation may provide for cumulative voting at all elections of directors of the corporation, or at elections held under specified circumstances. Either the certificate of incorporation or the bylaws may specify the number of shares and/or the amount of other securities that must be represented at a meeting in order to constitute a quorum, but in no event can a quorum consist of less than one-third of the shares entitled to vote at a meeting. | |
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| Brookfield Asset Management Inc. (OBCA) | Delaware General Corporation Law | |
| Special Meetings Called by Directors | ||
| Under the OBCA, the directors of a corporation may call a special meeting at any time. In addition, the holders of not less than five percent of the issued shares of a corporation that carry the right to vote at a meeting sought to be held may requisition the directors to call a meeting of shareholders for the purposes stated in the requisition. All shareholders as of the record date are entitled to notice of the meeting and have the right to attend and vote at the meeting. | Under the DGCL, a special meeting of shareholders may be called by the board of directors or by such persons authorized in the certificate of incorporation or the bylaws. Stockholders as of the record date for the meeting are entitled to vote at the meeting. | |
| Action Through Writing | ||
| Under the OBCA, a written resolution signed by all the shareholders of the corporation who would have been entitled to vote on the resolution at a meeting, is effective to approve the resolution. | Under the DGCL, a written consent signed by stockholders having not less than the minimum number of votes that would be required to authorize or take such action is effective to approve such action. | |
| Amendments to Governing Instruments | ||
| Amendment of Articles. Under the OBCA, amendments to the articles of
incorporation generally require the approval of not less than two-thirds of the votes cast by shareholders entitled to vote on the resolution. Amendment of By-laws. Under the OBCA, the directors may, by resolution, make, amend or repeal any by-laws that regulate the business or affairs of a corporation and they must submit the by-law, amendment or repeal to the shareholders at the next meeting of shareholders, and the shareholders may confirm, reject or amend the by-law, amendment or repeal. |
Under the DGCL, a corporation’s certificate of incorporation may be amended only if adopted and declared advisable by the board of directors and approved by a majority of the outstanding shares entitled to vote, provided that the certificate of incorporation may provide for a greater vote. Under the DGCL, holders of outstanding shares of a class or series are entitled to vote separately on an amendment to the certificate of incorporation if the amendment would have certain consequences, including changes that adversely affect the rights and preferences of such class or series. The by-laws may be amended with the approval of a majority of the outstanding shares entitled to vote and may, if so provided in the certificate of incorporation, also be amended by the board of directors. | |
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| Brookfield Asset Management Inc. (OBCA) | Delaware General Corporation Law | |
|
Merger, Sale or Other Disposition of Assets | ||
|
Under the OBCA, the approval of at least two-thirds of votes cast by shareholders entitled to vote on the resolution is required for extraordinary corporate actions. Extraordinary corporate actions include: amalgamations; continuances; sales, leases or exchanges of all or substantially all of the property of a corporation; liquidations and dissolutions. |
In addition to other aspects of Delaware law governing fiduciary duties of directors during a potential takeover, the DGCL also contains a business combination statute that protects Delaware companies from hostile takeovers and from actions following the takeover by prohibiting some transactions once an acquirer has gained a significant holding in the corporation.
Section 203 of the DGCL prohibits “business combinations,” including mergers, sales and leases of assets, issuances of securities and similar transactions by a corporation or a subsidiary with an interested stockholder that beneficially owns 15% or more of a corporation’s voting stock, within three years after the person becomes an interested stockholder, unless:
· the transaction that will cause the person to become an interested stockholder is approved by the board of directors of the target prior to the transaction;
· after the completion of the transaction in which the person becomes an interested stockholder, the interested stockholder holds at least 85% of the voting stock of the corporation not including shares owned by persons who are directors and officers of interested stockholders and shares owned by specified employee benefit plans; or
· after the person becomes an interested stockholder, the business combination is approved by the board of directors of the corporation and holders of at least 66.67% of the outstanding voting stock, excluding shares held by the interested stockholder.
A Delaware corporation may elect not to be governed by Section 203 of the DGCL by a provision contained in the original certificate of incorporation of the corporation or an amendment to the original certificate of incorporation or to the bylaws of the company, which amendment must be approved by a majority of the shares entitled to vote and may not be further amended by the board of directors of the corporation. Such an amendment is not effective until 12 months following its adoption. | |
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This prospectus relates to the issuance from time to time of up to 60,000,000 of our Class A Shares to OCGH unitholders upon exchange of OCGH units. The Class A Shares issuable upon exchange under this prospectus will only be issued to the extent that we elect to issue our Class A Shares to OCGH unitholders upon exchange of OCGH units. We will not receive cash proceeds from the issuance of our Class A Shares upon an exchange of OCGH units, with the exchanged OCGH units being subsequently redeemed or cancelled and our ownership interests in each Oaktree OpCo increasing commensurately.
Under the Exchange Agreement, we are required to ensure that all Class A Shares that may be delivered in any exchange be issued in transactions registered under the Securities Act. Following the eighth anniversary of the closing date of the Mergers, we can discontinue the exchange rights in the Exchange Agreement on 36-months’ notice. As a result, the earliest the exchange rights can be terminated is the eleventh anniversary of the closing date of the Mergers, or September 30, 2030.
Brookfield will pay all expenses of effecting the exchanges pursuant to this prospectus.
For more information, see “Exchange of Class A Shares for OCGH Units.”
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CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the principal Canadian federal income tax consequences of an exchange of OCGH units solely for Class A Shares in accordance with the terms of the Exchange Agreement (an “Exchange”) and of the ownership and disposition of Class A Shares acquired on an Exchange to a holder who is the beneficial owner of OCGH units and of Class A Shares acquired on an Exchange and who, at all relevant times and for the purposes of the Income Tax Act (Canada) (the “Tax Act”), is not and is not deemed to be resident in Canada, deals at arm’s length and is not affiliated with the Company, holds the OCGH units and Class A Shares as capital property, and does not use or hold and is not deemed to use or hold, the OCGH units or Class A Shares in the course of carrying on, or otherwise in connection with, a business in Canada (a “Non-Resident Holder”). This summary is not applicable to a Non-Resident Holder that is an insurer carrying on business in Canada and elsewhere, or that is an “authorized foreign bank” as such terms are defined in the Tax Act. Such Non-Resident Holders should consult their own tax advisors.
This summary is based on the current provisions of the Tax Act and the regulations thereunder in force at the date hereof, all specific proposals to amend the Tax Act or the regulations thereunder that have been publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof (the “Proposed Amendments”), the current provisions of the Canada-United States Tax Convention (1980) (the “Treaty”), and an understanding of the current administrative policies and assessing practices of the Canada Revenue Agency published in writing prior to the date hereof. It has been assumed that the 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 take into account or anticipate any changes in law or administrative policy or assessing practice whether by legislative, regulatory, administrative or judicial action or decision, nor does it take into account tax legislation or considerations of any provincial, territorial, U.S. or other foreign income tax jurisdictions, which may differ significantly from those discussed herein.
THIS SUMMARY IS OF A GENERAL NATURE ONLY AND IS NOT INTENDED TO BE, NOR SHOULD IT BE CONSTRUED TO BE, LEGAL OR TAX ADVICE TO ANY PARTICULAR NON-RESIDENT HOLDER. ACCORDINGLY, NON-RESIDENT HOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS ABOUT THE SPECIFIC TAX CONSEQUENCES TO THEM OF AN EXCHANGE AND OF THE OWNERSHIP AND DISPOSITION OF CLASS A SHARES ACQUIRED ON AN EXCHANGE IN THEIR OWN PARTICULAR CIRCUMSTANCES.
For purposes of the Tax Act, all amounts relating to the acquisition, exchange, holding or disposition of OCGH units and Class A Shares must be expressed in Canadian currency, including any distributions, adjusted cost base and proceeds of disposition. For purposes of the Tax Act, amounts denominated in another currency must be converted into Canadian currency using the applicable rate of exchange (pursuant to the Tax Act) quoted by the Bank of Canada on the date such amounts arose, or such other rate of exchange as is acceptable to the CRA.
Exchange of OCGH Units for Class A Shares
A Non-Resident Holder that exchanges OCGH units solely for Class A Shares on an Exchange will not be subject to tax under the Tax Act in respect of any capital gain realized on the Exchange unless the OCGH units are or are deemed to constitute “taxable Canadian property” (as defined in the Tax Act) of the Non-Resident Holder at the time of the Exchange and the Non-Resident Holder is not entitled to relief under an applicable income tax treaty or convention between Canada and the country in which the Non-Resident Holder is resident.
An OCGH unit generally will not constitute “taxable Canadian property” of a Non-Resident Holder at a particular time, unless, at any particular time during the 60-month period immediately preceding the particular time, more than 50% of the fair market value of the OCGH unit was derived, directly or indirectly (excluding through a corporation, partnership or trust, the shares or interests in which were not themselves “taxable Canadian property” at the particular time), from one or any combination of: (i) real or immovable property situated in Canada; (ii) “Canadian resource properties” (as defined in the Tax Act); (iii) “timber resource properties” (as defined in the Tax Act); and (iv) options in respect of, or interests in, or for civil law rights in, such property, whether or not such property exists. Notwithstanding the foregoing, in certain circumstances set out in the Tax Act, an OCGH unit could be deemed to be “taxable Canadian property.” Non-Resident Holders for whom OCGH units may constitute “taxable Canadian property” should consult their own tax advisors.
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Dividends on Class A Shares
Dividends paid or credited, or deemed to be paid or credited, on the Class A Shares by the Company to a Non-Resident Holder will be subject to Canadian withholding tax at the rate of 25%, subject to any reduction in the rate of withholding to which the Non-Resident Holder is entitled under any applicable income tax treaty or convention between Canada and the country in which the Non-Resident Holder is resident. For example, under the Treaty, the rate of withholding tax on dividends paid or credited to a Non-Resident Holder that is the beneficial owner of the dividends and is a U.S. resident for the purposes of, and is entitled to the full benefits of, the Treaty, is generally reduced to 15% of the gross amount of the dividend (or 5% in the case of such a holder that is a corporation that beneficially owns at least 10% of the Company’s voting shares).
Disposition of Class A shares
A Non-Resident Holder will not be subject to tax under the Tax Act on any capital gain realized on a disposition or deemed disposition of a Class A Share, unless the Class A Share constitutes “taxable Canadian property” of the Non-Resident Holder at the time of the disposition or deemed disposition and the Non-Resident Holder is not entitled to relief under an applicable income tax treaty or convention between Canada and the country in which the Non-Resident Holder is resident.
Provided that the Class A Shares are listed on a “designated stock exchange” at the time of the disposition or deemed disposition, a Class A Share generally will not constitute “taxable Canadian property” at such time, unless, at any particular time during the 60-month period immediately preceding that time, both of the following conditions are met concurrently: (a) 25% or more of the issued shares of any class of the capital stock of the Company were owned by or belonged to one or any combination of (i) the Non-Resident Holder, (ii) persons with whom the Non-Resident Holder did not deal at arm’s length for purposes of the Tax Act, and (iii) partnerships in which the Non-Resident Holder or a person described in (a)(ii) holds a membership interest directly or indirectly through one or more partnerships, and (b) more than 50% of the fair market value of the Class A Share was derived, directly or indirectly, from one or any combination of: (i) real or immoveable property situated in Canada, (ii) “Canadian resource properties,” (iii) “timber resource properties” and (iv) options in respect of, or interests in, or for civil law rights in, such property, whether or not such property exists. Notwithstanding the foregoing, in certain circumstances set out in the Tax Act, the Class A Shares could be deemed to be “taxable Canadian property.” Non-Resident Holders for whom Class A shares may constitute “taxable Canadian property” should consult their own tax advisors.
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MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES
The following discussion describes the material U.S. federal income tax consequences of an exchange of OCGH units solely for Class A Shares in accordance with the terms of the Exchange Agreement (an “Exchange”), and, with respect to U.S. Holders (as defined below), the ownership and disposition of the Class A Shares acquired in an Exchange, but does not purport to be a complete analysis of all potential tax effects. The effects of other U.S. federal tax laws, such as estate and gift tax laws, and any applicable state, local or non-U.S. tax laws are not discussed. This discussion is based on the U.S. Internal Revenue Code of 1986, as amended (the “Code”), Treasury Regulations promulgated thereunder, judicial decisions, and published rulings and administrative pronouncements of the U.S. Internal Revenue Service (the “IRS”), in each case in effect as of the date hereof. These authorities may change or be subject to differing interpretations. Any such change or differing interpretation may be applied retroactively in a manner that could adversely affect holders of OCGH units or the Class A Shares. Brookfield has not sought and will not seek any rulings from the IRS regarding the matters discussed below. There can be no assurance the IRS or a court will not take a contrary position to that discussed below regarding the tax consequences of an Exchange or the ownership and disposition of the Class A Shares. This discussion is limited to holders of OCGH units who participate in an Exchange and who hold their OCGH units, and will hold their Class A Shares received in an Exchange, solely as “capital assets” within the meaning of Section 1221 of the Code (generally, property held for investment).
This discussion does not address all U.S. federal income tax consequences relevant to a holder’s particular circumstances, including the impact of the Medicare contribution tax on net investment income, or any tax consequences of (i) any exchanges under the Exchange Agreement for consideration other than Class A Shares, (ii) any dispositions of property, other than OCGH units, under the Exchange Agreement or (iii) any transactions occurring prior to or after a particular Exchange, including any prior or subsequent exchanges under the Exchange Agreement. In addition, this discussion does not address consequences relevant to holders subject to special rules, including, without limitation:
| · | U.S. expatriates and former citizens or long-term residents of the United States; |
| · | persons subject to the alternative minimum tax; |
| · | persons holding OCGH units or Class A Shares as part of a hedge, straddle or other risk reduction strategy or as part of a conversion transaction or other integrated investment; |
| · | banks, insurance companies, and other financial institutions; |
| · | brokers, dealers or traders in securities; |
| · | persons that directly, indirectly or constructively own or have owned more than 5% of the OCGH units or 10% or more of the total combined voting power or value of all classes of Brookfield stock; |
| · | real estate investment trusts or regulated investment companies; |
| · | S corporations, partnerships or other entities or arrangements treated as partnerships for U.S. federal income tax purposes (and investors therein); |
| · | passive foreign investment companies or controlled foreign corporations; |
| · | tax-exempt organizations or governmental organizations; |
| · | persons deemed to sell OCGH units or Class A Shares under the constructive sale provisions of the Code; |
| · | persons who hold or receive OCGH units or Class A Shares pursuant to the exercise of any employee stock option or otherwise as compensation; |
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| · | corporations that accumulate earnings to avoid U.S. federal income tax; |
| · | persons that do not have the U.S. dollar as their functional currency; |
| · | U.S. Holders that are resident in or have a permanent establishment or branch outside of the United States; and |
| · | tax-qualified retirement plans. |
THIS DISCUSSION IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT TAX ADVICE. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES OF AN EXCHANGE AND THE OWNERSHIP AND DISPOSITION OF THE CLASS A SHARES ARISING UNDER THE U.S. FEDERAL ESTATE OR GIFT TAX LAWS OR UNDER THE LAWS OF ANY STATE, LOCAL OR NON-U.S. TAXING JURISDICTION OR UNDER ANY APPLICABLE INCOME TAX TREATY.
For purposes of this discussion, a “U.S. Holder” is any beneficial owner of OCGH units that, for U.S. federal income tax purposes, is or is treated as:
| · | an individual who is a citizen or resident of the United States; |
| · | a corporation created or organized under the laws of the United States, any state thereof, or the District of Columbia; |
| · | an estate, the income of which is subject to U.S. federal income tax regardless of its source; or |
| · | a trust that (1) is subject to the primary supervision of a U.S. court and the control of one or more “United States persons” (within the meaning of Section 7701(a)(30) of the Code), or (2) has a valid election in effect to be treated as a United States person for U.S. federal income tax purposes. |
A “non-U.S. Holder” is a beneficial owner of Class A Units or, after the completion of an Exchange, the Class A Shares, other than a U.S. Holder or a partnership or an entity or arrangement treated as a partnership for U.S. federal income tax purposes, referred to in this prospectus as a partnership.
If an entity treated as a partnership for U.S. federal income tax purposes holds OCGH units, or will hold the Class A Shares, the tax treatment of a partner in the partnership will depend on the status of the partner, the activities of the partnership and certain determinations made at the partner level. Accordingly, partnerships holding OCGH units or the Class A Shares and the partners in such partnerships should consult their tax advisors regarding the U.S. federal income tax consequences to them.
U.S. Holders
Taxation of an Exchange
An Exchange will be a taxable transaction for U.S. federal income tax purposes. U.S. Holders of OCGH units will recognize gain or loss on the exchange of their OCGH units equal to the difference, if any, between the amount realized and the U.S. Holder’s tax basis in the OCGH units exchanged. A U.S. Holder’s amount realized will be measured by the sum of the fair market value of the Class A shares received by the holder plus a portion of the holder’s share, under partnership tax rules, of OCGH’s liabilities, if any. Unless a U.S. Holder disposes of all of its OCGH units in an Exchange, the holder’s tax basis in the OCGH units exchanged is determined by allocating a portion of the holder’s tax basis in all of its OCGH units to the units exchanged.
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Your initial tax basis in your Class A Shares acquired in an Exchange will equal the fair market value of such Class A Shares at the time of closing of the Exchange. Your holding period in your Class A Shares acquired in an Exchange will begin on the day following such closing.
Except as described below, gain or loss recognized by a U.S. Holder on the exchange of an OCGH unit will be taxable as capital gain or loss and will be long-term capital gain or loss if all of the OCGH units of such U.S. Holder were held for more than one year on the date of such exchange. Long-term capital gain of non-corporate U.S. Holders generally will be subject to U.S. federal income tax at reduced tax rates. The deductibility of capital losses is subject to significant limitations. Certain gain attributable to “unrealized receivables” or “inventory items,” each as defined in Section 751 of the Code and the applicable Treasury Regulations, would be characterized as ordinary income rather than capital gain. If, for example, OCGH holds debt acquired at a market discount, accrued market discount on such debt may be treated as “unrealized receivables.” In addition, assuming OCGH has not made a qualified electing fund election to treat its interest in any passive foreign investment company (a “PFIC”) as a qualified electing fund, gain attributable to such investment in the PFIC would be taxable as ordinary income and would be subject to an interest charge. For additional information on certain tax consequences of an investment in a PFIC, see below the section entitled “Taxation of the Ownership and Disposition of Class A Shares—Passive Foreign Investment Company” below.
U.S. Holders who acquired OCGH units at different times and will exchange all or a portion of the units within a year of their most recent acquisition are urged to consult their tax advisers regarding the application of certain “split holding period” rules to them and the treatment of any gain or loss as long-term or short-term capital gain or loss.
Taxation of the Ownership and Disposition of Class A Shares
Passive Foreign Investment Company
Based on the current and anticipated composition of the income, assets and operations of Brookfield and its subsidiaries, Brookfield does not believe that it will be a PFIC for U.S. federal income tax purposes for the current taxable year or for future taxable years. However, the application of the PFIC rules is subject to uncertainty in several respects, and a separate determination must be made after the close of each taxable year as to whether Brookfield is a PFIC for that year. Changes in the composition of Brookfield’s income or assets may cause Brookfield to become a PFIC. Accordingly, there can be no assurance that Brookfield will not be a PFIC for any taxable year.
A non-U.S. entity treated as a corporation for U.S. federal income tax purposes generally will be a PFIC for U.S. federal income tax purposes for any taxable year if either:
| · | at least 75% of its gross income for such year is passive income; or |
| · | at least 50% of the value of its assets (based on an average of the quarterly values of the assets) during such year is attributable to assets that produce passive income or are held for the production of passive income. |
For this purpose, passive income generally includes dividends, interest, royalties and rents (other than royalties and rents derived in the active conduct of a trade or business and not derived from a related person). Additionally, Brookfield will be treated as owning its proportionate share of the assets and earning its proportionate share of the income of any other entity treated as a corporation for U.S. federal income tax purposes in which Brookfield owns, directly or indirectly, 25% or more (by value) of the stock.
The determination of whether Brookfield is a PFIC is made annually. Accordingly, it is possible that Brookfield may become a PFIC in the current or any future taxable year due to changes in its asset or income composition. If Brookfield is classified as a PFIC for any taxable year during which you hold the Class A Shares, Brookfield generally would continue to be treated as a PFIC with respect to your investment in the Class A Shares for all succeeding years during which you hold the Class A Shares, unless Brookfield ceases to be a PFIC and you make a deemed sale election with respect to such Class A Shares. If such election is made, you will be deemed to have sold the Class A Shares you hold at their fair market value on the last day of the last taxable year in which Brookfield is classified as a PFIC, and any gain from such deemed sale would be subject to the consequences described below. After the deemed sale election, the Class A Shares with respect to which the deemed sale election was made will not be treated as shares in a PFIC unless Brookfield again becomes a PFIC subsequent to the deemed sale election.
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For each taxable year that Brookfield is treated as a PFIC with respect to you, you will be subject to special tax rules with respect to any “excess distribution” (as defined below) you receive and any gain you realize from a sale or other disposition (including a pledge) of your Class A Shares, unless you make a valid mark-to-market election as discussed below. Distributions you receive in a taxable year that are greater than 125% of the average annual distributions you received during the shorter of the three preceding taxable years or your holding period for the Class A Shares will be treated as an excess distribution. Under these special tax rules:
| · | the excess distribution or gain will be allocated ratably over your holding period for the Class A Shares; |
| · | the amount allocated to the current taxable year, and any taxable years in your holding period prior to the first taxable year in which Brookfield is treated as a PFIC, will be treated as ordinary income; and |
| · | the amount allocated to each other taxable year will be subject to the highest tax rate in effect for individuals or corporations, as applicable, for each such year and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year. |
The tax liability for amounts allocated to taxable years prior to the year of disposition or excess distribution (other than any taxable years in your holding period prior to the first taxable year in which Brookfield is treated as a PFIC) cannot be offset by any deductions or losses, and gains realized on the sale of Class A Shares cannot be treated as capital gains, even if you hold such Class A Shares as capital assets; however, any losses realized on the sale of Brookfield Class A Shares can be treated as capital losses as discussed below under “Taxation of the Ownership and Disposition of Class A Shares —Taxation of Disposition of Class A Shares.”
If Brookfield is treated as a PFIC with respect to you for any taxable year, to the extent any of Brookfield’s subsidiaries are also PFICs, you may be deemed to own shares in any such lower-tier PFICs that are directly or indirectly owned by Brookfield in that proportion which the value of the Class A Shares you own bears to the value of all of Brookfield’s shares, and you may be subject to the adverse tax consequences described above with respect to the shares of such lower-tier PFICs you would be deemed to own. As a result, you may incur a tax liability for any excess distribution described above if Brookfield receives a distribution from such lower-tier PFICs or if any shares in such lower-tier PFICs are disposed of (or deemed disposed of). You should consult your tax advisor regarding the application of the PFIC rules to any of Brookfield’s subsidiaries.
A U.S. Holder of “marketable stock” (as defined below) in a PFIC may make a mark-to-market election for such stock to elect out of the tax treatment discussed above. If you make a valid mark-to-market election for the Class A Shares you own, you will include in income for each year that Brookfield is treated as a PFIC with respect to you an amount equal to the excess, if any, of the fair market value of such Class A Shares as of the close of your taxable year over your adjusted basis in such Class A Shares. You will be allowed a deduction for the excess, if any, of the adjusted basis of such Class A Shares over their fair market value as of the close of the taxable year. However, deductions will be allowable only to the extent of any net mark-to-market gains on such Class A shares included in your income for prior taxable years. Amounts included in your income under a mark-to-market election, as well as gain on the actual sale or other disposition of Class A Shares, will be treated as ordinary income. Ordinary loss treatment will also apply to the deductible portion of any mark-to-market loss on your Class A Shares, as well as to any loss realized on the actual sale or disposition of such Class A Shares, to the extent the amount of such loss does not exceed the net mark-to-market gains for such Class A Shares previously included in income. Your basis in the Class A Shares will be adjusted to reflect any such income or loss amounts. If you make a mark-to-market election, any distributions Brookfield makes would generally be subject to the rules discussed below under “Taxation of the Ownership and Disposition of Class A Shares—Taxation of Dividends and Other Distributions on the Class A Shares,” except the lower rates applicable to qualified dividend income would not apply.
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The mark-to-market election is available only for “marketable stock,” which is stock that is regularly traded on a qualified exchange or other market, as defined in applicable U.S. Treasury regulations. A “qualified exchange” includes the NYSE. For these purposes, the Brookfield Class A Shares will be considered regularly traded during any calendar year during which they are traded, other than in de minimis quantities, on at least 15 days during each calendar quarter. Any trades that have as their principal purpose meeting this requirement will be disregarded. There can be no assurance that the trading in the Class A Shares will be sufficiently regular to qualify them as marketable stock. In addition, because a mark-to-market election cannot be made for equity interests in any lower-tier PFICs Brookfield owns, you generally will continue to be subject to the PFIC rules with respect to your indirect interest in any investments held by us that are treated as an equity interest in a PFIC for U.S. federal income tax purposes. You should consult your tax advisor as to the availability and desirability of a mark-to-market election, as well as the impact of such election on interests in any lower-tier PFICs.
Alternatively, if a non-U.S. entity treated as a corporation is a PFIC, a holder of shares in that entity may avoid taxation under the PFIC rules described above regarding excess distributions and recognized gains by making a qualified electing fund election to include in income its share of the entity’s income on a current basis. However, you may make a qualified electing fund election with respect to the Class A Shares you hold only if Brookfield furnishes you annually with certain tax information, and there can be no assurance that such information will be provided.
A U.S. Holder of a PFIC may be required to file an IRS Form 8621. A U.S. Holder that does not file a required IRS Form 8621 may be subject to substantial penalties, and the statute of limitations on the assessment and collection of all U.S. federal income taxes of such U.S. Holder for the related tax year may not close before the date which is three years after the date on which such form is filed. If Brookfield is treated as a PFIC, you should consult your tax advisor regarding any reporting requirements that may apply to you. You are urged to consult your tax advisor regarding the application of the PFIC rules to the acquisition, ownership and disposition of the Class A Shares.
INVESTORS ARE STRONGLY URGED TO CONSULT THEIR TAX ADVISORS REGARDING THE IMPACT THAT BROOKFIELD BEING TREATED AS A PFIC WOULD HAVE ON THEIR OWNERSHIP OF THE CLASS A SHARES, AS WELL AS THE APPLICATION OF THE PFIC RULES AND THE POSSIBILITY OF MAKING A MARK-TO-MARKET ELECTION.
Taxation of Dividends and Other Distributions on the Class A Shares
Subject to the PFIC rules discussed above, the gross amount of any distributions Brookfield makes to you (including the amount of any tax withheld) with respect to the Class A Shares generally will be includible in your gross income as dividend income on the date you receive such distribution, but only to the extent the distribution is paid out of Brookfield’s current or accumulated earnings and profits (as determined under U.S. federal income tax principles). The dividends will not be eligible for the dividends-received deduction allowed to corporations in respect of dividends received from U.S. corporations. To the extent the amount of the distribution exceeds Brookfield’s current and accumulated earnings and profits (as determined under U.S. federal income tax principles), such excess amount will be treated first as a tax-free return of your tax basis in your Class A Shares, and then, to the extent such excess amount exceeds your tax basis in your Class A Shares, as capital gain. Brookfield currently does not, and does not intend to, calculate its earnings and profits under U.S. federal income tax principles. Therefore, you should expect that a distribution will generally be reported as a dividend for U.S. federal income tax purposes even if that distribution would otherwise be treated as a non-taxable return of capital or as capital gain under the rules described above.
With respect to certain non-corporate U.S. Holders, including individual U.S. Holders, dividends may be taxed at the lower capital gain rates applicable to qualified dividend income, provided (1)(a) Brookfield is eligible for the benefits of the U.S.-Canada tax treaty, or (b) the dividends are with respect to common shares that are readily tradable on an established securities market in the United States, (2) Brookfield is neither a PFIC nor treated as such with respect to you (as discussed above) for either the taxable year in which the dividend was paid or the preceding taxable year, and (3) certain other requirements (including holding period and at risk requirements) are met. The NYSE is an established securities market in the United States for this purpose. The determination of whether a dividend qualifies for the preferential tax rates described above must be made at the time the dividend is paid. Although Brookfield does not believe it is or will be a PFIC for the current taxable year or future taxable years, whether Brookfield is treated as a PFIC for any taxable year will depend on factual circumstances during such year, and therefore there can be no assurance that Brookfield will not be a PFIC for the taxable year in which such dividend is paid.
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The amount of any distribution paid in a currency other than U.S. dollars will be equal to the U.S. dollar value of such currency on the date such distribution is includible in your income, regardless of whether the payment is in fact converted into U.S. dollars at that time. If a distribution in a foreign currency is converted into U.S. dollars on the day it is received, the U.S. Holder will not be required to recognize foreign currency gain or loss with respect to such distribution. Any gain or loss on a conversion or other disposition of the foreign currency for a different U.S. dollar amount on a later date in general will be U.S. source ordinary income or loss. The amount of any distribution of property other than cash will be the fair market value of such property on the date of distribution.
Any dividends will constitute foreign-source income for foreign tax credit limitation purposes. If the dividends are taxed as qualified dividend income (as discussed above), the amount of the dividend taken into account for purposes of calculating the foreign tax credit limitation will in general be limited to the gross amount of the dividend, multiplied by the reduced tax rate applicable to qualified dividend income and divided by the highest tax rate normally applicable to dividends. The limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of income. For this purpose, dividends paid by us with respect the Class A Shares will generally constitute passive category income but could, in the case of certain U.S. Holders, constitute general category income.
If Canadian withholding taxes apply to any dividends paid to you with respect to the Class A Shares, subject to certain conditions and limitations (including specific holding period and at risk rules), such withholding taxes may be treated as foreign taxes eligible for credit against your U.S. federal income tax liability. Instead of claiming a credit, you may elect to deduct such taxes in computing taxable income, subject to applicable limitations. If a refund of the tax withheld is available under the applicable laws of Canada or under the U.S.-Canada tax treaty, the amount of tax withheld that is refundable will not be eligible for such credit against your U.S. federal income tax liability (and will not be eligible for the deduction against your U.S. federal taxable income). The rules relating to the determination of the foreign tax credit are complex, and you should consult your tax advisor regarding the availability of a foreign tax credit in your particular circumstances, including the effects of the U.S.-Canada tax treaty.
Taxation of Disposition of Class A Shares
Subject to the PFIC rules discussed above, upon a taxable sale or other taxable disposition of the Class A Shares, you generally will recognize capital gain or loss for U.S. federal income tax purposes in an amount equal to the difference between the amount realized (including the amount of any tax withheld) and your tax basis in such Class A Shares. Your initial tax basis in your Class A Shares acquired in an Exchange will equal the fair market value of such Class A Shares at the time of closing of the Exchange. Any gain or loss on the sale or other disposition of such Class A Shares generally will be treated as U.S.-source income or loss, and treated as long-term capital gain or loss if your holding period in such Class A Shares at the time of the disposition exceeds one year. Your holding period in your Class A Shares acquired in an Exchange will begin on the day following the closing of the Exchange. Because capital gain on the sale or other disposition of the Class A Shares generally will be treated as U.S.-source gain, in the event any Canadian tax (including withholding tax) is imposed upon such sale or other disposition, you may not be able to utilize foreign tax credits unless (1) the gain is resourced as foreign-source under the provisions of the U.S.-Canada tax treaty and you elect to apply the treaty or (2) you have foreign-source income or gain in the same category from other sources. Long-term capital gain of non-corporate U.S. Holders generally will be subject to U.S. federal income tax at reduced tax rates. The deductibility of capital losses is subject to significant limitations.
Information with respect to Foreign Financial Assets
Individuals and certain entities that have U.S. individual owners or beneficiaries may be required to report information on IRS Form 8938 relating to an interest in the Class A Shares, subject to certain exceptions (including an exception for Class A Shares held in accounts maintained by certain financial institutions). Penalties can apply if a U.S. Holder fails to satisfy such reporting requirements, and the statute of limitations on the assessment and collection of all U.S. federal income taxes of such U.S. Holder for the related tax year may not close before the date which is three years after the date on which a required IRS Form 8938 is filed. You should consult your tax advisor regarding the effect, if any, of this requirement on your ownership and disposition of the Class A Shares.
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Non-U.S. Holders
In light of OCGH’s activities, it likely is treated as engaged in a U.S. trade or business for U.S. federal income tax purposes, which will likely cause some portion of its income to be treated as effectively connected income, referred to as “ECI,” with respect to non-U.S. Holders.
If OCGH is treated as being engaged in a U.S. trade or business, any gain recognized by a non-U.S. Holder on the sale or exchange of OCGH units that is attributable to assets that if sold would produce income that would be effectively connected with such U.S. trade or business will be treated for U.S. federal income tax purposes as ECI, and hence, such non-U.S. Holder of OCGH units would be required to file a U.S. federal income tax return and would be subject to U.S. federal income tax in respect of such ECI.
Unless an exception applies, if any portion of any gain from the disposition of OCGH units in an Exchange would be treated as ECI, Atlas (or other applicable transferee of OCGH units) is required to withhold 10% of the amount realized (as discussed above under “U.S. Holders—Taxation of an Exchange”) in the Exchange. Unless an exception applies, Atlas (or other applicable transferee of OCGH units) intends to withhold such an amount from the Class A Shares otherwise payable to any non-U.S. Holder in an Exchange. You should consult your tax advisers regarding the application of this withholding tax and the potential of seeking a refund of any amounts withheld.
Special rules may apply in the case of a non-U.S. Holder that (1) has an office or fixed place of business in the United States or (2) is present in the United States for 183 days or more in a taxable year. You should consult your tax advisers regarding the application of these special rules.
Backup Withholding
Under the backup withholding rules, you may be subject to backup withholding (at the rate of 24%) with respect to the receipt of the Class A Shares and on the payments of dividends or the proceeds of any sale, exchange or redemption of the Class A Shares that are made within the United States or through certain U.S.-related financial intermediaries. Backup withholding generally will not apply to you, however, if: (1) you are a corporation or otherwise exempt from backup withholding and demonstrate this fact when required or (2) you provide a taxpayer identification number, certify as to no loss of exemption from backup withholding tax and otherwise comply with the applicable requirements of the backup withholding tax rules. If you are an exempt holder, you should indicate your exempt status on a properly completed IRS Form W-9. A non-U.S. Holder may qualify as an exempt recipient by submitting a properly completed IRS Form W-8BEN or Form W-8 BEN-E. Backup withholding is not an additional tax. The amount of any backup withholding from a payment to you will be allowed as a credit against your U.S. federal income tax liability and may entitle you to a refund.
THE DISCUSSION OF MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS SET FORTH ABOVE IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF ALL TAX CONSIDERATIONS APPLICABLE TO AN EXCHANGE AND THE OWNERSHIP AND DISPOSITION OF CLASS A SHARES. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS ABOUT THE APPLICATION OF THE U.S. FEDERAL TAX RULES TO THEIR PARTICULAR CIRCUMSTANCES, AS WELL AS THE STATE, LOCAL, NON-U.S. AND OTHER TAX CONSEQUENCES TO THEM OF AN EXCHANGE AND THE OWNERSHIP AND DISPOSITION OF CLASS A SHARES.
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The validity of the Class A Shares offered hereby and certain other legal matters with respect to the laws of Canada have been passed upon for us by Torys LLP.
The financial statements of Brookfield as of December 31, 2020 and 2019, and for each of the two years in the period ended December 31, 2020, incorporated by reference in this prospectus, and the effectiveness of Brookfield’s internal control over financial reporting have been audited by Deloitte LLP, an independent registered public accounting firm, as stated in their reports. Such financial statements are incorporated by reference in reliance upon the reports of such firm given their authority as experts in accounting and auditing. The offices of Deloitte LLP are located at 8 Adelaide Street West, Toronto, Ontario M5H 0A9.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the information requirements of the Exchange, and, accordingly, file reports with and furnish other information to the SEC. Under the multijurisdictional disclosure system adopted by the United States, these reports and other information (including financial information) may be prepared, in part, in accordance with the disclosure requirements of Canada, which differ from those in the United States. The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding Brookfield and other issuers that file electronically with the SEC. The address of the SEC Internet site is www.sec.gov. You are invited to read and copy any reports, statements or other information, other than confidential filings, that Brookfield files with the Canadian securities regulatory authorities. These filings are electronically available from the Canadian System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com, the Canadian equivalent of the SEC electronic document gathering and retrieval system. You can also find information about the Company on its website at www.brookfield.com. However, any information that is included on or linked to our website is not a part of this prospectus.
We have filed under the Securities Act a registration statement on Form F-3. This prospectus forms a part of the registration statement. This prospectus does not contain all of the information included in the registration statement, certain portions of which have been omitted as permitted by the rules and regulations of the SEC. For further information about us and the Class A Shares you are encouraged to refer to the registration statement and the exhibits that are incorporated by reference into it as well as the documents incorporated by reference into this prospectus.
The SEC allows us to “incorporate by reference” into this prospectus certain documents that we file with or furnish to the SEC. This means that we can disclose important information to you by referring to those documents. The information incorporated by reference is considered to be an important part of this prospectus, and later information that we file with the SEC will automatically update and supersede that information. The following documents, which we have filed with or furnished to the SEC, are specifically incorporated by reference in this prospectus:
| · | Brookfield’s Annual Report; |
| · | Brookfield’s management information circular dated April 30, 2021, included as Exhibit 99.2 to its Report on Form 6-K, filed on May 12, 2021; |
| · | Brookfield’s interim report for the three and nine months ended September 30, 2021, included as Exhibit 99.1 (pages 10-89 only) to its Report on Form 6-K, filed on November 15, 2021; and |
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In addition, all other annual reports filed by us with the SEC on Form 40-F, and any Form 6-K filed or furnished by us that is identified in such form as being incorporated by reference into the registration statement of which this prospectus forms a part, in each case subsequent to the date of this prospectus and prior to the termination of this offering, are incorporated by reference into this prospectus as of the date of the filing of such documents.
Documents incorporated by reference are available from Brookfield without charge, excluding any exhibits to those documents, unless the exhibit is specifically incorporated by reference into this prospectus. Shareholders may obtain these documents incorporated by reference by requesting them in writing or by telephone at the following address and telephone number:
Brookfield Asset Management Inc.
181 Bay Street, Suite 300
Toronto, Ontario M5J 2T3
Attention: Investor Relations
Telephone: (416) 359-8647
You should not rely on information that purports to be made by or on behalf of Brookfield other than the information contained in or incorporated by reference into this prospectus.
Brookfield has not authorized anyone to provide you with information on behalf of itself that is different from what is contained in this prospectus. If you are in a jurisdiction where offers to exchange, or solicitations of offers to exchange, the securities offered by this prospectus are unlawful, or if you are a person to whom it is unlawful to direct these types of activities, then the offer presented in this prospectus does not extend to you.
You should not assume that the information contained in this prospectus is accurate as of any date other than the date of this prospectus, or that the information incorporated by reference into this prospectus is accurate as of any date other than the date of such information.
SERVICE OF PROCESS AND ENFORCEABILITY OF CIVIL LIABILITIES
Brookfield is a corporation formed by articles of amalgamation dated August 1, 1997 and organized pursuant to articles of amalgamation under the Business Corporations Act (Ontario) dated January 1, 2005. Some of the Company’s assets are located outside of the United States and some of Brookfield’s directors and officers are residents of Canada. As a result, it may be difficult for U.S. investors to:
| · | effect service within the United States upon Brookfield or those directors and officers who are not residents of the United States; or |
| · | realize in the United States upon judgments of courts of the United States predicated upon the civil liability provisions of the United States federal securities laws. |
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The following are the estimated expenses of the exchanges of OCGH units for Class A Shares being registered under the registration statement of which this prospectus forms a part, all of which will be paid by us.
| SEC registration fee | $ | 313,085 | ||
| Printing and engraving costs | 20,000 | |||
| Legal fees and expenses | 65,000 | |||
| Accounting fees and expenses | 60,000 | |||
| Total | $ | 458,085 |
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 8. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under the OBCA, Brookfield may indemnify a present or former director or officer of Brookfield or another individual who acts or acted at Brookfield’s request as a director or officer, or in a similar capacity, of another entity (the “indemnified individual”), against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by the indemnified individual in respect of any civil, criminal, administrative, investigative or other proceeding in which the indemnified individual is involved because of that association with Brookfield or such other entity and provided that the indemnified individual acted honestly and in good faith with a view to the best interests of Brookfield or the other entity, as the case may be, and, in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, such indemnified individual had reasonable grounds for believing that his or her conduct was lawful. Brookfield may, with court approval, indemnify an indemnified individual in respect of an action by or on behalf of Brookfield or such other entity to obtain a judgment in its favor, to which the indemnified individual is made a party because of their association with Brookfield or such other entity. An indemnified individual is entitled to indemnification from Brookfield as a matter of right if such indemnified individual was not judged by a court or other competent authority to have committed any fault or omitted to do anything that the indemnified individual ought to have done and fulfilled the conditions set forth above.
In accordance with the OBCA, the board of directors of Brookfield approved a resolution (the “Resolution”) dated August 1, 1997 providing for the following:
| (i) | the Company shall indemnify a director or officer of the Company, a former director or officer of the Company or a person who acts or acted at the Company’s request as a director or officer of a body corporate of which the Company is or was a shareholder or creditor, and his or her heirs and legal representatives, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by him or her in respect of any civil, criminal or administrative action or proceeding to which he or she is made a party by reason of being or having been a director or officer of the Company or such body corporate (except in respect of an action by or on behalf of the Company or such body corporate to procure a judgment in its favor), if, |
| (a) | he or she acted honestly and in good faith with a view to the best interests of the Company, and |
| (b) | in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, he or she had reasonable grounds for believing that his or her conduct was lawful; |
| (ii) | the Company shall, with the prior approval of the court having jurisdiction, indemnify a person referred to in (i) above in respect of an action by or on behalf of the Company or such body corporate to procure a judgment in its favor, to which he or she is made a party by reason of being or having been a director or an officer of the Company or such body corporate, against all costs, charges and expenses reasonably incurred by him or her in connection with such action if he or she fulfils the conditions set out in paragraphs (i)(a) and (b) above; and |
| (iii) | notwithstanding anything in (i) and (ii) above, a person referred to in (i) above shall be indemnified by the Company in respect of all costs, charges and expenses reasonably incurred by him or her in connection with the defense of any civil, criminal or administrative action or proceeding to which he or she is made a party by reason of being or having been a director or officer of the Company or body corporate, if the person seeking indemnity, |
| (a) | was substantially successful on the merits in his or her defense of the action or proceeding, and |
| (b) | fulfils the conditions set out in paragraphs (i)(a) and (b) above. |
Nothing in the by-laws or resolutions of Brookfield limits the right of any person entitled to claim indemnity apart from the indemnity provided pursuant to the Resolution.
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A policy of directors’ and officers’ liability insurance is maintained by Brookfield which insures, subject to certain exclusions, directors and officers for losses as a result of claims against the directors and officers of Brookfield in their capacity as directors and officers and also reimburses Brookfield for payments made pursuant to the indemnity provided by Brookfield pursuant to the Resolution or as required or permitted by law.
Insofar as indemnification for liabilities arising under the U.S. Securities Act of 1933, as amended, may be permitted to directors, officers or persons controlling Brookfield pursuant to the foregoing provisions, Brookfield has been advised that in the opinion of the U.S. Securities and Exchange Commission such indemnification is against public policy as expressed in the U.S. Securities Act of 1933, as amended, and is therefore unenforceable.
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Item 9. EXHIBITS
The following exhibits have been filed or incorporated by reference as part of this Registration Statement on Form F-3:
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Item 10. UNDERTAKINGS
| (a) | The undersigned Registrant hereby undertakes: |
| (1) | To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: |
| (i) | To include any prospectus required by Section 10(a)(3) of the U.S. Securities Act of 1933, as amended (the “Securities Act”); |
| (ii) | To reflect in the prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement. Notwithstanding the foregoing, any increase or decrease in the volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission (the “Commission”), pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and |
| (iii) | To include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement; |
Provided, however, that:
Paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by or on behalf of the Registrant pursuant to Section 13 or Section 15(d) of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are incorporated by reference in this Registration Statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of this Registration Statement.
| (2) | That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
| (3) | To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
| (4) | That for the purpose of determining liability under the Securities Act to any purchaser: |
| (i) | Each prospectus filed by the Registrant pursuant to Rule 424(b)(3) shall be deemed to be part of this Registration Statement as of the date the filed prospectus was deemed part of and included in this Registration Statement; and |
| (ii) | Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by Section 10(a) of the Securities Act shall be deemed to be part of and included in this Registration Statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of this Registration Statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of this Registration Statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of this Registration Statement or made in any such document immediately prior to such effective date; and |
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| (5) | That, for the purpose of determining liability of the Registrant under the Securities Act to any purchaser in the initial distribution of the securities: the undersigned Registrant undertakes that in a primary offering of securities of the undersigned Registrant pursuant to this Registration Statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned Registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: |
| (i) | Any preliminary prospectus or prospectus of the undersigned Registrant relating to the offering required to be filed pursuant to Rule 424; |
| (ii) | Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned Registrant or used or referred to by the undersigned Registrant; |
| (iii) | The portion of any other free writing prospectus relating to the offering containing material information about the undersigned Registrant or its securities provided by or on behalf of the undersigned Registrant; and |
| (iv) | Any other communication that is an offer in the offering made by the undersigned Registrant to the purchaser. |
| (b) | The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of an annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Exchange Act) by or on behalf of the Registrant that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
| (c) | Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, such Registrant has been advised that, in the opinion of the Commission, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. |
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Brookfield Asset Management Inc. certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Toronto, Province of Ontario, Country of Canada on December 7, 2021.
| BROOKFIELD ASSET MANAGEMENT INC. | ||||
| By: | /s/ Nicholas Goodman | |||
| Name: | Nicholas Goodman | |||
| Title: | Chief Financial Officer | |||
Each person whose signature appears below constitutes and appoints each of Bruce Flatt, Nicholas Goodman and Justin B. Beber his/her true and lawful attorney-in-fact and agent, each acting alone, with full power of substitution and resubstitution, for him/her and in his/her name, place and stead, in any and all capacities, to sign any or all amendments (including amendments to be declared effective in accordance with Rule 462(b) promulgated under the Securities Act of 1933, as amended, and post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the U.S. Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, each acting alone, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he/she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, each acting alone, or his/her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933 this Registration Statement has been signed by the following persons in the following capacities on December 7, 2021.
| Signature | Title | |
| /s/ Bruce Flatt | ||
| Bruce Flatt | Director and Chief Executive Officer (Principal Executive Officer) | |
| /s/ Nicholas Goodman | ||
| Nicholas Goodman | Chief Financial Officer (Principal Financial and Accounting Officer) | |
| /s/ M. Elyse Allan | ||
| M. Elyse Allan | Director | |
| /s/ Jeffrey M. Blidner | ||
| Jeffrey M. Blidner | Director and Vice Chair | |
| /s/ Angela F. Braly | ||
| Angela F. Braly | Director | |
| /s/ Jack L. Cockwell | ||
| Jack L. Cockwell | Director |
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| /s/ Marcel R. Coutu | ||
| Marcel R. Coutu | Director | |
| /s/ Maureen V. Kempston Darkes | ||
| Maureen V. Kempston Darkes | Director | |
| /s/ Janice Fukakusa | ||
| Janice Fukakusa | Director | |
| /s/ Brian D. Lawson | ||
| Brian D. Lawson | Director and Vice Chair | |
| /s/ Howard S. Marks | ||
| Howard S. Marks | Director | |
| /s/ Frank J. McKenna | ||
| Frank J. McKenna | Chairman of the Board of Directors | |
| /s/ Rafael Miranda | ||
| Rafael Miranda | Director | |
| /s/ Diana L. Taylor | ||
| Diana L. Taylor | Director | |
| /s/ Seek Ngee Huat | ||
| Seek Ngee Huat | Director | |
| /s/ Lord Augustine Thomas O’Donnell | ||
| Lord Augustine Thomas O’Donnell | Director | |
| /s/ Hutham S. Olayan | ||
| Hutham S. Olayan | Director |
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AUTHORIZED UNITED STATES REPRESENTATIVE
Pursuant to the requirements of Section 6(a) of the Securities Act of 1933, as amended, the undersigned has signed this Registration Statement, solely in the capacity of the duly authorized representative of Brookfield Asset Management Inc. in the United States, on this 7th day of December, 2021.
| BROOKFIELD ASSET MANAGEMENT LLC | ||
| By: | /s/ Kathy Sarpash | |
| Name: Kathy Sarpash | ||
| Title: Secretary | ||
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Exhibit 4.2
Execution Version
THIRD AMENDED AND RESTATED EXCHANGE AGREEMENT
by and among
ATLAS HOLDINGS, LLC,
ATLAS OCM HOLDINGS, LLC,
OAKTREE CAPITAL GROUP, LLC,
OCM HOLDINGS I, LLC,
OAKTREE NEW HOLDINGS, LLC,
OAKTREE AIF HOLDINGS II, LLC,
OAKTREE HOLDINGS, LTD.,
OAKTREE CAPITAL GROUP HOLDINGS, L.P.,
OAKTREE CAPITAL I, L.P.,
OAKTREE CAPITAL II, L.P.,
OAKTREE CAPITAL MANAGEMENT, L.P.,
OAKTREE CAPITAL MANAGEMENT (CAYMAN), L.P.,
OAKTREE AIF INVESTMENTS, L.P.,
OAKTREE INVESTMENT HOLDINGS, L.P.,
OCGH EXCHANGECO, L.P.,
the OCGH LIMITED PARTNERS,
solely for purposes of Section 5.17, BROOKFIELD ASSET MANAGEMENT INC.
and
OTHER PARTIES JOINED HERETO FROM TIME TO TIME
Dated as of September 30, 2019
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TABLE OF CONTENTS
| ARTICLE I | Definitions | 2 |
| Section 1.1 | Definitions | 2 |
| ARTICLE II | Exchanges | 17 |
| Section 2.1 | Exchange Procedure | 17 |
| Section 2.2 | Closing Procedures | 24 |
| Section 2.3 | Dispute Resolution | 27 |
| Section 2.4 | Termination of Exchanges | 27 |
| Section 2.5 | Delivery of Valuation | 27 |
| Section 2.6 | Total Equity Value | 29 |
| Section 2.7 | Post-Closing Consents and Amendments | 29 |
| Section 2.8 | Additional Payments | 31 |
| ARTICLE III | Representations & Warranties | 31 |
| Section 3.1 | Representations and Warranties of Brookfield | 31 |
| Section 3.2 | Representations and Warranties of ExchangeCo | 33 |
| Section 3.3 | Representations and Warranties of OCGH | 35 |
| ARTICLE IV | Protective Provisions | 36 |
| Section 4.1 | Certain Events | 36 |
| ARTICLE V | Miscellaneous | 37 |
| Section 5.1 | Notices | 37 |
| Section 5.2 | Interpretation | 37 |
| Section 5.3 | Joinder | 38 |
| Section 5.4 | Transaction Expenses | 38 |
| Section 5.5 | Reserved | 38 |
| Section 5.6 | Severability | 38 |
| Section 5.7 | Counterparts | 38 |
| Section 5.8 | Entire Agreement; Third Party Beneficiaries | 38 |
| Section 5.9 | Further Assurances | 39 |
| Section 5.10 | Governing Law | 39 |
| Section 5.11 | Arbitration of Disputes | 39 |
| Section 5.12 | Amendments; Waivers | 41 |
| Section 5.13 | Assignment | 41 |
| Section 5.14 | Tax Treatment | 41 |
| Section 5.15 | Interference | 41 |
| Section 5.16 | Contra Proferentem | 42 |
| Section 5.17 | Brookfield Asset Management Inc | 42 |
| Section 5.18 | ExchangeCo Units | 43 |
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Exhibits
Exhibit A – Extraordinary Items
Exhibit B – Illustrative Calculation of Current Equity Value
Exhibit C – Form of Atlas Note Purchase Agreement
Exhibit D – Form of ExchangeCo Note Purchase Agreement
Exhibit E – Registration Rights Agreement
Exhibit F – Form of Call Agreement
Exhibit G – Form of Put Agreement
Exhibit H – Closed-End Funds
Exhibit I – Additional Payment Allocation
This THIRD AMENDED AND RESTATED EXCHANGE AGREEMENT (the “Agreement”), dated as of September 30, 2019, is by and among Atlas Holdings, LLC (“Brookfield”), Atlas OCM Holdings, LLC, a Delaware limited liability company (“Atlas OCM”), Oaktree Capital Group, LLC, a Delaware limited liability company (“Oaktree”), OCM Holdings I, LLC, a Delaware limited liability company (“OCM Holdings”), Oaktree New Holdings, LLC, a Delaware limited liability company (“Oaktree LLC”), Oaktree AIF Holdings II, LLC, a Delaware limited liability company (“Oaktree AIF”), Oaktree Holdings, Ltd., a Cayman Islands exempted company (“Oaktree Ltd.”), Oaktree Capital Group Holdings, L.P., a Delaware limited partnership (“OCGH”), OCGH ExchangeCo, L.P., a Delaware limited partnership (“ExchangeCo”), the OCGH Limited Partners (as defined below), the OpCos (as defined below), solely for purposes of Section 5.17, Brookfield Asset Management Inc., a corporation amalgamated under the laws of the Province of Ontario (“BAM”), and other parties joined hereto from time to time pursuant to Section 5.3. Capitalized terms used but not otherwise defined herein have the respective meanings ascribed thereto in Section 1.1.
WHEREAS, BAM, Berlin Merger Sub, LLC, Oaktree and the other parties thereto entered into an Agreement and Plan of Merger, dated as of March 13, 2019 (as the same may be amended, supplemented or waived from time to time in accordance with its terms, the “Merger Agreement”), pursuant to which, among other things, Berlin Merger Sub, LLC merged with and into Oaktree (the “Merger”) with Oaktree continuing as the surviving company in accordance with the terms set forth in the Merger Agreement;
WHEREAS, OCGH is an owner of OpCo Units;
WHEREAS, on the terms and subject to the conditions set forth herein, in the OCGH Partnership Agreement, any Oaktree equity ownership plan (pursuant to which Former Oaktree Units were issued) and any other arrangements between OCGH and the limited partners of OCGH, each limited partner of OCGH has the right to sell or exchange his or her vested OCGH Units, at Brookfield’s option (except as set forth herein): (i) to Brookfield in exchange for cash, (ii) to Brookfield in exchange for Class A Shares, (iii) to Brookfield in exchange for Atlas Notes, (iv) to OCGH in exchange for ExchangeCo Units or (v) a combination of the foregoing;
WHEREAS, on the terms and subject to the conditions set forth herein and in the OCGH Partnership Agreement, OCGH shall redeem the OCGH Units acquired by Brookfield or cancel the OCGH Units acquired by OCGH, as applicable, in an Exchange and, in exchange therefore, shall distribute to Brookfield the Equivalent OpCo Units that correspond to the redeemed or canceled OCGH Units;
WHEREAS, on the terms and subject to the conditions set forth herein, immediately upon the distribution of the Equivalent OpCo Units by OCGH to Brookfield, a number of Class B OCG Units and Class B AOH Units held by OCGH equal to the number of Equivalent OpCo Units delivered to Brookfield shall be automatically canceled without any further action by any party;
WHEREAS, the parties intend that (i) each Exchange for cash, Class A Shares, Atlas Notes, or a combination of the foregoing, consummated hereunder be treated for U.S. federal income tax purposes as a taxable sale of OCGH Units by an OCGH Limited Partner to Brookfield and (ii) each Exchange for ExchangeCo Units consummated hereunder (and any distributions on the ExchangeCo Units received in such Exchange) be treated as a distribution pursuant to Section 731 of the Internal Revenue Code of 1986, as amended from time to time (the “Code”);
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WHEREAS, the parties executed an Exchange Agreement, dated as of May 25, 2007 (the “Original Agreement”);
WHEREAS, the Original Agreement was amended and restated in its entirety by the execution of an Amended and Restated Exchange Agreement, dated as of March 28, 2008 (the “First Amended Agreement”);
WHEREAS, the First Amended Agreement was amended and restated in its entirety by the execution of a Second Amended and Restated Exchange Agreement, dated as of March 29, 2012 (the “Second Amended Agreement”);
WHEREAS, Section 3.11 of the Second Amended Agreement provides that the Second Amended Agreement may be amended, modified or waived at any time in writing by agreement of Oaktree and OCGH without the approval or consent of any other party (unless such amendment, modification or waiver would adversely affect in any material respect any OCGH Limited Partner relative to all OCGH Limited Partners collectively as a group); and
WHEREAS, Oaktree and OCGH desire to amend and restate the Second Amended Agreement in a manner that does not adversely affect in any material respect any OCGH Limited Partner relative to all OCGH Limited Partners collectively as a group.
NOW, THEREFORE, in consideration of the mutual covenants and undertakings contained herein and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Oaktree and OCGH hereby agree to amend and restate the Second Amended Agreement in its entirety as follows:
ARTICLE
I
Definitions
Section 1.1 Definitions. As used in this Agreement, the following terms shall have the following meanings:
“2018 10-K” means Oaktree’s Form 10-K for the year-ended December 31, 2018.
“Accelerated Former Oaktree Units” means any Former Oaktree Unit which has vested other than in connection with its original vesting schedule.
“Additional Payment” has the meaning set forth in Section 2.8.
“Advisers Act” means the U.S. Investment Advisers Act of 1940, as amended.
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“Affiliate” means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries Controls, is Controlled by, or is under common Control with, the Person in question; provided that no Fund or portfolio company (or any investment vehicle through which any Fund holds its interest in a portfolio company) of any Oaktree Group Member or Brookfield Group Member shall be deemed to be an Affiliate of any Oaktree Group Member or Brookfield Group Member.
“Agreement” has the meaning set forth in the preamble to this Agreement.
“Aggregate Exchange Notice” has the meaning set forth in Section 2.1(a).
“AOH Operating Agreement” means the operating agreement of Atlas OCM, as it may be amended or modified from time to time.
“Ancillary Agreement” means the Registration Rights Agreement, an Atlas Note Purchase Agreement, an ExchangeCo Note Purchase Agreement, a Put Agreement or a Call Agreement and any agreements entered into pursuant to any of the foregoing.
“Applicable Maximum Amount” has the meaning set forth in Section 2.1(b)(ii).
“Atlas Note Minimum Amount” means an amount equal to the product of (x) the difference between (1) the aggregate Current Equity Value of all Cash/Share/Note Exchange Units in a given Exchange and (2) the aggregate U.S. federal income tax basis of all such Exchanged Units (determined without taking into account any Partnership liabilities attributed to any Exchanged Units) assuming, for this purpose, that all such Exchanged Units have a U.S. federal income tax basis equal to the U.S. federal income tax basis of the Exchanged Unit with the lowest U.S. federal income tax basis, as determined in good faith by OCGH and reported to Brookfield, with reasonable back-up calculations, no later than the day that is twenty (20) days following the end of the applicable Open Period, it being understood that the result of this clause (2) shall not be less than zero, and (y) the maximum combined U.S. federal state and local income tax rate applicable to dispositions of OCGH Units, as determined in good faith by OCGH and reported to Brookfield for an individual subject to tax in Los Angeles, California or New York City, New York (whichever is higher).
“Atlas Note Purchase Agreement” means a note agreement substantially in the form attached as Exhibit C hereto.
“Atlas Notes” means the Atlas Notes as described in and issuable by Brookfield under the Atlas Note Purchase Agreement.
“Atlas OCM” has the meaning set forth in the preamble to this Agreement.
“Bankruptcy Event” means the date on which BAM or Brookfield makes any bankruptcy filing or declaration of insolvency or consents to the appointment of a receiver, liquidator, assignee, custodian or trustee for the purpose of winding up the affairs of BAM or Brookfield.
“Base Date” means February 28, 2019.
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“Base Fee Earnings” means for any fiscal year, without duplication, (a) the aggregate of (i) all management fees, Specified Performance Fees (but excluding any other performance based fees), asset management fees, administrative fees, transaction fees or similar fees, earned by any Oaktree Group Member (in each case, grossed up for any fee offsets to the extent such fee offsets (x) are also included as an expense or (y) are not otherwise included as an increase to Base Fee Earnings as a result of any other sub-clause of this clause (a)), calculated in a manner consistent with the line item entitled “Management Fees” set forth on pages 98 and 99 of the 2018 10-K, plus (ii) any amounts attributable to any Oaktree Group Member with respect to the interests of OCGH, Oaktree and Atlas OCM in the fee-related earnings of the type described in clause (i) above, calculated including any depreciation and amortization, of DL Capital or other investment managers, calculated in a manner consistent with such amount as captured within the line item entitled “Corporate investments” set forth on page 111 of the 2018 10-K, less (b) the aggregate of (i) compensation and benefits (excluding (x) equity issued in respect of compensation, (y) Compensation Expense Related to Incentive Income or compensation relating to Investment Income and (z) expenses in connection with the Brookfield Bonus Fund (as defined in the Oaktree Operating Agreement)), calculated in a manner consistent with the line item entitled “Compensation and benefits” set forth on page 98 of the 2018 10-K, (ii) Stock Based Compensation and (iii) general and administrative expenses (excluding depreciation and amortization), calculated in a manner consistent with the line item entitled “General and administrative” set forth on page 98 of the 2018 10-K. The items referenced in this definition shall be calculated using the Historic Principles, subject to only those adjustments described on Exhibit A. For the avoidance of doubt and notwithstanding the foregoing, Base Fee Earnings shall not include revenue attributable to Investment Income, Incentive Income or total other income (calculated in a manner consistent with the line items entitled “Other income (expense), net” and “Interest expense, net of interest income” set forth on page 98 of the 2018 10-K).
“Beneficially Own” has the meaning ascribed to such term in the Oaktree Operating Agreement; provided that notwithstanding anything to the contrary in the Oaktree Operating Agreement, all OCGH Units transferred pursuant to Permitted Control Released Transfers (as defined in the OCGH Partnership Agreement) shall be deemed not to be “Beneficially Owned” by the Permitted Oaktree Holders for purposes of this Agreement.
“Blackout Period” means a quarterly or other trading “blackout period” imposed as a matter of corporate or employment policy by BAM or any of its Affiliates that restricts the ability of an OCGH Limited Partner from freely trading its Class A Shares.
“Brookfield” has the meaning set forth in the preamble to this Agreement.
“Brookfield Group” means BAM and its Affiliates (other than, for the avoidance of doubt, (i) OCGH and (ii) until the expiration of the Initial Period, Oaktree, Atlas OCM or any of their respective subsidiaries, or any OpCo).
“Brookfield Group Member” means any member of the Brookfield Group.
“Brookfield OpCo Units” has the meaning set forth in Section 4.1(a).
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“Business Day” means any day, other than a Saturday, Sunday or other day on which commercial banks located in the State of New York or the Province of Ontario are authorized or required by law or other governmental action to close.
“Buyback Event” has the meaning set forth in Section 4.1(b).
“Buyback Notice” has the meaning set forth in Section 4.1(a).
“Buyback Right” has the meaning set forth in Section 4.1(a).
“Call Agreement” means a Call Agreement substantially in the form attached hereto as Exhibit F.
“Capital Distributions” means distributions made by OCGH in respect of the return of capital.
“Cash/Share/Note Exchange Units” has the meaning set forth in Section 2.1(c).
“Class A Shares” means Class A Limited Voting Shares of BAM that comply with Section 3.1(c).
“Class A Units” has the meaning set forth in the Oaktree Operating Agreement.
“Class B AOH Unit” means a Class B Unit of Atlas OCM, as described in the AOH Operating Agreement.
“Class B OCG Units” has the meaning set forth in the Oaktree Operating Agreement.
“Client” has the meaning set forth in the Merger Agreement.
“Closed-End Base Date Assets Under Management” means (a) for each Closed-End Fund that is a Registered Fund that has elected to be treated as a business development company under the Investment Company Act or that is a collaterized loan obligation, the aggregate assets under management as of the Base Date for such Closed-End Fund, (b) for each other Closed-End Fund, the investment period of which has not terminated as of the Base Date, the aggregate capital commitments to such Closed-End Fund as of the Base Date, and (c) for each other Closed-End Fund, the investment period of which has terminated as of the Base Date, the aggregate capital contributions, the aggregate cost basis of investments held by such Closed-End Fund, or other aggregate amount, in each case, as of the Base Date, upon which investment advisory, investment management, subadvisory or other similar recurring fees for such Closed-End Fund are calculated, in each case excluding general partner capital commitments.
“Closed-End Funds” means each closed-end Company Fund (including, for this purpose, each Registered Fund that has elected to be treated as a business development company under the Investment Company Act and each collaterized loan obligation) as of the Base Date, other than any closed-end Company Fund that has had an event of dissolution or is scheduled to have an event of dissolution on or prior to December 31, 2019. All Closed-End Funds are set forth on Exhibit H.
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“Closed-End Revenue Run-Rate” means, as of the Base Date, the aggregate annualized investment advisory, investment management, subadvisory or other similar recurring fees for all Closed-End Funds (but excluding any Incentive Income and Investment Income) payable to any OpCo or any subsidiary of an OpCo, determined by multiplying (a) the Closed-End Base Date Assets Under Management for each such Closed-End Fund as of the Base Date by (b) the applicable annual fee rate for such Closed-End Fund under the applicable Investment Advisory Arrangement as of the Base Date (not including any Incentive Income and Investment Income and net of any sub-advisory fees paid by any OpCo or any subsidiary of an OpCo to a Person that is not an OpCo or a subsidiary of an OpCo).
“Closing” has the meaning set forth in Section 2.2(b).
“Code” has the meaning set forth in the Recitals.
“Company Fund” has the meaning set forth in the Merger Agreement.
“Compensation Expense Related to Incentive Income” shall be calculated using the Historic Principles in a manner consistent with the line item entitled “Incentive income compensation expense” set forth on page 98 of the 2018 10-K.
“Competitive Business” means any business that is competitive with any portion of the Oaktree Strategy (including raising, organizing, managing or advising any fund or separate account having an investment strategy in any way competitive with any of the funds or separate accounts managed by any Oaktree Group Member).
“Competitor Acquisition Event” means the acquisition, directly or indirectly, of Control of BAM by a Person that materially engages in a core business that is directly and materially competitive with a core Oaktree Strategy (regardless of the form of such transaction and whether in a single transaction or in a series of related transactions); provided that in no event shall a Competitor Acquisition Event be deemed to occur if, following any such transaction or transactions, both (i) a majority of the Class B Limited Voting Shares of BAM are owned, beneficially or otherwise, by individuals who were, immediately prior to the consummation of such acquisition, existing or former officers, directors and employees of BAM or their respective Related Parties and (ii) a majority of the Class B Limited Voting Shares of BAM continue to have the right to elect at least 50% of BAM’s board of directors.
“Control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.
“Control Party” has the meaning set forth in Section 2.5(a).
“Convertible Phantom Units” means 9,621 “phantom equity” units of OCGH, which convert, upon vesting in accordance with their terms, into an equal number of OCGH Units.
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“Current Equity Value” means, as of any Exchange Date, a value per OCGH Unit calculated as (i) Total Equity Value divided by F, (ii) reduced by Quarterly Distributions already paid in respect of such OCGH Unit and (iii) increased by the Ticking Fee on the net amount of the foregoing clauses (i) and (ii), where:
“F” is the total number of common units outstanding as of December 31 of the immediately preceding calendar year with respect to one OpCo (it being understood that all OpCos shall at all times have the same number of units outstanding at the same time);
provided that, for any Exchange Date occurring in fiscal years 2020 or 2021, the Current Equity Value in respect of any Exchangeable Unit that is a Former Oaktree Unit shall be equal to the sum of (x) $49.00 minus (y) the value of the Capital Distributions received from OCGH upon the vesting of such Former Oaktree Unit. An illustrative calculation of the Current Equity Value as of December 31, 2018 is attached hereto as Exhibit B.
“Current Equity Value Calculation” has the meaning set forth in Section 2.5(a).
“Dispute Notice” has the meaning set forth in Section 2.5(b).
“DL Capital” means, collectively, DoubleLine Capital LP, DoubleLine GP Holdings LP and each of their respective subsidiaries.
“Enforceability Exceptions” has the meaning set forth in Section 3.1(b).
“Equivalent OpCo Unit” means, with respect to any OCGH Unit, the number and type of OpCo Units held by OCGH that correspond to such OCGH Unit, as determined by the General Partner and Brookfield.
“Exchange” means the exchange by an OCGH Limited Partner of an OCGH Unit for cash, Class A Shares, an ExchangeCo Unit, Atlas Notes or a combination of the foregoing, as described in Article II of this Agreement.
“Exchange Consideration” means, for each OCGH Unit being exchanged on the same Exchange Date:
(i) if Brookfield elects to deliver Class A Shares as consideration for all or a portion of the Exchange, a number of Class A Shares equal to (A) the Current Equity Value of the OCGH Units being exchanged pursuant to this clause (i) divided by (B) the ten (10)-day aggregate volume-weighted average price per Class A Share (as reported on Bloomberg) on the New York Stock Exchange or NASDAQ or any other U.S. national securities exchange on which shares of the same class are then listed for the VWAP Period; provided that no fractional Class A Shares shall be delivered as consideration and, in lieu thereof, cash in United States Dollars shall be paid at the same valuation as the Class A consideration; provided, further, that all fractional shares to which a single Exchanging LP would be entitled shall be aggregated;
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(ii) if Brookfield elects to deliver cash as consideration for all or a portion of the Exchange, an amount of cash in United States Dollars equal to the Current Equity Value of the OCGH Units being exchanged pursuant to this clause (ii);
(iii) if Brookfield elects for OCGH to deliver ExchangeCo Units as consideration for all or a portion of the Exchange, a number of ExchangeCo Units which shall in the aggregate represent the right to indirectly receive the proceeds from an ExchangeCo Note with an aggregate principal amount equal to the Current Equity Value of the OCGH Units being exchanged pursuant to this clause (iii), subject to the limitations of Section 2.1(f)(iii); provided that the ExchangeCo Units to be issued as Exchange Consideration shall be of the same series for all Exchanged Units by all Exchanging LPs at the Closing effected on such Exchange Date; and/or
(iv) if Brookfield elects to deliver Atlas Notes as consideration for all or a portion of the Exchange, such Atlas Notes shall have an aggregate principal amount equal to the Current Equity Value of the OCGH Units being exchanged pursuant to this clause (iv), subject to the limitations of Section 2.1(f)(iii).
For the avoidance of doubt, the total Exchange Consideration for each OCGH Unit being exchanged on the same Exchange Date shall equal the Current Equity Value of the applicable Exchangeable Unit.
“Exchange Date” has the meaning set forth in Section 2.2(a).
“Exchangeable Unit” means (a) any OCGH Unit issued and outstanding on the Merger Closing Date immediately after giving effect to the Transactions and (b) any Permitted Post-Closing OCGH Units.
“ExchangeCo” has the meaning set forth in the preamble to this Agreement.
“ExchangeCo Exchange Units” has the meaning set forth in Section 2.1(c).
“ExchangeCo Note Purchase Agreement” means a note purchase agreement substantially in the form attached as Exhibit D hereto.
“ExchangeCo Notes” means the notes issuable to ExchangeCo pursuant to an ExchangeCo Note Purchase Agreement.
“ExchangeCo Unit” means a unit of equity interest in ExchangeCo entitled to receive distributions in respect of ExchangeCo Notes.
“Exchanged Units” has the meaning set forth in Section 2.1(a).
“Exchanging LP” has the meaning set forth in Section 2.1(a).
“First Amended Agreement” has the meaning set forth in the Recitals.
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“Former Oaktree Unit” means any OCGH Unit (a) that (i) in connection with the transactions contemplated pursuant to the Merger Agreement was converted or exchanged into an OCGH Unit from a Class A Unit, (ii) immediately prior to such conversion or exchange, was not a Vested Class A OCG Unit and (iii) immediately prior to the consummation of the Merger, was not a Vested Unit or (b) described in clause (a)(ii) of the definition of Permitted Post-Closing OCGH Units.
“Former Oaktree Unit Threshold” means, in any given Exchange, an amount equal to the sum of (a) the product of (x) the applicable Current Equity Value for an OCGH Unit being exchanged and (y) the total number of Former Oaktree Units eligible for participation in the applicable Open Period and which were fully vested, in accordance with their original vesting schedules, as of the date of delivery of the Aggregate Exchange Notice for such Exchange, and (b) $20,000,000.
“Founding Co-Chairmen” means Howard Marks and Bruce Karsh, and “Founding Co-Chairman” means either of them individually.
“Fund” means any limited partnership, limited liability company, group trust, mutual fund, investment company or other entity (including any collateralized loan obligation vehicle or business development company), or any investment account.
“GAAP” means generally accepted accounting principles as in effect from time to time in the United States of America, except any requirement for the consolidation of investment funds or CLOs advised or managed by the OpCos and other entities that may be required by FASB ASC 810-20 or similar and subsequent authoritative accounting pronouncements.
“General Partner” means the general partner of OCGH.
“Governmental Entity” means any court, administrative agency, regulatory body, commission or other governmental authority, board, bureau or instrumentality, domestic or foreign and any subdivision thereof.
“Historic Principles” means the accounting principles used in preparation of the GAAP and non-GAAP financials set forth in the 2018 10-K. Unless otherwise agreed by OCGH and Brookfield, the changes in accounting principles after December 31, 2018 shall be disregarded when calculating any financial results, balance sheet items or other financial metrics that are expressly required to be calculated using Historic Principles (e.g., a change in accounting principles that would require an operating lease to be reclassified as a capital lease).
“Incentive Income” means an amount, for any fiscal year, calculated, without duplication, using the Historic Principles in a manner consistent with the line item entitled “Incentive income” set forth on page 98 of the 2018 10-K.
“Initial Period” means the “Initial Period” as defined in the Oaktree Operating Agreement.
“Investment Advisory Arrangement” has the meaning set forth in the Merger Agreement.
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“Investment Company Act” has the meaning set forth in the Merger Agreement.
“Investment Income” means an amount, for any fiscal year, calculated, without duplication, using the Historic Principles in a manner consistent with the line item entitled “Investment income” set forth on page 98 of the 2018 10-K.
“Investor” has the meaning set forth in the Merger Agreement.
“Issuer” has the meaning set forth in Section 3.2(d).
“JAMS” has the meaning set forth in Section 5.11(a).
“Liens” means any and all liens, charges, security interests, options, claims, mortgages, pledges, proxies, voting trusts or agreements, obligations, understandings or arrangements or other restrictions on title or transfer of any nature whatsoever.
“Managed Account” has the meaning set forth in the Merger Agreement.
“Material Adverse Effect” of a Person means a material adverse effect on (i) the business, operations, properties, assets or condition (financial or otherwise) of such Person, (ii) the ability of such Person to fully and timely perform their obligations under this Agreement or (iii) the rights, remedies or benefits available to OCGH or any OCGH Limited Partner under this Agreement.
“Merger” has the meaning set forth in the Recitals.
“Merger Agreement” has the meaning set forth in the Recitals.
“Merger Closing Date” has the meaning ascribed to the term “Closing Date” in the Merger Agreement.
“Merger Closing Units Amount” means a number equal to the sum of (i) 59,024,072 plus (ii) the amount of all Permitted Post-Closing OCGH Units (other than those referenced in clause (a)(ii) of the definition thereof).
“Merger Signing Date” means March 13, 2019.
“Negative Consent” has the meaning set forth in the Merger Agreement.
“Net Incentives Created” means, for any fiscal year, without duplication and calculated, where applicable, using the Historic Principles in a manner consistent with the line item entitled “Incentives created (fund level), net of associated incentive income compensation expense” set forth on page 91 of the 2018 10-K, the aggregate of (i) any “carried interest,” “incentive allocation,” “performance allocation,” “performance fees” (other than Specified Performance Fees) or similar items of gain or loss generated (directly or indirectly) by any Fund or any other investment vehicle based on mark-to-market performance during such fiscal year less any compensation expense that is a direct result of such gain or loss (other than, for the avoidance of doubt, (x) amounts that are treated as Base Fee Earnings and (y) allocations that are made pro rata based on contributed capital of all partners, members or other holders of similar economic interests in the applicable fund) plus (ii) the respective pro rata portion of any “carried interest,” “incentive allocation,” “performance allocation,” “performance fees” (other than Specified Performance Fees) or similar items of gain or loss), that are attributable to interests of OCGH, Oaktree and Atlas OCM in DL Capital or other investment managers generated during such fiscal year less any compensation expense that is a direct result of such gain or loss. For the avoidance of doubt, Net Incentives Created may be a negative amount.
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“Non-Control Party” has the meaning set forth in Section 2.5(a).
“Non-Senior Service Partners Group” means the OCGH Limited Partners other than those enumerated in the definition of “Senior Service Partners Group”.
“Oaktree” has the meaning set forth in the preamble to this Agreement.
“Oaktree AIF” has the meaning set forth in the preamble to this Agreement.
“Oaktree Business” means the business of any Oaktree Group Member as conducted as of the Merger Closing Date.
“Oaktree Group” means Oaktree and its Affiliates (other than, for the avoidance of doubt, the Brookfield Group) including each OpCo and, for so long as they are an Affiliate of Oaktree, OCGH and the General Partner.
“Oaktree Group Member” means each member of the Oaktree Group.
“Oaktree LLC” has the meaning set forth in the preamble to this Agreement.
“Oaktree Ltd.” has the meaning set forth in the preamble to this Agreement.
“Oaktree Operating Agreement” means the operating agreement of Oaktree, as it may be amended or modified from time to time.
“Oaktree Strategy” means (i) any business or strategy that Oaktree is engaged in as of the Merger Closing Date, including the Oaktree Business; (ii) any business or strategy that is included in any business plan shared with BAM prior to the Merger Signing Date; and (iii) any other strategies in any other industries, as have been or may be agreed by BAM, which Oaktree can form, launch or add at any time following the Merger Closing Date.
“OCGH” has the meaning set forth in the preamble to this Agreement.
“OCGH Limited Partner” means a “Limited Partner” as defined in the OCGH Partnership Agreement.
“OCGH Partnership Agreement” means the limited partnership agreement of OCGH, as it may be amended or modified from time to time; provided that, any amendment or modification that would adversely affect any OpCo or Brookfield Group Member shall not be binding on such OpCo or Brookfield Group Member, as applicable, without the written consent of Brookfield. For the avoidance of doubt, amendments or modifications to any definitions used herein that are defined in the OCGH Partnership Agreement shall be disregarded for purposes of this Agreement, unless such amendment or modification was approved by Brookfield in writing.
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“OCGH Units” means limited partnership units of OCGH.
“OCM Holdings” has the meaning set forth in the preamble to this Agreement.
“OpCo” means an “Oaktree Operating Group Member” as defined in the Oaktree Operating Agreement.
“OpCo Unit” means any equity unit of an OpCo.
“Open Period” means (a) with respect to Exchangeable Units that are Former Oaktree Units, the first sixty (60) days of each calendar year and (b) with respect to other Exchangeable Units, the first sixty (60) days of each calendar year beginning January 1, 2022.
“Original Agreement” has the meaning set forth in the Recitals.
“Paying Agent” means a Person serving as the agent of Brookfield and its subsidiaries, who shall be designated, from time to time, by mutual agreement of Oaktree and OCGH, with the consent of Brookfield (not to be unreasonably withheld) to facilitate Exchanges. The initial Paying Agent is OCGH.
“Percentage Interest” means with respect to any OCGH Limited Partner, as of any time, the fraction, expressed as a percentage, (i) the numerator of which is the aggregate number of OCGH Units held of record by such OCGH Limited Partner at such time, and (ii) the denominator of which is the aggregate number of OCGH Units issued and outstanding at such time, in each case, subject to any adjustment thereof in accordance with the Unit Designation of any such OCGH Unit or class of OCGH Units. The aggregate Percentage Interests of the OCGH Limited Partners shall at all times total 100%.
“Permitted Oaktree Holder” has the meaning ascribed to such term in the Oaktree Operating Agreement.
“Permitted Post-Closing OCGH Units” ” means (a) any OCGH Unit issued after the Merger Closing Date pursuant to (i) agreements in existence on the Merger Signing Date and set forth on Section 4.22A of the Company Disclosure Schedule and (ii) the Convertibile Phantom Units, in each case that is a Vested Unit, and (b) any other OCGH Unit issued after the Merger Closing Date and approved by Brookfield as a “Permitted Post-Closing OCGH Unit.”
“Person” means any individual, corporation, firm, partnership, joint venture, limited liability company, estate, trust, business association, organization, Governmental Entity or other entity.
“Put Agreement” means a Put Agreement substantially in the form attached hereto as Exhibit G.
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“Quarterly Distribution” means, with respect to any Exchangeable Unit exchanged, or to be exchanged, pursuant to Section 2.1, the distribution per such Exchangeable Unit in respect of (a) the fourth fiscal quarter of the fiscal year immediately preceding the fiscal year in which such Open Period occurs (payable in the first quarter of the year in which the Open Period occurs), (b) the first fiscal quarter of the fiscal year in which such Open Period occurs (payable in the second quarter of such year), (c) the second fiscal quarter of the fiscal year in which such Open Period occurs (payable in the third quarter of such year) and (d) each other fiscal quarter of such fiscal year that has elapsed prior to the Exchange Date (with such distribution payable in the subsequent applicable quarter); provided, that a Quarterly Distribution shall exclude any portion of such distribution that is a Tax Distribution.
“Registered Fund” has the meaning set forth in the Merger Agreement.
“Registration Rights Agreement” means the Registration Rights Agreement executed on the date hereof and attached as Exhibit E hereto.
“Related Parties” means, with respect to any individual, (i) such individual’s spouse, child (natural or adopted) a spouse of any such child, a grandchild, or a lineal descendent of the foregoing (the Persons referred to in this clause (i), such individual’s “Family Members”), (ii) a trust solely for the benefit of Family Members, (iii) a private foundation controlled by such individual or his or her Family Member or (iv) any corporation (including any non-profit corporation), general partnership, limited partnership, limited liability partnership, joint venture, estate, trust, company (including any company limited by shares, limited liability company or joint stock company), firm, society or other enterprise, association, organization or other entity of which the Persons listed in clauses (i)-(ii) above collectively own 100% of the outstanding securities.
“Required Amendment” means, with respect to each applicable Company Fund (or Managed Account or sub-advisory relationship), an amendment to the partnership agreement, operating agreement, shareholders’ agreement or similar governing agreement of such Company Fund (or the Investment Advisory Arrangement in respect of such Managed Account or sub-advisory relationship) that (a) provides for the advance approval of the assignment (within the meaning of the Advisers Act) of the applicable Investment Advisory Arrangement to Brookfield or its Affiliates and (b) other than with respect to any Registered Fund, either (i) modifies the definition of “affiliate” contained therein such that no affiliate of Oaktree, any OpCo, or its or their subsidiaries in respect of which an actual or virtual information barrier is in place, or in respect of which there is no coordination or consultation in respect of investment decisions (in each case, as determined by Oaktree in its discretion based on the relevant facts and circumstances applicable to each particular situation) shall be deemed to be an “affiliate” of Oaktree, any OpCo, or its or their direct or indirect subsidiaries for purposes of such governing agreement (or such Investment Advisory Arrangement), or (ii) otherwise provides that no Brookfield Group Member or any of its affiliates will be an “affiliate” of Oaktree, any OpCo, or its or their direct or indirect subsidiaries for purposes of such governing agreement (or such Investment Advisory Arrangement).
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“Required Closed-End Amendment Percentage” means a fraction (expressed as a percentage) the numerator of which is the Required Closed-End Amendment Revenue Run-Rate and the denominator of which is the Closed-End Revenue Run-Rate.
“Required Closed-End Amendment Revenue Run-Rate” means, as of any date of determination, the Closed-End Revenue Run-Rate as of the Base Date for all Closed-End Funds that have obtained the requisite consent described in clause (a) of the definition of Required Amendment, in each case, as of such date in accordance with the terms of the partnership agreement, operating agreement, shareholders’ agreement or similar governing agreement of each such Closed-End Fund. For purposes of the foregoing, each Closed-End Fund that has an event of dissolution on or after January 1, 2020 shall be deemed to have obtained the requisite consent to the Required Amendment if and when such Closed-End Fund liquidates in the ordinary course.
“Second Amended Agreement” has the meaning set forth in the Recitals.
“Securities Act” means the Securities Act of 1933, as amended.
“Senior Service Partners Group” means Howard Marks, Bruce Karsh, Jay Wintrob, John Frank, Sheldon Stone, Richard Masson and Larry Keele.
“Service Partner” means any OCGH Limited Partner or Person who will become an OCGH Limited Partner upon receiving OCGH Units who provides (or has provided) services to OCGH or any other Oaktree Group Member.
“Specified Performance Fees” means, without duplication and calculated in accordance with the Historic Principles, performance based fees payable by a business development company, permanent capital vehicle or open end fund similar to those vehicles currently included in the line item entitled “Management Fees” set forth on pages 98 and 99 of the 2018 10-K.
“Stock Based Compensation” means, for any fiscal year, an amount equal to the difference between (a) the product of (i) the number of Exchangeable Units (of the type described in clause (b) of the definition thereof) issued to compensate Service Partners during such year that dilute BAM’s direct or indirect interests in the Oaktree Group, and (ii) (A) in respect of fiscal years 2020 and 2021, $49.00 less the amount of cumulative Capital Distributions already paid from and after the Merger Closing Date in respect of a single Exchangeable Unit (of the type described in clause (a) of the definition thereof) and (B) in respect of fiscal years 2022 and thereafter, 100% of the Current Equity Value as determined for an Exchange Date (regardless of whether any Exchanges actually occur on such date) occurring in the fiscal year in which such Exchangeable Units (of the type described in clause (b) of the definition thereof) are issued and (b) the product of (1) the number of Exchangeable Units forfeited by such Service Partners or that otherwise ceased to be outstanding due to a “clawback” in such year (other than any such Exchangeable Units that do not ratably accrete to BAM’s direct or indirect interest in the Oaktree Group), and (2) (x) in respect of fiscal years 2020 and 2021, $49.00 plus the amount of the Capital Distributions actually forfeited with respect to such Exchangeable Units less the amount of cumulative Capital Distributions already paid from and after the Merger Closing Date in respect of a single Exchangeable Unit (of the type described in clause (a) of the definition thereof) and (y) in respect of fiscal years 2022 and thereafter, 100% of the Current Equity Value as determined for an Exchange Date (regardless of whether any Exchanges actually occur on such date) occurring in the fiscal year in which such Exchangeable Units (of the type described in clause (b) of the definition thereof) are issued plus the amount of the Capital Distributions actually forfeited with respect to such Exchangeable Units.
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“Tax Distribution” means distributions related to the tax-related Incentive Income with respect to taxable income allocated by a Fund during the fiscal year prior to the Exchange Date (which is usually recognized on a non-GAAP basis in the first quarter and paid in the second quarter of the fiscal year in which the Exchange Date occurs).
“Ticking Fee” means the product of (i) the number of days between (x) December 31st of the calendar year immediately preceding an Exchange Date and (y) such Exchange Date (not including December 31st and such Exchange Date) divided by 365, and (ii) the yield on the U.S. 5-year Treasury note plus 300 basis points as of December 31st of the calendar year immediately preceding such Exchange Date.
“Total Equity Value” means, as of any Exchange Date, a value calculated on a pro forma basis assuming deconsolidation of any Funds that may be reported on a consolidated basis, as (A*D + B*E + C) and pursuant to Section 2.6 hereof, where:
“A” is the average of Base Fee Earnings over the three fiscal years immediately preceding such Exchange Date, except for the Exchange Date that may occur in 2022 when “A” shall be calculated as the average of Base Fee Earnings over the two fiscal years immediately preceding such Exchange Date.
“B” is the average of Net Incentives Created over the three fiscal years immediately preceding such Exchange Date. The amount resulting from such average cannot be less than zero.
“C” is an amount equal to (a) the sum of (i) the value of each OpCo’s and its subsidiaries’ corporate investments as reported in the financial statements of such entities for the December 31 preceding the Exchange Date, calculated in a manner consistent with the line item entitled “Corporate investments – Non-GAAP” set forth on page 112 of the 2018 10-K (but specifically excluding unfunded commitments and amounts attributable to DL Capital and other investment managers whose earnings are included in Base Fee Earnings), (ii) cash and cash-equivalents as reported in the financial statements of such entities for the December 31 preceding the Exchange Date, calculated in a manner consistent with the line item entitled “Cash and cash-equivalents” set forth on page 111 of the 2018 10-K (but specifically excluding any cash or cash-equivalents distributed by any Fund in the fiscal year immediately prior to the Exchange Date in order to make Tax Distributions to the extent such Tax Distributions have been distributed by the OpCos by the second quarter of the subsequent year), (iii) U.S. Treasury and other securities as reported in the financial statements of such entities for the December 31 preceding the Exchange Date, calculated in a manner consistent with the line item entitled “U.S. Treasury and other securities” set forth on page 111 of the 2018 10-K and (iv) seventy-five percent (75%) of the amount equal to (A) the accrued incentives of Funds on an aggregate basis net of (B) compensation expense related to such accrued incentives as reported in the financial statements of such entities for the December 31 preceding the Exchange Date, calculated in a manner consistent with the line item entitled “Accrued incentives (fund level), net of associated incentive income compensation expense” set forth on page 91 of the 2018 10-K, less (b) the aggregate full face value of the debt and preferred equity of Oaktree and its direct and indirect subsidiaries and (without duplication) each OpCo, in each case calculated on a consolidated basis (but prior to the consolidation of any Funds) as reported in the financial statements of such entities for the December 31 preceding the Exchange Date; provided that the amount in the preceding clause (b) shall exclude (x) preferred equity issued in accordance with an Exchange and (y) debt owed by an OpCo that no longer nets to zero on a consolidated basis because such debt was transferred from Oaktree to another party.
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“D” is a multiple equal to 13.5.
“E” is a multiple equal to 6.75.
An illustrative calculation of the Total Equity Value as of December 31, 2018 is attached hereto as Exhibit B.
Notwithstanding the foregoing in this definition, to the extent not eliminated in the consolidation process, the calculation of “Total Equity Value” shall disregard payments made to, and costs incurred by, any Oaktree Group Member in connection with any agreement whereby one Oaktree Group Member provides bona fide services to another Oaktree Group Member.
“Transactions” means the Merger, the Subsequent Merger (as defined in the Merger Agreement) and the other transactions contemplated by the Merger Agreement.
“Treasury Regulations” means the regulations promulgated by the U.S. Department of the Treasury under the Code.
“Unit Designation” means a designation certificate approved by the General Partner and Brookfield.
“Valuation Firm” has the meaning set forth in Section 2.5(c).
“Vested Class A OCG Units” means a Class A Unit of Oaktree not subject to vesting or forfeiture.
“Vested Unit” has the meaning set forth in the OCGH Partnership Agreement.
“VWAP Period” means the period of the ten (10) consecutive trading days ending on the third (3rd) Business Day prior to the date of the issuance of Class A Shares as consideration in an Exchange.
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ARTICLE
II
Exchanges
Section 2.1 Exchange Procedure.
(a) Delivery of Aggregate Exchange Notices. Subject to Section 2.1(b) and Section 2.4, no later than the third (3rd) Business Day following the applicable Open Period, OCGH shall deliver written notice to Brookfield or its designee (an “Aggregate Exchange Notice”) (i) specifying (A) the name of each OCGH Limited Partner participating in the applicable Exchange (each, an “Exchanging LP”) and (B) the number of Exchangeable Units to be Exchanged by each such Exchanging LP subject to the limits, if any, set forth in Section 2.1(b) below (the “Exchanged Units”) and (ii) containing a representation and warranty by OCGH that all the Exchanging LPs are the legal, record and beneficial owners of the applicable Exchanged Units and that upon the sale of the applicable Exchanged Units pursuant to this Agreement, all right, title and interest in such Exchanged Units will vest in the purchaser thereof, free and clear of all Liens (other than Permitted Transfer Restrictions (as defined in the OCGH Partnership Agreement)). If, upon receipt of an Aggregate Exchange Notice, Brookfield determines that, following the applicable Exchange Date, the Permitted Oaktree Holders would in the aggregate Beneficially Own less than 1% of the issued and outstanding Oaktree Operating Group Units (as defined in the Oaktree Operating Agreement), Brookfield may thereupon provide written notice to OCGH to require that all remaining Exchangeable Units be included in the Aggregate Exchange Notice with respect to a specified future Open Period (which shall not be earlier than 36 months following the receipt of such written notice), it being understood and agreed that such right shall apply each time an Aggregate Exchange Notice is delivered to Brookfield, in the event that Brookfield has not previously exercised such right; provided that concurrently with or following the delivery of the written notice pursuant to Section 2.4, Brookfield shall have the right to require that all remaining Exchangeable Units be exchanged pursuant to an Aggregate Exchange Notice delivered with respect to the final Open Period if, following the Exchange Date with respect to the final Open Period, the Permitted Oaktree Holders would otherwise in the aggregate Beneficially Own less than 5% of the issued and outstanding Oaktree Operating Group Units (as defined in the Oaktree Operating Agreement). Except as otherwise permitted by Brookfield or its designee:
(i) an Aggregate Exchange Notice shall be irrevocable once delivered and must be unconditional;
(ii) any Aggregate Exchange Notice that purports to be revocable or conditional may be ignored or treated as irrevocable and unconditional; and
(iii) any Aggregate Exchange Notice that is delivered with respect to any Open Period shall not be valid with respect to any other Open Period.
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For the avoidance of doubt, any portion of the Exchangeable Units whose sale is being requested by such Aggregate Exchange Notice but are not sold due to exceeding the limitations set forth in Section 2.1(b)(i) or Section 2.1(b)(iv), may be submitted on a new Aggregate Exchange Notice in a subsequent Open Period with respect to any such excess.
(b) Limitations on Exchanges.
(i) In connection with each Open Period, except as otherwise agreed by Brookfield and an OCGH Limited Partner, Exchanging LPs shall not be permitted to sell a number of Exchangeable Units (other than in respect of Former Oaktree Units) pursuant to this Agreement in excess of the amount determined as set forth under the heading “Amount” in the table below; provided that (x) this Section 2.1(b) (other than Section 2.1(b)(iv)) shall not apply with respect to Exchangeable Units that were Former Oaktree Units and (y) references in the below table to “Exchangeable Units” shall exclude any Former Oaktree Units.
| Period | Amount (Senior Service Partners Group) |
Amount (Non-Senior Service Partners) |
| At any time following January 1, 2022 | Up to 20% of Merger Closing Units Amount held collectively by Senior Service Partners Group | Up to 12.5% of Merger Closing Units Amount held collectively by Non-Senior Service Partners Group |
| At any time following January 1, 2023 | Up to 40% of Merger Closing Units Amount (inclusive of prior Exchanges) held collectively by Senior Service Partners Group | Up to 25% of Merger Closing Units Amount (inclusive of prior Exchanges) held collectively by Non-Senior Service Partners Group |
| At any time following January 1, 2024 | Up to 60% of Merger Closing Units Amount (inclusive of prior Exchanges) held collectively by Senior Service Partners Group | Up to 37.5% of Merger Closing Units Amount (inclusive of prior Exchanges) held collectively by Non-Senior Service Partners Group |
| At any time following January 1, 2025 | Up to 80% of Merger Closing Units Amount (inclusive of prior Exchanges) held collectively by Senior Service Partners Group | Up to 50% of Merger Closing Units Amount (inclusive of prior Exchanges) held collectively by Non-Senior Service Partners Group |
| At any time following January 1, 2026 | Up to 100% of Merger Closing Units Amount (inclusive of prior Exchanges) held collectively by Senior Service Partners Group | Up to 62.5% of Merger Closing Units Amount (inclusive of prior Exchanges) held collectively by Non-Senior Service Partners Group |
| At any time following January 1, 2027 | Up to 100% of Merger Closing Units Amount (inclusive of prior Exchanges) held collectively by Senior Service Partners Group | Up to 75% of Merger Closing Units Amount (inclusive of prior Exchanges) held collectively by Non-Senior Service Partners Group |
| At any time following January 1, 2028 | Up to 100% of Merger Closing Units Amount (inclusive of prior Exchanges) held collectively by Senior Service Partners Group | Up to 87.5% of Merger Closing Units Amount (inclusive of prior Exchanges) held collectively by Non-Senior Service Partners Group |
| At any time following January 1, 2029 | Up to 100% of Merger Closing Units Amount held collectively by Senior Service Partners Group | Up to 100% of Merger Closing Units Amount held collectively by Non-Senior Service Partners Group |
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(ii) The maximum amount of the Exchangeable Units (excluding Former Oaktree Units, which are instead subject to the limitations set forth in Section 2.1(b)(iv)) that Brookfield and its designees or OCGH shall be required to purchase or acquire, respectively and in the aggregate, in any given Open Period shall not exceed (i) an amount equal to 20% of the Merger Closing Units Amount in the Open Period in 2022, (ii) an amount equal to 25% of the Merger Closing Units Amount in the Open Period in 2023, (iii) an amount equal to 30% of the Merger Closing Units Amount in the Open Period in 2024, and (iv) an amount equal to 35% of the Merger Closing Units Amount in the Open Period in 2025 and each Open Period thereafter (the “Applicable Maximum Amount”). In the event that the aggregate amount of the Exchangeable Units requested to be sold or exchanged in an Aggregate Exchange Notice in any given Open Period is greater than the Applicable Maximum Amount for such Open Period, OCGH shall re-allocate the Exchangeable Units among the Exchanging LPs in its sole discretion, such that only the Applicable Maximum Amount of the Exchangeable Units may be sold or exchanged, and OCGH shall notify Brookfield of the result of such re-allocation. Notwithstanding the foregoing, the limitations set forth in this Section 2.1(b)(ii) shall cease to apply immediately upon Brookfield’s delivery of a written notice to OCGH in accordance with Section 2.4 of its intention to discontinue any or all future Open Periods.
(iii) The parties hereto hereby acknowledge and agree that, notwithstanding anything herein to the contrary, no OCGH Limited Partner may participate in any Exchange pursuant hereto unless and until such OCGH Limited Partner shall have executed (including on their behalf by power of attorney, if applicable, and solely to the extent legally valid and binding) and delivered an effective counterpart to that certain TRA Amendment (as defined in the Merger Agreement).
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(iv) Notwithstanding anything in this Section 2.1(b) or otherwise in this Agreement to the contrary, in no event shall Exchanging LPs be entitled to sell Exchangeable Units that were Former Oaktree Units (including Accelerated Former Oaktree Units) in any given Exchange if the aggregate Current Equity Value attributable to such Former Oaktree Units would exceed the Former Oaktree Unit Threshold. In the event that the aggregate Current Equity Value of the Former Oaktree Units requested to be sold or exchanged in an Aggregate Exchange Notice in any given Open Period is greater than the Former Oaktree Unit Threshold for such Exchange, OCGH shall revise and re-allocate the Former Oaktree Units being included in the Exchange in its sole discretion, such that the applicable aggregate Current Equity Value for all participating Former Oaktree Units is equal to or less than the Former Oaktree Unit Threshold, and OCGH shall notify Brookfield of the result of such reallocation.
(c) Exchanges of OCGH Units. On the Exchange Date, each Exchanging LP shall receive an amount equal to the Exchange Consideration for each OCGH Unit being Exchanged by such Exchanging LP. To the extent the Exchange Consideration for the Exchange is (i) cash, Class A Shares or Atlas Notes, Brookfield shall purchase from each Exchanging LP the OCGH Units to be exchanged by such Exchanging LP for such cash, Class A Shares or Atlas Notes (such OCGH Units, the “Cash/Share/Note Exchange Units”) or (ii) ExchangeCo Units, OCGH shall acquire from the OCGH Limited Partners participating in an Exchange pursuant to this Agreement the OCGH Units to be exchanged for such ExchangeCo Units (such OCGH Units, the “ExchangeCo Exchange Units”) and such OCGH Limited Partner shall sell or transfer to Brookfield or, in the event the Exchange Consideration is ExchangeCo Units, to OCGH, the Exchanged Units. As consideration for the sale of Cash/Share/Note Exchange Units, Brookfield shall pay or cause to be paid to each Exchanging LP the portion of the Exchange Consideration payable to such Exchanging LP that is payable (at Brookfield’s election, subject to Section 2.1(f)(iii) and Article IV hereof) in cash, Class A Shares, Atlas Notes, or a combination of the foregoing. As consideration for the transfer of ExchangeCo Exchange Units, OCGH shall deliver to the Exchanging LP a number of ExchangeCo Units equal to the number of ExchangeCo Exchange Units, subject to Section 2.1(f)(iii) and Article IV hereof. Following the Exchange Date, to the extent not previously paid to an OCGH Limited Partner participating in an Exchange, OCGH shall pay such OCGH Limited Partner the aggregate Tax Distribution in respect of all OCGH Units exchanged by such Exchanging LP as and when paid to all other holders of OCGH.
(d) Redemption of OCGH Units. On the Exchange Date, immediately following the exchange of the Cash/Share/Note Exchange Units pursuant to Section 2.1(c) hereof, Brookfield shall tender for redemption, and OCGH shall redeem, each Cash/Share/Note Exchange Unit received by Brookfield pursuant to Section 2.1(c) and OCGH shall deliver to Brookfield a pro rata share of the partnership units of each OpCo, such that the aggregate number of OpCo Units delivered in the redemption comprises the Equivalent OpCo Units of the Cash/Share/Note Exchange Units being redeemed.
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(e) Cancellation of Class B OCG Units, Class B AOH Units and OCGH Units. Pursuant to Section 4.4 of the Oaktree Operating Agreement and Section 4.4 of the AOH Operating Agreement, on the Exchange Date, a number of Class B OCG Units and Class B AOH Units, each equal to the number of OCGH Units sold or transferred pursuant to Section 2.1(c) (whether or not actually delivered) in connection with the Exchanges effected on such Exchange Date, shall be automatically canceled without any further action by any party. In addition, any OCGH Units sold or transferred to OCGH pursuant to Section 2.1(c) (whether or not actually delivered) in connection with the Exchanges effected on any Exchange Date shall be automatically canceled without any further action by any party.
(f) Determination of Form of Exchange Consideration.
(i) Notwithstanding anything to the contrary in this Agreement but subject to Section 2.1(i), on each Exchange Date, each Exchanging LP shall be entitled to receive Exchange Consideration in respect of all of its Exchanged Units to be Exchanged on such Exchange Date.
(ii) Notwithstanding anything to the contrary in this Agreement, (A) no later than five (5) Business Days following a written request from Brookfield (which request may be made no earlier than ten (10) Business Days following the expiration of the applicable Open Period), OCGH shall provide Brookfield with (I) a redacted version of the most recent Schedule K-1 for each Exchanging LP, (II) (1) during the Initial Period, for those Exchanging LPs that are current employees of a member of the Oaktree Operating Group (as defined in the Oaktree Operating Agreement), a written confirmation from an officer of the Oaktree Operating Group entity that is the employer for the Exchanging LPs who is also a licensed attorney or certified public accountant certifying that such officer took reasonable steps within the prior three months to verify that the Exchanging LPs are accredited investors and identifying any Exchanging LPs that are not accredited or for whom status as an accredited investor could not be confirmed and (2) for those Exchanging LPs who are not current employees of a member of the Oaktree Operating Group and otherwise after the Initial Period, such supporting information as is necessary to satisfy Rule 506(c) under Regulation D promulgated under the Securities Act, (III) a schedule listing each Exchanging LP’s current tax basis in their respective Exchanged Units as of such date, (IV) a schedule listing each Exchanging LP’s share of OCGH’s partnership liabilities as of such date, (V) the then-current capitalization table of OCGH, indicating the holders of OCGH Units and the number of OCGH Units held by each such holder, and (VI) any other information reasonably requested by Brookfield to allow Brookfield to determine whether to pay or cause the Exchange Consideration to be paid in the form of Class A Shares, cash, ExchangeCo Units, Atlas Notes or a combination of the foregoing, (B) prior to the expiration of the Initial Period, each OpCo shall cooperate and provide responses with respect to any reasonable written request of Brookfield received no later than thirty (30) days following the later of (x) expiration of the applicable Open Period and (y) the date the Current Equity Valuation Calculation is delivered pursuant to Section 2.5(a) for information necessary for Brookfield to determine whether to pay or cause the Exchange Consideration to be paid in the form of Class A Shares, cash, ExchangeCo Units, Atlas Notes or a combination of the foregoing and (C) it is understood and agreed that, prior to the expiration of the Initial Period, the issuance of ExchangeCo Notes or Atlas Notes will not be precluded due to the failure of any Oaktree Group Member to deliver any certificates or other documents required by, or to comply with any representation, warranty, covenant or other agreement contained in, an ExchangeCo Note Purchase Agreement or an Atlas Note Purchase Agreement, respectively, in each case other than any such failure that results from a Brookfield Consent Matter (as defined in the Oaktree Operating Agreement). Any information required to be provided by OCGH pursuant to this Section 2.1(f) initially may be provided in draft form based on the information reasonably available to OCGH.
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(iii) Notwithstanding anything to the contrary in this Agreement or any other agreement to which any OCGH Limited Partner may from time to time be a party, no later than fifteen (15) Business Days prior to the applicable Exchange Date, Brookfield shall notify OCGH in writing of the anticipated Exchange Date and of Brookfield’s irrevocable determination whether to pay or cause the Exchange Consideration to be paid in the form of Class A Shares, cash, ExchangeCo Units, Atlas Notes or a combination of the foregoing, including the allocation among each such form of consideration; provided, however, that (A) no more than 50% of the Exchange Consideration in respect of the first $500,000,000 in aggregate Current Equity Value of all OCGH Units entitled to receive Exchange Consideration in connection with the delivery of an Aggregate Exchange Notice during a particular Open Period shall take the form of ExchangeCo Units or Atlas Notes, (B) if Atlas Notes form part of the Exchange Consideration, then the amount of Exchange Consideration provided in the form of Class A Shares and cash in the applicable Exchange must be equal to or greater than, in the aggregate, the Atlas Note Minimum Amount, (C) with respect to any Exchanges occurring in fiscal years 2020 and 2021, the Exchange Consideration shall consist solely of cash, Class A Shares or a combination of the foregoing and (D) all Exchanging LPs on each Exchange Date shall receive the same form of Exchange Consideration (or, if Brookfield elects multiple forms of Exchange Consideration in any Exchange, each Exchanging LP shall receive its pro rata proportion of each form of Exchange Consideration); provided that if an Exchanging LP (1) is adversely and disproportionately affected by a Blackout Period (relative to other Exchanging LPs and whether due to possession of material non-public information or otherwise) as jointly determined by OCGH and Brookfield acting in good faith, then such Exchanging LP shall receive cash, Atlas Notes, ExchangeCo Units or any combination of the foregoing (subject to the preceding clauses (A), (B) and (C)) in lieu of Class A Shares, (2) is resident in Canada and it is not possible to issue free trading Class A Shares to such Exchanging LP in a manner that is exempt from the prospectus requirements of applicable securities laws in the applicable province or territory of Canada, then such Exchanging LP shall receive cash, Atlas Notes, ExchangeCo Units or any combination of the foregoing (subject to the preceding clauses (A), (B) and (C)) in lieu of Class A Shares or (3) is not eligible to receive ExchangeCo Units or Atlas Notes pursuant to Section 2.1(i), then such Exchanging LP shall instead receive cash, Class A Shares or a combination of the foregoing. Notwithstanding anything to the contrary in this Agreement, if all or any portion of the Exchange Consideration consists of Class A Shares and the representation and warranty in Section 3.1(c) would, on the date the closing of the Exchange would otherwise occur hereunder, not be true and correct in all respects, Brookfield shall not be permitted to pay the Exchange Consideration in Class A Shares and shall instead be required to substitute cash, Atlas Notes or ExchangeCo Units in lieu of Class A Shares; provided, that if the representation and warranty in Section 3.1(c) would not be true and correct in all respects solely as a result of the existence of a Blackout Period or the need for a reasonable additional period of time in order to comply with applicable securities laws, then the Exchange Date may be delayed to a date that, subject to compliance with Section 2.2(c), is no later than one hundred and ten (110) days following the conclusion of the Open Period (but will, in any event, occur on such earlier date when the representation and warranty in Section 3.1(c) would be true and correct in all respects); provided, further, that if the representation and warranty in Section 3.1(c) is true and correct in all respects (but would not be true and correct in all respects without the proviso to the first sentence thereof), then the provisions related to accredited investors set forth herein with respect to issuances of Atlas Notes and ExchangeCo Units shall apply to the initial issuances of such Class A Shares, mutatis mutandis.
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(iv) To the extent any Exchange Consideration for an Exchange is in ExchangeCo Units, the parties hereto shall cause each of their respective Affiliates who is contemplated to be a party to, and who is not already a party to, the Put Agreement and/or the Call Agreement to enter into such agreement concurrently with the Closing of the applicable Exchange.
(g) Suspension of Liquidity Rights. Notwithstanding anything to the contrary herein, as of the earlier of (a) the expiration of the Initial Period, and (b) December 31, 2023, if the Required Closed-End Amendment Percentage is less than 80%, then the rights to initiate Exchanges pursuant to this Article II shall be suspended until such time as the Required Closed-End Amendment Percentage is at least 80%.
(h) Withholding. Brookfield or the Paying Agent shall be entitled to deduct and withhold, or cause to be deducted or withheld, from the amounts payable pursuant to this Agreement such amounts as are required to be deducted and withheld under the Code or other applicable Tax laws. Prior to withholding any amounts pursuant to this Section 2.1(h), Brookfield or Paying Agent (as applicable) will provide at least ten (10) Business Days prior written notice to the Person in respect of which such withholding is made, and shall cooperate with such Person to reduce or eliminate such withholding (including by providing such Person an opportunity to provide any applicable Tax forms); provided that no such prior notice will be required (i) for withholding pursuant to Section 1445 of the Code with respect to an Exchanging LP, if OCGH does not timely provide the certificate described in Section 2.2(d)(i)(B) of this Agreement or (ii) for withholding pursuant to Section 1446(f) of the Code with respect to an Exchanging LP, if such Exchanging LP does not timely provide the form described in Section 2.2(d)(i)(A)(I) of this Agreement. Any such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction and withholding was made; provided that such amounts are remitted to the applicable Governmental Entities. Any deductions or withholdings made from the Exchange Consideration payable pursuant to this Agreement shall be made (1) first from any Exchange Consideration payable in the form of cash (it being understood, for the avoidance of doubt, that the amount of any deduction or withholding shall not be limited to the amount of such cash), (2) second from any Exchange Consideration payable in the form of Class A Shares (it being understood, for the avoidance of doubt, that the amount of any deduction or withholding shall not be limited to the amount of such Class A Shares), and (3) last from any Exchange Consideration payable in the form of Atlas Notes or ExchangeCo Units.
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(i) Exemptions. Any ExchangeCo Units or Atlas Notes issued pursuant to the terms of this Agreement have not been, and will not be, registered under the Securities Act and will be issued only in transactions exempt from such registration. In particular, any such ExchangeCo Units or Atlas Notes will be issued only to Exchanging LPs that are (A) non-U.S. persons in offshore transactions in compliance with Regulation S under the Securities Act, (B) accredited investors (as defined in Rule 501 under Regulation D promulgated under the Securities Act) in a manner complying with the conditions set forth in Rule 506(c) under Regulation D promulgated under the Securities Act and/or (C) resident in Canada in a manner that is exempt from the prospectus requirements of applicable securities laws in the applicable provinces and territories of Canada. The parties hereto agree to reasonably cooperate with each other in order to ensure compliance with the foregoing, including (w) making or obtaining appropriate written representations regarding the status of Exchanging LPs, (x) facilitating reasonable investigation into the status thereof as contemplated by Rule 506(c)(2) under Regulation D promulgated under the Securities Act, (y) making or obtaining other representations customary in private placement transactions, and (z) making available appropriate information and opportunities to conduct due diligence. The parties hereto agree that any OCGH Limited Partner that is unable to make necessary representations or make available necessary information may not be able to receive ExchangeCo Units or Atlas Notes in an Exchange, and shall instead receive cash, Class A Shares or a combination of the foregoing. OCGH hereby agrees to use commercially reasonable efforts to cause any such OCGH Limited Partners to become “accredited investors”, or otherwise eligible to participate in a private placement, including by appointing a “purchaser representative” (at Brookfield’s sole cost and expense) pursuant to Rule 506 (it being understood that the parties hereto will cooperate in good faith to establish eligibility of an OCGH Limited Partner to participate in a private placement). In the event that, notwithstanding the foregoing, there are OCGH Limited Partners participating in an Exchange who are not “accredited investors” and are ineligible to participate in a private placement, and the value of the OCGH Units in such Exchange owned by such OCGH Limited Partners exceeds $20,000,000, then OCGH and Brookfield shall cooperate in good faith to determine and implement an approach in respect of the OCGH Units owned by such OCGH Limited Partners in excess of such amount that would be economically equivalent to the Atlas Notes and/or ExchangeCo Units being received by the other Exchanging LPs.
Section 2.2 Closing Procedures.
(a) Exchange Date. The closing of any sale or exchange of an OCGH Limited Partner’s OCGH Units hereunder shall occur on or prior to the ninety-fifth (95th) day following the expiration of the applicable Open Period (the date on which the closing of any such sale or exchange occurs, the “Exchange Date”), subject to delay pursuant to the penultimate proviso to Section 2.1(f)(iii) or to comply with Section 2.2(c); provided that, in the event the Valuation Firm has not completed its review and made its determination pursuant to Section 2.5 on or prior to the eighty-fifth (85th) day following expiration of the applicable Open Period, then the Exchange Date pursuant to this Section 2.2(a) shall be no earlier than the final determination by the Valuation Firm of the Current Equity Value, and no later than the date that is five (5) Business Days following the final determination by the Valuation Firm of the Current Equity Value; provided, however, that the final determination by such Valuation Firm shall not exceed the ninetieth (90th) day following the expiration of the applicable Open Period.
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(b) Location. On the Exchange Date, the parties shall effect the closing (the “Closing”) of the transactions contemplated by Section 2.1 at the offices of Oaktree Capital Group, LLC, 333 South Grand Avenue, 28th Floor, Los Angeles, California 90071, in the manner set forth in this Section 2.2 or at such other time, at such other place and in such other manner as OCGH and Brookfield shall mutually agree.
(c) Absence of Injunctions or Decrees. The obligations of the parties to this Agreement to consummate an Exchange shall be subject to the condition that there shall be no law, rule, regulation, injunction, restraining order or decree of any nature of any Governmental Entity that is in effect that restrains or prohibits such Exchange.
(d) Exchange Deliveries.
(i) No later than five (5) Business Days following (x) the written request by Brookfield (which request may be made no earlier than ten (10) Business Days following the expiration of the applicable Open Period) or (y) notification by Brookfield of the Exchange Date pursuant to Section 2.1(f)(iii), with respect to each OCGH Limited Partner participating in such Closing:
| A. | each Exchanging LP participating in such Closing shall deliver, or shall instruct the delivery of on its behalf, to the Paying Agent either (I) an IRS Form W-9 or (II) a certification from OCGH dated as of the Exchange Date which complies with the requirements of Section 7.03 of IRS Notice 2018-29 or any corresponding requirements of any superseding Treasury Regulations or other official guidance, certifying the amount of the OCGH Limited Partner’s share of OCGH’s partnership liabilities (which certification, if OCGH is not the Paying Agent, OCGH may deliver directly to Brookfield on behalf of the Exchanging LP); |
| B. | OCGH shall deliver, or shall instruct the delivery of on its behalf, to the Paying Agent a certificate from OCGH dated as of the Exchange Date which complies with the requirements of Treasury Regulation Section 1.1445-11T(d)(2), certifying that the transactions contemplated hereby are exempt from withholding under Section 1445 of the Code; and |
| C. | the Paying Agent shall (or if the Paying Agent is not OCGH, the parties shall direct the Paying Agent to) deliver to Brookfield, upon receipt, the forms and/or certificates delivered by the OCGH Limited Partners and OCGH pursuant to Section 2.2(d)(i)(A) and/or Section 2.2(d)(i)(B). |
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(ii) At each Closing, with respect to each OCGH Limited Partner participating in such Closing:
| A. | each OCGH Limited Partner participating in such Closing shall deliver, or shall instruct the delivery of on its behalf, to the Paying Agent the number of OCGH Units to be sold by such OCGH Limited Partner; |
| B. | Brookfield and OCGH, as applicable, shall deliver, or cause to be delivered, in each case to the extent applicable, (1) to the Paying Agent its pro rata portion of the Exchange Consideration (in cash, ExchangeCo Units, Atlas Notes or a combination of the foregoing) for the number of OCGH Units being acquired by Brookfield or OCGH, as applicable and (2) to the applicable OCGH Limited Partner, as directed by OCGH, its pro rata portion of the Exchange Consideration in Class A Shares, in each case as determined pursuant to Section 2.1(f); and |
| C. | OCGH shall deliver to the Paying Agent, to the extent certificated, the certificate or certificates representing a number of Class B OCG Units and Class B AOH Units in each case equal to the number of OCGH Units being acquired by Brookfield or OCGH. |
(e) Additional Exchange Deliveries. In addition to the closing deliveries provided for with respect to each OCGH Limited Partner, on any Exchange Date if OCGH delivers to the Paying Agent a certificate or certificates that represent more Class B OCG Units or Class B AOH Units than the number of OpCo Units to be delivered to Brookfield in connection with all Exchanges occurring on such Exchange Date, each of Oaktree and Atlas OCM shall deliver to the Paying Agent a certificate or certificates registered in the name of OCGH representing a number of Class B OCG Units and Class B AOH Units, respectively, equal to such excess.
(f) Paying Agent. After receiving all required closing deliveries set forth in Sections 2.2(d) and 2.2(e) for all Closings occurring on an Exchange Date, the Paying Agent shall deliver (or if the Paying Agent is not OCGH, the parties hereto shall direct the Paying Agent to deliver):
(i) to each Exchanging LP, cash, ExchangeCo Units, Atlas Notes or any combination of the foregoing (as determined by Brookfield) representing the Exchange Consideration for the number of OCGH Units delivered by or on behalf of such OCGH Limited Partner on such Exchange Date;
(ii) to Brookfield or OCGH, as applicable, the portion of the OCGH Units being acquired by Brookfield or OCGH, as applicable on such Exchange Date;
(iii) to Oaktree, the certificates, if any, representing the number of Class B OCG Units and Class B AOH Units in each case equal to the number of OCGH Units being acquired by Brookfield or OCGH, as applicable; and
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(iv) to OCGH, the certificates delivered by Oaktree pursuant to Section 2.2(e), if any.
Section 2.3 Dispute Resolution. Subject to Section 2.5, to the extent that OCGH (on behalf of itself or any OCGH Limited Partner) or Brookfield has a reasonable, good faith dispute with regard to any determinations, interpretations, calculations or adjustments of Oaktree, Atlas OCM or Brookfield other than with respect to the calculation of the Current Equity Value (which shall be addressed solely pursuant to Section 2.5), OCGH or Brookfield shall provide the other party with written notice of such good faith dispute (the “Notice of Dispute”), together with a reasonably detailed explanation of such dispute. Promptly upon the delivery of the Notice of Dispute (but no later than three (3) days), each of OCGH and Brookfield shall appoint a member of its senior management, and such members of senior management will negotiate in good faith and attempt to resolve such dispute; provided that if such members of senior management are unable to resolve such dispute within twenty (20) days following the delivery of the Notice of Dispute, then the members of senior management shall submit such dispute to arbitration in accordance with the procedure set forth in Section 5.11.
Section 2.4 Termination of Exchanges. At any time following the eighth (8th) anniversary of the Merger Closing Date, Brookfield may provide written notice to each OCGH Limited Partner, pursuant to Section 5.1, of the termination of any Open Periods beginning no earlier than 36 months following the date of such notice.
Section 2.5 Delivery of Valuation.
(a) Current Equity Value Calculation. As soon as reasonably practicable, but no later than sixty (60) days following the end of each calendar year (or ninety (90) days following the end of each of calendar years 2020 and 2021), Oaktree (which, solely for purposes of this Section 2.5, shall include Atlas OCM) shall prepare and deliver to Brookfield (or after the expiration of the Initial Period, to OCGH) (Brookfield, or after the expiration of the Initial Period, OCGH, the “Non-Control Party”, and OCGH, or, after the expiration of the Initial Period, Brookfield, the “Control Party”)) the consolidated audited financial statements of the OpCos prepared in accordance with GAAP, a calculation of each component of the Current Equity Value (other than clause (ii) of the definition thereof) for the immediately preceding calendar year and a bridge to GAAP for such components of the Current Equity Value Calculation that are non-GAAP, together with all of the components thereto (including all of the components of Total Equity Value), together with all reasonable supporting documentation (the “Current Equity Value Calculation”). Oaktree and its representatives shall make available or cause to be made available to the Non-Control Party and its representatives all work papers and other books and records used in preparing the Current Equity Value Calculation and provide reasonable access to members of its accounting and financial staff and outside auditors in connection with the Non-Control Party’s review thereof; provided, however, that the accountants of Oaktree shall not be obliged to make any work papers available to the Non-Control Party except in accordance with such accountants’ normal disclosure procedures and then only after such firm has signed a customary agreement relating to such access to work papers in form and substance reasonably acceptable to such accountants.
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(b) Dispute Notice. The Non-Control Party shall have 30 days following receipt of the Current Equity Value Calculation to notify the Control Party in writing (a “Dispute Notice”) of any dispute of any item, calculation or other matter contained in the Current Equity Value Calculation, including in the event that insufficient supporting documentation was delivered to the Non-Control Party, which Dispute Notice shall set forth a description of the items, calculations or matter disputed. If the Non-Control Party delivers a Dispute Notice during such 30 day period, then the items, calculations and other matters that are specified in such Dispute Notice shall be deemed in dispute and all other items, calculations and matters set forth in the Current Equity Value Calculation shall be final and binding. If the Non-Control Party fails to deliver a Dispute Notice to the Control Party within such 30 day period or if the Non-Control Party at any time during such 30 day period notifies the Control Party in writing that the Non-Control Party agrees with the Current Equity Value Calculation in its entirety (or any particular items, calculations or matters set forth in the Current Equity Value Calculation), then the Current Equity Value Calculation (or such item, calculation or matter, as applicable) shall become final and binding.
(c) Valuation Dispute. In the event that the Non-Control Party delivers a Dispute Notice, then the Non-Control Party and the Control Party shall work in good faith to resolve the Non-Control Party’s objections set forth therein and the calculation of the Current Equity Value. In the event the Non-Control Party and the Control Party fail to agree on the Current Equity Value within thirty (30) days after delivery of the Dispute Notice, then the applicable disputed items shall be promptly referred for valuation to a nationally recognized valuation firm (which may be the valuation practice of a nationally-recognized investment bank or accounting firm) with experience valuating asset management firms (the “Valuation Firm”) which shall determine, no later than ninety (90) days following the expiration of the applicable Open Period, the computation of the items remaining in dispute and the resulting calculation of the Current Equity Value, in each case in accordance with the terms of this Agreement. In resolving any disputed item, the Valuation Firm (i) shall be bound by the Historic Principles and the provisions of this Agreement, (ii) may not assign a value to any item greater than the greatest value for such item claimed by either party or less than the smallest value for such item claimed by either party and (iii) shall take into account only the Dispute Notice and the information and documents provided to the Valuation Firm by or on behalf of the Non-Control Party or the Control Party (i.e., not on the basis of independent review). The Valuation Firm shall consider only the disputed matters that were included in the Dispute Notice and that the Non-Control Party and the Control Party were unable to resolve. Neither the Non-Control Party nor the Control Party shall meet or have any conversations separately with the Valuation Firm (other than conversations limited to the submission of a request for documents or information by the Valuation Firm to such party) without the other party’s prior written consent. Each of the Non-Control Party and the Control Party may also furnish to the Valuation Firm such other information and documents as it deems relevant or such information and documents as may be requested by the Valuation Firm; provided, that it delivers a copy thereof substantially simultaneously to the other party. The aggregate fees, costs and expenses of the Valuation Firm shall be borne by the Oaktree Operating Group (provided that each party will bear their own legal fees with respect to any of the matters pursuant to this Section 2.5). During the review by the Valuation Firm, each party agrees that it will, and agrees to direct its independent accountants to, reasonably cooperate and assist in the calculation of the Current Equity Value Calculation and in the conduct of the review by the Valuation Firm of any proposed calculations of the Current Equity Value Calculation or the components thereof, including the Total Equity Value, and the making reasonably available to the extent necessary, of books, records, work papers and personnel; provided, however, that the accountants of Oaktree, the Control Party and the Non-Control Party shall not be obliged to make any work papers available to the Valuation Firm except in accordance with such accountants’ normal disclosure procedures and then only after such firm has signed a customary agreement relating to such access to work papers in form and substance reasonably acceptable to such accountants. The Current Equity Value Calculation as determined by the Valuation Firm shall be final and binding on the parties hereto absent manifest error. For the avoidance of doubt, any disputes with respect to the Current Equity Value Calculation shall be resolved pursuant to the terms of this Section 2.5, to the exclusion of any other dispute resolution mechanism provided in this Agreement, including Sections 2.3 and 5.11. The Control Party and the Non-Control Party shall mutually agree on a Valuation Firm or absent such agreement, the Valuation Firm shall be selected through arbitration pursuant to Section 5.11. It is further understood and agreed that the Control Party shall cause Oaktree and Atlas OCM to comply with their obligations under this Agreement.
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Section 2.6 Total Equity Value.
(a) Acquisitions and Dispositions. With respect to any completed acquisition or disposition, OCGH and Brookfield agree to negotiate in good faith to adjust the Total Equity Value and the components thereof on a pro forma basis for (i) the preceding three year period to properly reflect the impact on (x) Base Fee Earnings and (y) Net Incentives Created or (ii) item “C” under the definition of “Total Equity Value”.
(b) Consolidation of DL Capital or Other Investment Manager. This Agreement assumes that the Oaktree Group’s interest in DL Capital is a minority interest. In the event that the Oaktree Group’s interest in DL Capital or any other investment manager increases after the date hereof such that DL Capital or such other investment manager is consolidated in the financial statements of the OpCos or controlled by the Oaktree Group under applicable law, the parties hereto agree to negotiate in good faith to adjust the Total Equity Value and the components thereof on a pro forma basis for (i) the preceding three year period to properly reflect the impact on (x) Base Fee Earnings and (y) Net Incentives Created or (ii) item “C” under the definition of “Total Equity Value”.
(c) LTIP. To the extent that, following the date hereof, OCGH issues additional OCGH Units in accordance with the OCGH Partnership Agreement that are not Exchangeable Units, then the parties hereto agree to negotiate in good faith to adjust the Total Equity Value and the components thereof.
Section 2.7 Post-Closing Consents and Amendments.
(a) Formation of New Funds. With respect to each Company Fund formed during the Initial Period (and each Managed Account and sub-advisory relationship, the Investment Advisory Arrangement for which is entered into during the Initial Period), each Oaktree Group Member shall include in the partnership agreement, operating agreement, shareholders’ agreement or similar governing agreement (including a side letter) of such Company Fund (or the Investment Advisory Arrangement for such Managed Account or sub-advisory relationship), provisions that (i) provide for the advance approval of the assignment (within the meaning of the Advisers Act) of the applicable Investment Advisory Arrangement to Brookfield or its Affiliates and (ii) other than with respect to Registered Funds, modify the definition of “affiliate” contained therein such that no affiliate of Oaktree, any OpCo, or its or their direct and indirect subsidiaries in respect of which an actual or virtual information barrier is in place, or in respect of which there is no coordination or consultation in respect of investment decisions (in each case, as determined by Oaktree in its discretion based on the relevant facts and circumstances applicable to each particular situation) shall be deemed to be an “affiliate” of Oaktree, any OpCo, or its or their direct and indirect subsidiaries for purposes of such governing agreement (or such Investment Advisory Arrangement) or otherwise provide that none of BAM or any of its affiliates will be an “affiliate” of Oaktree, any OpCo, or its or their direct and indirect subsidiaries for purposes of such governing agreement (or such Investment Advisory Arrangement).
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(b) Required Amendments.
(i) As soon as reasonably practicable following the Merger Closing Date, with respect to each Company Fund that does not require affirmative consent to approve amendments to such Company Fund’s partnership agreement, operating agreement, shareholders’ agreement or similar governing agreement, the Oaktree Group shall amend such partnership agreement, operating agreement, shareholders’ agreement or similar governing agreement of such Company Fund to include the Required Amendment.
(ii) As soon as reasonably practicable following the Merger Closing Date, with respect to each Company Fund that requires affirmative consent to approve amendments to such Company Fund’s partnership agreement, operating agreement, shareholders’ agreement or similar governing agreement, the Oaktree Group shall use reasonable best efforts to amend such partnership agreement, operating agreement, shareholders’ agreement or similar governing agreement of such Company Fund to include the Required Amendment.
(iii) As soon as reasonably practicable following the Merger Closing Date, with respect to each Managed Account or sub-advisory relationship for which a Negative Consent is not sufficient under the applicable Investment Advisory Arrangement for approval of an assignment (within the meaning of the Advisers Act) to Brookfield or its Affiliates, the Oaktree Group shall use reasonable best efforts to amend such Investment Advisory Arrangement of such Managed Account or such sub-advisory relationship to include the Required Amendment.
(iv) Brookfield shall have the reasonable opportunity to review drafts of, and Oaktree shall obtain Brookfield’s prior written consent (such consent not to be unreasonably withheld) to the form and substance of (i) the Required Amendment and any related notice and consent form for any Company Fund, Managed Account or sub-advisory relationship, and (ii) the provisions required to be included in the partnership agreement, operating agreement, shareholders’ agreement or similar governing agreement for each Company Fund formed during the Initial Period (or, in the case of a new Managed Account or new sub-advisory relationship, included in its Investment Advisory Arrangement) as contemplated by Section 2.7(a) hereof; provided, that, if Oaktree has previously obtained Brookfield’s consent to the form and substance of a Required Amendment or the required provisions contemplated by this Section 2.7, Oaktree shall not be required to obtain Brookfield’s consent to subsequent amendments if the form and substance of such amendments and related notices and consent forms are substantially the same as the Required Amendment (or required provisions) and related notice and consent form previously reviewed and approved by Brookfield.
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Section 2.8 Additional Payments. On each of the first (1st), second (2nd) and third (3rd) anniversary of the Merger Closing Date, Brookfield (on behalf of itself and on behalf of Oaktree LLC and Oaktree AIF) shall pay to OCGH as administrative agent on behalf of the limited partners of OCGH set forth in the books and records thereof (for the avoidance of doubt, regardless of whether they are a limited partner as of any applicable payment date) a cash payment of $66,000,000 in the aggregate (each such payment, an “Additional Payment”), which shall be allocated among such limited partners based on their percentage interests in such Additional Payment as determined by OCGH in its sole discretion; provided, that notwithstanding anything to the contrary in this Agreement, OCGH shall be permitted to offset any Additional Payment received on behalf of a Limited Partner by any Tax indemnity payments paid or payable by OCGH pursuant to the limited partnership agreement (or other organizational document) of an OpCo that are attributable to such Limited Partner to the extent such Tax indemnity payments did not reduce distributions to OCGH attributable to such Limited Partner or any other liabilities of OCGH that OCGH determines are attributable to such Limited Partner; provided, further, that nothing in this Agreement shall expand any obligations of OCGH to indemnify for Taxes pursuant to the limited partnership agreement (or other organizational document) of an OpCo. The parties agree that (x) a portion of each Additional Payment will be treated for U.S. federal (and applicable state and local) income Tax purposes as consideration for the exchange of OCGH Units on the Merger Closing Date and (y) a portion of each Additional Payment will be treated for U.S. federal (and applicable state and local) income Tax purposes as consideration for the future Exchanges following the Merger Closing Date (and any portion attributable to a future Exchange shall be treated as an open transaction for U.S. federal (and applicable state and local) income Tax purposes until such future Exchange occurs). The Additional Payments will be allocated between exchanges of OCGH Units on the Merger Closing Date and Exchanges after the Merger Closing Date in accordance with the methodology set forth in Exhibit I, whether or not future Exchanges occur in accordance with the timing assumptions reflected on Exhibit I. Prior to the first anniversary of the Merger Closing Date, OCGH may make one update to such allocation in a manner consistent with such methodology to take into account any updated information regarding the built-in gain of the limited partners as of the Merger Closing Date and will deliver an updated allocation schedule to Brookfield.
ARTICLE
III
Representations & Warranties
Section 3.1 Representations and Warranties of Brookfield. Brookfield represents and warrants to each OCGH Limited Partner, as of each Exchange Date, as follows:
(a) Existence and Power.
(i) Brookfield is duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite limited liability company or other applicable power and authority to enter into this Agreement and to perform its obligations hereunder. Brookfield has all requisite corporate or other applicable power and authority to own, operate and lease its properties, rights and assets and to carry on its business as it is being conducted on the date of this Agreement.
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(ii) Except as would not, individually or in the aggregate, constitute a Material Adverse Effect on Brookfield, Brookfield has been duly qualified as a foreign corporation or other entity for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties, rights and assets or conducts any business so as to require such qualification. Except as would not, individually or in the aggregate, constitute a Material Adverse Effect on Brookfield, each subsidiary of Brookfield (other than the OpCos and their subsidiaries) has been duly organized and is validly existing in good standing (to the extent that the concept of “good standing” is recognized by the applicable jurisdiction) under the laws of its jurisdiction of organization.
(b) Authorization. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated herein have been duly authorized by Brookfield and, in the case of the issuance of any Class A Shares upon any Exchange in accordance with the terms of this Agreement, by BAM. Assuming this Agreement constitutes the valid and binding obligation of the other parties hereto, this Agreement is a valid and binding obligation of Brookfield, enforceable against Brookfield in accordance with its terms, subject to the limitation of such enforcement by (i) the effect of bankruptcy, insolvency, reorganization, receivership, conservatorship, arrangement, moratorium or other laws affecting or relating to creditors’ rights generally or (ii) the rules governing the availability of specific performance, injunctive relief or other equitable remedies and general principles of equity, regardless of whether considered in a proceeding in equity or at law (the “Enforceability Exceptions”).
(c) Valid Issuance of Class A Shares. The Class A Shares to be issued in any Exchange have been duly authorized, and when issued in an Exchange, all such Class A Shares shall (i) be validly issued, fully paid, nonassessable and free of pre-emptive or similar rights, (ii) be issued to the applicable OCGH Limited Partners in a transaction registered under the Securities Act, (iii) be delivered without restrictive legends, via book-entry or, if so elected by the applicable OCGH Limited Partner, in certificated form or in street name, (iv) be listed on the New York Stock Exchange or NASDAQ and any other United States national securities exchange or Canadian securities exchange on which shares of the same class are then listed, (v) not be subject to any restriction on transfer imposed by any contractual obligation with BAM, Brookfield or any of their Affiliates, other than the Registration Rights Agreement, (vi) not be subject to (and that BAM reasonably believes at the Exchange Date will, continuously for the ten (10) consecutive Business Days immediately following the Exchange Date, remain free from) any restriction on transfer (including a Blackout Period) by the recipient thereof and (vii) if the applicable OCGH Limited Partner upon receipt of such Class A Shares holds Registrable Securities (as defined in the Registration Rights Agreement), resale of such Registrable Securities is covered by an effective registration statement that is Available (as defined in the Registration Rights Agreement); provided that if a Governmental Entity issues an order, decree, ruling or injunction to the effect that, or otherwise indicates verbally or in writing to BAM or its counsel that, the Securities Act does not permit the registration of Class A Shares to be issued in an Exchange, then (x) the representation and warranty set forth in the foregoing clauses (ii) and (iii) shall not apply and (y) the foregoing clause (v) shall not fail to be true and correct in all respects solely due to (1) the existence of an agreement containing customary restrictions on transferring privately placed Class A Shares in violation of securities laws or (2) the inclusion of a restrictive legend on the Class A Shares. Each Exchanging LP to which Class A Shares are issued shall, upon issuance, have good and valid title thereto, free and clear of any liens (other than transfer restrictions under securities laws).
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(d) Non-Contravention/No Consents. The execution, delivery and performance of the Agreement and the issuance of any Class A Share upon any Exchange in accordance with the terms of this Agreement does not conflict with, violate or result in a breach of any provision of, or constitute a default under, or result in the termination of or accelerate the performance required by, or result in a right of termination or acceleration under, with respect to BAM: (i) the organizational documents of BAM, (ii) any credit agreement, mortgage, note, indenture, deed of trust, lease, license, loan agreement or other agreement binding upon BAM or any of its subsidiaries or (iii) any permit, government license, judgment, order, decree, ruling, injunction, statute, law, ordinance, rule or regulation applicable to BAM or any of its subsidiaries, other than in the cases of clauses (ii) and (iii) as would not, individually or in the aggregate, constitute a Material Adverse Effect on BAM. Assuming the accuracy of the representations of the other parties set forth herein, other than as have been obtained prior to the applicable Exchange Date, no consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity is required on the part of BAM or any of its subsidiaries in connection with the issuance of any Class A Share upon any Exchange in accordance with the terms of this Agreement, except for any consent, approval, order, authorization, registration, declaration, filing, exemption or review the failure of which to be obtained or made would not, individually or in the aggregate, constitute a Material Adverse Effect on BAM
(e) Brokers and Finders. Brookfield has not retained, utilized or been represented by, or otherwise become obligated to, any broker, placement agent, financial advisor or finder in connection with the transactions contemplated by this Agreement whose fees any of the other parties would be required to pay.
Section 3.2 Representations and Warranties of ExchangeCo. ExchangeCo represents and warrants to each OCGH Limited Partner, as of each Exchange Date, as follows:
(a) Existence and Power.
(i) ExchangeCo is duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite partnership power and authority to enter into this Agreement and to perform its obligations hereunder. ExchangeCo has all requisite corporate or other applicable power and authority to own, operate and lease its properties, rights and assets and to carry on its business as it is being conducted on the date of this Agreement.
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(ii) Except as would not, individually or in the aggregate, constitute a Material Adverse Effect on ExchangeCo, ExchangeCo has been duly qualified as a foreign corporation or other entity for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties, rights and assets or conducts any business so as to require such qualification. Except as would not, individually or in the aggregate, constitute a Material Adverse Effect on ExchangeCo, each subsidiary of ExchangeCo has been duly organized and is validly existing in good standing (to the extent that the concept of “good standing” is recognized by the applicable jurisdiction) under the laws of its jurisdiction of organization.
(b) Authorization. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated herein, including the Exchange as well as issuance of any ExchangeCo Unit upon any Exchange in accordance with the terms of this Agreement, have been duly authorized by all other necessary action on the part of ExchangeCo. Assuming this Agreement constitutes the valid and binding obligation of the other parties hereto, this Agreement is a valid and binding obligation of ExchangeCo, enforceable against ExchangeCo in accordance with its terms, subject to the limitation of such enforcement by (i) the effect of bankruptcy, insolvency, reorganization, receivership, conservatorship, arrangement, moratorium or other laws affecting or relating to creditors’ rights generally or (ii) the Enforceability Exceptions.
(c) Valid Issuance of ExchangeCo Units. The ExchangeCo Units to be issued in any Exchange have been duly authorized, and when issued in an Exchange, all such ExchangeCo Units shall be validly issued, fully paid, nonassessable and free of pre-emptive or similar rights. Each Exchanging LP to which ExchangeCo Units are issued shall, upon issuance thereof, have good and valid title thereto, free and clear of any liens other than transfer restrictions set forth in the organizational documents of ExchangeCo and under securities laws).
(d) Non-Contravention/No Consents. The execution, delivery and performance of the Agreement and the issuance of any ExchangeCo Unit or underlying ExchangeCo Note upon any Exchange in accordance with the terms of this Agreement (the issuer thereof, an “Issuer”) does not conflict with, violate or result in a breach of any provision of, or constitute a default under, or result in the termination of or accelerate the performance required by, or result in a right of termination or acceleration under, (i) the organizational documents of such Issuer, (ii) any credit agreement, mortgage, note, indenture, deed of trust, lease, license, loan agreement or other agreement binding upon such Issuer or any of its subsidiaries, or (iii) any permit, government license, judgment, order, decree, ruling, injunction, statute, law, ordinance, rule or regulation applicable to such Issuer or any of its subsidiaries, other than in the cases of clauses (ii) and (iii) as would not, individually or in the aggregate, constitute a Material Adverse Effect on such Issuer. Assuming the accuracy of the representations of the other parties set forth herein, other than as have been obtained prior to the date of this Agreement, no consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity is required on the part of such Issuer or any of its subsidiaries in connection with the applicable issuance upon any Exchange in accordance with the terms of this Agreement, except for any consent, approval, order, authorization, registration, declaration, filing, exemption or review the failure of which to be obtained or made would not, individually or in the aggregate, constitute a Material Adverse Effect on such Issuer.
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(e) Brokers and Finders. ExchangeCo has not retained, utilized or been represented by, or otherwise become obligated to, any broker, placement agent, financial advisor or finder in connection with the transactions contemplated by this Agreement whose fees any of the other parties would be required to pay.
Section 3.3 Representations and Warranties of OCGH. OCGH represents and warrants to Brookfield, as of the date of this Agreement, as follows:
(a) Existence and Power.
(i) OCGH is duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite partnership power and authority to enter into this Agreement and to perform its obligations hereunder. OCGH has all requisite power and authority to own, operate and lease its properties, rights and assets and to carry on its business as it is being conducted on the date of this Agreement.
(ii) Except as would not, individually or in the aggregate, constitute a Material Adverse Effect on OCGH, OCGH has been duly qualified as a foreign corporation or other entity for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties, rights and assets or conducts any business so as to require such qualification. Except as would not, individually or in the aggregate, constitute a Material Adverse Effect on OCGH, each subsidiary of OCGH has been duly organized and is validly existing in good standing (to the extent that the concept of “good standing” is recognized by the applicable jurisdiction) under the laws of its jurisdiction of organization.
(b) Authorization. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated herein, have been duly authorized by all other necessary action on the part of OCGH. Assuming this Agreement constitutes the valid and binding obligation of the other parties hereto, this Agreement is a valid and binding obligation of OCGH, enforceable against OCGH in accordance with its terms, subject to the limitation of such enforcement by (i) the effect of bankruptcy, insolvency, reorganization, receivership, conservatorship, arrangement, moratorium or other laws affecting or relating to creditors’ rights generally or (ii) the Enforceability Exceptions.
(c) Non-Contravention/No Consents. The execution, delivery and performance of the Agreement does not conflict with, violate or result in a breach of any provision of, or constitute a default under, or result in the termination of or accelerate the performance required by, or result in a right of termination or acceleration under, (i) the organizational documents of OCGH, (ii) any credit agreement, mortgage, note, indenture, deed of trust, lease, license, loan agreement or other agreement binding upon OCGH or any of its subsidiaries, or (iii) any permit, government license, judgment, order, decree, ruling, injunction, statute, law, ordinance, rule or regulation applicable to OCGH or any of its subsidiaries, other than in the cases of clauses (ii) and (iii) as would not, individually or in the aggregate, constitute a Material Adverse Effect on OCGH. Assuming the accuracy of the representations of the other parties set forth herein, other than as have been obtained prior to the date of this Agreement, no consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity is required on the part of OCGH or any of its subsidiaries in connection with any Exchange in accordance with the terms of this Agreement, except for any consent, approval, order, authorization, registration, declaration, filing, exemption or review the failure of which to be obtained or made would not, individually or in the aggregate, constitute a Material Adverse Effect on such Issuer.
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(d) Brokers and Finders. OCGH has not retained, utilized or been represented by, or otherwise become obligated to, any broker, placement agent, financial advisor or finder in connection with the transactions contemplated by this Agreement whose fees any of the other parties would be required to pay.
(e) Accredited Investors. To the best of OCGH’s knowledge, each limited partner of OCGH that is a current employee of a member of the Oaktree Operating Group is an accredited investor (as defined in Rule 501 under Regulation D promulgated under the Securities Act).
ARTICLE
IV
Protective Provisions
Section 4.1 Certain Events.
(a) Notwithstanding anything to the contrary contained in this Agreement, upon the occurrence of any of the events set forth in clause (b) of this Section 4.1, the provisions set forth in this Section 4.1 shall apply. Brookfield shall provide OCGH with prompt written notice of the occurrence (or expected occurrence) of any of such events, and in any event within seven (7) Business Days of the occurrence thereof (and, in the case of any expected occurrence thereof, within seven (7) Business Days of the date on which Brookfield becomes aware or should have become aware of such expected occurrence thereof), in each case, specifying the nature and extent thereof and, if applicable, the corrective action taken or proposed to be taken with respect thereto.
(b) In the case of a Competitor Acquisition Event or in the event of a Bankruptcy Event (collectively, a “Buyback Event”), OCGH shall be entitled to require the Brookfield Group, upon delivery of a written notice (a “Buyback Notice”) to Brookfield within 30 days following notice to OCGH of the occurrence of a Buyback Event, to promptly sell (or cause to be sold) all of the OpCo Units that are directly or indirectly held by Brookfield Group Members (“Brookfield OpCo Units”) to OCGH or such other entity as designated by OCGH such that each of the OpCos would be wholly-owned, directly or indirectly, by OCGH (the “Buyback Right”), which sale may, solely at the election of Brookfield and in lieu of transferring the OpCo Units of the Brookfield Group directly, include the disposition of the Brookfield Group’s interests in Oaktree and Atlas OCM; provided that the purchase price per Brookfield OpCo Unit to be purchased by OCGH or such other entity as may be designated by OCGH will be the Current Equity Value based on the year end immediately prior to the Buyback Event. The closing of such Buyback Event shall occur no later than the later of (x) 60 days following the receipt of any regulatory approvals required in connection with such Buyback Right and (y) 60 days following the delivery of a Buyback Notice.
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ARTICLE
V
Miscellaneous
Section 5.1 Notices. Any notice to any Service Partner that is required or permitted hereunder to be given to such Service Partner shall be in writing and shall be delivered to such Service Partner at the principal office of OCGH or at such other place where such Service Partner may be found. Any notice to a Service Partner which is delivered to the principal office of OCGH when such Service Partner is absent from the office shall, if reasonable efforts have been made to deliver it to him or her elsewhere, be deemed delivered to him or her on the next succeeding Business Day, if he or she does not actually receive such notice sooner. Any notice to any OCGH Limited Partner who is not a Service Partner that is required or permitted hereunder to be given to such OCGH Limited Partner shall be in writing and shall be delivered to such OCGH Limited Partner at the address or facsimile number of such OCGH Limited Partner shown on the register of OCGH. Any notice to OCGH or the General Partner required or permitted hereunder to be given to OCGH or the General Partner shall be in writing and shall be delivered to OCGH or the General Partner at the principal office of OCGH. Any notice to Oaktree or Atlas OCM required or permitted hereunder to be given to Oaktree or Atlas OCM shall be in writing and shall be delivered to Oaktree or Atlas OCM, as applicable, at the principal office of Oaktree. Any notice to Brookfield shall be in writing and shall be delivered to Brookfield at the principal office of Brookfield. A written notice may be delivered by facsimile or electronic transmission.
Section 5.2 Interpretation. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. For the purposes of this Agreement, the words “he,” “his” or “himself” shall be interpreted to include the masculine, feminine and corporate, other entity or trust form. Whenever the words “included,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” Whenever in this Agreement or any other agreement contemplated hereby or otherwise a Person is permitted or required to make a decision (i) in its “sole discretion” or “discretion” or under a grant of similar authority or latitude, then, to the fullest extent permitted by law, such Person may make such decision in its sole discretion (regardless of whether there is a reference to “sole discretion” or “discretion”), and shall be entitled to consider only such interests and factors as it desires, including its own interests, and shall have no duty or obligation to give any consideration to any interest of or factors affecting any other Person (other than a duty to act in good faith) and (ii) under another express standard, such Person shall act under such express standard and shall not be subject to any other or different standard. When calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded. References to “days” are to calendar days; provided, however, that any action otherwise required to be taken on a day that is not a Business Day shall instead be taken on the next succeeding Business Day. If the last day of such period is a non-Business Day, the period in question shall end on the next succeeding Business Day.
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Section 5.3 Joinder.
(a) The General Partner shall (unless determined otherwise by the General Partner in its sole discretion) cause each OCGH Limited Partner and each Person receiving an award of OCGH equity under any Oaktree or Atlas OCM ownership plan to be joined as a party to this Agreement by either (i) executing a counterpart to this Agreement or (ii) otherwise agreeing to be bound by all of the terms of this Agreement, in either case for so long as such Person remains a limited partner of OCGH or holds an equity award.
(b) Any joinder of parties to this Agreement permitted or required by this Section 5.3 shall be effective notwithstanding Section 5.12.
Section 5.4 Transaction Expenses. Except to the extent as otherwise provided in this Agreement or any Ancillary Agreement, all expenses incurred in connection with the Exchange, including fees and disbursements of counsel to Brookfield and OCGH, will be borne by Oaktree; provided, however, that all fees and expenses resulting from a registration under the Securities Act of 1933, as amended, will be borne by Brookfield, including all printing expenses, fees and disbursements of counsel to Brookfield and OCGH, the fees of independent certified accountants and the expenses of qualifying Class A Shares under blue sky laws; provided, further, that counsel fees and disbursements resulting from services to an OCGH Limited Partner in his or her personal capacity will be borne by such OCGH Limited Partner.
Section 5.5 Reserved.
Section 5.6 Severability. Whenever possible, each provision or portion of any provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or portion of any provision in such jurisdiction, and this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein, if the economic and legal substance of the arrangements contemplated hereby are not affected in any manner materially adverse to any party hereto. Upon such a determination, OCGH and Oaktree shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby shall be consummated as originally contemplated to the fullest extent possible.
Section 5.7 Counterparts. This Agreement may be executed in one or more counterparts, all of which shall constitute one and the same instrument.
Section 5.8 Entire Agreement; Third Party Beneficiaries. This Agreement and the OCGH Partnership Agreement collectively constitute the entire agreement and supersede all other prior agreements, both written and oral, among the parties with respect to the subject matter hereof; provided, that in the event of a conflict between this Agreement and the OCGH Partnership Agreement, the OCGH Partnership Agreement shall control; provided, further, that nothing herein shall be deemed to supersede any bona fide, ordinary course securities trading policy or other agreement binding on a Founding Co-Chairman in connection with his service as a member of the board of directors of BAM. This Agreement is not intended to confer upon any Person, other than the parties hereto, any rights or remedies hereunder.
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Section 5.9 Further Assurances. Each party shall execute, deliver, acknowledge and file such other documents and take such further actions as may be reasonably requested from time to time by the other party hereto to give effect to and carry out the transactions contemplated herein. In the event that the Closing would reasonably be expected to be delayed as a result of an injunction, restraining order or decree of any nature of any Governmental Entity, then the parties hereto shall use their reasonable best efforts to resist, vacate, modify, reverse, suspend, prevent, eliminate or remove such actual, anticipated or threatened injunction, restraining order or decree so as to permit the Closing to occur as promptly as practicable; provided that in no event shall any party hereto be forced to litigate with, or bring any claim against, a Governmental Entity to accomplish the same.
Section 5.10 Governing Law. This Agreement shall be construed and enforced, along with any rights, remedies or obligations provided for hereunder, in accordance with the laws of the State of Delaware applicable to contracts made and to be performed entirely within the State of Delaware by residents of the State of Delaware; provided, that the enforceability of Section 5.11 shall be governed by the Federal Arbitration Act, 9 U.S.C. § 1 et seq., and not the laws of the State of Delaware.
Section 5.11 Arbitration of Disputes.
(a) Except as provided in Section 2.5, any and all disputes, claims or controversies arising out of or relating to this Agreement, including any and all disputes, claims or controversies arising out of or relating to (i) OCGH, (ii) any OCGH Limited Partner’s rights and obligations hereunder, (iii) the validity or scope of any provision of this Agreement, (iv) whether a particular dispute, claim or controversy is subject to arbitration under this Section 5.11 and (v) the power and authority of any arbitrator selected hereunder, that are not resolved by mutual agreement shall be submitted to final and binding arbitration before Judicial Arbitration and Mediation Services, Inc. (“JAMS”) pursuant to the Federal Arbitration Act, 9 U.S.C. § 1 et seq. A party hereto may commence the arbitration process by filing a written demand for arbitration with JAMS and delivering a copy of such demand to the other party or parties to the arbitration in accordance with the notice procedures set forth in Section 5.1. The arbitration shall take place in Wilmington, Delaware, and shall be conducted in accordance with the provisions of JAMS Streamlined Arbitration Rules and Procedures in effect at the time of filing of the demand for arbitration. The parties to the arbitration shall cooperate with JAMS and with each other in selecting an arbitrator from JAMS’ panel of neutrals and in scheduling the arbitration proceedings. The arbitrator selected shall be neutral and a former Delaware chancery court judge or, if such judge is not available, a former U.S. federal judge with experience in adjudicating matters under the laws of the State of Delaware; provided, that if no such person is both willing and able to undertake such a role, the parties to the arbitration shall cooperate with each other and JAMS in good faith to select such other person as may be available from JAMS’ panel of neutrals with experience in adjudicating matters under the laws of the State of Delaware. The parties to the arbitration shall participate in the arbitration in good faith. Each party to the arbitration shall pay those costs, if any, of arbitration that it must pay to cause this Section 5.11 to be enforceable, and all other costs of arbitration shall be shared equally between the parties to the arbitration.
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(b) No party to an arbitration shall be entitled to undertake discovery in the arbitration; provided, that, if discovery is required by applicable law, discovery shall not exceed (i) one witness deposition plus the depositions of any expert designated by the other party or parties, (ii) two interrogatories, (iii) ten document requests and (iv) ten requests for admissions; provided, further, that additional discovery may be permitted to the extent such additional discovery is required by applicable law for this Section 5.11 to be enforceable. The arbitrator shall have no power to modify any of the provisions of this Agreement, to make an award or impose a remedy that, in each case, is not available to the Delaware chancery court or to make an award or impose a remedy that was not requested by a party to the dispute, and the jurisdiction of the arbitrator is limited accordingly. To the extent permitted by law, the arbitrator shall have the power to order injunctive relief, and shall expeditiously act on any petition for such relief.
(c) The provisions of this Section 5.11 may be enforced by any court of competent jurisdiction, and, to the extent permitted by law, the party seeking enforcement shall be entitled to an award of all costs, fees and expenses, including attorneys’ fees, to be paid by the party against whom enforcement is ordered. Notwithstanding any provision of this Agreement to the contrary, any party to an arbitration pursuant to this Section 5.11 shall be entitled to seek a restraining order or injunction in any court of competent jurisdiction to prevent any violation of the provisions of this Agreement pending a final determination on the merits by the arbitrator, and each party hereby consents that such a restraining order or injunction may be granted without the necessity of posting any bond.
(d) The details of any arbitration pursuant to this Section 5.11, including the existence and/or outcome of such arbitration and any information obtained in connection with any such arbitration, shall be kept strictly confidential and shall not be disclosed or discussed with any person not a party to the arbitration; provided, that such party may make such disclosures as are required by applicable law or legal process; provided, further, that such party may make such disclosures to its, his or her attorneys, accountants or other agents and representatives who reasonably need to know the disclosed information in connection with any arbitration pursuant to this Section 5.11 and who are obligated to keep such information confidential to the same extent as such party. If a party to an arbitration receives a subpoena or other request for information from a third party that seeks disclosure of any information that is required to be kept confidential pursuant to the prior sentence, or otherwise believes that it, he or she may be required to disclose any such information, such party shall (i) promptly notify the other party to the arbitration and (ii) reasonably cooperate with such other party in taking any legal or otherwise appropriate actions, including the seeking of a protective order, to prevent the disclosure, or otherwise protect the confidentiality, of such information.
(e) For the avoidance of doubt, (i) any arbitration pursuant to this Section 5.11 shall not include any disputes, claims or controversies that do not arise out of or relate to this Agreement, and (ii) any arbitration pursuant to this Section 5.11 of disputes, claims or controversies arising out of or relating to this Agreement is intended to be separate and distinct proceeding from any arbitration or other adjudication of disputes, claims or controversies between parties to this Agreement that do not arise out of or relate to this Agreement.
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Section 5.12 Amendments; Waivers.
(a) This Agreement may be amended, modified or waived at any time in writing by agreement of Brookfield, Oaktree and OCGH without the approval or consent of any other party; provided, that if any such amendment, modification or waiver would adversely affect in any material respect any OCGH Limited Partner relative to all OCGH Limited Partners collectively as a group, such amendment, modification, or waiver shall also require the written consent of the OCGH Limited Partners holding a majority of the Percentage Interests held by the OCGH Limited Partners so adversely affected.
(b) No waiver by any party hereto of any default with respect to any provision, condition or requirement hereof shall be deemed to be a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party hereto to exercise any right hereunder in any manner impair the exercise of any such right accruing to it, him or her thereafter. Any default hereunder by a party hereto shall not excuse any obligation of any other party.
Section 5.13 Assignment. Except as may be provided in the OCGH Partnership Agreement, neither this Agreement nor any of the rights or obligations hereunder shall be assigned by any of the parties hereto without the prior written consent of Brookfield, Oaktree and OCGH. Any assignment in violation of the foregoing shall be null and void ab initio. Subject to the preceding sentence, this Agreement shall be binding upon and inure to the benefit of the parties hereto, and their respective successors and assigns.
Section 5.14 Tax Treatment. To the extent this Agreement imposes obligations upon a particular OpCo or its general partner, this Agreement shall be treated as part of the partnership agreement of such OpCo as described in Section 761(c) of the Code, and Sections 1.704-1(b)(2)(ii)(h) and 1.761-1(c) of the Treasury Regulations. Unless otherwise required by the Code and the Treasury Regulations, for U.S. federal income tax purposes: (i) the parties shall report (A) an Exchange of Cash/Share/Note Exchange Units consummated hereunder as a taxable sale of OCGH Units by an OCGH Limited Partner to Brookfield; (B) an Exchange of ExchangeCo Exchange Units consummated hereunder (and any distributions on the ExchangeCo Units received in such Exchange) as distributions under Section 731 of the Code and (C) any redemption pursuant to Section 2.1(d) hereof as a redemption of Brookfield’s entire interest in OCGH and (ii) no party shall take a contrary position on any income tax return, amendment thereof or communication with a taxing authority.
Section 5.15 Interference.
(a) Each Service Partner hereby agrees that for so long as the Service Partner provides services to an Oaktree Group Member, and for two years after the Service Partner ceases to provide such services for any reason, such Service Partner shall not directly or indirectly (i) solicit any customer or client of the Oaktree Group for a Competitive Business; provided that the foregoing clause (i) shall not be deemed to prohibit such Service Partner from participating in the normal marketing efforts of a Competitive Business, so long as such Service Partner does not solicit any client or customer known to such Service Partner as a result of his or her provision of services to an Oaktree Group Member to be a client or customer of the Oaktree Group, other than clients or customers of the Oaktree Group that, as of the date the Service Partner ceases to provide services to an Oaktree Group Member, are bona fide pre-existing clients or customers of such Competitive Business, (ii) induce or attempt to induce any employee of the Oaktree Group to leave the Oaktree Group or in any way interfere with the relationship between the Oaktree Group and any employee thereof or (iii) hire, engage, employ, retain or otherwise enter into any business affiliation with any person who was an employee of the Oaktree Group at any time during the twelve-month period prior to the date a Service Partner ceases to provide services to the Oaktree Group.
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(b) Each Service Partner hereby agrees that for so long as the Service Partner provides services to an Oaktree Group Member and for the duration of the Restricted Period (as defined in the OCGH Partnership Agreement), the Service Partner shall not directly or indirectly:
(i) in any geographic location or area anywhere in the United States of America or any other country where an Oaktree Group Member conducts business, engage in a Competitive Business; or
(ii) invest in, own, manage, operate, finance, control, render services or participate (whether as an employee, consultant, independent contractor, officer, director, agent, security holder, creditor, or otherwise) in the ownership, management, operation, financing, or control of, or have any interest in, or be employed by, or be associated with or in any manner connected with, or render services, advice or aid to, or guarantee the obligations of, any Person that engages in or proposes to engage in a Competitive Business;
provided, in each case, that (x) nothing herein shall prohibit a Service Partner from being a passive owner of not more than one percent of the outstanding stock of any class of securities of a corporation or entity engaged in such business which is publicly traded so long as such Service Partner has no participation in the business of such corporation or entity (other than the exercise of his or her shareholder voting rights) and (y) nothing herein shall prohibit a Service Partner from engaging in any of the foregoing activities in respect of, or on behalf of, the Brookfield Group.
Section 5.16 Contra Proferentem. In the event any claim is made by any party hereto relating to any conflict, omission or ambiguity in this Agreement, no presumption or burden of proof or persuasion shall be implied by virtue of the fact that this Agreement was prepared by or at the request of a particular party or its, his or her counsel.
Section 5.17 Brookfield Asset Management Inc.
(a) Section 16 Matters. BAM will take such further actions as it determines in its discretion are required to cause any Exchange and all transactions related thereto or contemplated by this Agreement, directly or indirectly, by officers or directors of BAM (including “directors by deputization”) to be exempt from Section 16(b) of the Securities Exchange Act of 1934, as amended, pursuant to Rule 16b-3 thereunder, if such persons are subject to Section 16 of the Securities Exchange Act of 1934, as amended, with respect to the equity securities of BAM.
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(b) Delivery of Class A Shares. On each Exchange Date for which Brookfield has determined to pay or cause the Exchange Consideration to be paid in the form of Class A Shares, BAM will issue and deliver the requisite number of Class A Shares to the applicable OCGH Limited Partners, as contemplated by this Agreement, including Section 3.1(c).
Section 5.18 ExchangeCo Units. OCGH and Brookfield shall work together in good faith to draft a form redemption agreement to reflect the future transfer of equity interests of ExchangeCo to the OCGH Limited Partners who may receive Exchange Units in a future Exchange, within 60 days of date hereof.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered, all as of the date first set forth above.
| ATLAS HOLDINGS, LLC | ||
| By: | /s/ Joshua Zinn | |
| Name: Joshua Zinn | ||
| Title: Vice President | ||
| ATLAS OCM HOLDINGS, LLC | ||
| By: | /s/ Joshua Zinn | |
| Name: Joshua Zinn | ||
| Title: Vice President | ||
| OAKTREE CAPITAL GROUP, LLC | ||
| By: | /s/ Todd Molz | |
| Name: Todd Molz | ||
| Title: General Counsel and Chief Administrative Officer | ||
| By: | /s/ Richard Ting | |
| Name: Richard Ting | ||
| Title: Managing Director Associate General Counsel | ||
| OAKTREE CAPITAL GROUP HOLDINGS, L.P., for itself and as attorney-in-fact for the OCGH Limited Partners | ||
| By: | OAKTREE CAPITAL GROUP HOLDINGS GP, LLC, its General Partner | |
| By: | /s/ Todd Molz | ||
| Name: Todd Molz | |||
| Title: General Counsel and Chief Administrative Officer | |||
| By: | /s/ Richard Ting | ||
| Name: Richard Ting | |||
| Title: Managing Director Associate General Counsel | |||
[Third Amended and Restated Exchange Agreement]
2
| OCM HOLDINGS I, LLC | |||
| By: | OAKTREE HOLDINGS, LLC, its Managing Member | ||
| By: | OAKTREE CAPITAL GROUP, LLC, its Managing Member | ||
| By: | /s/ Todd Molz | ||
| Name: Todd Molz | |||
| Title: General Counsel and Chief Administrative Officer | |||
| By: | /s/ Richard Ting | ||
| Name: Richard Ting | |||
| Title: Managing Director Associate General Counsel | |||
| OAKTREE NEW HOLDINGS, LLC | |||
| By: | /s/ Joshua Zinn | ||
| Name: Joshua Zinn | |||
| Title: Vice President | |||
| By: | /s/ Mark Srulowitz | ||
| Name: Mark Srulowitz | |||
| Title: Vice President | |||
[Third Amended and Restated Exchange Agreement]
3
| OAKTREE HOLDINGS, LTD. | |||
| By: | OAKTREE CAPITAL GROUP, LLC, its Director | ||
| By: | /s/ Todd Molz | ||
| Name: Todd Molz | |||
| Title: General Counsel and Chief Administrative Officer | |||
| By: | /s/ Richard Ting | ||
| Name: Richard Ting | |||
| Title: Managing Director Associate General Counsel | |||
| OAKTREE AIF HOLDINGS II, LLC | |||
| By: | /s/ Joshua Zinn | ||
| Name: Joshua Zinn | |||
| Title: Vice President | |||
| By: | /s/ Mark Srulowitz | ||
| Name: Mark Srulowitz | |||
| Title: Vice President | |||
| OAKTREE CAPITAL I, L.P. | |||
| By: | /s/ Todd Molz | ||
| Name: Todd Molz | |||
| Title: Managing Director Associate General Counsel | |||
| By: | /s/ Richard Ting | ||
| Name: Richard Ting | |||
| Title: Managing Director Associate General Counsel | |||
[Third Amended and Restated Exchange Agreement]
4
| OAKTREE CAPITAL II, L.P. | |||
| By: | /s/ Todd Molz | ||
| Name: Todd Molz | |||
| Title: Managing Director Associate General Counsel | |||
| By: | /s/ Richard Ting | ||
| Name: Richard Ting | |||
| Title: Managing Director Associate General Counsel | |||
| OAKTREE CAPITAL MANAGEMENT (CAYMAN), L.P. | |||
| By: | /s/ Todd Molz | ||
| Name: Todd Molz | |||
| Title: Managing Director Associate General Counsel | |||
| By: | /s/ Richard Ting | ||
| Name: Richard Ting | |||
| Title: Managing Director Associate General Counsel | |||
| OAKTREE AIF INVESTMENTS, L.P. | |||
| By: | /s/ Todd Molz | ||
| Name: Todd Molz | |||
| Title: Managing Director Associate General Counsel | |||
| By: | /s/ Richard Ting | ||
| Name: Richard Ting | |||
| Title: Managing Director Associate General Counsel | |||
[Third Amended and Restated Exchange Agreement]
5
| OAKTREE INVESTMENT HOLDINGS, L.P. | |||
| By: | /s/ Todd Molz | ||
| Name: Todd Molz | |||
| Title: Managing Director Associate General Counsel | |||
| By: | /s/ Richard Ting | ||
| Name: Richard Ting | |||
| Title: Managing Director Associate General Counsel | |||
| OCGH EXCHANGECO, L.P. | |||
| By: | OAKTREE CAPITAL GROUP HOLDINGS, GP LLC,, its general partner | ||
| By: | /s/ Todd Molz | ||
| Name: Todd Molz | |||
| Title: Managing Director Associate General Counsel | |||
| By: | /s/ Richard Ting | ||
| Name: Richard Ting | |||
| Title: Managing Director Associate General Counsel | |||
| Solely for purposes of Section 5.17: | |||
| BROOKFIELD ASSET MANAGEMENT INC. | |||
| By: | /s/ Justin Beber | ||
| Name: Justin Beber | |||
| Title: Chief Legal Officer | |||
[Third Amended and Restated Exchange Agreement]
Exhibit 4.3
FIRST AMENDMENT TO
THIRD AMENDED AND RESTATED EXCHANGE AGREEMENT
This AMENDMENT TO THIRD AMENDED AND RESTATED EXCHANGE AGREEMENT (this “Amendment”) is effective as of September 30, 2019, by and among Atlas Holdings, LLC, a Delaware limited liability company (“Brookfield”), Oaktree Capital Group, LLC, a Delaware limited liability company (“Oaktree”), and Oaktree Capital Group Holdings, L.P., a Delaware limited partnership (“OCGH” and, together with Brookfield and Oaktree, the “Amending Parties”). Capitalized terms used herein without definition shall have the respective meanings ascribed thereto in the Exchange Agreement (as defined below).
WHEREAS, the Amending Parties are party to that certain Third Amended and Restated Exchange Agreement, dated as of September 30, 2019, by and among the Amending Parties and the other parties thereto (the “Exchange Agreement”);
WHEREAS, pursuant to Section 5.12(a) of the Exchange Agreement, the Exchange Agreement may be amended in writing by agreement of the Amending Parties without the approval or consent of any other party thereto (other than with respect to any amendment that would adversely affect in any material respect any OCGH Limited Partner relative to all OCGH Limited Partners collectively as a group); and
WHEREAS, the Amending Parties desire to amend the Exchange Agreement to reflect the understanding and agreement among the parties thereto that the Exchange Consideration for Exchanges occurring during fiscal year 2020 shall consist solely of cash, which was not reflected in the Exchange Agreement due to a scrivener’s error.
NOW THEREFORE, in consideration of the foregoing, the Amending Parties agree as follows:
1. Effective as of September 30, 2019, the Exchange Agreement is amended as follows:
(a) Section 2.1(f)(iii)(C).
Section 2.1(f)(iii)(C) of the Exchange Agreement is hereby amended and replaced in its entirety with the following: “(C) with respect to any Exchanges occurring in fiscal year 2020, the Exchange Consideration shall consist solely of cash, and with respect to any Exchanges occurring in fiscal year 2021, the Exchange Consideration shall consist solely of cash, Class A Shares or a combination of the foregoing”.
(b) “Base Fee Earnings”.
The phrase “(as defined in the Oaktree Operating Agreement)” in the definition of Base Fee Earnings of the Exchange Agreement is hereby amended and replaced in its entirety with the following: “(as defined in the AOH Operating Agreement)”.
2. The Amending Parties agree that, except as specifically provided in this Amendment, the Exchange Agreement shall remain in full force and effect without any other amendments or modifications.
3. Sections 5.1, 5.2, 5.7, 5.8, 5.10, 5.11, 5.12, 5.13 and 5.16 of the Exchange Agreement are hereby incorporated into this Amendment mutatis mutandis.
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2
IN WITNESS WHEREOF, this Amendment is effective as of the date first written above.
| OAKTREE CAPITAL GROUP, LLC | ||
| By: | /s/ Richard Ting | |
| Name: Richard Ting | ||
| Title: Managing Director, Associate General Counsel and Assistant Secretary | ||
| By: | /s/ Jeffrey Joseph | |
| Name: Jeffrey Joseph | ||
| Title: Managing Director | ||
| ATLAS HOLDINGS, LLC | ||
| By: | /s/ Karly Dyck | |
| Name: Karly Dyck | ||
| Title: Secretary | ||
| OAKTREE CAPITAL GROUP HOLDINGS, L.P. | ||
| By: | Oaktree Capital Group Holdings GP, LLC | |
| Its: | General Partner | |
| By: | /s/ Richard Ting | |
| Name: Richard Ting | ||
| Title: Managing Director, Associate General Counsel and Assistant Secretary | ||
| By: | /s/ Jeffrey Joseph | |
| Name: Jeffrey Joseph | ||
| Title: Managing Director | ||
[SIGNATURE PAGE TO AMENDMENT TO EXCHANGE AGREEMENT]
Exhibit 4.4
EXECUTION VERSION
REGISTRATION RIGHTS AGREEMENT
BROOKFIELD ASSET MANAGEMENT INC.
Dated as of September 30, 2019
Table of Contents
| Page |
| ARTICLE I - DEFINITIONS | 1 |
| 1.1 | Definitions | 1 | |
| 1.2 | Other Definitional and Interpretive Matters | 5 |
| ARTICLE II - REGISTRATION RIGHTS | 6 |
| 2.1 | Demand Registration | 6 | |
| 2.2 | Piggyback Registrations | 8 | |
| 2.3 | Holdback Agreement | 10 | |
| 2.4 | Registration Procedures | 10 | |
| 2.5 | Suspension of Dispositions | 13 | |
| 2.6 | Registration Expenses | 13 | |
| 2.7 | Indemnification | 14 | |
| 2.8 | Transfer of Registration Rights | 17 | |
| 2.9 | Current Public Information | 17 | |
| 2.10 | Free Writing Prospectuses | 17 |
| ARTICLE III - TERMINATION | 17 |
| 3.1 | Termination | 17 |
| ARTICLE IV - MISCELLANEOUS | 18 |
| 4.1 | Notices | 18 | |
| 4.2 | Choice of Law; Exclusive Jurisdiction; Waiver of Jury Trial | 19 | |
| 4.3 | No Third-Party Beneficiaries | 20 | |
| 4.4 | Successors and Assigns | 20 | |
| 4.5 | Counterparts | 20 | |
| 4.6 | Severability | 20 | |
| 4.7 | No Waivers; Amendments | 20 | |
| 4.8 | Entire Agreement | 20 | |
| 4.9 | Remedies; Specific Performance | 21 | |
| 4.10 | Negotiated Agreement | 21 |
| Exhibit A | JOINDER AGREEMENT | A-1 |
- i -
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement, dated as of September 30, 2019 (this “Agreement”), is by and among Brookfield Asset Management Inc., a corporation amalgamated under the laws of the Province of Ontario (and any successor thereto, the “Company”), Oaktree Capital Group Holdings, L.P., a Delaware limited liability partnership (“OCGH”), and the other parties listed on the signature pages hereof as “Holders” who may receive as contemplated herein Class A Limited Voting Shares, no par value (together with the common equity securities of any successor to the Company, the “Class A Shares”), of the Company.
RECITALS
WHEREAS, on March 13, 2019, the Company entered into an Agreement and Plan of Merger by and among the Company, Oaktree Capital Group, LLC (“Oaktree”), Oslo Holdings LLC, Oslo Holdings Merger Sub LLC and Berlin Merger Sub, LLC (the “Merger Agreement”);
WHEREAS, pursuant to the Merger Agreement, the Company and Oaktree agreed to amend and restate Oaktree’s existing exchange agreement;
WHEREAS, on the date hereof, certain parties hereto will enter into the Third Amended and Restated Exchange Agreement of Atlas Holdings, LLC (“Brookfield”) (as it may be amended, supplemented, restated or otherwise modified the “Exchange Agreement”);
WHEREAS, pursuant to the Exchange Agreement, under certain circumstances, at the Brookfield’s option, the Holders may receive Class A Shares in exchange for limited partnership units of OCGH (an “Exchange”); and
WHEREAS, resales by the Holders of the Class A Shares may be required to be registered under Canadian Securities Laws, the Securities Act and applicable state securities laws, depending upon the status of a Holder or the intended method of distribution of the Class A Shares.
NOW, THEREFORE, in consideration of the premises, mutual covenants and agreements hereinafter contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I - DEFINITIONS
1.1 Definitions.
(a) For purposes of this Agreement, the following terms shall have the meanings specified in this Section 1.1; provided, however, that capitalized terms used but not defined herein shall have the meaning ascribed to such terms in the Exchange Agreement.
“Affiliate” means, with respect to any Person, any Person who, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with any Person. For the avoidance of doubt, no Senior Service Partner shall be considered an Affiliate of any other Senior Service Partner by virtue of such Senior Service Partner (i) holding Registrable Securities or Exchangeable Units or (ii) also being an Affiliate of the Company or OCGH.
“Automatic Shelf Registration Statement” means an “Automatic Shelf Registration Statement,” as defined in Rule 405 under the Securities Act.
“Available” refers to a Registration Statement as of a date if (i) such Registration Statement is effective for an offering to be made on a delayed or continuous basis, there is no stop order with respect thereto and the Company reasonably believes that such Registration Statement will be continuously available for the resale of all Registrable Securities for the next ten (10) Business Days and (ii) as of such date and continuously for the next ten (10) Business Days, there is not in effect a Suspension Period.
“beneficial ownership” and terms of similar import shall be as defined under and determined pursuant to Rule 13d-3 promulgated under the Exchange Act.
“Business Day” means any day other than (a) a Saturday, Sunday and any day which is a legal holiday under the laws of the State of New York or the Province of Ontario or (b) a day on which banking institutions located in the State of New York or the Province of Ontario are authorized or required by law or other governmental action to close.
“Canadian Securities Laws” means all applicable securities laws in each of the provinces and territories of Canada and the respective regulations and rules made under those applicable securities laws, together with all policy statements, instruments, notices, blanket orders and rulings of the Canadian securities commissions or other similar regulatory authorities in each of the provinces and territories of Canada, as the same may hereafter be amended or replaced.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any similar federal statute, and the rules and regulations promulgated by the SEC thereunder.
“Exchangeable Units” has the meaning assigned to such term in the OCGH Partnership Agreement (as defined in the Exchange Agreement).
“Holder” means (i) a securityholder listed on a signature page hereof and (ii) any direct or indirect transferee of any such securityholder, including any securityholder that receives Class A Shares upon a distribution or liquidation of a Holder, who has been assigned the rights of the transferor Holder under this Agreement in accordance with Section 2.8.
“Initial Period” has the meaning assigned to such term in the Exchange Agreement.
“Outstanding Class A Shares” means, at any determination date, the number of Class A Shares actually outstanding at such time.
“Person” or “person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or government or other agency or political subdivision thereof.
“Prospectus” means the prospectus (including any preliminary or final prospectus or Shelf Prospectus), included in any Registration Statement or prepared in accordance with applicable Canadian Securities Laws for the purpose of qualifying Registrable Securities for distribution in any of the provinces or territories of Canada, including all amendments and supplements to such prospectus and all other material incorporated by reference in such prospectus.
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“register,” “registered” and “registration” refer to a registration effected by preparing and filing a Registration Statement in compliance with the Securities Act, and the effectiveness of such Registration Statement. With respect to Section 2.2 hereunder, “register,” “registered” and “registration” also refers to the qualification of Registrable Securities under any applicable Canadian Securities Laws by way of a Prospectus for which a final receipt has been issued, for distribution in any of the provinces or territories of Canada.
“Registrable Securities” means Class A Shares issued in an Exchange to a Holder, and any equity securities of the Company issued or issuable with regard to such Class A Shares by way of dividend, distribution, split or combination of securities, or any recapitalization, merger, consolidation or other reorganization, in each case unless and until (i) such shares are freely tradeable without volume or other limitations for “affiliates” under Rule 144 and (ii) such Holder, together with all of his, her or its Affiliates, beneficially owns less than 1% of the Outstanding Class A Shares; provided, however, that all Registrable Securities shall cease to be Registrable Securities from and after the date that is one year following the last day of the final Open Period (as defined in the Exchange Agreement) after the Company provides notice of the termination of Open Periods pursuant to Section 2.4 of the Exchange Agreement.
“Registration Expenses” means all expenses (other than Selling Expenses) arising from or incidental to the Company’s performance of or compliance with this Agreement, including: (i) SEC, Financial Industry Regulatory Authority and other registration and filing fees; (ii) all fees and expenses incurred in connection with complying with any securities or blue sky laws (including, fees, charges and disbursements of counsel in connection with blue sky qualifications of the Registrable Securities); (iii) all printing, messenger and delivery expenses; (iv) the fees, charges and disbursements of counsel to the Company and of its independent public accountants and any other accounting and legal fees, charges and expenses incurred by the Company (including, any expenses arising from any special audits or “comfort” letters required in connection with or incident to any registration); (v) the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange or over-the-counter market on which the Class A Shares are then listed; (vi) the fees and expenses incurred by the Company in connection with any road show for Underwritten Offerings; and (vii) the reasonable fees, charges and disbursements of counsel to the Holders, including, for the avoidance of doubt, any expenses of counsel to the Holders in connection with the filing or amendment of any Registration Statement or Prospectus hereunder; provided that Registration Expenses shall only include the fees and expenses of one firm of counsel to the Holders with respect to any registration or offering, which firm shall be selected by OCGH and be reasonably acceptable to the Company.
“Registration Statement” means any registration statement of the Company that covers the resale of any Registrable Securities pursuant to the provisions of this Agreement filed with, or to be filed with, the SEC under the rules and regulations promulgated under the Securities Act, including the related Prospectus, amendments and supplements to such registration statement, including pre- and post-effective amendments, and all exhibits, financial information and all other material incorporated by reference in such registration statement.
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“Required Holders” means Holders who then own beneficially more than 66-2/3% of the aggregate number of Class A Shares subject to this Agreement.
“Rule 144” means Rule 144 promulgated by the SEC pursuant to the Securities Act, as such rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC as a replacement thereto having substantially the same effect as such rule.
“Rule 430B” means Rule 430B promulgated by the SEC pursuant to the Securities Act, as such rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC as a replacement thereto having substantially the same effect as such rule.
“SEC” means the Securities and Exchange Commission or any other Federal agency at the time administering the Securities Act.
“Securities Act” means the Securities Act of 1933, as amended, or any similar Federal statute, and the rules and regulations promulgated by the SEC thereunder.
“Selling Expenses” means the underwriting fees, discounts, selling commissions and stock transfer taxes applicable to all Registrable Securities registered by the Holders and any legal expenses of the Holders not included within the definition of Registration Expenses.
“Senior Service Partners” means each of Howard Marks, Bruce Karsh, Jay Wintrob, John Frank, Sheldon Stone, Richard Masson and Larry Keele and any transferee of any of the foregoing so long as such transfer is permitted under the OCGH Partnership Agreement (as defined in the Exchange Agreement).
“Shelf Prospectus” means a shelf prospectus of the Company filed under Canadian Securities Laws for offers and secondary sales of Registrable Securities on a continuous basis.
“Shelf Registration Statement” means a “shelf” registration statement of the Company that covers all the Registrable Securities (and may cover other securities of the Company) on Form S-3, F-3 or F-10 under the Securities Act or, if the Company is not then eligible to file on Form S-3, F-3 or F-10, on Form S-1 or F-1 under the Securities Act, or any successor rule that may be adopted by the SEC, including without limitation any such registration statement filed pursuant to Section 2.1, and all amendments and supplements to such “shelf” registration statement, including post-effective amendments, in each case, including the Prospectus contained therein, all exhibits thereto and any document incorporated by reference therein.
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“Underwritten Offering” means a registered sale of securities of the Company to an underwriter or underwriters for reoffering to the public.
(b) For purposes of this Agreement, the following terms have the meanings set forth in the sections indicated:
|
Term |
Section |
| Adverse Effect | 2.1(e) |
| Advice | 2.5 |
| Agreement | Introductory Paragraph |
| Brookfield | Recitals |
| Class A Shares | Introductory Paragraph |
| Company | Introductory Paragraph |
| Company Notice | 2.1(c) |
| Demand Registration | 2.1(b) |
| Demand Request | 2.1(c) |
| Exchange | Recitals |
| Exchange Agreement | Recitals |
| Lock-Up Period | 2.3 |
| Merger Agreement | Recitals |
| NI 45-102 | 2.9 |
| Oaktree | Recitals |
| OCGH | Recitals |
| Participating Majority | 2.1(d) |
| Piggyback Maximum Offering Size | 2.2(b) |
| Records | 2.4(l) |
| Requesting Holder | 2.1(c) |
| Resale Prospectus | 2.1(a) |
| Resale Prospectus Request | 2.1(a) |
| Seller Affiliates | 2.7(a) |
| Selling Holder Information | 2.7(a) |
| Suspension Notice | 2.5 |
| Suspension Period | 2.1(f) |
| Unallocated Shelf Registration Statement | 2.1(a) |
1.2 Other Definitional and Interpretive Matters. Unless otherwise expressly provided or the context otherwise requires, for purposes of this Agreement the following rules of interpretation apply.
(a) When calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period is excluded. If the last day of such period is a non-Business Day, the period in question ends on the next succeeding Business Day.
(b) Any reference in this Agreement to $ means U.S. dollars.
(c) Any reference in this Agreement to gender includes all genders, and words imparting the singular number also include the plural and vice versa.
(d) The provision of a Table of Contents, the division of this Agreement into Articles, Sections and other subdivisions and the insertion of headings are for convenience of reference only and do not affect, and should not be utilized in, the construction or interpretation of this Agreement.
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(e) All references in this Agreement to any “Article” or “Section” are to the corresponding Article or Section of this Agreement.
(f) The words “herein,” “hereinafter,” “hereof,” and “hereunder” refer to this Agreement as a whole and not merely to a subdivision in which such words appear unless the context otherwise requires.
(g) The word “including” or any variation thereof means “including, but not limited to,” and does not limit any general statement that it follows to the specific or similar items or matters immediately following it.
(h) The word “or” is inclusive.
(i) For purposes of this Agreement, a concurrent filing of a Registration Statement under the Securities Act and a Prospectus under Canadian Securities Laws will be considered a single filing.
ARTICLE II - REGISTRATION RIGHTS
2.1 Resale Registration; Demand Registration.
(a) Prior to the first date any Class A Shares are delivered pursuant to the Exchange Agreement, the Company will use reasonable best efforts to prepare and file a Shelf Registration Statement (which Shelf Registration Statement, if on Form F-3 or S-3, shall be an Automatic Shelf Registration Statement if the Company is then eligible to file an Automatic Shelf Registration Statement) registering under the Securities Act for resale the Registrable Securities that may exist from time to time; provided, however, in no event shall any such Shelf Registration Statement be required to become effective prior to the date that is six months following the Merger Closing Date (as defined in the Exchange Agreement)1. Such Shelf Registration Statement may be combined with one or more registration statements filed in connection with the issuance of the Class A Shares in the Exchanges. As permitted pursuant to Rule 430B, the Company may omit in Shelf Registration Statement the names of any Holders that do not beneficially own Registrable Securities at the time of filing of or prior to effectiveness of such Shelf Registration Statement (an “Unallocated Shelf Registration Statement”); provided that the Company includes such disclosures in such Unallocated Shelf Registration Statement as may be required under Rule 430B in order to ensure that Holders of Registrable Securities may be added to such Unallocated Shelf Registration Statement at a later time through the filing of a prospectus supplement or, only if required under SEC rules and regulations, a post-effective amendment (either such prospectus supplement or post-effective amendment, a “Resale Prospectus”). Any Holder who, as of any date following effectiveness of the Shelf Registration Statement, becomes the beneficial owner of Registrable Securities or is to become a beneficial owner of Registrable Securities as the result of a pending Exchange, may request to be named as a selling securityholder in a Resale Prospectus for the resale of up to the maximum amount of such Registrable Securities, and the Company shall use reasonable best efforts to file a Resale Prospectus adding such Holder (and specifying the amount of such Registrable Securities so requested for resale) to such Shelf Registration Statement within ten (10) Business Days after it receives such request (a “Resale Prospectus Request”), provided that the Company may delay the filing of any such Resale Prospectus if such Holder has not complied with Section 2.1(h), to a date up to five (5) Business Days after such Holder has so complied with the provisions of such Section. The Company shall use reasonable best efforts to cause the Shelf Registration Statement (if not an Automatic Shelf Registration Statement) to be declared effective by the SEC as promptly as practicable following such filing, it being understood that an Automatic Shelf Registration Statement shall become automatically effective upon filing with the SEC. The Company shall use reasonable best efforts to keep such Shelf Registration Statement Available, current and effective and shall file such supplements or amendments (including pursuant to any Resale Prospectus Request) to such Shelf Registration Statement (or file a new Shelf Registration Statement (which Shelf Registration Statement, if on Form F-3 or S-3, shall be an Automatic Shelf Registration Statement if the Company is then eligible to file an Automatic Shelf Registration Statement) when such preceding Shelf Registration Statement expires, if at all, pursuant to the rules of the SEC) as may be necessary or appropriate in order to keep such Shelf Registration Statement continuously effective and useable for the resale of all Registrable Securities under the Securities Act; it being understood that such requirement for any Unallocated Shelf Registration Statement to be “useable” shall be limited to the Registrable Securities for which the Company has received a Resale Prospectus Request and in respect of which the Company has filed a Resale Prospectus as described above. Any Shelf Registration Statement when it becomes effective (including the documents incorporated therein by reference) will comply in all material respects as to form with all applicable requirements of the Securities Act and the Exchange Act and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading.
1 Note to Draft: To discuss with respect to closing timing and anticipated first delivery date.
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(b) Any Holder of Registrable Securities that holds, together with his, her or its Affiliates, more than 1% of the Outstanding Class A Shares may request to sell 1% or more of the Outstanding Class A Shares held by such Holder of Registrable Securities and his, her or its Affiliates in an Underwritten Offering that is registered pursuant to a Shelf Registration Statement (a “Demand Registration”); provided, however, for the avoidance of doubt, the foregoing shall not apply to requests by any Holder (i) holding, together with his, her or its Affiliates, less than 1% of the Outstanding Class A Shares, and/or (ii) requesting to sell less than 1% of the Outstanding Class A Shares; provided, further, that only one such demand, in the aggregate, may be made in any 12-month period by the Holders of Registrable Securities.
(c) All requests (a “Demand Request”) for Demand Registrations shall be made by the Holder or Holders making such request (the “Requesting Holder”) by giving written notice to the Company. Each Demand Request shall specify (i) the approximate number of Registrable Securities to be sold in the Demand Registration, (ii) the intended method of distribution and (iii) the identity of the Requesting Holders. Within five (5) Business Days after receipt of any Demand Request, the Company shall send written notice of such requested Demand Registration to all other Holders of Registrable Securities (the “Company Notice”) and shall include in such Demand Registration all Registrable Securities with respect to which the Company has received written requests for inclusion therein within five (5) Business Days after sending the Company Notice.
(d) In connection with a Demand Registration, the Requesting Holder(s) shall select one or more nationally prominent firms of investment bankers reasonably acceptable to the Company to act as the lead managing underwriter or underwriters in connection with such Underwritten Offering. All Holders proposing to distribute their Registrable Securities through such underwriting shall enter into an underwriting agreement with such underwriter or underwriters in accordance with Section 2.1(g). The Company shall not, without the written consent of the Participating Majority (as defined below), include in such Demand Registration any securities other than those beneficially owned by the participating Holders. The “Participating Majority” shall mean, with respect to any particular Underwritten Offering, the Holder(s) of a majority of the Registrable Securities requested to be included in such Underwritten Offering (or, if the participating Senior Service Partners do not constitute such a majority, OCGH).
(e) If the managing underwriter or underwriters for such Underwritten Offering advise the Company and the participating Holders in writing that, in their opinion, marketing factors require a limitation of the amount of securities to be underwritten (including Registrable Securities) because the amount of securities to be underwritten is likely to have an adverse effect on the price, timing or the distribution of the securities to be offered (an “Adverse Effect”), then the Company shall so advise all Holders of Registrable Securities which would otherwise be underwritten pursuant hereto, and the amount of Registrable Securities that may be included in such Underwritten Offering shall be allocated among participating Holders, (i) first among the participating Holders as nearly as possible on a pro rata basis based on the total amount of Registrable Securities and Exchangeable Units held by such Holders and (ii) second to the extent all Registrable Securities requested to be included in such Underwritten Offering by the participating Holders have been included, to any securities to be included with the written consent of the Participating Majority pursuant to the previous sentence allocated on such basis as the Company shall determine.
(f) The Company shall be entitled to suspend, for a period of time (each, a “Suspension Period”), the use of any Registration Statement or Prospectus and shall not be required to amend or supplement the Registration Statement, any related Prospectus or any document incorporated therein by reference if (i) an offering pursuant to this Section 2.1 would (A) require the Company to, or make advisable for the Company to, disclose material non-public information based on the advice of counsel, and such disclosure would not be in the best interests of the Company as determined by the Company in good faith, (B) interfere with a material bona fide financing, acquisition, disposition, investigation, corporate reorganization, merger or similar transaction by the Company, or (C) occur during the Company’s customary quarterly corporate governance blackout period or (ii) the board of directors, chief executive officer or chief financial officer of the Company determines in its or his or her reasonable good faith judgment that the Registration Statement or any Prospectus may contain an untrue statement of a material fact or may omit any fact necessary to make the statements in the Registration Statement or Prospectus not misleading; provided, however, in the case of clause (ii), that the Company shall use its good faith efforts to amend the Registration Statement or Prospectus to correct such untrue statement or omission as promptly as reasonably practicable; provided, further, that other than the Company’s customary quarterly corporate governance blackout periods, such blackouts in any 12-month period shall not exceed more than 90 aggregate days or more than one blackout in any 6-month period. Each Holder acknowledges and agrees that it will notify the Company at least two (2) Business Days prior to any proposed resale of Registrable Securities pursuant to an effective Shelf Registration Statement that does not constitute a Demand Request; provided, that, (x) such Registrable Securities were acquired in a transaction registered under the Securities Act, and (y) such resale occurs following the scheduled closing of the Open Period (as defined in the Exchange Agreement) during which such Registrable Securities were delivered to such Holder. Upon receipt of such notice of proposed resale or upon receipt of a Demand Request, the Company will give notice of any Suspension Period to such Holder(s), and each Holder acknowledges and agrees that (i) such notice may constitute material non-public information regarding the Company and shall keep the existence and contents of any such notice confidential, and (ii) any further actions taken by the Holder or the Company to realize such proposed resale or such Demand Request will be postponed until the Company has confirmed that the applicable Suspension Period has ended.
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(g) If requested by the underwriters for an Underwritten Offering, the Company shall enter into an underwriting agreement with such underwriters for such offering, such agreement to be in form and substance (including with respect to representations and warranties by the Company) as is customarily given by the Company to underwriters in an underwritten public offering, and to contain indemnities to the effect and to the extent provided in Section 2.7. The Holders of Registrable Securities participating in the Underwritten Offering shall be parties to such underwriting agreement; provided, however, that no such Holder shall be required to (i) make any representations or warranties in connection with any such registration other than representations and warranties as to (A) such Holder’s ownership of his or its Registrable Securities to be sold or transferred free and clear of all liens, claims and encumbrances, (B) such Holder’s power and authority to effect such transfer and (C) such matters pertaining to compliance with securities laws as may be reasonably requested or (ii) undertake any indemnification obligations to the Company or the underwriters with respect thereto except as otherwise provided in Section 2.7. No Holder may participate in the Underwritten Offering unless such Holder agrees to sell its Registrable Securities on the basis provided in such underwriting agreement and completes and executes all questionnaires, powers of attorney, indemnities and other documents reasonably required under the terms of such underwriting agreement and reasonably acceptable to the Participating Majority. Each participating Holder may, at its option, require that any or all of the representations and warranties by, and the other agreements on the part of, the Company to and for the benefit of such underwriters also be made to and for such participating Holder’s benefit and that any or all of the conditions precedent to the obligations of such underwriters under such underwriting agreement also be conditions precedent to its obligations.
(h) Any Holder named in a Shelf Registration Statement or in any Resale Prospectus pursuant to a Resale Prospectus Request will deliver any questionnaires or other information reasonably requested by the Company as necessary to enable it pursuant to SEC rules and regulations to list such Holder as a selling Holder therein in respect of such Holder’s Registrable Securities (to the extent provided in any Resale Prospectus Request, as applicable).
2.2 Piggyback Registrations.
(a) If the Company proposes (i) to register any of its Class A Shares under the Securities Act or (ii) to qualify any of its Class A Shares under any applicable Canadian Securities Laws for sale to the public, in each case other than to effectuate an exchange offer or any employee benefit or dividend reinvestment plan, the Company shall give reasonably prompt written notice to each Holder of Registrable Securities, which notice shall offer each such Holder the opportunity, to the extent reasonably practicable, to include any or all of its or his or her Registrable Securities in such Registration Statement or Prospectus, subject to the limitations contained in Section 2.2(b) hereof. Each Holder who desires to have its or his or her Registrable Securities included in such Registration Statement or Prospectus shall so advise the Company in writing (stating the number of Registrable Securities desired to be registered or sold) within five (5) days after the date of such notice from the Company (or within one (1) Business Day in the case of a “bought deal” financing). Any Holder shall have the right to withdraw such Holder’s request for inclusion of such Holder’s Registrable Securities in any such registration pursuant to this Section 2.2(a) by giving written notice to the Company of such withdrawal, provided, however, that such request is made prior to the execution of an underwriting agreement (or similar agreement) with respect to such offering. Subject to Section 2.2(b) below, the Company shall include in such registration all such Registrable Securities so requested to be included therein; provided, however, that the Company may at any time withdraw or cease proceeding with any such registration if it shall at the same time withdraw or cease proceeding with the registration of all other Class A Shares originally proposed to be registered or sold. For the avoidance of doubt, any registration or offering pursuant to this Section 2.2 shall not be considered a Demand Registration for purposes of Section 2.1 of this Agreement.
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(b) With respect to any registration pursuant to Section 2.2(a) that occurs by way of an Underwritten Offering, if the managing underwriter(s) advises the Company that, in their opinion, the inclusion of Registrable Securities requested to be included will have an Adverse Effect on the offering (the “Piggyback Maximum Offering Size”), the Company shall include in such registration Class A Shares in the following priority, up to the Piggyback Maximum Offering Size: (i) first, all such Class A Shares proposed to be registered for the account of the Company; (ii) second, all Registrable Securities requested to be included in such registration by any Holders up to the Piggyback Maximum Offering Size (the Registrable Securities in this clause (ii) allocated, if necessary for the Underwritten Offering not to exceed the Piggyback Maximum Offering Size, among the participating Holders as nearly as possible on a pro rata basis based on the total amount of Registrable Securities and Exchangeable Units held by such Holders); and (iii) third, any Class A Shares requested to be included by any other securityholder(s) of the Company, on such basis as the Company and such other securityholder(s) may agree. If, as a result of the provisions of this Section 2.2(b), any Holder shall not be entitled to include all Registrable Securities in a registration that such Holder has requested to be so included, such Holder may withdraw such Holder’s request to include Registrable Securities in such registration. No Person may participate in any registration pursuant to Section 2.2(a) unless such Person (i) agrees to sell such Person’s Registrable Securities on the basis provided in any underwriting arrangements approved by the Company and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents, each in customary form, reasonably required under the terms of such underwriting arrangements; provided, however, that no such Person shall be required to (A) make any representations or warranties in connection with any such registration other than representations and warranties as to (1) such Person’s ownership of its or his or her Registrable Securities to be sold or transferred free and clear of all liens, claims and encumbrances, (2) such Person’s power and authority to effect such transfer and (3) such matters pertaining to compliance with securities laws as may be reasonably requested or (B) undertake any indemnification obligations to the Company or the underwriters with respect thereto except as otherwise provided in Section 2.7.
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2.3 Holdback Agreement. In connection with any Underwritten Offering, the Company (and, if reasonably required by the managing underwriter(s), the Company’s directors and executive officers) and each Holder that has the opportunity to participate in such Underwritten Offering agrees to be bound by customary restrictions on the sale, disposition, distribution, hedging or other transfer of equity securities of the Company (except with respect to such Registrable Securities as are proposed to be offered pursuant to such Underwritten Offering) or any securities convertible into or exchangeable or exercisable for such securities, for the period commencing on and ending up to 60 days following the date of pricing of such Underwritten Offering (the “Lock-Up Period”), subject to customary exceptions to be agreed between the Company and the underwriters.
2.4 Registration Procedures. The Company shall endeavor in good faith to remain eligible to use Form F-3, Form S-3 or Form F-10. If and whenever the Company is required to use reasonable best efforts to effect the registration of any Registrable Securities under the Securities Act as provided in Section 2.1, the Company shall:
(a) if the Registration Statement is not automatically effective upon filing, use reasonable best efforts to cause such Registration Statement to become effective as promptly as reasonably practicable;
(b) promptly notify each selling Holder, promptly after the Company receives notice thereof, of the time when such Registration Statement has become effective or a supplement to any prospectus forming a part of such Registration Statement has been filed;
(c) after the Registration Statement becomes effective, promptly notify each selling Holder of any request by the SEC that the Company amend or supplement such Registration Statement or Prospectus;
(d) prepare and file with the SEC and applicable Canadian provincial securities regulators such amendments and supplements to the Registration Statement and the Prospectus used in connection therewith as may be reasonably necessary to keep the Registration Statement effective and to comply with the provisions of the Securities Act and Canadian Securities Laws with respect to the disposition of all Registrable Securities covered by the Registration Statement for the period required to effect the distribution of the Registrable Securities as set forth in Section 2.1 hereof;
(e) furnish to the selling Holders such numbers of copies of such Registration Statement, each amendment and supplement thereto, each Prospectus (including each preliminary Prospectus and Prospectus supplement) and such other documents as the Holder and any underwriter(s) may reasonably request in order to facilitate the disposition of the Registrable Securities;
(f) use its reasonable best efforts to register or qualify the Registrable Securities covered by such Registration Statement under such other securities or blue sky laws of such jurisdictions as shall be reasonably requested in writing by the Holders and any managing underwriter(s) and do any and all other acts and things that may be reasonably necessary or advisable to enable the Holders and any managing underwriter(s) to consummate the disposition of the Registrable Securities in such jurisdictions; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business in or to file a general consent to service of process in any jurisdiction, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act, or subject itself to taxation in any such jurisdiction, unless the Company is already subject to taxation in such jurisdiction;
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(g) use its reasonable best efforts to cause all such Registrable Securities to be listed on each securities exchange and over-the-counter market (if any) on which the Class A Shares are then listed;
(h) provide a transfer agent and registrar for the Registrable Securities and provide a CUSIP number for all such Registrable Securities, in each case not later than the effective date of the Registration Statement;
(i) in the event of any Underwritten Offering, use its reasonable best efforts to furnish, on the date that shares of Registrable Securities are delivered to the underwriters for sale, if such securities are being sold through underwriters, (i) an opinion, dated as of such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters by the Company in an underwritten public offering, addressed to the underwriters, and (ii) a letter dated as of such date, from the independent public accountants of the Company, in form and substance as is customarily given by independent public accountants to underwriters in an underwritten public offering, addressed to the underwriters;
(j) if requested by the Holders, cooperate with the Holders and the managing underwriter (if any) to facilitate the timely preparation and delivery of certificates (which shall not bear any restrictive legends unless required under applicable law) representing securities sold under the Registration Statement, and enable such securities to be in such denominations and registered in such names as such Holders or the managing underwriter (if any) may request and keep available and make available to the Company’s transfer agent prior to the effectiveness of such Registration Statement a supply of such certificates;
(k) in the event of any Underwritten Offering, enter into and perform its obligations under an underwriting agreement, in form and substance as is customarily given by the Company to underwriters in an underwritten public offering, with the underwriter(s) of such offering;
(l) upon execution of confidentiality agreements in form and substance reasonably satisfactory to the Company, promptly make available for inspection by the selling Holders, any underwriter(s) participating in any disposition pursuant to such Registration Statement, and any attorney or accountant or other agent retained by any such underwriter or selected by the selling Holders, all financial and other records, pertinent corporate documents, and properties of the Company (collectively, “Records”), and use reasonable best efforts to cause the Company’s officers, directors, employees, and independent accountants to supply all information reasonably requested by any such selling Holder, underwriter, attorney, accountant, or agent, in each case, as necessary or advisable to verify the accuracy of the information in such Registration Statement and to conduct appropriate due diligence in connection therewith; provided, Records shall not be disclosed by any such recipient, unless the release of such Record is ordered pursuant to a subpoena or other order from a court of competent jurisdiction or is otherwise required by applicable law. The Company shall not be required to provide any information under this subparagraph 2.4(l) if the Company believes, after consultation with counsel for the Company, that to do so would cause the Company to forfeit an attorney-client privilege that was applicable to such Records. Each Holder agrees that information obtained by it as a result of such inspections shall be deemed confidential and shall not be used by it or its Affiliates (other than with respect to such Holders’ due diligence) unless and until such information is made generally available to the public, and further agrees that, upon learning that disclosure of such Records is sought in a court of competent jurisdiction, to the extent permitted and to the extent practicable it shall give notice to the Company and allow the Company to undertake appropriate action to prevent disclosure of the Records deemed confidential;
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(m) promptly notify the selling Holders and any underwriter(s) of the notification to the Company by the SEC of its initiation of any proceeding with respect to the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement, and in the event of the issuance of any stop order suspending the effectiveness of such Registration Statement, or of any order of the SEC or any Canadian provincial securities regulator suspending or preventing the use of any related Prospectus or suspending the qualification of any Registrable Securities included in such Registration Statement for sale in any jurisdiction, use its reasonable best efforts to obtain promptly the withdrawal of such order;
(n) promptly notify the selling Holders (after receipt of notice from any selling Holders that they plan to use an effective Shelf Registration Statement for a resale of Registrable Securities pursuant to Section 2.1(a) hereof or after the receipt of a Demand Request) and any underwriter(s) at any time when a Prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the Prospectus included in the Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances under which they were made, and at the request of any Holder promptly prepare and furnish to such Holder a reasonable number of copies of a supplement to or an amendment of such Prospectus, or a revised Prospectus, as may be necessary so that, as thereafter delivered to the purchasers of such securities, such Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances under which they were made (following receipt of any supplement or amendment to any Prospectus, the selling Holders shall deliver such amended, supplemental or revised Prospectus in connection with any offers or sales of Registrable Securities, and shall not deliver or use any Prospectus not so supplemented, amended or revised);
(o) promptly notify the selling Holders and any underwriter(s) of the receipt by the Company of any notification with respect to the suspension of the qualification of any Registrable Securities for sale under the applicable securities or blue sky laws of any jurisdiction;
(p) make available to each Holder such number of conformed copies of such Registration Statement and any amendment thereto, each preliminary Prospectus and Prospectus and each amendment or supplement thereto, as any Holder or any underwriter may reasonably request in order to facilitate the disposition of the Registrable Securities. The Company will promptly notify the Holders of the effectiveness of each Registration Statement or any post-effective amendment or the filing of any supplement or amendment to such Registration Statement or of any Prospectus supplement. The Company will promptly respond to any and all comments received from the SEC, with a view towards causing each Registration Statement or any amendment thereto to be declared effective by the SEC as soon as practicable and shall file an acceleration request, if necessary, as soon as practicable following the resolution or clearance of all SEC comments or, if applicable, following notification by the SEC that any such Registration Statement or any amendment thereto will not be subject to review or, in the case of a Registration Statement on Form F-10, upon final receipt from the applicable Canadian securities regulator;
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(q) take no direct or indirect action prohibited by Regulation M under the Exchange Act; provided, that, to the extent that any prohibition is applicable to the Company, the Company will take all reasonable action to make any such prohibition inapplicable;
(r) in connection with an Underwritten Offering, use reasonable best efforts to cause its officers to assist and cooperate in the marketing of the Registrable Securities covered by such offering (including participation in “road shows” or other similar marketing efforts); and
(s) take all such other actions as are reasonably necessary in order to facilitate the disposition of such Registrable Securities.
2.5 Suspension of Dispositions. Each Holder agrees by acquisition of any Registrable Securities that, upon receipt of any notice (a “Suspension Notice”) from the Company of the happening of any event of the kind described in Section 2.4(n) such Holder will forthwith discontinue disposition of Registrable Securities pursuant to the Registration Statement until such Holder’s receipt of the copies of the supplemented or amended Prospectus, or until it is advised in writing (the “Advice”) by the Company that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings which are incorporated by reference in the Prospectus, and the period from and including the date of the giving of a Suspension Notice to and including the date each Holder either receives the supplemented or amended Prospectus or receives the Advice shall count as a Suspension Period. The Company shall extend the period of time during which the Company is required to maintain the Registration Statement effective pursuant to this Agreement by the number of days of such period and any other Suspension Period. If so directed by the Company, such Holder will deliver to the Company all copies, other than permanent file copies then in such Holder’s possession, of the Prospectus covering such Registrable Securities current at the time of receipt of such notice. The Company shall use its reasonable best efforts and take such actions as are reasonably necessary to render the Advice as promptly as practicable. The Holders acknowledge and agree that receipt of a Suspension Notice may constitute material non-public information regarding the Company and shall keep the existence and contents of any such Suspension Notice confidential.
2.6 Registration Expenses. All Registration Expenses shall be borne by the Company. In addition, for the avoidance of doubt, the Company shall pay its internal expenses in connection with the performance of or compliance with this Agreement (including, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit or quarterly review, the expense of any liability insurance and the expenses and fees for listing the securities to be registered on each securities exchange on which they are to be listed. All Selling Expenses relating to Registrable Securities registered shall be borne by the respective Holders of such Registrable Securities.
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2.7 Indemnification.
(a) The Company agrees to indemnify and reimburse, to the fullest extent permitted by law, each Holder that is a seller of Registrable Securities, and each of its employees, advisors, agents, representatives, partners, officers, and directors and each Person who controls (within the meaning of the Securities Act or the Exchange Act) such Holder and any agent or investment advisor thereof (collectively, the “Seller Affiliates”) against any and all losses, claims, damages, liabilities and expenses, joint or several (including reasonable expenses of investigation and reasonable attorneys’ fees and expenses, except as limited by Section 2.7(c)), based upon, arising out of, related to or resulting from any untrue or alleged untrue statement of a material fact contained in any Registration Statement or Prospectus or any amendment thereof or supplement thereto, or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading (and, in the case of a Prospectus, in the light of the circumstances in which they were made); except in the case of the foregoing insofar as (A) any such statements are made in reliance upon Selling Holder Information (as defined herein) furnished to the Company in writing by such Holder or any Seller Affiliate expressly for use therein, (B) during the Initial Period, to the extent any such statements relate to OCGH or any of its subsidiaries or (C) any amounts paid in settlement of any claim have been paid if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld or delayed. Each of the parties hereto hereby acknowledge and agree that, unless otherwise expressly agreed in writing by such Holder to the contrary, for all purposes of this Agreement, the only information furnished or to be furnished to the Company by any Holder or any of its Seller Affiliates for use in any Registration Statement or Prospectus or any amendment thereof or supplement thereto are statements relating to such Holder’s or Seller Affiliate’s beneficial ownership of securities of the Company and the name and address of such Holder or Seller Affiliate (such information, the “Selling Holder Information”).
(b) In connection with any Registration Statement or Prospectus in which a Holder that is a seller of Registrable Securities is participating, each such Holder will furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any such Registration Statement or Prospectus, as applicable, and, to the fullest extent permitted by law, each such seller will indemnify the Company and each of its employees, advisors, agents, representatives, partners, directors and officers and each Person who controls the Company (within the meaning of the Securities Act or the Exchange Act and excluding such Holder or any Seller Affiliate) and any agent or investment advisor thereof against any and all losses, claims, damages, liabilities and expenses (including, reasonable fees and disbursements of one counsel, except as limited by Section 2.7(c)) resulting from or based upon: (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or Prospectus, as applicable, or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading (and, in the case of a Prospectus, in the light of the circumstances in which they were made), but only to the extent that such untrue statement or alleged untrue statement or omission or alleged omission is contained in any Selling Holder Information and (ii) any order made or inquiry, investigation or proceedings commenced or threatened by any applicable securities regulatory authority, court or other competent authority based upon (A) any untrue statement or alleged untrue statement or omission or alleged omission based upon any information or affidavit furnished by such Holder or any of its Seller Affiliates in writing specifically for inclusion in the Registration Statement or Prospectus, or any amendments or supplements thereto, or (B) such Holder’s failure to deliver to a purchaser of Registrable Securities a copy of the Registration Statement or Prospectus, as applicable, or any amendments or supplements thereto, or to otherwise comply with the Securities Act, the Exchange Act or Canadian Securities Laws, as applicable, in a manner which is not a result of a failure or alleged failure of the Company to comply with the Securities Act, the Exchange Act or Canadian Securities Laws, as applicable, except insofar as caused by the Company’s or any underwriter’s failure to comply with such applicable securities laws; provided that the obligation to indemnify will be several, not joint and several, among such sellers of Registrable Securities, and the liability of each such seller of Registrable Securities will be in proportion to the amount of Registrable Securities registered by them, and, provided, further, that such liability will be limited to the net amount received by such seller from the sale of Registrable Securities pursuant to such Registration Statement or Prospectus or offering, as applicable; provided, however, that such seller of Registrable Securities shall not be liable in any such case to the extent that prior to the filing of any such Registration Statement or Prospectus, as applicable, or amendment thereof or supplement thereto, such seller has furnished in writing to the Company information expressly for use in such Registration Statement or Prospectus, as applicable, or any amendment thereof or supplement thereto which corrected or made not misleading information previously furnished to the Company.
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(c) Any Person entitled to indemnification hereunder will (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give such notice shall not limit the rights of such Person) and (ii) unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party, acting reasonably; provided, however, that any person entitled to indemnification hereunder shall have the right to employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such person unless (i) the indemnifying party has agreed to pay such fees or expenses or (ii) the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory to such person. If such defense is not assumed by the indemnifying party as permitted hereunder, the indemnifying party will not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent will not be unreasonably withheld, conditioned or delayed). If such defense is assumed by the indemnifying party pursuant to the provisions hereof, such indemnifying party shall not settle or otherwise compromise the applicable claim unless (i) such settlement or compromise contains a full and unconditional release of the indemnified party without any admission of liability or imposition of any expense, judgment, fine, penalty, obligation or limitation on the part of such indemnified party or (ii) the indemnified party otherwise consents in writing (which consent will not be unreasonably withheld, conditioned or delayed). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim will not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party, a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim, in which event the indemnifying party shall be obligated to pay the reasonable fees and disbursements of such additional counsel or counsels.
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(d) Each party hereto agrees that, if for any reason the indemnification provisions contemplated by Section 2.7(a) or Section 2.7(b) are unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities or expenses (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, liabilities or expenses (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party in connection with the actions which resulted in the losses, claims, damages, liabilities or expenses as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by such indemnifying party or indemnified party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 2.7(d) were determined by pro rata allocation (even if the Holders or any underwriters or all of them were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in this Section 2.7(d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities or expenses (or actions in respect thereof) referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such indemnified party in connection with investigating or, except as provided in Section 2.7(c), defending any such action or claim. Notwithstanding the provisions of this Section 2.7(d), no Holder shall be required to contribute an amount greater than the dollar amount by which the net proceeds received by such Holder with respect to the sale of any Registrable Securities exceeds the amount of damages which such Holder has otherwise been required to pay by reason of any and all untrue or alleged untrue statements of material fact or omissions or alleged omissions of material fact made in any Registration Statement or Prospectus or any amendment thereof or supplement thereto related to such sale of Registrable Securities. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Holders’ obligations in this Section 2.7(d) to contribute shall be several in proportion to the amount of Registrable Securities registered by them and not joint.
If indemnification is available under this Section 2.7, the indemnifying parties shall indemnify each indemnified party to the full extent provided in Section 2.7(a) and Section 2.7(b) without regard to the relative fault of said indemnifying party or indemnified party or any other equitable consideration provided for in this Section 2.7(d) subject, in the case of the Holders, to the limited dollar amounts set forth in Section 2.7(b).
(e) The indemnification and contribution provided for under this Agreement will remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling Person of such indemnified party and will survive the transfer of securities.
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2.8 Transfer of Registration Rights. All or any portion of the registration rights of a Holder under this Agreement with respect to any Registrable Securities may be transferred or assigned to any purchaser or transferee of Registrable Securities that is an Affiliate of the transferor; provided, however, that (i) such Holder shall give the Company written notice prior to the time of such transfer stating the name and address of the transferee and identifying the Registrable Securities with respect to which the rights under this Agreement are being transferred; (ii) such transferee shall execute and deliver to the Company a joinder agreeing to be bound as a Holder by the provisions of this Agreement, substantially in the form of Exhibit A hereto, and in connection therewith, shall consent to and cooperate with the Company in providing information required in any amendment or supplement to any Registration Statement and/or Prospectus as may be necessary to permit the offering and sale of Registrable Securities by such transferee; and (iii) immediately following such transfer the further disposition of such Registrable Securities by such transferee shall be restricted to the extent set forth under applicable law.
2.9 Current Public Information. With a view to making available to the Holders of Registrable Securities the benefits of Rule 144 promulgated under the Securities Act and other rules and regulations of the SEC that may at any time permit a Holder of Registrable Securities to sell securities of the Company to the public without registration, the Company covenants that it will use its reasonable best efforts to: (i) make and keep public information available, as those terms are understood and defined in Rule 144, (ii) furnish to any Holder upon reasonable request a statement as to the Company’s compliance with the reporting requirements of the Exchange Act and (iii) take such further action as may be necessary or appropriate in connection with the removal of any restrictive legend on the Registrable Securities being sold in accordance with Rule 144 or otherwise in compliance with applicable securities laws.
At any time that a Holder seeks to rely on the provisions of National Instrument 45-102 – Resale of Securities, or any successor instrument promulgated by the Canadian provincial securities regulators (“NI 45-102”) to resell its Registrable Securities under Canadian Securities Laws, the Company shall ensure that the Company is not in default of Canadian Securities Laws of the Canadian jurisdictions in which the Company is a “reporting issuer” under Canadian Securities Laws and otherwise take such steps as are required to satisfy the other requirements of NI 45-102.
2.10 Free Writing Prospectuses. The Company shall not permit any officer, director, underwriter, broker or any other Person acting on behalf of the Company to use any free writing prospectus (as defined in Rule 405 under the Securities Act) in connection with any registration statement covering Registrable Securities, without the prior written consent of each participating Holder and any underwriter. No Holder shall, or permit any officer, manager, underwriter, broker or any other Person acting on behalf of such Holder to use any free writing prospectus in connection with any registration statement covering Registrable Securities, without the prior written consent of the Company.
ARTICLE III - TERMINATION
3.1 Termination. The Agreement will be effective as of the Merger Closing Date and shall terminate and be of no further force and effect upon (a) the date when there shall no longer be any Registrable Securities outstanding and no Class A Shares are issuable under the Exchange Agreement that would be Registrable Securities or (b) with respect to a Holder, by written notice at any time by such Holder to the Company.
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ARTICLE IV - MISCELLANEOUS
4.1 Notices. Any notice or other communication required or permitted hereunder shall be in writing and shall be delivered by hand, by facsimile transmission or electronic mail transmission, or by certified or registered mail, postage prepaid and return receipt requested. Notices shall be deemed to have been given upon delivery, if delivered by hand, three days after mailing, if mailed, and upon receipt of an appropriate electronic confirmation, if delivered by facsimile or electronic mail transmission. Notices shall be delivered to the parties at the addresses set forth below:
if to the Company:
Brookfield
Asset Management Inc.
181 Bay Street
Toronto, Ontario
M5J 2T3
Attention: Jessica Diab (Legal & Regulatory)
Email: [***Redacted – Personally Identifying Information***].
with copies to (which shall not constitute notice):
Weil, Gotshal
& Manges LLP
767 5th Avenue
New York, New York 10153
Attention: Michael J. Aiello, Matthew J. Gilroy and
Eoghan P. Keenan
Email: [***Redacted – Personally Identifying Information***].
and
Torys LLP
79 Wellington St. W., Box 270, TD South Tower
Toronto, Ontario M5K 1N2 Canada
Attention: Karrin Powys-Lybbe
Email:
[***Redacted – Personally Identifying Information***].
if to OCGH:
Oaktree
Capital Group Holdings, L.P.
333 Grand Avenue, 28th Floor
Los Angeles, California 90071
Attention: Todd Molz, General Counsel and Chief Administrative
Officer
Email: [***Redacted – Personally Identifying Information***].
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with copies to (which shall not constitute notice):
Simpson
Thacher & Bartlett LLP
425 Lexington Avenue
New York, New York 10017
Attention: Elizabeth A. Cooper, Benjamin P. Schaye, Thomas A. Wuchenich and Daniel N Webb.
Email: [***Redacted – Personally Identifying Information***].
If to any Holder, at its address listed on the signature pages hereof.
Any party may from time to time change its address or designee for notification purposes by giving the other parties prior notice in the manner specified above of the new address or the new designee and the subsequent date upon which the change shall be effective.
4.2 Choice of Law; Exclusive Jurisdiction; Waiver of Jury Trial.
(a) This Agreement shall be constructed, interpreted and enforced in accordance with, and the respective rights and obligations of the parties shall be governed by, the laws of the State of Delaware without regard to principles of conflicts of law that would result in the application of the substantive law of another jurisdiction.
(b) All actions and proceedings for the enforcement of or based on, arising out of or relating to this Agreement shall be heard and determined exclusively in the Delaware Court of Chancery (or, only if the Delaware Court of Chancery declines to accept jurisdiction over the particular matter, any other court of the State of Delaware, or any federal court sitting in the State of Delaware), and each of the parties hereto hereby (i) irrevocably submits to the exclusive jurisdiction of such courts (and, in the case of appeals, appropriate appellate courts therefrom) in any such action or proceeding, (ii) irrevocably waives the defense of an inconvenient forum to the maintenance of any such action or proceeding, (iii) agrees that it shall not bring any such action in any court other than the Court of Chancery of the State of Delaware (or, only if the Delaware Court of Chancery declines to accept jurisdiction over the particular matter, any other court of the State of Delaware, or any federal court sitting in the State of Delaware), and (iv) irrevocably consents to service of process by first class certified mail, return receipt requested, postage prepaid, to the address at the Company is to receive notice in accordance with Section 4.1. The parties hereto agree that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable law.
(c) Each of the parties hereto hereby irrevocably waives any and all rights to trial by jury in any legal proceeding arising out of or related to this Agreement.
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4.3 No Third-Party Beneficiaries. This Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever, under or by reason of this Agreement; provided, however, the parties hereto hereby acknowledge that the Seller Affiliates are express third-party beneficiaries of the obligations of the parties hereto set forth in Section 2.7.
4.4 Successors and Assigns. Each Holder may assign all or a portion of its rights hereunder in accordance with Section 2.8; provided that such transferee shall only be admitted as a party hereunder and become a Holder upon its, his or her execution and delivery of a joinder agreement pursuant to which such transferee agrees to be bound by the terms and conditions of this Agreement as if such Person were a Holder party hereto; whereupon such Person will be treated as a Holder for all purposes of this Agreement, with the same rights, benefits and obligations hereunder as the transferring Holder with respect to the transferred Registrable Securities. Except as provided in the immediately preceding sentence, neither this Agreement nor any of the rights or obligations hereunder shall be assigned by any of the parties hereto without the prior written consent of the other parties. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns. Any attempted assignment in violation of this Section 4.4 shall be void.
4.5 Counterparts. This Agreement may be executed by the parties in separate counterparts (including by means of executed counterparts delivered via facsimile or other electronic means), each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
4.6 Severability. In case any provision in this Agreement shall be held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and the remaining provisions shall not in any way be affected or impaired thereby.
4.7 No Waivers; Amendments.
(a) No failure or delay on the part of the Company or any Holder in exercising any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies provided for herein are cumulative and are not exclusive of any remedies that may be available to the Company or any Holder at law or in equity or otherwise.
(b) Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by the Company and the Required Holders.
(c) Any amendment, waiver, consent or election, and the exercise of any remedy, under or in respect of this Agreement by any Holder (other than any Senior Service Partner) shall be exercised exclusively by OCGH as Attorney-in-Fact for such Holder.
4.8 Entire Agreement. This Agreement and the other writings referred to herein or therein or delivered pursuant hereto or thereto, contain the entire agreement between the Holders and the Company with respect to the subject matter hereof and supersede all prior and contemporaneous arrangements or understandings with respect thereto.
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4.9 Remedies; Specific Performance.
(a) Each Holder shall have all rights and remedies reserved for such Holder pursuant to this Agreement and all rights and remedies which such Holder has been granted at any time under any other agreement or contract and all of the rights which such Holder has under any law or equity. Any Person having any rights under any provision of this Agreement will be entitled to enforce such rights specifically, to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law or equity.
(b) The parties hereto recognize and agree that money damages may be insufficient to compensate the Holders of any Registrable Securities for breaches by the Company of the terms hereof and, consequently, that the equitable remedies of injunctive relief and of specific performance of the terms hereof will be available in the event of any such breach. If any action should be brought in equity to enforce any of the provisions of this Agreement, none of the parties hereto shall raise the defense that there is an adequate remedy at law.
4.10 Negotiated Agreement. This Agreement was negotiated by the parties with the benefit of legal representation, and any rule of construction or interpretation otherwise requiring this Agreement to be construed or interpreted against any party shall not apply to the construction or interpretation hereof.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first written above.
| BROOKFIELD ASSET MANAGEMENT INC. | ||
| By: | /s/ Justin Beber | |
| Name: Justin Beber | ||
| Title: Chief Legal Officer | ||
| OAKTREE CAPITAL GROUP HOLDINGS, L.P. | ||
| By: | OAKTREE CAPITAL GROUP HOLDINGS GP, LLC, its General Partner | |
| By: | /s/ Todd Molz | |
| Name: Todd Molz | ||
| Title: General Counsel and Chief Administrative Officer | ||
| By: | /s/ Richard Ting | |
| Name: Richard Ting | ||
| Title: Managing Director Associate General Counsel | ||
| EACH HOLDER OF EXCHANGEABLE UNITS | ||
| By: | OAKTREE CAPITAL GROUP HOLDINGS, L.P., as Attorney-in-Fact | |
| By: | OAKTREE CAPITAL GROUP HOLDINGS GP, LLC, its General Partner | |
| By: | /s/ Todd Molz | |
| Name: Todd Molz | ||
| Title: General Counsel and Chief Administrative Officer | ||
| By: | /s/ Richard Ting | |
| Name: Richard Ting | ||
| Title: Managing Director Associate General Counsel | ||
Exhibit A
JOINDER AGREEMENT
This Joinder Agreement is made this __ day of __________, 20___, by and between __________________ (the “New Holder”) and Brookfield Asset Management Inc., a corporation amalgamated under the laws of the Province of Ontario (and any successor thereto, the “Company”), pursuant to a Registration Rights Agreement dated as of September 30, 2019 (the “Agreement”), by and among the Company, OCGH and the Holders. Capitalized terms used herein but not otherwise defined herein shall have the meanings ascribed to them in the Agreement.
WITNESSETH:
WHEREAS, the Company has agreed to provide registration rights with respect to the Registrable Securities as set forth in the Agreement; and
WHEREAS, the New Holder has acquired Registrable Securities directly or indirectly from a Holder; and
WHEREAS, the Company and the Holders have required in the Agreement that each new Holder must enter into an Joinder Agreement binding the New Holder to the Agreement to the same extent as if it were an original party thereto;
NOW, THEREFORE, in consideration of the mutual promises of the parties, the New Holder acknowledges that it has received and read the Agreement and that the New Holder shall be bound by, and shall have the benefit of, all of the terms and conditions set out in the Agreement to the same extent as if it were an original party to the Agreement as a Holder [and a Senior Service Partner] thereunder.
| New Holder | |
| Address: | |
A-1
AGREED TO on behalf of the Company pursuant to Section 2.8 of the Agreement.
| BROOKFIELD ASSET MANAGEMENT INC. | ||
| By: | ||
| Printed Name and Title | ||
A-2
Exhibit 5.1
 |
|
| Suite 3000 79 Wellington St. W. Box 270, TD Centre Toronto, Ontario M5K 1N2 Canada Tel 416.865.0040 Fax 416.865.7380 |
December 7, 2021
Brookfield Asset Management Inc.
Brookfield Place, 181 Bay Street
Suite 300, P.O. Box 762
Toronto, Ontario M5J 2T3
Dear Sirs/Mesdames:
RE: BROOKFIELD ASSET MANAGEMENT INC.
We have acted as counsel to Brookfield Asset Management Inc. (the “Corporation”), a corporation existing under the laws of the Province of Ontario, in connection with the Registration Statement on Form F-3 (the “Registration Statement”) filed on the date hereof by the Corporation with the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Securities Act”), for the purpose of registering under the Securities Act the Corporation’s Class A Limited Voting Shares (the “Class A Shares”) that may be issued from time to time in connection with the exchange of limited partnership units (“OCGH units”) of Oaktree Capital Group Holdings, L.P. (“OCGH”) pursuant to the Exchange Agreement (as defined in the Registration Statement).
In connection with this opinion, we have examined the Registration Statement and the Exchange Agreement, which has been filed with the Commission as an exhibit to the Registration Statement. We also have examined the originals, or duplicate, certified, conformed, telecopied or photostatic copies, of such corporate records, agreements, documents and other instruments and have made such other investigations as we have considered necessary or relevant for the purposes of this opinion. With respect to the accuracy of factual matters material to this opinion, we have relied upon certificates or comparable documents and representations of public officials and of officers and representatives of the Corporation. In giving this opinion, we have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of all documents submitted to us as originals, the conformity to authentic original documents of all documents submitted to us as duplicates, certified, conformed, telecopied or photostatic copies and the authenticity of the originals of such latter documents.
Based upon and subject to the foregoing, we are of the opinion that upon the Corporation having received the consideration therefor and upon issuance of Class A Shares in connection with the exchange of OCGH units from time to time in accordance with the terms and conditions of the Exchange Agreement, such Class A Shares will be duly authorized, validly issued, fully paid and non-assessable.
This opinion is based upon and limited to the laws of the Province of Ontario and the federal laws of Canada applicable therein, and has been given by members of the Law Society of Ontario.
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We consent to the filing of this opinion as an exhibit to the Registration Statement and to the use of our name under the caption “Legal Matters” therein. In giving such consent, we do not admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission thereunder.
Yours very truly,
/s/ Torys LLP
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in this Registration Statement on Form F-3 of our reports dated March 23, 2021 relating to the financial statements of Brookfield Asset Management Inc. (the “Company”) and the effectiveness of the Company’s internal control over financial reporting, appearing in the Annual Report on Form 40-F (as amended by Amendment No. 1) of the Company for the year ended December 31, 2020. We also consent to the reference to us under the heading “Experts” in such Registration Statement.
/s/ Deloitte LLP
Chartered Professional Accountants
Licensed Public Accountants
Toronto, Canada
December 7, 2021