Brookfield Infrastructure Partners L.P F-3, filed Sep 25, 2020
Brookfield Infrastructure Partners L.P. (BIP)
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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 24, 2020
REGISTRATION NO. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM F-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
BROOKFIELD INFRASTRUCTURE PARTNERS L.P.
(Exact name of registrant as specified in its charter)
| Bermuda | Not applicable | |
| (State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification Number) |
73 Front Street, 5th Floor
Hamilton, HM 12, Bermuda
+1 (441) 294-3309
(Address and telephone number of Registrant’s principal executive offices)
Ralph Klatzkin
Brookfield Infrastructure US Holdings I Corporation
Brookfield Place
250 Vesey Street, 15th Floor
New York, New York 10281
(212) 417-7000
(Name, address and telephone number of agent for service)
Copies to:
Torys LLP
1114 Avenue of the Americas, 23rd Floor
New York, NY 10036
ATTENTION: Mile T. Kurta
(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. ☒
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
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| Title of Each Class of Securities to be Registered |
Amount to be Registered |
Proposed Maximum Offering Price per Unit |
Proposed Maximum Aggregate Offering Price |
Amount of Registration Fee | ||||
| Limited Partnership Units |
30,000,000 units(1)(2)(3) | $46.6950 | $1,400,850,000(3) | $181,830.33(4) | ||||
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| (1) | Represents the maximum number of the Registrant’s non-voting limited partnership units (“LP Units”) to be issued by the Registrant or to be delivered by Brookfield Infrastructure Corporation (“BIPC”) or Brookfield Asset Management Inc. (“Brookfield”), in each case in connection with the exchange, redemption or acquisition, as applicable, from time to time of class A exchangeable subordinate voting shares (“Exchangeable Shares”) of BIPC. |
| (2) | Pursuant to Rule 416, the securities being registered hereunder include such indeterminate number of additional LP Units as may be issuable as a result of unit splits, unit dividends or similar transactions. |
| (3) | In accordance with Rule 429 under the Securities Act of 1933, as amended (the “Securities Act”), the prospectus contained herein is a combined prospectus that relates to and will be used in connection with the issue by the Registrant or the delivery by BIPC or Brookfield of (i) 30,000,000 LP Units registered hereby and (ii) 44,988,147 LP Units registered pursuant to the registration statement on Form F-3 (File No. 333-235653), which was declared effective on March 12, 2020 (the “Prior Registration Statement”), which LP Units, to the Registrant’s knowledge, have not been issued or delivered by the registrant, BIPC or Brookfield as of the date hereof. |
| (4) | Pursuant to Rule 429 under the Securities Act, the securities covered by the prospectus filed as part of this registration statement include the securities of the registrant that were registered pursuant to the Prior Registration Statement. An aggregate registration fee of $312,399.40 was previously paid on December 20, 2019 and February 28, 2020 in connection with the Prior Registration Statement. As a result, a filing fee of $181,830.33 is being paid in connection with this registration statement, which is estimated solely for purposes of calculating the registration fee in accordance with Rule 457(c) under the Securities Act, based upon the average of the high and low sales prices of the LP Units as reported on the New York Stock Exchange on September 21, 2020. |
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act, or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
Pursuant to the provisions of Rule 429 under the Securities Act, the prospectus contained in this registration statement also relates to the Registrant’s registration statement on Form F-3 (File No. 333-235653). Upon effectiveness, this registration statement will also act as a post-effective amendment to such earlier registration statement.
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EXPLANATORY NOTE
On December 20, 2019, Brookfield Infrastructure Partners L.P. (the “Partnership”) filed a registration statement (the “Prior Registration Statement”) on Form F-3 (File No. 333-235653) with the U.S. Securities and Exchange Commission (the “SEC”) related to the issuance and/or delivery of an aggregate of 47,000,000 of its non-voting limited partnership units (“LP Units”) in connection with the exchange, redemption or acquisition, as applicable, from time to time of class A exchangeable subordinate voting shares (“Exchangeable Shares”) of Brookfield Infrastructure Corporation (“BIPC”). The Prior Registration Statement was subsequently declared effective by the SEC on March 12, 2020. Pursuant to Rule 429 under the Securities Act of 1933 (the “Securities Act”), this registration statement, which is a new registration statement, combines the 44,988,147 LP Units from the Prior Registration Statement, which remain unissued, with an additional 30,000,000 LP Units, all of which are registered hereby for issuance and/or delivery, as applicable, by the Partnership, BIPC and/or Brookfield, to enable an aggregate of 74,988,147 LP Units to be issued or delivered pursuant to the combined prospectus. Pursuant to Rule 429 under the Securities Act, this registration statement also constitutes a post-effective amendment to the Prior Registration Statement, and such post-effective amendment shall hereafter become effective concurrently with the effectiveness of this registration statement in accordance with Section 8(c) of the Securities Act.
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The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
Subject to Completion Dated September 24, 2020.
BROOKFIELD INFRASTRUCTURE PARTNERS L.P.
74,988,147 Limited Partnership Units
This prospectus relates to up to 74,988,147 non-voting limited partnership units (the “LP Units”) of Brookfield Infrastructure Partners L.P. (the “Partnership,” or “we”, “us” and “our”) that may be issued by the Partnership or delivered by Brookfield Infrastructure Corporation (“BIPC”) to satisfy any exchange, redemption or acquisition of class A exchangeable subordinate voting shares (the “Exchangeable Shares”) of BIPC (including, if applicable, in connection with liquidation, dissolution or winding up of BIPC). 44,988,147 of the LP Units, which remain unissued, were previously registered pursuant to the Partnership’s registration statement on Form F-3 (File No. 333-235653), which was declared effective by the Securities and Exchange Commission (the “SEC”) on March 12, 2020 (the “Prior Registration Statement”). Pursuant to Rule 429 under the Securities Act of 1933, as amended (the “Securities Act”), this prospectus updates the Prior Registration Statement and includes the LP Units previously registered by the Partnership pursuant to such Prior Registration Statement.
Brookfield Asset Management Inc. (“Brookfield” or the “selling unitholder”) has also agreed that, in the event that neither BIPC nor the Partnership has satisfied an exchange request by a holder of Exchangeable Shares, then Brookfield, as selling unitholder, will satisfy until March 31, 2025 such exchange requests by paying such cash amount or delivering such LP Units (up to 74,988,147 LP Units) pursuant to this prospectus, which includes the LP Units previously registered by the Partnership pursuant to the Prior Registration Statement.
Each Exchangeable Share is exchangeable at the option of the holder thereof for one LP Unit (subject to adjustment to reflect certain capital events) or its cash equivalent (the form of payment to be determined at the election of BIPC), as more fully described in this prospectus.
None of the Partnership, BIPC or Brookfield will receive any cash proceeds from the issuance or delivery of any LP Units upon exchange, redemption or acquisition, as applicable, of Exchangeable Shares pursuant to this prospectus.
The LP Units are listed on the New York Stock Exchange (the “NYSE”) under the trading symbol “BIP” and the Toronto Stock Exchange (“TSX”) under the symbol “BIP.UN.” On September 23, 2020, the closing price of the LP Units was $46.14 per unit on the NYSE and C$61.83 per unit on the TSX.
Investing in the LP Units involves risks. Please see “Risk Factors” beginning on page 3 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 the LP Units.
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
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| COMPARISON OF RIGHTS OF HOLDERS OF EXCHANGEABLE SHARES AND LP UNITS |
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This prospectus is part of a registration statement on Form F-3 that we have filed with the SEC under the Securities Act with respect to LP Units to be issued or delivered, from time to time, in connection with the exchange, redemption or acquisition, if any, of Exchangeable Shares (including in connection with liquidation, dissolution or winding up of BIPC). The term registration statement means the Prior Registration Statement and any and all amendments including the schedules and exhibits to the Prior Registration Statement and this registration statement, which is combined with the Prior Registration Statement pursuant to Rule 429 under the Securities Act. We, BIPC or the selling unitholder may issue or deliver, as the case may be, to holders of Exchangeable Shares, at any time and from time to time, LP Units in exchange for Exchangeable Shares under circumstances that are more fully described in this prospectus. As allowed by the SEC rules, this prospectus does not contain all the information included in the registration statement. For further information, you are referred to the registration statement, including its exhibits, as well as any prospectus supplement and any documents incorporated by reference herein or therein.
You should read this prospectus together with any applicable prospectus supplement thereto, and in any free writing prospectus that we may provide to you, and 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 LP Units 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 and any accompanying prospectus supplement, and in any free writing prospectus that we may provide to you. We and the selling unitholder have not authorized anyone else to provide you with other information. We and the selling unitholder are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted.
Unless the context requires otherwise, when used in this prospectus, the term “Partnership” refers to Brookfield Infrastructure Partners L.P. alone; the terms “Brookfield Infrastructure,” “we,” “us” and “our” refer to, collectively, the Partnership, Brookfield Infrastructure L.P. (the “Holding LP”), and the subsidiaries of the Holding LP, from time to time, through which we hold all our interests in the operating entities, which are the entities that directly or indirectly hold our current operations and assets that we may acquire in the future, including any assets held through joint ventures, partnerships and consortium arrangements; the term “general partner” refers to Brookfield Infrastructure Partners Limited, the Partnership’s general partner. References to “our group” mean, collectively, the Partnership and BIPC.
The financial information contained in or incorporated by reference this prospectus and any prospectus supplement, 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”).
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION
This prospectus and the documents incorporated by reference in this prospectus contain certain “forward-looking statements” and “forward-looking information” within the meaning of applicable securities laws. These forward-looking statements and information also relate to, among other things, our business, operations, objectives, goals, strategies, intentions, plans, beliefs, expectations and estimates and anticipated events or trends. In particular, our statements with respect to continuity plans and preparedness measures we have implemented in response to the COVID-19 pandemic and its expected impact on our businesses, operations, earnings and results, are forward-looking statements. In some cases, you can identify forward-looking statements and information by terms such as “anticipate”, “believe”, “could”, “estimate”, “likely”, “expect”, “intend”, “may”, “continue”, “plan”, “potential”, “objective”, “tend”, “seek”, “target”, “foresee”, “aim to”, “outlook”, “endeavor”, “will”, “would” and “should”, or the negative of those terms or other comparable terminology. These forward-looking statements and information are not historical facts but reflect our current expectations regarding future results or events and are based on information currently available to us and on assumptions we believe are reasonable.
Although we believe that our anticipated future results, performance or achievements expressed or implied by these forward-looking statements and information are based on reasonable assumptions and expectations, we cannot assure you that such expectations will prove to have been correct. You should not place undue reliance on forward-looking statements and information because they involve assumptions, known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by these forward-looking statements and information. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to us or are within our control. If a change occurs, our business, financial condition, liquidity and results of operations and our plans and strategies may vary materially from those expressed in the forward-looking statements and forward-looking information herein.
Factors that could cause our actual results to differ materially from those contemplated or implied by the forward-looking statements and information in this prospectus and the documents incorporated by reference in this prospectus include, without limitation:
| • | our assets are or may become highly leveraged and we intend to incur indebtedness above the asset level; |
| • | we are a holding entity that relies on its subsidiaries to provide the funds necessary to pay our distributions and meet our financial obligations; |
| • | future sales and issuances of our LP Units, preferred units or securities exchangeable for our LP Units, including Exchangeable Shares, or the perception of such sales or issuances, could depress the trading price of our LP Units; |
| • | pending acquisitions, dispositions and other transactions may not be completed on the timeframe or in the manner contemplated, or at all; |
| • | deployment of capital for our committed backlog and other projects we are pursuing may be delayed, curtailed or redirected altogether; |
| • | acquisitions may subject us to additional risks and the expected benefits of our acquisitions may not materialize; |
| • | foreign currency risk and risk management activities; |
| • | increasing political uncertainty, which may impact our ability to expand in certain markets; |
| • | general economic conditions and risks relating to the economy; |
| • | pandemics or epidemics, including risks associated with the global pandemic caused by the novel strain of coronavirus, COVID-19, and the related global impact on commerce and travel, which may result in a decrease in cash flows and impairment losses and/or revaluations of our investments and infrastructure assets; |
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| • | commodity risks; |
| • | alternative technologies could impact the demand for, or use of, the businesses and assets that we own and operate and could impair or eliminate the competitive advantage of our businesses and assets; |
| • | availability and cost of credit; |
| • | government policy and legislation change; |
| • | exposure to uninsurable losses and force majeure events; |
| • | infrastructure operations may require substantial capital expenditures; |
| • | labor disruptions and economically unfavorable collective bargaining agreements; |
| • | exposure to occupational health and safety related accidents; |
| • | exposure to increased economic regulation and adverse regulatory decisions; |
| • | exposure to environmental risks, including increasing environmental legislation and the broader impacts of climate change; |
| • | high levels of government regulation upon many of our operating entities, including with respect to rates set for our regulated businesses; |
| • | First Nations claims to land, adverse claims or governmental claims may adversely affect our infrastructure operations; |
| • | the competitive market for acquisition opportunities and the inability to identify and complete acquisitions as planned; |
| • | our ability to renew existing contracts and win additional contracts with existing or potential customers; |
| • | timing and price for the completion of unfinished projects; |
| • | some of our current operations are held in the form of joint ventures or partnerships or through consortium arrangements; |
| • | our infrastructure business is at risk of becoming involved in disputes and possible litigation; |
| • | some of our businesses operate in jurisdictions with less developed legal systems and could experience difficulties in obtaining effective legal redress, which creates uncertainties; |
| • | actions taken by national, state, or provincial governments, including nationalization, or the imposition of new taxes, could materially impact the financial performance or value of our assets; |
| • | reliance on technology and exposure to cyber-security attacks; |
| • | customers may default on their obligations; |
| • | reliance on tolling and revenue collection systems; |
| • | our ability to finance our operations due to the status of the capital markets; |
| • | changes in our credit ratings; |
| • | our operations may suffer a loss from fraud, bribery, corruption or other illegal acts; |
| • | some of our acquisitions may be of distressed companies, which may subject us to increased risks, including the incurrence of legal or other expenses; |
| • | Brookfield’s influence over us and our dependence on Brookfield as our service provider; |
| • | the lack of an obligation of Brookfield to source acquisition opportunities for us; |
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| • | our dependence on Brookfield and its professionals; |
| • | the role and ownership of Brookfield in the Partnership and in the Holding LP may change and interests in our general partner may be transferred to a third party without unitholder or preferred unitholder consent; |
| • | Brookfield may increase its ownership of us; |
| • | our master services agreement (the “Master Services Agreement”) as described in Item 6.A “Directors and Senior Management — Our Master Services Agreement” of our Annual Report (as defined herein) and our other arrangements with Brookfield do not impose on Brookfield any fiduciary duties to act in the best interests of unitholders or preferred unitholders; |
| • | conflicts of interest between us, our preferred unitholders and our unitholders, on the one hand, and Brookfield, on the other hand; |
| • | our arrangements with Brookfield may contain terms that are less favorable than those which otherwise might have been obtained from unrelated parties; |
| • | our general partner may be unable or unwilling to terminate our Master Services Agreement; |
| • | the limited liability of, and our indemnification of, our service provider; |
| • | our unitholders and preferred unitholders do not have a right to vote on Partnership matters or to take part in the management of the Partnership; |
| • | the market price of our LP Units and preferred units may be volatile; |
| • | dilution of existing unitholders; |
| • | adverse changes in currency exchange rates; |
| • | investors may find it difficult to enforce service of process and enforcement of judgments against us; |
| • | we may not be able to continue paying comparable or growing cash distributions to unitholders in the future; |
| • | the Partnership may become regulated as an investment company under the U.S. Investment Company Act of 1940, as amended (the “Investment Company Act”); |
| • | we are exempt from certain requirements of Canadian securities laws and we are not subject to the same disclosure requirements as a U.S. domestic issuer; |
| • | we may be subject to the risks commonly associated with a separation of economic interest from control or the incurrence of debt at multiple levels within an organizational structure; |
| • | effectiveness of our internal controls over financial reporting; |
| • | changes in tax law and practice; and |
| • | other factors described in our Annual Report, including, but not limited to, those described under Item 3.D “Risk Factors” and elsewhere in our Annual Report. |
We caution that the foregoing list of important factors that may affect future results is not exhaustive. When relying on our forward-looking statements or information, investors and others should carefully consider the foregoing factors and other uncertainties and potential events.
The risk factors included in our Annual Report and in the other documents incorporated by reference in this prospectus could cause our actual results and our plans and strategies to vary from our forward-looking statements and information. In light of these risks, uncertainties and assumptions, the events described by our forward-looking statements and information might not occur. We qualify any and all of our forward-looking statements and information by these risk factors. Please keep this cautionary note in mind as you read this prospectus. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements or information, whether 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 LP Units. You should read this entire prospectus carefully, including the “Risk Factors” section and the documents incorporated by reference herein.
Brookfield Infrastructure Partners L.P.
We are a Bermuda exempted limited partnership that was established on May 21, 2007 under the provisions of the Bermuda Exempted Partnerships Act 1992 and the Bermuda Limited Partnership Act 1883. Our head and registered office is located at 73 Front Street, 5th Floor, Hamilton HM 12, Bermuda and its telephone number at that address is +1 441 294-3309.
The Partnership’s sole material assets are its managing general partnership interest and preferred limited partnership interest in the Holding LP. We serve as the Holding LP’s managing general partner and have sole authority for the management and control of the Holding LP. The Holding LP owns, directly or indirectly, all of the common shares of each of (i) BIP Bermuda Holdings I Limited, a corporation incorporated under the laws of Bermuda, (ii) Brookfield Infrastructure Holdings (Canada) Inc., a corporation incorporated under the laws of Ontario, and (iii) Brookfield Infrastructure US Holdings I Corporation, a corporation incorporated under the laws of the State of Delaware.
We are a leading global infrastructure company that owns and operates high quality, long-life assets in the utilities, transport, energy and data infrastructure sectors across North and South America, Asia Pacific and Europe. We are focused on assets that generate stable cash flows and require minimal maintenance capital expenditures. The LP Units are listed on the NYSE and the TSX. For additional information, see our Annual Report, which is incorporated by reference into this prospectus.
Brookfield Infrastructure Corporation
On March 31, 2020, we distributed pro rata to the holders of our LP Units 32,621,168 Exchangeable Shares (the “Special Distribution”). BIPC is a corporation incorporated under, and governed by, the laws of British Columbia. Each Exchangeable Share is structured with the intention of providing an economic return equivalent to one LP Unit (subject to adjustment to reflect certain capital events). Each Exchangeable Share will receive identical dividends to the distributions paid on each LP Unit, and is exchangeable at the option of the holder for one LP Unit (subject to adjustment to reflect certain capital events) or its cash equivalent (the form of payment to be determined at the election of BIPC), as more fully described in this prospectus. See “Exchanges of Exchangeable Shares for LP Units—Primary Exchange Rights—Adjustments to Reflect Certain Capital Events.”
Immediately prior to the Special Distribution, the Partnership received Exchangeable Shares through a distribution in specie by Holding LP (the “Holding LP Distribution”) of Exchangeable Shares to all the holders of its equity units (which does not include preferred partnership units). As a result of the Holding LP Distribution, 13,728,155 Exchangeable Shares were distributed to Brookfield on its indirectly owned RPUs (as defined below) and special general partner units in Holding LP.
Brookfield has also entered into a rights agreement (the “Rights Agreement”) pursuant to which Brookfield has agreed that, until March 31, 2025, in the event that, on the applicable specified exchange date with respect to any subject Exchangeable Shares, (i) BIPC has not satisfied its obligation under its articles and notice of articles (“BIPC’s articles”) of delivering the LP Units amount or its cash equivalent amount and (ii) we have not, upon our election in our sole and absolute discretion, acquired such subject Exchangeable Shares from the holder thereof and delivered the LP Units amount or its cash equivalent, Brookfield will satisfy, or cause to be satisfied,
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the obligations pursuant to BIPC’s articles to exchange such subject Exchangeable Shares for the LP Units amount or its cash equivalent. The holders of Exchangeable Shares have a right to receive the LP Units amount or its cash equivalent in such circumstances.
The Partnership will pay all expenses of effecting the exchanges pursuant to this prospectus.
See “Exchange Rights of Exchangeable Shares for LP Units” for more information.
LP Units
As of September 18, 2020, there were 295,284,506 LP Units, 121,952,992 redeemable partnership units (“RPUs”) of Holding LP and 44,988,147 Exchangeable Shares outstanding. The RPUs are subject to a redemption-exchange mechanism pursuant to which LP Units may be issued in exchange for RPUs on a one for one basis. All of the RPUs are currently owned by Brookfield.
On October 16, 2018, Brookfield Infrastructure Partners Exchange LP (“Exchange LP”), one of our subsidiaries, issued 5,726,170 exchangeable limited partnership units of Exchange LP (“Exchangeable LP Units”) in connection with the privatization of Enercare Inc. Each Exchangeable LP Unit is exchangeable for one Unit. As of September 18, 2020, there were 1,101,378 Exchangeable LP Units outstanding.
Tax Consequences of Exchanges and Ownership of LP Units
Please see “Material Canadian Federal Income Tax Considerations” and “Material United States Federal Income Tax Considerations” for a summary of material Canadian and U.S. federal income tax considerations that may be relevant to holders of Exchangeable Shares if such holders exchange their Exchangeable Shares for LP Units. 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.
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An investment in the LP Units involves a high degree of risk. Before making an investment decision, you should carefully consider the risks incorporated by reference from our Annual Report and the other information incorporated by reference in this prospectus, as updated by our subsequent filings with the SEC, pursuant to Sections 13(a), 14 or 15(d) of the Exchange Act of 1934, as amended (the “Exchange Act”), and securities regulatory authorities in Canada, which are incorporated in this prospectus. The risks and uncertainties described therein and herein are not the only risks and uncertainties we face. In addition, please consider the following risks before making an investment decision: See “Where You Can Find More Information” and “Incorporation by Reference.”
Risks Related to Exchanging Exchangeable Shares for LP Units
The exchange of Exchangeable Shares for LP Units may result in the U.S. federal income taxation of any gain realized by a U.S. Holder.
Depending on the facts and circumstances, the exchange by a U.S. Holder (as defined below) of Exchangeable Shares for LP Units may result in the U.S. federal income taxation of any gain realized by such U.S. Holder. In general, a U.S. Holder exchanging Exchangeable Shares for LP Units pursuant to the exercise of the exchange right will recognize capital gain or loss (i) if the exchange request is satisfied by the delivery of LP Units by Brookfield pursuant to the Rights Agreement or (ii) if the exchange request is satisfied by the delivery of LP Units by BIPC and the exchange is, within the meaning of Section 302(b) of the U.S. Internal Revenue Code (as defined below), in “complete redemption” of the U.S. Holder’s equity interest in BIPC, a “substantially disproportionate” redemption of stock, or “not essentially equivalent to a dividend”, applying certain constructive ownership rules that take into account not only the Exchangeable Shares and other equity interests in BIPC actually owned but also other equity interests in BIPC treated as constructively owned by such U.S. Holder for U.S. federal income tax purposes. If an exchange request satisfied by the delivery of LP Units by BIPC is not treated as a sale or exchange under the foregoing rules, then it will be treated as a distribution equal to the amount of cash and the fair market value of the LP Units received, taxable under the rules generally applicable to distributions on stock of a corporation.
In general, if the Partnership satisfies an exchange request by delivering LP Units to a U.S. Holder pursuant to the Partnership’s exercise of the Partnership Call Right (as defined below), then the U.S. Holder’s exchange of Exchangeable Shares for LP Units will qualify as tax-free under Section 721(a) of the U.S. Internal Revenue Code, unless, at the time of such exchange, the Partnership (i) is a publicly traded partnership treated as a corporation or (ii) would be an “investment company” if it were incorporated for purposes of Section 721(b) of the U.S. Internal Revenue Code. In the case described in (i) or (ii) of the preceding sentence, a U.S. Holder may recognize gain upon the exchange. The general partner of the Partnership believes that the Partnership will be treated as a partnership and not as a corporation for U.S. federal income tax purposes. In addition, based on the holders’ rights in the event of the liquidation or dissolution of BIPC (or the Partnership) and the terms of the Exchangeable Shares, which are intended to provide an economic return equivalent to the economic return on the LP Units (including identical distributions), and taking into account the expected relative values of the Partnership’s assets and its ratable share of the assets of its subsidiaries for the foreseeable future, the general partner of the Partnership currently expects that a U.S. Holder’s exchange of Exchangeable Shares for LP Units pursuant to the exercise of the Partnership Call Right will not be treated as a transfer to an investment company for purposes of Section 721(b) of the U.S. Internal Revenue Code. Accordingly, the general partner of the Partnership currently expects a U.S. Holder’s exchange of Exchangeable Shares for LP Units pursuant to the Partnership’s exercise of the Partnership Call Right to qualify as tax-free under Section 721(a) of the U.S. Internal Revenue Code. However, no definitive determination can be made as to whether any such future exchange will qualify as tax-free under Section 721(a) of the U.S. Internal Revenue Code, as this will depend on the facts and circumstances at the time of the exchange. Many of these facts and circumstances are not within the control of the Partnership, and no assurance can be provided as to the position, if any, taken by the general partner of the Partnership with regard to the U.S. federal income tax treatment of any such exchange. Nor can
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any assurance be given that the IRS will not assert, or that a court would not sustain, a position contrary to any future position taken by the Partnership. If Section 721(a) of the U.S. Internal Revenue Code does not apply, then a U.S. Holder who exchanges Exchangeable Shares for LP Units pursuant to the Partnership’s exercise of the Partnership Call Right will be treated as if such holder had sold in a taxable transaction such holder’s Exchangeable Shares to the Partnership for cash in an amount equal to the value of the LP Units received.
Even if a U.S. Holder’s transfer of Exchangeable Shares in exchange for LP Units pursuant to the Partnership’s exercise of the Partnership Call Right qualifies as tax-free under Section 721(a) of the U.S. Internal Revenue Code, the general partner of the Partnership currently expects for the Partnership and Holding LP to immediately undertake subsequent transfers of such Exchangeable Shares that would result in the allocation to such U.S. Holder of any gain realized under Section 704(c)(1) of the U.S. Internal Revenue Code. Under this provision, if appreciated property is contributed to a partnership, the contributing partner must recognize any gain that was realized but not recognized for U.S. federal income tax purposes with respect to the property at the time of the contribution (referred to as “built-in gain”) if the partnership sells such property (or otherwise transfers such property in a taxable exchange) at any time thereafter or distributes such property to another partner within seven years of the contribution in a transaction that does not otherwise result in the recognition of built-in gain by the partnership. If, contrary to the current expectations of the general partner of the Partnership, Section 704(c)(1) does not apply as a result of any such subsequent transfers by the Partnership or Holding LP of Exchangeable Shares transferred by a U.S. Holder for LP Units in an exchange qualifying as tax-free under Section 721(a) of the U.S. Internal Revenue Code, then such U.S. Holder could, nonetheless, be required to recognize part or all of the built-in gain in its Exchangeable Shares deferred as a result of such exchange under Section 737 or Section 707(a) of the U.S. Internal Revenue Code, depending on whether the Partnership or Holding LP were to make certain types of distributions to such U.S. Holder following the exchange.
For a more complete discussion of the U.S. federal income tax consequences of the exchange of Exchangeable Shares for LP Units, see “Material United States Federal Income Tax Considerations” below. The U.S. federal income tax consequences of exchanging Exchangeable Shares for LP Units are complex, and each U.S. Holder should consult its own tax advisor regarding such consequences in light of such holder’s particular circumstances.
Canadian federal income tax considerations described herein may be materially and adversely impacted by certain events.
If BIPC ceases to qualify as a “mutual fund corporation” under the Tax Act (as defined below), the income tax considerations described under the heading “Material Canadian Federal Income Tax Considerations” would be materially and adversely different in certain respects.
In general, there can be no assurance that Canadian federal income tax laws respecting the treatment of mutual fund corporations or otherwise respecting the treatment of BIPC, the Partnership and the exchange of Exchangeable Shares for LP Units as described in this prospectus will not be changed in a manner that adversely affects shareholders or unitholders, or that such tax laws will not be administered in a way that is less advantageous to BIPC, the Partnership, shareholders or unitholders.
Your investment may change upon an exchange of Exchangeable Shares for LP Units.
If you exchange Exchangeable Shares pursuant to the terms set forth in BIPC’s articles or the Rights Agreement, you may receive LP units or cash in exchange for such Exchangeable Shares. To the extent that you receive LP Units in any such exchange, you will become a holder of limited partnership units of a Bermuda limited partnership rather than a holder of a security of a British Columbia corporation. We are organized as an exempted limited partnership under the laws of Bermuda, whereas BIPC is organized as a British Columbia corporation. Therefore, recipients of LP Units following an exchange of Exchangeable Shares for LP Units will have different rights and obligations, including voting rights, from those that they had prior to the consummation
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of the exchange as a holder of Exchangeable Shares. See “Comparison of Rights of Holders of Exchangeable Shares and LP Units.” Although the Exchangeable Shares are intended to provide an economic return, including with respect to distributions, equivalent to the LP Units, we can provide no assurance that the LP Units will trade at comparable market prices to the Exchangeable Shares. For example, as of the close of trading on September 23, 2020, the closing price of the LP Units was $46.14 and C$61.83 on the NYSE and TSX, respectively, and the closing price of the Exchangeable Shares was $53.66 and C$71.69 on the NYSE and TSX, respectively.
The LP Units may not trade at the same price as the Exchangeable Shares.
Although the Exchangeable Shares are intended to provide an economic return that is equivalent to the LP Units, there can be no assurance that the market price of LP Units will be equal to the market price of Exchangeable Shares at any time. For example, as of the close of trading on September 23, 2020, the closing price of the LP Units was $46.14 and C$61.83 on the NYSE and TSX, respectively, and the closing price of the Exchangeable Shares was $53.66 and C$71.69 on the NYSE and TSX, respectively. If BIPC redeems the Exchangeable Shares (which can be done without the consent of the holders) at a time when the trading price of the Exchangeable Shares is greater than the trading price of the LP Units, holders will receive LP Units (or its cash equivalent) with a lower trading price. Factors that could cause differences in such market prices may include:
| • | perception and/or recommendations by analysts, investors and/or other third parties that these securities should be priced differently; |
| • | actual or perceived differences in dividends to holders of Exchangeable Shares versus distributions to holders of LP Units, including as a result of any legal prohibitions; |
| • | business developments or financial performance or other events or conditions that may be specific to only Brookfield Infrastructure or BIPC; and |
| • | difficulty in the exchange mechanics between Exchangeable Shares and LP Units, including any delays or difficulties experienced by the transfer agent in processing the exchange requests. |
Any holder requesting an exchange of their Exchangeable Shares for which BIPC or the Partnership elects to provide LP Units in satisfaction of the exchange amount may experience a delay in receiving such LP Units, which may affect the value of the LP Units the holder receives in an exchange.
Each Exchangeable Share is exchangeable at the option of the holder for one LP Unit (subject to adjustment to reflect certain capital events) or its cash equivalent (the form of payment to be determined at the election of BIPC or the Partnership). See “Exchanges of Exchangeable Shares for LP Units—Primary Exchange Rights—Adjustments to Reflect Certain Capital Events.” In the event cash is used to satisfy an exchange request, the amount payable per Exchangeable Share will be equal to the NYSE closing price of one LP Unit on the date that the request for exchange is received by the transfer agent. As a result, any decrease in the value of the LP Units after that date will not affect the amount of cash received. However, any holder whose Exchangeable Shares are subsequently exchanged for LP Units will not receive such LP Units for up to ten (10) business days after the applicable request is received. During this period, the market price of LP Units may decrease. Any such decrease would affect the value of the consideration to be received by the holder of Exchangeable Shares on the effective date of the exchange.
Further, the Partnership is required to maintain an effective registration statement in the United States in order to exchange any Exchangeable Shares for LP Units. If a registration statement with respect to the LP Units issuable upon any exchange, redemption or purchase of Exchangeable Shares (including in connection with any liquidation, dissolution or winding up of BIPC) is not current or is suspended for use by the SEC, no exchange or redemption of Exchangeable shares for LP Units may be effected during such period.
Exchanges of Exchangeable Shares for LP Units may negatively affect the market price of the LP Units, and additional issuances of Exchangeable Shares would be dilutive to the LP Units.
Each Exchangeable Share is exchangeable by the holder thereof for one LP Unit (subject to adjustment to reflect certain capital events) or its cash equivalent (the form of payment to be determined at the election of our
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group). See “Exchanges of Exchangeable Shares for LP Units—Primary Exchange Rights—Adjustments to Reflect Certain Capital Events.” If our group elects to deliver LP Units in satisfaction of any such exchange request, a significant number of additional LP Units may be issued from time to time which could have a negative impact on the market price for LP Units. Additionally, any Exchangeable Shares issued by BIPC in the future will be exchangeable for LP Units, and, accordingly, any future exchanges satisfied by the delivery of LP Units would dilute the percentage interest of existing holders of the LP Units and may reduce the market price of the LP Units.
Our group has the right to elect whether holders of Exchangeable Shares to receive cash or LP Units upon a liquidation, exchange or redemption event.
In the event that (i) there is a liquidation, dissolution or winding up of BIPC or the Partnership, (ii) BIPC or the Partnership exercises its right to redeem (or cause the redemption of) all of the then outstanding Exchangeable Shares, or (iii) a holder of Exchangeable Shares requests an exchange of Exchangeable Shares, holders of Exchangeable Shares shall be entitled to receive one LP Unit per Exchangeable Share held (subject to adjustment to reflect certain capital events as described in elsewhere in this prospectus and certain other payment obligations in the case of a liquidation, dissolution or winding up of BIPC or the Partnership) or its cash equivalent. The form of payment will be determined at the election of our group so holders of LP Units and Exchangeable Shares will not know whether cash or LP Units will be delivered in connection with any of the events described above. BIPC and the Partnership currently intend to satisfy any exchange requests on the Exchangeable Shares through the delivery of LP Units rather than cash.
BIPC or the Partnership may issue additional Exchangeable Shares or LP Units, respectively, in the future, including in lieu of incurring indebtedness, which may dilute holders of our group’s equity securities. BIPC or the Partnership may also issue securities that have rights and privileges that are more favorable than the rights and privileges accorded to our group’s equity holders.
Subject to the terms of any of BIPC securities then outstanding, BIPC may issue additional securities, including Exchangeable Shares, class B shares, class C shares, preference shares, options, rights and warrants for any purpose and for such consideration and on such terms and conditions as BIPC’s board may determine. Subject to the terms of any of BIPC securities then outstanding, BIPC’s board will be able to determine the class, designations, preferences, rights, powers and duties of any additional securities, including any rights to share in BIPC’s profits, losses and dividends, any rights to receive BIPC’s assets upon its dissolution or liquidation and any redemption, conversion and exchange rights. Subject to the terms of any of BIPC securities then outstanding, BIPC’s board may use such authority to issue such additional securities, which would dilute holders of such securities, or to issue securities with rights and privileges that are more favorable than those of the Exchangeable Shares.
Similarly, under the Partnership’s limited partnership agreement, subject to the terms of any preferred units then outstanding, the Partnership’s general partner may issue additional partnership securities, including LP Units, preferred units, options, rights, warrants and appreciation rights relating to partnership securities for any purpose and for such consideration and on such terms and conditions as the board of the Partnership’s general partner may determine. Subject to the terms of any of the Partnership securities then outstanding, the board of the Partnership’s general partner will be able to determine the class, designations, preferences, rights, powers and duties of any additional partnership securities, including any rights to share in the Partnership’s profits, losses and dividends, any rights to receive the Partnership’s assets upon its dissolution or liquidation and any redemption, conversion and exchange rights. Subject to the terms of any of the Partnership securities then outstanding, the board of the Partnership’s general partner may use such authority to issue such additional partnership securities, which would dilute holders of such securities, or to issue securities with rights and privileges that are more favorable than those of the LP Units.
The sale or issuance of a substantial number of Exchangeable Shares, the LP Units or other equity securities of BIPC or the Partnership in the public markets, or the perception that such sales or issuances could occur, could
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depress the market price of LP Units and impair the Partnership’s ability to raise capital through the sale of additional LP Units. We cannot predict the effect that future sales or issuances of Exchangeable Shares, LP Units or other equity securities would have on the market price of the LP Units. Subject to the terms of any of our securities then outstanding, holders of LP Units will not have any pre-emptive right or any right to consent to or otherwise approve the issuance of any securities or the terms on which any such securities may be issued.
The Rights Agreement will terminate on March 31, 2025.
The Rights Agreement will terminate on March 31, 2025, unless otherwise terminated earlier pursuant to its terms. After such date, holders of Exchangeable Shares will no longer have the benefit of protections provided for by the Rights Agreement and will be reliant on the rights provided for in BIPC’s articles. In the event that BIPC or the Partnership fails to satisfy a request for exchange after the expiry of the Rights Agreement, a tendering holder will not be entitled to rely on the secondary exchange rights. See “Exchanges of Exchangeable Shares for LP Units — Primary Exchange Rights”
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None of the Partnership, BIPC or Brookfield will receive any cash proceeds from the issuance or delivery of any LP Units upon exchange, redemption or acquisition, as applicable, of Exchangeable Shares pursuant to this prospectus. See “Exchange of Exchangeable Shares for LP Units” below.
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The table below sets forth our cash and capitalization as at June 30, 2020, on an actual basis and after giving effect to (i) the issuance of C$500 million of medium term notes in September 2020, and the use of proceeds thereof and (ii) the issuance of $200 million of Class A Preferred Limited Partnership Units, Series 13 of the Partnership (“Series 13 Preferred Units”), and the use of proceeds thereof.
You should read this table in conjunction with the financial statements incorporated by reference in this prospectus.
| As at June 30, 2020 | ||||||||
| ($ Millions) |
Actual | As adjusted | ||||||
| Corporate borrowings(1) |
$ | 3,074 | $ | 2,915 | ||||
| Non-recourse borrowings |
17,860 | 17,860 | ||||||
| Other current and non-current liabilities(2) |
11,625 | 11,625 | ||||||
| Preferred Shares |
20 | 20 | ||||||
| Partnership Capital |
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| Limited Partners |
3,823 | 3,823 | ||||||
| General Partner |
17 | 17 | ||||||
| Non-controlling interest |
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| RPUs |
1,520 | 1,520 | ||||||
| Exchangeable Shares |
576 | 576 | ||||||
| Exchangeable LP Units |
12 | 12 | ||||||
| Interest of others in operating subsidiaries |
11,860 | 11,860 | ||||||
| Preferred Units |
935 | 1,130 | ||||||
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| Total capitalization |
$ | 51,322 | $ | 51,358 | ||||
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| (1) | These amounts are guaranteed by certain subsidiaries of the Partnership, and/or BIPC Holdings Inc. and the Partnership, but are unsecured. As adjusted (i) includes the issuance of C$500 million of medium term notes in September 2020, and the expected use of proceeds thereof to redeem C$450 million of outstanding medium term notes, converted to U.S. dollars at a rate of $1=C$0.7670 and (ii) gives effect to the use of proceeds of the offering and sale of $200 million of Series 13 Preferred Units after deducting underwriting discounts and estimated expenses. |
| (2) | Includes the deferred income tax liability of the Partnership as of June 30, 2020. |
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EXCHANGES OF EXCHANGEABLE SHARES FOR LP UNITS
The exchange rights relating to the Exchangeable Shares are set forth in BIPC’s articles and the Rights Agreement, which are filed as exhibits to the registration statement of which this prospectus forms a part. Upon exchange, holders of Exchangeable Shares will receive, with respect to each exchanged share, either (i) one LP Unit or (ii) cash in an amount equivalent to the market value of one LP Unit, in each case as described in further detail below.
Holders of Exchangeable Shares have the right to exchange all or a portion of their Exchangeable Shares for one LP Unit per Exchangeable Share held (subject to adjustment in the event of certain dilutive or other capital events by BIPC or the Partnership as described below in “—Adjustments to Reflect Certain Capital Events”) or its cash equivalent based on the NYSE closing price of one LP Unit on the date that the request for exchange is received by BIPC’s transfer agent (or if not a trading day, the next trading day thereafter) plus all unpaid accrued dividends, if any (the form of payment to be determined at the sole election of our group). In the event the Partnership ceases to be a publicly listed entity, the value of a LP Unit will be determined by (i) the last available bid price from an independent source such as an over-the-counter market or an independent investment banking firm; or (ii) if (i) is not applicable, then the amount that a holder of a LP Unit would receive upon the liquidation of the Partnership and sale of its assets in accordance with the terms of its partnership agreement. Holders of Exchangeable Shares that hold such shares through a broker must contact their brokers to request an exchange on their behalf. Holders of Exchangeable Shares that are registered holders must contact BIPC’s transfer agent and follow the process described below. BIPC and the Partnership currently intend to satisfy any exchange, redemption or acquisition of Exchangeable Shares through the delivery of LP Units rather than cash.
Each holder of Exchangeable Shares who wishes to exchange one or more of his or her Exchangeable Shares for LP Units or its cash equivalent is required to complete and deliver a notice of exchange in the form available from BIPC’s transfer agent. Upon receipt of a notice of exchange, BIPC shall be obligated, within ten (10) business days after the date that the notice of exchange is received by BIPC’s transfer agent, to deliver to the tendering holder of Exchangeable Shares, in accordance with instructions set forth in the notice of exchange, one LP Unit per Exchangeable Share held (subject to adjustments in the event of certain dilutive or other capital events by BIPC or the Partnership as described below in “—Adjustments to Reflect Certain Capital Events”) or its cash equivalent based on the NYSE closing price of one LP Unit on the date that the request for exchange is received by BIPC’s transfer agent (or if not a trading day, the next trading day thereafter) plus all unpaid accrued dividends, if any (the form of payment to be determined at the sole election of our group). The LP Units that BIPC would be obligated to deliver following an exchange request as set forth in the preceding sentence will be issued by the Partnership to BIPC, and BIPC in turn will deliver such LP Units to such holder. As described in the next paragraph, the Partnership may also elect to satisfy such exchange request by issuing LP Units directly to the tendering holder of Exchangeable Shares. Upon completion of the exchange of any Exchangeable Shares as described herein, the holder of Exchangeable Shares who has exchanged their Exchangeable Shares will have no further right, with respect to any Exchangeable Shares so exchanged, to receive any dividends on Exchangeable Shares with a record date on or after the date on which such Exchangeable Shares are exchanged.
Notwithstanding the paragraph above, when a notice of exchange has been delivered to each of BIPC and the Partnership and, until such time as the Rights Agreement is terminated, Brookfield, by the transfer agent on behalf of a tendering holder of Exchangeable Shares, BIPC will promptly, and in any event, within one (1) business day after receipt thereof, deliver to each of Brookfield and the Partnership a written notification of BIPC’s receipt of such notice of exchange setting forth the identity of the holder of Exchangeable Shares who wishes to exchange such Exchangeable Shares and the number of Exchangeable Shares to be exchanged. The Partnership may elect to satisfy BIPC’s exchange obligation by acquiring all of the tendered Exchangeable Shares in exchange for issuing to such tendering holder one LP Unit per Exchangeable Share held (subject to adjustments in the event of certain dilutive or other capital events by our group as described below in
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“—Adjustments to Reflect Certain Capital Events”) or delivering its cash equivalent based on the NYSE closing price of one LP Unit on the date that the request for exchange is received by BIPC’s transfer agent (or if not a trading day, the next trading day thereafter) plus all unpaid accrued dividends, if any (the form of payment to be determined at the sole election of our group). If the Partnership elects to satisfy BIPC’s exchange obligation, it shall, within three (3) days from the receipt of the holder’s notice of exchange, provide written notice to BIPC and BIPC’s transfer agent of its intention to satisfy the exchange obligation and shall satisfy such obligation within ten (10) business days from the date that the notice of exchange is received by BIPC’s transfer agent by issuing to such holder of Exchangeable Shares the LP Units or delivering the cash equivalent. The Partnership’s unitholders are not entitled to vote on the Partnership’s exercise of the overriding call right described in the preceding sentence.
In the event that a tendering holder of Exchangeable Shares has not received the number of LP Units or its cash equivalent (the form of payment to be determined by BIPC or the Partnership in each of their sole discretion) in satisfaction of the tendered Exchangeable Shares, then such tendering holder of Exchangeable Shares will be entitled to receive the equivalent of such cash amount or LP Units amount from Brookfield pursuant to the Rights Agreement until March 31, 2025. In this scenario, the tendered Exchangeable Shares will be delivered to the rights agent (as defined below) in exchange for the delivery of the equivalent of the cash amount or LP Units amount from a collateral account of Brookfield administered by the rights agent. See the section entitled “—Secondary Exchange Rights” below for a further description of the Rights Agreement. The Partnership has also agreed to indemnify Brookfield, in its capacity as selling unitholder, for certain liabilities under applicable securities laws concerning selling unitholders, in connection with any LP Units delivered by Brookfield pursuant to the Rights Agreement.
No Fractional LP Units. No fractional LP Units will be issued or delivered upon exchange of Exchangeable Shares. In lieu of any fractional LP Units to which the tendering holder of Exchangeable Shares would otherwise be entitled at our group’s election, BIPC or the Partnership, as applicable, will pay an amount in cash equal to the LP Unit value on the trading day immediately preceding the exchange date multiplied by such fraction of a LP Unit.
Adjustments to Reflect Certain Capital Events. The conversion factor (which is currently one) is subject to adjustment in accordance with BIPC’s articles to reflect certain capital events, including (i) if the Partnership and/or BIPC declares or pays a distribution to its unitholders consisting wholly or partly of LP Units or a dividend to its shareholders consisting wholly or partly of Exchangeable Shares, as applicable, without a corresponding distribution or dividend, as applicable, being declared or paid by the other entity; (ii) if the Partnership or BIPC splits, subdivides, reverse-splits or combines its outstanding LP Units or Exchangeable Shares, as applicable, without a corresponding event occurring at the other entity; (iii) if the Partnership and/or BIPC distributes any rights, options or warrants to all or substantially all holders of its LP Units or Exchangeable Shares to convert into, exchange for or subscribe for or to purchase or to otherwise acquire LP Units or Exchangeable Shares (or other securities or rights convertible into, exchangeable for or exercisable for LP Units or Exchangeable Shares), as applicable, without a corresponding distribution of rights, options or warrants by the other entity; (iv) if the Partnership distributes to all or substantially all holders of LP Units evidences of its indebtedness or assets (including securities), or rights, options or warrants to convert into, exchange for or subscribe for or to purchase or to otherwise acquire such securities but excluding all distributions where a comparable distribution (or the cash equivalent) is made by BIPC; or (v) if the Partnership or one of its subsidiaries makes a payment in respect of a tender or exchange offer for the LP Units (but excluding for all purposes any exchange or tender offer to exchange LP Units for Exchangeable Shares or any other security economically equivalent to LP Units), to the extent that the cash and value of any other consideration included in the payment per LP Unit exceeds certain thresholds.
Brookfield has entered into the Rights Agreement with Wilmington Trust, National Association (the “rights agent”), pursuant to which Brookfield has agreed that, until March 31, 2025, upon an exchange of Exchangeable
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Shares, if BIPC has not satisfied its obligation under BIPC’s articles by delivering the LP Units amount or its cash equivalent amount (or the Partnership has not exercised its call right), Brookfield will satisfy, or cause to be satisfied, the obligations pursuant to BIPC’s articles to exchange such Exchangeable Shares for the LP Units amount or its cash equivalent. Brookfield currently intends to satisfy any exchange requests on the Exchangeable Shares through the delivery of LP Units rather than cash. The Master Services Agreement also provides that, so long as Brookfield is a party to the Rights Agreement, Brookfield shall have a consent right prior to the issuance by BIPC of any Exchangeable Shares, subject to certain exceptions. After the expiry of the Rights Agreement, holders of Exchangeable Shares will continue to have all of the rights provided for in BIPC’s articles but will no longer be entitled to rely on the secondary exchange rights.
Appointment of Rights Agent; Term. The rights agent has agreed to act as the rights agent for the holders, as a class and not individually, of Exchangeable Shares. Pursuant to and subject to the terms and conditions set forth in BIPC’s articles, a holder of Exchangeable Shares may request to exchange each Exchangeable Share (“subject Exchangeable Share”) for one LP Unit per Exchangeable Share held (subject to adjustment to reflect certain capital events) or its cash equivalent (the form of payment to be determined at the election of our group). See “—Primary Exchange Rights—Adjustments to Reflect Certain Capital Events” above. Upon receipt of a notice of exchange, BIPC shall, within ten (10) business days after the date that the notice of exchange is received by BIPC’s transfer agent (the “specified exchange date”), deliver to the tendering holder of Exchangeable Shares, such LP Unit or cash amount. See above under “—Primary Exchange Rights”. Pursuant to the Rights Agreement, Brookfield has agreed that, in the event that, on the applicable specified exchange date with respect to any subject Exchangeable Shares, (i) BIPC has not satisfied its obligation under its articles by delivering the applicable LP Unit or cash amount and (ii) the Partnership has not, upon its election in its sole and absolute discretion, acquired such subject Exchangeable Share from the holder thereof and delivered the applicable LP Unit or cash amount, Brookfield will satisfy, or cause to be satisfied, the obligations pursuant to BIPC’s articles to exchange such subject Exchangeable Shares for the LP Unit or the cash amount. The holders of Exchangeable Shares have a right to receive the LP Units amount or the cash amount in such circumstances (the “Secondary Exchange Rights”).
The Secondary Exchange Rights are a part of the terms of the Exchangeable Shares and may not be evidenced, transferred or assigned separate or apart from the Exchangeable Shares.
The Rights Agreement will terminate on March 31, 2025, unless otherwise terminated pursuant to its terms as described below.
Satisfaction of Secondary Exchange Rights. In accordance with the Rights Agreement, Brookfield has agreed to satisfy, or cause to be satisfied, the obligations with respect to the Secondary Exchange Rights contained in BIPC’s articles. The rights agent has agreed to establish a collateral account, and Brookfield has contributed an amount of cash or securities in accordance with the Rights Agreement (as further described below) in order to enable the rights agent to exchange subject Exchangeable Shares for the cash amount or the LP Units amount in accordance with the Rights Agreement.
In accordance with BIPC’s articles, BIPC is required to deliver a notice (the “company notice”) to the rights agent and Brookfield on the specified exchange date if the conditions to the exercise of the Secondary Exchange Rights with respect to any subject Exchangeable Shares have been satisfied. The company notice must set forth the LP Units amount and the cash amount for such subject Exchangeable Shares and any necessary wire transfer or other delivery instructions.
Brookfield may provide notice to the rights agent by the business day immediately following receipt of the company notice, providing that Brookfield has elected, in Brookfield’s sole discretion, to fund the cash amount. If the rights agent has not received such notice from Brookfield, the rights agent must exchange the subject Exchangeable Shares for a number of LP Units held in the collateral account equal to the LP Units amount and promptly, and in any event within two (2) business days, deliver such LP Units from the collateral account to the
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holder of the subject Exchangeable Shares. If there are not enough LP Units in the collateral account to satisfy the LP Units amount with respect to one or more of such subject Exchangeable Shares, the rights agent will exchange such subject Exchangeable Shares for an amount of cash from the collateral account equal to the cash amount and promptly, and in any event within two business days, deliver the cash amount to the holder of the subject Exchangeable Shares.
If the holder of the subject Exchangeable Shares has not received the LP Units amount or the cash amount by the specified exchange date, the holder of the subject Exchangeable Shares may deliver, or cause to be delivered, a notice (an “Exchanging Shareholder notice”) to the rights agent and Brookfield. The Exchanging Shareholder notice must set forth the number of such subject Exchangeable Shares and any necessary wire transfer or other delivery instructions and be in a format that is acceptable to the rights agent. On the next business day following receipt of the Exchanging Shareholder notice, Brookfield will provide notice to the rights agent (i) setting forth the LP Units amount and the cash amount for such subject Exchangeable Shares and (ii) either (a) providing that Brookfield has elected, in Brookfield’s sole discretion, to fund the cash amount or (b) instructing the rights agent to exchange each subject Exchangeable Share. Brookfield is not obligated to deliver such notice if it has determined in good faith that the conditions to the exercise of the Secondary Exchange Right have not been satisfied. On or prior to the second business day following receipt by the rights agent of such instruction by Brookfield, the Exchanging Shareholder notice and the subject Exchangeable Shares, the rights agent will exchange such subject Exchangeable Shares for the LP Units amount from the collateral account or, if there are not enough LP Units in the collateral account, for the cash amount from the collateral account. With respect to any exchange of subject Exchangeable Shares, Brookfield may elect to instruct the rights agent to exchange the subject Exchangeable Shares for the cash amount. If Brookfield makes such an election and there is not a sufficient amount of cash in the collateral account, Brookfield must deposit the required amount into the collateral account simultaneously with such election.
In connection with the exercise by a holder of the Secondary Exchange Rights with respect to any subject Exchangeable Shares held through the Depository Trust Company (“DTC”), such holder will deliver to the rights agent such subject Exchangeable Shares pursuant to DTC’s applicable procedures. In addition, such holder will deliver to the rights agent via e-mail on the business day prior to delivery of such subject Exchangeable Shares a copy of the exchanging Exchangeable Shareholder notice, if applicable.
Receipt of Subject Exchangeable Shares; Withholding. Holders of subject Exchangeable Shares will deliver such shares free and clear of all liens, claims and encumbrances, and should any such liens, claims and encumbrances exist with respect to such subject Exchangeable Shares, the holder of such subject Exchangeable Shares will not be entitled to exercise its Secondary Exchange Rights with respect to such shares. Each holder of subject Exchangeable Shares will pay to Brookfield the amount of any tax withholding due upon the exchange of such shares and, in the event Brookfield elects to acquire some or all of the subject Exchangeable Shares in exchange for the cash amount, will authorize Brookfield to retain a portion of the cash amount to satisfy tax withholding obligations. If Brookfield elects to acquire some or all of the subject Exchangeable Shares in exchange for the LP Units amount, Brookfield may elect to either satisfy the amount of any tax withholding by retaining LP Units with a fair market value equal to the amount of such obligation, or satisfy such tax withholding obligation using amounts paid by Brookfield, which amounts will be treated as a loan by Brookfield to the holder of the subject Exchangeable Shares, in each case, unless the holder, at the holder’s election, has made arrangements to pay the amount of any such tax withholding.
LP Units Record Date. Each former holder of subject Exchangeable Shares who receives the LP Units amount will be deemed to have become the owner of the LP Units as of the date upon which such subject Exchangeable Shares are duly surrendered in accordance with the Rights Agreement.
Collateral Account. Brookfield or its affiliates have established a non-interest bearing trust account administered by the rights agent (the “collateral account”). Brookfield will ensure that the aggregate of (i) the LP Units in or issuable pursuant to any convertible securities in the collateral account (the “collateral account
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LP Unit balance”), and (ii) the number of LP Units equal to the aggregate amount of cash in the collateral account divided by the value of a LP Unit (the “collateral cash balance” and, together with the collateral account LP Unit balance, the “collateral account balance”) will at all times be equal to or exceed the number of LP Units that is equal to the product of the total number of Exchangeable Shares outstanding (excluding those owned by Brookfield or its affiliates) multiplied by the conversion factor in accordance with BIPC’s articles (the “required collateral account balance”).
If the collateral account balance is at any time less than the required collateral account balance, Brookfield will, within two (2) business days, deposit or cause to be deposited into the collateral account either (i) a number of LP Units or any security convertible into or redeemable for LP Units (other than Exchangeable Shares) (the “LP Unit convertibles”), or (ii) an amount of cash or cash equivalents, in each case in an amount necessary to cause the collateral account balance to be at least equal to the required collateral account balance. To the extent that conversion or redemption of a LP Unit convertible results in the imposition of any fees, payments, premiums or penalties, such fees, payments, premiums or penalties will be borne by Brookfield or its affiliates, and must either be satisfied directly by Brookfield or such affiliates or will be deemed to reduce the collateral account balance. Brookfield must keep the rights agent informed of the collateral account balance and the required collateral account balance in writing on a regular basis, and must inform the rights agent in writing within two (2) business days of any change in the collateral account balance or the required collateral account balance for any reason, including as a result of an adjustment to the conversion factor pursuant to BIPC’s articles.
Brookfield and its affiliates will not be entitled to withdraw any LP Unit or LP Unit convertible from the collateral account, except (i) if the collateral account balance exceeds the required collateral account balance, either as a result of a change in the conversion factor pursuant to BIPC’s articles or a decrease in the number of Exchangeable Shares outstanding (excluding Exchangeable Shares held by Brookfield or its affiliates) or (ii) upon the deposit by Brookfield or its affiliates in the collateral account of an amount in cash or cash equivalents equal to one hundred and fifty percent (150%) of the value of the LP Units withdrawn or the number of LP Units convertibles that are convertible into or redeemable for such LP Units.
If the collateral account contains any amount of cash in lieu of LP Units, such cash amount is required to be no less than the product of the required collateral account balance minus the collateral account LP Unit balance, multiplied by one hundred and twenty-five percent (125%) of the value of a LP Unit (the “required collateral account cash balance”). If at any time the collateral account cash balance is less than the required collateral account cash balance, Brookfield will within two (2) business days deposit or cause to be deposited cash or cash equivalents in the collateral account in an amount sufficient to cause the collateral account cash balance to be at least equal to the required collateral account cash balance.
Brookfield and its affiliates will not be entitled to withdraw any cash or cash equivalents from the collateral account, except (i) to the extent the collateral account cash balance is greater than one hundred and twenty percent (120%) of the required collateral account cash balance or (ii) upon the deposit in the collateral account of a corresponding number of LP Units or LP Unit convertibles.
Registration of LP Units. Brookfield has agreed that if a shelf registration statement has not been effective for five (5) consecutive business days with respect to all of the LP Units in the collateral account, including LP Units issuable from time to time upon conversion of or redemption for LP Unit convertibles, and the transfer of such LP Units from the collateral account to a holder of subject Exchangeable Shares, Brookfield will deposit or cause to be deposited into the collateral account an amount of cash or cash equivalents equal to one hundred and fifty percent (150%) of the value of all LP Units (including LP Units issuable from time to time upon conversion of or redemption for LP Unit convertibles) held in the collateral account at such time; provided, however, no such deposit is required to the extent all of the LP Units in the collateral account, including LP Units issuable from time to time upon conversion of or redemption for LP Unit convertibles, and the transfer of such LP Units from the collateral account to a holder of subject Exchangeable Shares, are registered under an effective shelf registration statement.
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Termination or Amendment. This Rights Agreement will terminate automatically on the earliest of (i) the date on which there are no Exchangeable Shares outstanding, other than Exchangeable Shares owned by Brookfield or its affiliates and (ii) March 31, 2025. Brookfield may not, without the affirmative vote of holders of at least two-thirds (2/3rds) of the outstanding Exchangeable Shares not held by Brookfield, voting as a class, and the approval of a majority of the independent directors of BIPC, materially amend, modify, or alter the Rights Agreement or repeal, terminate or waive any rights under the Rights Agreement. After the expiry of the Rights Agreement, holders of Exchangeable Shares will continue to have all of the rights provided for in BIPC’s articles but will no longer be entitled to rely on the secondary exchange rights.
BIPC’s board has the right upon sixty (60) days’ prior written notice to holders of Exchangeable Shares to redeem all of the then outstanding Exchangeable Shares at any time and for any reason, in its sole discretion and subject to applicable law, including without limitation following the occurrence of any of the following redemption events: (i) the total number of Exchangeable Shares outstanding decreases by 50% or more over any twelve-month period; (ii) a person acquires 90% of the LP Units in a take-over bid (as defined by applicable securities law); (iii) unitholders of the Partnership approve an acquisition of the Partnership by way of arrangement or amalgamation; (iv) unitholders of the Partnership approve a restructuring or other reorganization of the Partnership; (v) there is a sale of all or substantially all of the Partnership’s assets; (vi) there is a change of law (whether by legislative, governmental or judicial action), administrative practice or interpretation, or a change in circumstances of BIPC and its shareholders, that may result in adverse tax consequences for BIPC or its shareholders; or (vii) BIPC’s board, in its sole discretion, concludes that the unitholders of the Partnership or holders of Exchangeable Shares are adversely impacted by a fact, change or other circumstance relating to BIPC. For greater certainty, unitholders of the Partnership do not have the ability to vote on such redemption and the BIPC’s board’s decision to redeem all of the then outstanding Exchangeable Shares will be final. In addition, the holders of class B shares of BIPC may deliver a notice to BIPC specifying a redemption date upon which BIPC shall redeem all of the then outstanding Exchangeable Shares, and upon sixty (60) days’ prior written notice from BIPC to the holders of Exchangeable Shares and without the consent of holders of Exchangeable Shares, BIPC shall be required to redeem all of the then outstanding Exchangeable Shares on such redemption date, subject to applicable law.
Upon any such redemption event, the holders of Exchangeable Shares shall be entitled to receive pursuant to such redemption one LP Unit per Exchangeable Share held (subject to adjustment in the event of certain dilutive or other capital events by BIPC or the Partnership) or its cash equivalent based on the NYSE closing price of one LP Unit on the trading day immediately preceding the announcement of such redemption plus all unpaid accrued dividends, if any (the form of payment to be determined at the election of BIPC). See “—Primary Exchange Rights—Adjustments to Reflect Certain Capital Events” above.
Notwithstanding the foregoing, upon any redemption event, the Partnership may elect to acquire all of the outstanding Exchangeable Shares in exchange for one LP Unit per Exchangeable Share held (subject to adjustment in the event of certain dilutive or other capital events by BIPC or the Partnership as described above in “—Primary Exchange Rights—Adjustments to Reflect Certain Capital Events”) or its cash equivalent based on the NYSE closing price of one LP Unit on the trading day immediately preceding the announcement of such redemption plus all unpaid accrued dividends, if any (the form of payment to be determined at the election of the Partnership). Unit holders are not entitled to vote on the Partnership’s exercise of the overriding call right described in the preceding sentences.
Upon any liquidation, dissolution or winding up of BIPC, and subject to the prior rights of holders of all classes and series of preferred shares and any other class of shares of BIPC ranking in priority or ratably with the Exchangeable Shares and after the payment in full to (i) any holder of Exchangeable Shares or class C shares of
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BIPC that has submitted a notice of the exercise of the exchange rights described above at least ten (10) days prior to the date of the liquidation, dissolution or winding up (or in the case of the class B shares of BIPC, thirty (30) days prior to the date of the liquidation, dissolution or winding up) and (ii) any unpaid accrued dividends, the holders of Exchangeable Shares shall be entitled to one LP Unit per Exchangeable Share held (subject to adjustment in the event of certain dilutive or other capital events by BIPC or the Partnership as described above in “—Primary Exchange Rights—Adjustments to Reflect Certain Capital Events”) or its cash equivalent based on the NYSE closing price of one LP Unit on the trading day immediately preceding announcement of such liquidation, dissolution or winding up (the form of payment to be determined at the election of BIPC). If, upon any such liquidation, dissolution or winding up, the assets of BIPC are insufficient to make such payment in full, then the assets of BIPC will be distributed among the holders of Exchangeable Shares ratably in proportion to the full amounts to which they would otherwise be respectively entitled to receive.
Notwithstanding the foregoing, upon any liquidation, dissolution or winding up of BIPC, the Partnership may elect to acquire all of the outstanding Exchangeable Shares for one LP Unit per Exchangeable Share held (subject to adjustment in the event of certain dilutive or other capital events by BIPC or the Partnership) plus all unpaid accrued dividends, if any. See “—Primary Exchange Rights—Adjustments to Reflect Certain Capital Events” above. The acquisition by the Partnership of all the outstanding Exchangeable Shares will occur on the day prior to the effective date of the liquidation, dissolution or winding up of BIPC. Unitholders are not entitled to vote on the Partnership’s exercise of the overriding call right described in the preceding sentences.
Automatic Redemption upon Liquidation of the Partnership
Upon any liquidation, dissolution or winding up of the Partnership, including where substantially concurrent with a liquidation, dissolution or winding up of BIPC, all of the then outstanding Exchangeable Shares will be automatically redeemed by BIPC on the day prior to the liquidation, dissolution or winding up of the Partnership. Each holder of Exchangeable Shares shall be entitled to one LP Unit per Exchangeable Share held (subject to adjustment in the event of certain dilutive or other capital events by BIPC or the Partnership as described above in “—Primary Exchange Rights—Adjustments to Reflect Certain Capital Events”) or its cash equivalent based on the NYSE closing price of one LP Unit on the trading day immediately preceding the announcement of such redemption plus all unpaid accrued dividends, if any (the form of payment to be determined at the election of BIPC).
Notwithstanding the foregoing, upon any such redemption, the Partnership may elect to acquire all of the outstanding Exchangeable Shares in exchange for one LP Unit per Exchangeable Share held (subject to adjustment in the event of certain dilutive or other capital events by BIPC or the Partnership) plus all unpaid accrued dividends, if any. See “—Primary Exchange Rights—Adjustments to Reflect Certain Capital Events.” The acquisition by the Partnership of all the outstanding Exchangeable Shares will occur on the day prior to the effective date of the liquidation, dissolution or winding up of BIPC. Unitholders of the Partnership are not entitled to vote on the Partnership’s exercise of the overriding call right described in the preceding sentences.
Registration Rights Agreement
BIPC, the Partnership and Brookfield have entered into a registration rights agreement (the “Registration Rights Agreement”) comparable to the registration rights agreement existing between Brookfield and the Partnership. Under the Registration Rights Agreement, BIPC has agreed that, upon the request of Brookfield, BIPC will file one or more registration statements or prospectuses to register for sale and qualify for distribution under applicable securities laws any of the Exchangeable Shares held by Brookfield. In the Registration Rights Agreement, BIPC has also agreed to pay expenses in connection with such registration and sales and will indemnify Brookfield for material misstatements or omissions in the registration on statement. This prospectus constitutes a prospectus of the Partnership with respect to the delivery of LP Units to holders of Exchangeable Shares upon exchange, redemption or acquisition of the Exchangeable Shares as contemplated by the Registration Rights Agreement.
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DESCRIPTION OF THE PARTNERSHIP’S CAPITAL STRUCTURE
The following is a description of the material terms of the LP Units and a summary of certain terms of the Partnership’s limited partnership agreement, as amended (the “limited partnership agreement”), which is incorporated herein by reference. For more information on the limited partnership agreement, see Item 10.B, “Additional Information—Memorandum and Articles of Association—Description of Our Units and Our Limited Partnership Agreement” in our Annual Report, which is incorporated by reference herein.
As of September 18, 2020, there were 295,284,506 LP Units outstanding (417,237,498 LP Units assuming the exchange of all of Brookfield’s RPUs and 418,338,876 LP Units assuming the exchange of all of Brookfield’s RPUs and Exchange LP Units), 4,989,265 Class A Preferred Units, Series 1, 4,989,262 Class A Preferred Units, Series 3, 9,986,588 Class A Preferred Units, Series 5, 11,979,750 Class A Preferred Units, Series 7, 7,986,595 Class A Preferred Units, Series 9, 9,936,190 Class A Preferred Units, Series 11 and 8,000,000 Class A Preferred Units, Series 13 outstanding and no Class A Preferred Units, Series 2, Class A Preferred Units, Series 4, Class A Preferred Units, Series 6, Class A Preferred Units, Series 8, Class A Preferred Units, Series 10 and Class A Preferred Units, Series 12 outstanding. The RPUs are subject to a redemption-exchange mechanism pursuant to which LP Units may be issued in exchange for RPUs on a one for one basis.
As of September 18, 2020, there were 44,988,147 Exchangeable Shares outstanding.
On October 16, 2018, Exchange LP issued 5,726,170 Exchangeable LP Units in connection with the privatization of Enercare Inc. Each Exchangeable LP Unit is exchangeable for one LP Unit. As of September 18, 2020, there were 1,101,378 Exchangeable LP Units outstanding.
The LP Units are non-voting limited partnership interests in the Partnership. Holders of LP Units are not entitled to the withdrawal or return of capital contributions in respect of the LP Units, except to the extent, if any, that distributions are made to such holders pursuant to the Partnership’s limited partnership agreement or upon the liquidation of the Partnership as described in our Annual Report or as otherwise required by applicable law. Except to the extent expressly provided in the Partnership’s limited partnership agreement, a holder of LP Units will not have priority over any other holder of LP Units, either as to the return of capital contributions or as to profits, losses or distributions. The LP Units rank junior to the Preferred LP Units with respect to priority in the payment of distributions and in the distribution of the assets of the Partnership in the event of the liquidation, dissolution or winding-up of the Partnership, whether voluntary or involuntary, as further described in our Annual Report. Holders of LP Units will not be granted any preemptive or other similar right to acquire additional interests in the Partnership. In addition, holders of LP Units do not have any right to have their LP Units redeemed by the Partnership. For a more detailed description of the LP Units, please refer to our Annual Report, as updated by our subsequent filings with the SEC that are incorporated herein by reference.
Further, subject to the terms of any preferred LP Units then outstanding, our limited partnership agreement authorizes us to establish one or more classes, or one or more series of any such classes of preferred LP Units with such designations, preferences, rights, powers and duties (which may be senior to existing classes and series of our preferred LP Units, such as the Class A Preferred Units), as shall be determined by the Partnership’s general partner in its sole discretion, including: (i) the right to share in our profits and losses or items thereof; (ii) the right to share in our distributions; (iii) the rights upon our dissolution and liquidation; (iv) whether, and the terms and conditions upon which, we may or shall be required to redeem our preferred LP Units (including sinking fund provisions); (v) whether such preferred LP Unit is issued with the privilege of conversion or exchange and, if so, the terms and conditions of such conversion or exchange; (vi) the terms and conditions upon which each preferred LP Unit will be issued, evidenced by certificates and assigned or transferred; and (viii) the requirement, if any, of each such preferred LP Unit to consent to certain Partnership matters.
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COMPARISON OF RIGHTS OF HOLDERS OF EXCHANGEABLE SHARES AND LP UNITS
BIPC is a corporation existing under British Columbia law. The Partnership is an exempted limited partnership existing under Bermuda law. The rights of holders of Exchangeable Shares are governed by the Business Corporations Act (British Columbia) (“BCBCA”) and BIPC’s articles. The rights of holders of the LP Units are governed by the Partnership’s limited partnership agreement and certain provisions of Bermuda law.
The following comparison is a summary of certain material differences between the rights of holders of Exchangeable Shares and holders of the LP Units under the governing documents of BIPC and the Partnership and the applicable laws noted above. The following summary is qualified in its entirety by reference to the relevant provisions of (i) the BCBCA, (ii) the Bermuda Limited Partnership Act 1883, the Bermuda Exempted Partnerships Act 1992 and the Bermuda Partnership Act 1902, (iii) BIPC’s articles, (iv) the Partnership’s limited partnership agreement and (v) the bye-laws of the Partnership’s general partner.
This section does not include a complete description of all of the differences between the rights of holders of Exchangeable Shares and holders of the LP Units, 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 British Columbia law and Bermuda law, as well as the governing documents of each of BIPC and the Partnership, each as amended, restated, supplemented or otherwise modified from time to time, copies of which are available, without charge, to any person, including any beneficial owner of LP Units to whom this prospectus is delivered, by following the instructions listed under “Where You Can Find More Information”.
| EXCHANGEABLE SHARES |
LP UNITS | |||
| Corporate Governance |
BIPC is a corporation formed under the laws of the Province of British Columbia. The rights of holders of Exchangeable Shares are governed by the BCBCA and BIPC’s articles. |
The Partnership is a Bermuda—exempted limited partnership registered under the Bermuda Limited Partnership Act 1883 and the Bermuda Exempted Partnerships Act 1992. The Partnership’s limited partnership agreement provides for the management and control of the Partnership by a general partner, the Partnership’s general partner. | ||
| Authorized Capital |
BIPC is authorized to issue an unlimited number of: (i) Exchangeable Shares; (ii) class B shares; (iii) class C shares; (iv) class A senior preferred shares, issuable in series, and (v) class B junior preferred shares, issuable in series. All Exchangeable Shares, class B share, class C shares, class A senior preferred shares and class B junior preferred shares are or will be issued without par value. The number of authorized Exchangeable Shares can be changed in accordance with BIPC’s articles or, if the articles are silent, by special resolution, in accordance with s. 54(3)(c) of the BCBCA. |
The Partnership’s interests consist of the general partner unit, which represents the general partnership interest, the LP Units and the preferred units, together with the units representing limited partnership interests in the Partnership, and any additional partnership interests representing limited partnership interests that it may issue in the future. | ||
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| EXCHANGEABLE SHARES |
LP UNITS | |||
| The Partnership’s general partner has broad rights to cause the Partnership to issue additional partnership interests and may cause the Partnership to issue additional partnership interests (including new classes of partnership interests and options, rights, warrants and appreciation rights relating to such interests) for any partnership purpose, at any time and on such terms and conditions as it may determine without the approval of any limited partners, subject to the terms of any preferred units then outstanding. Any additional partnership interests may be issued in one or more classes, or one or more series of classes, with such designations, preferences, rights, powers and duties (which may be senior to existing classes and series of partnership interests) as may be determined by the Partnership’s general partner in its sole discretion, all without the approval of the Partnership’s limited partners. | ||||
| Voting Rights |
Except as otherwise expressly provided in the articles or as required by law, the holders of Exchangeable Shares and class B shares, will vote together and not as separate classes. Each holder of an Exchangeable Share will be entitled to cast one vote per Exchangeable Share on all matters submitted to a vote. On each such matter, the holders of class B shares will be entitled to cast, in the aggregate, a number of votes equal to three times the number of votes attached to the Exchangeable Shares. As Brookfield Infrastructure holds all of the Class B Shares, it holds 75% of the votes eligible to be cast on all matters where the Exchangeable Shares and Class B Shares vote together.
At any time that no Exchangeable Shares are outstanding and for any vote held only in respect of the class B shares, the holder of the class B shares will be entitled to cast one vote per class B shares. At any time that no Exchangeable Shares are outstanding, quorum will be at least one holder of class B shares. |
Limited partners are not entitled to vote on matters relating to the Partnership, although holders of LP Units are entitled to consent to certain matters with respect to certain amendments to the Partnership’s limited partnership agreement and certain matters with respect to the withdrawal of the Partnership’s general partner. Each LP Unit entitles the holder thereof to one vote for the purposes of any approvals of holders of LP Units. In addition to their rights under the Partnership’s limited partnership agreement, limited partners have consent rights with respect to certain fundamental matters and on any other matters that require their approval in accordance with applicable securities laws and stock exchange rules. | ||
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| EXCHANGEABLE SHARES |
LP UNITS | |||
| Size of Board |
BIPC’s board currently has (7) directors. The board may consist of between three (3) and eleven (11) directors or such other number of directors as may be determined from time-to-time by a resolution of BIPC’s shareholders and subject to its articles. BIPC expects that its board of directors will continue to mirror the board of directors of the general partner of the Partnership, except for one additional non-overlapping director to assist BIPC with, among other things, resolving any conflicts of interest that may arise from BIPC’s relationship with Brookfield Infrastructure. John Fees currently serves as the non-overlapping member of BIPC’s board of directors. Mr. Fees previously served on the board of directors of the general partner of the Partnership and resigned from such board of directors prior to the Special Distribution. At least three (3) directors and at least a majority of the directors holding office must be independent of BIPC, as determined by the full board using the standards for independence established by the NYSE. |
The Partnership’s general partner board currently has six (6) directors. The board may consist of between three (3) and eleven (11) directors or such other number of directors as may be determined from time-to-time by a resolution of the shareholders of the Partnership’s general partner and subject to its bye-laws. At least three (3) directors and at least a majority of the directors holding office must be independent of the Partnership’s general partner and Brookfield, as determined by the full board of directors using the standards of independence established by NYSE. | ||
| Election and Removal of Directors |
BIPC’s board is elected by its shareholders and each of its current directors will serve until the close of the next annual meeting of shareholders of BIPC or his or her death, resignation or removal from office, whichever occurs first. Vacancies on the board may be filled and additional directors may be added by a resolution of BIPC’s shareholders or a vote of the directors then in office. A director may be removed from office by a special resolution duly passed by BIPC’s shareholders. A director will be automatically removed from BIPC’s board if he or she becomes bankrupt, insolvent or suspends payments to his or her creditors or becomes disqualified by law from acting as a director. |
The Partnership’s general partner’s board of directors was elected by its shareholder and each of its current directors will serve until the close of the next annual meeting of shareholders of the Partnership’s general partner or his or her death, resignation or removal from office, whichever occurs first. Vacancies on the Partnership’s general partner’s board of directors may be filled and additional directors may be added by a resolution of the shareholders of the Partnership’s general partner or a vote of the directors then in office. A director may be removed from office by a resolution duly passed by the shareholders of the Partnership’s general partner or, if the director has been absent without leave from three consecutive meetings of the board of directors, by a written resolution requesting resignation signed by all other directors then holding office. A director will be automatically removed from the board of directors if he or she becomes | ||
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| EXCHANGEABLE SHARES |
LP UNITS | |||
| bankrupt, insolvent or suspends payments to his or her creditors or becomes prohibited by law from acting as a director. | ||||
| Process to Amend the Governing Instruments |
BIPC may from time to time amend, modify or repeal any provision contained in the notice of articles or the articles of BIPC in a manner authorized by the BCBCA.
Under the BCBCA, alteration of the notice of articles generally requires authorization by either court order, by a two-thirds (2/3rds) vote of all voting shares or by the methods specified in BIPC’s articles. Certain alterations to matters such as changes to company name or address or a change in directors will not require authorization by the above-mentioned methods. Specific alterations such as those of a nature affecting a particular class or series in a manner that would prejudice or interfere with the rights of such class or series, will entitle the affected class or series to consent by special resolution to the alteration, whether or not such class or series otherwise carries the right to vote.
Under the BCBCA, BIPC may resolve to alter its articles by the type of resolution specified in the BCBCA, if not specified in the BCBCA, by the type of resolution specified in our articles or if neither the BCBCA or our articles specify the type of resolution, by a two-thirds (2/3rds) vote of all voting shares; provided however, if such alteration would prejudice or interfere with the rights of a particular class or series, such class or series must consent by special resolution to the alteration, whether or not such class or series otherwise carries the right to vote. |
Amendments to the Partnership’s limited partnership agreement may be proposed only by or with the consent of the Partnership’s general partner. To adopt a proposed amendment, other than the amendments that do not require limited partner approval discussed below, the Partnership’s general partner must seek approval of a majority of outstanding LP Units required to approve the amendment, either by way of a meeting of the limited partners to consider and vote upon the proposed amendment or by written approval.
No amendment may be made that would: (i) enlarge the obligations of any limited partner without its consent, except that any amendment that would have a material adverse effect on the rights or preferences of any class of Partnership interests in relation to other classes of Partnership interests may be approved by at least a majority of the type or class of Partnership interests so affected; or (ii) enlarge the obligations of, restrict in any way any action by or rights of, or reduce in any way the amounts distributable, reimbursable or otherwise payable by the Partnership to, the Partnership’s general partner or any of its affiliates without the consent of the Partnership’s general partner, which may be given or withheld in its sole discretion. The provision of the Partnership’s limited partnership agreement preventing the amendments having the effects described in clauses (i) and (ii) above can be amended upon the approval of the holders of at least 90% of the outstanding LP Units. | ||
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| EXCHANGEABLE SHARES |
LP UNITS | |||
| Subject to applicable law, the Partnership’s general partner may generally make amendments to the Partnership’s limited partnership agreement without the approval of any limited partner to reflect: (i) a change in the name of the Partnership, the location of its registered office or its registered agent; (ii) the admission, substitution or withdrawal of partners in accordance with the Partnership’s limited partnership agreement; (iii) a change that the Partnership’s general partner determines is reasonable and necessary or appropriate for the Partnership to qualify or to continue its qualification as an exempted limited partnership under the laws of Bermuda or a partnership in which the limited partners have limited liability under the laws of any jurisdiction or is necessary or advisable in the opinion of the Partnership’s general partner to ensure that the Partnership will not be treated as an association taxable as a corporation or otherwise taxed as an entity for tax purposes; (iv) an amendment that the Partnership’s general partner determines to be necessary or appropriate to address certain changes in tax regulations, legislation or interpretation; (v) an amendment that is necessary, in the opinion of the Partnership’s counsel, to prevent the Partnership or the Partnership’s general partner or its directors or officers, from in any manner being subjected to the provisions of the Investment Company Act, or similar legislation in other jurisdictions; (vi) subject to the terms of any preferred LP Units then outstanding, an amendment that the Partnership’s general partner determines in its sole discretion to be necessary or appropriate for the creation, authorization or issuance of any class or series of partnership interests or options, rights, warrants or appreciation rights relating to partnership securities; (vii) any amendment expressly permitted in the Partnership’s limited partnership agreement to be made by the Partnership’s general partner acting alone; (viii) an |
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| EXCHANGEABLE SHARES |
LP UNITS | |||
| amendment effected, necessitated or contemplated by a merger or consolidation of the Partnership with one or more persons in accordance with the provisions of the Partnership’s limited partnership agreement; (ix) any amendment that the partnership’s general partner determines in its sole discretion to be necessary or appropriate to reflect and account for the formation by the Partnership of, or its investment in, any corporation, partnership, joint venture, limited liability company or other entity, as otherwise permitted by the Partnership’s limited partnership agreement; (x) a change in the Partnership’s fiscal year and related changes; or (xi) any other amendments substantially similar to any of the matters described in (i) through (x) above. | ||||
| In addition, the Partnership’s general partner may make amendments to the Partnership’s limited partnership agreement without the approval of any limited partner if those amendments, in the discretion of the Partnership’s general partner: (i) do not adversely affect the Partnership’s limited partners considered as a whole (including any particular class of partnership interests as compared to other classes of partnership interests) in any material respect; (ii) are necessary or appropriate to satisfy any requirements, conditions or guidelines contained in any opinion, directive, order, ruling or regulation of any governmental agency or judicial authority; (iii) are necessary or appropriate to facilitate the trading of the LP Units or to comply with any rule, regulation, guideline or requirement of any securities exchange on which the LP Units are or will be listed for trading; (iv) are necessary or appropriate for any action taken by the Partnership’s general partner relating to splits or combinations of LP Units under the provisions of the Partnership’s limited partnership agreement; or (v) are required to effect the intent of the provisions of the | ||||
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| EXCHANGEABLE SHARES |
LP UNITS | |||
| Partnership’s limited partnership agreement or are otherwise contemplated by the Partnership’s limited partnership agreement.
The Partnership’s general partner will not be required to obtain an opinion of counsel that an amendment will not result in a loss of limited liability to the limited partners if one of the amendments described in the preceding two paragraphs should occur. No other amendments to the Partnership’s limited partnership agreement will become effective without the approval of holders of at least 90% of the LP Units, unless the Partnership obtains an opinion of counsel to the effect that the amendment will not (i) cause the Partnership to be treated as an association taxable as a corporation or otherwise taxable as an entity for tax purposes (provided that for U.S. tax purposes the Partnership’s general partner has not made the election described below under the section entitled “Qualification”), or (ii) affect the limited liability under the Bermuda Limited Partnership Act 1883 of any of the Partnership’s limited partners. | ||||
| In addition to the above restrictions, any amendment that would have a material adverse effect on the rights or preferences of any type or class of Partnership interests in relation to other classes of Partnership interests will also require the approval of the holders of at least a majority of the outstanding Partnership interests of the class so affected.
In addition, any amendment that reduces the voting percentage required to take any action must be approved by the written consent or affirmative vote of limited partners whose aggregate outstanding voting LP Units constitute not less than the voting requirement sought to be reduced. | ||||
| Special Meetings of the Shareholders |
A special meeting of the shareholders for any purpose or purposes may be called only by BIPC’s board on a date not less than twenty one (21) days nor more than two (2) months |
The Partnership’s general partner may call special meetings of the limited partners at a time and place outside of Canada determined by the Partnership’s general | ||
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| EXCHANGEABLE SHARES |
LP UNITS | |||
| after the sending of the notice of the meeting to each shareholder of record entitled to vote at such meeting. |
partner on a date not less than ten (10) days nor more than sixty (60) days after the mailing of notice of the meeting. The limited partners do not have the ability to call a special meeting. Only holders of record on the date set by the Partnership’s general partner (which may not be less than ten (10) nor more than sixty (60) days before the meeting) are entitled to notice of any meeting. | |||
| Written Consent in Lieu of Meeting |
Under the BCBCA, generally, shareholder action without a meeting may only be taken by consent resolution of the shareholders entitled to vote on the resolution: with a written consent executed by shareholders holding two-thirds (2/3rds) of the shares that carry the right to vote at general meetings being effective to approve an action requiring an ordinary resolution; or with a written consent executed by all shareholders that carry the right to vote at general meetings or by all of the shareholders holding shares of the applicable class or series of shares, as the case may be, being effective to approve an action requiring a special resolution or an exceptional resolution. |
Written consents may be solicited only by or on behalf of the Partnership’s general partner. Any such consent solicitation may specify that any written consents must be returned to the Partnership within the time period, which may not be less than twenty (20) days, specified by the Partnership’s general partner. | ||
| For purposes of determining holders of Partnership interests entitled to provide consents to any action described above, the Partnership’s general partner may set a record date, which may be not less than ten (10) nor more than sixty (60) days before the date by which record holders are requested in writing by the Partnership’s general partner to provide such consents. Only those holders of Partnership interests on the record date established by the Partnership’s general partner will be entitled to provide consents with respect to matters as to which a consent right applies. | ||||
| Limitation of Liability and Indemnification of |
No director will be personally liable to BIPC or its shareholders for monetary damages for breach of fiduciary duty, except to the extent such exemption is not |
Under the Partnership’s limited partnership agreement, the Partnership is required to indemnify to the fullest extent permitted by law the Partnership’s general | ||
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| EXCHANGEABLE SHARES |
LP UNITS | |||
| Directors and Officers |
permitted under the BCBCA. Under the BCBCA, no provision in BIPC’s articles or other contract relieves a director or officer from (a) the duty to act in accordance with the BCBCA and the regulations, or (b) liability that by virtue of any enactment or rule of law or equity would otherwise attach to that director or officer in respect of any negligence, default, breach of duty or breach of trust of which the director or officer may be guilty in relation to BIPC.
To the fullest extent permitted by law, BIPC will indemnify any present or former director or officer of BIPC (or a person serving as a director, officer, trustee, employee or agent of another corporation), who was or is a party or is threatened to be made a party to, or is otherwise involved in, any threatened, pending or completed action while acting in such capacity, for all liability and loss suffered (including, without limitation, any judgments, fines, or penalties and amounts paid in settlement) and expenses (including attorneys’ fees and disbursements), actually and reasonably incurred. BIPC may enter into agreements with any such person to provide such indemnification. The right to indemnification includes the right to be paid by BIPC the expenses (including attorneys’ fees) incurred by such person in defending any such proceeding in advance of its final disposition, such that the advances are paid by BIPC within sixty (60) days after the receipt by BIPC of a statement or statements from the claimant requesting such advance or advances from time to time (and subject to filing a written request for indemnification pursuant to the articles). |
partner and any of its affiliates (and their respective officers, directors, agents, shareholders, partners, members and employees), any person who serves on a governing body of a holding entity or operating entity of the Partnership and any other person designated by the Partnership’s general partner as an indemnified person, in each case, against all losses, claims, damages, liabilities, costs or expenses (including legal fees and expenses), judgments, fines, penalties, interest, settlements and other amounts arising from any and all claims, demands, actions, suits or proceedings, incurred by an indemnified person in connection with the Partnership’s investments and activities or by reason of their holding such positions, except to the extent that the claims, liabilities, losses, damages, costs or expenses are determined to have resulted from the indemnified person’s bad faith, fraud or willful misconduct, or in the case of a criminal matter, action that the indemnified person knew to have been unlawful. In addition, under the Partnership’s limited partnership agreement: (i) the liability of such persons has been limited to the fullest extent permitted by law, except to the extent that their conduct involves bad faith, fraud or willful misconduct, or in the case of a criminal matter, action that the indemnified person knew to have been unlawful; and (ii) any matter that is approved by the independent directors of the Partnership’s general partner will not constitute a breach of the Partnership’s limited partnership agreement or any duties stated or implied by law or equity, including fiduciary duties. The Partnership’s limited partnership agreement requires the Partnership to advance funds to pay the expenses of an indemnified person in connection with a matter in which indemnification may be sought until it is determined that the indemnified person is not entitled to indemnification. |
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| EXCHANGEABLE SHARES |
LP UNITS | |||
| BIPC will not indemnify any present or former director or officer of BIPC for acts of bad faith, fraud, willful misfeasance, gross negligence, knowing violation of law or reckless disregard of the director’s duties or for any act for which indemnification is specifically prohibited under the BCBCA. |
The Partnership’s general partner’s bye-laws provide that, as permitted by the laws of Bermuda, it will pay or reimburse an indemnified person’s expenses in advance of a final disposition of a proceeding for which indemnification is sought.
Under the Partnership’s general partner’s bye-laws, the Partnership’s general partner is required to indemnify, to the fullest extent permitted by law, its affiliates, directors, officers, resident representatives, shareholders, employees or any of its subsidiaries and certain others against any and all losses, claims, damages, liabilities, costs or expenses (including legal fees and expenses), judgments, fines, penalties, interest, settlements or other amounts arising from any and all claims, demands, actions, suits or proceedings, incurred by an indemnified person in connection with the Partnership’s investments and activities or in respect of or arising from their holding such positions, except to the extent that the claims, liabilities, losses, damages, costs or expenses are determined to have resulted from the indemnified person’s bad faith, fraud or willful misconduct, or in the case of a criminal matter, action that the indemnified person knew to have been unlawful. In addition, under the Partnership’s general partner’s bye-laws: (i) the liability of such persons has been limited to the fullest extent permitted by law and except to the extent that their conduct involves bad faith, fraud or willful misconduct, or in the case of a criminal matter, action that the indemnified person knew to have been unlawful; and (ii) any matter that is approved by the independent directors will not constitute a breach of any duties stated or implied by law or equity, including fiduciary duties. The Partnership’s general partner’s bye-laws require it to advance funds to pay the expenses of an indemnified person in connection with a matter in which indemnification may be sought until it is determined that the indemnified person is not entitled to indemnification. |
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| EXCHANGEABLE SHARES |
LP UNITS | |||
| Dividends and Distributions |
Pursuant to BIPC’s articles and subject to the prior rights of holders of all classes and series of preferred shares at the time outstanding having prior rights as to dividends, each Exchangeable Share entitles its holder to the Exchangeable Shares dividend in a cash amount equal in value to (i) the amount of any distribution made on a LP Unit multiplied by (ii) the conversion factor determined in accordance with BIPC’s articles and in effect on the record date of such dividend (which conversion factor is currently one, subject to adjustment in the event of certain dilutive or other capital events by BIPC or the Partnership). See “Exchanges of Exchangeable Shares for LP Units—Primary Exchange Rights—Adjustments to Reflect Certain Capital Events.” The record and payment dates for the dividends upon the Exchangeable Shares, to the extent not prohibited by applicable law, shall be substantially the same as the record and payment dates for distributions on the LP Units.
If the full amount of an Exchangeable Shares dividend is not declared and paid concurrent with a distribution on the LP Units, then the undeclared or unpaid amount of such Exchangeable Shares dividend shall accrue and accumulate (without interest), whether or not BIPC has earnings, whether or not there are funds legally available for the payment thereof and whether or not such Exchangeable Shares dividend has been declared or authorized. Any Exchangeable Shares dividend payment made shall first be credited against the earliest accumulated but unpaid Exchangeable Shares dividends due which remain payable which we refer to as unpaid dividends. All Exchangeable Shares dividends shall be paid prior and in preference to any dividends or distributions on the class C shares of BIPC. The holders of Exchangeable Shares shall not be entitled to any dividends from BIPC other than the Exchangeable Shares dividends. |
Distributions to partners of the Partnership will be made only as determined by the general partner in its sole discretion. However, the general partner will not be permitted to cause the Partnership to make a distribution if the Partnership does not have sufficient cash on hand to make the distribution, the distribution would render the Partnership insolvent, or if, in the opinion of the general partner, the distribution would leave the Partnership with insufficient funds to meet any future or contingent obligations, or the distribution would contravene applicable laws.
Subject to the terms of any preferred units outstanding, the general partner has sole authority to determine whether the Partnership will make distributions and the amount and timing of these distributions.
The Partnership has a distribution reinvestment plan for holders of its LP Units who are resident in Canada, the United States and Australia. Holders of LP Units who are not resident in Canada, the United States or Australia may participate in the distribution reinvestment plan provided that there are not any laws or governmental regulations that may limit or prohibit them from doing so. |
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| EXCHANGEABLE SHARES |
LP UNITS | |||
| Exchange by Holder |
Holders of Exchangeable Shares have the right to exchange all or a portion of their Exchangeable Shares for one LP Unit per Exchangeable Share held (subject to adjustment in the event of certain dilutive or other capital events by BIPC or the Partnership) or its cash equivalent based on the NYSE closing price per LP Unit on the date of the request for exchange (or if not a trading day, the next trading day thereafter), plus all unpaid accrued dividends, if any (the form of payment to be determined at the election of BIPC). See “Exchanges of Exchangeable Shares for LP Units—Primary Exchange Rights—Adjustments to Reflect Certain Capital Events.”
The Partnership may elect to satisfy BIPC’s exchange obligation by acquiring all of the tendered Exchangeable Shares for one LP Unit per Exchangeable Share held (subject to adjustment in the event of certain dilutive or other capital events by BIPC or the Partnership) or its cash equivalent based on the NYSE closing price of one LP Unit on the date that the request for exchange is received by BIPC’s transfer agent (or if not a trading day, the next trading day thereafter), plus all unpaid accrued dividends, if any (the form of payment to be determined at the election of the Partnership). See “Exchanges of Exchangeable Shares for LP Units—Primary Exchange Rights—Adjustments to Reflect Certain Capital Events.” |
N/A. | ||
| Redemption by Issuer |
BIPC’s board has the right upon sixty (60) days’ prior written notice to holders of Exchangeable Shares to redeem all of the then outstanding Exchangeable Shares at any time and for any reason, in its sole discretion subject to applicable law, including without limitation following the occurrence of certain redemption events described in “Exchanges of Exchangeable Shares for LP Units—Redemption.”. In addition, upon sixty (60) days’ prior written notice from the holder of class B |
N/A | ||
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| EXCHANGEABLE SHARES |
LP UNITS | |||
| shares of BIPC to holders of the Exchangeable Shares and without the consent of holders of Exchangeable Shares, BIPC shall be required to redeem all of the then outstanding Exchangeable Shares, subject to applicable law.
Upon any such redemption event, the holders of Exchangeable Shares shall be entitled to one LP Unit per Exchangeable Share held (subject to adjustment in the event of certain dilutive or other capital events by BIPC or the Partnership) or its cash equivalent based on the NYSE closing price per LP Unit on the trading day immediately preceding the announcement of such redemption, plus all unpaid accrued dividends, if any (the form of payment to be determined at the election of BIPC). See “Exchanges of Exchangeable Shares for LP Units—Primary Exchange Rights—Adjustments to Reflect Certain Capital Events.”
Upon any liquidation, dissolution or winding up of the Partnership, including where substantially concurrent with a liquidation, dissolution or winding up of BIPC, all of the then outstanding Exchangeable Shares of BIPC will be automatically redeemed by BIPC on the day prior to the liquidation, dissolution or winding up of the partnership. Each holder of Exchangeable Shares shall be entitled to one LP Unit per Exchangeable Share held (subject to adjustment in the event of certain dilutive or other capital events by BIPC or the partnership) or its cash equivalent based on the NYSE closing price per LP Unit on the trading day immediately preceding the announcement of such redemption, plus all unpaid accrued dividends, if any (the form of payment to be determined at the election of BIPC). See “Exchanges of Exchangeable Shares for LP Units—Primary Exchange Rights—Adjustments to Reflect Certain Capital Events.” |
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| EXCHANGEABLE SHARES |
LP UNITS | |||
| Qualification |
N/A | If the Partnership’s general partner determines in its sole discretion that it is no longer in the Partnership’s best interests to continue as a partnership for U.S. federal income tax purposes, the Partnership’s general partner may elect to treat Partnership as an association or as a publicly traded partnership taxable as a corporation for U.S. federal (and applicable state) income tax purposes. | ||
| Liquidation |
Upon any liquidation, dissolution or winding up of BIPC, and subject to the prior rights of holders of preferred shares and any other class of shares of BIPC ranking in priority or ratably with the Exchangeable Shares and after the payment in full to (i) any holder of Exchangeable Shares or class C shares of BIPC that has submitted a notice of the exercise of the exchange rights described above at least ten (10) days prior to the date of the liquidation, dissolution or winding up (or in the case of the class B shares, thirty (30) days prior to the date of the liquidation, dissolution or winding up) and (ii) any accrued unpaid dividends, the holders of Exchangeable Shares shall be entitled to one LP Unit per Exchangeable Share held (subject to adjustment in the event of certain dilutive or other capital events by BIPC or the partnership) or its cash equivalent based on the NYSE closing price per LP Unit on the trading day immediately preceding announcement of such liquidation, dissolution or winding up (the form of payment to be determined at the election of BIPC). See “Exchanges of Exchangeable Shares for LP Units—Primary Exchange Rights—Adjustments to Reflect Certain Capital Events.” If, upon any such liquidation, dissolution or winding up, the assets of BIPC are insufficient to make such payment in full, then the assets of BIPC will be distributed among the holders of Exchangeable Shares ratably in proportion to the full amounts to which they would otherwise be respectively entitled to receive. |
The Partnership will terminate upon the earlier to occur of: (i) the date on which all of the Partnership’s assets have been disposed of or otherwise realized by the Partnership and the proceeds of such disposals or realizations have been distributed to partners; (ii) the service of notice by the Partnership’s general partner, with the special approval of a majority of its independent directors, that in its opinion the coming into force of any law, regulation or binding authority renders illegal or impracticable the continuation of the Partnership; and (iii) at the election of the Partnership’s general partner, if the Partnership, as determined by the Partnership’s general partner, is required to register as an “investment company” under the Investment Company Act or similar legislation in other jurisdictions. | ||
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| EXCHANGEABLE SHARES |
LP UNITS | |||
| Notwithstanding the foregoing, upon any liquidation, dissolution or winding up of BIPC, the Partnership may elect to acquire all of the outstanding Exchangeable Shares for one LP Unit per Exchangeable Share held (subject to adjustment in the event of certain dilutive or other capital events by BIPC or the Partnership) plus all unpaid accrued dividends, if any. See “Exchanges of Exchangeable Shares for LP Units—Primary Exchange Rights—Adjustments to Reflect Certain Capital Events.” The acquisition by the Partnership of all the outstanding Exchangeable Shares will occur on the day prior to the effective date of the liquidation, dissolution or winding up of BIPC. |
The Partnership will be dissolved upon the withdrawal of the Partnership’s general partner as the general partner of the Partnership (unless a successor entity becomes the general partner pursuant to the Partnership’s limited partnership agreement) or the date on which any court of competent jurisdiction enters a decree of judicial dissolution of the partnership or an order to wind-up or liquidate the Partnership’s general partner without the appointment of a successor in compliance with the Partnership’s limited partnership agreement. The Partnership will be reconstituted and continue without dissolution if within 30 days of the date of dissolution (and provided a notice of dissolution has not been filed with the Bermuda Monetary Authority), a successor general partner executes a transfer deed pursuant to which the new general partner assumes the rights and undertakes the obligations of the general partner, but only if the Partnership receives an opinion of counsel that the admission of the new general partner will not result in the loss of limited liability of any limited partner.
Upon the Partnership’s dissolution, unless the Partnership is continued as a new limited partnership, the liquidator authorized to wind-up the Partnership’s affairs will, acting with all of the powers of the Partnership’s general partner that the liquidator deems necessary or appropriate in its judgment, liquidate the Partnership’s assets and apply the proceeds of the liquidation first, to discharge the Partnership’s liabilities as provided in its limited partnership agreement and by law, then to the preferred units up to the amount of the liquidation entitlement of the preferred units, and thereafter to the partners pro rata according to the percentages of their respective partnership interests as of a record date selected by the liquidator. The liquidator may defer liquidation of the Partnership’s assets for a reasonable period of time or distribute assets to |
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| EXCHANGEABLE SHARES |
LP UNITS | |||
| partners in kind if it determines that an immediate sale or distribution of all or some of the Partnership’s assets would be impractical or would cause undue loss to the partners. | ||||
| Conversion |
The Partnership, or any of its controlled subsidiaries, is entitled to convert any Exchangeable Shares held to a class C share on a one-for-one basis. |
N/A | ||
| Fiduciary Duties |
The directors of BIPC have three principal responsibilities under the BCBCA and BIPC’s articles, being (i) the duty to manage, (ii) the fiduciary duty, which is to act honestly and in good faith with a view to the best interests of BIPC, and (iii) the duty of care, which is to exercise the care, diligence and skill that a reasonably prudent individual would exercise in comparable circumstances. |
A general partner is required to act in good faith and in a manner which it reasonably believes to be in the best interests of a partnership. The partnership’s limited partnership agreement contains various express provisions that modify, waive and/or limit the fiduciary duties that might otherwise be owed to the partnership and the limited partners. These modifications inter alia restrict the remedies available for actions that might otherwise constitute a breach of fiduciary duty and permit the general partner of the partnership to take into account the interests of third parties, including Brookfield, when resolving conflicts of interest. | ||
| Protection of Shareholders |
Under the BCBCA, pursuant to the oppression remedy, any holder of Exchangeable Shares may apply to court for an order where the affairs of BIPC are being or have been conducted, or that the powers of the directors are being or have been exercised, in a manner that is oppressive to one or more shareholders, or where there has been some act of BIPC that is unfairly prejudicial to one or more of the shareholders. Under the BCBCA, pursuant to the derivative action remedy, a shareholder (including a beneficial shareholder) may bring an action in the name of and on behalf of BIPC to enforce a right, duty or obligation owed to BIPC that could be enforced by BIPC itself or to obtain damages for any such breach of right, duty or obligation. |
There is no oppression remedy or derivative action remedy available under the Bermuda Limited Partnership Act 1883 and the Bermuda Exempted Partnerships Act 1992.
Furthermore, the partnership’s limited partnership agreement also stipulates that unless otherwise determined by the general partner of the partnership, a Person (as defined in the limited partnership agreement) shall not have pre-emptive, preferential or other similar rights in respect to the issuance of a LP Unit. | ||
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| EXCHANGEABLE SHARES |
LP UNITS | |||
| Takeover Bids, Issuer Bids and Tender Offers |
The Exchangeable Shares are not LP Units and will not be treated as LP Units for purposes of the application of applicable Canadian or U.S. rules relating to takeover bids, issuer bids and tender offers. As a result, holders of Exchangeable Shares will not be entitled to participate in an offer or bid made to acquire units unless such offer has been extended to holders of Exchangeable Shares. |
The LP Units are not Exchangeable Shares and will not be treated as Exchangeable Shares for purposes of the application of applicable Canadian or U.S. rules relating to takeover bids, issuer bids and tender offers. As a result, holders of LP Units will not be entitled to participate in an offer or bid made to acquire the Exchangeable Shares unless such offer has been extended to holders of LP Units. |
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The table below sets forth information regarding beneficial ownership of LP Units by the selling unitholder as of September 18, 2020.
The percentage of beneficial ownership for the following table is based on 295,284,506 LP Units outstanding, and 121,952,992 RPUs and 8,675,193 Exchangeable Shares beneficially owned by Brookfield as of September 18, 2020. Pursuant to Rule 13d-4 under the Exchange Act, the statements concerning voting and dispositive power concerning the LP Units included in the footnotes to this table shall not be construed as admissions that such persons are the beneficial owners of such LP Units.
| Selling Unitholder |
LP Units Beneficially Owned |
Percentage of LP Units Outstanding |
Maximum Number of LP Units That May Be Delivered upon Exchange of Exchangeable Shares |
Percentage after Maximum Number of LP Units are Delivered upon Exchange |
||||||||||||
| Brookfield Asset Management Inc.(1) |
130,877,830 | 30.7 | % | 74,988,147 | 13.4 | %(2) | ||||||||||
| (1) | The business address of Brookfield is Brookfield Place, 181 Bay Street, Suite 300, Toronto, Ontario M5J 2T3. |
| (2) | The percentage shown assumes that all exchange requests of Exchangeable Shares are satisfied in reliance on the secondary exchange rights and no LP Units are delivered by the Partnership or BIPC in satisfaction of exchange requests on the Exchangeable Shares. The Partnership and BIPC currently intend to satisfy any exchange requests on the Exchangeable Shares through the delivery of LP Units rather than cash. |
For a description of our relationship with Brookfield as well as potential conflicts of interest (and the methods for resolving them) and other material considerations arising from our relationship with Brookfield, please see Item 7.B, “Related Party Transactions—Relationship with Brookfield” in our Annual Report, which is incorporated by reference in this prospectus.
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This prospectus relates to the issuance by the Partnership or delivery by BIPC or Brookfield of up to an aggregate of 74,988,147 LP Units, in each case in connection with the satisfaction of exchange requests by a holder of Exchangeable Shares of BIPC, which shares are currently outstanding or may be offered and sold from time to time outside of the United States. No broker, dealer or underwriter has been engaged in connection with any such exchange. We will pay all expenses of effecting the exchanges pursuant to this prospectus.
For more information, see “Exchange of Exchangeable Shares for LP Units”.
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MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
This summary discusses material United States federal income tax considerations for holders relating to the exchange of Exchangeable Shares for LP Units as described in this prospectus as of the date hereof. This summary is based on provisions of the U.S. Internal Revenue Code of 1986, as amended (the “U.S. Internal Revenue Code”), on the regulations promulgated thereunder (the “Treasury Regulations”), and on published administrative rulings, judicial decisions, and other applicable authorities, all as in effect on the date hereof and all of which are subject to change at any time, possibly with retroactive effect. This summary should be read in conjunction with the discussion of the principal U.S. federal income tax considerations associated with the operations of the Partnership and the purchase, ownership, and disposition of LP Units set forth in Item 10.E “Taxation—Certain Material U.S. Federal Income Tax Considerations” and Item 3.D “Risk Factors—Risks Related to Taxation” in the Annual Report. The following discussion is limited as described in Item 10.E “Taxation—Certain Material U.S. Federal Income Tax Considerations” in the Annual Report and as described herein.
This summary is necessarily general and may not apply to all categories of investors, some of whom may be subject to special rules, including, without limitation, persons that own (directly, indirectly or constructively, applying certain attribution rules) 5% or more of the LP Units or (directly, indirectly or constructively, applying certain attribution rules) 10% or more of the equity interests (by vote or value) of BIPC, dealers in securities or currencies, financial institutions or financial services entities, mutual funds, life insurance companies, persons that hold Exchangeable Shares as part of a straddle, hedge, constructive sale or conversion transaction with other investments, U.S. Holders (as defined below) whose functional currency is not the U.S. dollar, persons who have elected mark-to-market accounting, persons who hold Exchangeable Shares through a partnership or other entity treated as a pass-through entity for U.S. federal income tax purposes, persons for whom the Exchangeable Shares are not a capital asset, persons who are liable for the alternative minimum tax, and certain U.S. expatriates or former long-term residents of the United States. Except as otherwise specifically provided herein, this summary does not address any tax consequences to holders of preferred units of the Partnership, nor does this summary address any tax consequences to holders of exchangeable limited partnership units of Exchange LP. The actual tax consequences of the exchange of Exchangeable Shares for LP Units may vary depending on your individual circumstances.
For purposes of this discussion, a “U.S. Holder” is a beneficial owner of Exchangeable Shares who is for U.S. federal tax purposes: (i) an individual citizen or resident of the United States; (ii) a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia; (iii) an estate the income of which is subject to U.S. federal income taxation regardless of its source; or (iv) a trust (a) that is subject to the primary supervision of a court within the United States and all substantial decisions of which one or more U.S. persons have the authority to control or (b) that has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person.
A “Non-U.S. Holder” is a beneficial owner of Exchangeable Shares, other than a U.S. Holder or an entity classified as a partnership or other fiscally transparent entity for U.S. federal tax purposes.
If a partnership holds Exchangeable Shares, the tax treatment of a partner of such partnership generally will depend upon the status of the partner and the activities of the partnership. Partners of partnerships that hold Exchangeable Shares should consult their own tax advisors.
This discussion does not constitute tax advice and is not intended to be a substitute for tax planning. You should consult your own tax advisor concerning the U.S. federal, state and local income tax consequences of exchanging Exchangeable Shares for LP Units, as well as any tax consequences under the laws of any other taxing jurisdiction.
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Partnership Status of the Partnership and Holding LP
Each of the Partnership and Holding LP has made a protective election to be classified as a partnership for U.S. federal tax purposes. An entity that is treated as a partnership for U.S. federal tax purposes generally incurs no U.S. federal income tax liability. Instead, each partner is generally required to take into account its allocable share of items of income, gain, loss, deduction, or credit of the partnership in computing its U.S. federal income tax liability, regardless of whether cash distributions are made. Distributions of cash by a partnership to a partner generally are not taxable unless the amount of cash distributed to a partner is in excess of the partner’s adjusted basis in its partnership interest.
An entity that would otherwise be classified as a partnership for U.S. federal income tax purposes may nonetheless be taxable as a corporation if it is a “publicly traded partnership”, unless an exception applies. The partnership is publicly traded. However, an exception, referred to as the “Qualifying Income Exception”, exists with respect to a publicly traded partnership if (i) at least 90% of such partnership’s gross income for every taxable year consists of “qualifying income” and (ii) the partnership would not be required to register under the Investment Company Act of 1940 if it were a U.S. corporation. Qualifying income includes certain interest income, dividends, real property rents, gains from the sale or other disposition of real property, and any gain from the sale or disposition of a capital asset or other property held for the production of income that otherwise constitutes qualifying income.
The general partner of the Partnership intends to manage the affairs of the Partnership and Holding LP so that the Partnership will meet the Qualifying Income Exception in each taxable year. Accordingly, the general partner of the Partnership believes that the Partnership will be treated as a partnership and not as a corporation for U.S. federal income tax purposes.
The remainder of this summary assumes that the Partnership and Holding LP will be treated as partnerships for U.S. federal tax purposes.
Characterization of the Exchangeable Shares
The U.S. federal income tax consequences for holders of Exchangeable Shares relating to the exchange of Exchangeable Shares for LP Units will depend, in part, on whether the Exchangeable Shares are, for U.S. federal income tax purposes, treated as stock of BIPC and not as interests in the Partnership. The general partner of the Partnership intends to take the position and believes that the Exchangeable Shares are properly characterized as stock of BIPC for U.S. federal income tax purposes. However, the treatment of the Exchangeable Shares as stock of BIPC is not free from doubt, as there is no direct authority regarding the proper U.S. federal income tax treatment of securities similar to the Exchangeable Shares. If the Exchangeable Shares are not treated as stock of BIPC and are instead treated as LP Units, then a holder of Exchangeable Shares generally would be expected to be taxed in the same manner as a holder of LP Units. The remainder of this summary assumes that the Exchangeable Shares will be treated as stock of BIPC for U.S. federal income tax purposes.
Consequences to U.S. Holders
Exchange of Exchangeable Shares. Subject to the discussion below under the headings “—Exercise of the Partnership Call Right” and “—Passive Foreign Investment Company Considerations”, a U.S. Holder generally will recognize capital gain or loss upon an exchange at the request of the holder (other than an exchange that is treated as a distribution, as discussed below) of the Exchangeable Shares for LP Units equal to the difference between the amount realized upon the exchange and such holder’s adjusted tax basis in the Exchangeable Shares so exchanged. The amount realized will equal the amount of cash, if any, plus the fair market value of the LP Units received. Any such capital gain or loss will be long-term capital gain or loss if such holder’s holding period for the Exchangeable Shares exceeds one year at the time of the exchange. Gain or loss recognized by a U.S. Holder generally will be treated as U.S.-source gain or loss for foreign tax credit limitation purposes. Long-term capital gains of non-corporate U.S. Holders generally are taxed at preferential rates. The deductibility of capital losses is subject to limitations.
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The U.S. federal income tax consequences described in the preceding paragraph should also apply to a U.S. Holder (i) whose exchange request is satisfied by the delivery of cash or LP Units by Brookfield pursuant to the Rights Agreement or (ii) whose exchange request is satisfied by the delivery of cash by the Partnership pursuant to the exercise of the Partnership Call Right. For the U.S. federal income tax consequences to a U.S. Holder whose exchange request is satisfied by the delivery of LP Units pursuant to the Partnership’s exercise of the Partnership Call Right, see the discussion below under the heading “—Exercise of the Partnership Call Right”. The U.S. federal income tax consequences to a U.S. Holder whose exchange request is satisfied by the delivery of LP Units by BIPC is described in the following paragraph.
An exchange of Exchangeable Shares satisfied by BIPC will result in the recognition of gain or loss by a U.S. Holder, as described above, if such exchange is (i) in “complete redemption” of the U.S. Holder’s equity interest in BIPC (within the meaning of Section 302(b)(3) of the U.S. Internal Revenue Code), (ii) a “substantially disproportionate” redemption of stock (within the meaning of Section 302(b)(2) of the U.S. Internal Revenue Code), or (iii) “not essentially equivalent to a dividend” (within the meaning of Section 302(b)(1) of the U.S. Internal Revenue Code). In determining whether any of these tests has been met with respect to the exchange of the Shares, you may be required to take into account not only the Exchangeable Shares and other equity interests in BIPC that you actually own but also other equity interests in BIPC that you constructively own within the meaning of Section 318 of the U.S. Internal Revenue Code. If you own (actually or constructively) only an insubstantial percentage of the total equity interests in BIPC and exercise no control over BIPC’s corporate affairs, you may be entitled to sale or exchange treatment on an exchange of the Exchangeable Shares if you experience a reduction in your equity interest in BIPC (taking into account any constructively owned equity interests) as a result of the exchange.
If you meet none of the alternative tests of Section 302(b) of the U.S. Internal Revenue Code, the exchange will be treated as a distribution with respect to Exchangeable Shares. Subject to the discussion below under the heading “—Passive Foreign Investment Company Considerations”, the gross amount of a distribution paid to a U.S. Holder with respect to Exchangeable Shares (including any amounts withheld to pay Canadian withholding taxes) would be included in such holder’s gross income as a dividend to the extent paid out of BIPC’s current or accumulated earnings and profits (as determined under U.S. federal income tax principles). To the extent that the amount of such distribution exceeds BIPC’s current and accumulated earnings and profits, it would be treated first as a tax-free return of a U.S. Holder’s tax basis in its Exchangeable Shares, and to the extent the amount of such distribution exceeds such U.S. Holder’s tax basis, the excess would be taxed as capital gain. In the event that the exchange is properly treated as a distribution, the amount of the distribution will be equal to the amount of cash, if any, and the fair market value of the LP Units received. Dividends received by non-corporate U.S. Holders may be subject to tax at preferential rates applicable to long-term capital gains, provided certain conditions are met.
Because the determination as to whether any of the alternative tests of Section 302(b) of the U.S. Internal Revenue Code is satisfied with respect to any particular U.S. Holder of Exchangeable Shares will depend upon the facts and circumstances as of the time the determination is made, each U.S. Holder should consult its own tax advisor regarding the tax treatment of the exchange of Exchangeable Shares for LP Units, including the calculation of such holder’s tax basis in any remaining Exchangeable Shares in the event the exchange of Exchangeable Shares for LP Units is treated as a distribution.
Exercise of the Partnership Call Right. The Partnership has the right to acquire Exchangeable Shares directly from a holder under certain circumstances in exchange for LP Units or cash (the “Partnership Call Right”). For the U.S. federal income tax consequences to a U.S. Holder of the exchange of Exchangeable Shares for cash pursuant to the exercise of the Partnership Call Right, see the discussion above under “—Exchange of Exchangeable Shares”. The U.S. federal income tax consequences to a U.S. Holder of the exchange of Exchangeable Shares for LP Units pursuant to the exercise of the Partnership Call Right will depend in part on whether the exchange qualifies as tax-free under Section 721(a) of the U.S. Internal Revenue Code. For the exchange to so qualify, the Partnership (i) must be classified as a partnership and not as an association or publicly
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traded partnership taxable as a corporation for U.S. federal income tax purposes and (ii) must not be treated as an investment company for purposes of Section 721(b) of the U.S. Internal Revenue Code. With respect to the classification of the Partnership as a partnership, see the discussion above under “—Partnership Status of the Partnership and Holding LP”.
Section 721(b) of the U.S. Internal Revenue Code provides that Section 721(a) of the U.S. Internal Revenue Code will not apply to gain realized on a transfer of property to a partnership which would be treated as an investment company (within the meaning of Section 351 of the U.S. Internal Revenue Code) if the partnership were incorporated. Under Section 351 of the U.S. Internal Revenue Code and the Treasury Regulations thereunder, a transfer of property will be considered a transfer to an investment company only if (i) the transfer results, directly or indirectly, in “diversification” of the transferor’s interests, and (ii) the transferee is a regulated investment company, a real estate investment trust, or a corporation more than 80% of the value of whose assets are held for investment and (subject to certain exclusions) are stock or securities, as defined in Section 351(e) of the U.S. Internal Revenue Code. For purposes of this determination, the stock and securities of a corporate subsidiary are disregarded and the parent corporation is treated as owning its ratable share of the subsidiary’s assets if the parent corporation owns 50% or more of the subsidiary corporation’s stock by voting power or value. The Treasury Regulations also provide that whether an entity is an investment company ordinarily will be determined by reference to the circumstances in existence immediately after the transfer in question. However, where circumstances change thereafter pursuant to a plan in existence at the time of the transfer, this determination will be made by reference to the later circumstances.
Based on the holders’ rights in the event of the liquidation or dissolution of BIPC (or the Partnership) and the terms of the Exchangeable Shares, which are intended to provide an economic return equivalent to the economic return on the LP Units (including identical distributions), and taking into account the expected relative values of the Partnership’s assets and its ratable share of the assets of its subsidiaries for the foreseeable future, the general partner of the Partnership currently does not expect a U.S. Holder’s exchange of Exchangeable Shares for LP Units pursuant to the Partnership’s exercise of the Partnership Call Right to be treated as a transfer of property to an investment company within the meaning of Section 721(b) of the U.S. Internal Revenue Code. Thus, the general partner of the Partnership currently expects such exchange to qualify as tax-free under Section 721(a) of the U.S. Internal Revenue Code. However, no definitive determination can be made as to whether any such future exchange will qualify as tax-free under Section 721(a) of the U.S. Internal Revenue Code, as this will depend on the facts and circumstances at the time of the exchange. Many of these facts and circumstances are not within the control of the Partnership, and no assurance can be provided as to the position, if any, taken by the general partner of the Partnership with regard to the U.S. federal income tax treatment of any such exchange. Nor can any assurance be given that the IRS will not assert, or that a court would not sustain, a position contrary to any future position taken by the Partnership. If the Partnership were an investment company immediately following the exchange of Exchangeable Shares for LP Units pursuant to the exercise of the Partnership Call Right, and such exchange were to result in diversification of interests with respect to a U.S. Holder, then Section 721(a) of the U.S. Internal Revenue Code would not apply with respect to such holder, and such holder would be treated as if such holder had sold in a taxable transaction such holder’s Exchangeable Shares to the Partnership for cash in an amount equal to the value of the LP Units received.
Even if a U.S. Holder’s transfer of Exchangeable Shares in exchange for LP Units pursuant to the Partnership’s exercise of the Partnership Call Right qualifies as tax-free under Section 721(a) of the U.S. Internal Revenue Code, the general partner of the Partnership currently expects for the Partnership and Holding LP to immediately undertake subsequent transfers of such Exchangeable Shares that would result in the allocation to such U.S. Holder of any gain realized under Section 704(c)(1) of the U.S. Internal Revenue Code. Under this provision, if appreciated property is contributed to a partnership, the contributing partner must recognize any gain that was realized but not recognized for U.S. federal income tax purposes with respect to the property at the time of the contribution (referred to as “built-in gain”) if the partnership sells such property (or otherwise transfers such property in a taxable exchange) at any time thereafter or distributes such property to another partner within seven years of the contribution in a transaction that does not otherwise result in the recognition of
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built-in gain by the partnership. If Section 704(c)(1) of the U.S. Internal Revenue Code applies with respect to a U.S. Holder, and such holder fails to disclose to the Partnership its basis in Exchangeable Shares exchanged for LP Units pursuant to the exercise of the Partnership Call Right, then, solely for the purpose of allocating items of income, gain, loss, or deduction under Section 704(c) of the U.S. Internal Revenue Code, the general partner of the Partnership intends to use a reasonable method to estimate such holder’s basis in the Exchangeable Shares exchanged for LP Units pursuant to the exercise of the Partnership Call Right. To ensure compliance with Section 704(c) of the U.S. Internal Revenue Code, such estimated basis could be lower than a U.S. Holder’s actual basis in its Exchangeable Shares. As a result, the amount of gain reported by the Partnership to the IRS with respect to such U.S. Holder in connection with such subsequent transfers could be greater than the correct amount.
If, contrary to the current expectations of the general partner of the Partnership, Section 704(c)(1) does not apply as a result of any such subsequent transfers by the Partnership or Holding LP of Exchangeable Shares transferred by a U.S. Holder for LP Units in an exchange qualifying as tax-free under Section 721(a) of the U.S. Internal Revenue Code, then such U.S. Holder could, nonetheless, be required to recognize part or all of the built-in gain in its Exchangeable Shares deferred as a result of such exchange under other provisions of the U.S. Internal Revenue Code. Under Section 737 of the U.S. Internal Revenue Code, such U.S. Holder could be required to recognize built-in gain if the Partnership were to distribute any property of the Partnership other than money or Exchangeable Shares to such former holder of Exchangeable Shares within seven years of exercise of the Partnership Call Right. Under Section 707(a) of the U.S. Internal Revenue Code, such U.S. Holder could be required to recognize built-in gain if the Partnership were to make distributions (other than “operating cash flow distributions”, unless another exception were to apply) to such U.S. Holder within two years of exercise of the Partnership Call Right.
If Section 721(a) of the U.S. Internal Revenue Code applies to a U.S. Holder’s exchange of Exchangeable Shares for LP Units pursuant to the exercise of the Partnership Call Right by the Partnership and, contrary to the current expectations of the general partner of the Partnership, none of the special provisions (including Section 704(c)(1) of the U.S. Internal Revenue Code) described in the two preceding paragraphs applies, then such U.S. Holder generally should not recognize gain or loss with respect to Exchangeable Shares treated as contributed to the Partnership in exchange for LP Units, except as described below under the heading “—Passive Foreign Investment Company Considerations”. The aggregate tax basis of the LP Units received by such U.S. Holder pursuant to the Partnership Call Right would be the same as the aggregate tax basis of the Exchangeable Shares (or single undivided portion thereof) exchanged therefor, increased by such holder’s share of the Partnership’s liabilities, if any. The holding period of the LP Units received in exchange for Exchangeable Shares would include the holding period of the Exchangeable Shares surrendered in exchange therefor. A U.S. Holder who acquired different blocks of Exchangeable Shares at different times or different prices should consult its own tax advisor regarding the manner in which gain or loss should be determined in such holder’s particular circumstances and such holder’s holding period in LP Units received in exchange for Exchangeable Shares.
For a general discussion of the U.S. federal income tax consequences to a U.S. Holder of owning and disposing of LP Units received in exchange for Exchangeable Shares, see the discussion in Item 10.E “Taxation—Certain Material U.S. Federal Income Tax Considerations” in the Annual Report. The U.S. federal income tax consequences of exchanging Exchangeable Shares for LP Units are complex, and each U.S. Holder should consult its own tax advisor regarding such consequences in light of such holder’s particular circumstances.
Passive Foreign Investment Company Considerations. Certain adverse tax consequences could apply to a U.S. Holder if BIPC is treated as a passive foreign investment company (“PFIC”) for any taxable year during which the U.S. Holder holds Exchangeable Shares. A non-U.S. corporation, such as BIPC, will be classified as a PFIC for U.S. federal income tax purposes for any taxable year in which, after applying certain look-through rules, either (i) 75% or more of its gross income for such year consists of certain types of “passive” income or (ii) 50% or more of the value of its assets (determined on the basis of a quarterly average) during such year produce
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or are held for the production of passive income. Passive income generally includes dividends, interest, royalties, rents, annuities, net gains from the sale or exchange of property producing such income, and net foreign currency gains.
Based on its expected income, assets, and activities, BIPC does not expect to be a PFIC for the current taxable year, nor does it expect to become a PFIC in 2021 or for the foreseeable future. However, the determination of whether BIPC is or will be a PFIC must be made annually as of the close of each taxable year. Because PFIC status depends upon the composition of BIPC’s income and assets from time to time, there can be no assurance that BIPC will not be considered a PFIC for any taxable year, or that the IRS or a court will agree with BIPC’s determination as to its PFIC status.
If BIPC were a PFIC for any taxable year during which a U.S. Holder held Exchangeable Shares, then any gain recognized by such U.S. Holder upon the sale or other taxable disposition of the Exchangeable Shares (such as gain from a taxable exchange of Exchangeable Shares for LP Units) generally would be allocated ratably over the U.S. Holder’s holding period for the Exchangeable Shares. The amounts allocated to the taxable year of the sale or other taxable disposition and to any year before BIPC became a PFIC would be taxed as ordinary income. The amount allocated to each other taxable year would be subject to tax at the highest rate in effect for individuals or corporations, as appropriate, for that taxable year, and an interest charge would be imposed on the tax on such amount. Further, to the extent that any distribution received by a U.S. Holder on its Exchangeable Shares were to exceed 125% of the average of the annual distributions on the Exchangeable Shares received during the preceding three years or the U.S. Holder’s holding period, whichever is shorter, that distribution would be subject to taxation in the same manner as gain, described immediately above. Similar rules would apply with respect to any lower-tier PFICs treated as owned indirectly by a U.S. Holder through such holder’s ownership of Exchangeable Shares.
Certain elections may be available to U.S. Holders to mitigate some of the adverse tax consequences resulting from PFIC treatment. If you were to elect to treat your interest in BIPC as a “qualified electing fund” (“QEF election”) for the first year you were treated as holding such interest, then in lieu of the tax consequences described in the paragraph immediately above, you would be required to include in income each year a portion of the ordinary earnings and net capital gains of our company, even if not distributed to you. A QEF election must be made by you on an entity-by-entity basis. To make a QEF election, you must, among other things, (i) obtain a PFIC annual information statement and (ii) prepare and submit IRS Form 8621 with your annual income tax return. To the extent reasonably practicable, BIPC intends to timely provide you with information related to its PFIC status and any other subsidiary that it is able to identify as a PFIC with respect to U.S. Holders, including information necessary to make a QEF election with respect to each such entity.
In the case of a PFIC that is a publicly traded foreign company, and in lieu of making a QEF election, an election may be made to “mark to market” the stock of such publicly traded foreign company on an annual basis. Pursuant to such an election, you would include in each year as ordinary income the excess, if any, of the fair market value of such stock over its adjusted basis at the end of the taxable year. No assurance can be provided that BIPC or any of its subsidiaries will qualify as PFICs that are publicly traded or that a mark-to-market election will be available for any such entity.
Subject to certain exceptions, a U.S. person who directly or indirectly owns an interest in a PFIC generally is required to file an annual report with the IRS, and the failure to file such report could result in the imposition of penalties on such U.S. person and in the extension of the statute of limitations with respect to federal income tax returns filed by such U.S. person. The application of the PFIC rules to U.S. Holders is uncertain in certain respects, and the PFIC rules remain subject to recently proposed Treasury Regulations yet to be made final. Each U.S. Holder should consult its own tax advisor regarding the application of the PFIC rules, including the foregoing filing requirements and the recently proposed Treasury Regulations, as well as the potential consequences of having made any available election under the PFIC rules, with regard to such holder’s exchange of Exchangeable Shares for LP Units.
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Additional Tax on Net Investment Income. Certain U.S. Holders that are individuals, estates or trusts are subject to a 3.8% tax on all or a portion of their “net investment income”, which may include all or a portion of their dividend income and net gains from the disposition of Exchangeable Shares. Each U.S. Holder that is an individual, estate or trust should consult its tax advisors regarding the applicability of this tax to its income and gains in respect of Exchangeable Shares.
Foreign Financial Asset Reporting. Certain U.S. Holders are required to report information relating to an interest in the Exchangeable Shares, subject to certain exceptions (including an exception for shares held in accounts maintained by certain financial institutions) by filing IRS Form 8938 (Statement of Specified Foreign Financial Assets) with their U.S. federal income tax returns. Significant penalties may apply for the failure to satisfy these reporting obligations. U.S. Holders are urged to consult their own tax advisors regarding their information reporting obligations, if any, with respect to their exchange of Exchangeable Shares for LP Units.
Information Reporting and Backup Withholding. Distributions on Exchangeable Shares made to a U.S. Holder and proceeds from the sale or other disposition of Exchangeable Shares may, under certain circumstances, be subject to information reporting and backup withholding, unless the holder provides proof of an applicable exemption or, in the case of backup withholding, furnishes its taxpayer identification number and otherwise complies with all applicable requirements of the backup withholding rules. Backup withholding is not an additional tax and generally will be allowed as a refund or credit against the holder’s U.S. federal income tax liability, provided that the required information is timely furnished to the IRS.
Consequences to Non-U.S. Holders
The exchange of Exchangeable Shares for LP Units by a Non-U.S. Holder generally will not be subject to U.S. federal income tax. Special rules may apply to any Non-U.S. Holder (i) that has an office or fixed place of business in the United States; (ii) that is present in the United States for 183 days or more in a taxable year; or (iii) that is (a) a former citizen or long-term resident of the United States, (b) a foreign insurance company that is treated as holding a partnership interest in the Partnership in connection with its U.S. business, (c) a PFIC, (d) a controlled foreign corporation, or (e) a corporation that accumulates earnings to avoid U.S. federal income tax. Non-U.S. Holders should consult their own tax advisors regarding the application of these special rules.
THE FOREGOING DISCUSSION IS NOT INTENDED AS A SUBSTITUTE FOR CAREFUL TAX PLANNING. THE TAX MATTERS RELATING TO THE PARTNERSHIP, LP UNITHOLDERS, BIPC, AND BIPC SHAREHOLDERS ARE COMPLEX AND ARE SUBJECT TO VARYING INTERPRETATIONS. MOREOVER, THE EFFECT OF EXISTING INCOME TAX LAWS, THE MEANING AND IMPACT OF WHICH IS UNCERTAIN, AND OF PROPOSED CHANGES IN INCOME TAX LAWS WILL VARY WITH THE PARTICULAR CIRCUMSTANCES OF EACH HOLDER, AND IN REVIEWING THIS PROSPECTUS THESE MATTERS SHOULD BE CONSIDERED. EACH HOLDER SHOULD CONSULT ITS OWN TAX ADVISOR WITH RESPECT TO THE U.S. FEDERAL, STATE, LOCAL, AND OTHER TAX CONSEQUENCES OF THE EXCHANGE OF EXCHANGEABLE SHARES FOR LP UNITS.
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MATERIAL CANADIAN FEDERAL INCOME TAX CONSIDERATIONS
The following describes the material Canadian federal income tax consequences with respect to the exchange of Exchangeable Shares for LP Units as described in this prospectus as of the date hereof by a holder who is the beneficial owner of such Exchangeable Shares and, who at all relevant times, for the purposes of the Income Tax Act (Canada) (the “Tax Act”), (i) deals at arm’s length and is not affiliated with BIPC and the Partnership and (ii) holds the Exchangeable Shares as capital property (a “Holder”). Generally, the Exchangeable Shares will be considered to be capital property to a Holder provided the Holder does not hold such shares in the course of carrying on a business of trading or dealing in securities and has not acquired them in one or more transactions considered to be an adventure or concern in the nature of trade.
This summary is based upon the facts as set out in this prospectus, the current provisions of the Tax Act and the regulations thereunder, and the current administrative policies and assessing practices of the Canada Revenue Agency (the “CRA”) published in writing prior to the date hereof. This summary takes into account all specific proposals to amend the Tax Act and the regulations thereunder publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof (the “Proposed Amendments”), and assumes that all Proposed Amendments will be enacted in the form proposed. However, no assurances can be given that the Proposed Amendments will be enacted as proposed, or at all. This summary does not otherwise take into account or anticipate any changes in law or administrative policy or assessing practice whether by legislative, administrative or judicial action or decision, nor does it take into account tax legislation or considerations of any province, territory or foreign jurisdiction, which may differ from those discussed herein.
This summary should be read in conjunction with the discussion of the material Canadian federal income tax considerations associated with the holding and disposition of LP Units set forth in Item 10.E “Taxation—Certain Material Canadian Federal Income Tax Considerations” and Item 3.D “Risk Factors—Risks Related to Taxation” in the Partnership’s most recent Annual Report. The following discussion is limited as described in Item 10.E “Taxation—Certain Material Canadian Federal Income Tax Considerations” in the Partnership’s most recent Annual Report and as described herein.
This summary assumes that at all relevant times (i) the Exchangeable Shares will be listed on a “designated stock exchange” in Canada for the purposes of the Tax Act (which currently includes the TSX), (ii) not more than 50% of the fair market value of an Exchangeable Share or LP Unit is attributable to one or more properties each of which is real property in Canada, a “Canadian resource property” or a “timber resource property”, and (iii) neither the Partnership nor BIPC is a “tax shelter” or a “tax shelter investment”, each as defined in the Tax Act. No assurance can be given in relation to the foregoing.
BIPC currently qualifies as a “mutual fund corporation” as defined in the Tax Act. BIPC filed the necessary election under the Tax Act so that it will be deemed to be a “public corporation” effective from the beginning of its first taxation year, and therefore qualified as a “mutual fund corporation” throughout its first taxation year. BIPC intends to continue to qualify as a “mutual fund corporation” throughout each taxation year in which Exchangeable Shares are outstanding and this summary assumes that will be the case.
This summary is not applicable to a holder: (i) an interest in which would be a “tax shelter investment” or who holds or acquires Exchangeable Shares or LP Units as a “tax shelter investment”, (ii) that is a “financial institution” for purposes of the “mark-to-market property” rules, (iii) that reports its “Canadian tax results” in a currency other than Canadian currency, (iv) that has entered or will enter into a “derivative forward agreement” in respect of the Exchangeable Shares or the LP Units, each as defined in the Tax Act, or (v) that is a corporation resident in Canada and is, or becomes (or does not deal at arm’s length for purposes of the Tax Act with a corporation that is or becomes) as part of a transaction or event or series of transactions or events that includes the acquisition of Exchangeable Shares, controlled by a non-resident person or a group of non-resident persons not dealing with each other at arm’s length for purposes of section 212.3 of the Tax Act. Furthermore, this summary is not applicable to a holder that is a “controlling corporation” of BIPC (for purposes of subsection
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191(1) of the Tax Act), a person with whom the controlling corporation does not deal at arm’s length or a partnership or trust of which the controlling corporation or person with whom the controlling corporation does not deal at arm’s length is a member or beneficiary for purposes of the Tax Act. Such holders should consult their own tax advisors.
This summary is of a general nature only and is not, and is not intended to be, nor should it be construed to be, legal or tax advice to any particular Holder, and no representation concerning the tax consequences to any particular Holder or prospective Holder are made. This summary is not exhaustive of all Canadian federal income tax considerations. Accordingly, prospective Holders should consult their own tax advisors having regard to their particular circumstances.
Generally, for purposes of the Tax Act, all amounts relating to the disposition of Exchangeable Shares (including on an exchange for LP Units at the request of a Holder) must be expressed in Canadian currency. 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.
Taxation of Holders Resident in Canada
The following portion of the summary is generally applicable to a Holder who, at all relevant times, is resident or deemed to be resident in Canada under the Tax Act (a “Resident Holder”). Certain Resident Holders may be entitled to make, or may have already made, the irrevocable election permitted by subsection 39(4) of the Tax Act the effect of which may be to deem any Exchangeable Shares (and all other “Canadian securities”, as defined in the Tax Act) owned by such Resident Holder to be capital property in the taxation year in which the election is made and in all subsequent taxation years. Resident Holders whose Exchangeable Shares might not otherwise be considered to be capital property should consult their own tax advisors concerning this election.
Exchange of Exchangeable Shares. A Resident Holder who disposes of, or who is deemed to dispose of, Exchangeable Shares (including on an exchange for LP Units at the request of the Resident Holder), will realize a capital gain (or sustain a capital loss) equal to the amount by which the proceeds of disposition exceed (or are exceeded by) the aggregate of the Resident Holder’s adjusted cost base of such shares and any reasonable costs of disposition.
In general, one-half of a capital gain realized by a Resident Holder in a taxation year must be included in income as a “taxable capital gain”. One-half of a capital loss realized by a Resident Holder in a taxation year generally must be deducted as an “allowable capital loss” against taxable capital gains realized in the year. Allowable capital losses in excess of taxable capital gains realized in a taxation year may be carried back and deducted in any of the three preceding taxation years or carried forward and deducted in any subsequent taxation year against net taxable capital gains realized in such years in accordance with the provisions of the Tax Act.
The amount of any capital loss realized by a Resident Holder that is a corporation on the disposition of Exchangeable Shares may be reduced by the amount of any dividends received or deemed to be received by the Resident Holder on such Exchangeable Shares to the extent and under the circumstances described in the Tax Act. Similar rules may apply where Exchangeable Shares are owned by a partnership or trust of which a corporation, partnership or trust is a member or beneficiary. Such Resident Holders should consult their own advisors.
A taxable capital gain realized by a Resident Holder that is an individual (other than certain trusts) may give rise to a liability for alternative minimum tax.
The cost to a Resident Holder of an LP Unit received on the exchange of an Exchangeable Share will equal the fair market value of the Exchangeable Share for which it was exchanged at the time of the Exchange. The
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adjusted cost base to a Resident Holder of LP Units at any time will be determined by averaging the cost of such LP Units with the adjusted cost base of any other LP Units owned by the Resident Holder as capital property at the time.
For a description of the Canadian federal income tax considerations of holding and disposing of Units, please see the section titled “Certain Material Canadian Federal Income Tax Considerations” in the Partnership’s Annual Report.
Additional Refundable Tax. A Resident Holder that is throughout its taxation year a “Canadian-controlled private corporation” (as defined in the Tax Act) will be liable to pay an additional refundable tax on its “aggregate investment income”, which includes an amount in respect of net taxable capital gains.
Taxation of Holders Not Resident in Canada
The following portion of the summary is generally applicable to a Holder who, at all relevant times, for the purposes of the Tax Act, is not, and is not deemed to be, resident in Canada and does not use or hold the Exchangeable Shares in a business carried on in Canada (a “Non-Resident Holder”). Special rules, which are not discussed in this summary, may apply to a Non-Resident Holder that is an insurer that carries on an insurance business in Canada and elsewhere.
Exchange of Exchangeable Shares. A Non-Resident Holder will not be subject to tax under the Tax Act on a disposition or deemed disposition of Exchangeable Shares (including on an exchange for LP Units at the request of the Non-Resident Holder) unless the Exchangeable Shares are “taxable Canadian property” of the Non-Resident Holder for purposes of the Tax Act at the time of the disposition or deemed disposition and the Non-Resident Holder is not entitled to relief under an applicable income tax convention between Canada and the country in which the Non-Resident Holder is resident.
Generally, the Exchangeable Shares will not constitute “taxable Canadian property” of a Non-Resident Holder at a particular time provided that BIPC is a mutual fund corporation unless, at any particular time during the 60-month period that ends at 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 BIPC 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 (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 Exchangeable Shares was derived, directly or indirectly, 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, property described in any of (b)(i) to (iii), whether or not the property exists. A Non-Resident Holder of Exchangeable Shares that also holds one or more LP Units will generally meet the condition in (a) above; however, BIPC does not expect that the condition in (b) will be met.
Notwithstanding the foregoing, in certain circumstances set out in the Tax Act, the Exchangeable Shares may be deemed to be “taxable Canadian property.” Non-Resident Holders for whom Exchangeable Shares may constitute “taxable Canadian property” should consult their own tax advisors.
The cost to a Non-Resident Holder of an LP Unit received on the exchange of an Exchangeable Share will equal the fair market value of the Exchangeable Share for which it was exchanged at the time of the Exchange. The adjusted cost base to a Non-Resident Holder of LP Units at any time will be determined by averaging the cost of such LP Units with the adjusted cost base of any other LP Units owned by the Non-Resident Holder as capital property at the time.
For a description of the Canadian federal income tax considerations of holding and disposing of Units, please see the section titled “Certain Material Canadian Federal Income Tax Considerations” in the Partnership’s Annual Report.
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The validity of the securities offered hereby and certain other legal matters with respect to the laws of Bermuda will be passed upon for us by Appleby (Bermuda) Limited.
The financial statements incorporated in this prospectus by reference from the Partnership’s Annual Report on Form 20-F and the effectiveness of the Partnership’s internal control over financial reporting have been audited by Deloitte LLP, an independent registered public accounting firm, as stated in their reports, which are incorporated herein by reference. Such financial statements have been so incorporated in reliance upon the reports of such firm given upon 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 and periodic reporting requirements of the Exchange Act applicable to “foreign private issuers” (as such term is defined in Rule 405 under the Securities Act) and will fulfill the obligations with respect to those requirements by filing or furnishing reports with the SEC. In addition, we are required to file documents filed with the SEC with the securities regulatory authority in each of the provinces and territories of Canada. The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding us 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 we file 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. This information is also available on our website at https://bip.brookfield.com. Throughout the period of distribution, copies of these materials will also be available for inspection during normal business hours at the offices of our service provider at Brookfield Place, 250 Vesey Street, 15th Floor, New York, New York, United States 10281.
As a foreign private issuer, we are exempt from the rules under the Exchange Act related to the furnishing and content of proxy statements, and our officers, directors and principal unitholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act relating to their purchases and sales of Units. In addition, we are not required under the Exchange Act to file annual, quarterly and current reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act. However, we intend to file with the SEC, as soon as practicable, and in any event within 120 days after the end of each fiscal year, an annual report on Form 20-F containing financial statements audited by an independent public accounting firm. We also intend to furnish quarterly reports on Form 6-K containing unaudited interim financial information for each of the first three quarters of each fiscal year.
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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 have been filed with the securities regulatory authorities in Canada and filed with, or furnished to, the SEC, are specifically incorporated by reference into, and form an integral part of, this prospectus:
| • | Our Annual Report on Form 20-F for the fiscal year ended December 31, 2019, filed with the SEC on February 28, 2020 (the “Annual Report”), including the description of our LP Units and any amendment or report filed for purposes of updating such description, is hereby incorporated by reference in this prospectus; and |
| • | Our reports on Form 6-K, furnished to the SEC on April 2, 2020 (Exhibit 99.2 only), May 13, 2020 (exhibit 99.1 only), August 13, 2020 (exhibit 99.1 only) and September 21, 2020 (Exhibits 3.1 and 3.2, only). |
In addition, all subsequent annual reports filed by us with the SEC on Form 20-F and any current reports on 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, shall be deemed to be incorporated by reference into this prospectus as of the date of the filing or furnishing of such documents. We shall undertake to provide without charge to each person to whom a copy of this prospectus has been delivered, upon the written or oral request of any such person to us, a copy of any or all of the documents referred to above that have been or may be incorporated into this prospectus by reference, including exhibits to such documents. Requests for such copies should be directed to:
Brookfield Infrastructure Partners L.P.
Investor Relations
73 Front Street
5th Floor
Hamilton HM 12
Bermuda
Attn: Investor Relations and Communications
E-mail: bip.enquiries@brookfield.com
Tel: +1 441 294 3309
Any statement contained in this prospectus or in a document incorporated or deemed to be incorporated by reference in this prospectus shall be deemed to be modified or superseded, for the purposes of this prospectus, to the extent that a statement contained in this prospectus or in any other subsequently filed or furnished document which also is or is deemed to be incorporated by reference in this prospectus, modifies or supersedes that statement. The modifying or superseding statement need not state that it has modified or superseded a prior statement or include any other information set forth in the document that it modifies or supersedes. The making of a modifying or superseding statement shall not be deemed to be an admission for any purposes that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus.
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SERVICE OF PROCESS AND ENFORCEABILITY OF CIVIL LIABILITIES
The Partnership is formed under the laws of Bermuda. A substantial portion of the Partnership’s assets are located outside of Canada and the United States and certain of the directors of our general partner, as well as certain of the experts named in this prospectus, may be residents of jurisdictions outside of Canada and the United States. The Partnership has expressly submitted to the jurisdiction of the Ontario courts and has appointed an attorney for service of process in Ontario and in the United States. However, it may be difficult for investors to effect service within Ontario or elsewhere in Canada or the United States upon those directors and experts who are not residents of Canada or the United States, as applicable. Investors are advised that it may also not be possible for investors to enforce judgments obtained in Canada or the United States against any person or company that is incorporated, continued or otherwise organized under the laws of a foreign jurisdiction or resides outside of Canada or the United States, even if the party has appointed an agent for service of process. Furthermore, it may be difficult to realize upon or enforce in Canada or the United States any judgment of a court of Canada or the United States against the Partnership, the directors of our general partner or the experts named in this prospectus since a substantial portion of the Partnership’s assets and the assets of such persons may be located outside of Canada and the United States. The Partnership has been advised by counsel that there is no treaty in force between Canada and Bermuda or the United States and Bermuda providing for the reciprocal recognition and enforcement of judgments in civil and commercial matters. As a result, whether a Canadian or U.S. judgment would be capable of being the subject of enforcement proceedings in Bermuda against the Partnership, the directors of our general partner or the experts named in this prospectus depends on whether the Canadian or U.S. court that entered the judgment is recognized by a Bermuda court as having jurisdiction over the Partnership, the directors of our general partner or the experts named in this prospectus, as determined by reference to Bermuda conflict of law rules. The courts of Bermuda would issue a valid, final and conclusive judgment in personam in respect of a judgment obtained in a Canadian or U.S. court pursuant to which a sum of money is payable (other than a sum of money payable in respect of multiple damages, taxes or other charges of a like nature or in respect of a fine or other penalty) as long as (i) the court had proper jurisdiction over the parties subject to the judgment according to Bermuda’s conflicts of law principles; (ii) the court did not contravene the rules of natural justice of Bermuda; (iii) the judgment was not obtained by fraud; (iv) the enforcement of the judgment would not be contrary to the public policy of Bermuda; and (v) there is due compliance with the applicable common law rules in Bermuda governing the enforcement of a foreign judgment.
In addition to and irrespective of jurisdictional issues, Bermuda courts will not enforce a provision of Canadian or U.S. federal securities laws that is either penal in nature or contrary to public policy. It is the advice of the Partnership’s Bermuda counsel that an action brought pursuant to a public or penal law, the purpose of which is the enforcement of a sanction, power or right at the instance of the state in its sovereign capacity, is unlikely to be enforced by a Bermuda court. Specified remedies available under the laws of Canadian or U.S. jurisdictions, including specified remedies under Canadian securities laws or U.S. federal securities laws, would not likely be available under Bermuda law or enforceable in a Bermuda court, as they may be contrary to Bermuda public policy. Further, no claim may be brought in Bermuda against the Partnership, the directors of our general partner or the experts named in this prospectus in the first instance for a violation of Canadian securities laws or U.S. federal securities laws because these laws have no extraterritorial application under Bermuda law and do not have force of law in Bermuda.
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The following are the estimated expenses incurred or expected to be incurred in connection with the exchanges of Exchangeable Shares for LP Units being registered under the registration statement of which this prospectus forms a part, all of which will be paid by us.
| SEC registration fee |
$ | 181,830.33 | ||
| Trustee and transfer agent fees |
$ | 20,000.00 | ||
| Legal fees and expenses |
$ | 30,000.00 | ||
| Accounting fees and expenses |
$ | 15,000.00 | ||
|
|
|
|||
| Total |
$ | 246,830.33 | ||
|
|
|
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
| Item 8. | INDEMNIFICATION OF DIRECTORS AND OFFICERS. |
The sections of the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2019 entitled “Item 6.A. Directors and Senior Management—Our Master Services Agreement—Indemnification and Limitations on Liability,” “Item 7.B. Related Party Transactions—Indemnification Arrangements,” “Item 10.B. Memorandum and Articles of Association—Description of Our Units, Preferred Units and Our Limited Partnership Agreement—Indemnification; Limitations on Liability,” and “Item 10.B. Memorandum and Articles of Association—Description of the Holding LP’s Limited Partnership Agreement—Indemnification; Limitations on Liability” include disclosure relating to the indemnification of certain of the Registrant’s affiliates and the directors and officers of the Registrant’s general partner and the Registrant’s service provider and are incorporated by reference herein.
| Item 9. | EXHIBITS |
The following exhibits have been filed or incorporated by reference as part of this Registration Statement on Form F-3:
| + | Filed herewith. |
| * | Previously filed. |
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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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Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant 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 on Form F-3 to be signed on its behalf by the undersigned, thereunto duly authorized in Hamilton, Bermuda on September 24, 2020.
| BROOKFIELD INFRASTRUCTURE BROOKFIELD INFRASTRUCTURE | ||
| By: | /s/ Jane Sheere | |
| Name: Jane Sheere | ||
| Title: Secretary | ||
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Jane Sheere, Gregory Morrison, Gregory McConnie, James Bodi, and Anna Knapman-Scott, and each of them, his or her true and lawful attorney-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to sign any related registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agents, full power and authority to do and to perform each and every act and thing required and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agents, or any of them or their substitutes or substitutes, could lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities indicated on September 24, 2020.
| Signature |
Title | |
| /s/ Samuel Pollock Samuel Pollock |
Chief Executive Officer of Brookfield Infrastructure Group L.P. (Principal Executive Officer) | |
| /s/ Bahir Manios Bahir Manios |
Chief Financial Officer of Brookfield Infrastructure Group L.P. (Principal Financial and Accounting Officer) | |
| /s/ Anne Schaumburg Anne Schaumburg |
Chair of the Board, Director | |
| /s/ Jeffrey Blidner Jeffrey Blidner |
Director | |
| /s/ William Cox William Cox |
Director | |
| /s/ Roslyn Kelly Roslyn Kelly |
Director | |
| /s/ Daniel Muñiz Quintanilla Daniel Muñiz Quintanilla |
Director | |
| /s/ Rajeev Vasudeva Rajeev Vasudeva |
Director | |
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AUTHORIZED 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 Infrastructure Partners L.P. in the United States, on this 24th day of September, 2020.
| BROOKFIELD INFRASTRUCTURE US HOLDINGS I CORPORATION | ||
| By: | /s/ Ralph Klatzkin | |
| Name: Ralph Klatzkin | ||
| Title: President | ||
Exhibit 4.2
BROOKFIELD ASSET MANAGEMENT INC.
and
WILMINGTON TRUST, NATIONAL ASSOCIATION
Rights Agent
RIGHTS AGREEMENT
Dated as of March 31, 2020
| TABLE OF CONTENTS | |
| Page | |
| Section 1. Certain Definitions. | 2 |
| Section 2. Appointment of Rights Agent. | 5 |
| Section 3. Secondary Exchange Rights. | 5 |
| Section 4. Satisfaction of Secondary Exchange Rights. | 6 |
| Section 5. Exercise of Rights. | 9 |
| Section 6. Confirmation Procedures. | 9 |
| Section 7. BIP Units Record Date. | 11 |
| Section 8. Collateral Account. | 11 |
| Section 9. Registration of BIP Unit Resales. | 14 |
| Section 10. Concerning BAM. | 14 |
| Section 11. Rights of Action. | 16 |
| Section 12. Concerning the Rights Agent. | 16 |
| Section 13. Merger or Consolidation or Change of Name of Rights Agent. | 17 |
| Section 14. Duties of Rights Agent. | 17 |
| Section 15. Change of Rights Agent. | 20 |
| Section 16. Notices. | 21 |
| Section 17. Supplements and Amendments. | 22 |
| Section 18. Successors. | 22 |
| Section 19. Benefits of this Agreement. | 22 |
| Section 20. Severability. | 22 |
| Section 21. Governing Law; Forum Selection. | 23 |
| Section 22. Counterparts. | 23 |
| Section 23. Descriptive Headings. | 23 |
| Section 24. Administration; Termination. | 23 |
| Section 25. No Waiver; Cumulative Rights. | 24 |
| Section 26. Fractional Units. | 24 |
| Section 27. Book Entry. | 24 |
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RIGHTS AGREEMENT
This Rights Agreement (this "Agreement") is dated as of March 31, 2020 between Brookfield Asset Management Inc., a corporation organized under the laws of Ontario, Canada ("BAM"), and Wilmington Trust, National Association (the "Rights Agent").
WHEREAS, Brookfield Infrastructure Partners L.P. ("BIP") has agreed to distribute class A exchangeable subordinate voting shares (the "Class A Shares") of Brookfield Infrastructure Corporation (the "Company," and together with BIP, "our group") to the holders of BIP Units pursuant to a special distribution (the "Special Distribution"), and additionally to BAM and its subsidiaries (other than entities within our group), and in connection therewith, certain Affiliates of BAM will become service providers to the Company and certain of the Company's Affiliates pursuant to an amendment to the amended and restated master services agreement dated March 13, 2015 among BAM, BIP and others (the "Master Services Agreement"), which amendment will be effective as of the distribution date for the Special Distribution (the "Distribution Date");
WHEREAS, pursuant to the terms of the Company's Articles, each Class A Shareholder will have the right (the "Exchange Right") to require the Company to exchange all or a portion of the Class A Shares held by such Class A Shareholder (such Class A Shares being hereafter referred to as "Subject Class A Shares" and such exchanging Class A Shareholder, the "Exchanging Class A Shareholder") for the BIP Units Amount or the Cash Amount in accordance with the terms and conditions of the Company's Articles;
WHEREAS, BIP may, in its sole and absolute discretion (including by means of a standing resolution adopted by the board of directors of the general partner of BIP, which may be amended or withdrawn at any time) elect to satisfy the Company's Exchange Right obligation and acquire the Subject Class A Shares from such Exchanging Class A Shareholder in exchange for the BIP Units Amount or the Cash Amount, in accordance with the terms and conditions of the Company's Articles;
WHEREAS, BAM is willing to provide for the delivery of the BIP Units Amount or, in its sole election, the Cash Amount to satisfy the Class A Shareholders' Secondary Exchange Right in the event that, in connection with any Subject Class A Shares, (i) the Company has not satisfied its Exchange Right obligation under the Company's Articles by delivering the BIP Units Amount or Cash Amount on the Specified Exchange Date (as hereinafter defined) and (ii) BIP has not, upon its election in its sole and absolute discretion, acquired such Subject Class A Shares from the Exchanging Class A Shareholder in exchange for the delivery of the BIP Units Amount or the Cash Amount pursuant to the Company's Articles on the Specified Exchange Date;
WHEREAS, the Rights Agent desires to serve as agent for the Class A Shareholders with respect to the administration of the Secondary Exchange Rights (as hereinafter defined); and
WHEREAS, BAM and the Rights Agent desire to set forth their rights and obligations with respect to the Secondary Exchange Rights and the delivery of the BIP Units Amount or, at BAM's sole election, the Cash Amount in satisfaction of the Secondary Exchange Rights.
NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions.
For purposes of this Agreement, the following terms have the meanings indicated:
"Affiliate" shall have the meaning ascribed thereto in Rule 12b-2 of the General Rules and Regulations under the Exchange Act, as in effect on the date of this Agreement, including, for the avoidance of doubt, any future Affiliates.
"Agreement" shall have the meaning set forth in the recitals.
"Applicable Procedures" means, with respect to any transfer of securities that are held through DTC or another Depositary, the rules and procedures of DTC or such other Depositary, as applicable, that apply to such transfer or exchange.
"BAM" shall have the meaning set forth in the recitals.
"BIP" shall have the meaning set forth in the recitals.
"BIP Unit" shall mean a limited partnership interest in BIP representing a fractional part of all the limited partner interests in BIP as outstanding on the date hereof (or any other class of equity security of BIP into which the limited partnership interests in BIP may be converted after the date hereof), which is designated as a "Unit", and shall include any limited partnership interest or other equity interest of BIP or any successor to BIP into which such BIP Unit is converted or for which such Unit is exchanged.
"BIP Unit Convertible" shall mean any security, other than the Class A Shares, convertible into or redeemable for BIP Unit(s), provided such conversion or redemption right is freely and immediately exercisable by the holder thereof at any time, including, for the avoidance of doubt and without limitation, redemption-exchange units of Brookfield Infrastructure L.P.
"BIP Unit Release Price" shall mean, as of the date of withdrawal of any BIP Unit or BIP Unit Convertible from the Collateral Account, an amount in cash or Cash Equivalents equal to one hundred and fifty percent (150%) of the BIP Unit Value of such BIP Units or the BIP Unit Value of the number of BIP Units into which such BIP Unit Convertible may be converted or redeemed for, as of such date.
"BIP Unit Value" shall have the meaning as provided in the Company's Articles.
"BIP Units Amount" shall have the meaning as provided in the Company's Articles.
"Business Day" shall mean any day other than a Saturday, Sunday, or a day on which banking institutions in New York, New York are authorized or obligated by law or executive order to close.
"Cash Amount" shall have the meaning as provided in the Company's Articles.
"Cash Equivalents" shall mean (i) securities issued or directly and fully guaranteed or insured by the United States or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than one year from the date of acquisition, (ii) readily marketable direct obligations issued by any state of the United States or any political subdivision of any such state maturing within one year from the date of acquisition thereof and having one of the two highest ratings obtainable from either S&P or Moody's, (iii) dollar denominated time deposits, certificates of deposit and bankers acceptances of any commercial bank having, or which is the principal banking subsidiary of a bank holding company having, a combined capital and surplus of at least $1,000,000,000 with maturities of not more than one year from the date of acquisition, (iv) repurchase obligations with a term of not more than seven (7) days for underlying securities of the types described in clause (i) above entered into with any bank meeting the qualifications specified in clause (iii) above, and (v) investments in money market funds substantially all of whose assets are comprised of securities of the types described in clauses (i) through (v) above.
"Class A Shareholder" shall mean any holder of at least one Class A Share.
"Class A Shares" shall have the meaning set forth in the recitals.
"Close of Business" on any given date shall mean 5:00 P.M., New York City time, on such date; provided, however, that if such date is not a Business Day it shall mean 5:00 P.M., New York City time, on the next succeeding Business Day.
"Collateral Account" shall have the meaning as provided in Section 8.
"Collateral Account Balance" shall mean the aggregate of the Collateral Account BIP Unit Balance and the Collateral Account Cash Balance.
"Collateral Account BIP Unit Balance" shall mean, as of any date, (i) the number of BIP Units in the Collateral Account plus (ii) the number of BIP Units issuable upon conversion or redemption of BIP Unit Convertibles in the Collateral Account as of such date.
"Collateral Account Cash Balance" shall mean, as of any date, a number of BIP Units (rounded down to the nearest whole unit) equal to the quotient of (i) the aggregate amount of cash and Cash Equivalents in the Collateral Account divided by (ii) the BIP Unit Value as of such date; provided that for purposes of Section 8(d) and Section 8(e), the Collateral Account Cash Balance shall equal the aggregate amount of cash and Cash Equivalents in the Collateral Account as of such date.
"Company" shall have the meaning set forth in the recitals.
"Company Notice" shall mean a written notice in substantially the form attached hereto as Exhibit D-1 delivered by the Company to the Rights Agent, BIP and BAM, with respect to any Subject Class A Share, stating that (i) the Company has not satisfied its obligation under sections 25.11 and 25.13 of the Company's Articles with respect to such Subject Class A Share by delivering the Cash Amount or BIP Units Amount on the applicable Specified Exchange Date and (ii) BIP has not, upon its election in its sole and absolute discretion, acquired such Subject Class A Share from the Exchanging Class A Shareholder and delivered the BIP Units Amount or Cash Amount in exchange therefor pursuant to section 25.23 of the Company's Articles on the Specified Exchange Date.
"Company's Articles" shall mean the Articles of Incorporation of the Company substantially in the form attached hereto as Exhibit A, as amended from time to time following the Distribution Date in accordance with its terms.
"Conversion Factor" shall have the meaning as provided in the Company's Articles.
"Depositary" means a clearing agency registered under the Exchange Act.
"Distribution Date" shall have the meaning set forth in the recitals, and BAM shall notify the Rights Agent in writing immediately following the determination of such date.
"DTC" means The Depository Trust Company.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Exchange Right" shall have the meaning set forth in the recitals.
"Exchanging Class A Shareholder" shall have the meaning set forth in the recitals.
"Exchanging Class A Shareholder Notice" shall mean a written notice in substantially the form attached hereto as Exhibit D-2 delivered by a Class A Shareholder to the Rights Agent and BAM and containing a medallion guarantee, with respect to any Subject Class A Share, that (i) the Company has not satisfied its obligation under sections 25.11 and 25.13 of the Company's Articles by delivering the BIP Units Amount or Cash Amount on the applicable Specified Exchange Date and (ii) BIP has not, upon its election in its sole and absolute discretion, acquired such Subject Class A Share from the Exchanging Class A Shareholder and delivered the BIP Units Amount or Cash Amount in exchange therefor pursuant to section 25.23 of the Company's Articles on the applicable Specified Exchange Date.
"Final Expiration Date" shall mean the fifth anniversary of the Distribution Date.
"Participant" means, with respect to a Depositary, a Person who has an account with the Depositary.
"Person" shall mean any individual, firm, corporation, partnership, limited partnership, limited liability partnership, business trust, limited liability company, unincorporated association or other entity, and shall include any successor (by merger or otherwise) of such entity.
"Received Class A Share Account" shall have the meaning as provided in Section 4(c).
"Registered BIP Unit" shall have the meaning set forth in Section 9.
"Required Collateral Account Balance" shall mean, as of a particular date, a number of BIP Units equal to the product of (i) the total number of Class A Shares outstanding on such date, excluding Class A Shares owned by BAM or its Affiliates, multiplied by (ii) the Conversion Factor in effect on such date.
"Required Collateral Account Cash Balance" shall mean, as of a particular date, the product of (i)(a) the Required Collateral Account Balance minus (b) the Collateral Account BIP Unit Balance, multiplied by (ii) one hundred and twenty-five percent (125%) of the BIP Unit Value as of such date.
"Rights Agent" shall have the meaning set forth in the recitals.
"Secondary Exchange Right" shall have the meaning as provided in the Company's Articles.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Specified Exchange Date" shall have the meaning as provided in the Company's Articles.
"Subject Class A Shares" shall have the meaning set forth in the recitals.
Section 2. Appointment of Rights Agent.
The Rights Agent is hereby appointed to act as agent for the holders of the Secondary Exchange Rights, as a class and not individually, in accordance with the express terms and conditions hereof, and the Rights Agent hereby accepts such appointment. The obligations of the Rights Agent hereunder shall become effective as of the Distribution Date. The Rights Agent shall neither be responsible for, nor chargeable with, knowledge of the terms and conditions of any other agreement, instrument, or document (including, without limitation, the Company's Articles or the Class A Shares) other than this Agreement, except to the extent that defined terms set forth in the Company's Articles are expressly incorporated herein, whether or not an original or a copy of such agreement, instrument, or document has been provided to the Rights Agent; and the Rights Agent shall have no duty to know or inquire as to the performance or nonperformance of any provision of any such agreement, instrument, or document. Except to the extent that defined terms set forth in the Company's Articles are expressly incorporated herein, references in this Agreement to any other agreement, instrument, or document are for the convenience of the parties and the Rights Agent has no duties or obligations with respect thereto.
Section 3. Secondary Exchange Rights.
(a) The Secondary Exchange Rights are a part of the terms of the Class A Shares and shall not be transferred or assigned separate or apart from the Class A Shares. The Secondary Exchange Rights shall not be separately evidenced. Any sale, transfer, assignment or other disposition of a Class A Share shall also constitute the sale, transfer, assignment or other disposition of the Secondary Exchange Rights associated with such Class A Share.
(b) Physical certificates for Class A Shares, if any, which become outstanding prior to the Close of Business on the Final Expiration Date shall have impressed on, printed on, written on or otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder hereof to certain Secondary Exchange Rights as set forth in a Rights Agreement between Brookfield Asset Management Inc. and Wilmington Trust, National Association, as Rights Agent, dated as of March 31, 2020, as it may from time to time be amended or supplemented pursuant to its terms (the "Agreement"), the terms of which are hereby incorporated herein by reference and a copy of which is on file at the principal executive offices of the Company. The Company will mail to the holder of this certificate a copy of the Agreement without charge after receipt of a written request therefor. The Secondary Exchange Rights are a part of the terms of the Class A Shares and shall not be transferred or assigned separate or apart from the Class A Shares.
Notwithstanding this Section 3(b), the omission of a legend shall not affect the enforceability of any part of this Agreement or the rights of any holder of the Secondary Exchange Rights.
Section 4. Satisfaction of Secondary Exchange Rights.
(a) BAM hereby agrees to satisfy, or cause to be satisfied, the obligations with respect to the Secondary Exchange Rights contained in the Company's Articles in accordance with the terms of this Agreement in the event that, in connection with any Subject Class A Share, (i) the Company has not satisfied its obligation under sections 25.11 and 25.13 of the Company's Articles by delivering the BIP Units Amount or Cash Amount on the applicable Specified Exchange Date and (ii) BIP has not, upon its election in its sole and absolute discretion, acquired such Subject Class A Share from the Exchanging Class A Shareholder and delivered the BIP Units Amount or Cash Amount in exchange therefor pursuant to section 25.23 of the Company's Articles on the applicable Specified Exchange Date.
(i) In accordance with the Company's Articles, the Company is required to deliver a Company Notice, which shall be executed by an authorized signatory identified in Exhibit B-1 attached hereto (which exhibit may be updated by the Company from time to time in the Company's reasonable discretion, provided that such update does not adversely affect any Class A Shareholder or its rights hereunder in any respect), to the Rights Agent and BAM on the Specified Exchange Date if the conditions to the exercise of the Secondary Exchange Rights set forth in the immediately preceding sentence with respect to such Subject Class A Shares have been satisfied, which Company Notice shall set forth the BIP Units Amount and the Cash Amount for such Subject Class A Shares and any wire transfer or other delivery instructions necessary to permit the Rights Agent to transfer the BIP Units or the Cash Amount to the Exchanging Class A Shareholder and be in a format that is acceptable to the Rights Agent (determined by the Rights Agent acting reasonably and in good faith). If the Rights Agent shall not have received a signed written notice executed by an authorized signatory identified in Exhibit B-2 attached hereto from BAM (which exhibit may be updated by BAM from time to time in BAM's reasonable discretion, provided that such update does not adversely affect any Class A Shareholder or its rights hereunder in any respect) by the Close of Business on the Business Day immediately following the date the Rights Agent received the Company Notice, providing that BAM has elected, in BAM's sole discretion, to fund the Cash Amount pursuant to Section 4(b) below, the Rights Agent shall exchange (in accordance with Section 4(e) below) such Subject Class A Shares for a number of BIP Units held in the Collateral Account equal to the BIP Units Amount for such Subject Class A Shares set forth in such Company Notice and promptly, and in any event within two Business Days following the receipt of the Company Notice and the Subject Class A Shares in the Received Class A Share Account pursuant to Section 4(c), deliver such BIP Units from the Collateral Account to the Exchanging Class A Shareholder; provided that if there shall not be enough BIP Units in the Collateral Account to satisfy the BIP Units Amount with respect to one or more of such Subject Class A Shares, the Rights Agent shall exchange each such Subject Class A Share for an amount of cash from the Collateral Account equal to the Cash Amount for such Subject Class A Share and promptly, and in any event within two Business Days of receipt of the Company Notice and the Subject Class A Shares in the Received Class A Share Account pursuant to Section 4(c), deliver the Cash Amount to the Exchanging Class A Shareholder. For the avoidance of doubt, if for any given exercise of the Secondary Exchange Rights under this Section 4 there are not enough BIP Units in the Collateral Account to satisfy the BIP Units Amount with respect to all Subject Class A Shares subject to such Secondary Exchange Right, the Rights Agent shall not cause any BIP Units to be exchanged with respect to any such Subject Class A Shares, and shall instead only deliver to the Exchanging Class A Shareholder the Cash Amount with respect to each such Subject Class A Share from the Collateral Account.
(ii) In the event that, in connection with any Subject Class A Share, (i) the Company has not satisfied its obligation under sections 25.11 and 25.13 of the Company's Articles by delivering the BIP Units Amount or Cash Amount on the applicable Specified Exchange Date and (ii) BIP has not, upon its election in its sole and absolute discretion, acquired such Subject Class A Share from the Exchanging Class A Shareholder and delivered the BIP Units Amount or Cash Amount in exchange therefor pursuant to section 25.23 of the Company's Articles on the applicable Specified Exchange Date, the Exchanging Class A Shareholder shall have the right to deliver, or cause to be delivered, an original Exchanging Class A Shareholder Notice to the Rights Agent and BAM, which Exchanging Class A Shareholder Notice shall set forth the number of such Subject Class A Shares and any wire transfer or other delivery instructions necessary to permit the Rights Agent to transfer the BIP Units Amount or the Cash Amount to the Exchanging Class A Shareholder and be in a format that is acceptable to the Rights Agent (determined by the Rights Agent acting reasonably and in good faith). As promptly as practicable and in any event on or prior to the Business Day immediately following the date of such Exchanging Class A Shareholder Notice, BAM shall provide written notice to the Rights Agent, which notice shall (i) set forth the BIP Units Amount and the Cash Amount for such Subject Class A Shares subject to such Exchanging Class A Shareholder Notice and (ii) either (A) provide that BAM has elected, in BAM's sole discretion, to fund the Cash Amount pursuant to Section 4(b) below with respect to such Subject Class A Shares, or (B) instruct the Rights Agent to exchange (in accordance with Section 4(c), and 4(e) below) each Subject Class A Share in accordance with this Section 4(a)(ii), it being understood that BAM shall not be obligated to deliver such notice to the Rights Agent if it has determined in good faith that the conditions to the exercise of the Secondary Exchange Right set forth in Section 4(a) have not been satisfied. Upon receipt of an instruction by BAM pursuant to clause (ii)(B) of the immediately preceding sentence and receipt of an original Exchanging Class A Shareholder Notice and the Subject Class A Shares in the Received Class A Share Account pursuant to Section 4(c), the Rights Agent shall exchange such Subject Class A Shares for a number of BIP Units held in the Collateral Account equal to the BIP Units Amount for such Subject Class A Shares set forth in such BAM instructions and, on or prior to the second Business Day following receipt of such instruction from BAM and receipt of an original Exchanging Class A Shareholder Notice, and the Subject Class A Shares in the Received Class A Share Account pursuant to Section 4(c), deliver such BIP Units from the Collateral Account to the Exchanging Class A Shareholder; provided that if there shall not be enough BIP Units in the Collateral Account to satisfy the BIP Units Amount with respect to one of more of such Subject Class A Shares, the Rights Agent shall exchange each such Subject Class A Share for an amount of cash from the Collateral Account equal to the Cash Amount for such Subject Class A Share and, on or prior to the second Business Day following receipt of such instruction from BAM and receipt of an original Exchanging Class A Shareholder Notice, and the Subject Class A Shares in the Received Class A Share Account pursuant to Section 4(c), deliver the Cash Amount to the Exchanging Class A Shareholder. The Rights Agent shall not take any action under this Section 4(a)(ii) or otherwise upon receipt of an Exchanging Class A Shareholder Notice unless BAM has instructed the Rights Agent to exchange any Subject Class A Share for a number of BIP Units or the Cash Amount, as applicable, as set forth in this Section 4(a)(ii).
(b) With respect to any Company Notice or Exchanging Class A Shareholder Notice, BAM shall have the right, in its sole and absolute discretion, to elect that the Rights Agent exchange the Subject Class A Shares for the Cash Amount for each Subject Class A Share by providing written notice of such election to the Rights Agent on or prior to the Close of Business on the Business Day immediately following the date the Rights Agent received the Company Notice or Exchanging Class A Shareholder Notice, as applicable, in accordance with Section 4(a)(i) and Section 4(a)(ii), as applicable. In the event that BAM shall make the election described in the immediately preceding sentence and there shall not be an amount of cash in the Collateral Account sufficient to exchange any such Subject Class A Share for the Cash Amount, BAM shall deposit an amount of cash into the Collateral Account equal to the Cash Amount with respect to each such Subject Class A Share simultaneously with the delivery of the written notice set forth in the immediately preceding sentence. In the event that BAM shall elect that the Rights Agent exchange the Subject Class A Shares for the Cash Amount pursuant to this Section 4(b), the Rights Agent shall deliver the Cash Amount for each Subject Class A Share from the Collateral Account to the Exchanging Class A Shareholder on or before the second Business Day following receipt of the written notice of such election from BAM and receipt of an original Exchanging Class A Shareholder Notice (only if applicable per Section 4(a)(ii)) and the Subject Class A Shares in the Received Class A Share Account pursuant to Section 4(c).
(c) BAM shall establish a non-interest bearing trust account in the name of BAM that will be administered by the Rights Agent for purposes of receiving any Subject Class A Shares exchanged pursuant to this Agreement (the "Received Class A Share Account"). Such Received Class A Share Account information is as set forth in Exhibits D-1 and D-2. Any Class A Shares received by the Rights Agent pursuant to Section 4(a) or Section 4(b) shall be delivered to the Received Class A Share Account. Any Class A Shares in the Received Class A Share Account shall be transferable to BAM or, at BAM's direction, an Affiliate of BAM which was the beneficial owner of the BIP Units transferred to the Exchanging Class A Shareholder, pursuant to delivery instructions provided by BAM to the Rights Agent (which may be standing written instructions), and shall not be delivered into the Collateral Account, and thereafter BAM or such Affiliate, as applicable, shall be the beneficial owner of such Class A Shares with all rights, powers, privileges and preferences appurtenant thereto, including, without limitation, the Exchange Right. Delivery to BAM or such Affiliate pursuant to this Section 4(c) shall be accomplished by the Rights Agent instructing the transfer agent for the Class A Shares to record the transfer of the Class A Shares from the Received Class A Shares Account to, and the ownership thereof by, BAM or such Affiliate in accordance with the Applicable Procedures. The Rights Agent shall provide BAM with online access to view the Received Class A Share Account, which online interface shall be kept reasonably up-to-date by the Rights Agent.
(d) Notwithstanding anything to the contrary contained in this Agreement, BAM shall be entitled to cause any of its Affiliates to take any action required to satisfy BAM's obligations with respect to the Secondary Exchange Rights or otherwise pursuant to this Agreement; provided that nothing other than full and complete payment and performance of such obligations shall relieve BAM of such obligations.
(e) In connection with an Exchanging Class A Shareholder's exercise of the Secondary Exchange Right with respect to any Subject Class A Shares held through DTC or another Depositary, such Exchanging Class A Shareholder shall deliver to the Rights Agent such Subject Class A Shares to the Received Class A Share Account pursuant to DTC's or such other Depositary's Applicable Procedures. In addition, such Exchanging Class A Shareholder shall deliver to the Rights Agent via email or other appropriate method of communication on the Business Day prior to the delivery of such Subject Class A Shares, a copy of such Exchanging Class A Shareholder's Exchanging Class A Shareholder Notice; provided that the Rights Agent's obligations pursuant to Section 4(a)(ii) shall not be affected by such Exchanging Class A Shareholder's failure to so deliver a copy of such Exchanging Class A Shareholder Notice if such Exchanging Class A Shareholder's original Exchanging Class A Shareholder Notice is received by the Rights Agent within two Business Days of the date that the Rights Agent receives such Subject Class A Shares pursuant to DTC's or another Depositary's Applicable Procedures. In connection with any transfer by an Exchanging Class A Shareholder of any Subject Class A Shares required by this Agreement which are not held through DTC or another Depositary, such Exchanging Class A Shareholder shall take all necessary action to cause such Subject Class A Shares to be delivered to the Received Class A Share Account.
Section 5. Exercise of Rights.
The Rights Agent shall cause the BIP Units Amount delivered to any Exchanging Class A Shareholder pursuant to Section 4(a) to be delivered to or upon the order of the Exchanging Class A Shareholder, registered in such name or names as such Exchanging Class A Shareholder held such Subject Class A Shares (all as set forth in the Company Notice or the Exchanging Class A Shareholder Notice, as applicable).
Section 6. Confirmation Procedures.
(a) If the BIP Units Amount or the Cash Amount to be delivered pursuant to Section 4 above is to be delivered in a name other than that in which the Subject Class A Shares surrendered in exchange therefor are registered in the stock transfer books or ledger of the Company, the BIP Units Amount or the Cash Amount may be delivered to a Person other than the Person in whose name the Subject Class A Shares so surrendered are registered in the stock transfer books or ledger of the Company only if such Subject Class A Shares are properly endorsed and otherwise in proper form for surrender and transfer and the Person requesting such delivery has paid to BAM (or any agent designated by BAM) any transfer taxes reasonably expected to be required by reason of the payment of the BIP Units Amount or the Cash Amount to a Person other than the registered holder of such Subject Class A Shares, or established to the reasonable satisfaction of BAM (or any agent designated by BAM) that such transfer taxes have been paid or are otherwise not payable. Upon satisfaction of the condition in the immediately preceding sentence, BAM shall instruct the Rights Agent in writing to deliver such BIP Units Amount or Cash Amount to such other Person. Unless the Rights Agent has received such written instruction from BAM pursuant to the immediately preceding sentence prior to the delivery by the Rights Agent of the BIP Units Amount or Cash Amount with respect to such Subject Class A Shares, the Rights Agent shall have no duty or obligation under this Section 6(a) and shall deliver or cause to be delivered the BIP Units Amount or Cash Amount to the party designated in the Company Notice without further inquiry.
(b) All Subject Class A Shares shall be delivered to the Received Class A Share Account free and clear of all liens, claims and encumbrances whatsoever, and should any such liens, claims and encumbrances exist or arise with respect to such Subject Class A Shares, the Exchanging Class A Shareholder shall not be entitled to exercise its Secondary Exchange Rights with respect to such Subject Class A Shares. Each Exchanging Class A Shareholder will pay to BAM the amount of any tax withholding due upon the exchange of Subject Class A Shares pursuant to this Agreement and, in the event BAM elects to acquire some or all of the Subject Class A Shares from the Exchanging Class A Shareholder in exchange for the Cash Amount in accordance with Section 4(b), will authorize BAM to retain such portion of the Cash Amount as BAM reasonably determines is necessary to satisfy its tax withholding obligations. In the event BAM elects to acquire some or all of the Subject Class A Shares from the Exchanging Class A Shareholder in exchange for the BIP Units Amount, BAM may elect to either satisfy the amount of any tax withholding due upon the exchange of Subject Class A Shares by retaining BIP Units with a fair market value, as reasonably determined by BAM in good faith, equal to the amount of such obligation, or satisfy such tax withholding obligation using amounts paid by BAM, which amounts shall be treated as a loan by BAM to the Exchanging Class A Shareholder, in each case, unless the Exchanging Class A Shareholder, at the Exchanging Class A Shareholder's election, has paid or has made arrangements satisfactory to BAM, in its sole discretion, to pay, the amount of any such tax withholding. BAM shall notify the Exchanging Class A Shareholder within one Business Day following the date of the Company Notice or the Exchanging Class A Shareholder Notice, as applicable, of BAM's good faith estimate of the amount of any tax withholding due upon the exchange of the Subject Class A Shares subject to such Company Notice or the Exchanging Class A Shareholder Notice, provide the Exchanging Class A Shareholder with sufficient opportunity to provide any forms or other documentation or take such other steps in order to avoid or reduce such withholding, and reasonably cooperate with the Exchanging Class A Shareholder in good faith to attempt to reduce any amounts that would otherwise be withheld pursuant to this Section 6(b); provided that any determination with respect to the withholding shall be made by BAM, in its sole discretion exercised in good faith. Notwithstanding anything to the contrary in this Section 6(b), in no event shall an Exchanging Class A Shareholder be subject to withholding both under section 25.18 of the Company's Articles and under this Section 6(b), and any amounts paid or withheld with respect to a Subject Class A Share pursuant to section 25.18 of the Company's Articles shall be credited against and deemed to satisfy the Exchanging Class A Shareholder's withholding obligation pursuant to this Section 6(b).
Section 7. BIP Units Record Date.
Each former Exchanging Class A Shareholder who receives the BIP Units Amount upon the exercise of the Secondary Exchange Right with respect to any Subject Class A Share pursuant to this Agreement shall for all purposes be deemed to have become the owner of the BIP Units representing the BIP Units Amount for which the Secondary Exchange Right with respect to such Subject Class A Share is exercisable as of the date upon which such Class A Shareholder's Subject Class A Share is duly surrendered in accordance with this Agreement. Prior to such Class A Shareholder's surrender of such Subject Class A Share in accordance with this Agreement, the Class A Shareholder shall not be entitled to any rights of a holder of such BIP Units for which the Secondary Exchange Right with respect to such Subject Class A Share shall be exercisable, including, without limitation, the right to vote, to receive dividends or other distributions or to exercise any preemptive rights, and shall not be entitled to receive any notice of any proceedings of BIP with respect to such BIP Units. For the avoidance of doubt, any Class A Shareholder who receives the Cash Amount in satisfaction of the Secondary Exchange Right with respect to any Class A Share pursuant to this Agreement shall not be entitled to any rights of a holder of BIP Units at any time with respect to the BIP Units for which the Secondary Exchange Right with respect to such Subject Class A Share was exercisable prior to the receipt of such Cash Amount.
Section 8. Collateral Account.
(a) BAM or one or more Affiliates of BAM shall establish one or more non-interest bearing trust accounts in the name of BAM or such Affiliates that will be administered by the Rights Agent (together, the "Collateral Account"). The Rights Agent shall requisition the BIP Units Amount or the Cash Amount, as applicable, without any further action or approval from BAM, for payment to any Class A Shareholder in accordance with Section 4(a) or Section 4(b) in accordance with the terms and conditions set forth in this Agreement. BAM shall be responsible for ensuring that the Collateral Account Balance shall at times equal or exceed the Required Collateral Account Balance. Notwithstanding anything to the contrary contained in this Section 8 and subject to any additional requirements with respect to the Collateral Account Balance contained in this Section 8, in the event that the Collateral Account Balance shall at any time be less than the Required Collateral Account Balance, including, without limitation, as a result of an adjustment to the Conversion Factor or an increase in the BIP Unit Value, within two Business Days, BAM shall, or shall cause an Affiliate to, deposit into the Collateral Account either (i) a number of BIP Units or BIP Unit Convertibles or (ii) an amount of cash or Cash Equivalents, in an amount necessary to cause the Collateral Account Balance to be at least equal to the Required Collateral Account Balance. The Rights Agent shall have no duty or obligation to calculate the Required Collateral Account Balance, determine the Conversion Factor, determine if the Collateral Account Balance equals or exceeds the Required Collateral Account Balance, or determine the amounts necessary to cause the Collateral Account Balance to equal or exceed the Required Collateral Account Balance. BAM covenants and agrees that it will take all action within its control (including making requests of third parties and enforcing any contractual rights and/or obligations) to convert or redeem any BIP Unit Convertibles if necessary to satisfy any Class A Shareholder's Secondary Exchange Right in accordance with this Agreement, and any delivery of a BIP Units Amount pursuant to this Agreement shall be made in the form of BIP Units and not, for the avoidance of doubt, in the form of BIP Unit Convertibles. To the extent that conversion or redemption of a BIP Unit Convertible results in the imposition of any fees, payments, premiums or penalties, such fees, payments, premiums or penalties shall be borne by BAM, or its applicable Affiliates, and shall either be satisfied directly by BAM or such Affiliates or shall be deemed to reduce the Collateral Account Balance. BAM shall keep the Rights Agent informed of the Collateral Account Balance and the Required Collateral Account Balance in writing on a regular basis, and shall inform the Rights Agent in writing within two Business Days of any change in the Collateral Account Balance or the Required Collateral Account Balance for any reason, including as a result of an adjustment to the Conversion Factor or an increase in the BIP Unit Value.
(b) Prior to or substantially concurrently with the issuance of any Class A Shares by the Company, BAM shall, or cause an Affiliate of BAM to, deposit BIP Units or BIP Unit Convertibles into the Collateral Account such that, after taking into account the number of BIP Units issued or issuable upon conversion or redemption of such BIP Unit Convertibles, the number of BIP Units deposited into the Collateral Account shall be equal to the product of (i) the number of such Class A Shares issued (excluding any shares issued to BAM or its Affiliates) multiplied by (ii) the Conversion Factor. The Rights Agent shall have no duty or obligation to calculate the Conversion Factor, to determine the number of Class A Shares issued, or to determine the number of BIP Units or BIP Unit Convertibles necessary to equal the product of (i) the number of such Class A Shares issued (excluding any shares issued to BAM or its Affiliates) multiplied by (ii) the Conversion Factor.
(c) Except as set forth in this Section 8(c), BAM and its Affiliates shall not be entitled to withdraw any BIP Unit or BIP Unit Convertible from the Collateral Account.
(i) In the event that the Collateral Account Balance shall exceed the Required Collateral Account Balance, either as a result of a change in the Conversion Factor or a decrease in the number of Class A Shares (excluding Class A Shares owned by BAM or its Affiliates) outstanding, BAM or an Affiliate of BAM shall be entitled to withdraw (pursuant to a written instruction from BAM to the Rights Agent) from the Collateral Account a number of BIP Units, or BIP Unit Convertibles that are convertible into or redeemable for a number of BIP Units, up to an amount equal to (i) the Collateral Account Balance minus (ii) the Required Collateral Account Balance. The Rights Agent shall be entitled to conclusively and exclusively rely upon such written instruction from BAM in accordance with this Section 8(c)(i) without liability or further inquiry.
(ii) BAM, or any Affiliate of BAM, shall be permitted to withdraw from the Collateral Account a BIP Unit, or the number of BIP Unit Convertibles that are convertible into or redeemable for a BIP Unit, upon the deposit by BAM or any Affiliate of BAM of the BIP Unit Release Price with respect to such BIP Unit, or the number of BIP Unit Convertibles that are convertible into or redeemable for such BIP Unit, in the Collateral Account.
(d) If at any time the Collateral Account Cash Balance shall be less than the Required Collateral Account Cash Balance, BAM shall, or shall cause its Affiliates to, within two Business Days, deposit cash or Cash Equivalents (pursuant to a written instruction from BAM to the Rights Agent and as selected by BAM) in an amount necessary to cause the Collateral Account Cash Balance to be at least equal to the Required Collateral Account Cash Balance.
(e) Except as set forth in this Section 8(e), BAM and its Affiliates shall not be entitled to withdraw any cash or Cash Equivalents from the Collateral Account.
(i) If at any time the Collateral Account Cash Balance shall be greater than one hundred and twenty percent (120%) of the Required Collateral Account Cash Balance, either as a result of a change in the Conversion Factor or a decrease in the number of Class A Shares (excluding Class A Shares owned by BAM or its Affiliates) outstanding, BAM or its Affiliates shall be permitted to withdraw (pursuant to a written instruction from BAM to the Rights Agent) cash or Cash Equivalents in an amount not to exceed the excess of (i) the Collateral Account Cash Balance minus (ii) one hundred and twenty percent (120%) of the Required Collateral Account Cash Balance. The Rights Agent shall be entitled to conclusively and exclusively rely upon such written instruction from BAM in accordance with this Section 8(e)(i) without liability or further inquiry.
(ii) Upon the deposit in the Collateral Account of a number of BIP Units, or of BIP Unit Convertibles that are convertible into or redeemable for such number of BIP Units, BAM, or an Affiliate of BAM, shall be permitted to withdraw (pursuant to a written instruction from BAM to the Rights Agent) cash or Cash Equivalents from the Collateral Account in an amount equal to the aggregate BIP Unit Value of such number of BIP Units, or of the number of BIP Units issuable upon the conversion or redemption of such BIP Unit Convertibles, as applicable.
(f) For the avoidance of doubt, BAM, or its applicable Affiliates, shall remain the beneficial owner of any BIP Units or BIP Unit Convertibles deposited by BAM or such Affiliates into the Collateral Account for so long as such BIP Units or BIP Unit Convertibles remain in the Collateral Account, and shall hold all of the rights, powers, privileges and preferences appurtenant to such BIP Units or BIP Unit Convertibles, including, without limitation, the right to distributions on such BIP Units or BIP Unit Convertibles. In the event that the Collateral Account consists of more than one account and (i) the Rights Agent has not received written instructions from BAM as to which account to use for any specific transaction described in this Section 8 or (ii) there shall not be an amount within the account designated by BAM to satisfy any applicable BIP Units Amount or Cash Amount to be delivered pursuant to this Agreement, in such cases the Rights Agent shall follow an order of account priority, to be provided in writing by BAM upon the establishment each new account, when determining which account to use for any of the transactions described in this Section 8. BAM also covenants and agrees that it will take all action within its control to ensure that any transfer agent of the BIP Unit certificates and Class A Shares will comply with the Rights Agent's instructions in carrying out the purposes of this Agreement. BAM shall provide the Rights Agent with all necessary information and contact details for each transfer agent for the BIP Unit certificates and Class A Shares. The Rights Agent shall have no liability for the failure of any transfer agent to facilitate or effect any transfers contemplated hereby, or for any delay in doing so, or for the failure of BAM of its obligations under this Section 8(f). Prior to any transfer contemplated by this Agreement, BAM shall instruct the transfer agents for any BIP Unit certificates and Class A Shares to follow the instructions of the Rights Agent in connection with any exchange of Class A Shares for BIP Units as set forth herein.
(g) In connection with any transfer by BAM of BIP Units or BIP Unit Convertibles into the Collateral Account required by this Agreement which are held through DTC or another Depositary, BAM shall deliver to the Rights Agent such BIP Units or BIP Unit Convertibles to the Collateral Account pursuant to DTC's or such other Depositary's Applicable Procedures. In connection with any transfer by BAM of BIP Units or BIP Unit Convertibles into the Collateral Account required by this Agreement which are not held through DTC or another Depositary, BAM shall take all necessary action to cause such BIP Units or BIP Unit Convertibles to be delivered to the Collateral Account.
Section 9. Registration of BIP Unit Resales.
In the event that a shelf registration statement, prospectus or Prospectus Exemption (as defined below) registering or exempting, as applicable, the transfer of BIP Units (including BIP Units that are issuable upon conversion of or redemption for BIP Unit Convertibles in the Collateral Account) from the Collateral Account to an Exchanging Class A Shareholder (or to such other Person as may be entitled thereto pursuant to the terms of this Agreement) has, at any time, not been effective for five (5) consecutive Business Days, BAM shall, or shall cause an Affiliate of BAM to, deposit in the Collateral Account an amount of cash or Cash Equivalents equal to the BIP Unit Release Price for all BIP Units held in the Collateral Account (including BIP Units that are issuable upon conversion of for redemption for BIP Unit Convertibles in the Collateral Account) that cease to be Registered BIP Units (as defined below) as a result thereof, within five (5) Business Days; provided, however, for the avoidance of doubt, no such deposit is required to the extent all of the BIP Units in the Collateral Account, including BIP Units that are issuable upon conversion of or redemption for BIP Unit Convertibles in the Collateral Account, and the transfer of such BIP Units (including BIP Units that are issuable upon conversion of or redemption for BIP Unit Convertibles in the Collateral Account) from the Collateral Account to an Exchanging Class A Shareholder (or to such other Person as may be entitled thereto pursuant to the terms of this Agreement) are (i) registered under the Securities Act pursuant to an effective shelf registration statement with the Securities and Exchange Commission and (ii) qualified for distribution by BAM to Exchanging Class A Shareholders under the securities laws applicable in each of the provinces and territories of Canada through the filing of a prospectus (or exempt from the applicable prospectus requirements in such jurisdictions (a "Prospectus Exemption")) (each BIP Unit so registered, including BIP Units that are issuable upon conversion of or redemption for BIP Unit Convertibles in the Collateral Account, a "Registered BIP Unit"). The Rights Agent shall have no duty or obligation (and no liability) to determine if any BIP Unit, including BIP Units that are issuable upon conversion of or redemption for BIP Unit Convertibles, or any BIP Unit Convertible held in the Collateral Account or transferred to an Exchanging Class A Shareholder is a Registered BIP Unit freely transferable under the U.S. federal securities laws or the laws applicable in each of the provinces and territories of Canada.
Section 10. Concerning BAM.
(a) BAM agrees that any Class A Shareholder may at any time and from time to time, without notice to or further consent of BAM, extend the time of payment of the Exchange Rights or Secondary Exchange Rights, and may also make any agreement with the Company, BIP, or any other Person, for the extension, renewal, payment, compromise, discharge or release thereof, in whole or in part, or for any modification of the terms thereof or of any agreement between a Class A Shareholder, on the one hand, and the Company, BIP or any such other Person, on the other hand, it being understood that no such action shall impair, affect, alter or increase BAM's obligations under this Agreement or affect the validity or enforceability of this Agreement.
(b) BAM agrees that its obligations hereunder shall in no way be terminated, affected or impaired by reason of (a) the assertion by any Class A Shareholder of any rights or remedies which it may have under or with respect to this Agreement or against any Person obligated hereunder, (b) any Class A Shareholder's failure to exercise, or delay in exercising, any such right or remedy or any right or remedy such Class A Shareholder may have hereunder, (c) any change in the structure or ownership of the Company, (d) any insolvency, bankruptcy, reorganization or other similar proceeding affecting the Company, BIP or any other Person, (e) the existence of any claim, set-off or other right that BAM may have at any time against the Company, BIP or any of their respective Affiliates, whether in connection with the Exchange Right, the Secondary Exchange Rights or otherwise; (f) the validity or enforceability of the Exchange Right; or (g) any other circumstance whatsoever which constitutes, or might be construed to constitute, an equitable or legal discharge of the Company with respect to the Exchange Right, in bankruptcy or any other instance, other than as provided herein.
(c) To the fullest extent permitted by applicable law, BAM hereby expressly waives any and all rights or defenses arising by reason of any applicable law which would otherwise require any election of remedies by any Class A Shareholder. BAM waives promptness, diligence, notice of the acceptance of this Agreement and of the Exchange Right, all defenses that may be available by virtue of any valuation, stay, moratorium law or other similar applicable law now or hereafter in effect, any right to require the marshalling of assets of the Company or any other Person, and all suretyship defenses generally. BAM acknowledges that it will receive substantial direct and indirect benefits from the Master Services Agreement and that this Agreement, including specifically the waivers set forth in this Agreement, is knowingly made in contemplation of such benefits and after the advice of counsel.
(d) BAM hereby unconditionally waives any rights that it may now have or hereafter acquire against the Company or its subsidiaries that arise from the existence, payment, performance, or enforcement of BAM's obligations under or in respect of this Agreement, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification.
(e) BAM hereby represents and warrants that:
(i) the execution, delivery and performance of this Agreement have been duly and validly authorized by all necessary action, and do not contravene any provision of BAM's organizational documents or any applicable law, order, judgment or contractual restriction binding on BAM or its assets;
(ii) all consents, approvals, authorizations, permits of, filings with and notifications to, any governmental entity necessary for the due execution, delivery and performance of this Agreement by BAM have been obtained or made and all conditions thereof have been duly complied with, and no other action by, and no notice to or filing with, any governmental entity is required in connection with the execution, delivery or performance of this Agreement;
(iii) this Agreement constitutes a legal, valid and binding obligation of the BAM enforceable against BAM in accordance with its terms, subject to (i) the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar applicable laws affecting creditors' rights generally, and (ii) general equitable principles (whether considered in a proceeding in equity or at law); and
(iv) as of the date hereof, BAM has the financial capacity to pay and perform its obligations under this Agreement.
Section 11. Rights of Action.
All rights of action in respect of this Agreement, excepting the rights of action given to the Rights Agent under Section 12 hereof, are vested in the Class A Shareholders; and any Class A Shareholder may, without the consent of the Rights Agent or of any other Class A Shareholder, on such holder's own behalf and for such holder's own benefit, enforce, and may institute and maintain any suit, action or proceeding against BAM to enforce, or otherwise act in respect of, such holder's right to exercise the Secondary Exchange Rights and the Class A Shareholders' rights under this Agreement, in each case in the manner provided in the Company's Articles and in this Agreement. Without limiting the foregoing or any remedies available to the Class A Shareholders, it is specifically acknowledged that the Class A Shareholders would not have an adequate remedy at law for any breach of this Agreement and will be entitled to specific performance of the obligations under, and injunctive relief against actual or threatened violations of the obligations of any Person subject to, this Agreement. BAM agrees to pay all expenses, including all reasonable and documented third party costs and out-of-pocket expenses (including reasonable fees of counsel), actually paid or incurred by such Class A Shareholder in enforcing any of such Class A Shareholder's rights hereunder or otherwise relating to any litigation or other proceeding brought by such Class A Shareholder to enforce such Class A Shareholder's rights hereunder, if such Class A Shareholder prevails in such litigation or proceeding.
Section 12. Concerning the Rights Agent.
(a) BAM agrees to pay to the Rights Agent reasonable compensation for all services rendered by it hereunder in accordance with Exhibit C attached hereto and, from time to time, on demand of the Rights Agent, its reasonable and documented out-of-pocket expenses and counsel fees and other disbursements incurred in the administration and execution of this Agreement and the exercise and performance of its duties hereunder. BAM also agrees to indemnify the Rights Agent for, and to hold it harmless against, any loss, liability, or expense, incurred without gross negligence, bad faith or willful misconduct on the part of the Rights Agent, for anything done or omitted by the Rights Agent in connection with the acceptance and administration of this Agreement, including the costs and expenses of defending against any claim or liability in connection therewith. The indemnification provided for hereunder shall survive the expiration of the Secondary Exchange Rights and the termination of this Agreement. The costs and expenses of enforcing this right of indemnification shall also be paid by BAM. The Rights Agent shall have no right of set-off against any funds in the Collateral Account with respect to any amounts owed to the Rights Agent by BAM hereunder.
(b) The Rights Agent may conclusively rely upon and shall be protected and shall incur no liability for or in respect of any action taken, suffered or omitted by it in connection with its administration of this Agreement in reliance upon any instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter, notice, direction, consent, certificate, statement, or other paper or document reasonably believed by it, in good faith, to be genuine and to be signed, executed and, where necessary, verified or acknowledged, by the proper Person or Persons, or otherwise upon the advice of legal counsel to the Rights Agent (who may be an employee of the Rights Agent or outside legal counsel for the Rights Agent). Notwithstanding anything in this Agreement to the contrary, in no event shall the Rights Agent be liable for special, indirect or consequential loss or damage of any kind whatsoever (including but not limited to lost profits), even if the Rights Agent has been advised of the likelihood of such loss or damage and regardless of the form of the action.
Section 13. Merger or Consolidation or Change of Name of Rights Agent.
Any Person into which the Rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, or any Person resulting from any merger or consolidation to which the Rights Agent or any successor Rights Agent shall be a party, or any Person succeeding to the corporate trust business of the Rights Agent or any successor Rights Agent, shall be the successor to the Rights Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided that such Person would be eligible for appointment as a successor Rights Agent under the provisions of Section 15 hereof. The acquisition of substantially all of the Rights Agent's assets employed in the exercise of corporate trust powers shall be deemed to be a merger or consolidation for purposes of this Section 13.
Section 14. Duties of Rights Agent.
The Rights Agent undertakes the duties and obligations expressly set forth in this Agreement which shall be deemed purely ministerial in nature and no implied duties or obligations shall be read into this Agreement against the Rights Agent. Under no circumstances will the Rights Agent be deemed to be a fiduciary to BAM, the Company, any Class A Shareholder or any other person under this Agreement. The Rights Agent will not be responsible or liable for the failure of BAM, the Company, BIP, any transfer agent, any Class A Shareholder or any other person to perform in accordance with this Agreement. The Rights Agent shall perform those duties and obligations upon the following terms and conditions:
(a) Before the Rights Agent acts or refrains from acting, it may consult with legal counsel (who may be an employee of the Rights Agent or outside legal counsel for the Rights Agent), and the opinion of such counsel shall be full and complete authorization and protection to the Rights Agent as to any action taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the Rights Agent shall deem it necessary or desirable that any fact or matter be proved or established prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by an authorized signatory of BAM identified in Exhibit B-2 attached hereto (which exhibit may be updated by BAM from time to time in BAM's reasonable discretion, provided that such update does not adversely affect any Class A Shareholder or its rights hereunder in any respect) and delivered to the Rights Agent; and such certificate shall be full authorization to the Rights Agent for any action taken or suffered in good faith by it under the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own gross negligence, bad faith or willful misconduct. The Rights Agent shall not be liable, directly or indirectly, for any special, indirect or consequential damages or losses of any kind whatsoever (including without limitation lost profits), even if the Rights Agent has been advised of the possibility of such losses or damages and regardless of the form of action.
(d) The Rights Agent shall not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement or in the Company's Articles or be required to verify the same.
(e) The Rights Agent shall not be under any responsibility in respect of the validity of this Agreement or the execution and delivery hereof (except the due execution hereof by the Rights Agent); nor shall it be responsible for any breach by BAM of any covenant or condition contained in this Agreement; nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any BIP Units to be issued pursuant to this Agreement or as to whether any BIP Units will, when so issued, be validly authorized and issued, fully paid and nonassessable.
(f) BAM agrees that it will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further and other acts, instruments and assurances as may reasonably be required by the Rights Agent for the carrying out or performing by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept (and shall be entitled to conclusively and exclusively rely upon, without further inquiry) instructions with respect to the performance of its duties hereunder from any Person reasonably believed by the Rights Agent to be one of the authorized signatories of BAM listed on Exhibit B-2 attached hereto (which exhibit may be updated by BAM from time to time in BAM's reasonable discretion, provided that such update does not adversely affect any Class A Shareholder or its rights hereunder in any respect), and to apply to such Persons for advice or instructions in connection with its duties, and it shall not be liable for any action taken or suffered to be taken by it in good faith in accordance with instructions of any such officer. Without limiting the generality of the foregoing, whenever the Rights Agent is unable to decide between alternative courses of action permitted or required by the terms of this Agreement, or in the event that the Rights Agent is unsure as to the application of any provision of this Agreement or believes any such provision is ambiguous as to its application, or is, or appears to be, in conflict with any other applicable provision, or in the event that this Agreement permits any determination or discretion by the Rights Agent or is silent or is incomplete as to the course of action that the Rights Agent is required to take with respect to a particular set of facts, the Rights Agent shall promptly give notice (in such form as shall be appropriate under the circumstances) to BAM requesting instruction as to the course of action to be adopted, and to the extent the Rights Agent acts in good faith in accordance with any written instructions received from BAM the Rights Agent shall not be liable on account of such action to any person. If the Rights Agent shall not have received appropriate instruction within ten (10) days of such notice (or such shorter period as reasonably may be specified in such notice or as may be necessary under the circumstances) it shall be entitled to take no action and shall give prompt written notice of its decision not to take action to BAM, to the Company, and to any Exchanging Class A Shareholder that may be affected by such decision not to take action. Any application by the Rights Agent for written instructions from BAM may, at the option of the Rights Agent, set forth in writing any action proposed to be taken or omitted by the Rights Agent under this Agreement and the date on or after which such action shall be taken or such omission shall be effective. The Rights Agent shall not be liable for any action taken by, or omission of, the Rights Agent in accordance with a proposal included in any such application on or after the date specified in such application unless, prior to taking any such action (or the effective date in the case of an omission), the Rights Agent shall have received, in response to such application, written instructions with respect to the proposed action or omission specifying a different action to be taken or omitted.
(h) To the extent permitted by applicable law, the Rights Agent and any shareholder, director, officer or employee of the Rights Agent may buy, sell or deal in any of the Class A Shares or other securities of the Company or become pecuniarily interested in any transaction in which BAM or the Company may be interested, or contract with or lend money to BAM or the Company or otherwise act as fully and freely as though it were not Rights Agent under this Agreement. Nothing herein shall preclude the Rights Agent from acting in any other capacity for BAM, the Company or for any other Person.
(i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys or agents, and the Rights Agent shall not be answerable or accountable for any act, default, neglect or misconduct of any such attorneys or agents or for any loss to BAM or the Class A Shareholders resulting from any such act, default, neglect or misconduct, provided reasonable care was exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to expend or risk its own funds or otherwise incur any financial liability (other than expenses and overhead incurred in the ordinary course by the Rights Agent's performance under this Agreement) in the performance of any of its duties hereunder or in the exercise of its rights if there shall be reasonable grounds for believing that repayment of such funds or adequate indemnification against such risk or liability is not reasonably assured to it.
(k) Other than with respect to a Company Notice, Exchanging Class A Shareholder Notice, BAM instruction, or deposit of Class A Shares in the Received Class A Share Account in accordance with Section 4, the Rights Agent shall not be required to take notice or be deemed to have notice of any fact, event or determination under this Agreement unless and until the Rights Agent shall be specifically notified in writing by BAM of such fact, event or determination.
(l) The Rights Agent shall not be responsible or liable for any failure or delay in the performance of its obligation under this Agreement arising out of or caused, directly or indirectly, by circumstances beyond its reasonable control, including, without limitation, acts of God; earthquakes; fire; flood; wars; acts of terrorism; civil or military disturbances; sabotage; epidemic; riots; interruptions, loss or malfunctions of utilities, computer (hardware or software) or communications services; accidents; labor disputes; acts of civil or military authority or governmental action; it being understood that the Rights Agent shall use commercially reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as reasonably practicable under the circumstances.
(m) The Rights Agent may rely upon and shall not be liable for acting or refraining from acting upon any written notice, instruction or request furnished to it hereunder in accordance with the terms of this Agreement and reasonably believed by it to be genuine and to have been signed or presented by the proper party or parties. The Rights Agent shall be under no duty to inquire into or investigate the validity, accuracy or content of any such document.
(n) Unless subject to reimbursement by BAM pursuant to Section 12(a) or reasonably necessary in order for the Rights Agent to perform its express obligations hereunder in accordance herewith, notwithstanding anything contained herein or elsewhere to the contrary, the Rights Agent shall not be required to take any action in any jurisdiction other than in the State of Delaware if the taking of such action will (x) require the Rights Agent in its individual capacity to obtain the consent, approval, authorization or order of or the giving of notice to, or the registration with, or taking of any action in respect of, any state or other governmental authority or agency other than the State of Delaware; (y) result in any fee, tax or other governmental charge under the laws of any jurisdiction other than the State of Delaware becoming payable by the Rights Agent in its individual capacity, or (z) subject the Rights Agent in its individual capacity to personal jurisdiction in any jurisdiction other than the State of Delaware for causes of action arising from acts unrelated to the consummation of the transactions by the Rights Agent contemplated hereby.
(o) The right of the Rights Agent to perform any discretionary act (if any) enumerated in this Agreement shall not be construed as a duty.
Section 15. Change of Rights Agent.
The Rights Agent or any successor Rights Agent may resign and be discharged from its duties under this Agreement upon 30 days' notice in writing mailed to BAM and the Company and to each transfer agent of the Class A Shares and the BIP Units by registered or certified mail. BAM may remove the Rights Agent or any successor Rights Agent upon 30 days' notice in writing, mailed to the Rights Agent or successor Rights Agent, as the case may be, and to each transfer agent of the Class A Shares and the BIP Units by registered or certified mail. If the Rights Agent shall resign or be removed or shall otherwise become incapable of acting, BAM shall appoint a successor to the Rights Agent. If BAM shall fail to make such appointment within a period of 30 days after giving notice of such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by a Class A Shareholder, then any Class A Shareholder may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent, whether appointed by BAM or by such a court, shall be a corporation organized and doing business under the laws of the United States or of any state of the United States, in good standing, which is authorized under such laws to exercise corporate trust powers and is subject to supervision or examination by federal or state authority and which has at the time of its appointment as Rights Agent a combined capital and surplus of at least $100 million. After appointment, the successor Rights Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, including, without limitation, the Collateral Account, and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose. Not later than the effective date of any such appointment BAM shall file notice thereof in writing with the predecessor Rights Agent, the Company, and each transfer agent of the Class A Shares and the BIP Units. Failure to give any notice provided for in this Section 15, however, or any defect therein, shall not affect the legality or validity of the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be.
Section 16. Notices.
Notices or demands authorized by this Agreement to be given or made by the Rights Agent or by any Exchanging Class A Shareholder, other Class A Shareholder, or other holder of a Secondary Exchange Right, to or on BAM shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until another address is filed in writing with the Rights Agent) as follows:
Brookfield Asset Management Inc.
Brookfield Place, Suite 300
181 Bay Street, P.O.
Box 762
Toronto, Ontario, Canada M5J 2T3
Attention: Chief Legal Officer
Subject to the provisions of Section 15 hereof, any notice or demand authorized by this Agreement to be given or made by BAM or by any Exchanging Class A Shareholder, other Class A Shareholder, or other holder of a Secondary Exchange Right to or on the Rights Agent shall be sufficiently given or made if sent by registered or certified mail and shall be deemed given upon receipt and, addressed (until another address is filed in writing with BAM) as follows:
Wilmington Trust, National Association
Attn: Robert L. Reynolds
246 Goose Lane,
Suite 105
Guilford, CT 06437
Phone: (203) 453-1318
Fax: (203) 453-1183
Email: rlreynolds@wilmingtontrust.com
With a copy to the following Email address: restructuring@wilmingtontrust.com
Notices or demands authorized by this Agreement to be given or made by BAM or the Rights Agent to any Class A Shareholder shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed to such holder at the address of such holder as shown on the registry books of the Company or the transfer agent for the Class A Shares.
Section 17. Supplements and Amendments.
BAM may from time to time, and the Rights Agent shall, if BAM so directs, supplement or amend this Agreement without the approval of any Class A Shareholder in order to cure any ambiguity, to correct or supplement any provision contained herein which may be defective or inconsistent with any other provisions herein, to make modifications necessary to reflect changes in applicable law, including, without limitation, tax law, or to make any other change, in each case, provided that such change, amendment, modification or supplementation does not adversely affect any Class A Shareholder or its rights hereunder in any respect. Except as set forth in the immediately preceding sentence or as otherwise contemplated by Section 4(a)(i) or Section 14(b) with respect to updates to Exhibits B-1 and B-2, any amendment or modification to this Agreement shall require (a) pursuant to a consent request duly conducted by, and at the expense of, BAM or (b) at a duly called annual or special meeting of the Company's shareholders, the affirmative consent or vote, as applicable, of holders of at least two-thirds of the outstanding Class A Shares not held by BAM, BIP or their controlled Affiliates, voting as a class, and the approval of a majority of the independent directors (within the meaning of the listing standards of the securities exchange on which the Company's securities may then be listed) of the Company. Any supplement or amendment authorized by this Section 17 shall be evidenced by a writing signed by BAM and the Rights Agent. Notwithstanding anything in this Agreement to the contrary, no supplement or amendment that changes the rights and duties of the Rights Agent under this Agreement will be effective against the Rights Agent without the execution of such supplement or amendment by the Rights Agent. In executing any amendment or supplement contemplated hereby, the Rights Agent shall be provided with, and shall be entitled to conclusively and exclusively rely upon, an opinion of counsel (which may be counsel to BAM) stating that the execution of such amendment or supplement is authorized or permitted by this Agreement and all conditions precedent to the execution and delivery thereof have been duly satisfied or waived.
Section 18. Successors.
All the covenants and provisions of this Agreement by or for the benefit of BAM or the Rights Agent shall bind and inure to the benefit of their respective successors and assigns hereunder.
Section 19. Benefits of this Agreement.
Nothing in this Agreement shall be construed to give to any Person other than BAM, the Rights Agent and the Class A Shareholders any legal or equitable right, remedy or claim under this Agreement; but this Agreement shall be for the sole and exclusive benefit of BAM, the Rights Agent and the Class A Shareholders.
Section 20. Severability.
If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. If any provision of this Agreement is so broad as to be unenforceable, such provision shall be interpreted to be only so broad as is enforceable.
Section 21. Governing Law; Forum Selection.
This Agreement and the Secondary Exchange Rights issued hereunder shall be deemed to be a contract made under the laws of the State of Delaware and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts to be made and performed entirely within such State. Each party to this Agreement irrevocably and unconditionally agrees to be, and all the rights governed by this Agreement, including the rights of the Class A Shareholders in accordance with Section 11 shall be, subject to the exclusive jurisdiction of the state courts sitting in the City of Wilmington in the State of Delaware and of the United States of America located in the District of the State of Delaware for any actions, suits or proceedings arising out of, or relating to, this Agreement. No action, suit or proceeding relating thereto shall be commenced in any other court. Service of any process, summons, notice or document if delivered or made pursuant to Section 16 shall be effective service of process for any action, suit or proceeding. Each party to this Agreement hereby irrevocably and unconditionally waives any objection which it may now or hereafter have to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in the aforementioned courts and hereby further irrevocably and unconditionally waives all claims, and agrees not to plead or claim in any such court, that any action, suit or proceeding brought in any such court has been brought in an inconvenient forum.
Section 22. Counterparts.
This Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.
Section 23. Descriptive Headings.
The table of contents and descriptive headings of the several Sections of this Agreement are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof.
Section 24. Administration; Termination.
This Agreement shall terminate on the earliest to occur of (i) the first Business Day where there shall be no Class A Shares outstanding, other than Class A Shares owned by BAM or its Affiliates, (ii) (a) pursuant to a consent request duly conducted by, and at the expense of, BAM or (b) at a duly called annual or special meeting of the Company's shareholders, the affirmative consent or vote, as applicable, of holders of at least two-thirds of the outstanding Class A Shares not held by BAM, BIP or their controlled Affiliates, voting as a class, and the approval of a majority of the independent directors (within the meaning of the listing standards of the securities exchange on which the Company's securities may then be listed) of the Company, and (iii) the Final Expiration Date. BAM shall provide the Rights Agent with written notice of the termination of this Agreement pursuant to section (i) or (ii) above.
Section 25. No Waiver; Cumulative Rights.
No failure on the part of any Class A Shareholder to exercise, and no delay in exercising, any right, remedy or power hereunder shall operate as a waiver thereof; nor shall any single or partial exercise by any Class A Shareholder of any right, remedy or power hereunder preclude any other or future exercise of any right, remedy or power hereunder by such Class A Shareholder or any other Class A Shareholder. Each and every right, remedy and power hereby granted to the Class A Shareholders shall be cumulative and not exclusive of any other right, remedy or power, and may be exercised by any Class A Shareholder at any time or from time to time.
Section 26. Fractional Units.
Class A Shareholders holding a number of Subject Class A Shares which would entitle such holders to receive less than one whole BIP Unit pursuant to this Agreement shall receive cash in lieu of fractional units. Fractional BIP Units shall not be distributed to Class A Shareholders or credited to book-entry accounts. With respect to any delivery of BIP Units to a Class A Shareholder under this Agreement, BAM shall promptly instruct the transfer agent for the BIP Units to, as soon as practicable, (a) determine the number of whole BIP Units and fractional BIP Units allocable to each holder of record or beneficial owner of Class A Shares entitled to receive BIP Units at such time, (b) aggregate all such fractional units into whole BIP Units and sell the whole BIP Units obtained thereby in open market transactions, in each case, at then-prevailing trading prices on behalf of holders who would otherwise be entitled to fractional BIP Units, and (c) distribute to each such holder, or for the benefit of each such beneficial owner, such holder or owner's ratable share of the net proceeds of such sale, based upon the average gross selling price per BIP Unit after making appropriate deductions for any amount required to be withheld for tax purposes and any brokerage fees incurred in connection with these sales of fractional BIP Units. Neither BAM nor the Rights Agent will guarantee any minimum sale price for the fractional BIP Units. Neither BAM nor the Rights Agent will pay any interest on the proceeds from the sale of fractional BIP Units. The transfer agent of the BIP Units acting on behalf of the applicable party will have the sole discretion to select the broker-dealers through which to sell the aggregated fractional BIP Units and to determine when, how and at what price to sell such units, provided that neither the transfer agent nor the broker-dealers through which the aggregated fractional BIP Units are sold shall be Affiliates of BAM.
Section 27. Book Entry.
Reference in this Agreement to certificates for Class A Shares or BIP Units shall include, in the case of uncertificated shares or units, the balances indicated in the book-entry account system of the transfer agent for the Class A Shares or BIP Units, as applicable. Any legend required to be placed on any certificates for Class A Shares or BIP Units may instead be included on any book-entry confirmation or notification to the registered holder of such Class A Shares or BIP Units.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective duly authorized officers as of the day and year first above written.
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Brookfield Asset Management Inc. | ||
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By: |
/s/ Aaron Kline |
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Name: Aaron Kline Title: Managing Director |
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Wilmington Trust, National Association as Rights Agent | ||
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By: |
/s/ Robert L. Reynolds |
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Name: Robert L. Reynolds Title: Vice President |
[Signature Page to Rights Agreement]
EXHIBIT A
Form of the Company's Articles
| Number: |
BC1221659 |
BUSINESS CORPORATIONS ACT
ARTICLES
of
BROOKFIELD INFRASTRUCTURE CORPORATION
TABLE OF CONTENTS
| PART 1 INTERPRETATION | 1 |
| PART 2 SHARES AND SHARE CERTIFICATES | 16 |
| PART 3 ISSUE OF SHARES | 18 |
| PART 4 SHARE REGISTERS | 19 |
| PART 5 SHARE TRANSFERS | 19 |
| PART 6 TRANSMISSION OF SHARES | 20 |
| PART 7 PURCHASE, REDEEM OR OTHERWISE ACQUIRE SHARES | 21 |
| PART 8 BORROWING POWERS | 22 |
| PART 9 ALTERATIONS | 22 |
| PART 10 MEETINGS OF SHAREHOLDERS | 23 |
| PART 11 PROCEEDINGS AT MEETINGS OF SHAREHOLDERS | 26 |
| PART 12 VOTES OF SHAREHOLDERS | 30 |
| PART 13 DIRECTORS | 35 |
| PART 14 ELECTION AND REMOVAL OF DIRECTORS | 36 |
| PART 15 POWERS AND DUTIES OF DIRECTORS | 43 |
| PART 16 INTERESTS OF DIRECTORS AND OFFICERS | 44 |
| PART 17 PROCEEDINGS OF DIRECTORS | 45 |
| PART 18 EXECUTIVE AND OTHER COMMITTEES | 48 |
| PART 19 OFFICERS | 50 |
| PART 20 INDEMNIFICATION | 50 |
| PART 21 DIVIDENDS | 52 |
| PART 22 ACCOUNTING RECORDS AND AUDITOR | 54 |
| PART 23 NOTICES | 54 |
| PART 24 PROHIBITIONS | 57 |
| PART 25 SPECIAL RIGHTS AND RESTRICTIONS CLASS A EXCHANGEABLE SUBORDINATE VOTING SHARES | 58 |
| PART 26 SPECIAL RIGHTS AND RESTRICTIONS CLASS B MULTIPLE VOTING SHARES | 67 |
| PART 27 SPECIAL RIGHTS AND RESTRICTIONS CLASS C NON-VOTING SHARES | 70 |
| PART 28 SPECIAL RIGHTS AND RESTRICTIONS CLASS A SENIOR PREFERRED SHARES | 73 |
| PART 29 SPECIAL RIGHTS AND RESTRICTIONS CLASS B JUNIOR PREFERRED SHARES | 74 |
| Number: |
BC1221659 |
BUSINESS CORPORATIONS ACT
ARTICLES
of
BROOKFIELD INFRASTRUCTURE CORPORATION
(the "Company")
PART
1
INTERPRETATION
Definitions
1.1 In these Articles, unless the context otherwise requires:
(a) "Act" means the Business Corporations Act (British Columbia) from time to time in force and all amendments thereto and includes all regulations and amendments thereto made pursuant to that Act;
(b) "affiliate" means with respect to a Person, any other Person that, directly or indirectly, through one or more intermediaries, Controls or is Controlled by such Person, or is under common Control of a third Person;
(c) "BAM" means Brookfield Asset Management Inc., a corporation existing under the Laws of the Province of Ontario, and is deemed to refer to all successors, including, without limitation, by operation of Law;
(d) "BIP" means Brookfield Infrastructure Partners L.P., a Bermuda exempted limited partnership, and is deemed to refer to all successors, including, without limitation, by operation of Law;
(e) "BIP-Affiliated Class A Shareholder" means BIP or a Person Controlled by BIP to the extent BIP or such other Person holds Class A Shares;
(f) "BIP Distribution Declaration Date" means the date on which the BIP GP declares any distribution on the BIP Units;
(g) "BIP Distributed Right" has the meaning as provided in clause (ii) of the definition of "Conversion Factor" below;
(h) "BIP GP" means the general partner of BIP from time to time;
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(i) "BIP Liquidation Event" has the meaning as provided in §25.25;
(j) "BIP Unit" means a limited partnership interest in BIP representing a fractional part of all the limited partnership interests in BIP, other than a preferred limited partnership interest, and which limited partnership interest is designated by BIP as an "Equity Unit" (as defined in the Amended and Restated Limited Partnership Agreement of BIP dated as of February 16, 2018), and includes any limited partnership interest or other equity interest of BIP into which such BIP Unit is converted or for which such BIP Unit is exchanged;
(k) "BIP Unit Value" means, with respect to a BIP Unit on a particular date, the market price of a BIP Unit on such date or, if such date is not a Trading Day, the most recent Trading Day. The market price for each such Trading Day shall be: (i) if the BIP Units are listed on a U.S. National Securities Exchange, the closing price per BIP Unit (or, if no closing price is reported, the average of the last quoted bid and ask prices or, if more than one in either case, the average of the average bid and average ask prices) on such day for such U.S. National Securities Exchange; (ii) if the BIP Units are not listed on a U.S. National Securities Exchange but are listed on the TSX, the U.S. dollar equivalent (calculated using the rate published by the Bank of Canada as of 4:30 p.m., Eastern Time, on such date) of the closing price per BIP Unit (or, if no closing price is reported, the average of the last quoted bid and ask prices or, if more than one in either case, the average of the average bid and average ask prices) on such day for the TSX; (iii) if the BIP Units are not listed or admitted to trading on any U.S. National Securities Exchange or the TSX, the last quoted bid price on such day in the over-the-counter market on such day as reported by OTC Markets Group Inc. or a similar organization; (iv) if the BIP Units are not listed or admitted to trading on any U.S. National Securities Exchange or the TSX and the BIP Units are not quoted in the over-the-counter market, the average of the mid-point of the last quoted bid and ask prices on such day from each of at least three nationally recognized independent investment banking firms selected by the Company for such purpose or (v) if none of the conditions set forth in clauses (i), (ii), (iii) or (iv) is met, then the amount that a holder of one BIP Unit would receive if each of the assets of BIP were sold for its fair market value on such date, BIP were to pay all of its outstanding liabilities and the remaining proceeds were to be distributed to its partners in accordance with the terms of its partnership agreement;
(l) "BIP Units Amount" means, with respect to each Tendered Share, such number of BIP Units equal to the Conversion Factor in effect on the Valuation Date with respect to such Tendered Shares;
(m) "board of directors", "directors" and "board" mean the directors or sole director of the Company for the time being;
(n) "Business Day" means any day except a Saturday, Sunday or other day on which commercial banks in New York, New York, United States of America or Toronto, Ontario, Canada are authorized or required by Law to close;
(o) "Cash Amount" means (a) with respect to each Tendered Class A Share, an amount in cash equal to the product of (i) the applicable BIP Units Amount for such Tendered Class A Share multiplied by (ii) the BIP Unit Value as of the applicable Valuation Date, and (b) with respect to each Tendered Class B Share and Tendered Class C Share, an amount in cash equal to the BIP Unit Value for such Tendered Class B Share or Tendered Class C Share, as applicable;
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(p) "Class A Distributed Right" has the meaning as provided in clause (vi) of the definition of "Conversion Factor" below;
(q) "Class A Dividend" has the meaning as provided in §25.2;
(r) "Class A Senior Preferred Share" means a class A senior preferred share of the Company;
(s) "Class A Share" means a class A exchangeable subordinate voting share of the Company;
(t) "Class A Share Value" means, with respect to a Class A Share on a particular date, the market price of a Class A Share on such date or, if such date is not a Trading Day, the most recent Trading Day. The market price for each such Trading Day shall be: (i) if the Class A Shares are listed on a U.S. National Securities Exchange, the closing price per Class A Share (or, if no closing price is reported, the average of the last quoted bid and ask prices or, if more than one in either case, the average of the average bid and average ask prices) on such day for such U.S. National Securities Exchange; (ii) if the Class A Shares are not listed on a U.S. National Securities Exchange but are listed on the TSX, the U.S. dollar equivalent (calculated using the rate published by the Bank of Canada as of 4:30 p.m., Eastern Time, on such date) of the closing price per Class A Share (or, if no closing price is reported, the average of the last quoted bid and ask prices or, if more than one in either case, the average of the average bid and average ask prices) on such day for the TSX; (iii) if the Class A Shares are not listed or admitted to trading on any U.S. National Securities Exchange or the TSX, the last quoted bid price on such day in the over-the-counter market on such day as reported by OTC Markets Group Inc. or a similar organization; (iv) if the Class A Shares are not listed or admitted to trading on any U.S. National Securities Exchange or the TSX and the Class A Shares are not quoted in the over-the-counter market, the average of the mid-point of the last quoted bid and ask prices on such day from each of at least three nationally recognized independent investment banking firms selected by the Company for such purpose or (v) if none of the conditions set forth in clauses (i), (ii), (iii) or (iv) is met then the amount that a holder of one Class A Share would receive if each of the assets of the Company were sold for its fair market value on such date, the Company were to pay all of its outstanding liabilities and the remaining proceeds were to be distributed to its shareholders in accordance with the terms of these Articles;
(u) "Class A Shareholder" means a holder of Class A Shares;
(v) "Class B Junior Preferred Share" means a class B junior preferred share of the Company;
(w) "Class B Retraction Amount" has the meaning as provided in §26.11;
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(x) "Class B Retraction Right" has the meaning as provided in §26.11;
(y) "Class B Share" means a class B multiple voting share of the Company;
(z) "Class B Shareholder" means a holder of Class B Shares;
(aa) "Class C Retraction Amount" has the meaning as provided in §27.8;
(bb) "Class C Retraction Right" has the meaning as provided in §27.8;
(cc) "Class C Share" means a class C non-voting share of the Company;
(dd) "Class C Shareholder" means a holder of Class C Shares;
(ee) "Close of Business" means 5:00 p.m., Eastern Time;
(ff) "Company" means Brookfield Infrastructure Corporation;
(gg) "Control" means the control by one Person of another Person in accordance with the following: a Person ("A") controls another Person ("B") where A has the power to determine the management and policies of B by contract or status (for example, the status of A being the general partner of B) or by virtue of the beneficial ownership of or control over a majority of the voting interests in B; and, for certainty and without limitation, if A owns or has control over shares or other securities to which are attached more than 50% of the votes permitted to be cast in the election of directors of to the Governing Body of B or A is the general partner of B, a limited partnership, then in each case A controls B for this purpose;
(hh) "Conversion Factor" means 1.0; provided that in the event that:
(i) BIP (a) declares or pays a distribution on its outstanding BIP Units wholly or partly in BIP Units; (b) splits or subdivides its outstanding BIP Units or (c) effects a reverse unit split or otherwise combines or reclassifies its outstanding BIP Units into a smaller number of BIP Units, the Conversion Factor shall be adjusted to equal the amount determined by multiplying the Conversion Factor in effect immediately prior to the Open of Business on the Record Date for such event by a fraction, (x) the numerator of which shall be the number of BIP Units issued and outstanding as of the Close of Business on the Record Date for such distribution or the Effective Date for such split, subdivision, reverse split, combination or reclassification, as applicable (assuming for such purpose that such distribution, split, subdivision, reverse split, combination or reclassification has occurred as of such time), and (y) the denominator of which shall be the actual number of BIP Units (determined without the above assumption) issued and outstanding as of the Close of Business on the Record Date for such distribution or the Effective Date for such split, subdivision, reverse split, combination or reclassification, as applicable.
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Any adjustment under this clause (i) shall become effective immediately after the Open of Business on the Record Date for such distribution, or immediately after the Open of Business on the Effective Date for such split, subdivision, reverse split, combination or reclassification, as applicable. If such distribution of the type described in this clause (i) is declared but not so paid or made and will not be so paid or made, the Conversion Factor shall be immediately readjusted, effective as of the date the BIP GP determines not to pay such distribution, to the Conversion Factor that would be in effect if such distribution had not been declared.
(ii) BIP distributes any rights, options or warrants to all or substantially all holders of BIP Units to convert into, exchange for or subscribe for or to purchase or to otherwise acquire BIP Units (or other securities convertible into, exchangeable for or exercisable for BIP Units) (each a "BIP Distributed Right"), then, as of the Record Date for the distribution of such BIP Distributed Rights or, if later, the time such BIP Distributed Rights become exercisable, the Conversion Factor shall be adjusted to equal the amount determined by multiplying the Conversion Factor in effect immediately prior to the Open of Business on the Record Date by a fraction (A) the numerator of which shall be the number of BIP Units issued and outstanding as of the Close of Business on the Record Date (or, if later, the date such BIP Distributed Rights become exercisable) plus the maximum number of BIP Units deliverable or purchasable under such BIP Distributed Rights and (B) the denominator of which shall be (x) the number of BIP Units issued and outstanding as of the Close of Business on the Record Date plus (y) such number of BIP Units determined by dividing the minimum aggregate cash purchase price under such BIP Distributed Rights of the maximum number of BIP Units purchasable under such BIP Distributed Rights by the average of the BIP Unit Value for the ten (10) consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement of such issuance (or, if later, the date such BIP Distributed Rights become exercisable); provided, however, that, if any such BIP Distributed Rights expire or become no longer exercisable, then the Conversion Factor shall be adjusted, effective retroactive to the Record Date of the BIP Distributed Rights, to reflect a reduced maximum number of BIP Units or any change in the minimum aggregate purchase price for the purposes of the above fraction.
Any adjustment under this clause (ii) will be made successively whenever such rights, options or warrants are issued and shall become effective immediately after the Open of Business on the Record Date for such issuance (or, if later, the date such rights, options or warrants become exercisable). To the extent that the BIP Units are not delivered and will not be delivered after the exercise of such rights, options or warrants, the Conversion Factor shall be decreased to the Conversion Factor that would then be in effect had the increase with respect to the issuance of such rights, options or warrants been made on the basis of delivery of only the number of BIP Units actually delivered. If such rights, options or warrants are not so issued, the Conversion Factor shall be decreased, effective as of the date the BIP GP determines not to issue such rights, options or warrants, to the Conversion Factor that would then be in effect if such Record Date for such issuance had not occurred.
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In determining the minimum aggregate purchase price under such BIP Distributed Rights, there shall be taken into account any consideration received by BIP for such rights, options or warrants and any amount payable on exercise or conversion thereof, the value of such consideration, if other than cash, to be determined by the BIP GP.
(iii) (A) BIP distributes to all or substantially all holders of BIP Units evidences of its indebtedness or assets (including securities, but excluding distributions paid exclusively in cash, distributions referred to in clauses (i) or (ii) above or any Spin-off referred to in clause (iii)(B) below) or rights, options or warrants to convert into, exchange for or subscribe for or to purchase or to otherwise acquire such securities (but excluding distributions referred to in clause (ii) above), the Conversion Factor shall be adjusted to equal the amount determined by multiplying the Conversion Factor in effect immediately prior to the Open of Business on the Record Date for such distribution by a fraction (a) the numerator of which shall be the average of the BIP Unit Value over the ten (10) consecutive Trading Day period ending on, and including, the Trading Day immediately prior to the Ex-Dividend Date for such distribution and (b) the denominator of which shall be the average of the BIP Unit Value over the ten (10) consecutive Trading Day period ending on, and including, the Trading Day immediately prior to the Ex-Dividend Date for such distribution less the fair market value on the Record Date for such distribution (as determined by the BIP GP) of the portion of the evidences of indebtedness or assets, rights, options or warrants so distributed applicable to one BIP Unit.
Any adjustment under this clause (iii)(A) will become effective immediately after the Open of Business on the Record Date for such distribution. If such distribution is not paid or made, the Conversion Factor shall be decreased, effective as of the date the BIP GP determines not to pay or make such distribution, to be the Conversion Factor that would then be in effect if such distribution had not been declared.
Notwithstanding the foregoing, if the fair market value (as determined by the BIP GP) of the portion of the evidences of indebtedness or assets, rights, options or warrants distributable to one BIP Unit is equal to or greater than the average BIP Unit Value referenced above in this clause (iii)(A), in lieu of the foregoing adjustment, each Class A Shareholder shall receive from the Company, in respect of each Class A Share, a distribution of cash payable out of the funds legally available therefor (at the same time as holders of the BIP Units), that in the determination of the Company, is comparable as a whole in all material respects with the amount of BIP indebtedness or assets or rights, options or warrants to convert into, exchange for or subscribe for or to purchase or to otherwise acquire such securities that such holder would have received if such holder owned a number of BIP Units equal to the Conversion Factor in effect immediately prior to the Record Date.
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(B) Where there has been a Spin-off, the Conversion Factor shall be adjusted to equal the amount determined by multiplying the Conversion Factor in effect immediately prior to the Open of Business on the Record Date for such Spin-off by a fraction (a) the numerator of which shall be the average of the Last Reported Sale Prices of the share capital or similar equity interest applicable to one BIP Unit distributed to BIP Unit holders over the Valuation Period plus the average of the BIP Unit Value over the Valuation Period and (b) the denominator of which shall be the average of the BIP Unit Value over the Valuation Period; provided that, the Company may elect to pay cash in lieu of making an adjustment to the Conversion Factor provided by this clause (iii)(B), in which case the Company shall be required to pay to the Class A Shareholders and the Class A Shareholders shall be entitled to receive, cash on the third (3rd) Business Day immediately following the last Trading Day of the Valuation Period in an amount in respect of each Class A Share held, calculated by multiplying the BIP Unit Value on the Record Date of such Spin-off by the amount the Conversion Factor would have increased as a result of such Spin-off if no such cash payment was made.
Any adjustment under this clause (iii)(B) will be made immediately after the Close of Business on the last Trading Day of the Valuation Period, but will be given effect as of the Open of Business on the Record Date for such Spin-off.
Notwithstanding the foregoing, in respect of any exchange by a Class A Shareholder during the Valuation Period, references contained in the definition of Valuation Period to "ten (10) consecutive Trading Days" shall be deemed for the purposes of the foregoing for such holder to be replaced with such lesser number of Trading Days as have elapsed between the Record Date of such Spin-off and the Trading Day immediately preceding the Exchange Date in determining the Conversion Factor. If any such Spin-off does not occur, the Conversion Factor shall be decreased, effective as of the date the BIP GP determines not to proceed with the Spin-off, to be the Conversion Factor that would then be in effect if such Spin-off had not been pursued.
(iv) BIP or one of its subsidiaries makes a payment in respect of a tender or exchange offer for the BIP Units (but excluding for all purposes any tender or exchange offer involving an offer to exchange BIP Units for Class A Shares or any other security that is economically equivalent to BIP Units), to the extent that the cash and value of any other consideration included in the payment per BIP Unit exceeds the average of the BIP Unit Value over the ten (10) consecutive Trading Day period commencing on, and including, the Trading Day next succeeding the last date on which tenders or exchanges may be made pursuant to such tender or exchange offer (the "Expiration Date"), then the Conversion Factor shall be adjusted to equal the amount determined by multiplying the Conversion Factor in effect immediately prior to the Open of Business on the Trading Day next succeeding the Expiration Date by a fraction (a) the numerator of which shall be (x) the sum of the aggregate value of all cash and any other consideration (as determined by the BIP GP) paid or payable in respect of BIP Units in such tender or exchange offer plus (y) the average of the BIP Unit Value over the ten (10) consecutive Trading Day period commencing on, and including, the Trading Day next succeeding the Expiration Date multiplied by the number of BIP Units issued and outstanding immediately after the Expiration Date (after giving effect to the purchase of all BIP Units accepted for purchase or exchange in such tender or exchange offer, without duplication), and (b) the denominator of which shall be the number of BIP Units issued and outstanding immediately prior to the Expiration Date (before giving effect to the purchase of all BIP Units accepted for purchase or exchange in such tender or exchange offer) multiplied by the average of the BIP Unit Value over the ten (10) consecutive Trading Day period commencing on, and including, the Trading Day next succeeding the Expiration Date.
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For greater certainty, no adjustment under this clause (iv) will be made for any normal course issuer bid or similar stock buyback. Any adjustment under this clause (iv) will be made immediately after the Close of Business on the tenth (10th) Trading Day immediately following, and including, the Trading Day next succeeding the Expiration Date and shall be given effect as of the Open of Business on the day next succeeding the Expiration Date.
Notwithstanding the foregoing, in respect of any exchange by a Class A Shareholder during the Valuation Period, references above to "ten (10) consecutive Trading Days" shall be deemed for such holder to be replaced with such lesser number of Trading Days as have elapsed between the Expiration Date and the Trading Day immediately preceding the Exchange Date in determining the Conversion Factor.
(v) the Company (a) declares or pays a dividend on its outstanding Class A Shares wholly or partly in Class A Shares; (b) splits or subdivides its outstanding Class A Shares or (c) effects a reverse share split or otherwise combines or reclassifies its outstanding Class A Shares into a smaller number of Class A Shares, the Conversion Factor shall be adjusted to equal the amount determined by multiplying the Conversion Factor in effect immediately prior to the Open of Business on the Record Date for such event by a fraction, (x) the numerator of which shall be the number of Class A Shares issued and outstanding as of the Close of Business on the Record Date for such dividend or the Effective Date for such split, subdivision, reverse split, combination or reclassification, as applicable (determined without the assumption for such purpose that such dividend, split, subdivision, reverse split, combination or reclassification has occurred as of such time), and (y) the denominator of which shall be the actual number of Class A Shares (assuming the above assumption has occurred) issued and outstanding as of the Close of Business on the Record Date for such dividend or the Effective Date for such split, subdivision, reverse split, combination or reclassification, as applicable.
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Any adjustment under this clause (v) shall become effective immediately after the Open of Business on the Record Date for such dividend, or immediately after the Open of Business on the Effective Date for such split, subdivision, reverse split, combination or reclassification, as applicable. If such dividend of the type described in this clause (v) is declared but not so paid or made and will not be so paid or made, the Conversion Factor shall be immediately readjusted, effective as of the date the board of directors determines not to pay such dividend, to the Conversion Factor that would be in effect if such dividend had not been declared.
(vi) the Company distributes any rights, options or warrants to all or substantially all holders of Class A Shares to convert into, exchange for or subscribe for or to purchase or to otherwise acquire Class A Shares (or other securities convertible into, exchangeable for or exercisable for Class A Shares) at a price per share that is less than the average of the Class A Share Value for the ten (10) consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement of such issuance (each a "Class A Distributed Right"), then, as of the Record Date for the distribution of such Class A Distributed Rights or, if later, the time such Class A Distributed Rights become exercisable, the Conversion Factor shall be adjusted to equal the amount determined by multiplying the Conversion Factor in effect immediately prior to the Open of Business on the Record Date by a fraction (A) the numerator of which shall be (x) the number of Class A Shares issued and outstanding as of the Close of Business on the Record Date (or, if later, the date such Class A Distributed Rights become exercisable) plus (y) such number of Class A Shares determined by dividing the minimum aggregate cash purchase price under such Class A Distributed Rights of the maximum number of Class A Shares purchasable under such Class A Distributed Rights by the average of the Class A Share Value for the ten (10) consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement of such issuance (or, if later, the date such Class A Distributed Rights become exercisable) and (B) the denominator of which shall be the number of Class A Shares issued and outstanding as of the Close of Business on the Record Date (or, if later, the date such Class A Distributed Rights become exercisable) plus the maximum number of Class A Shares purchasable under such Class A Distributed Rights; provided, however, that, if any such Class A Distributed Rights expire or become no longer exercisable, then the Conversion Factor shall be adjusted, effective retroactive to the Record Date of the Class A Distributed Rights, to reflect a reduced maximum number of Class A Shares or any change in the minimum aggregate purchase price for the purposes of the above fraction.
Any adjustment under this clause (vi) will be made successively whenever such rights, options or warrants are issued and shall become effective immediately after the Open of Business on the Record Date (or, if later, the date such Class A Distributed Rights become exercisable) for such issuance. To the extent that the Class A Shares are not delivered and will not be delivered after the exercise of such rights, options or warrants, the Conversion Factor shall be increased to the Conversion Factor that would then be in effect had the increase with respect to the issuance of such rights, options or warrants been made on the basis of delivery of only the number of Class A Shares actually delivered. If such rights, options or warrants are not so issued, the Conversion Factor shall be increased, effective as of the date the board of directors determines not to issue such rights, options or warrants, to the Conversion Factor that would then be in effect if such Record Date for such issuance had not occurred.
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In determining the minimum aggregate purchase price under such Class A Distributed Rights, there shall be taken into account any consideration received by the Company for such rights, options or warrants and any amount payable on exercise or conversion thereof, the value of such consideration, if other than cash, to be determined by the board of directors.
Any adjustment to the Conversion Factor shall be calculated up to four (4) decimal places. Within ten (10) Business Days of the effectiveness of any adjustment or readjustment of the Conversion Factor, the Company shall make a public announcement of such adjustment or readjustment.
Notwithstanding the foregoing, the Conversion Factor shall not be adjusted in connection with (a) an event described in clauses (i) through (iv) above (other than clause (iii)(B) above) if, in connection with such event, the Company makes a distribution of cash, Class A Shares, BIP Units and/or rights, options or warrants to acquire Class A Shares and/or BIP Units with respect to all applicable Class A Shares, splits or subdivides the Class A Shares, distributes to all or substantially all holders of Class A Shares evidences of its indebtedness or assets or effects a reverse split of, or otherwise combines or makes an offer for, the Class A Shares, as applicable, that, in the determination of the Company, is comparable as a whole in all material respects with such event, (b) a Spin-off as described in clause (iii)(B) above if the Company makes a distribution of the share capital or similar equity interests distributed to BIP Unit holders in the Spin-off in an amount and on terms that are comparable in all material respects to such Spin-off, or (c) an event described in clauses (v) through (vi) above if, in connection with such event, BIP makes a distribution of cash, Class A Shares, BIP Units and/or rights, options or warrants to acquire Class A Shares and/or BIP Units with respect to all BIP Units, splits or subdivides the BIP Units or effects a reverse split of, or otherwise combines or makes an offer for, the BIP Units, as applicable, that, in the determination of the Company, is comparable as a whole in all material respects with such event;
(ii) "Conversion Notice" has the meaning as provided in §25.31;
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(jj) "Effective Date" means, with respect to an event described in clauses (i) and (v) of the definition of "Conversion Factor" above, the first date on which the BIP Units or Class A Shares, as applicable, trade on the applicable exchange or in the applicable market, in a regular way, reflecting the relevant unit or share split, subdivision, reserve split, combination or reclassification, as applicable;
(kk) "Exchange Act" means the U.S. Securities Exchange Act of 1934, as amended;
(ll) "Exchange Consideration" has the meaning as provided in §25.13;
(mm) "Exchange Date" means the date upon which a Tendering Class A Shareholder's Exchange Right has been satisfied by the delivery of the Exchange Consideration to such Tendering Class A Shareholder with respect to its Tendered Class A Shares;
(nn) "Exchange-Redemption Call Right" has the meaning as provided in §25.23;
(oo) "Exchange Right" has the meaning as provided in §25.11;
(pp) "Ex-Dividend Date" means, in respect of a dividend or distribution on the applicable securities, (a) the date on which such securities are traded without an entitlement to such dividend or distribution or (b) where such securities trade on a due bill basis, the date on which such dividend or distribution is paid;
(qq) "Expiration Date" has the meaning as provided in clause (iv) of the definition of "Conversion Factor" above;
(rr) "Governing Body" means (i) with respect to a corporation or limited company, the board of directors of such corporation or limited company, (ii) with respect to a limited liability company, the manager(s), director(s) or managing partner(s) of such limited liability company, (iii) with respect to a partnership, the board, committee or other body of each general partner or managing partner of such partnership, respectively, that serves a similar function (or if any such general partner is itself a partnership, the board, committee or other body of such general or managing partner's general or managing partner that serves a similar function), and (iv) with respect to any other Person, the body of such Person that serves a similar function, and in the case of each of (i) through (iv) includes any committee or other subdivision of such body and any Person to whom such body has delegated any power or authority, including any officer or managing director;
(ss) "Interpretation Act" means the Interpretation Act (British Columbia) from time to time in force and all amendments thereto and includes all regulations and amendments thereto made pursuant to that Act;
(tt) "Last Reported Sale Price" means with respect to a security on a particular date, the market price of such security on such date or, if such date is not a Trading Day, the most recent Trading Day. The market price for each such Trading Day shall be: (i) if such security is listed on a U.S. National Securities Exchange, the closing price per security (or, if no closing price is reported, the average of the last quoted bid and ask prices or, if more than one in either case, the average of the average bid and average ask prices) on such day for such U.S. National Securities Exchange (or, if listed on more than one U.S. National Securities Exchange, the U.S. National Securities Exchange with the greatest volume of trading by dollar value over the 12-month period preceding the date of the calculation); (ii) if such security is not listed on a U.S. National Securities Exchange but is listed on the TSX, the U.S. dollar equivalent (calculated using the rate published by the Bank of Canada as of 4:30 p.m., Eastern Time, on such date) of the closing price per security (or, if no closing price is reported, the average of the last quoted bid and ask prices or, if more than one in either case, the average of the average bid and average ask prices) on such day for the TSX; (iii) if such security is not listed or admitted to trading on any U.S. National Securities Exchange or the TSX, the last quoted bid price on such day in the over-the-counter market on such day as reported by OTC Markets Group Inc. or a similar organization; or (iv) if such security is not listed or admitted to trading on any U.S. National Securities Exchange or the TSX and such security is not quoted in the over-the-counter market, the average of the mid-point of the last quoted bid and ask prices on such day from each of at least three nationally recognized independent investment banking firms selected by the Company for such purpose;
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(uu) "Laws" means all federal, provincial, state, municipal, regional and local laws (including common law), by-laws, statutes, rules, regulations, principles of law and equity, orders, rulings, certificates, ordinances, judgments, injunctions, determinations, awards, decrees, legally binding codes, policies or other requirements, whether domestic or foreign, and the terms and conditions of any grant of approval, permission, authority or license of any governmental entity, and the term "applicable" with respect to such Laws and in a context that refers to one or more Persons, means such Laws as are binding upon or applicable to such Person or its assets;
(vv) "legal personal representative" means the personal or other legal representative of the shareholder;
(ww) "Liquidation Amount" has the meaning as provided in §25.25;
(xx) "Liquidation Call Consideration" has the meaning as provided in §25.28;
(yy) "Liquidation Call Right" has the meaning as provided in §25.28;
(zz) "Liquidation Date" has the meaning as provided in §25.25;
(aaa) "Liquidation Event" has the meaning as provided in §25.25;
(bbb) "Liquidation Reference Date" has the meaning as provided in §25.25;
(ccc) "Non-Affiliated Holders" means the holders of Class A Shares other than BIP-Affiliated Class A Shareholders;
(ddd) "Notice of Class A Redemption" means a Notice of Redemption substantially in the form set forth on Exhibit B hereto;
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(eee) "Notice of Class B Retraction" means a Notice of Retraction substantially in the form set forth on Exhibit C hereto;
(fff) "Notice of Class C Retraction" means a Notice of Retraction substantially in the form set forth on Exhibit D hereto;
(ggg) "Notice of Exchange" means a Notice of Exchange substantially in the form set forth on Exhibit A hereto (or notice of the exercise of Exchange Rights in such other form as may be acceptable to the Company);
(hhh) "Open of Business" means 9:00 a.m., Eastern Time;
(iii) "Person" means any natural person, partnership, limited partnership, limited liability partnership, joint venture, syndicate, sole proprietorship, company or corporation (with or without share capital), limited liability corporation, unlimited liability company, joint stock company, unincorporated association, trust, trustee, executor, administrator or other legal personal representative, governmental entity or other entity however designated or constituted and pronouns have a similarly extended meaning;
(jjj) "Preferred Shares" means the Class A Senior Preferred Shares and the Class B Junior Preferred Shares;
(kkk) "Record Date" means with respect to any dividend, distribution or other transaction or event in which the holders of BIP Units and/or Class A Shares have the right to receive any cash, securities, assets or other property or in which BIP Units and/or Class A Shares are exchanged for or converted into any combination of securities, cash, assets or other property, the date fixed for determination of holders of BIP Units and/or Class A Shares entitled to receive such cash, securities, assets or other property (whether such date is fixed by the board of directors or the BIP GP, as applicable, or a duly authorized committee thereof, or as determined pursuant to any statute, constating document, contract or otherwise);
(lll) "Redemption Consideration" has the meaning as provided in §25.21;
(mmm) "registered address" of a shareholder means the shareholder's address as recorded in the central securities register;
(nnn) "Rights Agent" means Wilmington Trust, National Association or any successor thereto as rights agent for the Secondary Exchange Amount;
(ooo) "Rights Agreement" means that certain Rights Agreement dated on or about March 31, 2020 by and between BAM and the Rights Agent as it may be amended or modified from time to time in accordance with the terms thereof;
(ppp) "Secondary Exchange Amount" means, with respect to a Tendered Share, the BIP Units Amount for such Tendered Share or, at the election of BAM, the Cash Amount for such Tendered Share, in each case, on the terms and subject to the conditions of the Rights Agreement;
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(qqq) "Secondary Exchange Date" means, with respect to any Class A Share, the date that is two (2) Business Days following the Specified Exchange Date or Specified Class A Redemption Date, as applicable, with respect to such Class A Share;
(rrr) "Secondary Exchange Right" has the meaning set forth in §25.16;
(sss) "share" means a share in the share structure of the Company;
(ttt) "special majority" means the number of votes described in §11.2 which is required to pass a special resolution;
(uuu) "Specified Class A Redemption Date" means, with respect to the Notice of Class A Redemption, the sixtieth (60th) day following delivery of such Notice of Class A Redemption to the Class A Shareholder or such later day specified in such Notice of Class A Redemption;
(vvv) "Specified Class B Retraction Date" means, with respect to each Notice of Class B Retraction, the thirtieth (30th) day following receipt of such Notice of Class B Retraction by the Company;
(www) "Specified Class C Retraction Date" means, with respect to each Notice of Class C Retraction, the thirtieth (30th) day following receipt of such Notice of Class C Retraction by the Company;
(xxx) "Specified Exchange Date" means, with respect to each Notice of Exchange for which an Exchange Date has not occurred prior thereto, the tenth (10th) Business Day following the receipt of such Notice of Exchange by the Transfer Agent;
(yyy) "Spin-off" means a payment by BIP of a distribution of shares of any class or series, or similar equity interest, of or relating to a subsidiary or business unit of BIP, that are, or, when issued, will be, listed or admitted for trading on a U.S. National Securities Exchange or the TSX;
(zzz) "Tendered Class A Shares" has the meaning as provided in §25.11;
(aaaa) "Tendered Class B Shares" has the meaning as provided in §26.11;
(bbbb) "Tendered Class C Shares" has the meaning as provided in §27.8;
(cccc) "Tendered Shares" means the Tendered Class A Shares, Tendered Class B Shares or Tendered Class C Shares, as applicable;
(dddd) "Tendering Class A Shareholder" has the meaning as provided in §25.11;
(eeee) "Tendering Class B Shareholder" has the meaning as provided in §26.11;
(ffff) "Tendering Class C Shareholder" has the meaning as provided in §27.8;
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(gggg) "Trading Day" means a day on which (a) trading in the applicable securities generally occurs on a U.S. National Securities Exchange or, if the applicable securities are not then listed on a U.S. National Securities Exchange, on the TSX or such other market on which the applicable securities are then traded and (b) a Last Reported Sale Price for the applicable securities is available on such securities exchange or market. If the applicable securities are not so listed, or in the case of unlisted securities, so traded, "Trading Day" means a "Business Day";
(hhhh) "Transfer" means any sale, assignment, surrender, gift or transfer of ownership of, the granting or foreclosure of a pledge, mortgage, charge, security interest, hypothecation or other encumbrance, whether voluntary, involuntary, by operation of law or otherwise, or the entry into of any contract, option or other arrangement or understanding with respect to the foregoing;
(iiii) "Transfer Agent" means Computershare Investor Services Inc., and includes any person who becomes a successor or replacement transfer agent is deemed to refer to all successors, including, without limitation, by operation of law of such transfer agent;
(jjjj) "TSX" means Toronto Stock Exchange;
(kkkk) "Unpaid Dividends" has the meaning as provided in §25.3;
(llll) "U.S. National Securities Exchange" means an exchange registered with the U.S. Securities and Exchange Commission under Section 6(a) of the Exchange Act on which the applicable securities are listed, or if the applicable securities are not listed on an exchange so registered with the U.S. Securities and Exchange Commission, any other U.S. exchange, whether or not so registered, on which the applicable securities are listed;
(mmmm) "Valuation Date" means (i) the date of receipt by the Transfer Agent of a Notice of Exchange, or by the Company of a Notice of Class B Retraction or Notice of Class C Retraction, as applicable, or, if such date is not a Trading Day, the first (1st) Trading Day thereafter; or (ii) the day immediately preceding the date the Company issues a Notice of Class A Redemption, or, if such day is not a Business Day, the Trading Day immediately preceding such day; and
(nnnn) "Valuation Period" means, with respect to any Spin-off, the ten (10) consecutive Trading Day period commencing on, and including, the Ex-Dividend Date of the Spin-off.
Act and Interpretation Act Definitions Applicable
1.2 The definitions in the Act and the definitions and rules of construction in the Interpretation Act, with the necessary changes, so far as applicable, and except as the context requires otherwise, apply to these Articles as if they were an enactment. If there is a conflict between a definition in the Act and a definition or rule in the Interpretation Act relating to a term used in these Articles, the definition in the Act will prevail. If there is a conflict or inconsistency between these Articles and the Act, the Act will prevail.
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Actions on Non-Business Days
1.3 Whenever any payment to be made or action to be taken hereunder is required to be made or taken on a day other than a Business Day, such payment shall be made or action taken on the next following Business Day.
Currency
1.4 Except where otherwise expressly provided herein, all amounts are stated in U.S. currency.
PART 2
SHARES AND SHARE CERTIFICATES
Authorized Share Structure
2.1 The authorized share structure of the Company consists of shares of the class or classes and series, if any, described in the Notice of Articles of the Company.
Form of Share Certificate
2.2 Each share certificate issued by the Company must comply with, and be signed as required by, the Act.
Shareholder Entitled to Certificate, Acknowledgment or Written Notice
2.3 Unless the shares of which the shareholder is the registered owner are uncertificated shares, each shareholder is entitled, without charge, to (a) one share certificate representing the shares of each class or series of shares registered in the shareholder's name or (b) a non-transferable written acknowledgment of the shareholder's right to obtain such a share certificate, provided that in respect of a share held jointly by several persons, the Company is not bound to issue more than one share certificate and delivery of a share certificate for a share to one of several joint shareholders or to one of the shareholders' duly authorized agents will be sufficient delivery to all. If a shareholder is the registered owner of uncertificated shares, the Company must send to a holder of an uncertificated share a written notice containing the information required by the Act within a reasonable time after the issue or transfer of such share.
Delivery by Mail
2.4 Any share certificate or non-transferable written acknowledgment of a shareholder's right to obtain a share certificate may be sent to the shareholder by mail at the shareholder's registered address and neither the Company nor any director, officer or agent of the Company is liable for any loss to the shareholder because the share certificate or acknowledgement is lost in the mail or stolen.
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Replacement of Worn Out or Defaced Certificate or Acknowledgement
2.5 If a share certificate or a non-transferable written acknowledgment of the shareholder's right to obtain a share certificate is worn out or defaced, the Company must, on production of the share certificate or acknowledgment, as the case may be, and on such other terms, if any, as are deemed fit:
(a) cancel the share certificate or acknowledgment; and
(b) issue a replacement share certificate or acknowledgment.
Replacement of Lost, Stolen or Destroyed Certificate or Acknowledgment
2.6 If a share certificate or a non-transferable written acknowledgment of a shareholder's right to obtain a share certificate is lost, stolen or destroyed, the Company must issue a replacement share certificate or acknowledgment, as the case may be, to the person entitled to that share certificate or acknowledgment, if it receives:
(a) proof satisfactory to it of the loss, theft or destruction; and
(b) any indemnity the directors consider adequate.
Splitting Share Certificates
2.7 If a shareholder surrenders a share certificate to the Company with a written request that the Company issue in the shareholder's name two or more share certificates, each representing a specified number of shares and in the aggregate representing the same number of shares as the share certificate so surrendered, the Company must cancel the surrendered share certificate and issue replacement share certificates in accordance with that request.
Certificate Fee
2.8 There must be paid to the Company, in relation to the issue of any share certificate under §2.5, §2.6 or §2.7, the amount, if any, not exceeding the amount prescribed under the Act, determined by the directors.
Recognition of Trusts
2.9 Except as required by law or statute or these Articles, no person will be recognized by the Company as holding any share upon any trust, and the Company is not bound by or compelled in any way to recognize (even when having notice thereof) any equitable, contingent, future or partial interest in any share or fraction of a share or (except as required by law or statute or these Articles or as ordered by a court of competent jurisdiction) any other rights in respect of any share except an absolute right to the entirety thereof in the shareholder.
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PART 3
ISSUE OF
SHARES
Directors Authorized
3.1 Subject to the Act and the rights, if any, of the holders of issued shares of the Company, the Company may allot, issue, sell or otherwise dispose of the unissued shares, and issued shares held by the Company, at the times, to the persons, including directors, in the manner, on the terms and conditions and for the consideration (including any premium at which shares with par value may be issued) that the directors may determine. The issue price for a share with par value must be equal to or greater than the par value of the share.
Commissions and Discounts
3.2 The Company may at any time pay a reasonable commission or allow a reasonable discount to any person in consideration of that person's purchase or agreement to purchase shares of the Company from the Company or any other person's procurement or agreement to procure purchasers for shares of the Company.
Brokerage
3.3 The Company may pay such brokerage fee or other consideration as may be lawful for or in connection with the sale or placement of its securities.
Conditions of Issue
3.4 Except as provided for by the Act, no share may be issued until it is fully paid. A share is fully paid when:
(a) consideration is provided to the Company for the issue of the share by one or more of the following:
(i) past services performed for the Company;
(ii) property;
(iii) money; and
(b) the value of the consideration received by the Company equals or exceeds the issue price set for the share under §3.1.
Share Purchase Warrants and Rights
3.5 Subject to the Act and the rights if any, of the holders of issued shares of the Company, the Company may issue share purchase warrants, options and rights upon such terms and conditions as the directors determine, which share purchase warrants, options and rights may be issued alone or in conjunction with debentures, debenture stock, bonds, shares or any other securities issued or created by the Company from time to time.
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PART 4
SHARE REGISTERS
Central Securities Register
4.1 As required by and subject to the Act, the Company must maintain a central securities register and may appoint an agent to maintain such register. The directors may appoint one or more agents, including the agent appointed to keep the central securities register, as transfer agent for shares or any class or series of shares and the same or another agent as registrar for shares or such class or series of shares, as the case may be. The directors may terminate such appointment of any agent at any time and may appoint another agent in its place. If the directors designate a location outside British Columbia as the location at which the company maintains its central securities register, the central securities register must be available for inspection and copying in accordance with the Act at a location inside British Columbia by means of a computer terminal or other electronic technology.
PART 5
SHARE TRANSFERS
Registering Transfers
5.1 A transfer of a share must not be registered unless the Company or the transfer agent or registrar for the class or series of shares to be transferred has received:
(a) except as exempted by the Act, a duly signed proper instrument of transfer in respect of the share;
(b) if a share certificate has been issued by the Company in respect of the share to be transferred, that share certificate;
(c) if a non-transferable written acknowledgment of the shareholder's right to obtain a share certificate has been issued by the Company in respect of the share to be transferred, that acknowledgment; and
(d) such other evidence, if any, as the Company or the transfer agent or registrar for the class or series of share to be transferred may require to prove the title of the transferor or the transferor's right to transfer the share, the due signing of the instrument of transfer and the right of the transferee to have the transfer registered.
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Form of Instrument of Transfer
5.2 The instrument of transfer in respect of any share of the Company must be either in the form, if any, on the back of the Company's share certificates of that class or series or in some other form that may be approved by the directors.
Transferor Remains Shareholder
5.3 Except to the extent that the Act otherwise provides, the transferor of a share is deemed to remain the holder of it until the name of the transferee is entered in a securities register of the Company in respect of the transfer.
Signing of Instrument of Transfer
5.4 If a shareholder, or the shareholder's duly authorized attorney, signs an instrument of transfer in respect of shares registered in the name of the shareholder, the signed instrument of transfer constitutes a complete and sufficient authority to the Company and its directors, officers and agents to register the number of shares specified in the instrument of transfer or specified in any other manner, or, if no number is specified, all the shares represented by the share certificates or set out in the written acknowledgments deposited with the instrument of transfer:
(a) in the name of the person named as transferee in that instrument of transfer; or
(b) if no person is named as transferee in that instrument of transfer, in the name of the person on whose behalf the instrument is deposited for the purpose of having the transfer registered.
Enquiry as to Title Not Required
5.5 Neither the Company nor any director, officer or agent of the Company is bound to inquire into the title of the person named in the instrument of transfer as transferee or, if no person is named as transferee in the instrument of transfer, of the person on whose behalf the instrument is deposited for the purpose of having the transfer registered or is liable for any claim related to registering the transfer by the shareholder or by any intermediate owner or holder of the shares transferred, of any interest in such shares, of any share certificate representing such shares or of any written acknowledgment of a right to obtain a share certificate for such shares.
Transfer Fee
5.6 There must be paid to the Company, in relation to the registration of a transfer, the amount, if any, determined by the directors.
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PART 6
TRANSMISSION OF SHARES
Legal Personal Representative Recognized on Death
6.1 In case of the death of a shareholder, the legal personal representative of the shareholder, or in the case of shares registered in the shareholder's name and the name of another person in joint tenancy, the surviving joint holder, will be the only person recognized by the Company as having any title to the shareholder's interest in the shares. Before recognizing a person as a legal personal representative of a shareholder, the Company shall receive the documentation required by the Act.
Rights of Legal Personal Representative
6.2 The legal personal representative of a shareholder has the same rights, privileges and obligations that attach to the shares held by the shareholder, including the right to transfer the shares in accordance with these Articles, provided the documents required by the Act and the directors have been deposited with the Company. This §6.2 does not apply in the case of the death of a shareholder with respect to shares registered in the name of the shareholder and the name of another person in joint tenancy.
PART 7
PURCHASE, REDEEM OR OTHERWISE ACQUIRE SHARES
Company Authorized to Purchase, Redeem or Otherwise Acquire Shares
7.1 Subject to the special rights or restrictions attached to the shares of any class or series and the Act, the Company may, if authorized by the directors, purchase or otherwise acquire any of its shares at the price and upon the terms determined by the directors.
Sale and Voting of Purchased, Redeemed or Otherwise Acquired Shares
7.2 If the Company retains a share redeemed, purchased or otherwise acquired by it, the Company may sell, gift, cancel or otherwise dispose of the share, but, while such share is held by the Company, it:
(a) is not entitled to vote the share at a meeting of its shareholders;
(b) must not pay a dividend in respect of the share; and
(c) must not make any other distribution in respect of the share.
Company Entitled to Purchase, Redeem or Otherwise Acquire Share Fractions
7.3 The Company may, without prior notice to the holders, purchase, redeem or otherwise acquire for fair value any and all outstanding share fractions of any class or kind of shares in its authorized share structure as may exist at any time and from time to time. Upon the Company delivering the purchase funds and confirmation of purchase or redemption of the share fractions to the holders' registered or last known address, or if the Company has a transfer agent then to such agent for the benefit of and forwarding to such holders, the Company shall thereupon amend its central securities register to reflect the purchase or redemption of such share fractions and if the Company has a transfer agent, shall direct the transfer agent to amend the central securities register accordingly.
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PART
8
BORROWING POWERS
8.1 The Company, if authorized by the directors, may:
(a) borrow money in the manner and amount, on the security, from the sources and on the terms and conditions that they consider appropriate;
(b) issue bonds, debentures and other debt obligations either outright or as security for any liability or obligation of the Company or any other person and at such discounts or premiums and on such other terms as the directors consider appropriate;
(c) guarantee the repayment of money by any other person or the performance of any obligation of any other person; and
(d) mortgage, charge, whether by way of specific or floating charge, grant a security interest in, or give other security on, the whole or any part of the present and future assets and undertaking of the Company.
PART 9
ALTERATIONS
Alteration of Authorized Share Structure
9.1 Subject to §9.2 and the Act, the Company may by ordinary resolution (or a resolution of the directors in the case of §9.1(c) or §9.1(f)):
(a) create one or more classes of shares or, if none of the shares of a class of shares are allotted or issued, eliminate that class of shares;
(b) increase, reduce or eliminate the maximum number of shares that the Company is authorized to issue out of any class of shares or establish a maximum number of shares that the Company is authorized to issue out of any class of shares for which no maximum is established;
(c) subdivide or consolidate all or any of its unissued, or fully paid issued, shares;
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(d) if the Company is authorized to issue shares of a class of shares with par value:
(i) decrease the par value of those shares; or
(ii) if none of the shares of that class of shares are allotted or issued, increase the par value of those shares;
(e) change all or any of its unissued, or fully paid issued, shares with par value into shares without par value or any of its unissued shares without par value into shares with par value;
(f) alter the identifying name of any of its shares; or
(g) otherwise alter its shares or authorized share structure when required or permitted to do so by the Act where it does not specify by a special resolution;
and, if applicable, alter its Notice of Articles and Articles accordingly.
Special Rights or Restrictions
9.2 Subject to the Act and in particular those provisions of the Act relating to the rights of holders of outstanding shares to vote if their rights are prejudiced or interfered with, the Company may by ordinary resolution:
(a) create special rights or restrictions for, and attach those special rights or restrictions to, the shares of any class of shares, whether or not any or all of those shares have been issued; or
(b) vary or delete any special rights or restrictions attached to the shares of any class of shares, whether or not any or all of those shares have been issued,
and alter its Notice of Articles and Articles accordingly.
Change of Name
9.3 The Company may by directors resolution authorize an alteration of its Notice of Articles in order to change its name or adopt or change any translation of that name.
Other Alterations
9.4 If the Act does not specify the type of resolution and these Articles do not specify another type of resolution, the Company may by ordinary resolution alter these Articles.
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PART
10
MEETINGS OF SHAREHOLDERS
Annual General Meetings
10.1 Unless an annual general meeting is deferred or waived in accordance with the Act, the Company must hold its first annual general meeting within 18 months after the date on which it was incorporated or otherwise recognized, and after that must hold an annual general meeting at least once in each calendar year and not more than 15 months after the last annual reference date at such time and place as may be determined by the directors.
Resolution Instead of Annual General Meeting
10.2 If all the shareholders who are entitled to vote at an annual general meeting consent in writing by a unanimous resolution to all of the business that is required to be transacted at that annual general meeting, the annual general meeting is deemed to have been held on the date of the unanimous resolution. The shareholders must, in any unanimous resolution passed under this §10.2, select as the Company's annual reference date a date that would be appropriate for the holding of the applicable annual general meeting. A unanimous resolution passed in writing under this §10.2 may be by signed document, fax, email or any other method of transmitting legibly recorded messages. Any electronic signature on a unanimous resolution, whether digital or encrypted, shall be deemed to have the same force and effect as a manual signature. A unanimous resolution in writing may be in two or more counterparts which together are deemed to constitute one unanimous resolution in writing.
Calling of Meetings of Shareholders
10.3 The directors may, at any time, call a meeting of shareholders.
Notice for Meetings of Shareholders
10.4 The Company must send notice of the date, time and location of any meeting of shareholders (including, without limitation, any notice specifying the intention to propose a resolution as a special resolution and any notice to consider approving a continuation into a foreign jurisdiction, an arrangement or the adoption of an amalgamation agreement, and any notice of a general meeting, class meeting or series meeting), in the manner provided in these Articles, or in such other manner, if any, as may be prescribed by ordinary resolution (whether previous notice of the resolution has been given or not), to each shareholder entitled to attend the meeting, to each director and to the auditor of the Company, unless these Articles otherwise provide, at least the following number of days before the meeting:
(a) if the Company is a public company, 21 days;
(b) otherwise, 10 days.
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Record Date for Notice
10.5 The directors may set a date as the record date for the purpose of determining shareholders entitled to notice of any meeting of shareholders. The record date must not precede the date on which the meeting is to be held by more than two months or, in the case of a general meeting requisitioned by shareholders under the Act, by more than four months. The record date must not precede the date on which the meeting is held by fewer than:
(a) if the Company is a public company, 21 days;
(b) otherwise, 10 days.
If no record date is set, the record date is 5 p.m. on the day immediately preceding the first date on which the notice is sent or, if no notice is sent, the beginning of the meeting.
Record Date for Voting
10.6 The directors may set a date as the record date for the purpose of determining shareholders entitled to vote at any meeting of shareholders. The record date must not precede the date on which the meeting is to be held by more than two months or, in the case of a general meeting requisitioned by shareholders under the Act, by more than four months. If no record date is set, the record date is 5 p.m. on the day immediately preceding the first date on which the notice is sent or, if no notice is sent, the beginning of the meeting.
Failure to Give Notice and Waiver of Notice
10.7 The accidental omission to send notice of any meeting of shareholders to, or the non-receipt of any notice by, any of the persons entitled to notice does not invalidate any proceedings at that meeting. Any person entitled to notice of a meeting of shareholders may, in writing or otherwise, waive that entitlement or may agree to reduce the period of that notice. Attendance of a person at a meeting of shareholders is a waiver of entitlement to notice of the meeting unless that person attends the meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called.
Notice of Special Business at Meetings of Shareholders
10.8 If a meeting of shareholders is to consider special business within the meaning of §11.1, the notice of meeting must:
(a) state the general nature of the special business; and
(b) if the special business includes considering, approving, ratifying, adopting or authorizing any document or the signing of or giving of effect to any document, have attached to it a copy of the document or state that a copy of the document will be available for inspection by shareholders:
(i) at the Company's records office, or at such other reasonably accessible location in British Columbia as is specified in the notice; and
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(ii) during statutory business hours on any one or more specified days before the day set for the holding of the meeting.
Place of Meetings
10.9 In addition to any location in British Columbia, any general meeting may be held in any location outside British Columbia approved by a resolution of the directors, or if so approved by a resolution of the directors, any general meeting may be held entirely by means of an electronic or other communication facility that permits all persons participating in the meeting to communicate adequately with each other to the extent permitted by the Act.
PART 11
PROCEEDINGS AT MEETINGS OF SHAREHOLDERS
Special Business
11.1 At a meeting of shareholders, the following business is special business:
(a) at a meeting of shareholders that is not an annual general meeting, all business is special business except business relating to the conduct of or voting at the meeting;
(b) at an annual general meeting, all business is special business except for the following:
(i) business relating to the conduct of or voting at the meeting;
(ii) consideration of any financial statements of the Company presented to the meeting;
(iii) consideration of any reports of the directors or auditor;
(iv) the setting or changing of the number of directors;
(v) the election or appointment of directors;
(vi) the appointment of an auditor;
(vii) the setting of the remuneration of an auditor;
(viii) business arising out of a report of the directors not requiring the passing of a special resolution;
(ix) any other business which, under these Articles or the Act, may be transacted at a meeting of shareholders without prior notice of the business being given to the shareholders.
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Special Resolutions
11.2 The number of votes required for the Company to pass a special resolution at a general meeting of shareholders is two-thirds of the votes cast on the resolution.
Ordinary Resolutions
11.3 The number of votes required for the Company to pass an ordinary resolution at a general meeting of shareholders is a majority of the votes cast on the resolution.
Quorum
11.4 Subject to the special rights or restrictions attached to the shares of any class or series of shares, and to §11.6, the quorum for the transaction of business at a meeting of shareholders is at least two shareholders who, whether present in person or represented by proxy, in the aggregate, hold at least 25% of the votes attached to the shares entitled to be voted at the meeting.
11.5 Where a separate vote by a class or series or classes or series is required, the quorum for that matter is at least two shareholders who, whether present in person or represented by proxy, in the aggregate, hold at least 25% of the votes attached to the shares of such class or series or classes or series entitled to vote on that matter.
One Shareholder May Constitute Quorum
11.6 If there is only one shareholder entitled to vote at a meeting of shareholders:
(a) the quorum is one person who is, or who represents by proxy, that shareholder, and
(b) that shareholder, present in person or by proxy, may constitute the meeting.
Persons Entitled to Attend Meeting
11.7 In addition to those persons who are entitled to vote at a meeting of shareholders, the only other persons entitled to be present at the meeting are the directors, the president (if any), the secretary (if any), the assistant secretary (if any), any lawyer for the Company, the auditor of the Company, any persons invited to be present at the meeting by the directors or by the chair of the meeting and any persons entitled or required under the Act or these Articles to be present at the meeting; but if any of those persons does attend the meeting, that person is not to be counted in the quorum and is not entitled to vote at the meeting unless that person is a shareholder or proxy holder entitled to vote at the meeting.
Requirement of Quorum
11.8 No business, other than the election of a chair of the meeting and the adjournment of the meeting, may be transacted at any meeting of shareholders unless a quorum of shareholders entitled to vote is present at the commencement of the meeting, but such quorum need not be present throughout the meeting.
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Lack of Quorum
11.9 If, within one-half hour from the time set for the holding of a meeting of shareholders, a quorum is not present:
(a) in the case of a general meeting requisitioned by shareholders, the meeting is dissolved, and
(b) in the case of any other meeting of shareholders, the meeting stands adjourned to the same day in the next week at the same time and place specified in the notice calling the meeting unless otherwise determined by an ordinary resolutions of those shareholders present and for which notification is provided to all shareholders entitled to attend such meeting.
Lack of Quorum at Succeeding Meeting
11.10 If, at the meeting to which the meeting referred to in §11.9(b) was adjourned, a quorum is not present within one-half hour from the time set for the holding of the meeting, the person or persons present and being, or representing by proxy one or more shareholders, entitled to attend and vote at the meeting shall be deemed to constitute a quorum.
Chair
11.11 The following individual is entitled to preside as chair at a meeting of shareholders:
(a) the chair of the board, if any; or
(b) if the chair of the board is absent or unwilling to act as chair of the meeting, the president, if any.
Selection of Alternate Chair
11.12 If, at any meeting of shareholders, there is no chair of the board or president present within 15 minutes after the time set for holding the meeting, or if the chair of the board and the president are unwilling to act as chair of the meeting, or if the chair of the board and the president have advised the secretary, if any, or any director present at the meeting, that they will not be present at the meeting, the directors present may choose either one of their number or the lawyer of the Company to be chair of the meeting. If all of the directors present decline to take the chair or fail to so choose or if no director is present or the lawyer of the Company declines to take the chair, the shareholders entitled to vote at the meeting who are present in person or by proxy may choose any person present at the meeting to chair the meeting.
Adjournments
11.13 The chair of a meeting of shareholders may, and if so directed by the meeting must, adjourn the meeting from time to time and from place to place, but no business may be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place.
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Notice of Adjourned Meeting
11.14 It is not necessary to give any notice of an adjourned meeting of shareholders or of the business to be transacted at an adjourned meeting of shareholders except that, when a meeting is adjourned for 30 days or more, notice of the adjourned meeting must be given as in the case of the original meeting.
Decisions by Show of Hands or Poll
11.15 Subject to the Act, every motion put to a vote at a meeting of shareholders will be decided on a show of hands unless a poll, before or on the declaration of the result of the vote by show of hands, is directed by the chair or demanded by any shareholder entitled to vote who is present in person or by proxy.
Declaration of Result
11.16 The chair of a meeting of shareholders must declare to the meeting the decision on every question in accordance with the result of the show of hands or the poll, as the case may be, and that decision must be entered in the minutes of the meeting. A declaration of the chair that a resolution is carried by the necessary majority or is defeated is, unless a poll is directed by the chair or demanded under §11.15, conclusive evidence without proof of the number or proportion of the votes recorded in favour of or against the resolution.
Motion Need Not be Seconded
11.17 No motion proposed at a meeting of shareholders need be seconded unless the chair of the meeting rules otherwise, and the chair of any meeting of shareholders is entitled to propose or second a motion.
Casting Vote
11.18 In case of an equality of votes, the chair of a meeting of shareholders does not, either on a show of hands or on a poll, have a second or casting vote in addition to the vote or votes to which the chair may be entitled as a shareholder.
Manner of Taking Poll
11.19 Subject to §11.20, if a poll is duly demanded at a meeting of shareholders:
(a) the poll must be taken:
(i) at the meeting, or within seven days after the date of the meeting, as the chair of the meeting directs; and
(ii) in the manner, at the time and at the place that the chair of the meeting directs;
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(b) the result of the poll is deemed to be the decision of the meeting at which the poll is demanded; and
(c) the demand for the poll may be withdrawn by the person who demanded it.
Demand for Poll on Adjournment
11.20 A poll demanded at a meeting of shareholders on a question of adjournment must be taken immediately at the meeting.
Chair Must Resolve Dispute
11.21 In the case of any dispute as to the admission or rejection of a vote given on a poll, the chair of the meeting must determine the dispute, and the determination of the chair made in good faith is final and conclusive.
Casting of Votes
11.22 On a poll, a shareholder entitled to more than one vote need not cast all the votes in the same way.
No Demand for Poll on Election of Chair
11.23 No poll may be demanded in respect of the vote by which a chair of a meeting of shareholders is elected.
Demand for Poll Not to Prevent Continuance of Meeting
11.24 The demand for a poll at a meeting of shareholders does not, unless the chair of the meeting so rules, prevent the continuation of a meeting for the transaction of any business other than the question on which a poll has been demanded.
Retention of Ballots and Proxies
11.25 The Company must, for at least three months after a meeting of shareholders, keep each ballot cast on a poll and each proxy voted at the meeting, and, during that period, make them available for inspection during normal business hours by any shareholder or proxy holder entitled to vote at the meeting. At the end of such three month period, the Company may destroy such ballots and proxies.
PART
12
VOTES OF SHAREHOLDERS
Number of Votes by Shareholder or by Shares
12.1 Subject to any special rights or restrictions attached to any shares and to the restrictions imposed on joint shareholders under §12.3:
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(a) on a vote by show of hands, every person present who is a shareholder or proxy holder and entitled to vote on the matter has one vote; and
(b) on a poll, every shareholder entitled to vote on the matter has one vote in respect of each share entitled to be voted on the matter and held by that shareholder and may exercise that vote either in person or by proxy.
Votes of Persons in Representative Capacity
12.2 A person who is not a shareholder may vote at a meeting of shareholders, whether on a show of hands or on a poll, and may appoint a proxy holder to act at the meeting, if, before doing so, the person satisfies the chair of the meeting, or the directors, that the person is a legal personal representative or a trustee in bankruptcy for a shareholder who is entitled to vote at the meeting.
Votes by Joint Holders
12.3 If there are joint shareholders registered in respect of any share:
(a) any one of the joint shareholders may vote at any meeting of shareholders, personally or by proxy, in respect of the share as if that joint shareholder were solely entitled to it; or
(b) if more than one of the joint shareholders is present at any meeting of shareholders, personally or by proxy, and more than one of them votes in respect of that share, then only the vote of the joint shareholder present whose name stands first on the central securities register in respect of the share will be counted.
Legal Personal Representatives as Joint Shareholders
12.4 Two or more legal personal representatives of a shareholder in whose sole name any share is registered are, for the purposes of §12.3, deemed to be joint shareholders registered in respect of that share.
Representative of a Corporate Shareholder
12.5 If a corporation, that is not a subsidiary of the Company, is a shareholder, that corporation may appoint a person to act as its representative at any meeting of shareholders of the Company, and:
(a) for that purpose, the instrument appointing a representative must be received:
(i) at the registered office of the Company or at any other place specified, in the notice calling the meeting, for the receipt of proxies, at least the number of Business Days specified in the notice for the receipt of proxies, or if no number of days is specified, two Business Days before the day set for the holding of the meeting or any adjourned meeting; or
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(ii) at the meeting or any adjourned meeting, by the chair of the meeting or adjourned meeting or by a person designated by the chair of the meeting or adjourned meeting;
(b) if a representative is appointed under this §12.5:
(i) the representative is entitled to exercise in respect of and at that meeting the same rights on behalf of the corporation that the representative represents as that corporation could exercise if it were a shareholder who is an individual, including, without limitation, the right to appoint a proxy holder; and
(ii) the representative, if present at the meeting, is to be counted for the purpose of forming a quorum and is deemed to be a shareholder present in person at the meeting.
Evidence of the appointment of any such representative may be sent to the Company by written instrument, fax or any other method of transmitting legibly recorded messages.
Proxy Provisions Do Not Apply to All Companies
12.6 If and for so long as the Company is a public company or a pre-existing reporting company which has the Statutory Reporting Company Provisions as part of its Articles or to which the Statutory Reporting Company Provisions apply, then §12.7 to §12.15 are not mandatory, however the directors of the Company are authorized to apply all or part of such sections or to adopt alternative procedures for proxy form, deposit and revocation procedures to the extent that the directors deem necessary in order to comply with securities laws applicable to the Company.
Appointment of Proxy Holders
12.7 Every shareholder of the Company, including a corporation that is a shareholder but not a subsidiary of the Company, entitled to vote at a meeting of shareholders may, by proxy, appoint one or more (but not more than five) proxy holders to attend and act at the meeting in the manner, to the extent and with the powers conferred by the proxy.
Alternate Proxy Holders
12.8 A shareholder may appoint one or more alternate proxy holders to act in the place of an absent proxy holder.
Proxy Holder Need Not Be Shareholder
12.9 A proxy holder need not be a shareholder of the Company.
Deposit of Proxy
12.10 A proxy for a meeting of shareholders must:
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(a) be received at the registered office of the Company or at any other place specified, in the notice calling the meeting, for the receipt of proxies, at least the number of Business Days specified in the notice, or if no number of days is specified, two Business Days before the day set for the holding of the meeting or any adjourned meeting; or
(b) unless the notice provides otherwise, be received, at the meeting or any adjourned meeting, by the chair of the meeting or adjourned meeting or by a person designated by the chair of the meeting or adjourned meeting.
A proxy may be sent to the Company by written instrument, fax or any other method of transmitting legibly recorded messages, including through Internet or telephone voting or by email, if permitted by the notice calling the meeting or the information circular for the meeting.
Validity of Proxy Vote
12.11 A vote given in accordance with the terms of a proxy is valid notwithstanding the death or incapacity of the shareholder giving the proxy and despite the revocation of the proxy or the revocation of the authority under which the proxy is given, unless notice in writing of that death, incapacity or revocation is received:
(a) at the registered office of the Company, at any time up to and including the last Business Day before the day set for the holding of the meeting or any adjourned meeting at which the proxy is to be used; or
(b) at the meeting or any adjourned meeting by the chair of the meeting or adjourned meeting, before any vote in respect of which the proxy has been given has been taken.
Form of Proxy
12.12 A proxy, whether for a specified meeting or otherwise, must be either in the following form or in any other form approved by the directors or the chair of the meeting:
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[name of company]
(the "Company")
The undersigned, being a shareholder of the Company, hereby appoints [name] or, failing that person, [name], as proxy holder for the undersigned to attend, act and vote for and on behalf of the undersigned at the meeting of shareholders of the Company to be held on [month, day, year] and at any adjournment of that meeting.
Number of shares in respect of which this proxy is given (if no number is specified, then this proxy is given in respect of all shares registered in the name of the undersigned):
| Signed [month, day, year] | ||
| [Signature of shareholder] | ||
| [Name of shareholder—printed] | ||
Revocation of Proxy
12.13 Subject to §12.14, every proxy may be revoked by an instrument in writing that is received:
(a) at the registered office of the Company at any time up to and including the last Business Day before the day set for the holding of the meeting or any adjourned meeting at which the proxy is to be used; or
(b) at the meeting or any adjourned meeting, by the chair of the meeting or adjourned meeting, before any vote in respect of which the proxy has been given has been taken.
Revocation of Proxy Must Be Signed
12.14 An instrument referred to in §12.13 must be signed as follows:
(a) if the shareholder for whom the proxy holder is appointed is an individual, the instrument must be signed by the shareholder or the shareholder's legal personal representative or trustee in bankruptcy;
(b) if the shareholder for whom the proxy holder is appointed is a corporation, the instrument must be signed by the corporation or by a representative appointed for the corporation under §12.5.
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Production of Evidence of Authority to Vote
12.15 The chair of any meeting of shareholders may, but need not, inquire into the authority of any person to vote at the meeting and may, but need not, demand from that person production of evidence as to the existence of the authority to vote.
PART
13
DIRECTORS
First Directors; Number of Directors
13.1 The first directors are the persons designated as directors of the Company in the Notice of Articles that applies to the Company when it is recognized under the Act. The number of directors, excluding additional directors appointed under §14.8, is set at:
(a) subject to §(b) and §(c), the number of directors that is equal to the number of the Company's first directors;
(b) if the Company is a public company, the greater of three and the most recently set of:
(i) the number of directors set by a resolution of the directors (whether or not previous notice of the resolution was given); and
(ii) the number of directors in office pursuant to §14.4;
(c) if the Company is not a public company, the most recently set of:
(i) the number of directors set by a resolution of the directors (whether or not previous notice of the resolution was given); and
(ii) the number of directors in office pursuant to §14.4.
Change in Number of Directors
13.2 If the number of directors is set under §13.1(b)(i) or §13.1(c)(i), subject to any restrictions in the Act and to §14.8, the board of directors may appoint the directors needed to fill any vacancies in the board of directors up to that number.
Directors' Acts Valid Despite Vacancy
13.3 An act or proceeding of the directors is not invalid merely because fewer than the number of directors set or otherwise required under these Articles is in office.
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Qualifications of Directors
13.4 A director is not required to hold a share in the share structure of the Company as qualification for his or her office but must be qualified as required by the Act to become, act or continue to act as a director.
Remuneration of Directors
13.5 The directors are entitled to the remuneration for acting as directors, if any, as the directors may from time to time determine. If the directors so decide, the remuneration of the directors, if any, will be determined by the shareholders.
Reimbursement of Expenses of Directors
13.6 The Company must reimburse each director for the reasonable expenses that he or she may incur in and about the business of the Company.
Special Remuneration for Directors
13.7 If any director performs any professional or other services for the Company that in the opinion of the directors are outside the ordinary duties of a director, he or she may be paid remuneration fixed by the directors, or at the option of the directors, fixed by ordinary resolution, and such remuneration will be in addition to any other remuneration that he or she may be entitled to receive.
Gratuity, Pension or Allowance on Retirement of Director
13.8 Unless otherwise determined by ordinary resolution, the directors on behalf of the Company may pay a gratuity or pension or allowance on retirement to any director who has held any salaried office or place of profit with the Company or to his or her spouse or dependants and may make contributions to any fund and pay premiums for the purchase or provision of any such gratuity, pension or allowance.
PART 14
ELECTION AND REMOVAL OF DIRECTORS
Election at Annual General Meeting
14.1 At every annual general meeting and in every unanimous resolution contemplated by §10.2:
(a) the shareholders entitled to vote at the annual general meeting for the election of directors must elect, or in the unanimous resolution appoint, a board of directors consisting of the number of directors for the time being set under these Articles; and
(b) all the directors cease to hold office immediately before the election or appointment of directors under §(a), but are eligible for re-election or re-appointment.
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Consent to be a Director
14.2 No election, appointment or designation of an individual as a director is valid unless:
(a) that individual consents to be a director in the manner provided for in the Act;
(b) that individual is elected or appointed at a meeting at which the individual is present and the individual does not refuse, at the meeting, to be a director; or
(c) with respect to first directors, the designation is otherwise valid under the Act.
Failure to Elect or Appoint Directors
14.3 If:
(a) the Company fails to hold an annual general meeting, and all the shareholders who are entitled to vote at an annual general meeting fail to pass the unanimous resolution contemplated by §10.2, on or before the date by which the annual general meeting is required to be held under the Act; or
(b) the shareholders fail, at the annual general meeting or in the unanimous resolution contemplated by §10.2, to elect or appoint any directors;
then each director then in office continues to hold office until the earlier of:
(c) when his or her successor is elected or appointed; and
(d) when he or she otherwise ceases to hold office under the Act or these Articles.
Places of Retiring Directors Not Filled
14.4 If, at any meeting of shareholders at which there should be an election of directors, the places of any of the retiring directors are not filled by that election, those retiring directors who are not re-elected and who are asked by the newly elected directors to continue in office will, if willing to do so, continue in office to complete the number of directors for the time being set pursuant to these Articles but their term of office shall expire no later than the date on which new directors are elected at a meeting of shareholders convened for that purpose. If any such election or continuance of directors does not result in the election or continuance of the number of directors for the time being set pursuant to these Articles, the number of directors of the Company is deemed to be set at the number of directors actually elected or continued in office.
Directors May Fill Casual Vacancies
14.5 Any casual vacancy occurring in the board of directors may be filled by the directors.
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Remaining Directors Power to Act
14.6 The directors may act notwithstanding any vacancy in the board of directors, but if the Company has fewer directors in office than the number set pursuant to these Articles as the quorum of directors, the directors may only act for the purpose of appointing directors up to that number or of calling a meeting of shareholders for the purpose of filling any vacancies on the board of directors or, subject to the Act, for any other purpose.
Shareholders May Fill Vacancies
14.7 If the Company has no directors or fewer directors in office than the number set pursuant to these Articles as the quorum of directors, the shareholders may elect or appoint directors to fill any vacancies on the board of directors.
Additional Directors
14.8 Notwithstanding §13.1, §13.2, and §14.1, between annual general meetings or by unanimous resolutions contemplated by §10.2, the directors may appoint one or more additional directors but the number of additional directors appointed under this §14.8 must not at any time exceed one-third of the number of the current directors who were elected or appointed as directors other than under this §14.8. Any director so appointed ceases to hold office immediately before the next election or appointment of directors under §14.1(a), but is eligible for re-election or re-appointment.
Ceasing to be a Director
14.9 A director ceases to be a director when:
(a) the term of office of the director expires;
(b) the director dies;
(c) the director resigns as a director by notice in writing provided to the Company or a lawyer for the Company; or
(d) the director is removed from office pursuant to §14.10 or §14.11.
Removal of Director by Shareholders
14.10 The Company may remove any director before the expiration of his or her term of office by special resolution. In that event, the shareholders may elect, or appoint by ordinary resolution, a director to fill the resulting vacancy. If the shareholders do not elect or appoint a director to fill the resulting vacancy contemporaneously with the removal, then the directors may appoint or the shareholders may elect, or appoint by ordinary resolution, a director to fill that vacancy.
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Removal of Director by Directors
14.11 The directors may remove any director before the expiration of his or her term of office if the director is convicted of an indictable offence, or if the director ceases to be qualified to act as a director of a company and does not promptly resign, and the directors may appoint a director to fill the resulting vacancy.
Nomination of Directors
14.12
(a) Subject only to the Act, only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Company. Nominations of persons for election to the board may be made at any annual meeting of shareholders, or at any special meeting of shareholders (but only if the election of directors is a matter specified in the notice of meeting given by or at the direction of the person calling such special meeting):
(i) by or at the direction of the board or an authorized officer of the Company, including pursuant to a notice of meeting;
(ii) by or at the direction or request of one or more shareholders pursuant to a proposal made in accordance with the provisions of the Act or a requisition of the shareholders made in accordance with the provisions of the Act; or
(iii) by any person (a "Nominating Shareholder") (A) who, at the close of business on the date of the giving of the notice provided for below in this §14.12 and on the record date for notice of such meeting, is entered in the securities register as a holder of one or more shares carrying the right to vote at such meeting or who beneficially owns shares that are entitled to be voted at such meeting and (B) who complies with the notice procedures set forth below in this §14.12.
(b) In addition to any other applicable requirements, for a nomination to be made by a Nominating Shareholder, such person must be given
(i) timely notice thereof in proper written form to an officer of the Company of the Company at the principal executive offices of the Company in accordance with this §14.12 and
(ii) the representation and agreement with respect to each candidate for nomination as required by, and within the time period specified in §14.12(c).
(c) To be timely under §14.12(b)(i), a Nominating Shareholder's notice to an officer of the Company, being either the Chief Executive Officer, the Chief Financial Officer, or the Corporate Secretary (singularly, "an officer of the Company"), must be made:
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(i) in the case of an annual meeting of shareholders, not less than 40 days prior to the date of the annual meeting of shareholders; provided, however, that in the event that the annual meeting of shareholders is called for a date that is less than 50 days after the date (the "Notice Date") on which the first public announcement of the date of the annual meeting was made, notice by the Nominating Shareholder may be made not later than the tenth (10th) day following the Notice Date; and
(ii) in the case of a special meeting (which is not also an annual meeting) of shareholders called for the purpose of electing directors (whether or not called for other purposes), not later than the fifteenth (15th) day following the day on which the first public announcement of the date of the special meeting of shareholders was made.
(iii) Notwithstanding the foregoing, the board may, in its sole discretion, waive any requirement in this §14.12(c).
(d) To be in proper written form, a Nominating Shareholder's notice to an officer of the Company, under §14.12(b) must set forth:
(i) as to each person whom the Nominating Shareholder proposes to nominate for election as a director (A) the name, age, business address and residence address of the person, (B) the principal occupation or employment of the person, (C) the class or series and number of shares in the capital of the Company which are controlled or which are owned beneficially or of record by the person as of the record date for the Meeting of Shareholders (if such date shall then have been made publicly available and shall have occurred) and as of the date of such notice, (D) a statement as to whether such person would be "independent" of the Company (within the meaning of sections 1.4 and 1.5 of National Instrument 52-110 - Audit Committees of the Canadian Securities Administrators, as such provisions may be amended from time to time) if elected as a director at such meeting and the reasons and basis for such determination and (E) any other information relating to the person that would be required to be disclosed in a dissident's proxy circular in connection with solicitations of proxies for election of directors pursuant to the Act and Applicable Securities Laws; and
(ii) as to the Nominating Shareholder giving the notice, (A) any information relating to such Nominating Shareholder that would be required to be made in a dissident's proxy circular in connection with solicitations of proxies for election of directors pursuant to the Act and Applicable Securities Laws, and (B) the class or series and number of shares in the capital of the Company which are controlled or which are owned beneficially or of record by the Nominating Shareholder as of the record date for the Meeting of Shareholders (if such date shall then have been made publicly available and shall have occurred) and as of the date of such notice.
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(e) No person shall be eligible for election as a director of the Company unless nominated in accordance with the provisions of this §14.12; provided, however, that nothing in this §14.12 shall be deemed to preclude discussion by a shareholder (as distinct from nominating directors) at a meeting of shareholders of any matter in respect of which it would have been entitled to submit a proposal pursuant to the provisions of the Act. The chair of the meeting shall have the power and duty to determine whether a nomination was made in accordance with the procedures set forth in the foregoing provisions and, if any proposed nomination is not in compliance with such foregoing provisions, to declare that such defective nomination shall be disregarded.
(f) For purposes of this §14.12:
(i) "Applicable Securities Laws" means the Securities Act (British Columbia) and the equivalent legislation in the other provinces and in the territories of Canada, as amended from time to time, the rules, regulations and forms made or promulgated under any such statute and the published national instruments, multilateral instruments, policies, bulletins and notices of the securities commissions and similar regulatory authorities of each of the applicable provinces and territories of Canada;
(ii) "Associate", when used to indicate a relationship with a specified person, shall mean (A) any corporation or trust of which such person owns beneficially, directly or indirectly, voting securities carrying more than 10% of the voting rights attached to all voting securities of such corporation or trust for the time being outstanding, (B) any partner of that person, (C) any trust or estate in which such person has a substantial beneficial interest or as to which such person serves as trustee or in a similar capacity, (D) a spouse of such specified person, (E) any person of either sex with whom such specified person is living in conjugal relationship outside marriage or (F) any relative of such specified person or of a person mentioned in clauses (D) or (E) of this definition if that relative has the same residence as the specified person;
(iii) "Derivatives Contract" shall mean a contract between two parties (the "Receiving Party" and the "Counterparty") that is designed to expose the Receiving Party to economic benefits and risks that correspond substantially to the ownership by the Receiving Party of a number of shares in the capital of the Company or securities convertible into such shares specified or referenced in such contract (the number corresponding to such economic benefits and risks, the "Notional Securities"), regardless of whether obligations under such contract are required or permitted to be settled through the delivery of cash, shares in the capital of the Company or securities convertible into such shares or other property, without regard to any short position under the same or any other Derivatives Contract. For the avoidance of doubt, interests in broad-based index options, broad-based index futures and broad-based publicly traded market baskets of stocks approved for trading by the appropriate governmental authority shall not be deemed to be Derivatives Contracts;
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(iv) "Meeting of Shareholders" shall mean such annual shareholders meeting or special shareholders meeting, whether general or not, at which one or more persons are nominated for election to the board by a Nominating Shareholder;
(v) "owned beneficially" or "owns beneficially" means, in connection with the ownership of shares in the capital of the Company by a person, (A) any such shares as to which such person or any of such person's affiliates or Associates owns at law or in equity, or has the right to acquire or become the owner at law or in equity, where such right is exercisable immediately or after the passage of time and whether or not on condition or the happening of any contingency or the making of any payment, upon the exercise of any conversion right, exchange right or purchase right attaching to any securities, or pursuant to any agreement, arrangement, pledge or understanding whether or not in writing; (B) any such shares as to which such person or any of such person's affiliates or Associates has the right to vote, or the right to direct the voting, where such right is exercisable immediately or after the passage of time and whether or not on condition or the happening of any contingency or the making of any payment, pursuant to any agreement, arrangement, pledge or understanding whether or not in writing; (C) any such shares which are beneficially owned, directly or indirectly, by a Counterparty (or any of such Counterparty's affiliates or Associates) under any Derivatives Contract (without regard to any short or similar position under the same or any other Derivatives Contract) to which such person or any of such person's affiliates or Associates is a Receiving Party; provided, however that the number of shares that a person owns beneficially pursuant to this clause (C) in connection with a particular Derivatives Contract shall not exceed the number of Notional Securities with respect to such Derivatives Contract; provided, further, that the number of securities owned beneficially by each Counterparty (including their respective affiliates and Associates) under a Derivatives Contract shall for purposes of this clause be deemed to include all securities that are owned beneficially, directly or indirectly, by any other Counterparty (or any of such other Counterparty's affiliates or Associates) under any Derivatives Contract to which such first Counterparty (or any of such first Counterparty's affiliates or Associates) is a Receiving Party and this proviso shall be applied to successive Counterparties as appropriate; and (D) any such shares which are owned beneficially within the meaning of this definition by any other person with whom such person is acting jointly or in concert with respect to the Company or any of its securities; and
(vi) "public announcement" shall mean disclosure in a press release reported by a national news service in Canada, or in a document publicly filed by the Company or its agents under its profile on the System of Electronic Document Analysis and Retrieval at www.sedar.com.
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(g) Notwithstanding any other provision to this §14.12, notice or any delivery given to an officer of the Company pursuant to this §14.12 may only be given by personal delivery, facsimile transmission, email or other electronic transmission method made available by the Company, and shall be deemed to have been given and made only at the time it is served by personal delivery, email, electronic transmission or sent by facsimile transmission (provided that receipt of confirmation of such transmission has been received) to an officer of the Company at the address of the principal executive offices of the Company; provided that if such delivery or electronic communication is made on a day which is a not a Business Day or later than 5:00 p.m. (Vancouver time) on a day which is a Business Day, then such delivery or electronic communication shall be deemed to have been made on the subsequent day that is a Business Day.
14.13 In no event shall any adjournment or postponement of a Meeting of Shareholders or the announcement thereof commence a new time period for the giving of a Nominating Shareholder's notice as described in §14.12(c).
PART 15
POWERS AND DUTIES OF DIRECTORS
Powers of Management
15.1 The directors must, subject to the Act and these Articles, manage or supervise the management of the business and affairs of the Company and have the authority to exercise all such powers of the Company as are not, by the Act or by these Articles, required to be exercised by the shareholders of the Company.
Appointment of Attorney of Company
15.2 The directors may from time to time, by power of attorney or other instrument, appoint any person to be the attorney of the Company for such purposes, and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the directors under these Articles and excepting the power to fill vacancies in the board of directors, to remove a director, to change the membership of, or fill vacancies in, any committee of the directors, to appoint or remove officers appointed by the directors and to declare dividends) and for such period, and with such remuneration and subject to such conditions as the directors may think fit. Any such power of attorney may contain such provisions for the protection or convenience of persons dealing with such attorney as the directors think fit. Any such attorney may be authorized by the directors to sub-delegate all or any of the powers, authorities and discretions for the time being vested in him or her.
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PART 16
INTERESTS OF DIRECTORS AND OFFICERS
Obligation to Account for Profits
16.1 A director or senior officer who holds a disclosable interest (as that term is used in the Act) in a contract or transaction into which the Company has entered or proposes to enter is liable to account to the Company for any profit that accrues to the director or senior officer under or as a result of the contract or transaction only if and to the extent provided in the Act.
Restrictions on Voting by Reason of Interest
16.2 A director who holds a disclosable interest in a contract or transaction into which the Company has entered or proposes to enter is not entitled to vote on any directors' resolution to approve that contract or transaction, unless all the directors have a disclosable interest in that contract or transaction, in which case any or all of those directors may vote on such resolution.
Interested Director Counted in Quorum
16.3 A director who holds a disclosable interest in a contract or transaction into which the Company has entered or proposes to enter and who is present at the meeting of directors at which the contract or transaction is considered for approval may be counted in the quorum at the meeting whether or not the director votes on any or all of the resolutions considered at the meeting.
Disclosure of Conflict of Interest or Property
16.4 A director or senior officer who holds any office or possesses any property, right or interest that could result, directly or indirectly, in the creation of a duty or interest that materially conflicts with that individual's duty or interest as a director or senior officer, must disclose the nature and extent of the conflict as required by the Act.
Director Holding Other Office in the Company
16.5 A director may hold any office or place of profit with the Company, other than the office of auditor of the Company, in addition to his or her office of director for the period and on the terms (as to remuneration or otherwise) that the directors may determine.
No Disqualification
16.6 No director or intended director is disqualified by his or her office from contracting with the Company either with regard to the holding of any office or place of profit the director holds with the Company or as vendor, purchaser or otherwise, and no contract or transaction entered into by or on behalf of the Company in which a director is in any way interested is liable to be voided for that reason.
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Professional Services by Director or Officer
16.7 Subject to the Act, a director or officer, or any person in which a director or officer has an interest, may act in a professional capacity for the Company, except as auditor of the Company, and the director or officer or such person is entitled to remuneration for professional services as if that director or officer were not a director or officer.
Director or Officer in Other Corporations
16.8 A director or officer may be or become a director, officer or employee of, or otherwise interested in, any person in which the Company may be interested as a shareholder or otherwise, and, subject to the Act, the director or officer is not accountable to the Company for any remuneration or other benefits received by him or her as director, officer or employee of, or from his or her interest in, such other person.
PART 17
PROCEEDINGS OF DIRECTORS
Meetings of Directors
17.1 The directors may meet together for the conduct of business, adjourn and otherwise regulate their meetings as they think fit, and meetings of the directors held at regular intervals may be held at the place, at the time and on the notice, if any, as the directors may from time to time determine.
Voting at Meetings
17.2 Questions arising at any meeting of directors are to be decided by a majority of votes and, in the case of an equality of votes, the chair of the meeting does not have a second or casting vote.
Chair of Meetings
17.3 The following individual is entitled to preside as chair at a meeting of directors:
(a) the chair of the board, if any;
(b) in the absence of the chair of the board, the president, if any, if the president is a director; or
(c) any other director chosen by the directors if:
(i) neither the chair of the board nor the president, if a director, is present at the meeting within 15 minutes after the time set for holding the meeting;
(ii) neither the chair of the board nor the president, if a director, is willing to chair the meeting; or
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(iii) the chair of the board and the president, if a director, have advised the secretary, if any, or any other director, that they will not be present at the meeting.
Place of Meetings
17.4 Meetings of directors may be held at any place within or outside of Canada, or if so approved by all of the directors, such meeting may be held entirely by means of an electronic or other communication facility that permits all persons participating in the meeting to communicate adequately with each other to the extent permitted by the Act.
Meetings by Telephone or Other Communications Medium
17.5 A director may participate in a meeting of the directors or of any committee of the directors:
(a) in person; or
(b) by telephone or by other communications medium if all directors participating in the meeting, whether in person or by telephone or other communications medium, are able to communicate with each other.
A director who participates in a meeting in a manner contemplated by this §17.5 is deemed for all purposes of the Act and these Articles to be present at the meeting and to have agreed to participate in that manner.
Calling of Meetings
17.6 A director may, and the secretary or an assistant secretary of the Company, if any, on the request of a director must, call a meeting of the directors at any time.
Notice of Meetings
17.7 Other than for meetings held at regular intervals as determined by the directors pursuant to §17.1, reasonable notice of each meeting of the directors, specifying the place, day and time of that meeting must be given to each of the directors by any method set out in §23.1 or orally or by telephone.
When Notice Not Required
17.8 It is not necessary to give notice of a meeting of the directors to a director if:
(a) the meeting is to be held immediately following a meeting of shareholders at which that director was elected or appointed, or is the meeting of the directors at which that director is appointed; or
(b) the director has waived notice of the meeting.
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Meeting Valid Despite Failure to Give Notice
17.9 The accidental omission to give notice of any meeting of directors to, or the non-receipt of any notice by, any director, does not invalidate any proceedings at that meeting.
Waiver of Notice of Meetings
17.10 Any director may send to the Company a document signed by him or her waiving notice of any past, present or future meeting or meetings of the directors and may at any time withdraw that waiver with respect to meetings held after that withdrawal. After sending a waiver with respect to all future meetings and until that waiver is withdrawn, no notice of any meeting of the directors need be given to that director and all meetings of the directors so held are deemed not to be improperly called or constituted by reason of notice not having been given to such director. Attendance of a director at a meeting of the directors is a waiver of notice of the meeting unless that director attends the meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called.
Quorum
17.11 The quorum necessary for the transaction of the business of the directors may be set by the directors and, if not so set, is deemed to be a majority of the directors or, if the number of directors is set at one, is deemed to be set at one director, and that director may constitute a meeting.
Validity of Acts Where Appointment Defective
17.12 Subject to the Act, an act of a director or officer is not invalid merely because of an irregularity in the election or appointment or a defect in the qualification of that director or officer.
Consent Resolutions in Writing
17.13 A resolution of the directors or of any committee of the directors may be passed without a meeting:
(a) in all cases, if each of the directors entitled to vote on the resolution consents to it in writing; or
(b) in the case of a resolution to approve a contract or transaction in respect of which a director has disclosed that he or she has or may have a disclosable interest, if each of the other directors who have not made such a disclosure consents in writing to the resolution.
A consent in writing under this §17.13 may be by signed document, fax, email or any other method of transmitting legibly recorded messages. Any electronic signature on a consent, whether digital or encrypted, shall be deemed to have the same force and effect as a manual signature. A consent in writing may be in two or more counterparts which together are deemed to constitute one consent in writing. A resolution of the directors or of any committee of the directors passed in accordance with this §17.13 is effective on the date stated in the consent in writing or on the latest date stated on any counterpart and is deemed to be a proceeding at a meeting of directors or of the committee of the directors and to be as valid and effective as if it had been passed at a meeting of the directors or of the committee of the directors that satisfies all the requirements of the Act and all the requirements of these Articles relating to meetings of the directors or of a committee of the directors.
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PART
18
EXECUTIVE AND OTHER COMMITTEES
Appointment and Powers of Executive Committee
18.1 The directors may, by resolution, appoint an executive committee consisting of the director or directors that they consider appropriate, and this committee has, during the intervals between meetings of the board of directors, all of the directors' powers, except:
(a) the power to fill vacancies in the board of directors;
(b) the power to remove a director;
(c) the power to change the membership of, or fill vacancies in, any committee of the directors; and
(d) such other powers, if any, as may be set out in the resolution or any subsequent directors' resolution.
Appointment and Powers of Other Committees
18.2 The directors may, by resolution:
(a) appoint one or more committees (other than the executive committee) consisting of the director or directors that they consider appropriate;
(b) delegate to a committee appointed under §(a) any of the directors' powers, except:
(i) the power to fill vacancies in the board of directors;
(ii) the power to remove a director;
(iii) the power to change the membership of, or fill vacancies in, any committee of the directors; and
(iv) the power to appoint or remove officers appointed by the directors; and
(c) make any delegation referred to in §(b) subject to the conditions set out in the resolution or any subsequent directors' resolution.
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Obligations of Committees
18.3 Any committee appointed under §18.1 or §18.2, in the exercise of the powers delegated to it, must:
(a) conform to any rules that may from time to time be imposed on it by the directors; and
(b) report every act or thing done in exercise of those powers at such times as the directors may require.
Powers of Board
18.4 The directors may, at any time, with respect to a committee appointed under §18.1 or §18.2
(a) revoke or alter the authority given to the committee, or override a decision made by the committee, except as to acts done before such revocation, alteration or overriding;
(b) terminate the appointment of, or change the membership of, the committee; and
(c) fill vacancies in the committee.
Committee Meetings
18.5 Subject to §18.3(a) and unless the directors otherwise provide in the resolution appointing the committee or in any subsequent resolution, with respect to a committee appointed under §18.1 or §18.2:
(a) the committee may meet and adjourn as it thinks proper;
(b) the committee may elect a chair of its meetings but, if no chair of a meeting is elected, or if at a meeting the chair of the meeting is not present within 15 minutes after the time set for holding the meeting, the directors present who are members of the committee may choose one of their number to chair the meeting;
(c) a majority of the members of the committee constitutes a quorum of the committee; and
(d) questions arising at any meeting of the committee are determined by a majority of votes of the members present, and in case of an equality of votes, the chair of the meeting does not have a second or casting vote.
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PART 19
OFFICERS
Directors May Appoint Officers
19.1 The directors may, from time to time, appoint such officers, if any, as the directors determine and the directors may, at any time, terminate any such appointment.
Functions, Duties and Powers of Officers
19.2 The directors may, for each officer:
(a) determine the functions and duties of the officer;
(b) entrust to and confer on the officer any of the powers exercisable by the directors on such terms and conditions and with such restrictions as the directors think fit; and
(c) revoke, withdraw, alter or vary all or any of the functions, duties and powers of the officer.
Qualifications
19.3 No person may be appointed as an officer unless that person is qualified in accordance with the Act. One person may hold more than one position as an officer of the Company. Any person appointed as the chair of the board, chair of a committee of the board or lead independent director, if any, must be a director. Any other officer need not be a director.
Remuneration and Terms of Appointment
19.4 All appointments of officers are to be made on the terms and conditions and at the remuneration (whether by way of salary, fee, commission, participation in profits or otherwise) that the directors thinks fit and are subject to termination at the pleasure of the directors, and an officer may in addition to such remuneration be entitled to receive, after he or she ceases to hold such office or leaves the employment of the Company, a pension or gratuity.
PART 20
INDEMNIFICATION
Definitions
20.1 In this Part 20:
(a) "eligible party", in relation to a company, means an individual who:
(i) is or was a director or officer of the Company;
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(ii) is or was a director or officer of another corporation
(A) at a time when the corporation is or was an affiliate of the Company, or
(B) at the request of the Company; or
(iii) at the request of the Company, is or was, or holds or held a position equivalent to that of, a director or officer of a partnership, trust, joint venture or other unincorporated entity,
and includes, except in the definition of "eligible proceeding" and Sections 163(1)(c) and (d) and 165 of the Act, the heirs and personal or other legal representatives of that individual;
(b) "eligible penalty" means a judgment, penalty or fine awarded or imposed in, or an amount paid in settlement of, an eligible proceeding;
(c) "eligible proceeding" means a proceeding in which an eligible party or any of the heirs and personal or other legal representatives of the eligible party, by reason of the eligible party being or having been a director or officer of, or holding or having held a position equivalent to that of a director or officer of, the Company or an associated corporation
(i) is or may be joined as a party; or
(ii) is or may be liable for or in respect of a judgment, penalty or fine in, or expenses related to, the proceeding;
(d) "expenses" has the meaning set out in the Act and includes costs, charges and expenses, including legal and other fees, but does not include judgments, penalties, fines or amounts paid in settlement of a proceeding; and
(e) "proceeding" includes any legal proceeding or investigative action, whether current, threatened, pending or completed.
Mandatory Indemnification of Eligible Parties
20.2 Subject to the Act, the Company must indemnify each eligible party and his or her heirs and legal personal representatives against all eligible penalties to which such person is or may be liable, and the Company must, after the final disposition of an eligible proceeding, pay the expenses actually and reasonably incurred by such person in respect of that proceeding. Each eligible party is deemed to have contracted with the Company on the terms of the indemnity contained in this §20.2.
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Indemnification of Other Persons
20.3 Subject to any restrictions in the Act, the Company may agree to indemnify and may indemnify any person (including an eligible party) against eligible penalties and pay expenses incurred in connection with the performance of services by that person for the Company.
Authority to Advance Expenses
20.4 The Company may advance expenses to an eligible party to the extent permitted by and in accordance with the Act.
Non-Compliance with Act
20.5 Subject to the Act, the failure of an eligible party of the Company to comply with the Act or these Articles or, if applicable, any former Companies Act or former Articles does not, of itself, invalidate any indemnity to which he or she is entitled under this Part 20.
Company May Purchase Insurance
20.6 The Company may purchase and maintain insurance for the benefit of any eligible party (or the heirs or legal personal representatives of any eligible party) against any liability incurred by any eligible party.
PART 21
DIVIDENDS
Payment of Dividends Subject to Special Rights
21.1 The provisions of this Part 21 are subject to the rights, if any, of shareholders holding shares with special rights as to dividends.
Declaration of Dividends
21.2 Subject to the Act, the directors may from time to time declare and authorize payment of such dividends as they may deem advisable.
No Notice Required
21.3 The directors need not give notice to any shareholder of any declaration under §21.2.
Record Date
21.4 The directors must set a date as the record date for the purpose of determining shareholders entitled to receive payment of a dividend. The record date must not precede the date on which the dividend is to be paid by more than two months.
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Manner of Paying Dividend
21.5 A resolution declaring a dividend may direct payment of the dividend wholly or partly in money or by the distribution of specific assets or of fully paid shares or of bonds, debentures or other securities of the Company or any other entity, or in any one or more of those ways.
Settlement of Difficulties
21.6 If any difficulty arises in regard to a distribution under §21.5, the directors may settle the difficulty as they deem advisable, and, in particular, may:
(a) set the value for distribution of specific assets;
(b) determine that money in substitution for all or any part of the specific assets to which any shareholders are entitled may be paid to any shareholders on the basis of the value so fixed in order to adjust the rights of all parties; and
(c) vest any such specific assets in trustees for the persons entitled to the dividend.
When Dividend Payable
21.7 Any dividend may be made payable on such date as is fixed by the directors.
Dividends to be Paid in Accordance with Number of Shares
21.8 All dividends on shares of any class or series of shares must be declared and paid according to the number of such shares held.
Receipt by Joint Shareholders
21.9 If several persons are joint shareholders of any share, any one of them may give an effective receipt for any dividend, bonus or other money payable in respect of the share.
Dividend Bears No Interest
21.10 No dividend bears interest against the Company.
Fractional Dividends
21.11 If a dividend to which a shareholder is entitled includes a fraction of the smallest monetary unit of the currency of the dividend, that fraction may be disregarded in making payment of the dividend and that payment represents full payment of the dividend.
Payment of Dividends
21.12 Any dividend or other distribution payable in money in respect of shares may be paid (i) by cheque, made payable to the order of the person to whom it is sent, and mailed to the registered address of the shareholder, or in the case of joint shareholders, to the registered address of the joint shareholder who is first named on the central securities register, or to the person and to the address the shareholder or joint shareholders may direct in writing or (ii) with the consent of the Company and the shareholder, by wire transfer or other electronic means. In the case of payment of a dividend by cheque, mailing of such cheque will, to the extent of the sum represented by the cheque (plus the amount of the tax required by law to be deducted), discharge all liability for the dividend unless such cheque is not paid on presentation or the amount of tax so deducted is not paid to the appropriate taxing authority. In the case of payment of a dividend by wire transfer or other electronic means, the initiation of such payment by the Company will, to the extent of the sum represented by the transfer (plus the amount of the tax required by law to be deducted), discharge all liability for the dividend unless the amount of tax so deducted is not paid to the appropriate taxing authority.
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Capitalization of Retained Earnings or Surplus
21.13 Notwithstanding anything contained in these Articles, the directors may from time to time capitalize any retained earnings or surplus of the Company and may from time to time issue, as fully paid, shares or any bonds, debentures or other securities of the Company as a dividend representing the retained earnings or surplus so capitalized or any part thereof.
PART 22
ACCOUNTING RECORDS AND AUDITOR
Recording of Financial Affairs
22.1 The directors must cause adequate accounting records to be kept to record properly the financial affairs and condition of the Company and to comply with the Act.
Inspection of Accounting Records
22.2 Unless the directors determine otherwise, or unless otherwise determined by ordinary resolution, no shareholder of the Company is entitled to inspect or obtain a copy of any accounting records of the Company.
Remuneration of Auditor
22.3 The directors may set the remuneration of the auditor of the Company.
PART 23
NOTICES
Method of Giving Notice
23.1 Unless the Act or these Articles provide otherwise, a notice, statement, report or other record required or permitted by the Act or these Articles (a "Notice") to be sent by or to a person may be sent by:
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(a) mail addressed to the person at the applicable address for that person as follows:
(i) for a Notice mailed to a shareholder, the shareholder's registered address;
(ii) for a Notice mailed to a director or officer, the prescribed address for mailing shown for the director or officer in the records kept by the Company or the mailing address provided by the recipient for the sending of Notices of that class;
(iii) in any other case, the mailing address of the intended recipient;
(b) delivery at the applicable address for that person as follows, addressed to the person:
(i) for a Notice delivered to a shareholder, the shareholder's registered address;
(ii) for a Notice delivered to a director or officer, the prescribed address for delivery shown for the director or officer in the records kept by the Company or the delivery address provided by the recipient for the sending of Notices of that class;
(iii) in any other case, the delivery address of the intended recipient;
(c) sending the Notice by fax to the fax number provided by the intended recipient for the sending of Notices that class;
(d) sending the Notice by email to the email address provided by the intended recipient for the sending of Notices of that class;
(e) sending the Notice by other means of electronic transmission accessible by the intended recipient for the sending of Notices of that class in accordance with applicable law; and
(f) physical delivery to the intended recipient.
Press Release
23.2 Unless the Act or these Articles provide otherwise, a Notice to be sent to a shareholder shall be deemed conclusively to have been given or made, and the obligation to give any Notice shall, unless otherwise required by applicable laws and regulations, be deemed conclusively to have been fully satisfied upon issuing a press release complying with applicable laws and regulations if deemed by the board of directors to be a reasonable or appropriate means of providing such Notice.
Deemed Receipt of Mailing
23.3 A notice, statement, report or other record that is:
(a) mailed to a person by ordinary mail to the applicable address for that person referred to in §23.1 is deemed to be received by the person to whom it was mailed on the day (Saturdays, Sundays and holidays excepted) following the date of mailing;
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(b) faxed to a person to the fax number provided by that person under §23.1 is deemed to be received by the person to whom it was faxed on the day it was faxed;
(c) emailed to a person to the e-mail address provided by that person under §23.1 is deemed to be received by the person to whom it was e-mailed on the day that it was emailed; and
(d) sent to a person by other means of electronic transmission under §23.1 is deemed to be received by the person to whom it was transmitted on the day that such transmission occurred.
Certificate of Sending
23.4 A certificate signed by the secretary, if any, or other officer of the Company or of any other corporation acting in that capacity on behalf of the Company stating that a notice, statement, report or other record was sent in accordance with §23.1 is conclusive evidence of that fact.
Notice to Joint Shareholders
23.5 A notice, statement, report or other record may be provided by the Company to the joint shareholders of a share by providing such record to the joint shareholder first named in the central securities register in respect of the share.
Notice to Legal Personal Representatives and Trustees
23.6 A notice, statement, report or other record may be provided by the Company to the persons entitled to a share in consequence of the death, bankruptcy or incapacity of a shareholder by:
(a) mailing the record, addressed to them:
(i) by name, by the title of the legal personal representative of the deceased or incapacitated shareholder, by the title of trustee of the bankrupt shareholder or by any similar description; and
(ii) at the address, if any, supplied to the Company for that purpose by the persons claiming to be so entitled; or
(b) if an address referred to in §(a)(ii) has not been supplied to the Company, by giving the notice in a manner in which it might have been given if the death, bankruptcy or incapacity had not occurred.
Undelivered Notices
23.7 If on two consecutive occasions, a notice, statement, report or other record is sent to a shareholder pursuant to §23.1 and on each of those occasions any such record is returned because the shareholder cannot be located, the Company shall not be required to send any further records to the shareholder until the shareholder informs the Company in writing of his or her new address.
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PART
24
PROHIBITIONS
Definitions
24.1 In this Part 24:
(a) "designated security" means:
(i) a voting security of the Company;
(ii) a security of the Company that is not a debt security and that carries a residual right to participate in the earnings of the Company or, on the liquidation or winding up of the Company, in its assets; or
(iii) a security of the Company convertible, directly or indirectly, into a security described in §(a) or §(b);
(b) "security" has the meaning assigned in the Securities Act (British Columbia); and
(c) "voting security" means a security of the Company that:
(i) is not a debt security; and
(ii) carries a voting right either under all circumstances or under some circumstances that have occurred and are continuing.
Application
24.2 §24.3 does not apply to the Company if and for so long as it is a public company, a private company which is no longer eligible to use the private issuer exemption under the Securities Act (British Columbia) or a pre-existing reporting company which has the Statutory Reporting Company Provisions as part of its Articles or a company to which the Statutory Reporting Company Provisions apply.
Consent Required for Transfer of Shares or Designated Securities
24.3 No share or designated security may be sold, transferred or otherwise disposed of without the consent of the directors and the directors are not required to give any reason for refusing to consent to any such sale, transfer or other disposition.
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PART 25
SPECIAL RIGHTS AND RESTRICTIONS
CLASS A EXCHANGEABLE SUBORDINATE VOTING SHARES
Special Rights and Restrictions
25.1 The Class A Shares as a class shall have attached thereto the special rights and restrictions specified in this Part 25.
DIVIDENDS
Dividend Rights
25.2 Each Class A Shareholder shall be entitled to receive, and the Company shall pay thereon, as and when declared by the board of directors, a dividend on each Class A Share in an amount in cash for each Class A Share equal to the cash distribution declared on each BIP Unit on each BIP Distribution Declaration Date multiplied by the Conversion Factor in effect on the Record Date of such dividend (the "Class A Dividend"), it being understood that Class A Shareholders will not be entitled to any dividends other than the Class A Dividend.
Unpaid Dividends
25.3 If the full amount of a Class A Dividend is not declared on a BIP Distribution Declaration Date, or is declared but is not paid on the payment date, then such Class A Dividend shall accrue and accumulate, whether or not the Company has earnings, whether or not there are funds legally available for the payment thereof and whether or not such distributions are earned, declared or authorized (such amounts, the "Unpaid Dividends"). Any dividend payment made on the Class A Shares shall first be credited against the earliest Unpaid Dividends due with respect to such Class A Shares which remains payable.
Payment of Dividends
25.4 Cheques of the Company may be issued in respect of all Class A Dividends contemplated by §25.2 and the sending of such cheque to each Class A Shareholder will satisfy the cash dividend represented thereby unless the cheque is not paid on presentation. Subject to the requirements of applicable Law with respect to unclaimed property, no Class A Shareholder will be entitled to recover by action or other legal process against the Company any dividend that is represented by a cheque that has not been duly presented to the Company's bankers for payment or that otherwise remains unclaimed for a period of two years from the date on which such dividend was first payable.
Record and Payment Dates
25.5 The Record Date with respect to any Class A Dividend declared by the board of directors and the payment date of such Class A Dividend will be the same dates as the Record Date and the payment date, respectively, for the corresponding distribution declared on the BIP Units, each as approved by the board of directors.
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RANKING
Ranking of the Class A Shares
25.6 The Class A Shares shall, as to the payment of dividends and return of capital in a Liquidation Event, rank junior to the Preferred Shares and senior to the Class B Shares, the Class C Shares and any other shares ranking junior to the Class A Shares with respect to priority in payment of dividends and return of capital in the event of the liquidation, dissolution or winding-up of the Company.
VOTING
Voting Rights
25.7 Except as expressly provided herein, each Class A Shareholder will be entitled to receive notice of, and to attend and vote at, all meetings of shareholders of the Company, except for meetings at which only holders of another specified class or series of shares are entitled to vote separately as a class or series. Each Class A Shareholder shall be entitled to cast one vote for each Class A Share held at the record date for the determination of shareholders entitled to vote on any matter.
25.8 Except as otherwise expressly provided herein or as required by Law, the Class A Shareholders and Class B Shareholders will vote together and not as separate classes.
25.9 Subject to any rights of the holders of any series of Preferred Shares to elect directors under specified circumstances, the holders of the outstanding Class A Shares and Class B Shares, voting together, shall be entitled to vote in respect of the election of all directors of the Company.
Amendment with Approval of Class A Shareholders
25.10 In addition to any other approvals required by Law, any approval given by the Class A Shareholders to add to, change or remove any right, privilege, restriction or condition attaching to the Class A Shares or any other matter requiring the approval or consent of the Class A Shareholders as a separate class will be deemed to have been sufficiently given if it will have been given in accordance with applicable Law, subject to a minimum requirement that such amendment be approved by not less than 66 2/3% of the votes cast on such amendment at a meeting of Class A Shareholders duly called and held at which the Class A Shareholders holding at least 10% of the outstanding Class A Shares at that time are present or represented by proxy; provided that such approval must be given also by the affirmative vote of holders of not less than 66 2/3% of the Non-Affiliated Holders represented in person or by proxy at the meeting. If at any such meeting the Class A Shareholders holding at least 10% of the outstanding Class A Shares at as of the Record Date of such meeting are not present or represented by proxy within one-half hour after the time appointed for such meeting, then the meeting will be adjourned to such date not less than five days thereafter and to such time and place as may be designated by the chairman of such meeting. At such reconvened meeting, the Class A Shareholders present or represented by proxy thereat may transact the business for which the meeting was originally called and a resolution passed thereat by the affirmative vote of not less than 66 2/3% of the votes cast on such amendment at such reconvened meeting excluding the BIP-Affiliated Class A Shareholders shall be effective.
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EXCHANGE RIGHTS
Exchange at the Option of the Class A Shareholder
25.11 Subject to applicable Law and the due exercise by BIP of the Exchange-Redemption Call Right, at any time from and after the date of the issuance of the Class A Shares, each Class A Shareholder shall have the right (the "Exchange Right") to require the Company to redeem all or such portion of the Class A Shares registered in the name of such Class A Shareholder specified in a Notice of Exchange delivered to the Transfer Agent by or on behalf of such Class A Shareholder (such Class A Shares being hereafter referred to as "Tendered Class A Shares" and such Class A Shareholder, the "Tendering Class A Shareholder") for the BIP Units Amount per Tendered Class A Share or, if the Company elects in its sole and absolute discretion, the Cash Amount (in lieu of the BIP Units Amount per Tendered Class A Share), plus, in either case, a cash amount equal to any Unpaid Dividends per Tendered Class A Share.
Notice of Exchange
25.12 A Class A Shareholder must deliver a Notice of Exchange either electronically (by electronic mail or by any other electronic procedure that may be established by the Transfer Agent and communicated to the Class A Shareholders by the Company or the Transfer Agent) or physically (by mail, courier, hand delivery or otherwise) to any office of the Transfer Agent prior to the issuance by the Company of a Notice of Class A Redemption or the announcement of a Liquidation Event in order to exercise his, her or its Exchange Right. The Transfer Agent shall promptly notify the Company, BIP and, until such time as the Rights Agreement has been terminated, BAM, of the receipt of a Notice of Exchange.
Satisfaction of Exchange Rights
25.13 Upon receipt by the Transfer Agent of a Notice of Exchange and such additional documents and instruments as the Company or the Transfer Agent may reasonably require, and provided that BIP has not exercised the Exchange-Redemption Call Right, the Company will redeem the applicable Tendered Class A Shares on or prior to the Specified Exchange Date. The Company will deliver or cause to be delivered to the Tendering Class A Shareholder, at the address of the holder recorded in the register of the Company for the Class A Shares or at the address specified in the holder's Notice of Exchange, either (i) the BIP Units Amount, or (ii) the Cash Amount, as the Company may determine in its sole and absolute discretion, together with a cash amount for each Tendered Class A Share equal to any Unpaid Dividends per Tendered Class A Share ((i) or (ii), plus such Unpaid Dividends collectively being the "Exchange Consideration") and such delivery of such Exchange Consideration by or on behalf of the Company by the Transfer Agent will be deemed to be payment of and will satisfy and discharge all liability for the Exchange Rights so exercised. Should the Company elect to satisfy Exchange Rights by delivering the Cash Amount, then the payment of such amount shall be made in the manner set forth in §25.4.
25.14 Any Tendering Class A Shareholder shall have no further right, with respect to any Tendered Class A Shares redeemed, repurchased or exchanged, to receive any dividends on Class A Shares with a Record Date on or after the date on which the Transfer Agent receives such Notice of Exchange. Each Tendering Class A Shareholder shall continue to own each Class A Share subject to any Notice of Exchange, and be treated as a Class A Shareholder with respect to each such Class A Share for all other purposes of these Articles, until such Class A Share has been redeemed in accordance with §25.13 or repurchased or exchanged in accordance with the Rights Agreement, as applicable, for the Secondary Exchange Amount in accordance with §25.16. A Tendering Class A Shareholder shall have no rights as a unitholder of BIP with respect to any BIP Units to be received by such Tendering Class A Shareholder in exchange for Tendered Class A Shares pursuant to §25.11 until the Transfer Agent has issued such BIP Units to such Tendering Class A Shareholder.
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25.15 Notwithstanding anything to the contrary set forth herein, the Company will not be obligated to redeem Tendered Class A Shares to the extent that such redemption would be contrary to solvency requirements or other provisions of applicable Law. If the Company believes that it would not be permitted by any such requirements or other provisions to redeem the Tendered Class A Shares, and BIP has not exercised its Exchange-Redemption Call Right with respect to the Tendered Class A Shares, the Company will only be obligated to redeem the maximum number of Tendered Class A Shares (rounded down to a whole number of Class A Shares) that would not be contrary to such requirements or other provisions. The Company will notify any such Tendering Class A Shareholder at least one Business Day prior to the Specified Exchange Date as to the number of Tendered Class A Shares that will be redeemed by the Company. Where there is more than one Tendering Class A Shareholder, the Company will redeem the maximum number of Tendered Class A Shares that would not be contrary to such requirements or other provisions among such Tendering Class A Shareholders on a pro rata basis.
Secondary Exchange Rights
25.16 For so long as the Rights Agreement has not been terminated, if a Tendering Class A Shareholder has not received the Exchange Consideration with respect to any Tendered Class A Shares by the Close of Business on the applicable Specified Exchange Date for any reason, then, on the terms and subject to the conditions set forth in the Rights Agreement, which the Class A Shareholders shall have a right to enforce, such Tendering Class A Shareholder shall be entitled to receive from BAM the Secondary Exchange Amount with respect to each such Tendered Class A Share no later than the applicable Secondary Exchange Date (the "Secondary Exchange Right"). The Company shall send to BAM and to the Rights Agent on the applicable Specified Exchange Date a notice to the effect that the Tendering Class A Shareholder has not received the Exchange Consideration and such notice will set forth the identity of the Tendering Class A Shareholder, the number of Tendered Class A Shares, the amounts of such Exchange Consideration then not paid and will be otherwise consistent with the definition of "Company Notice" in the Rights Agreement.
No Fractional BIP Units
25.17 Notwithstanding anything to the contrary set forth herein, no fractional BIP Units shall be issued in connection with the satisfaction of Exchange Rights, in connection with a redemption of a Class A Share or in connection with a Liquidation Event. In lieu of any fractional BIP Units to which the Tendering Class A Shareholder would otherwise be entitled, the Company shall pay a cash amount equal to the BIP Unit Value on the Trading Day immediately preceding the Exchange Date multiplied by such fraction of a BIP Unit. In lieu of any fractional BIP Units to which the Tendering Class A Shareholder would otherwise be entitled pursuant to the Rights Agreement, the Rights Agent shall pay a cash amount as determined in accordance with the terms and conditions of the Rights Agreement.
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Withholding Taxes
25.18 Each Tendering Class A Shareholder shall be required to pay to the Company the amount of any tax withholding due upon the redemption of Tendered Class A Shares pursuant to §25.11 to §25.13 and will be deemed to have authorized the Company to retain such portion of the Exchange Consideration as the Company reasonably determines is necessary to satisfy its tax withholding obligations. Before making any withholding pursuant to this §25.18, the Company shall give each Tendering Class A Shareholder within three (3) Business Days after the Company's receipt of a Notice of Exchange from such Tendering Class A Shareholder, notice of the Company's good faith estimate of the amount of any anticipated tax withholding (together with the legal basis therefor) due upon the redemption of the Tendered Class A Shares subject to such Notice of Exchange, provide the Tendering Class A Shareholder with sufficient opportunity to provide any forms or other documentation or take such other steps in order to avoid or reduce such tax withholding, and reasonably cooperate with the Tendering Class A Shareholder in good faith to attempt to reduce any amounts that would otherwise be withheld pursuant to this §25.18; provided that any determination with respect to the tax withholding shall be made by the Company, BIP or an affiliate of BIP, as applicable, in its sole discretion exercised in good faith.
COMPANY REDEMPTION RIGHTS
Company Redemption
25.19 If the Company delivers or causes to be delivered a Notice of Class A Redemption to the Class A Shareholders, it shall redeem all of the issued and outstanding Class A Shares on the Specified Class A Redemption Date. The Company may deliver a Notice of Class A Redemption at any time, in its sole discretion and subject to applicable Law, including in any of the following circumstances:
(a) the total number of Class A Shares outstanding decreases by 50% or more over any 12-month period;
(b) a Person acquires 90% of the BIP Units in a take-over bid (as defined by Applicable Securities Laws);
(c) the holders of BIP Units approve an acquisition of BIP by way of arrangement or amalgamation;
(d) the holders of BIP Units approve a restructuring or other reorganization of BIP;
(e) there is a sale of all or substantially all the assets of BIP;
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(f) there is a change of Law (whether by legislative, governmental or judicial action), administrative practice or interpretation, or a change in circumstances of the Company and the shareholders of the Company, that may result in adverse tax consequences for the Company or the shareholders of the Company; or
(g) the board, in its good faith, concludes that the holders of BIP Units or the Class A Shareholders are adversely impacted by a fact, change, or other circumstance relating to the Company.
Right of Class B Shareholders to Cause Redemption of Class A Shares
25.20 The Class B Shareholders may, at any time and in their sole discretion, deliver a notice to the Company specifying a date upon which the Company shall redeem all of the issued and outstanding Class A Shares (provided that such specified date is no less than 60 days from the date on which the Class B Shareholders deliver such notice), and as soon as reasonably practicable after the receipt of such notice, the Company shall, subject to applicable Law, deliver a Notice of Class A Redemption to the Class A Shareholders and, without the consent of the Class A Shareholders, shall redeem all of the Class A Shares on the Specified Class A Redemption Date.
Redemption Procedure
25.21 In the event of a redemption of the Class A Shares, each Class A Shareholder shall be considered a Tendering Class A Shareholder and each Class A Share shall be considered a Tendered Class A Share for the purposes of §25.19 to §25.22, and the Company shall, at or prior to Close of Business on the Specified Class A Redemption Date, pay to each Tendering Class A Shareholder either (i) the BIP Units Amount, or (ii) the Cash Amount, as the Company may determine in its sole and absolute discretion, together with a cash amount for each Tendered Class A Share equal to any Unpaid Dividends per Tendered Class A Share ((i) or (ii), plus such Unpaid Dividends collectively being the "Redemption Consideration") and such delivery of such Redemption Consideration by or on behalf of the Company by the Transfer Agent will be deemed to be payment of and will satisfy and discharge all liability for the redemption of the Class A Shares. Should the Company elect to satisfy its obligation to redeem the Class A Shares by delivering the Cash Amount, then the payment of such amount shall be made in the manner set forth in §25.4.
25.22 §25.14 to §25.18 shall apply in their entirety, mutatis mutandis, to a redemption of the Class A Shares.
Exchange-Redemption Call Right
25.23 Notwithstanding the provisions in §25.11 to §25.22 above,
(a) in the event the Company receives a Notice of Exchange from a Tendering Class A Shareholder, BIP shall have an overriding right to acquire, or cause its affiliate to acquire all, but not less than all, of the Tendered Class A Shares from the Tendering Class A Shareholder by delivering the Exchange Consideration (the form of Exchange Consideration to be determined by BIP in its sole and absolute discretion) in accordance with §25.11 to §25.18, mutatis mutandis, in satisfaction of the obligations of the Company, and
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(b) in the event the Company provides a Notice of Class A Redemption to each Class A Shareholder, BIP shall have an overriding right to acquire, or cause its affiliate to acquire all, but not less than all, of the Class A Shares from each Class A Shareholder by delivering the Redemption Consideration (the form of Redemption Consideration to be determined by BIP in its sole and absolute discretion) in accordance with §25.19 to §25.22, mutatis mutandis, in satisfaction of the obligations of the Company as set out therein (the right in either (a) or (b) being the "Exchange-Redemption Call Right"),
and in the event of the exercise by BIP of the Exchange-Redemption Call Right, each Tendering Class A Shareholder will be obligated to sell all Tendered Class A Shares held by such Tendering Class A Shareholder to BIP (or its affiliate, as applicable) on delivery by BIP (or its affiliate, as applicable) to such Tendering Class A Shareholder of the Exchange Consideration or the Redemption Consideration, as applicable, and the Company will have no obligation to pay any Exchange Consideration or Redemption Consideration to the holders of such Class A Shares so purchased by BIP (or its affiliate, as applicable).
25.24 In order to exercise its Exchange-Redemption Call Right, BIP must notify the Transfer Agent in writing, as agent for the holders of Class A Shares, and the Company, of its intention to exercise such right at least 3 days before the Specified Exchange Date or at least 10 days before the Specified Class A Redemption Date, as applicable. Delivery by BIP to the Transfer Agent of a standing direction as to any exercise of the Exchange-Redemption Call Right in respect of the exercise of Exchange Rights shall satisfy the notification requirements set forth in this §25.24.
LIQUIDATION
Liquidation Rights
25.25 Upon any liquidation, dissolution, winding up of the Company or any other distribution of its assets among its shareholders, whether voluntary or involuntary (a "Liquidation Event"), including where substantially concurrent with the liquidation, dissolution, or winding up of BIP, whether voluntary or involuntary (a "BIP Liquidation Event"), each Class A Shareholder shall, subject to the exercise of the Liquidation Call Right, be entitled to be paid out of the assets of the Company legally available for distribution on the effective date of the Liquidation Event (the "Liquidation Date") an amount in cash per Class A Share then held by them equal to the BIP Unit Value on the Trading Day immediately preceding the public announcement of the Liquidation Event (the "Liquidation Reference Date") multiplied by the Conversion Factor (and together with a cash amount for each Class A Share equal to any Unpaid Dividends per Class A Share, the "Liquidation Amount"). Notwithstanding the foregoing, in connection with a Liquidation Event, including where substantially concurrent with a BIP Liquidation Event, if the Company, in its sole and absolute discretion elects, it may, subject to applicable Law, redeem all of the outstanding Class A Shares in exchange for such number of BIP Units per Class A Share equal to the Conversion Factor in effect on the Liquidation Reference Date, together with a cash amount per Class A Share equal to any Unpaid Dividends per Class A Share in accordance with §25.21 and §25.22, in lieu of paying the Liquidation Amount.
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25.26 The rights of the Class A Shareholders to receive the amount set forth in §25.25 is subject to:
(a) the prior rights of holders of all classes and series of Preferred Shares and any other class of shares ranking in priority with the Class A Shares;
(b) prior payment in full to each Tendering Class A Shareholder and Tendering Class C Shareholder that submitted a Notice of Exchange or a Notice of Class C Retraction, as applicable, at least 10 days prior to the date of the Liquidation Event of the Exchange Consideration (in the case of the Tendering Class A Shareholders) and the Class C Retraction Amount (in the case of the Tendering Class C Shareholders); and
(c) prior payment in full to each Tendering Class B Shareholder that submitted a Notice of Class B Retraction at least 30 days prior to the date of the Liquidation Event of the Cash Amount.
25.27 If, upon any such Liquidation Event, the assets of the Company are insufficient to make payment in full to all Class A Shareholders of the foregoing amounts set forth in §25.25 with respect to the Liquidation Event, then such assets (or consideration) shall be distributed among the Class A Shareholders at the time outstanding, rateably in proportion to the full amounts to which they would otherwise be respectively entitled to receive under §25.25.
BIP Liquidation Call Right
25.28 Notwithstanding §25.25, BIP will have the overriding right (the "Liquidation Call Right"), in the event of and notwithstanding the occurrence of any Liquidation Event, to purchase from, or cause its affiliate to purchase from, all but not less than all of the Class A Shareholders on the Liquidation Date all but not less than all of the Class A Shares held by each such holder in exchange for the issuance by BIP of such number of BIP Units per Class A Share equal to the Conversion Factor in effect on the Liquidation Reference Date (and together with a cash amount for each Class A Share equal to any Unpaid Dividends per Class A Share, the "Liquidation Call Consideration"). In the event of the exercise of a Liquidation Call Right, each such Class A Shareholder will be obligated on the Liquidation Date to sell all the Class A Shares held by such holder to BIP on the Liquidation Date upon issuance by BIP to the holder of the Liquidation Call Consideration for each such Class A Share and the Company will have no obligation to pay any Liquidation Amount to the holders of such Class A Shares so purchased by BIP.
25.29 In order to exercise the Liquidation Call Right, BIP must notify the Transfer Agent in writing, as agent for the Class A Shareholders and the Company, of its intention to exercise such right at least 30 days before the Liquidation Date in the case of a voluntary liquidation, dissolution or winding up of the Company and at least five Business Days before the Liquidation Date in the case of an involuntary liquidation, dissolution or winding up of the Company. If BIP exercises the Liquidation Call Right in accordance with this §25.29, all obligations of the Company under §25.25 to §25.27 will terminate and on the Liquidation Date BIP will purchase and Class A Shareholders will sell all of their Class A Shares then outstanding for a price per unit equal to the Liquidation Call Consideration.
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Automatic Redemption Rights
25.30 Subject to the exercise of the Liquidation Call Right, in connection with a BIP Liquidation Event, including where substantially concurrent with a Liquidation Event, the Company shall, subject to applicable Law, redeem all outstanding Class A Shares on the day prior to the effective date of the BIP Liquidation Event for, in its sole and absolute discretion, (i) an amount in cash per share equal to the BIP Unit Value on the Trading Day immediately preceding the public announcement of the BIP Liquidation Event multiplied by the Conversion Factor (together with a cash amount for each Class A Share equal to any Unpaid Dividends per Class A Share), or (ii) such number of BIP Units equal to the Conversion Factor in effect on the Trading Day immediately preceding the public announcement of the BIP Liquidation Event (together with a cash amount for each Class A Share equal to any Unpaid Dividends per Class A Share).
OTHER RIGHTS AND RESTRICTIONS
Conversion of Class A Shares
25.31 Any BIP-Affiliated Class A Shareholder shall be entitled at any time to have any or all of such BIP-Affiliated Class A Shareholder's Class A Shares converted into Class C Shares at a conversion rate equal to one Class C Share for each Class A Share in respect of which the conversion right is exercised. The right of conversion herein provided for may be exercised by notice in writing given to the Transfer Agent (a "Conversion Notice"), which notice shall specify the number of Class A Shares that the BIP-Affiliated Class A Shareholder desires to have converted. Upon receipt of a Conversion Notice, the Company shall, subject to applicable Law, promptly issue to the converting BIP-Affiliated Class A Shareholder the requisite number of Class C Shares and the Transfer Agent shall cancel the converted Class A Shares subject to the Conversion Notice effective concurrently therewith.
Call Rights
25.32 Each Class A Shareholder, whether a registered holder or a beneficial holder, by virtue of becoming and being such a holder will be deemed to acknowledge each of the Exchange-Redemption Call Right and the Liquidation Call Right, in each case, in favour of BIP, and the overriding nature thereof in connection with the exercise of Exchange Rights, the liquidation, dissolution or winding-up of the Company or any other distribution of the assets of the Company among its shareholders for the purpose of winding up its affairs, or the retraction or redemption of Class A Shares, as the case may be, and to be bound thereby in favour of BIP as herein provided.
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PART 26
SPECIAL RIGHTS AND RESTRICTIONS
CLASS B MULTIPLE VOTING SHARES
Special Rights and Restrictions
26.1 The Class B Shares as a class shall have attached thereto the special rights and restrictions specified in this Part 26.
Dividend Rights
26.2 Except as set out in §26.3, the Class B Shareholders shall not be entitled to receive any dividends on the Class B Shares.
Stock Dividends
26.3 In the event a dividend is declared and paid on the Class A Shares consisting of Class A Shares, the board shall, subject to applicable Law, contemporaneously declare and pay an equivalent dividend on the Class B Shares consisting of Class B Shares.
Ranking of the Class B Shares
26.4 The Class B Shares shall, as to the return of capital in the event of the liquidation, dissolution or winding-up of the Company, rank junior to the Preferred Shares and to the Class A Shares and senior to the Class C Shares and any other shares ranking junior to the Class B Shares with respect to priority in the return of capital in a Liquidation Event.
Voting Rights
26.5 Except as expressly provided herein, each Class B Shareholder will be entitled to receive notice of, and attend and vote at, all meetings of shareholders of the Company, except for meetings at which only holders of another specified class or series of shares are entitled to vote separately as a class or series. Each Class B Shareholder will be entitled to cast a number of votes per Class B Share equal to: (i) the number that is three times the number of Class A Shares then issued and outstanding, divided by (ii) the number of Class B Shares then issued and outstanding.
26.6 Except as otherwise expressly provided herein or as required by Law, the Class A Shareholders and the Class B Shareholders will vote together and not as separate classes.
26.7 At any time that no Class A Shares are outstanding or for any vote held only in respect of the Class B Shares, each Class B Shareholder will be entitled to cast one vote per Class B Share.
26.8 Subject to any rights of the holders of any series of Preferred Shares to elect directors under specified circumstances, the holders of the outstanding Class A Shares and Class B Shares, voting together, shall be entitled to vote for the election of all directors of the Company.
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Amendment with Approval of Class B Shareholders
26.9 In addition to any other approvals required by Law, the rights, privileges, restrictions and conditions attached to the Class B Shares as a class may be added to, changed or removed but only with the approval of the Class B Shareholders given as hereinafter specified.
26.10 The approval of the Class B Shareholders to add to, change or remove any right, privilege, restriction or condition attaching to the Class B Shares as a class or in respect of any other matter requiring the consent of the holders of the Class B Shareholders may be given in such manner as may then be required by Law, subject to a minimum requirement that such approval be given by resolution signed by all the Class B Shareholders or passed by the affirmative vote of at least two thirds of the votes cast at a meeting of the Class B Shareholders duly called for that purpose. On every poll taken at every meeting of the Class B Shareholders as a class, each Class B Shareholder entitled to vote thereat shall have one vote in respect of each Class B Share held.
Retraction at the Option of the Class B Shareholder
26.11 Subject to applicable Law, at any time from and after the date of the issuance of the Class B Shares, each Class B Shareholder shall have the right (the "Class B Retraction Right") to require the Company to redeem all or such portion of the Class B Shares registered in the name of such Class B Shareholder specified in a Notice of Class B Retraction delivered to the Company by or on behalf of such Class B Shareholder (such Class B Shares being hereafter referred to as "Tendered Class B Shares" and such Class B Shareholder, the "Tendering Class B Shareholder") for the Cash Amount (the "Class B Retraction Amount").
Notice of Class B Retraction
26.12 A Class B Shareholder must deliver a Notice of Class B Retraction to the registered office of the Company in order to exercise his, her or its Class B Retraction Right.
Satisfaction of Retraction Right
26.13 Upon receipt by Company of a Notice of Class B Retraction and such additional documents and instruments as the Company may reasonably require, the Company shall redeem the Tendered Class B Shares on or prior to the Specified Class B Retraction Date. The Company will deliver or cause to be delivered to the Tendering Class B Shareholder, at the address of the holder recorded in the register of the Company for the Class B Shares or at the address specified in the holder's Notice of Class B Retraction, the Class B Retraction Amount, and such delivery of such Class B Retraction Amount by or on behalf of the Company, will be deemed to be payment of and will satisfy and discharge all liability for the Class B Retraction Right so exercised.
26.14 Each Tendering Class B Shareholder shall continue to own each Class B Share subject to any Notice of Class B Retraction, and be treated as a Class B Shareholder with respect to each such Class B Share for all other purposes of these Articles, until such Class B Share has been redeemed by the Company in accordance with §26.11 to §26.16.
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26.15 Notwithstanding anything to the contrary set forth herein, the Company will not be obligated to redeem Tendered Class B Shares to the extent that such redemption would be contrary to solvency requirements or other provisions of applicable Law.
Withholding Taxes
26.16 Each Tendering Class B Shareholder shall be required to pay to the Company the amount of any tax withholding due upon the redemption of Tendered Class B Shares pursuant to §26.11 to §26.13 and will be deemed to have authorized the Company to retain such portion of the Class B Retraction Amount as the Company reasonably determines is necessary to satisfy its tax withholding obligations. Before making any withholding pursuant to this §26.16, the Company shall give each Tendering Class B Shareholder within three (3) Business Days after the Company's receipt of a Notice of Class B Retraction from such Tendering Class B Shareholder, notice of the Company's good faith estimate of the amount of any anticipated tax withholding (together with the legal basis therefor) due upon the redemption of the Tendered Class B Shares subject to such Notice of Class B Retraction, provide the Tendering Class B Shareholder with sufficient opportunity to provide any forms or other documentation or take such other steps in order to avoid or reduce such tax withholding, and reasonably cooperate with the Tendering Class B Shareholder in good faith to attempt to reduce any amounts that would otherwise be withheld pursuant to this §26.16; provided that any determination with respect to the tax withholding shall be made by the Company in its sole discretion exercised in good faith.
Liquidation Rights
26.17 Upon any Liquidation Event, including where substantially concurrent with a BIP Liquidation Event, subject to the following sentence, the Class B Shareholders shall be entitled to be paid out of the assets of the Company legally available for distribution on the Liquidation Date an amount in cash per Class B Share then held by them equal to the BIP Unit Value for each such Class B Share. At any time no Class C Shares are outstanding, the Class B Shareholders shall be entitled to receive on the Liquidation Date the assets and property of the Company remaining, if any, after the prior payments of the amounts set forth in §26.18.
26.18 The rights of the Class B Shareholders to receive the amount set forth in §26.17 is subject to the prior payment of the amounts set forth in §25.26(b) and §25.26(c) and to the prior rights of holders of all classes and series of Preferred Shares, Class A Shares and any other class of shares ranking in priority or rateably with the Class B Shares.
26.19 If, upon any such Liquidation Event, the assets of the Company, after payment of any amounts owed to holders of all classes of shares ranking in priority to the Class B Shares, shall be insufficient to make payment in full to all Class B Shareholders of the foregoing amounts set forth in §26.17 with respect to the Liquidation Event, then such assets (or consideration) shall be distributed among the Class B Shareholders at the time outstanding, rateably in proportion to the full amounts to which they would otherwise be respectively entitled to receive under §26.17.
Transfer Restrictions
26.20 The Class B Shares may not be Transferred to any Person other than to BIP or a Person Controlled by BIP. If any Class B Shares are Transferred in contravention of the preceding sentence, (i) such Transfer shall be null and void, and the Company shall not register or otherwise recognize the Transfer of the Class B Shares to the transferee, (ii) any rights to vote attaching to the Class B Shares so Transferred may not be exercised by any Person, (iii) any payment by the Company on the Class B Shares so Transferred shall be prohibited and any such payment shall be forfeited, and (iv) any rights that an ineligible transferee may have as a result of being a holder of Class B Shares shall be null and void, in each case, until such time as such Transfer is cancelled.
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PART 27
SPECIAL RIGHTS AND RESTRICTIONS
CLASS C NON-VOTING SHARES
Special Rights and Restrictions
27.1 The Class C Shares as a class shall have attached thereto the special rights and restrictions specified in this Part 27.
Dividend Rights
27.2 Class C Shareholders shall be entitled to receive, as and when declared by the board of directors, out of any assets of the Company legally available therefor, such dividends as may be declared from time to time by the board of directors. The Class C Shareholders shall not be entitled to receive dividends (i) unless and until the Company has paid any Unpaid Dividends, and (ii) unless and until the Company has paid all of the Exchange Consideration owing to any Tendering Class A Shareholders who have submitted Notices of Exchange before the date the board of directors declares a dividend on the Class C Shares. The record and payment dates for dividends on Class C Shares shall be such date that the board of directors shall designate for the payment of such dividends.
Stock Dividends
27.3 In the event a dividend is declared and paid on the Class A Shares consisting of Class A Shares, the board shall, subject to applicable Law, contemporaneously declare and pay on the Class C Shares an equivalent dividend on a per share basis consisting of Class C Shares.
Ranking of the Class C Shares
27.4 The Class C Shares shall, as to the payment of dividends and return of capital in a Liquidation Event, rank junior to the Preferred Shares, the Class A Shares and the Class B Shares and senior over any other shares ranking junior to the Class C Shares with respect to priority in payment of dividends and return of capital in the event of the liquidation, dissolution or winding-up of the Company.
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Voting Rights
27.5 Except as otherwise expressly provided herein or as required by Law, each Class C Shareholder shall be entitled to notice of, and to attend, any meetings of shareholders of the Company, but shall not otherwise be entitled to vote at any such meeting.
Amendment with Approval of Class C Shareholders
27.6 In addition to any other approval required by Law, the rights, privileges, restrictions and conditions attached to the Class C Shares as a class may be added to, changed or removed but only with the approval of the holders of the Class C Shares given as hereinafter specified.
27.7 The approval of the Class C Shareholders to add to, change or remove any right, privilege, restriction or condition attaching to the Class C Shares as a class or in respect of any other matter requiring the consent of the Class C Shareholders may be given in such manner as may then be required by Law, subject to a minimum requirement that such approval be given by resolution signed by all the Class C Shareholders or passed by the affirmative vote of at least two thirds of the votes cast at a meeting of the Class C Shareholders duly called for that purpose. On every poll taken at every meeting of the Class C Shareholders as a class, each Class C Shareholder entitled to vote thereat shall have one vote in respect of each Class C Share held.
Retraction at the Option of the Class C Shareholder
27.8 Subject to applicable Law, at any time from and after the date of the issuance of the Class C Shares, each Class C Shareholder shall have the right (the "Class C Retraction Right") to require the Company to redeem all or such portion of the Class C Shares registered in the name of such Class C Shareholder specified in an Notice of Class C Retraction delivered to the Company by or on behalf of such Class C Shareholder (such Class C Shares being hereafter referred to as "Tendered Class C Shares" and such Class C Shareholder, the "Tendering Class C Shareholder") for the Cash Amount (the "Class C Retraction Amount").
Notice of Class C Retraction
27.9 A Class C Shareholder must deliver a Notice of Class C Retraction to the registered office of the Company in order to exercise his, her or its Class C Retraction Right.
Satisfaction of Retraction Right
27.10 Upon receipt by Company of a Notice of Class C Retraction and such additional documents and instruments as the Company may reasonably require, the Company shall redeem the Tendered Class C Shares on or prior to the Specified Class C Retraction Date. The Company will deliver or cause to be delivered to the Tendering Class C Shareholder, at the address of the holder recorded in the register of the Company for the Class C Shares or at the address specified in the holder's Notice of Class C Retraction, the Class C Retraction Amount, and such delivery of such Class C Retraction Amount by or on behalf of the Company, will be deemed to be payment of and will satisfy and discharge all liability for the Class C Retraction Right so exercised.
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27.11 Each Tendering Class C Shareholder shall continue to own each Class C Share subject to any Notice of Class C Retraction, and be treated as a Class C Shareholder with respect to each such Class C Share for all other purposes of these Articles, until such Class C Share has been redeemed by the Company in accordance with §27.8 to §27.13.
27.12 Notwithstanding anything to the contrary set forth herein, the Company will not be obligated to redeem Tendered Class C Shares to the extent that such redemption would be contrary to solvency requirements or other provisions of applicable Law.
Withholding Taxes
27.13 Each Tendering Class C Shareholder shall be required to pay to the Company the amount of any tax withholding due upon the redemption of Tendered Class C Shares pursuant to §27.8 to §27.10 and will be deemed to have authorized the Company to retain such portion of the Class C Retraction Amount as the Company reasonably determines is necessary to satisfy its tax withholding obligations. Before making any tax withholding pursuant to this §27.13, the Company shall give each Tendering Class C Shareholder within three (3) Business Days after the Company's receipt of a Notice of Class C Retraction from such Tendering Class C Shareholder, notice of the Company's good faith estimate of the amount of any anticipated tax withholding (together with the legal basis therefor) due upon the redemption of the Tendered Class C Shares subject to such Notice of Class C Retraction, provide the Tendering Class C Shareholder with sufficient opportunity to provide any forms or other documentation or take such other steps in order to avoid or reduce such tax withholding, and reasonably cooperate with the Tendering Class C Shareholder in good faith to attempt to reduce any amounts that would otherwise be withheld pursuant to this §27.13; provided that any determination with respect to the tax withholding shall be made by the Company in its sole discretion exercised in good faith.
Liquidation Rights
27.14 Upon any Liquidation Event, including where substantially concurrent with a BIP Liquidation Event, the Class C Shareholders shall be entitled to receive on the Liquidation Date the assets and property of the Company remaining, if any, after the prior payments of the amounts set forth in §27.15.
27.15 The rights of the Class C Shareholders to receive the amounts set forth in §27.14 is subject to the prior payment of the amounts set forth in §25.26(b) and §25.26(c) and the prior rights of holders of all classes and series of Preferred Shares, Class A Shares, Class B Shares and any other class of shares ranking in priority or rateably with the Class C Shares.
Transfer Restrictions
27.16 The Class C Shares may not be Transferred to any Person other than to BIP or a Person Controlled by BIP. If any Class C Shares are Transferred in contravention of the preceding sentence, (i) such Transfer shall be null and void, and the Company shall not register or otherwise recognize the Transfer of the Class C Shares to the transferee, (ii) any payment by the Company on the Class C Shares so Transferred shall be prohibited and any such payment shall be forfeited, and (iii) any rights that an ineligible transferee may have as a result of being a holder of Class C Shares shall be null and void, in each case, until such time as such Transfer is cancelled.
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PART 28
SPECIAL
RIGHTS AND RESTRICTIONS
CLASS A SENIOR PREFERRED SHARES
Special Rights and Restrictions
28.1 Subject to the rights, if any, of the holders of issued shares of the Company, the Class A Senior Preferred Shares as a class shall have attached thereto the special rights and restrictions specified in this Part 28.
Directors' Right to Issue in One or More Series
28.2 The Class A Senior Preferred Shares may be issued at any time or from time to time in one or more series. Before any Class A Senior Preferred Shares of a series are issued, the board of directors shall, subject to the Business Corporations Act (British Columbia), by resolution:
(a) determine the maximum number of shares of any of those series of shares that the Company is authorized to issue, determine that there is no maximum number or, if none of the shares of that series is issued, alter any determination so made, and authorize the alteration of the notice of articles accordingly;
(b) alter the articles, and authorize the alteration of the notice of articles, to create an identifying name by which the shares of any of those series of shares may be identified or, if none of the shares of that series is issued, to alter any such identifying name so created; and
(c) alter the articles, and authorize the alteration of the notice of articles accordingly, to attach special rights or restrictions to the shares of any of those series of shares, including, but without in any way limiting or restricting the generality of the foregoing, the rate or amount of dividends, whether cumulative, non-cumulative or partially cumulative, the dates, places and currencies of payment thereof, the consideration for, and the terms and conditions of, any purchase, retraction or redemption thereof, including redemption after a fixed term or at a premium, conversion or exchange rights, the terms and conditions of any share purchase plan or sinking fund, the restrictions respecting payment of dividends on, or the repayment of capital in respect of, any other shares of the Company and voting rights and restrictions but no special right or restriction so created, defined or attached shall contravene the provisions of §28.3 and §28.4, or, if none of the shares of that series is issued, to alter any such special rights or restrictions.
Ranking of the Class A Senior Preferred Shares
28.3 The Class A Senior Preferred Shares of each series shall, as to the payment of dividends and return of capital in a Liquidation Event, rank on a parity with the Class A Senior Preferred Shares of every other series and senior to the Class B Junior Preferred Shares, the Class A Shares, the Class B Shares and the Class C Shares and over any other shares ranking junior to the Preferred Shares with respect to priority in payment of dividends and return of capital in a Liquidation Event.
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Voting
28.4 Except as hereinafter referred to or as required by Law or unless provision is made in the articles of the Company relating to any series of Class A Senior Preferred Shares that such series is entitled to vote, the holders of the Class A Senior Preferred Shares as a class shall not be entitled as such to receive notice of, to attend or to vote at any meeting of the shareholders of the Company.
Amendment with Approval of Holder of Class A Senior Preferred Shares
28.5 In addition to any other approval required by Law, the rights, privileges, restrictions and conditions attached to the Class A Senior Preferred Shares as a class may be added to, changed or removed but only with the approval of the holders of the Class A Senior Preferred Shares given as hereinafter specified.
28.6 The approval of the holders of the Class A Senior Preferred Shares to add to, change or remove any right, privilege, restriction or condition attaching to the Class A Senior Preferred Shares as a class or in respect of any other matter requiring the consent of the holders of the Class A Senior Preferred Shares may be given in such manner as may then be required by Law, subject to a minimum requirement that such approval be given by resolution signed by all the holders of the Class A Senior Preferred Shares or passed by the affirmative vote of at least two thirds of the votes cast at a meeting of the holders of the Class A Senior Preferred Shares duly called for that purpose. On every poll taken at every meeting of the holders of the Class A Senior Preferred Shares as a class, or at any joint meeting of the holders of two or more series of Class A Senior Preferred Shares, each holder of Class A Senior Preferred Shares entitled to vote thereat shall have one vote in respect of each Class A Senior Preferred Share held.
PART 29
SPECIAL RIGHTS AND RESTRICTIONS
CLASS B JUNIOR PREFERRED SHARES
Special Rights and Restrictions
29.1 Subject to the rights, if any, of the holders of issued shares of the Company, the Class B Junior Preferred Shares as a class shall have attached thereto the special rights and restrictions specified in this Part 29.
Directors' Right to Issue in One or More Series
29.2 The Class B Junior Preferred Shares may be issued at any time or from time to time in one or more series. Before any Class B Junior Preferred Shares of a series are issued, the board of directors shall, subject to the Business Corporations Act (British Columbia), by resolution:
(a) determine the maximum number of shares of any of those series of shares that the Company is authorized to issue, determine that there is no maximum number or, if none of the shares of that series is issued, alter any determination so made, and authorize the alteration of the notice of articles accordingly;
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(b) alter the articles, and authorize the alteration of the notice of articles, to create an identifying name by which the shares of any of those series of shares may be identified or, if none of the shares of that series is issued, to alter any such identifying name so created; and
(c) alter the articles, and authorize the alteration of the notice of articles accordingly, to attach special rights or restrictions to the shares of any of those series of shares, including, but without in any way limiting or restricting the generality of the foregoing, the rate or amount of dividends, whether cumulative, non-cumulative or partially cumulative, the dates, places and currencies of payment thereof, the consideration for, and the terms and conditions of, any purchase, retraction or redemption thereof, including redemption after a fixed term or at a premium, conversion or exchange rights, the terms and conditions of any share purchase plan or sinking fund, the restrictions respecting payment of dividends on, or the repayment of capital in respect of, any other shares of the Company and voting rights and restrictions but no special right or restriction so created, defined or attached shall contravene the provisions of §29.3 and §29.4, or, if none of the shares of that series is issued, to alter any such special rights or restrictions.
Ranking of the Class B Junior Preferred Shares
29.3 The Class B Junior Preferred Shares of each series shall, as to the payment of dividends and return of capital in a Liquidation Event, rank on a parity with the Class B Junior Preferred Shares of every other series, junior to the Class A Senior Preferred Shares and senior to the Class A Shares, the Class B Shares and the Class C Shares and over any other shares ranking junior to the Preferred Shares with respect to priority in payment of dividends and in return of capital in a Liquidation Event.
Voting
29.4 Except as hereinafter referred to or as required by Law or unless provision is made in the articles of the Company relating to any series of Class B Junior Preferred Shares that such series is entitled to vote, the holders of the Class B Junior Preferred Shares as a class shall not be entitled as such to receive notice of, to attend or to vote at any meeting of the shareholders of the Company.
Amendment with Approval of Holder of Class B Junior Preferred Shares
29.5 In addition to any other approval required by Law, the rights, privileges, restrictions and conditions attached to the Class B Junior Preferred Shares as a class may be added to, changed or removed but only with the approval of the holders of the Class B Junior Preferred Shares given as hereinafter specified.
29.6 The approval of the holders of the Class B Junior Preferred Shares to add to, change or remove any right, privilege, restriction or condition attaching to the Class
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B Junior Preferred Shares as a class or in respect of any other matter requiring the consent of the holders of the Class B Junior Preferred Shares may be given in such manner as may then be required by Law, subject to a minimum requirement that such approval be given by resolution signed by all the holders of the Class B Junior Preferred Shares or passed by the affirmative vote of at least two thirds of the votes cast at a meeting of the holders of the Class B Junior Preferred Shares duly called for that purpose. On every poll taken at every meeting of the holders of the Class B Junior Preferred Shares as a class, or at any joint meeting of the holders of two or more series of Class B Junior Preferred Shares, each holder of Class B Junior Preferred Shares entitled to vote thereat shall have one vote in respect of each Class B Junior Preferred Share held.
EXHIBIT “A”
Notice of Exchange
NOTICE OF EXCHANGE
| To: | Computershare Trust Company of Canada (the “Transfer Agent”) |
PLEASE DELIVER YOUR EXCHANGE REQUEST BY ONE OF THE OPTIONS BELOW:
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Via PDF Email (recommended)*: |
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Via Mail: | |||
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onlinedeposits@computershare.com
*You can either scan this document via PDF or take a picture with your phone (send a CLEAR picture of all pages, both front and back within the same email)
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Computershare Trust Company of Canada P.O. Box 7021 31 Adelaide St E Toronto, ON M5C 3H2 Attn: Corporate Actions
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This notice is given pursuant to Section 26.12 of the articles (the “Articles”) of Brookfield Infrastructure Corporation (the “Company”). All capitalized words and expressions used in this notice that are defined in the Articles have the meanings ascribed to such words and expressions in the Articles.
The undersigned hereby notifies the Company that the undersigned desires to have the Company redeem in accordance with the Articles:
| ☐ | all Class A Share(s) registered in the name of the undersigned; or |
| ☐ | _____ Class A Share(s) registered in the name of the undersigned. |
The undersigned acknowledges the Exchange-Redemption Call Right of Brookfield Infrastructure Partners L.P. (“BIP”) or an affiliate of BIP to acquire all, but not less than all, of the Tendered Class A Shares from the undersigned and that this notice is and will be deemed to be an offer by the undersigned to sell the Tendered Class A Shares to BIP in accordance with the Exchange-Redemption Call Right on or prior to the Specified Exchange Date for the Exchange Consideration and on the other terms and conditions set out in the Articles.
The undersigned acknowledges that the Company will not be obligated to redeem Tendered Class A Shares to the extent that such redemption would be contrary to solvency requirements or other provisions of applicable Law. If the Company believes that it would not be permitted by any such requirements or other provisions to redeem the Tendered Class A Shares, provided that BIP has not exercised its Exchange-Redemption Call Right with respect to the Tendered Class A Shares, the Company will only be obligated to redeem the maximum number of Tendered Class A Shares (rounded down to a whole number of Class A Shares) that would not be contrary to such provisions.
The undersigned hereby represents and warrants to the Company and BIP that the undersigned has good title to, and owns, the Class A Share(s) to be acquired by the Company, BIP or an affiliate of BIP as the case may be, free and clear of all liens, claims and encumbrances whatsoever.
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(Date) |
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(Signature of Tendering Class A Shareholder) |
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(Guarantee of Signature) |
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CURRENCY ELECTION
(only if exchange or acquisition of the Tendered Class A Shares is satisfied by the Cash Amount)
Shareholders domiciled in Canada will receive the Cash Amount in Canadian dollars (CAD) and shareholders domiciled in the United States and all other countries will receive the Cash Amount in U.S. dollars (USD), unless otherwise elected below;
☐ Issue my cash entitlement payment(s) in U.S. dollars (USD).
☐ Issue my cash entitlement payment(s) in Canadian dollars (CAD).
☐ Issue my cash entitlement payment(s) in Australian dollars (AUD).
By electing to receive payment in another currency, the undersigned acknowledges that (a) the exchange rate used will be the rate established by Computershare, in its capacity as foreign exchange service provider to the Company, on the date the funds are converted; (b) the risk of any fluctuation in such rate will be borne by the undersigned; and (c) Computershare may earn commercially reasonable spread between its exchange rate and the rate used by any counterparty from which it purchases the elected currency.
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Payment Delivery Instruction
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☐ Please check this box if the Cash Amount, if applicable, resulting from the exchange or acquisition of the Tendered Class A Shares is to be paid by cheque and mailed to the last address of the Tendering Class A Shareholder as it appears on the register of the Company or as instructed below in Exhibit A. ALL CHEQUE PAYMENTS WILL BE ISSUED TO THE REGISTERED NAME AS IT CURRENTLY APPEARS. |
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☐ Please check this box if the Cash Amount, if applicable, resulting from the exchange or acquisition of the Tendered Class A Shares is to be paid by cheque and held for pick-up by the Tendering Class A Shareholder at the principal transfer office of the Transfer Agent in Toronto, Ontario. |
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☐ Please check this box if the Cash Amount, if applicable, resulting from the exchange or acquisition of the Tendered Class A Shares is to be paid electronically to the Tendering Class A Shareholder using the electronic payment information as it appears on the dividend register of the Company or as instructed below in Exhibit B.
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| NOTE: | This panel must be completed and such additional documents as the Transfer Agent may require must be deposited with the Transfer Agent at its principal transfer office in Toronto, Ontario. The BIP Units Amount and any payment resulting from the exchange or acquisition of the Tendered Class A Shares will be issued and registered in, and made payable to respectively, the name of the Tendering Class A Shareholder as it appears on the register of the Company and the BIP Units Amount and payment resulting from such exchange or acquisition will be delivered to such Tendering Class A Shareholder as indicated above, unless the form appearing immediately below is duly completed. |
EXHIBIT A:
Cheque Delivery Information
| Date: |
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Name of Person in Whose Name Payment is to be Delivered (please print) |
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Street Address or P.O. Box |
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City, Province and Postal Code |
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Signature of Tendering Class A Shareholder |
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EXHIBIT B
| BROOKFIELD INFRASTRUCTURE CORPORATION EXCHANGE WIRE PAYMENT FORM* |
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| **Beneficiary Name(s) that appears on the account at your financial institution – this MUST be the same name and address that your shares are registered to
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| **Beneficiary Address (Note: PO Boxes will not be accepted) | **City | **Province/State | **Postal Code/Zip Code | |||||||||||||
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| **Beneficiary Bank/Financial Institution | ||||||||||||||||
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| **Bank Address | **City | **Province/State | **Postal Code/Zip Code | |||||||||||||
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| PLEASE ONLY COMPLETE THE APPLICABLE BOXES BELOW, AS PROVIDED BY YOUR FINANCIAL INSTITUTION. YOU ARE NOT REQUIRED TO COMPLETE ALL BOXES | ||||||||||||||||
| **Bank Account No. | Bank No. & Transit No. (Canadian Banks) | ABA/Routing No. (US Banks) | ||||||||||||||
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| (3 digits & 5 digits) | (9 digits) | |||||||||||||||
| SWIFT or BIC Code | IBAN Number | Sort Code (GBP) | ||||||||||||||
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| (11 characters – if you only have eight, put ‘XXX’ for the last three) | ||||||||||||||||
| Additional Notes and special routing instructions: | ||||||||||||||||
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| *PLEASE NOTE THAT THERE IS A $100 BANKING FEE ON WIRE PAYMENTS. ALTERNATIVELY, CHEQUE PAYMENTS ARE ISSUED AT NO ADDITIONAL COST. IF WIRE DETAILS ARE INCORRECT OR INCOMPLETE, COMPUTERSHARE WILL ATTEMPT TO CONTACT YOU AND CORRECT THE ISSUE. HOWEVER, IF WE CANNOT CORRECT THE ISSUE PROMPTLY, A CHEQUE WILL BE AUTOMATICALLY ISSUED AND MAILED TO THE ADDRESS ON RECORD. NO FEES WILL BE CHARGED |
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| **MANDATORY FIELD |
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| Please provide email address and phone number in the event that we need to contact you for corrective measures: |
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EMAIL ADDRESS: _____________________________________________ PHONE NUMBER: ________________
EXHIBIT “B”
Notice of Class A Redemption
NOTICE OF CLASS A REDEMPTION
| To: | Class A Shareholders of Brookfield Infrastructure Corporation (the “Company”) |
This notice is given pursuant to Section 26.19 of the articles of the Company (the “Articles”). All capitalized words and expressions used in this notice that are defined in the Articles have the meanings ascribed to such words and expressions in such Articles.
The Company hereby notifies the Class A Shareholders that the Company desires to redeem all of the issued and outstanding Class A Shares in accordance with the Articles.
The Company acknowledges that this notice is and will be deemed to be an irrevocable offer by the Company to redeem all of the Class A Shares on the Specified Class A Redemption Date for the Redemption Consideration and on the other terms and conditions set out in the Articles.
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| Brookfield Infrastructure Corporation |
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| (Date) |
EXHIBIT “C”
Notice of Class B Retraction
NOTICE OF CLASS B RETRACTION
| To: | Brookfield Infrastructure Corporation (the “Company”) |
This notice is given pursuant to Section 26.12 of the articles of the Company (the “Articles”). All capitalized words and expressions used in this notice that are defined in the Articles have the meanings ascribed to such words and expressions in such Articles.
The undersigned hereby notifies the Company that the undersigned desires to have the Company redeem in accordance with the Articles:
| ___ | all Class B Share(s) registered in the name of the undersigned; or |
| ___ | ______ Class B Share(s) registered in the name of the undersigned. |
The undersigned acknowledges that this notice is and will be deemed to be an irrevocable offer by the undersigned to sell the Tendered Class B Shares to the Company on or prior to the Specified Class B Retraction Date for the Class B Retraction Amount and on the other terms and conditions set out in the Articles.
The undersigned acknowledges that the Company will not be obligated to redeem Tendered Class B Shares to the extent that such redemption would be contrary to solvency requirements or other provisions of applicable Law. If the Company believes that it would not be permitted by any such requirements or other provisions to redeem the Tendered Class B Shares, the Company will only be obligated to redeem the maximum number of Tendered Class B Shares (rounded down to a whole number of Class B Shares) that would not be contrary to such provisions.
The undersigned hereby represents and warrants to the Company that the undersigned has good title to, and owns, the Class B Share(s) to be acquired by the Company, free and clear of all liens, claims and encumbrances whatsoever.
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| (Date) |
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| (Signature of Tendering Class B Shareholder) |
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| (Guarantee of Signature) |
☐ Please check this box if the Cash Amount resulting from the acquisition of the Tendered Class B Shares is to be mailed to the last address of the Tendering Class B Shareholder as it appears on the register of the Company.
NOTE: This panel must be completed and this certificate, together with such additional documents as the Company may require, must be delivered to the registered office of the Company in Vancouver, British Columbia. Any payment resulting from the acquisition of the Tendered Class B Shares will be made payable to the name of the Tendering Class B Shareholder as it appears on the register of the Company and payment resulting from such acquisition will be delivered to such Tendering Class B Shareholder as indicated above, unless the form appearing immediately below is duly completed.
| Date: | ||
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| Name of Person in Whose Name Payment is to be Delivered (please print) |
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| Street Address or P.O. Box |
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| City, Province and Postal Code |
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| Signature of Tendering Class B Shareholder |
NOTE: If this Notice of Class B Retraction is for less than all of the Class B Share(s) represented by this certificate, a certificate representing the remaining Class B Shares of the Company will be issued and registered in the name of the Tendering Class B Shareholder as it appears on the register of the Company.
EXHIBIT “D”
Notice of Class C Retraction
NOTICE OF CLASS C RETRACTION
| To: | Brookfield Infrastructure Corporation (the “Company”) |
This notice is given pursuant to Section 27.9 of the articles of the Company (the “Articles”). All capitalized words and expressions used in this notice that are defined in the Articles have the meanings ascribed to such words and expressions in such Articles.
The undersigned hereby notifies the Company that the undersigned desires to have the Company redeem in accordance with the Articles:
| ___ | all Class C Share(s) registered in the name of the undersigned; or |
| ___ | ______ Class C Share(s) registered in the name of the undersigned. |
The undersigned acknowledges that this notice is and will be deemed to be an irrevocable offer by the undersigned to sell the Tendered Class C Shares to the Company on or prior to the Specified Class C Retraction Date for the Class C Retraction Amount and on the other terms and conditions set out in the Articles.
The undersigned acknowledges that the Company will not be obligated to redeem Tendered Class C Shares to the extent that such redemption would be contrary to solvency requirements or other provisions of applicable Law. If the Company believes that it would not be permitted by any such requirements or other provisions to redeem the Tendered Class C Shares, the Company will only be obligated to redeem the maximum number of Tendered Class C Shares (rounded down to a whole number of Class C Shares) that would not be contrary to such provisions.
The undersigned hereby represents and warrants to the Company that the undersigned has good title to, and owns, the Class C Share(s) to be acquired by the Company, free and clear of all liens, claims and encumbrances whatsoever.
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| (Date) |
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| (Signature of Tendering Class C Shareholder) |
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| (Guarantee of Signature) |
☐ Please check this box if the Cash Amount resulting from the acquisition of the Tendered Class C Shares is to be mailed to the last address of the Tendering Class C Shareholder as it appears on the register of the Company.
NOTE: This panel must be completed and this certificate, together with such additional documents as the Company may require, must be delivered to the registered office of the Company in Vancouver, British Columbia. Any payment resulting from the acquisition of the Tendered Class C Shares will be made payable to the name of the Tendering Class C Shareholder as it appears on the register of the Company and payment resulting from such acquisition will be delivered to such Tendering Class C Shareholder as indicated above, unless the form appearing immediately below is duly completed.
| Date: | ||
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| Name of Person in Whose Name Payment is to be Delivered (please print) |
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| Street Address or P.O. Box |
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| City, Province and Postal Code |
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| Signature of Tendering Class C Shareholder |
NOTE: If this Notice of Class C Retraction is for less than all of the Class C Share(s) represented by this certificate, a certificate representing the remaining Class C Shares of the Company will be issued and registered in the name of the Tendering Class C Shareholder as it appears on the register of the Company.
EXHIBIT B-1
Authorized Signatures for Brookfield Infrastructure Corporation
("BIPC")
under Rights Agreement dated as of March 31, 2020
[Omitted]
EXHIBIT B-2
Authorized Signatures for Brookfield Asset Management Inc. ("BAM")
under Rights Agreement dated as of March 31, 2020
[Omitted]
EXHIBIT C
Terms of Compensation of Rights Agent
[Omitted]
EXHIBIT D-1
Form of Company Notice
To: Brookfield Asset Management Inc.
Attn: Investor Relations
Brookfield Place, Suite 300
181 Bay Street, P.O. Box 762
Toronto, Ontario, Canada M5J 2T3
Phone: 1-866-989-0311
Email: enquiries@brookfield.com
Brookfield Infrastructure Partners L.P.
73 Front Street, 5th Floor
Hamilton, HM 12, Bermuda
Phone: (441)
294-3309
E-mail: bip.enquiries@brookfield.com
Wilmington Trust, National Association
Attn: Project Remus Administrator
50 South Sixth Street, Suite 1290
Minneapolis, MN 55402
Phone: (203) 453-1318
Fax: (203) 453-1183
Email: rlreynolds@wilmingtontrust.com
With a copy to the following Email address: restructuring@wilmingtontrust.com
Wilmington Trust, National Association:
Reference is made to that certain Rights Agreement, dated as of March 31, 2020, between Brookfield Asset Management Inc., and Wilmington Trust, National Association (the "Rights Agreement"). Capitalized terms that are not otherwise defined in this Exchanging Class A Shareholder Notice shall have the meanings given to them in the Rights Agreement.
THE DTC FREE DELIVERY OF THE SUBJECT CLASS A SHARES SHOULD BE DIRECTED TO THE RIGHTS AGENT'S DTC PARTICIPANT NUMBER 990, FOR FURTHER CREDIT OF THE RECEIVED CLASS A SHARE ACCOUNT, ACCOUNT NUMBER [WT TO INSERT].
The Company represents and warrants that, with respect to ______________ Subject Class A Share(s):
(i) the Company has not satisfied its obligation under sections 25.11 and 25.13 of the Company's Articles by delivering the BIP Units Amount or Cash Amount on the applicable Specified Exchange Date; and
(ii) BIP has not, upon its election in its sole and absolute discretion, acquired such Subject Class A Share(s) from the Exchanging Class A Shareholder and delivered the BIP Units Amount or Cash Amount in exchange therefor pursuant to section 25.23 of the Company's Articles on the applicable Specified Exchange Date.
The BIP Units Amount and the Cash Amount for such Subject Class A Share(s) are as follows:
BIP Units Amount:_______________________
Cash Amount:____________________________
The BIP Units Amount or the Cash Amount, as applicable, shall be issued or paid to the Exchanging Class A Shareholder, whose information is as follows:
Please insert social security
or other identifying number
| (Please print name and address) |
Delivery instructions for BIP Units Amount:
[Please insert complete instructions including recipient's DTC participant number and the account number at the participant.]
Delivery instructions for Cash Amount:
[Please insert complete wire transfer instructions.]
Dated: _____________ __, ______
|
|
BROOKFIELD INFRASTRUCTURE CORPORATION, a British Columbia corporation By:________________________ Name: Title: |
EXHIBIT D-2
Form of Exchanging Class A Shareholder Notice
To: Brookfield Asset Management Inc.
Attn: Investor Relations
Brookfield Place, Suite 300
181 Bay Street, P.O. Box 762
Toronto, Ontario, Canada M5J 2T3
Phone: 1-866-989-0311
Email: enquiries@brookfield.com
Wilmington Trust, National Association
Attn: Project Remus Administrator
50 South Sixth Street, Suite 1290
Minneapolis, MN 55402
Phone: (203) 453-1318
Fax: (203) 453-1183
Email: rlreynolds@wilmingtontrust.com
With a copy to the following Email address: restructuring@wilmingtontrust.com
Wilmington Trust, National Association:
Reference is made to that certain Rights Agreement, dated as of March 31, 2020, between Brookfield Asset Management Inc., and Wilmington Trust, National Association (the "Rights Agreement"). Capitalized terms that are not otherwise defined in this Exchanging Class A Shareholder Notice shall have the meanings given to them in the Rights Agreement.
THE DTC FREE DELIVERY OF THE SUBJECT CLASS A SHARES SHOULD BE DIRECTED TO THE RIGHTS AGENT'S DTC PARTICIPANT NUMBER 990, FOR FURTHER CREDIT OF THE RECEIVED CLASS A SHARE ACCOUNT, ACCOUNT NUMBER [WT TO INSERT].
The undersigned (the "Holder") represents and warrants that, with respect to ______________ Subject Class A Share(s):
(i) the Company has not satisfied its obligation under sections 25.11 and 25.13 of the Company's Articles by delivering the Cash Amount on the applicable Specified Exchange Date; and
(ii) BIP has not, upon its election in its sole and absolute discretion, acquired such Subject Class A Share(s) from the Exchanging Class A Shareholder and delivered the BIP Units Amount or Cash Amount in exchange therefor pursuant to section 25.23 of the Company's Articles on the applicable Specified Exchange Date.
Pursuant to and in accordance with the terms and conditions of the Rights Agreement, the Holder irrevocably elects to exercise its Secondary Exchange Rights for the Holder's Subject Class A Shares identified above. The BIP Units Amount or the Cash Amount, as applicable, shall be issued or paid to:
Please insert social security
or other identifying number
| (Please print name and address) |
Delivery instructions for BIP Units Amount:
[Please insert complete instructions including recipient's DTC participant number and the account number at the participant.]
Delivery instructions for Cash Amount:
[Please insert complete wire transfer instructions.]
Dated: _____________ __, ______
__________________________________
Signature
Signature Medallion Guaranteed:
Signatures should be guaranteed by an eligible guarantor institution (bank, stock broker or savings and loan association with membership in an approved signature medallion program).
Exhibit 4.3
BROOKFIELD ASSET MANAGEMENT INC.
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BROOKFIELD INFRASTRUCTURE CORPORATION
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BROOKFIELD INFRASTRUCTURE PARTNERS L.P.
| REGISTRATION RIGHTS AGREEMENT |
March 31, 2020
| TABLE OF CONTENTS | |
| Page | |
| ARTICLE 1 INTERPRETATION | 1 |
| 1.1 Definitions | 1 |
| 1.2 Headings and Table of Contents | 5 |
| 1.3 Interpretation | 5 |
| 1.4 Invalidity of Provisions | 6 |
| 1.5 Entire Agreement | 6 |
| 1.6 Waiver, Amendment | 6 |
| 1.7 Governing Law | 7 |
| ARTICLE 2 REGISTRATION RIGHTS | 7 |
| 2.1 Demand Registration | 7 |
| 2.2 Piggyback Registrations | 10 |
| 2.3 Short-Form Filings | 11 |
| 2.4 Registration Procedures | 12 |
| 2.5 Suspension of Dispositions | 17 |
| 2.6 Registration Expenses | 17 |
| 2.7 Indemnification | 18 |
| 2.8 Transfer of Registration Rights | 21 |
| 2.9 Current Public Information | 21 |
| 2.10 Preservation of Rights | 22 |
| 2.11 Obligations of BIP | 22 |
| ARTICLE 3 TERMINATION | 22 |
| 3.1 Termination | 22 |
| ARTICLE 4 MISCELLANEOUS | 23 |
| 4.1 Enurement | 23 |
| 4.2 Notices | 23 |
| 4.3 Authority | 24 |
| 4.4 Further Assurances | 24 |
| 4.5 Counterparts | 24 |
-i-
REGISTRATION RIGHTS AGREEMENT
THIS AGREEMENT made as of the 31st day of March, 2020
B E T W E E N:
BROOKFIELD ASSET MANAGEMENT INC. ("Brookfield")
- and -
BROOKFIELD INFRASTRUCTURE CORPORATION ("BIPC")
-and -
BROOKFIELD INFRASTRUCTURE PARTNERS L.P. ("BIP")
RECITALS:
WHEREAS, BIPC desires to provide the Holders (as defined herein) with the registration rights specified in this Agreement with respect to Registrable Shares (as defined herein) on the terms and subject to the conditions set forth herein.
NOW THEREFORE in consideration of the premises, mutual covenants and agreements contained in this Agreement and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties covenant and agree, each with the other, as follows:
ARTICLE 1
INTERPRETATION
1.1 Definitions
The following definitions shall be for all purposes, unless otherwise clearly indicated to the contrary, applied to the terms used in this Agreement.
1.1.1 "Adverse Effect" has the meaning assigned to such term in Section 2.1.5;
1.1.2 "Advice" has the meaning assigned to such term in Section 2.5;
1.1.3 "Affiliate" means, with respect to a Person, any other Person that, directly or indirectly, through one or more intermediaries, Controls or is Controlled by such Person, or is under common Control of a third Person;
1.1.4 "Agreement" means this Registration Rights Agreement;
1.1.5 "BIP" has the meaning assigned to such term in the preamble;
1.1.6 "BIPC" has the meaning assigned to such term in the preamble;
1.1.7 "Brookfield" has the meaning assigned to such term in the preamble;
1.1.8 "Business Day" means every day except a Saturday or Sunday, or a day which is a statutory or civic holiday in the Province of Ontario or the State of New York;
1.1.9 "Canadian Commissions" means the securities commissions or other securities regulatory authorities in each of the provinces and territories of Canada and any successor regulatory authorities having similar powers and, to the extent applicable, in any such province or territory, a federal securities commission or similar regulatory authority;
1.1.10 "Canadian Securities Laws" means, collectively, the applicable securities legislation, regulations, rules, policies, blanket rulings, decisions and orders of each of the provinces and territories of Canada and the Canadian Commissions;
1.1.11 "Control" means the control by one Person of another Person in accordance with the following: a Person ("A") controls another Person ("B") where A has the power to determine the management and policies of B by contract or status (for example, the status of A being the general partner of B) or by virtue of the beneficial ownership of or control over a majority of the voting interests in B; and, for greater certainty and without limitation, if A owns or has control over shares or other securities to which are attached more than 50% of the votes permitted to be cast in the election of directors to the Governing Body of B, or A is the general partner of B, a limited partnership, then in each case A Controls B for this purpose; and the term "Controlled" has the corresponding meaning;
1.1.12 "Demand Registration" has the meaning assigned to such term in Section 2.1.1(a);
1.1.13 "Demand Request" has the meaning assigned to such term in Section 2.1.1(a);
1.1.14 "Demanding Shareholders" has the meaning assigned to such term in Section 2.1.1(a);
1.1.15 "Effective" means, in the case of a Registration Statement, a declaration by the SEC that such registration statement is effective, and in the case of a Prospectus, the issuance by the applicable Canadian Commission of a receipt for the final prospectus;
1.1.16 "Effective Date" means the date a Registration Statement or Prospectus becomes Effective;
1.1.17 "Excluded Registration" means a registration of (i) securities pursuant to one or more Demand Registrations pursuant to Section 2.1 hereof, (ii) securities registered under the U.S. Securities Act on Form S-8, (iii) securities registered to effect the acquisition of, or combination with, another Person and (iv) securities pursuant to an exchange offer or any employee benefit or dividend reinvestment plan;
1.1.18 "FINRA" means Financial Industry Regulatory Authority, Inc.;
1.1.19 "Governing Body" means (i) with respect to a corporation or limited company, the board of directors of such corporation or limited company, (ii) with respect to a limited liability company, the manager(s), director(s) or managing partner(s) of such limited liability company, (iii) with respect to a partnership, the board, committee or other body of each general partner or managing partner of such partnership that serves a similar function (or if any such general partner or managing partner is itself a partnership, the board, committee or other body of such general or managing partner's general or managing partner that serves a similar function), and (iv) with respect to any other Person, the body of such Person that serves a similar function, and in the case of each of (i) through (iv) includes any committee or other subdivision of such body and any Person to whom such body has delegated any power or authority, including any officer or managing director;
1.1.20 "Holder" means (i) Brookfield, (ii) any subsidiary of Brookfield holding Registrable Shares, and (iii) any direct or indirect transferee of Brookfield or any of its subsidiaries who shall become a party to this Agreement in accordance with Section 2.8 and has agreed in writing to be bound by the terms of this Agreement, provided that "Holder" shall not include BIPC and its subsidiaries;
1.1.21 "Inspectors" has the meaning assigned to such term in Section 2.4(m);
1.1.22 "Person" means any natural person, partnership, limited partnership, limited liability partnership, joint venture, syndicate, sole proprietorship, company or corporation (with or without share capital), limited liability company, unlimited liability company, joint stock company, unincorporated association, trust, trustee, executor, administrator or other legal personal representative, regulatory body or agency, government or governmental agency, authority or entity however designated or constituted and pronouns have a similarly extended meaning;
1.1.23 "Piggyback Registration" has the meaning assigned to such term in Section 2.2.1;
1.1.24 "POP Issuer" means an issuer eligible to use the POP System or equivalent system established from time to time by the Canadian Commissions;
1.1.25 "POP System" means the prompt offering prospectus qualification system under National Instrument 44-101 of the Canadian Securities Administrators entitled "Short Form Prospectus Distributions";
1.1.26 "Prospectus" means a prospectus (including a Shelf Prospectus), including any amendment or supplement thereto, prepared in accordance with applicable Canadian Securities Laws for the purpose of qualifying securities for distribution to the public in any province or territory of Canada;
1.1.27 "Records" has the meaning assigned to such term in Section 2.4(m);
1.1.28 "register," "registered" and "registration" refers to (i) a registration effected by preparing and filing a registration statement in compliance with the U.S. Securities Act, and the declaration or ordering of the effectiveness of such registration statement, and (ii) a qualification for distribution under Canadian Securities Laws effected by preparing and filing a Prospectus;
1.1.29 "Registrable Shares" means the Shares owned by Holders from time to time, including Shares issuable to Holders on the conversion of securities convertible, exchangeable or exercisable into Shares owned by a Holder, together with any securities owned by Holders issued with respect to such Shares by way of dividend or split or in connection with a combination of shares, recapitalization, merger, consolidation, amalgamation, arrangement or other reorganization; provided, however, that Shares that, pursuant to Section 3.1, no longer have registration rights hereunder shall not be considered Registrable Shares;
1.1.30 "Registration Statement" means a registration statement under the U.S. Securities Act (which includes any preliminary prospectus, prospectus, prospectus supplement or free writing prospectus used in connection therewith);
1.1.31 "Requesting Holders" shall mean any Holder(s) requesting to have its (their) Registrable Shares included in any Demand Registration or Shelf Registration;
1.1.32 "Required Filing Date" has the meaning assigned to such term in Section 2.1.1(b);
1.1.33 "SEC" means the U.S. Securities and Exchange Commission or any other federal agency at the time administering the U.S. Securities Act;
1.1.34 "Securities Laws" means Canadian Securities Laws and/or U.S. Securities Laws, as applicable;
1.1.35 "Seller Affiliates" has the meaning assigned to such term in Section 2.7.1;
1.1.36 "Shares" means class A subordinate voting shares of BIPC;
1.1.37 "Shelf Prospectus" means a shelf prospectus of BIPC filed with the Canadian Commissions under Canadian Securities Laws for offers and secondary sales of Registrable Shares on a continuous basis;
1.1.38 "Shelf Registration" means a registration of the Registrable Shares under a registration statement pursuant to Rule 415 under the U.S. Securities Act;
1.1.39 "Suspension Notice" has the meaning assigned to such term in Section 2.5;
1.1.40 "U.S. Exchange Act" means the United States Securities Exchange Act of 1934, as amended, or any similar federal statute, and the rules and regulations promulgated by the SEC thereunder;
1.1.41 "U.S. Securities Act" means the United States Securities Act of 1933, as amended, or any similar federal statute and the rules and regulations promulgated by the SEC thereunder; and
1.1.42 "U.S. Securities Laws" means, collectively, the securities laws of the United States, including the U.S. Exchange Act, the U.S. Securities Act, state securities or "blue sky" laws within the United States, and all rules, regulations and ordinances promulgated thereunder.
1.2 Headings and Table of Contents
The inclusion of headings and a table of contents in this Agreement are for convenience of reference only and will not affect the construction or interpretation hereof.
1.3 Interpretation
In this Agreement, unless the context otherwise requires:
1.3.1 words importing the singular shall include the plural and vice versa, words importing gender shall include all genders or the neuter, and words importing the neuter shall include all genders;
1.3.2 the words "include", "includes", "including", or any variations thereof, when following any general term or statement, are not to be construed as limiting the general term or statement to the specific items or matters set forth or to similar items or matters, but rather as referring to all other items or matters that could reasonably fall within the broadest possible scope of the general term or statement;
1.3.3 references to any Person include such Person's successors and permitted assigns;
1.3.4 except as otherwise provided in this Agreement, any reference in this Agreement to a statute, regulation, policy, rule or instrument shall include, and shall be deemed to be a reference also to, all rules and regulations made under such statute, in the case of a statute, all amendments made to such statute, regulation, policy, rule or instrument and to any statute, regulation, policy, rule or instrument that may be passed which has the effect of supplementing or superseding the statute, regulation, policy, rule or instrument so referred to;
1.3.5 any reference to this Agreement or any other agreement, document or instrument shall be construed as a reference to this Agreement or, as the case may be, such other agreement, document or instrument as the same may have been, or may from time to time be, amended, varied, replaced, amended and restated, supplemented or otherwise modified;
1.3.6 in the event that any day on which any amount is to be determined or any action is required to be taken hereunder is not a Business Day, then such amount shall be determined or such action shall be required to be taken at or before the requisite time on the next succeeding day that is a Business Day; and
1.3.7 except where otherwise expressly provided, all amounts in this Agreement are stated and shall be paid in U.S. currency.
1.4 Invalidity of Provisions
Each of the provisions contained in this Agreement is distinct and severable and a declaration of invalidity or unenforceability of any such provision or part thereof by a court of competent jurisdiction will not affect the validity or enforceability of any other provision hereof. To the extent permitted by applicable law, the parties waive any provision of law which renders any provision of this Agreement invalid or unenforceable in any respect. The parties will engage in good faith negotiations to replace any provision which is declared invalid or unenforceable with a valid and enforceable provision, the economic effect of which comes as close as possible to that of the invalid or unenforceable provision which it replaces.
1.5 Entire Agreement
This Agreement constitutes the entire agreement between the parties pertaining to the subject matter of this Agreement. There are no warranties, conditions, or representations (including any that may be implied by statute) and there are no agreements in connection with such subject matter except as specifically set forth or referred to in this Agreement. No reliance is placed on any warranty, representation, opinion, advice or assertion of fact made either prior to, contemporaneous with, or after entering into this Agreement, or any amendment or supplement hereto, by any party to this Agreement or its directors, officers, employees or agents, to any other party to this Agreement or its directors, officers, employees or agents, except to the extent that the same has been reduced to writing and included as a term of this Agreement, and none of the parties to this Agreement has been induced to enter into this Agreement or any amendment or supplement by reason of any such warranty, representation, opinion, advice or assertion of fact. Accordingly, there will be no liability, either in tort or in contract, assessed in relation to any such warranty, representation, opinion, advice or assertion of fact, except to the extent contemplated above.
1.6 Waiver, Amendment
Except as expressly provided in this Agreement, no waiver of this Agreement will be binding unless executed in writing by the party to be bound thereby. No waiver of any provision of this Agreement will constitute a waiver of any other provision nor will any waiver of any provision of this Agreement constitute a continuing waiver unless otherwise expressly provided. A party's failure or delay in exercising any right under this Agreement will not operate as a waiver of that right. A single or partial exercise of any right will not preclude a party from any other or further exercise of that right or the exercise of any other right. This Agreement may not be amended or modified in any respect except by a written agreement signed by BIPC, BIP and Brookfield (so long as Brookfield owns any Shares) and the Holders of a majority of the then outstanding Registrable Shares.
1.7 Governing Law
This Agreement will be governed by and interpreted and enforced in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein. Each party irrevocably attorns and submits to the non-exclusive jurisdiction of the Ontario courts situated in the City of Toronto and waives objection to the venue of any proceeding in such court or any argument that such court provides an inconvenient forum.
ARTICLE 2
REGISTRATION RIGHTS
2.1 Demand Registration
2.1.1 Request for Registration
(a) Commencing on the date hereof, any Holder shall have the right to require BIPC to file a Registration Statement and/or a Prospectus for a public offering of all or part of its Registrable Shares (a "Demand Registration"), by delivering to BIPC written notice stating that such right is being exercised, naming the Holders whose Registrable Shares are to be included in such registration (collectively, the "Demanding Shareholders"), specifying the number of each such Demanding Shareholder's Registrable Shares to be included in such registration and, subject to Section 2.1.3 hereof, describing the intended method of distribution thereof (a "Demand Request").
(b) Each Demand Request shall specify the aggregate number of Registrable Shares proposed to be sold. Subject to Section 2.1.6, BIPC shall file a Registration Statement and/or Prospectus in respect of a Demand Registration as soon as practicable and, in any event, within forty-five (45) days after receiving a Demand Request (the "Required Filing Date") and shall use reasonable best efforts to cause the same to be declared Effective as promptly as practicable after such filing; provided, however, that:
(i) BIPC shall not be obligated to file a Registration Statement or a Prospectus in respect of a Demand Registration pursuant to Section 2.1.1(a) within sixty (60) days after the Effective Date of a previous Demand Registration, other than a Shelf Registration pursuant to this Article 2; and
(ii) BIPC shall not be obligated to file a Registration Statement or a Prospectus in respect of a Demand Registration pursuant to Section 2.1.1(a) unless the Demand Request is for (A) a number of Registrable Shares with a market value that is equal to at least $50,000,000 as of the date of such Demand Request, or (B) all of the Registrable Shares then held by the Demanding Shareholder.
2.1.2 Shelf Registration. With respect to any Demand Registration, the Requesting Holders may request BIPC to file a Shelf Prospectus or effect a Shelf Registration, provided that BIPC is permitted to do so under Canadian Securities Laws and/or U.S. Securities Laws, as applicable.
2.1.3 Selection of Underwriters. At the request of a Requesting Holder, the offering of Registrable Shares pursuant to a Demand Registration shall be in the form of a "firm commitment" underwritten offering. The Requesting Holder shall select the investment banking firm or firms to manage the underwritten offering; provided that such selection shall be subject to the consent of BIPC, which consent shall not be unreasonably withheld or delayed. No Holder may participate in any registration pursuant to Section 2.1.1 unless such Holder (a) agrees to sell such Holder's Registrable Shares on the basis provided in any underwriting arrangements described above and (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements; provided, however, that no such Holder shall be required to make any representations or warranties in connection with any such registration other than representations and warranties as to (i) such Holder's ownership of Registrable Shares to be transferred free and clear of all liens, claims, and encumbrances, (ii) such Holder's power and authority to effect such transfer, and (iii) such matters pertaining to compliance with Securities Laws as may be reasonably requested; provided, further, however, that the obligation of such Holder to indemnify pursuant to any such underwriting arrangements shall be several, not joint and several, among such Holders selling Registrable Shares, and the liability of each such Holder will be in proportion thereto, and provided, further, that such liability will be limited to the net amount received by such Holder from the sale of its Registrable Shares pursuant to such registration.
2.1.4 Rights of Non-Requesting Holders. Upon receipt of any Demand Request, BIPC shall promptly (but in any event within ten (10) days) give written notice of such proposed Demand Registration to all other Holders, who shall have the right, exercisable by written notice to BIPC within twenty (20) days of their receipt of BIPC's notice, to elect to include in such Demand Registration such portion of their Registrable Shares as they may request. All Holders requesting to have their Registrable Shares included in a Demand Registration in accordance with the preceding sentence and all Demanding Shareholders shall be deemed to be "Requesting Holders" for purposes of this Section 2.1. BIPC shall also have the right to issue and sell Shares in such Demand Registration, subject to Section 2.1.5.
2.1.5 Priority on Demand Registrations. No securities to be sold for the account of any Person (including BIPC) other than a Requesting Holder shall be included in a Demand Registration unless the managing underwriter or underwriters shall advise the Requesting Holders in writing that the inclusion of such securities will not adversely affect the price, timing or distribution of the offering or otherwise adversely affect its success (an "Adverse Effect"). Furthermore, if the managing underwriter or underwriters shall advise the Requesting Holders that, even after exclusion of all securities of other Persons (including BIPC) pursuant to the immediately preceding sentence, the amount of Registrable Shares proposed to be included in such Demand Registration by Requesting Holders is sufficiently large to cause an Adverse Effect, the Registrable Shares of the Requesting Holders to be included in such Demand Registration shall equal the number of Registrable Shares which the Requesting Holders are so advised can be sold in such offering without an Adverse Effect and such Registrable Shares shall be allocated pro rata among the Requesting Holders on the basis of the number of Registrable Shares requested to be included in such registration by each such Requesting Holder.
2.1.6 Deferral of Filing. BIPC may defer the filing (but not the preparation) of a Registration Statement or Prospectus, as applicable, required by Section 2.1 until a date not later than ninety (90) days after the Required Filing Date if (a) at the time BIPC receives the Demand Request, BIPC is engaged in confidential negotiations or other confidential activities, disclosure of which would be required in such Registration Statement or Prospectus, as applicable (but would not be required if such Registration Statement or Prospectus, as applicable, were not filed), and the Board of Directors of BIPC determines in good faith that such disclosure would be materially detrimental to BIPC and its shareholders, (b) prior to receiving the Demand Request, BIPC had determined to effect a registered underwritten public offering of BIPC's securities for BIPC's account and BIPC has taken substantial steps (including, but not limited to, selecting a managing underwriter for such offering) and is proceeding with reasonable diligence to effect such offering, or (c) at the time BIPC receives the Demand Request, BIPC is currently engaged in a self-tender or exchange offer and the filing of a Registration Statement or Prospectus, as applicable, would cause a violation of applicable Securities Laws. A deferral of the filing of a Registration Statement or Prospectus, as applicable, pursuant to this Section 2.1.6 shall be lifted, and the requested Registration Statement or Prospectus, as applicable, shall be filed forthwith, if, in the case of a deferral pursuant to clause (a) of the preceding sentence, the negotiations or other activities are disclosed, otherwise become publicly known, or are terminated, or, in the case of a deferral pursuant to clause (b) of the preceding sentence, the proposed registration for BIPC's account is abandoned. In order to defer the filing of a Registration Statement or Prospectus, as applicable, pursuant to this Section 2.1.6, BIPC shall promptly (but in any event within ten (10) days), upon determining to seek such deferral, deliver to the Requesting Holders a certificate signed by an officer of BIPC or the Board of Directors of BIPC stating that BIPC is deferring such filing pursuant to this Section 2.1.6 and a general statement of the reason for such deferral and an approximation of the anticipated delay. Within twenty (20) days after receiving such certificate, the Requesting Holder may withdraw such Demand Request by giving notice to BIPC; if withdrawn, the Demand Request shall be deemed not to have been made for all purposes of this Agreement. BIPC may defer the filing of a particular Registration Statement or Prospectus, as applicable, pursuant to this Section 2.1.6 only once.
2.2 Piggyback Registrations
2.2.1 Right to Piggyback. Each time BIPC proposes to (a) register any of its equity securities (other than pursuant to an Excluded Registration) under Canadian Securities Laws or U.S. Securities Laws for sale to the public (whether for the account of BIPC or the account of any securityholder of BIPC) or (b) sell any of its equity securities (other than pursuant to an Excluded Registration) and with respect to which a Shelf Registration or Shelf Prospectus is expressly being utilized to effect such sale, (clause (a) and (b) are each referred to as a "Piggyback Registration"), BIPC shall give prompt written notice to each Holder of Registrable Shares, which notice shall offer each such Holder the opportunity to include any or all of its Registrable Shares in such Registration Statement, Shelf Registration or Prospectus, as applicable, subject to the limitations contained in Section 2.2.2 hereof. Each Holder who desires to have its Registrable Shares included in such Registration Statement, Shelf Registration or Prospectus, as applicable, shall so advise BIPC in writing (stating the number of Registrable Shares desired to be registered) within three (3) days after the date of such notice from BIPC (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 Shares in any Registration Statement, Shelf Registration or Prospectus, as applicable, pursuant to this Section 2.2.1 by giving written notice to BIPC 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 2.2.2 below, BIPC shall include in such Registration Statement, Shelf Registration or Prospectus, as applicable, all such Registrable Shares so requested to be included therein; provided, however, that BIPC may at any time withdraw or cease proceeding with any such registration or sale if it shall at the same time withdraw or cease proceeding with the registration or sale of all other equity securities originally proposed to be registered or sold. Each Holder shall protect and maintain the confidentiality of all information communicated to it by BIPC concerning a proposed Piggyback Registration pursuant to this Section 2.2.1 until such information becomes available in the public domain.
2.2.2 Priority on Piggyback Registrations
(a) If a Piggyback Registration is an underwritten offering, and if the managing underwriter advises BIPC that the inclusion of Registrable Shares requested to be included in a Registration Statement, Shelf Registration or Prospectus, as applicable, would cause an Adverse Effect, BIPC shall only be required to include such number of Registrable Shares in such Registration Statement, Shelf Registration or Prospectus, as applicable, as such underwriter advises in writing would not cause an Adverse Effect, with priority given as follows: (i) first, the securities BIPC proposes to sell, (ii) second, the Registrable Shares requested to be included in such Registration Statement, Shelf Registration or Prospectus, pro rata among the Holders of such Registrable Shares on the basis of the number of Registrable Shares owned by each such Holder, and (iii) third, any other securities requested to be included in such Registration Statement, Shelf Registration or Prospectus. If as a result of the provisions of this Section 2.2.2(a) any Holder shall not be entitled to include all Registrable Shares in a Registration Statement, Shelf Registration or Prospectus that such Holder has requested to be so included, such Holder may withdraw such Holder's request to include Registrable Shares in such Registration Statement, Shelf Registration or Prospectus, as applicable.
(b) No Holder may participate in any Registration Statement, Shelf Registration or Prospectus, as applicable, in respect of a Piggyback Registration hereunder unless such Holder (i) agrees to sell such Holder's Registrable Shares on the basis provided in any underwriting arrangements approved by BIPC 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 Holder shall be required to make any representations or warranties in connection with any such registration other than representations and warranties as to (A) such Holder's ownership of Registrable Shares 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 applicable Securities Laws as may be reasonably requested; provided, further, however, that the obligation of such Holder to indemnify pursuant to any such underwriting arrangements shall be several, not joint and several, among such Holders selling Registrable Shares, and the liability of each such Holder will be in proportion thereto, and provided, further, that such liability will be limited to the net amount received by such Holder from the sale of its Registrable Shares pursuant to such Registration Statement, Shelf Registration or Prospectus.
2.3 Short-Form Filings
(a) Shelf Registration Statement. BIPC shall use its reasonable best efforts to cause Demand Registrations in the United States to be registered on a shelf registration statement on an appropriate form (including, but not limited to, Form F-10, Form F-3 or Form S-3, as may be applicable, or their successor forms, but excluding Form S-8, Form S-4 or Form F-4, or their successor forms, or any other form for a similar purpose) once BIPC becomes eligible to use any such form, and BIPC shall use its reasonable best efforts to remain so eligible to use any such form.
(b) Short-Form Prospectus. BIPC shall use its reasonable best efforts to cause Demand Registrations in Canada to be qualified by way of a short-form Prospectus prepared pursuant to the POP System if, at the time of such Demand Registration, BIPC is a POP Issuer and is able to do so in all of the provinces and territories in which the Demand Registration is to be effected. For greater certainty, it is acknowledged that in the event that BIPC is not a POP Issuer or is unable to utilize the POP System in one or more Canadian provinces or territories in which the Demand Registration is to be effected, BIPC shall proceed by way of long-form Prospectus.
2.4 Registration Procedures
Whenever any Holder has requested that any Registrable Shares be registered pursuant to this Agreement, BIPC will use its reasonable best efforts to effect the registration and the sale of such Registrable Shares in accordance with the intended method of disposition thereof as promptly as is practicable, and pursuant thereto BIPC will as expeditiously as possible:
(a) prepare and file, pursuant to Section 2.1.1(b) with respect to any Demand Registration, subject to Section 2.3, a Registration Statement or Prospectus, as applicable, with respect to such Registrable Shares and use its reasonable best efforts to cause such Registration Statement or Prospectus, as applicable, to become Effective; provided that as far in advance as practicable before filing such Registration Statement or Prospectus, as applicable, or any amendment or supplement thereto, BIPC will furnish to the selling Holders copies of reasonably complete drafts of all such documents prepared to be filed (including exhibits), and any such Holder shall have the opportunity to object to any information contained therein and BIPC will make corrections reasonably requested by such Holder with respect to such information prior to filing any such Registration Statement or Prospectus, as applicable, or any amendment or supplement thereto;
(b) except in the case of a Shelf Registration or Shelf Prospectus, prepare and file with the SEC or the applicable Canadian Commissions, such amendments, post-effective amendments and supplements to such Registration Statement or Prospectus, as applicable, as may be necessary to keep such Registration Statement or Prospectus, as applicable, effective for a period of not less than one hundred eighty (180) days (or such lesser period as is necessary for the underwriters in an underwritten offering to sell unsold allotments) and comply with the provisions of the applicable Securities Laws with respect to the disposition of all securities covered by such Registration Statement or Prospectus, as applicable, during such period in accordance with the intended methods of disposition by the sellers thereof set forth in such Registration Statement or Prospectus, as applicable;
(c) in the case of a Shelf Registration or Shelf Prospectus, prepare and file with the SEC or the applicable Canadian Commissions, as applicable, such amendments and supplements to such Shelf Registration or Shelf Prospectus, as applicable, as may be necessary to keep such Shelf Registration or Shelf Prospectus, as applicable, effective and to comply with the provisions of the applicable Securities Laws with respect to the disposition of all Registrable Shares subject thereto for a period ending on the earlier of (i) twenty four (24) months after the Effective Date and (ii) the date on which all the Registrable Shares subject thereto have been sold pursuant to such Shelf Registration or Shelf Prospectus, as applicable;
(d) furnish to each seller of Registrable Shares and the underwriters of the securities being registered such number of copies of such Registration Statement, Shelf Registration or Prospectus, as applicable (in the English language and, if required, the French language), each amendment and supplement thereto, any documents incorporated by reference therein and such other documents as such seller or underwriters may reasonably request in order to facilitate the disposition of the Registrable Shares owned by such seller or the sale of such securities by such underwriters (it being understood that, subject to Section 2.5 and the requirements of the applicable Securities Laws, BIPC consents to the use of the Registration Statement, Shelf Registration and Prospectus, as applicable, and any amendment or supplement thereto by each seller and the underwriters in connection with the offering and sale of the Registrable Shares covered by the Registration Statement, Shelf Registration or Prospectus, as applicable);
(e) use its reasonable best efforts to register or qualify such Registrable Shares under such other securities or "blue sky" laws of such jurisdictions as the managing underwriter reasonably requests (or, in the event the Registration Statement, Shelf Registration or Prospectus, as applicable, does not relate to an underwritten offering, as the holders of a majority of such Registrable Shares may reasonably request); use its reasonable best efforts to keep each such registration or qualification (or exemption therefrom) effective during the period in which such Registration Statement, Shelf Registration or Prospectus, as applicable, is required to be kept effective; and do any and all other acts and things which may be reasonably necessary or advisable to enable each seller to consummate the disposition of the Registrable Shares owned by such seller in such jurisdictions (provided, however, that BIPC will not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subparagraph, (ii) subject itself to taxation in any such jurisdiction, or (iii) consent to general service of process in any such jurisdiction);
(f) notify each seller of Registrable Shares and each underwriter and (if requested by any such Person) confirm such notice in writing (i) when any supplement or amendment to the Registration Statement, Shelf Registration or Prospectus, as applicable, has been filed following the Effective Date, and when the same has become effective, (ii) of the issuance by any state securities or other regulatory authority of any order suspending the qualification or exemption from qualification of any of the Registrable Shares under state securities or "blue sky" laws or the initiation of any proceedings for that purpose, and (iii) of the happening of any event which makes any statement made in the Registration Statement, Shelf Registration or Prospectus, as applicable, untrue or which requires the making of any changes in such Registration Statement, Shelf Registration or Prospectus, as applicable, or documents so that they will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and, as promptly as practicable thereafter, prepare and file with the SEC and the applicable Canadian Commissions (as applicable) and furnish a supplement or amendment to such Registration Statement, Shelf Registration or Prospectus, as applicable, so that, as thereafter deliverable to the purchasers of such Registrable Shares, such Registration Statement, Shelf Registration or Prospectus, as applicable, will not contain any untrue statement of a material fact or omit a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;
(g) permit any selling Holder, which in such Holder's sole and exclusive judgment, might reasonably be deemed to be an underwriter or a controlling person of BIPC, to participate in the preparation of such Registration Statement, Shelf Registration or Prospectus, as applicable, and to require the insertion therein of material, furnished to BIPC in writing, which in the reasonable judgment of such Holder and its counsel should be included;
(h) make reasonably available personnel, as selected by the Holders of a majority of the Registrable Shares included in such registration, for assistance in the selling effort relating to the Registrable Shares covered by such registration, including, but not limited to, the participation of such members of BIPC's management in road show presentations;
(i) otherwise use its reasonable best efforts to comply with all applicable Securities Laws, and make generally available to BIPC's securityholders an earnings statement satisfying the provisions of Section 11(a) of the U.S. Securities Act no later than thirty (30) days after the end of the twelve (12) month period beginning with the first day of BIPC's first fiscal quarter commencing after the Effective Date, which earnings statement shall cover said twelve (12) month period, and which requirement will be deemed to be satisfied if BIPC timely files complete and accurate information on Forms 20-F and 6-K under the Exchange Act which otherwise complies with Rule 158 under the U.S. Securities Act;
(j) if requested by the managing underwriter or any seller of Registrable Shares, promptly incorporate in a prospectus supplement or post-effective amendment such information as the managing underwriter or any seller reasonably requests to be included therein, including, without limitation, with respect to the Registrable Shares being sold by such seller, the purchase price being paid therefor by the underwriters and with respect to any other terms of the underwritten offering of the Registrable Shares to be sold in such offering, and promptly make all required filings of such prospectus supplement or post-effective amendment;
(k) after filing of any document which is incorporated by reference into the Registration Statement or Prospectus, as applicable (in the form in which it was incorporated), deliver a copy of each such document to each seller of Registrable Shares;
(l) cooperate with the sellers of Registrable Shares and the managing underwriter 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 any Registration Statement or Prospectus, as applicable, and enable such securities to be in such denominations and registered in such names as the managing underwriter or such sellers may request and keep available and make available to BIPC's transfer agent prior to the Effective Date a supply of such certificates;
(m) make available for inspection by any seller of Registrable Shares, any underwriter participating in any disposition pursuant to any Registration Statement or Prospectus, as applicable, and any attorney, accountant or other agent or representative retained by any such seller or underwriter (collectively, the "Inspectors"), all financial and other records, pertinent corporate documents and properties of BIPC (collectively, the "Records"), as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause BIPC's officers, directors and employees to supply all information requested by any such Inspector in connection with such Registration Statement or Prospectus, as applicable; provided, however, that, unless the disclosure of such Records is necessary to avoid or correct a misstatement or omission in the Registration Statement or Prospectus, as applicable, or the release of such Records is ordered pursuant to a subpoena or other order from a court of competent jurisdiction, BIPC shall not be required to provide any information under this subparagraph (m) if (i) BIPC believes, after consultation with counsel for BIPC, that to do so would cause BIPC to forfeit an attorney-client privilege that was applicable to such information or (ii) if either (x) BIPC has requested and been granted from the SEC or a Canadian Commission confidential treatment of such information contained in any filing with the SEC or a Canadian Commission or documents provided supplementally or otherwise or (y) BIPC reasonably determines in good faith that such Records are confidential and so notifies the Inspectors in writing, unless prior to furnishing any such information with respect to clause (ii) such Holder of Registrable Shares requesting such information agrees to enter into a confidentiality agreement in customary form and subject to customary exceptions; and provided, further, that each Holder of Registrable Shares agrees that it will, upon learning that disclosure of such Records is sought in a court of competent jurisdiction, give notice to BIPC and allow BIPC, at its expense, to undertake appropriate action and to prevent disclosure of the Records deemed confidential;
(n) furnish to each seller of Registrable Shares and underwriter a signed counterpart of (i) an opinion or opinions of counsel to BIPC, (ii) a comfort letter or comfort letters from BIPC's independent auditors, addressed to the underwriters, each in customary form and covering such matters of the type customarily covered by opinions or comfort letters, as the case may be, as the managing underwriter reasonably requests, and (iii) if a Prospectus is filed in Quebec, opinions of Quebec counsel to BIPC and the auditors of BIPC addressed to the Holder and the underwriter or underwriters of such distribution relating to the translation of the Prospectus;
(o) cause the Registrable Shares included in any Prospectus or Registration Statement, as applicable, to be listed on the Toronto Stock Exchange and on the New York Stock Exchange;
(p) provide and cause to be maintained a transfer agent and registrar for all Registrable Shares registered hereunder;
(q) cooperate with each seller of Registrable Shares and each underwriter participating in the disposition of such Registrable Shares and their respective counsel in connection with any filings required to be made with FINRA;
(r) during the period when the Registration Statement or Prospectus, as applicable, is required to be delivered under the applicable Securities Laws, promptly file all documents required to be filed with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act or with the Canadian Commissions pursuant to Canadian Securities Laws;
(s) notify each seller of Registrable Shares promptly of any request by the SEC or a Canadian Commission for the amending or supplementing of such Registration Statement or Prospectus, as applicable, or for additional information;
(t) enter into such agreements (including underwriting agreements in the managing underwriter's customary form) as are customary in connection with an underwritten registration; and
(u) advise each seller of such Registrable Shares, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order or ruling by the SEC or a Canadian Commission suspending the effectiveness of such Registration Statement or Prospectus, as applicable, or the initiation or threatening of any proceeding for such purpose and promptly use its reasonable best efforts to prevent the issuance of any stop order or to obtain its withdrawal at the earliest possible moment if such stop order should be issued.
2.5 Suspension of Dispositions
Each Holder agrees by acquisition of any Registrable Shares that, upon receipt of any notice (a "Suspension Notice") from BIPC of the happening of any event of the kind described in Section 2.4(f)(iii) such Holder will forthwith discontinue disposition of Registrable Shares until such Holder's receipt of the copies of the supplemented or amended Registration Statement or Prospectus, as applicable, or until it is advised in writing (the "Advice") by BIPC that the use of the Registration Statement or Prospectus, as applicable, may be resumed, and has received copies of any additional or supplemental filings which are incorporated by reference in the Registration Statement or Prospectus, as applicable, and, if so directed by BIPC, such Holder will deliver to BIPC all copies, other than permanent file copies then in such Holder's possession, of the Registration Statement or Prospectus, as applicable, covering such Registrable Shares current at the time of receipt of such notice. In the event BIPC shall give any such notice, the time period regarding the effectiveness of Registration Statements or Prospectuses, as applicable, set forth in Sections 2.4(b) and 2.4(c) hereof shall be extended by the number of days during the period from and including the date of the giving of the Suspension Notice to and including the date when each seller of Registrable Shares covered by such Registration Statement or Prospectus, as applicable, shall have received the copies of the supplemented or amended Registration Statement or Prospectus, as applicable, or the Advice. BIPC shall use its reasonable best efforts and take such actions as are reasonably necessary to render the Advice as promptly as practicable.
2.6 Registration Expenses
All fees and expenses incident to any registration including, without limitation, BIPC's performance of or compliance with this Article 2, all registration and filing fees, all fees and expenses associated with filings required to be made with FINRA (including, if applicable, the reasonable fees and expenses of any "qualified independent underwriter" and of its counsel), as may be required by the rules and regulations of FINRA, fees and expenses of compliance with securities or "blue sky" laws (including reasonable fees and disbursements of counsel in connection with "blue sky" qualifications of the Registrable Shares), rating agency fees, printing expenses (including expenses of printing certificates for the Registrable Shares and of printing prospectuses), messenger and delivery expenses, the fees and expenses incurred in connection with any listing or quotation of the Registrable Shares, fees and expenses of counsel for BIPC and its independent auditors (including the expenses of any special audit or "cold comfort" letters required by or incident to such performance), the fees and expenses of any special experts retained by BIPC in connection with such registration, and the fees and expenses of other persons retained by BIPC, will be borne by BIPC (unless paid by a security holder that is not a Holder for whose account the registration is being effected) whether or not any Registration Statement or Prospectus becomes Effective; provided, however, that any underwriting discounts, commissions, or fees attributable to the sale of the Registrable Shares will be borne by the Holders pro rata on the basis of the number of Shares so registered and the fees and expenses of any counsel, accountants, or other persons retained or employed by any Holder will be borne by such Holder.
2.7 Indemnification
2.7.1 BIPC agrees to indemnify and reimburse, to the fullest extent permitted by law, each seller of Registrable Shares, and each of its employees, advisors, agents, representatives, partners, officers, and directors and each Person who Controls such seller and any agent or investment advisor thereof (collectively, the "Seller Affiliates") (a) against any and all losses, claims, damages, liabilities, and expenses, joint or several (including, without limitation, reasonable attorneys' fees and disbursements except as limited by Section 2.7.3) 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, (b) against any and all loss, liability, claim, damage, and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation or investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon, arising out of, related to or resulting from any such untrue statement or omission or alleged untrue statement or omission, and (c) against any and all costs and expenses (including reasonable fees and disbursements of counsel) as may be reasonably incurred in investigating, preparing, or defending against any litigation, or investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon, arising out of, related to or resulting from any such untrue statement or omission or alleged untrue statement or omission, or violation of the Securities Laws, to the extent that any such expense or cost is not paid under subparagraph (a) or (b) above; except insofar as any such statements are made in reliance upon and in strict conformity with information furnished in writing to BIPC by such seller or any Seller Affiliate for use therein or arise from such seller's or any Seller Affiliate's failure to deliver a copy of the Registration Statement or Prospectus or any amendments or supplements thereto after BIPC has furnished such seller or Seller Affiliate with a sufficient number of copies of the same. The reimbursements required by this Section 2.7.1 will be made by periodic payments during the course of the investigation or defense, as and when bills are received or expenses incurred.
2.7.2 In connection with any Registration Statement or Prospectus in which a seller of Registrable Shares is participating, each such seller will furnish to BIPC and/or BIP in writing such information and affidavits as BIPC and/or BIP 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 BIPC, BIP and each of their respective employees, advisors, agents, representatives, partners, officers and directors and each Person who Controls BIPC or BIP, as applicable (excluding such seller or any Seller Affiliate) and any agent or investment advisor thereof against any and all losses, claims, damages, liabilities, and expenses (including, without limitation, reasonable attorneys' fees and disbursements except as limited by Section 2.7.3) resulting from 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, but only to the extent that such untrue statement or alleged untrue statement or omission or alleged omission is contained in any information or affidavit so furnished in writing by such seller or any of its Seller Affiliates specifically for inclusion in the Registration Statement or Prospectus, as applicable; provided that the obligation to indemnify will be several, not joint and several, among such sellers of Registrable Shares, and the liability of each such seller of Registrable Shares will be in proportion to, and will be limited to, the net amount received by such seller from the sale of Registrable Shares pursuant to such Registration Statement or Prospectus, as applicable; provided, however, that such seller of Registrable Shares 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 BIPC and/or BIP 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 BIPC and/or BIP.
2.7.3 Any Person entitled to indemnification hereunder will (a) 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 (b) 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; 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, (ii) the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory to such person, or (iii) such counsel has been retained due to a conflict as described below. 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 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 (A) such settlement or compromise contains a full and unconditional release of the indemnified party without any admission of liability on the part of such indemnified party or (B) the indemnified party otherwise consents in writing. 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 (together with appropriate local counsel), 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.
2.7.4 Each party hereto agrees that, if for any reason the indemnification provisions contemplated by Section 2.7.1 or Section 2.7.2 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 2.7.4 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 2.7.4. 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 2.7.3, defending any such action or claim. Notwithstanding the provisions of this Section 2.7.4, 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 Shares 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, as applicable, or any amendment thereof or supplement thereto related to such sale of Registrable Shares. No person guilty of fraudulent misrepresentation shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Holders' obligations in this Section 2.7.4 to contribute shall be several in proportion to the amount of Registrable Shares registered by them and not joint.
2.7.5 If indemnification is available under this Section 2.7, the indemnifying parties shall indemnify each indemnified party to the full extent provided in Section 2.7.1 and Section 2.7.2 without regard to the relative fault of said indemnifying party or indemnified party or any other equitable consideration provided for in Section 2.7.4 subject, in the case of the Holders, to the limited dollar amounts set forth in Section 2.7.2.
2.7.6 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.
2.8 Transfer of Registration Rights
The rights of each Holder under this Agreement may, in the Holder's discretion, be assigned, in whole or in part, to any direct or indirect transferee of all or any portion of such Holder's Registrable Shares who agrees in writing to be subject to and bound by all the terms and conditions of this Agreement. For greater certainty, in the case of a transfer of less than all of such Holder's Registrable Shares, no such assignment will limit or otherwise impair the transferor's rights under this Agreement.
2.9 Current Public Information
BIPC will file the reports required to be filed by it under applicable Securities Laws (or, if BIPC is not required to file such reports, will, upon the request of the Holders, make publicly available other information) and will take such further action as any of the Holders may reasonably request, all to the extent required from time to time to enable the Holders to sell Registrable Securities without registration under, and subject to the limitations of, applicable Securities Laws. Upon the reasonable request of any Holder, BIPC will deliver to such parties a written statement as to whether it has complied with such requirements and will, at its expense, forthwith upon the request of any such Holder, deliver to such Holder a certificate, signed by an officer, stating (a) BIPC's name, address and telephone number (including area code), (b) BIPC's Internal Revenue Service identification number and Business Number issued by the Canada Revenue Agency, (c) BIPC's SEC and SEDAR file numbers, (d) the number of Shares outstanding as shown by the most recent report or statement published by BIPC, and (e) whether BIPC has filed the reports required to be filed under the applicable Securities Laws for a period or at least ninety (90) days prior to the date of such certificate and in addition has filed the most recent annual report required to be filed thereunder.
2.10 Preservation of Rights
BIPC will not directly or indirectly (a) grant any registration rights to third parties which are more favorable than or inconsistent with the rights granted hereunder or (b) enter into any agreement, take any action, or permit any change to occur, with respect to its securities that violates or subordinates the rights expressly granted to the Holders in this Agreement.
2.11 Obligations of BIP
Whenever any Holder has requested that any Registrable Shares be registered in accordance with the terms of this Agreement, BIP shall (i) cooperate with BIPC to satisfy BIPC's obligations pursuant to this Agreement and participate in the preparation, as necessary, of a Registration Statement and/or Prospectus by BIPC and (ii) take any and all such actions as may be required under this Agreement and/or applicable Securities Laws to register the underlying limited partnership units of BIP that may be issued upon an exchange, redemption or purchase of Shares, or as a result of the liquidation, dissolution or winding up of BIPC or BIP. The provisions of the registration rights agreement between BIP and Brookfield dated December 4, 2007 (as amended, the "BIP-Brookfield Registration Rights Agreement"), other than sections 2.1.1(b)(i) and 2.1.1(b)(ii) thereof, shall apply to the registration of any underlying limited partnership units of BIP that may be delivered by Brookfield to a holder of Shares upon an exchange of Shares, mutatis mutandis, and the preparation of a Registration Statement and/or Prospectus by BIP in connection therewith shall be deemed to be a "Demand Registration" under the BIP-Brookfield Registration Rights Agreement without the need for Brookfield to take any further action thereunder.
ARTICLE 3
TERMINATION
3.1 Termination
The Holders may exercise the registration rights granted hereunder in such manner and proportions as they shall agree among themselves. The registration rights hereunder shall cease to apply to any particular Registrable Shares when: (a) a Registration Statement or Prospectus, as applicable, with respect to the sale of such Shares (or other securities) shall have become Effective and such Shares shall have been disposed of in accordance with such Registration Statement or Prospectus, as applicable; (b) such Shares (or other securities) shall have been sold to the public pursuant to an exemption under applicable Securities Laws; (c) such Shares (or other securities) shall have been otherwise transferred, new certificates for them not bearing a legend restricting further transfer shall have been delivered by BIPC and subsequent public distribution of them shall not require registration under applicable Securities Laws; (d) such Shares (or other securities) shall have ceased to be outstanding; or (e) such Registrable Shares are eligible for sale pursuant to Rule 144(b)(1) (without the requirement for BIPC to be in compliance with the current public information required under Rule 144) under the U.S. Securities Act. BIPC shall promptly upon the request of any Holder furnish to such Holder evidence of the number of Registrable Shares then outstanding.
ARTICLE 4
MISCELLANEOUS
4.1 Enurement
This Agreement will enure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns.
4.2 Notices
Any notice or other communication required or permitted to be given hereunder will be in writing and will be given by prepaid first-class mail, by facsimile or other means of electronic communication, including e-mail, or by hand-delivery as hereinafter provided. Any such notice or other communication, if mailed by prepaid first-class mail at any time other than during a general discontinuance of postal service due to strike, lockout or otherwise, will be deemed to have been received on the fourth Business Day after the post-marked date thereof, or if sent by facsimile or other means of electronic communication, will be deemed to have been received on the Business Day following the sending, or if delivered by hand will be deemed to have been received at the time it is delivered to the applicable address noted below either to the individual designated below or to an individual at such address having apparent authority to accept deliveries on behalf of the addressee. Notice of change of address will also be governed by this section. In the event of a general discontinuance of postal service due to strike, lock-out or otherwise, notices or other communications will be delivered by hand or sent by facsimile or other means of electronic communication and will be deemed to have been received in accordance with this section. Notices and other communications will be addressed as follows:
4.2.1 if to Brookfield:
Brookfield Asset Management Inc.
Brookfield Place, 181 Bay Street
Suite 300, P.O. Box 762
Toronto, Ontario M5J 2T3
Attention: Chief Legal Officer
4.2.2 if to BIPC:
Brookfield Infrastructure Corporation
250 Vesey Street, 15th Floor
New York, NY 10281-1023
Attention: Chief Financial Officer
4.2.3 if to BIP:
Brookfield Infrastructure Partners L.P.
73 Front Street, 5th Floor
Hamilton
HM12, Bermuda
Attention: Chief Financial Officer
or to such other addresses as a party may from time to time notify the other in accordance with this Section 4.2.
If to any other Holder, the address indicated for such Holder in BIPC's stock transfer records with copies, so long as Brookfield owns any Registrable Shares, to Brookfield as provided above.
4.3 Authority
Each of the parties hereto represents to the other that (a) it has the corporate power and authority to execute, deliver and perform this Agreement, (b) the execution, delivery and performance of this Agreement by it has been duly authorized by all necessary corporate action and no such further action is required, (c) it has duly and validly executed and delivered this Agreement, and (d) this Agreement is a legal, valid and binding obligation, enforceable against it in accordance with its terms subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally and general equity principles.
4.4 Further Assurances
Each of the parties hereto will promptly do, make, execute or deliver, or cause to be done, made, executed or delivered, all such further acts, documents and things as the other party hereto may reasonably require from time to time for the purpose of giving effect to this Agreement and will use commercially reasonable efforts and take all such steps as may be reasonably within its power to implement to their full extent the provisions of this Agreement.
4.5 Counterparts
This Agreement may be signed in counterparts and each of such counterparts will constitute an original document and such counterparts, taken together, will constitute one and the same instrument.
IN WITNESS WHEREOF the parties have executed this Agreement as of the day and year first above written.
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BROOKFIELD ASSET MANAGEMENT INC. | |
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By: |
/s/ Aaron Kline |
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Name: Aaron
Kline |
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BROOKFIELD INFRASTRUCTURE CORPORATION | |
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By: |
/s/ Aaron Kline |
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Name: Aaron
Kline |
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BROOKFIELD INFRASTRUCTURE PARTNERS L.P., by its general partner, BROOKFIELD INFRASTRUCTURE PARTNERS LIMITED |
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By: |
/s/ James Bodi |
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Name: James
Bodi |
[Signature page to Registration Rights Agreement]
5
Bermuda ◾ British Virgin Islands ◾ Cayman Islands ◾ Guernsey ◾ Hong Kong ◾ Isle of Man ◾ Jersey ◾ London ◾ Mauritius ◾ Seychelles ◾ Shanghai ◾ Zurich
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 February 28, 2020 relating to the financial statements of Brookfield Infrastructure Partners L.P. and subsidiaries (the “Partnership”) and the effectiveness of the Partnership’s internal control over financial reporting, appearing in the Annual Report on Form 20-F of the Partnership for the year ended December 31, 2019, and to the reference to us under the heading “Experts” in the Prospectus, which is part of this Registration Statement.
| /s/ Deloitte LLP |
| Chartered Professional Accountants |
| Licensed Public Accountants |
| Toronto, Canada |
| September 24, 2020 |
Exhibit 99.1
NOTICE OF EXCHANGE
To: Computershare Trust Company of Canada (the “Transfer Agent”)
PLEASE DELIVER YOUR EXCHANGE REQUEST BY ONE OF THE OPTIONS BELOW:
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| onlinedeposits@computershare.com
* You can either scan this document via PDF or take a picture with your phone (send a CLEAR picture of all pages, both front and back within the same email) |
Computershare Trust Company of Canada P.O. Box 7021 31 Adelaide St E Toronto, ON M5C 3H2 Attn: Corporate Actions | |
Via PDF Email (recommended)*:
Via Mail:This notice is given pursuant to Section 25.12 of the articles (the “Articles”) of Brookfield Infrastructure Corporation (the “Company”). All capitalized words and expressions used in this notice that are defined in the Articles have the meanings ascribed to such words and expressions in the Articles.
The undersigned hereby notifies the Company that the undersigned desires to have the Company redeem in accordance with the Articles:
| ❑ | all Class A Share(s) registered in the name of the undersigned; or |
| ❑ | ____ Class A Share(s) registered in the name of the undersigned. |
The undersigned acknowledges the Exchange-Redemption Call Right of Brookfield Infrastructure Partners L.P. (“BIP”) or an affiliate of BIP to acquire all, but not less than all, of the Tendered Class A Shares from the undersigned and that this notice is and will be deemed to be an offer by the undersigned to sell the Tendered Class A Shares to BIP in accordance with the Exchange-Redemption Call Right on or prior to the Specified Exchange Date for the Exchange Consideration and on the other terms and conditions set out in the Articles.
The undersigned acknowledges that the redemption or acquisition of the Tendered Class A Shares may be satisfied by the delivery of an equivalent number of BIP Units (subject to adjustment to reflect certain capital events) or its cash equivalent. The form of payment is to be determined by the Company or BIP in its respective sole and absolute discretion. It is the intention of the Company and BIP to satisfy any exchange or acquisition of Tendered Class A Shares through the delivery of BIP Units rather than the Cash Amount.
The undersigned acknowledges that the Company will not be obligated to redeem Tendered Class A Shares to the extent that such redemption would be contrary to solvency requirements or other provisions of applicable Law. If the Company believes that it would not be permitted by any such requirements or other provisions to redeem the Tendered Class A Shares, provided that BIP has not exercised its Exchange-Redemption Call Right with respect to the Tendered Class A Shares, the Company will only be obligated to redeem the maximum number of Tendered Class A Shares (rounded down to a whole number of Class A Shares) that would not be contrary to such provisions.
The undersigned hereby represents and warrants to the Company and BIP that the undersigned has good title to, and owns, the Class A Share(s) to be acquired by the Company, BIP or an affiliate of BIP as the case may be, free and clear of all liens, claims and encumbrances whatsoever.
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| (Signature of Tendering Class A Shareholder) |
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| (Guarantee of Signature) |
| CURRENCY ELECTION
(only if exchange or acquisition of the Tendered Class A Shares is satisfied by the Cash Amount)
Shareholders domiciled in Canada will receive the Cash Amount in Canadian dollars (CAD) and shareholders domiciled in the United States and all other countries will receive the Cash Amount in U.S. dollars (USD), unless otherwise elected below:
❑ Issue my cash entitlement payment(s) in U.S. dollars (USD).
❑ Issue my cash entitlement payment(s) in Canadian dollars (CAD).
❑ Issue my cash entitlement payment(s) in Australian dollars (AUD).
By electing to receive payment in another currency, the undersigned acknowledges that (a) the exchange rate used will be the rate established by the Transfer Agent, in its capacity as foreign exchange service provider to the Company, on the date the funds are converted; (b) the risk of any fluctuation in such rate will be borne by the undersigned; and (c) the Transfer Agent may earn commercially reasonable spread between its exchange rate and the rate used by any counterparty from which it purchases the elected currency.
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Payment Delivery Instruction
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❑ Please check this box if the Cash Amount, if applicable, resulting from the exchange or acquisition of the Tendered Class A Shares is to be paid by cheque and mailed to the last address of the Tendering Class A Shareholder as it appears on the register of the Company or as instructed below in Exhibit A. ALL CHEQUE PAYMENTS WILL BE ISSUED TO THE REGISTERED NAME AS IT CURRENTLY APPEARS.
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❑ Please check this box if the Cash Amount, if applicable, resulting from the exchange or acquisition of the Tendered Class A Shares is to be paid by cheque and held for pick-up by the Tendering Class A Shareholder at the principal transfer office of the Transfer Agent in Toronto, Ontario.
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❑ Please check this box if the Cash Amount, if applicable, resulting from the exchange or acquisition of the Tendered Class A Shares is to be paid electronically to the Tendering Class A Shareholder using the electronic payment information as it appears on the dividend register of the Company or as instructed below in Exhibit B. |
| NOTE: | This panel must be completed and such additional documents as the Transfer Agent may require must be deposited with the Transfer Agent at its principal transfer office in Toronto, Ontario. The BIP Units Amount and any payment resulting from the exchange or acquisition of the Tendered Class A Shares will be issued and registered in, and made payable to respectively, the name of the Tendering Class A Shareholder as it appears on the register of the Company and the BIP Units Amount and payment resulting from such exchange or acquisition will be delivered to such Tendering Class A Shareholder as indicated above, unless the form appearing immediately below is duly completed. |
EXHIBIT A:
Cheque Delivery Information
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| Name of Person in Whose Name Payment is to be Delivered (please print) |
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| Street Address or P.O. Box |
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| City, Province and Postal Code |
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| Signature of Tendering Class A Shareholder |
EXHIBIT B
| BROOKFIELD INFRASTRUCTURE CORPORATION EXCHANGE WIRE PAYMENT FORM* |
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| **Beneficiary Name(s) that appears on the account at your financial institution – this MUST be the same name and address that your shares are registered to
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| **Beneficiary Address (Note: PO Boxes will not be accepted) | **City | **Province/State | **Postal Code/Zip Code | |||||||||||||
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| **Beneficiary Bank/Financial Institution | ||||||||||||||||
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| **Bank Address | **City | **Province/State | **Postal Code/Zip Code | |||||||||||||
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| PLEASE ONLY COMPLETE THE APPLICABLE BOXES BELOW, AS PROVIDED BY YOUR FINANCIAL INSTITUTION. YOU ARE NOT REQUIRED TO COMPLETE ALL BOXES | ||||||||||||||||
| **Bank Account No. | Bank No. & Transit No. (Canadian Banks) | ABA/Routing No. (US Banks) | ||||||||||||||
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| (3 digits & 5 digits) | (9 digits) | |||||||||||||||
| SWIFT or BIC Code | IBAN Number | Sort Code (GBP) | ||||||||||||||
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| (11 characters – if you only have eight, put ‘XXX’ for the last three) | ||||||||||||||||
| Additional Notes and special routing instructions: | ||||||||||||||||
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| *PLEASE NOTE THAT THERE IS A $100 BANKING FEE ON WIRE PAYMENTS. ALTERNATIVELY, CHEQUE PAYMENTS ARE ISSUED AT NO ADDITIONAL COST. IF WIRE DETAILS ARE INCORRECT OR INCOMPLETE, THE TRANSFER AGENT WILL ATTEMPT TO CONTACT YOU AND CORRECT THE ISSUE. HOWEVER, IF WE CANNOT CORRECT THE ISSUE PROMPTLY, A CHEQUE WILL BE AUTOMATICALLY ISSUED AND MAILED TO THE ADDRESS ON RECORD. NO FEES WILL BE CHARGED |
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| **MANDATORY FIELD |
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| Please provide email address and phone number in the event that we need to contact you for corrective measures: |
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EMAIL ADDRESS: _____________________________________________ PHONE NUMBER: ________________