|
|
|
|
|
Area
|
|
Eligible Categories
|
|
|
(vii)
|
|
Projects that increase the consumption of (or transition to) renewable energy sources.
|
Energy Efficiency
|
|
(i)
|
|
Climate change and eco-efficient products, production technologies and processes and energy storage technologies or assets, such as battery storage assets to solve intermittency, residential battery solutions, waste
to energy generation;
|
|
|
(ii)
|
|
Expenditures related to the development or provision of intelligent energy systems or other energy efficiency improvements, such as technology or "smart" systems that are proven to contribute to reduced energy
consumption or mitigate greenhouse gas emissions; and
|
|
|
(iii)
|
|
Expenditures related to data infrastructure initiatives, including network or data transmission and storage infrastructure, that are proven to contribute to reduced energy consumption and/or increased energy
efficiency.
|
Sustainable Water and Waste Management
|
|
(i)
|
|
Investments related to the development of sustainable infrastructure for the production, treatment or distribution of clean and/or drinking water or the collection and treatment of sewage.
|
Pollution Prevention, Energy Efficiency, and Climate Change Adaption
|
|
(i)
|
|
Investment in, acquisition of or partnership with heavy-emissions companies to facilitate transition towards "net-zero" through, among other things, upgrading infrastructure and/or technology, or improving operations,
to reduce energy consumption and carbon footprint; and
|
|
|
(ii)
|
|
Investments related to the development of Waste to Energy generation assets.
|
Clean Transportation
|
|
(i)
|
|
Investments related to the reduction in locomotive emissions; and
|
|
|
(ii)
|
|
Expenditures related to design, build, recover and reuse of advanced battery technologies for vehicles.
|
Eco-efficient and/or circular economy adapted products
|
|
(i)
|
|
Investments in resource-efficient packaging and distribution.
|
-
(1)
-
Leadership
in Energy and Environmental Design ("LEED") is a voluntary, third party building certification
process developed by the U.S. Green Building Council ("USGBC"), a non-profit organization. The USGBC developed the LEED certification process to
(i) evaluate the environmental performance from a whole building perspective over a building's life cycle, (ii) provide a definitive standard for what constitutes a "green building,"
(iii) enhance environmental awareness among architects and building contractors, and (iv) encourage the design and construction of energy efficient, water conserving buildings that use
sustainable or green resources and materials.
-
(2)
-
National
Australian Built Environment Rating System ("NABERS") is Australia's leading building performance
rating that can be used to measure a building's energy efficiency, carbon emissions, as well as the water consumed, the waste produced and compare it to similar buildings.
-
(3)
-
BREEAM,
which is published by Building Research Establishment Ltd., is an international scheme that provides independent third-party certification of
the assessment of the sustainability performance of individual buildings, communities and infrastructure projects. Assessment and certification can take place at a number of stages in the built
environment life cycle, from design and construction through to operation and refurbishment. In the case of BREEAM, third party certification involves the checking by impartial
experts of the assessment of a building or project by a qualified and licensed BREEAM assessor to ensure that it meets the quality and performance standards of the scheme.
-
(4)
-
Biomass
generation feedstock will be limited to sources that do not deplete existing terrestrial carbon pools, such as agricultural or forestry residue.
S-15
Table of Contents
Process for Project Evaluation and Selection
Our Capital Markets and Treasury ("CMT") team will be responsible for determining if an
investment is an Eligible Green Project. The CMT team will verify the suitability and eligibility of such investments in collaboration with internal experts and stakeholders, including our in-house
sustainability team and affiliates of the Company.
Eligibility
of investments will be evaluated based on several criteria, such as financial, technical/operating, market, legal and environmental, social and governance risks. In addition,
our Code of Business Conduct and Ethics sets forth principles to guide behavior and standards that must be adhered to.
Management of Proceeds of the Offering
The net proceeds of the Offering will be deposited into a general account and an amount equal to the net proceeds will be earmarked for
allocation to Eligible Green Projects. The Company has established a register to record on an ongoing basis the allocation of the net proceeds to investments in Eligible Green Projects.
Reporting
The Company will provide annual updates to investors on its website or in its financial statements, which will contain information on
its green bond program, including amounts allocated to Eligible Green Projects and the balance of unallocated proceeds. Where feasible, the Company will incorporate the allocation of proceeds by
eligible category and provide examples of investments being financed with green bonds proceeds until all such proceeds have been allocated. Where feasible, the annual updates will include qualitative
and quantitative impact indicators. The information found on, or accessible through, the Company's website is not incorporated into and does not form a part of this Prospectus Supplement.
Green Bond Principles, 2018
The Green Bond Principles are a set of voluntary guidelines for the issuance of green securities developed by a committee made up of
issuers, investors and intermediaries in the green finance market and are intended to promote integrity in the green finance market through guidelines that recommend transparency, disclosure and
reporting. We are in alignment with the four core components of the Green Bond Principles as administered by the International Capital Markets Association (ICMA). The Green Bond Principles, 2018 have
four components: (i) use of proceeds (ii) process for project evaluation and selection, (iii) management of proceeds, and (iv) reporting on the use of proceeds.
S-16
Table of Contents
CONSOLIDATED CAPITALIZATION OF THE COMPANY
The following table sets forth the consolidated capitalization of the Company (i) as at September 30, 2020 and
(ii) as at September 30, 2020 as adjusted to give effect to the issuance of the Notes hereunder and the issuance by BFI of the 2080 Subordinated Notes. For further disclosures in respect
of consolidated capitalization, please see the Company's unaudited comparative interim consolidated financial statements for the three and nine months ended September 30, 2020 and 2019 and
notes thereto, which are incorporated by reference in this Prospectus Supplement.
|
|
|
|
|
|
|
|
|
|
As at September 30, 2020
|
|
|
|
Actual
|
|
As adjusted(1)
|
|
|
|
($ amounts in millions)
|
|
Corporate borrowings
|
|
$
|
8,587
|
|
$
|
8,976
|
|
Non-recourse borrowings
|
|
|
|
|
|
|
|
Property-specific mortgages
|
|
|
129,646
|
|
|
129,646
|
|
Subsidiary borrowings
|
|
|
10,584
|
|
|
10,584
|
|
Accounts payable and other
|
|
|
45,153
|
|
|
45,153
|
|
Liabilities associated with assets classified as held for sale
|
|
|
1,503
|
|
|
1,503
|
|
Deferred tax liabilities
|
|
|
14,314
|
|
|
14,314
|
|
Subsidiary equity obligations
|
|
|
3,989
|
|
|
3,989
|
|
Equity
|
|
|
|
|
|
|
|
Non-controlling interests
|
|
|
80,156
|
|
|
80,349
|
|
Preferred equity
|
|
|
4,145
|
|
|
4,145
|
|
Common equity
|
|
|
29,006
|
|
|
29,006
|
|
|
|
|
|
|
|
Total capitalization
|
|
$
|
327,083
|
|
$
|
327,665
|
|
|
|
|
|
|
|
-
(1)
-
Assumes
no exercise of the Underwriters' Over-Allotment Option
EARNINGS COVERAGE RATIOS OF THE COMPANY
The Company's borrowing cost requirements for the 12-month periods ended December 31, 2019 and September 30, 2020
amounted to $7,548 million and $7,529 million, respectively, after giving effect to (i) the issuance of the Notes (assuming no exercise of the Underwriters' Over-Allotment
Option), (ii) the issuance of the 2080 Subordinated Notes, (iii) the issuance by BFI of $500 million principal amount of 3.500% senior unsecured notes due March 30, 2051;
(iv) the issuance by Brookfield Finance LLC of $600 million principal amount of 3.450% senior unsecured notes due April 15, 2050, (v) the issuance by BFI of
$1 billion principal amount of 4.850% senior unsecured notes due March 29, 2029, (vi) the redemption of Cdn$350 million principal amount of the Company's 5.30% senior
unsecured notes due March 1, 2021, and (vii) the issuance by BFI of an aggregate of $750 million principal amount of 4.350% senior unsecured notes due April 15, 2030, as if
each such issuance or redemption had occurred on January 1, 2019 (collectively, the "Adjustments"). Net income attributable to shareholders
before borrowing costs and income taxes for the 12-month periods ended December 31, 2019 and September 30, 2020 was $10,463 million and $7,503 million, respectively, which
is approximately 1.4 times and 1.0 times the Company's borrowing cost requirements for the period, after giving effect to the Adjustments.
DESCRIPTION OF THE NOTES
The UK Issuer will issue $200,000,000 aggregate principal amount (or $230,000,000 aggregate principal amount if the Underwriters
exercise their Over-Allotment Option in full) of 4.50% Subordinated Notes (the "Notes") under an indenture, to be dated as of the date the Notes are
originally issued (the "Base Indenture"), among Brookfield Finance I (UK) plc (the "UK Issuer"),
Brookfield Asset Management Inc. (the "Company"), as guarantor, Computershare Trust Company of Canada, as Canadian trustee (the
"Canadian Trustee"), and Computershare Trust Company, N.A., as U.S. trustee (the "U.S. Trustee" and
together with the Canadian Trustee, the "Trustees"), as supplemented by a supplemental indenture, to be dated as of the date the Notes are
S-17
Table of Contents
originally
issued (the "Supplemental Indenture" and, together with the Base Indenture, the "Indenture"),
among the UK Issuer, the Company and the Trustees. The Indenture is subject to the provisions of the U.S. Trust Indenture Act of 1939, as amended, and
the Business Corporations Act (Ontario) and the Trustees are subject to such indenture legislation, as applicable. The U.S. Trustee and the Canadian
Trustee are joint trustees under the Indenture. Notices to the Trustees may be served on either Trustee, and the U.S. Trustee will initially act as Paying Agent for the Notes.
The
following is a summary of the material rights, privileges, restrictions, obligations and conditions attaching to the Notes and certain provisions of the Indenture and is intended to
supplement, and to the extent inconsistent, to replace, the more general terms and provisions of the debt securities described in the accompanying Base Shelf Prospectus, to which we refer you. This
summary is qualified in its entirety by the provisions of the Indenture and the Notes. You should read the Indenture and the Notes in their entirety. Copies of the Indenture and the Notes may be
obtained upon request to the Company at the address set forth under "Documents Incorporated by Reference."
Unless
otherwise indicated, defined terms used in this section apply only to this "Description of the Notes" section and not to any other
sections of this Prospectus Supplement.
General
The Notes will be unsecured subordinated obligations of the UK Issuer and will initially be limited to up to $230,000,000 aggregate
principal amount, all of which will be issued under the Supplemental Indenture. The Notes will bear interest at the rate of 4.50% per annum from November 24,
2020, or from the most recent interest payment date to which interest has been paid or provided for, payable quarterly in arrears on February 24, May 24, August 24, and
November 24 of each year, commencing on February 24, 2021.
The
Notes will be fully and unconditionally guaranteed, on a subordinated basis, by the Company.
The
Notes are perpetual securities in respect of which there is no fixed maturity date or fixed Redemption Date.
Further Issuance
The Notes will constitute a separate series of Securities (as defined in the Base Indenture) under the Indenture, initially limited to
up to $230,000,000 in aggregate principal amount. Under the Indenture the UK Issuer may, from time to time, without the consent of the holders of the Notes but with the consent of the Company,
"reopen" the series of Securities of which the Notes are a part and issue additional notes of such series from time to time in the future with terms (other than the Issue Date, issue price and,
possibly, the First Call Date and the date interest starts accruing) identical to the Notes issued hereby. The Notes offered by this Prospectus Supplement and any additional notes of such series that
we may issue in the future will constitute a single series of Securities under the Indenture; provided that such additional notes will be only issued if they are fungible with the original Notes for
U.S. federal income tax purposes. This means that, in circumstances in which the Indenture provides for the holders of Securities of any series to vote or take any other action as a single class, the
Notes offered hereby and any additional notes of such series of notes that we may issue by reopening such series will vote or take that action as a single class.
Interest
The UK Issuer will pay interest on the Notes on every February 24, May 24, August 24, and November 24 of
each year during which the Notes are outstanding (each such quarterly date, an "Interest Payment Date"), subject to Optional Interest Deferral as
described below in " Optional Interest Deferral."
The
UK Issuer will pay interest on the Notes at a rate of 4.50% per year (the "Interest Rate") in equal quarterly installments in arrears
on each Interest Payment Date. Subject to Optional Interest Deferral as described below in " Optional Interest Deferral", the amount
of interest payable on each Interest Payment Date will be in the amount of $0.28125 per $25 principal amount of Notes (the "Interest Amount").
S-18
Table of Contents
The
first interest period will begin on (and include) the Issue Date and end on (but exclude) the first Interest Payment Date and each successive interest period will begin on (and
include) an Interest Payment Date and end on (but exclude) the next succeeding Interest Payment Date (each, an "Interest Period").
Interest
for each Interest Period from the date the Notes are originally issued (the "Issue Date") will be calculated on the basis of a
360-day year consisting of twelve 30-day months. Where it is necessary to calculate an amount of interest in respect of any Note for a period which is less than or equal to a complete Interest Period,
such interest shall be calculated on the basis of a 360-day year consisting of 12 months of 30 days each and, in the case of an incomplete month, the number of days elapsed.
Interest
payments will be made to the persons or entities in whose names the Notes are registered at the close of business on February 9, May 9, August 9, and
November 9 (in each case, whether or not a business day), as the case may be, immediately preceding the relevant Interest Payment Date. If an Interest Payment Date falls on a day that is not a
business day, the Interest Payment Date will be postponed to the next business day, and no further interest will accrue in respect of such postponement.
Specified Denominations
The Notes will be issued only in minimum denominations of $25 and integral multiples of $25 in excess thereof.
Optional Interest Deferral
Interest which accrues during an Interest Period will be due and payable on the relevant Interest Payment Date, unless the UK Issuer
elects to defer the relevant payment of interest (in whole or in part). The UK Issuer may, at its discretion, elect to defer any payment of interest (in whole or in part) (a
"Deferred Interest Payment") which is otherwise scheduled to be paid on an Interest Payment Date. If the UK Issuer elects not to make all or part of any
payment of interest on an Interest Payment Date, then it will not have any obligation to pay such interest on the relevant Interest Payment Date.
Notice of Interest Deferral
The UK Issuer will notify the holders of the Notes, the Trustees and, if required by the rules of any stock exchange on which the Notes
are listed from time to time, such stock exchange, of any determination by it not to pay all or part of the Interest Amount which would otherwise fall due on an Interest Payment Date with respect to
the Notes not more than 30 business days and not less than five business days prior to the relevant Interest Payment Date. Deferral of Interest Amounts will not constitute a default of the UK Issuer
or the Company or any breach of their respective obligations under the Notes, the Guarantee or the Indenture or for any other purpose.
Restrictions during an Optional Interest Deferral Period
Unless the UK Issuer has paid all accrued and payable Arrears of Interest, neither the Company nor the UK Issuer will (collectively,
the "Optional Interest Deferral Period Restrictions"):
-
(a)
-
resolve
to pay or declare a dividend or distribution or make any other payment on any Ordinary Shares of the UK Issuer or Company Shares, other than
(i) in the form of the issuance of any Ordinary Shares of the UK Issuer or Company Shares, as applicable or (ii) a dividend, distribution or payment declared by the UK Issuer or the
Company before the notice that was given by the UK Issuer in accordance with " Notice of Interest Deferral" in respect of the then
outstanding Arrears of Interest under the Notes;
-
(b)
-
pay
or declare a dividend or distribution, or make any other payment, to any holders of UK Issuer Parity Obligations and/or Company Parity Obligations, as
applicable, other than a dividend, distribution or payment declared by the UK Issuer or the Company, as applicable, before the notice that was given by the UK Issuer in accordance with
" Notice of Interest Deferral" in respect of the then outstanding Arrears of Interest under the Notes;
S-19
Table of Contents
-
(c)
-
redeem
or repurchase any UK Issuer Parity Obligations and/or Company Parity Obligations, as applicable (in each case, other than on a pro rata basis with redemption of the Notes), except where such redemption
or repurchase is effected as a public cash tender offer or public exchange
offer at a redemption or purchase price per security which is below its par value;
-
(d)
-
repurchase
any Notes; or
-
(e)
-
repurchase
any Ordinary Shares of the UK Issuer or Company Shares, except where such repurchase results from the hedging of convertible securities issued by
or guaranteed by the UK Issuer or the Company (whether physically or cash settled),
except,
in each case, (I) if the UK Issuer or the Company (as the case may be) is obliged under the terms and conditions of such securities or obligations to make such dividend, distribution or
payment, such redemption or such repurchase, (II) such dividend, distribution, payment, redemption or repurchase is made or effected by the UK Issuer or the Company to, or for the benefit of,
employees or former employees (including directors holding or formerly holding executive office or the personal service company of any such person) or their spouses or relatives of the UK Issuer or
the Company or any associated company or to a trustee or trustees to be held for the benefit of any such person or to the administrator or estate of any such person, in any such case pursuant to any
share, share-based or option plan or scheme or pursuant to any dividend reinvestment plan or similar plan or scheme, or (III) such dividend, distribution or payment is made between the UK
Issuer and the Company or its subsidiaries.
Paragraph (b)
above shall not apply in respect of any pro rata dividend or distribution or any other payment on any UK Issuer Parity Obligation and/or Company Parity Obligation
which is made with a pro rata payment of any Arrears of Interest with respect to the Notes.
It is in the interest of the UK Issuer and the Company to ensure that the UK Issuer pays interest on the Notes in a timely manner so as to avoid triggering the
Optional Interest Deferral Period Restrictions.
Arrears of Interest
Any Deferred Interest Payment shall itself bear interest, at the Interest Rate from (and including) the date on which (but for such
deferral) the Deferred Interest Payment would otherwise have been due to be made to (but excluding) the date on which the Deferred Interest Payment is paid, and interest will be added to such Deferred
Interest Payment (and thereafter accumulate additional interest at the Interest Rate accordingly) on each Interest Payment Date (such further interest together with the Deferred Interest Payment,
being "Arrears of Interest"). Non-payment of Arrears of Interest shall not
constitute a default by the UK Issuer or the Company under the Notes or the Guarantee or for any other purpose, unless such payment of Arrears of Interest becomes due and payable in accordance with
" Optional Settlement of Arrears of Interest" or " Mandatory Payment of Arrears of
Interest" as described below or otherwise in accordance with the terms of the Notes.
Optional Settlement of Arrears of Interest
The UK Issuer will be entitled to pay outstanding Arrears of Interest (in whole or in part) at any time on giving notice to the holders
of the Notes not less than three business days before such voluntary payment and specifying (i) the amount of Arrears of Interest to be paid and (ii) the date fixed for such payment.
Mandatory Payment of Arrears of Interest
The UK Issuer must pay all outstanding Arrears of Interest (in whole but not in part) on the earliest of the
following:
-
(i)
-
the
next scheduled Interest Payment Date in respect of which the UK Issuer does not elect to defer the interest accrued in respect of the relevant Interest
Period with respect to the Notes;
-
(ii)
-
the
date on which any or all of the Notes are redeemed; or
S-20
Table of Contents
-
(iii)
-
the
date on which an order is made or a resolution is passed for a Liquidation Proceeding of the UK Issuer or the Company (other than a Solvent
Reorganization of the UK Issuer or the Company), as the case may be.
"Liquidation" means a liquidation, winding-up or dissolution of the UK Issuer or the Company or of all or substantially all of
their respective assets or businesses.
"Liquidation Proceeding" means:
Redemption Provisions
No Fixed Maturity Date or Fixed Redemption Date
The Notes are perpetual securities in respect of which there is no fixed maturity date or fixed Redemption Date and the UK Issuer shall
only have the right to redeem, purchase or substitute or vary the Notes in accordance with " Optional Redemption",
" Optional Redemption for Certain Events", " Optional Tax
Redemption", " Substitution or Variation" as described below or otherwise in accordance with the terms of
the Notes.
"Redemption Date" means any date on which the Notes become due for redemption in accordance with their terms.
First Call Date
November 24, 2025.
S-21
Table of Contents
Optional Redemption
Subject to applicable laws, the UK Issuer may, by giving not less than 10 days' nor more than 60 days' notice to the
holders of the Notes in accordance with the notice provisions set forth in the Indenture (which notice shall be irrevocable), redeem the Notes (in whole or in part) on the First Call Date and at any
time and from time to time thereafter, at a redemption price per $25 principal amount of the Notes equal to 100% of the principal amount thereof, together with accrued but unpaid interest up to (but
excluding) the relevant Redemption Date and any outstanding Arrears of Interest (without double counting). The UK Issuer will give notice to the Trustees of any redemption at least five (5) business
days prior to when notice is due to holders.
Optional Redemption for Certain Events
Subject to " Conditions to the Special Event Redemption and the Substitution or
Variation" as described below, if an Accounting Event, Rating Agency Event or a Tax Deduction Event occurs, the UK Issuer may, subject to applicable laws, redeem the Notes (in
whole but not in part) at their applicable Early Redemption Amount, on the giving of not less than 10 days' nor more than 60 days' notice to the holders of the Notes in accordance with
the notice provisions set forth in the Indenture (which notice shall be irrevocable).
"Early Redemption Amount" means (i) in the case of a Rating Agency Event, an Accounting Event or a Tax Deduction Event where the
relevant date fixed for redemption falls prior to the First Call Date, an amount equal to the sum of (x) 100% of the principal amount of the Notes, and (y) 1% of the principal amount of
the Notes (which amount shall represent a fixed interest amount for the period from (and including) the Issue Date up to (but excluding) the relevant Redemption Date payable in addition
to any accrued and unpaid interest up to (but excluding) the relevant Redemption Date and any outstanding Arrears of Interest); and (ii) in the case of (x) a Rating Agency Event,
an Accounting Event or a Tax Deduction Event where the relevant date fixed for redemption falls on or after the First Call Date or (y) pursuant to an Optional Tax Redemption at any time, an
amount equal to 100% of the outstanding principal amount of the Notes, plus, in each case, any accrued and unpaid interest up to (but excluding) the relevant Redemption Date and any outstanding
Arrears of Interest (without double counting).
An
"Accounting Event" shall occur if, as a result of a change in accounting principles (or interpretation thereof) which have been
officially adopted on or after the Issue Date (such date, the "Accounting Event Adoption Date"), but not otherwise, the obligations of the UK Issuer
under the Notes must not or may no longer be recorded as "equity" in the audited annual or interim consolidated financial statements of the Company, in each case prepared in accordance with IFRS or
any other accounting standards that the Company may adopt in the future for the preparation of its audited annual or interim consolidated financial statements in accordance with applicable Canadian,
United States or United Kingdom laws. The Accounting Event shall be deemed to have occurred on the Accounting Event Adoption Date notwithstanding any later effective date.
A
"Rating Agency Event" shall be deemed to occur if the UK Issuer or the Company has received confirmation from any Rating Agency that,
due to any amendment to, clarification of, or change in the assessment criteria under its hybrid capital methodology or in the interpretation thereof, in each case occurring or becoming effective
after the Issue Date (or, if "equity credit" is not assigned to the Notes by the relevant Rating Agency on the Issue Date, the date on which "equity credit" is assigned by such Rating Agency for the
first time), the Notes will no longer be eligible (or if the Notes have been partially or fully re-financed since the Issue Date and are no longer eligible for "equity credit" from such Rating Agency
in part or in full as a result, the Notes would no longer have been eligible as a result of such amendment to, clarification of or, change in the assessment criteria or in the interpretation thereof
had they not been re-financed) for the same or a higher amount of "equity credit" as was attributed to the Notes as at the Issue Date (or, if "equity credit" is not assigned to the Notes by the
relevant Rating Agency on the Issue Date, the date on which "equity credit" is assigned by such Rating Agency for the first time).
"Rating Agency" means any of S&P Global Ratings (or any of its subsidiaries or any successor in business thereto from time to time),
Moody's Investors Service, Inc. (or any of its subsidiaries or any successor in business thereto from time to time), DBRS Limited (or any of its subsidiaries or any successor in business
thereto from time to time), Fitch Ratings, Inc. (or any of its subsidiaries or any successor in business thereto from time to time), or any other rating agency substituted for either of them by
the UK Issuer and/or the Company.
S-22
Table of Contents
A
"Tax Deduction Event" means (a) that as a result of a Tax Law Change, interest paid by the UK Issuer on the Notes would no
longer, or within 90 days of such change or proposed change will no longer, be fully deductible (or the entitlement to make such deduction shall be materially reduced or materially delayed) by
the UK Issuer for corporate income tax purposes; and/or (b) that, as a result of a Tax Law Change and the Notes being held by the holders thereof, the UK Issuer (or any intra-group borrower
under back-to-back lending arrangements within the BAM Group) (as applicable) would no longer, or within 90 days of such change or proposed change will no longer, be able to surrender to or
receive from companies with which it is grouped for tax purposes under the laws or regulations of the United Kingdom or Canada (or with which it would be grouped but for any Tax Law Change), losses or
other amounts which can be set against the recipient company's profits (or the amounts capable of being surrendered and set against the recipient company's profits or the timing of surrender or set
off are materially reduced or materially delayed), in either case, as determined in the reasonable opinion of the UK Issuer and provided that the foregoing cannot be avoided by the UK Issuer (or
intra-group borrower under back-to-back lending arrangements within the BAM Group) (as applicable) taking reasonable measures available to it, where references in this definition to the United Kingdom
shall be deemed also to refer to any other jurisdiction or relevant authority thereof in which any successor issuer of the Notes is incorporated (except that as regards any such jurisdiction, the
words "which in each case becomes, or would become, effective on or after the Issue Date" as used in the definition of Tax Law Change shall be replaced with the words "becomes effective after, and has
not been announced on or before, the date on which the successor issuer, as applicable, is substituted for the UK Issuer (or its successor)").
For
the purposes of the definition of Tax Deduction Event:
Being
"grouped for tax purposes" with another company includes, for the avoidance of doubt and without limitation, being a member of the same "group of companies" as the other company, any "consortium
condition" being met in respect of the other company or any other relationship sufficient to allow a surrender of losses or other amounts between the two companies for the purposes of Part 5 of
the Corporation Tax Act 2010 of the United Kingdom;
"BAM Group" means the Company and those of its subsidiaries from time to time who are incorporated within and resident for all tax purposes in the
United Kingdom or Canada; and
"Tax Law Change" means (i) a change in or proposed change in, or amendment or proposed amendment to, the laws or regulations of the United
Kingdom (in respect of the UK Issuer only) or Canada (in respect of the Company only) or any political subdivision or any authority thereof or therein having the power to tax, including any
treaty to which the United Kingdom and/or Canada is a party, (ii) any change in the application or official or generally published interpretation of such laws or regulations, including a
decision of any court or tribunal, or (iii) any interpretation or pronouncement by any relevant tax authority that provides for a position with respect to such laws or regulations or
interpretation thereof that differs from the previously generally accepted position in relation to similar transactions, which in each case becomes or would become effective on or after the Issue
Date.
Optional Tax Redemption
Subject to " Conditions to the Special Event Redemption and the Substitution or
Variation" as described below and on the giving of not less than 10 days' nor more than 60 days' notice to the holders of the Notes in accordance with the notice
provisions set forth in the Indenture (which notice shall be irrevocable), the Notes may be redeemed or purchased and cancelled (in whole but not in part) at their applicable Early Redemption Amount
(an "Optional Tax Redemption") if, as a result of any Tax Law Change, the UK Issuer or the Company would be required to pay additional amounts as
described below under "Description of the Notes Payment of Additional Amounts," where, prior to such Tax Law Change the requirement
to pay additional amounts did not exist or there was materially less risk that the payment of additional amounts would be required as determined in the reasonable opinion of the UK Issuer in respect
of payments by the UK Issuer, or as determined in an opinion of independent counsel of a nationally recognized law firm in Canada experienced in such matters in respect of payments by the Company, and
provided that the foregoing cannot be avoided by the UK Issuer taking reasonable measures available to it including, without limitation, applying for listing of the Notes on a Recognised Stock
Exchange or Multilateral Trading Facility (each as defined below). Additionally, references in
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this
section and in "Description of the Notes Payment of Additional Amounts to the United Kingdom and/or Canada shall be deemed
also to refer to any other jurisdiction or relevant authority thereof in respect of which any successor issuer or guarantor is required to pay additional amounts pursuant to the Indenture (except that
as regards any such jurisdiction, the provisions for an Optional Tax Redemption described herein will apply to Tax Law Changes (where references to the United Kingdom and Canada in the
definition of "Tax Law Change" shall be deemed also to refer to the jurisdiction in which the relevant successor issuer or guarantor is incorporated) in the jurisdiction in which the successor issuer
or guarantor is incorporated) occurring after the date of the relevant succession). The Notes may be redeemed, purchased or cancelled at their Early Redemption Amount (as defined above).
Substitution or Variation
If a Rating Agency Event, an Accounting Event, a Tax Deduction Event or an event that permits an Optional Tax Redemption to occur (a
"Substitution or Variation Event") has occurred and is continuing, then the UK Issuer or the Company may, as an alternative to redemption, subject to
the conditions set forth under " Conditions to Special Event Redemption and Substitution or Variation" (without any requirement for
the consent or approval of the holders of the Notes) and subject to the Trustees, immediately prior to the giving of any notice referred to herein, having received an Officer's Certificate and an
Opinion of Counsel (each as defined in the Indenture), each stating to the effect that the provisions of this section have been complied with, and having given not less than 10 days nor more
than 60 days' notice to the holders of the Notes (which notice shall be irrevocable), at any time either (i) substitute all, but not less than all, of the Notes for, or (ii) vary
certain terms of the Notes with the effect that they remain or become (as the case may be), Qualifying Securities, and the holders of the Notes shall be bound by such substitution or variation.
Upon
expiry of such notice, the UK Issuer or the Company will either vary certain terms of or, as the case may be, substitute the Notes in accordance with this section.
In
connection with the substitution of Qualifying Securities for the Notes or the variation of the terms of the Notes, each holder of the Notes by the purchase of the Notes authorizes
the Trustees to, and the Trustees shall, authenticate such new notes in accordance with Section 2.2 of the Indenture.
In
connection with any substitution or variation in accordance with this section, the UK Issuer will comply with the rules of any stock exchange on which the Notes are for the time being
listed or admitted to trading.
Any
such substitution or variation in accordance with the foregoing provisions following a Substitution or Variation Event shall only be permitted if it does not give rise to any other
Substitution or Variation Event with respect to the Qualifying Securities.
Any
such substitution or variation in accordance with the foregoing provisions following a Substitution or Variation Event shall only be permitted if it does not result in the Qualifying
Securities no longer being eligible for the same, or a higher amount of, "equity credit" (or such other nomenclature that the Rating Agency may then use to describe the degree to which an instrument
exhibits the characteristics of an ordinary share) as is attributed to the Notes on the date notice is given to holders of the Notes of the substitution or variation. In no event shall the Trustees
have any responsibility whatsoever to determine whether any such substitution or variation results in Qualifying Securities.
Any
such substitution or variance could have unexpected commercial consequences depending on the circumstances of an individual holder of the Notes, and we will consider the impact on
the holders of the Notes taken as a whole and are not required to take into account the individual circumstances of each holder of the Notes.
"Qualifying Securities" means securities that contain terms not materially less favorable to the holders of the Notes, taken as a whole,
than the terms of the Notes (as reasonably determined by the UK Issuer (in consultation with an independent investment bank or counsel of international standing)) and provided that an Officer's
Certificate to such effect (and confirming that the conditions set out in (a) to (j) below have been
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satisfied)
shall have been delivered to the Trustees prior to the substitution or variation of the Notes upon which certificate the Trustees shall rely absolutely). Such Qualifying
Securities:
-
(a)
-
shall
be issued by (x) the UK Issuer (or any successor thereto as issuer of the Notes) with a guarantee of the Company (or any successor thereto as
guarantor of the Notes), (y) the Company or (z) a direct or indirect subsidiary of the Company with a guarantee of the Company (or any successor thereto as guarantor of the Notes); and
-
(b)
-
(and/or,
as appropriate, the guarantee as aforesaid) shall rank pari passu on a Liquidation Proceeding of
the UK Issuer (or any successor thereto as issuer of the Notes) with the Notes or on a Liquidation Proceeding of the Company (or any successor thereto as guarantor of the Notes) with the Guarantee;
and
-
(c)
-
shall
contain terms which provide for the same or a more favorable Interest Rate applying to the Notes and preserve the same Interest Payment Dates; and
-
(d)
-
shall
preserve the obligations (including the obligations arising from the exercise of any right) of the UK Issuer (or any successor thereto as issuer of
the Notes) as to redemption of the Notes, including (without limitation) as to timing of, and amounts payable upon, such redemption; and
-
(e)
-
shall
preserve any existing rights under the terms of the Notes to any accrued interest, any Deferred Interest Payments, any Arrears of Interest and any
other amounts payable under the Notes which, in each case, has accrued to holders of the Notes and not been paid; and
-
(f)
-
shall
not contain terms providing for loss absorption through principal write-down or conversion to ordinary shares; and
-
(g)
-
shall
otherwise contain substantially identical terms (as reasonably determined by the UK Issuer (or any successor thereto as issuer of the Notes)) to the
Notes, save where (without prejudice to the requirement that the terms are not materially less favorable to the holders of the Notes taken as a whole than the terms of the Notes as described above)
any modifications to such terms are required to be made to avoid the occurrence or effect of a Rating Agency Event, an Accounting Event, a Tax Deduction Event or an event that permits an Optional Tax
Redemption to occur; and
-
(h)
-
shall,
immediately after such substitution or variation, be assigned at least the same credit rating(s) by the same Rating Agencies as may have been
assigned to the Notes at the invitation of or with the consent of the UK Issuer (or any successor thereto as issuer of the Notes) immediately prior to such substitution or variation; and
-
(i)
-
shall
not provide for the mandatory deferral or cancellation of payments of interest and/or principal; and
-
(j)
-
shall
be listed on such stock exchange as is a Recognised Stock Exchange at that time or admitted to trading on a Multilateral Trading Facility as selected
by the UK Issuer (or any successor thereto as issuer of the Notes).
For
the purposes of the definition of Qualifying Securities:
"Multilateral Trading Facility" means a multilateral trading facility described in section 987(1)(b) of the Income Tax Act 2007 of the United
Kingdom, as the same may be amended from time to time and any provision, statute or statutory instrument replacing the same from time to time;
"Recognised Stock Exchange" means a recognized stock exchange as defined in section 1005 of the Income Tax Act 2007 of the United Kingdom as the
same may be amended from time to time and any provision, statute or statutory instrument replacing the same from time to time.
Conditions to Special Event Redemption and Substitution and Variation
Prior to the publication of any notice of redemption pursuant to the provisions set for under
" Redemption Provisions" (other than redemption pursuant to " Redemption
Provisions Optional Redemption") or any notice of substitution or variation pursuant to the provisions set forth in
" Substitution or
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Variation", the UK Issuer or the Company will deliver to the Trustees an Officer's Certificate and Opinion of Counsel stating that all conditions precedent, the relevant
requirement or circumstance giving rise to the right to redeem, substitute or vary is satisfied, and where the relevant Special Event requires measures reasonably available to the UK Issuer or the
Company to be taken, the relevant Special Event cannot be avoided by the UK Issuer or the Company taking such measures. In relation to a substitution or variation pursuant to the provisions set
forth in " Substitution or Variation", such certificate shall also include further certifications that the criteria specified in
paragraphs (a) to (j) of the definition of Qualifying Securities will be satisfied by the Qualifying Securities upon issue and that such determinations were reached by the UK Issuer in
consultation with an independent investment bank or counsel of international standing. The Trustees may rely absolutely upon and shall be entitled to accept such Officer's Certificate without any
liability to any person for so doing and without any further inquiry as sufficient evidence of the satisfaction of the conditions precedent set out in such paragraphs, in which event it shall be
conclusive and binding on the holders of the Notes.
Any
redemption of the Notes in accordance with conditions set forth under " Optional Redemption for Certain Events"
and " Optional Tax Redemption" in respect of a Special Event, as applicable, shall be conditional on all outstanding Arrears of
Interest being paid in full in accordance with the provisions under "Description of the Notes Optional Interest Deferral" on or
prior to the date thereof, together with any accrued and unpaid interest up to (but excluding) such redemption, substitution or, as the case may be, variation date, with respect to the Notes.
The
Trustees are under no obligation to ascertain whether any Special Event or any event which could lead to the occurrence of, or could constitute, any such Special Event has occurred
and, until it shall receive an Officer's Certificate and Opinion of Counsel pursuant to the Indenture to the contrary, the Trustees may assume that no such Special Event or such other event has
occurred.
"Special Event" means any of an Accounting Event, a Rating Agency Event, a Tax Deduction Event, an event that permits an Optional Tax
Redemption to occur or any combination of the foregoing.
Intent-Based Replacement Disclosure
In the event that the UK Issuer redeems or purchases any of the Notes, the UK Issuer intends (without thereby assuming a legal
obligation) to do so only to the extent the aggregate redemption or purchase price is equal to or less than the net proceeds, if any, received by the UK Issuer from new issuances during the period
commencing on the 365th or 366th calendar day, depending upon the actual number of days in the applicable year, prior to the date of such redemption or purchase of securities which are
assigned by DBRS Limited (or any of its subsidiaries or any successor in business thereto from time to time) at the time of sale or issuance, an aggregate equity credit that is equal to or greater
than the equity credit assigned to the Notes to be redeemed or repurchased (but taking into account any changes in hybrid capital methodology or another relevant methodology or the interpretation
thereof since the issuance of the Notes), unless the Notes are redeemed pursuant to a Rating Agency Event (to the extent it is triggered by a change of methodology at DBRS Limited (or any of its
subsidiaries or any successor in business thereto from time to time)), an Accounting Event, a Tax Deduction Event or an event that permits an Optional Tax Redemption.
Rank and Subordination and Waiver of Set-off Provisions
Ranking and Subordination of the Notes
The Notes will be direct unsecured subordinated obligations of the UK Issuer and will rank pari
passu without any preference among themselves and pari passu with any UK Issuer Parity Obligations but junior to any UK Issuer
Senior Obligations and senior to the Ordinary Shares of the UK Issuer.
The
payment obligations of the UK Issuer under the Notes shall, save for such exceptions as may be provided by applicable laws, at all times rank in the event of a Liquidation Proceeding
of the UK Issuer:
-
(a)
-
junior
to the rights and claims of the holders of UK Issuer Senior Obligations;
-
(b)
-
pari passu with the rights and claims of any holders of UK Issuer Parity Obligations; and
-
(c)
-
senior
to the rights and claims of the holders of Ordinary Shares of the UK Issuer.
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To
give effect to the intended ranking described above, if at any time a Liquidation Proceeding of the UK Issuer occurs (otherwise than for the purposes of a Solvent Reorganization of
the UK Issuer), the amount payable by the UK Issuer to a holder of the Notes under or in relation to such Notes (in lieu of any other payment by the UK Issuer to such holder of the Notes under or in
relation to the Notes, including pursuant to the terms of the Notes or the Indenture) shall be the amount that would have been paid to such holder of the Notes if, immediately prior to and throughout
such Liquidation Proceeding, such holder of Notes was the holder of UK Issuer Notional Preference Shares. For the purposes only of that calculation, in respect of each Note and accrued but unpaid
interest (including any outstanding Arrears of Interest in respect of such interest), a holder of the Note will be deemed to hold a UK Issuer Notional Preference Share entitling the holder thereof to
receive in respect of such UK Issuer Notional Preference Share an amount in the Liquidation Proceeding of the UK Issuer that is equal to the principal amount of the relevant Note and all accrued but
unpaid interest and outstanding Arrears of Interest in respect of such interest (without double counting).
Amounts
payable to the holders of the Notes pursuant to a Liquidation Proceeding of the UK Issuer will only be paid after the debts owing to the holders of the UK Issuer Senior
Obligations have been paid in full.
Nothing
in this provision or "Description of the Notes Event of Default Provisions" below shall affect, apply to or
prejudice the payment or reimbursement of the costs, charges, expenses, indemnities, liabilities or remuneration of the Trustees or the rights and remedies of the Trustees in respect thereof.
The
subordination provisions applicable to the Notes will be governed by English law.
"Ordinary Shares" means (i) any ordinary shares in the capital of the UK Issuer or (ii) any present or future shares of any
other class of shares of the UK Issuer ranking pari passu with the ordinary shares of the UK Issuer.
"UK Issuer Notional Preference Shares" means, with respect to the UK Issuer a notional class of preference shares in the capital of the UK
Issuer: (i) ranking junior to the claims of all holders of UK Issuer Senior
Obligations; (ii) having an equal right to return of assets in the Liquidation Proceeding of the UK Issuer as UK Issuer Parity Obligations, and so ranking pari
passu with any UK Issuer Parity Obligations; and (iii) having a right to return of capital on a Liquidation Proceeding of the UK Issuer ahead of, and so ranking ahead
of, the claims of holders of the Ordinary Shares of the UK Issuer.
"UK Issuer Parity Obligations" means all present and future obligations and liabilities of the UK Issuer in respect of: (a) the
most junior class of preference share capital of the UK Issuer that is or may from time to time be outstanding and (b) all other securities, guaranties, instruments and agreements that are
issued or entered into by the UK Issuer from time to time and rank or are expressed to rank pari passu with the UK Issuer's obligations under the Notes
or the most junior outstanding class of preference share capital of the UK Issuer.
"UK Issuer Senior Obligations" means all obligations and liabilities of the UK Issuer, but excluding all UK Issuer Parity Obligations and
all obligations and liabilities of the UK Issuer in respect of any Ordinary Shares of the UK Issuer.
Ranking and Subordination of the Company Guarantee
The payment of principal, premium (if any), interest and certain other amounts by the UK Issuer under or pursuant to the Notes will be
unconditionally and irrevocably guaranteed by the Company. For the avoidance of doubt, any Arrears of Interest will not become subject to the Guarantee until they constitute a Mandatory Payment of
Arrears of Interest. The obligations of the Company under the Guarantee will be unconditional, unsecured and subordinated obligations of the Company.
The
payment obligations of the Company under the Guarantee shall, save for such exceptions as may be provided by applicable laws, at all times rank in the event of a Liquidation
Proceeding of the Company:
-
(a)
-
junior
to the rights and claims of the holders of Company Senior Obligations;
-
(b)
-
pari passu with the rights and claims of any holders of Company Parity Obligations; and
-
(c)
-
senior
to the rights and claims of the holders of the Company Shares.
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To
give effect to the intended ranking described above, if at any time a Liquidation Proceeding of the Company occurs (otherwise than for the purposes of a Solvent Reorganization of the
Company), the amount payable by the Company to a holder of the Notes under or in relation to the Guarantee (in lieu of any other payment by the Company to such holder of the Notes under or in relation
to the Guarantee), shall be the amount that would have been paid to such holder of the Notes if, immediately prior to and throughout such Liquidation Proceeding, such holder of the Notes was the
holder of Company Preference Shares. For the purposes only of that calculation, in respect of each Note and accrued but unpaid interest (including any outstanding Arrears of Interest in respect of
such interest payment), a holder of the Note will be deemed to hold a Company Preference Share entitling the holder thereof to receive in respect of such Company Preference Share an amount in the
Liquidation Proceeding of the Company that is equal to the principal amount of the relevant Note and any accrued but unpaid interest and any outstanding Arrears of Interest in respect of such interest
(without double counting). For the purpose of construing the provisions of the Guarantee and the Company's payment obligations in respect thereof, the latter amounts shall be treated as due and
payable by UK Issuer on the date such Liquidation Proceeding of the UK Issuer or the Company commences and consequently, a claim under the Guarantee in respect of such amount may be made
on, or at any time after, such date.
Amounts
payable to the holders of the Notes upon a Liquidation Proceeding of the Company will only be paid after the debts owing to the holders of the Company Senior Obligations have
been paid in full.
As
of September 30, 2020, the Company Senior Obligations for borrowed money totaled approximately $8.6 billion, which includes the Company's guarantees of approximately
$5.1 billion of existing unsecured senior notes of BFI and $600 million of senior notes of BFL. In addition, in October 2020, BFI issued the 2080 Subordinated Notes that are also
guaranteed by the Company, which guarantee constitutes a Company Senior Obligation. As of September 30, 2020, the Company also had outstanding approximately $4.1 billion of
Class A Preference Shares, which as of the Issue Date will rank as Company Parity Obligations to the Guarantee.
Nothing
in this provision or " Event of Default Provisions" below shall affect, apply to or prejudice the payment or
reimbursement of the costs, charges, expenses, indemnities, liabilities or remuneration of the Trustees or the rights and remedies of the Trustees in respect thereof.
The
subordination provisions applicable to the Guarantee will be governed by the laws of Ontario, Canada and the federal laws of Canada applicable therein.
"Company Parity Obligations" means all present and future obligations and liabilities of the Company in respect of: (a) the most
junior class of preference shares that are or may from time to time be outstanding in the capital of the Company; and (b) all other securities, guaranties, instruments and agreements that are
issued or entered into by the Company from time to time and rank or are expressed to rank pari passu with
the Company's obligations under the Guarantee or the most junior outstanding class of preference shares of the Company.
"Company Preference Shares" means, with respect to the Company a class of preference shares in the capital of the Company:
(i) ranking junior to the claims of all holders of Company Senior Obligations; (ii) having an equal right to return of assets in a Liquidation Proceeding of the Company as Company Parity
Obligations, and so ranking pari passu with any Company Parity Obligations; and (iii) having a right to return of capital on a Liquidation
Proceeding of the Company ahead of, and so ranking ahead of, the claims of holders of the Company Shares.
"Company Senior Obligations" means all obligations and liabilities of the Company, but excluding all Company Parity Obligations and all
obligations and liabilities of the Company in respect of Company Shares.
"Company Shares" means the Class A Limited Voting Shares of the Company and the Class B Limited Voting Shares of the
Company, and any shares of the Company ranking pari passu or junior to the Class A Limited Voting Shares of the Company and the Class B
Limited Voting Shares of the Company.
In
addition to the contractual subordination described above, the UK Issuer's obligations under the Notes will be structurally subordinated to all indebtedness and other obligations of
any subsidiaries of the UK Issuer, and the obligations of the Company under its Guarantee will be structurally subordinated to all indebtedness and other obligations of the Company's subsidiaries.
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Waiver of Set-off
To the extent and in the manner permitted by applicable law, neither the Trustees (in respect of amounts owed to the Trustees by the UK
Issuer or the Company, as the case may be, in respect of, and arising from, the Notes and/or the Guarantee, as applicable, but not in respect of any costs, charges, indemnities, remuneration fees,
liabilities or expenses owed to the Trustees by the UK Issuer or the Company, as the case may be) nor any holder of the Notes may exercise, claim or plead any right of set-off, counterclaim,
compensation or retention in respect of any amount owed to it by the UK Issuer or the Company, as the case may be, in respect of, or arising from, the Notes and/or the Guarantee, as applicable, and
each holder of the Notes will, by virtue of its holding of any Note, be deemed to have waived and to have directed and authorized the Trustees on its behalf to have waived, all such rights of set-off,
counterclaim, compensation or retention. Notwithstanding the preceding sentence, if any of the rights and claims of any holder of the Notes in respect of or arising under the Notes or the Guarantee
are discharged by set-off, such noteholder will immediately pay an amount equal to the amount of such discharge to the UK
Issuer or the Company or, if applicable, the liquidator, trustee, receiver or administrator of the UK Issuer and, until such time as payment is made, will hold a sum equal to such amount on trust for
the UK Issuer or the Company or, if applicable, the liquidator, trustee, receiver or administrator in the relevant liquidation, winding-up or administration. Accordingly, such discharge will be deemed
not to have taken place.
Nothing
in this provision or " Event of Default Provisions" below shall affect, apply to or prejudice the payment or
reimbursement of the fees, costs, charges, expenses, indemnities, liabilities or remuneration of the Trustees or the rights and remedies of the Trustees in respect thereof.
The
waiver of set-off provisions applicable to the Notes will be governed by English law and the waiver of set-off provisions applicable to the Guarantee will be governed by the laws of
Ontario, Canada.
Event of Default Provisions
The events of default provisions of the Indenture describing certain events of default (Section 6.1), providing for collection
suits (Section 6.3) and providing for limitations on suits (Section 6.7) shall not apply to the Notes. The following provisions apply in respect of the Notes:
Event of Default
An Event of Default under the Notes occurs only in the event of a Liquidation Proceeding of the UK Issuer or the Company other than for
the purposes of a Solvent Reorganization of the UK Issuer or the Company.
Payment Default
If, for a period of 30 days or more, the UK Issuer or the Company are in default in the payment of any principal or interest
(including any Arrears of Interest) in respect of the Notes which has become due and payable (a "Payment Default"), then the UK Issuer and/or the
Company, as the case may be, will be deemed to be in default under the Indenture and the Notes, and the Trustees may, and if instructed by the holders as described in
" Entitlement of the Trustees" below shall, take such actions as set forth under
" Proceedings" or " Enforcement" below to institute actions,
steps or proceedings for the Liquidation Proceeding of the UK Issuer. For the avoidance of doubt, a Payment Default is not an Event of Default and shall not result in any right of Acceleration
pursuant to Section 6.2 of the Indenture.
Proceedings
If a Payment Default occurs and is continuing, then the UK Issuer or the Company, as the case may be, shall, without notice from the
Trustees, be deemed to be in default under the Indenture and the Notes and (subject to the provisions set forth below) the Trustees may, and if instructed by the holders as described in
" Entitlement of the Trustees" below shall, institute actions, steps or proceedings for a Liquidation Proceeding of the UK Issuer,
and/or prove in a Liquidation Proceeding of the UK Issuer and/or claim in the liquidation or administration of the UK Issuer, such claim being subordinated, and for the amount, as provided in
" Ranking and Subordination and Waiver of Set-off Provisions Ranking and Subordination of the Notes".
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Enforcement
Without prejudice to " Proceedings" and subject to the provisions set
forth below and the Indenture, the Trustees may, and if instructed by the holders as described in " Entitlement of the Trustees"
below shall, at any time and without further notice, institute such proceedings or take such steps or actions against the UK Issuer and/or the Company as it may think fit to enforce any term or
condition binding on the UK Issuer and/or the Company under the Indenture or the Notes, but in no event shall the UK Issuer and/or the Company, by virtue of the institution of any such proceedings,
steps or actions, be obliged to pay any sum or sums in cash or otherwise, sooner than the same would otherwise have been payable by it under the Indenture or the Notes.
Entitlement of Trustees
The Trustees shall not be bound to take any of the actions referred to in the provisions set forth under
" Proceedings" or " Enforcement" above against the UK Issuer
and/or the Company to enforce the terms of the Indenture or the Notes at the request of the holders of the Notes or take any other action or step under or pursuant to the terms of the Notes or the
Indenture unless (i) it shall have been so requested in writing by the holders of the Notes of at least 25% in principal amount of the Notes then outstanding and (ii) it shall have been
indemnified and/or secured and/or prefunded by the holders of the Notes to their satisfaction. However, if a Payment Default or an Event of Default has occurred and is continuing, the Trustees shall
exercise such of the rights and powers vested in
them by the Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. The
Trustees shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the request of the holders of the Notes of at least 25% in principal amount
of the Notes then outstanding. The Trustees shall not be deemed to have knowledge or notice of the occurrence of any default or event of default, unless a responsible trust officer of each Trustee
shall have received written notice from the UK Issuer or a holder describing such default or event of default, and stating that such notice is a notice of default.
Right of Holders of the Notes
No holder of the Notes shall be entitled to proceed directly against the UK Issuer or the Company or to institute a Liquidation
Proceeding of the UK Issuer or claim in the liquidation of the UK Issuer or the Company or to prove in such Liquidation Proceeding unless the Trustees, having become so bound to proceed, institute,
prove or claim, fails to do so within a 60 day period and such failure shall be continuing, in which case the holder of the Notes shall have only such rights against the UK Issuer or the
Company as those which the Trustees are entitled to exercise as set out in this section.
Extent of Remedy of Holders of the Notes
No remedy against the UK Issuer or the Company, other than as referred to in this section, shall be available to the Trustees or the
holders of the Notes, whether for the recovery of amounts owing in respect of the Notes, the Guarantee or under the Indenture or in respect of any breach by the UK Issuer or the Company of any of
their other obligations under or in respect of the Notes, the Guarantee or under the Indenture. For the avoidance of doubt, nothing in the foregoing shall (i) prevent the Trustees from proving
in any Liquidation Proceeding (otherwise than for the purposes of a Solvent Reorganization of the UK Issuer or the Company, as the case may be) or administration of the UK Issuer or the Company and/or
claiming in any liquidation of the UK Issuer or the Company, or (ii) impair the right of any holder of the Notes to receive payment of principal, premium (if any), interest (including Arrears
of Interest) and certain other amounts on such holder's Notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such holder's Notes.
"Solvent Reorganization" means one or more transactions for the purposes of a reorganization, reconstruction, consolidation, amalgamation,
merger, transfer, sale, or the substitution in place (or similar transaction) of the UK Issuer or the Company, as the case may be, with or to a Successor (as defined herein), the terms of which
reorganization, reconstruction, consolidation, amalgamation, merger, transfer, sale, or the substitution in place (or similar transaction) (x) have previously been provided for by way of a
supplemental indenture to the Indenture in accordance with the terms of the Indenture and (y) do not provide that the Notes shall thereby become redeemable or repayable. Any such substitution
in place of the UK Issuer or the Company shall only be permitted if it does not result in the Notes no longer being eligible for the same, or a higher amount
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of,
"equity credit" as is attributed to the Notes on the date notice is given to the holder of the Notes of the aforementioned substitution.
Additional Covenants
In addition to the Optional Interest Deferral Period Restrictions, the Company will covenant for the benefit of the holders of the
Notes that the UK Issuer shall at all times remain a subsidiary of the Company. For the avoidance of doubt, there will be no right of acceleration in the case of a default in the performance of any
other covenant of the UK Issuer or the Company in the Indenture, although a legal action could be brought to enforce such covenant.
Merger, Amalgamation, Consolidation, Sale, Lease or Conveyance
Pursuant to the Indenture, neither the UK Issuer nor the Company (in each case for purposes of this paragraph, a
"Predecessor") shall enter into any transaction (whether by way of reorganization, reconstruction, consolidation, amalgamation, merger, transfer, sale
or otherwise) whereby all or substantially all of its undertaking, property and assets would become the property of any other Person (in each case for purposes of this paragraph, a
"Successor") unless: (a) the Predecessor and the Successor shall have executed, prior to or contemporaneously with the consummation of such
transaction, such instruments and done such things as, in the opinion of counsel, are necessary or advisable to establish that, upon the consummation of such transaction, (i) the Successor will
have assumed all the covenants and obligations of the Predecessor under the Indenture in respect of the Notes, and in the case of the Company, its subordinated guarantee of the Notes and
(ii) the Notes will be valid and binding obligations of the Successor, entitling the holders thereof, as against the Successor, to all the rights of holders of Notes under the Indenture; and
(b) such transaction shall be on such terms and shall be carried out at such times and otherwise in such manner as shall not be prejudicial to the interests of the holders of the Notes or to
the rights and powers of the Trustees under the Indenture; provided, however, that such restrictions are not applicable to any sale or transfer by the UK Issuer or the Company to any one or more of
their subsidiaries.
No Sinking Fund
The Notes will not be entitled to the benefit of any sinking fund.
Payment of Additional Amounts
All payments made by the UK Issuer or the Company under or with respect to the Notes will be made free and clear of, and without
withholding or deduction for or on account of, any present or future tax, duty, levy, impost, assessment or other governmental charge (hereinafter,
"Taxes") imposed or levied by or on behalf of the government of the United Kingdom and/or Canada or of any province or territory or other jurisdiction
thereof or therein or by any authority or agency thereof or therein having power to tax, unless the UK Issuer or the Company (as applicable) is required to withhold or deduct Taxes by law or by the
interpretation or administration thereof. If the UK Issuer or the Company is so required to withhold or deduct any amount for or on account of Taxes imposed or levied by or on behalf of the government
of the United Kingdom and/or Canada or of any province or territory or other jurisdiction thereof or therein or by any authority or agency thereof or therein having power to tax from any
payment made by it under or with respect to the Notes and the Notes are not redeemed in accordance with the provisions described under " Optional Tax
Redemption", the UK Issuer or the Company (as applicable) will pay such additional amounts (hereinafter "Additional Amounts") as
may be necessary so that the net amount received (including Additional Amounts) by each holder (including, as applicable, the beneficial owners in respect of any such holder) after such withholding or
deduction will not be less than the amount the holder (including, as applicable, the beneficial owners in respect of any such holder) would have received if such Taxes had not been withheld or
deducted; provided that no Additional Amounts will be payable with respect to: (a) any payment to a holder or beneficial owner who is liable for such Taxes in respect of such Note (i) by
reason of such holder or beneficial owner, or any other person entitled to payments on the Note, being a person with whom the Company does not deal at arm's length (within the meaning of the Income
Tax Act (Canada)), or (ii) by reason of the existence of any present or former connection between such holder or beneficial owner (or between a fiduciary, settlor, beneficiary, member or
shareholder of, or possessor of power over, such holder or beneficial owner, if such holder or beneficial owner is an estate, trust, partnership,
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limited
liability company or corporation) and the United Kingdom and/or Canada or any province or territory or other jurisdiction thereof or therein other than the mere ownership, or receiving
payments under or enforcing any rights in respect, of such Note as a non-resident or deemed non-resident of the United Kingdom and/or Canada or any province or territory or other jurisdiction thereof
or therein; (b) any Tax that is levied or collected other than by withholding from payments on or in respect of the Notes; (c) any Note presented for payment (where presentation is
required) more than 30 days after the later of (i) the date on which such payment first becomes due or (ii) (if any amount of the money payable is improperly withheld or refused)
the date on which payment in full of the amount outstanding is made, except to the extent that the holder of the Notes would have been entitled to such Additional Amounts on presentation of the Notes
for payment on the last day of such period of 30 days; (d) any estate, inheritance, gift, sales, transfer, excise or personal property Tax or any similar Tax; (e) any Tax imposed
as a result of the failure of a holder or beneficial owner to comply with certification, identification, declaration, filing or similar requirements concerning the nationality, residence, identity or
connection with the United Kingdom and/or Canada or any province or territory or other jurisdiction thereof or therein of such holder or beneficial owner, if such compliance is required by statute or
by regulation, as a precondition to reduction of, or exemption, from such Tax; (f) any (i) withholding or deduction imposed pursuant to Sections 1471 to 1474 of the U.S. Internal
Revenue Code of 1986, as amended ("FATCA"), or any successor version thereof, or any similar legislation imposed by any other governmental authority, or
(ii) Tax or penalty arising from the holder's or beneficial owner's failure to properly comply with the holder's or beneficial owner's obligations imposed under the Canada-United States
Enhanced Tax Information Exchange Agreement Implementation Act (Canada) or any treaty, law or regulation or other official guidance enacted by Canada implementing FATCA or an intergovernmental
agreement with respect to FATCA or any similar legislation imposed by any other governmental authority, including, for greater certainty, Part XVIII and Part XIX of the Income Tax Act
(Canada); or (g) any combination of the foregoing clauses (a) to (f).
The
UK Issuer or the Company (as applicable) will also (1) make such withholding or deduction and (2) remit the full amount deducted or withheld by it to the relevant
authority in accordance with applicable law. The UK Issuer or the Company (as applicable) will furnish to the holders of the Notes, within 30 days after the date the payment of any Taxes by it
is due pursuant to applicable law, certified copies of tax receipts evidencing such payment by it. The UK Issuer and the Company will indemnify and hold harmless each holder (including, as applicable,
the beneficial owners in respect of any such holder) and, upon written request, will reimburse each such holder (including, as applicable, the beneficial owners in respect of any such holder) for the
amount of (i) any Taxes (other than any Taxes for which Additional Amounts would not be payable pursuant to clauses (a) through (g) above) levied or imposed and paid by such
holder (including, as applicable, the beneficial owners in respect of any such holder) as a result of payments made under or with respect to the Notes which have not been withheld or deducted and
remitted by the UK Issuer or the Company (as applicable) in accordance with applicable law, (ii) any liability (including penalties, interest and expenses) arising therefrom or with respect
thereto, and (iii) any Taxes (other than any Taxes for which Additional Amounts would not be payable pursuant to clauses (a) through (g) above) imposed with respect to any
reimbursement under clause (i) or (ii) above, but excluding any such Taxes on such holder's (including, as applicable, the beneficial owners in respect of any such holder's) net income.
Whenever
in the Indenture there is mentioned, in any context, the payment of principal (and premium, if any), Early Redemption Amount, purchase price, interest or any other amount
payable under or with respect to any Note, such mention shall be deemed to include mention of the payment of Additional Amounts to the extent that, in such context, Additional Amounts are, were or
would be payable in respect thereof.
Co-Obligors and/or Additional Guarantors
Without the consent of any holders, the UK Issuer, when authorized by a resolution of the board of directors of the UK Issuer, the
Company and the Trustees, may enter into a supplemental indenture to the Indenture in respect of the Notes, in form satisfactory to the Trustees, for the purpose of adding as a co-obligor (whether as
an additional issuer or guarantor) of the Notes, an Affiliate of the UK Issuer or the Company (each, a "Co-Obligor"); provided that any such Co-Obligor
shall be organized or formed under the laws of (1) any state of the United States, (2) Canada or any province or territory thereof, (3) the United Kingdom, (4) Australia or
(5) any country that is a member of the European Union. Any such supplemental indenture entered into for the purpose of adding a Co-Obligor formed under any jurisdiction other than a state of
the United States (each, a
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"Non-U.S. Co-Obligor") shall include a provision for (i) the payment of additional amounts in the form substantially similar to that described in
"Description of the Notes Additional Amounts" including, for the avoidance of doubt, provision that Additional Amounts shall be
payable if the Non-U.S. Co-Obligor is required to withhold or deduct any amount for or on account of Taxes from any payment made by it under or with respect to the Notes in respect of Taxes
imposed or levied by or on behalf of the jurisdiction of incorporation of such Non-U.S. Co-Obligor or relevant authority thereof or therein having power to tax, with such modifications as the
Company and such Non-U.S. Co-Obligor reasonably determine are customary and appropriate for U.S. bondholders to address then-applicable (or potentially applicable future) Taxes imposed or levied by or
on behalf of the applicable governmental authority in respect of payments made by such Non-U.S. Co-Obligor under or with respect to the Notes, including any exceptions thereto as the Company and such
Non-U.S. Co-Obligor shall reasonably determine would be customary and appropriate for U.S. bondholders and (ii) the right of any Non-U.S. Co-Obligor to redeem the Notes at the Early Redemption
Amount that would be applicable to an Optional Tax Redemption in the event that Additional Amounts become payable by a Non-U.S. Co-Obligor in respect of the Notes as a result of any Tax Law Change
(where references to the United Kingdom and Canada in the definition of "Tax Law Change" shall be deemed also to refer to the jurisdiction in
which the Non-U.S. Co-Obligor is incorporated) that is announced or becomes effective after the date of such supplemental indenture.
Any
such Co-Obligor shall be jointly and severally liable with the UK Issuer or the Company (as applicable) to pay the principal, premium (if any), interest and certain other amounts on
the Notes. The UK Issuer would only add a Co-Obligor if the UK Issuer determines that adding a Co-Obligor would not result in a deemed sale or exchange of the Notes by any holder for U.S. federal
income tax purposes under applicable Treasury Regulations.
"Affiliate" of any Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common
control with such Person. For the purposes of this definition, "control", when used with respect to any Person, means the power to influence the
management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
Amendment, Supplement and Waiver
Modifications and amendments of the Indenture may be made by the Company, the UK Issuer and the Trustees with the consent of the
holders of a majority of the principal amount of the outstanding debt securities of each series issued under the Indenture (including the Notes) affected by such modification or amendment; provided,
however, that no such modification or amendment may, without the consent of the holder of each outstanding debt security of such affected series: (1) change the stated maturity of the principal
of, or any installment of interest, if any, on any debt security; (2) reduce the principal amount of, or the premium, if any, or the rate of interest, if any, on any debt security;
(3) reduce the amount of the principal of any debt security payable upon the acceleration of the maturity thereof, (4) change the currency or currency unit of payment of principal of (or
premium, if any) or interest, if any, on any debt security; (5) impair the right to institute suit for the enforcement of any payment on or
with respect to any debt security; (6) reduce the percentage of principal amount of outstanding debt securities of such series, the consent of the holders of which is required for modification
or amendment of the Indenture or for waiver of compliance with certain provisions of the Indenture or for waiver of certain defaults; (7) modify the provisions of the Indenture relating to
subordination in a manner that adversely affects the rights of the holders of debt securities; (8) modify any provisions of the Indenture relating to the modification and amendment of the
Indenture or the waiver of past defaults or covenants except as otherwise specified in the Indenture; (9) following the mailing of any offer to purchase, modify any offer to purchase for such
debt security required to be made pursuant to the terms of such outstanding debt security in a manner materially adverse to the holders thereof; (10) change the premium payable upon redemption
of any outstanding debt security, or the dates or times fixed for redemption; or (11) release the Company from its Guarantee under the Indenture.
The
holders of a majority of the principal amount of the Notes may on behalf of the holders of the Notes waive, insofar as the Notes are concerned, compliance by the UK Issuer and the
Company with certain restrictive provisions of the Indenture, including the covenants and events of default. The holders of a majority in principal amount of the Notes may waive any past default under
the Indenture with respect to the Notes,
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except
a default in the payment of the principal of (or premium, if any) and interest, if any, on the Notes or in respect of a provision which under the Indenture cannot be modified or amended without
the consent of the holder of each outstanding Note. The Indenture or the Notes may be amended or supplemented, without the consent of any holder of debt securities, in order, among other purposes, to
cure any ambiguity or inconsistency or to make any change that does not have an adverse effect on the rights of any holder of Notes. The Trustees shall not be obligated to enter into any amendment,
supplement or waiver that affects each their rights, protections or obligations under the Indenture. The UK Issuer and any Guarantor, as applicable, shall deliver to the Trustees an Officer's
Certificate and Opinion of Counsel each stating that (i) all conditions precedent to such amendment, supplement, or waiver have been satisfied, and (ii) the amendment, supplement, or
waiver is authorized or permitted by the terms of the Indenture.
Issue of Additional Notes
The UK Issuer may, at any time and from time to time, issue additional Notes or other subordinated notes without the authorization of
holders of the Notes. In the event that the UK Issuer issues additional series of subordinated notes, the rights, privileges, restrictions and conditions attached to such additional series may vary
materially from the Notes. In such event, the right of the holders of the Notes to receive interest or principal may rank pari passu with the rights of
the holders of other subordinated notes.
The Trustees and the Paying Agent
The address of the Canadian Trustee is 100 University Avenue, 11th Floor, Toronto, Ontario M5J 2Yl. The "Place of Payment" for
the Notes will be at the address of the U.S. Trustee and Paying Agent, currently located at 6200 S. Quebec St., Greenwood Village, Colorado 80111. Neither Trustee has participated in the
preparation of this Prospectus or makes any representation or warranty as to the accuracy or validity of the information contained herein.
Governing Law
The Notes, the Guarantee and the Indenture will be governed by the laws of the state of New York, except for the subordination
provisions and waiver of set-off provisions with respect to the Notes, which will be governed under English law, and the subordination provisions and waiver of set-off provisions with respect to the
Guarantee, which will be governed under the laws of Ontario, Canada.
Book-Entry Only Form
Upon issuance, the Notes will be represented by one or more fully registered global securities (the "Global
Securities") registered in the name of Cede & Co. (the nominee of The Depository Trust Company (the "Clearing
Agency")), or such other name as may be requested by an authorized representative of the Clearing Agency. The authorized denominations of each Note will be $25 and integral
multiples of $25 in excess thereof. Accordingly, the Notes may be transferred or exchanged only through the Clearing Agency and its Participants. Except as described below, owners of beneficial
interests in the Global Securities will not be entitled to receive the Notes in definitive form.
Beneficial
interests in the Notes will be represented through book-entry accounts of financial institutions acting on behalf of beneficial owners as direct and indirect Participants in
the Clearing Agency. Holders of the Notes may elect to hold interests in the Notes in book-entry form through either the Clearing Agency in the U.S. or Clearstream Banking,
société anonyme ("Clearstream"), or Euroclear Bank S.A./N.V.
("Euroclear"), if they are participants in those systems, or indirectly through organizations which are participants in those systems. Clearstream and
Euroclear will hold interests on behalf of their participants through customers' securities accounts in Clearstream's and Euroclear's names on the books of their respective depositaries, which in turn
will hold such interests in customers' securities accounts in the depositaries' names on the books of the Clearing Agency.
Each
person owning a beneficial interest in a Global Security must rely on the procedures of the Clearing Agency and, if such person is not a Participant, on the procedures of the
participant through which such
person owns its interest in order to exercise any rights of a holder under the Indenture. The laws of some jurisdictions require that certain purchasers of securities take physical delivery of such
securities in certificated form. Such
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limits
and such laws may impair the ability to transfer beneficial interests in a Global Security representing the Notes.
The
following is based on information furnished by the Clearing Agency:
The
Clearing Agency is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the
U.S. Exchange Act. The Clearing Agency holds securities that its Participants deposit with the Clearing Agency. The Clearing Agency also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in Participants' accounts, thereby eliminating the need for physical movement of
securities certificates. These direct Participants ("Direct Participants") include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations. The Clearing Agency is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation
("DTCC"). DTCC is the holding company for the Clearing Agency, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of
which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the Clearing Agency's system is also available to others such as securities brokers and
dealers, banks and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect
Participants"). The rules applicable to the Clearing Agency and its Participants are on file with the SEC.
Purchases
of the Notes under the Clearing Agency's system must be made by or through Direct Participants, which will receive a credit for such Notes on the Clearing Agency's records. The
ownership interest of each actual purchaser of each Note represented by a Global Security ("Beneficial Owner") is in turn to be recorded on the Direct
Participants' and Indirect Participants' records. Beneficial Owners will not receive written confirmation from the Clearing Agency of their purchase. Beneficial Owners are, however, expected to
receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct Participants or Indirect Participants through which such
Beneficial Owner entered into the transaction. Transfers of ownership interests in a Global Security representing the Notes are to be accomplished by entries made on the books of Participants acting
on behalf of Beneficial Owners. Beneficial Owners of a Global Security representing the Notes will not receive the Notes in definitive form representing their ownership interests therein, except in
the event that use of the book-entry system for such Notes is discontinued.
To
facilitate subsequent transfers, the Global Securities representing the Notes which are deposited with the Clearing Agency are registered in the name of the Clearing Agency's nominee,
Cede & Co., or such other
name as may be requested by an authorized representative of the Clearing Agency. The deposit of Global Securities with the Clearing Agency and their registration in the name of
Cede & Co. or such other nominee effect no change in beneficial ownership. The Clearing Agency has no knowledge of the actual Beneficial Owners of the Global Securities representing the
Notes; the Clearing Agency's records reflect only the identity of the Direct Participants to whose accounts such Notes are credited, which may or may not be the Beneficial Owners. The Participants
will remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance
of notices and other communications by the Clearing Agency to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect
Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.
Neither
the Clearing Agency nor Cede & Co. (nor such other nominee of the Clearing Agency) will consent or vote with respect to the Global Securities representing the
Notes. Under its usual procedures, the Clearing Agency mails an "omnibus proxy" to the UK Issuer as soon as possible after the applicable record date. The omnibus proxy assigns
Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Notes are credited on the applicable record date (identified in a listing attached to the
omnibus proxy).
Principal,
premium (if any), interest and certain other amounts payable on the Global Securities representing the Notes will be made to Cede & Co. (or such other nominee as
may be requested by an authorized representative of the Clearing Agency). The Clearing Agency's practice is to credit Direct
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Participants'
accounts, upon the Clearing Agency's receipt of funds and corresponding detailed information from the UK Issuer or the Trustees, on the applicable payment date in accordance with their
respective holdings shown on the Clearing Agency's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with
securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of the Clearing Agency, the applicable Trustees
or the UK Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, premium (if any), interest and certain other amounts to
Cede & Co. (or such other nominee as may be requested by an authorized representative of the Clearing Agency) is the responsibility of the UK Issuer or the applicable Trustee (provided
it has received funds from the UK Issuer), disbursement of such payments to Direct Participants shall be the responsibility of the Clearing Agency, and disbursement of such payments to the Beneficial
Owners shall be the responsibility of Direct and Indirect Participants.
The
Clearing Agency may discontinue providing its services as securities depository with respect to the Notes at any time by giving reasonable notice to the UK Issuer or the Trustees.
Under such circumstances, in the event that a successor securities depository is not obtained, Notes in definitive form are required to be printed and delivered to each holder.
The
UK Issuer may decide to discontinue use of the system of book-entry transfers through the Clearing Agency (or a successor securities depositary). In that event, the Notes in
definitive form will be printed and delivered.
Clearstream
advises that it is incorporated under the laws of Luxembourg as a professional depositary. Clearstream holds securities for its participating organizations
("Clearstream participants"), and facilitates the clearance and settlement of securities transactions between Clearstream participants through
electronic book-entry changes in accounts of Clearstream participants, thereby eliminating the need for physical movement of certificates. Clearstream provides to Clearstream participants, among other
things, services for safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and borrowing. Clearstream interfaces with domestic markets in
several countries. As a professional depositary, Clearstream is subject to regulation by the Luxembourg Commission for the Supervision of the Financial Sector (Commission de
Surveillance du Secteur Financier). Clearstream participants are recognized financial institutions around the world, including underwriters, securities brokers and dealers,
banks, trust companies, clearing corporations and certain other organizations and may include the Underwriters of the Offering. Indirect access to Clearstream is also available to others, such as
banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Clearstream participant, either directly or indirectly.
Distributions
with respect to interests in the Notes held beneficially through Clearstream will be credited to cash accounts of Clearstream participants in accordance with its rules and
procedures, to the extent received by the Clearing Agency for Clearstream.
Euroclear
advises that it was created in 1968 to hold securities for participants of Euroclear ("Euroclear participants"), and to clear
and settle transactions between Euroclear participants through simultaneous electronic book-entry delivery against payment, thereby eliminating the need for physical movement of certificates and any
risk from lack of simultaneous transfers of securities and cash. Euroclear includes various other services, including securities lending and borrowing and interfaces with domestic markets in several
countries. Euroclear is operated by Euroclear Bank S.A./N.V. ("Euroclear Operator"). All operations are conducted by the Euroclear Operator, and
all Euroclear securities clearance accounts and Euroclear cash accounts are accounts with the Euroclear Operator. Euroclear participants include banks (including central banks), securities brokers and
dealers and other professional financial intermediaries and may include the Underwriters of the Offering. Indirect access to Euroclear is also available to other firms that clear through or maintain a
custodial relationship with a Euroclear participant, either directly or indirectly.
Securities
clearance accounts and cash accounts with the Euroclear Operator are governed by the Terms and Conditions Governing Use of Euroclear and the related Operating Procedures of
the Euroclear System, and applicable Belgian law (collectively, the "Terms and Conditions"). The Terms and Conditions govern transfers of securities and
cash within the Euroclear System, withdrawals of securities and cash from the Euroclear System, and receipts of payment with respect to securities in the Euroclear System. All securities in the
Euroclear System are held on a fungible basis without attribution of specific certificates to specific securities clearance accounts. The Euroclear Operator acts under the Terms and Conditions only on
behalf of Euroclear participants, and has no records of or relationship with persons holding through Euroclear participants.
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Distributions with respect to the Notes held beneficially through the Euroclear System will be credited to the cash accounts of Euroclear participants in
accordance with the Terms and Conditions, to the extent received by the U.S. depositary for the Euroclear System.
The
information in this section concerning the Clearing Agency and the Clearing Agency's book-entry system, Clearstream and Euroclear has been obtained from sources that the UK Issuer
and the Company believe to be reliable, but is subject to any changes to the arrangements between the UK Issuer and the Clearing Agency and any changes to such procedures that may be instituted
unilaterally by the Clearing Agency, Clearstream and Euroclear.
Transfers
Transfers of ownership of the Notes will be effected only through records maintained by the Clearing Agency for such Notes with respect
to interests of Participants and on the records of Participants with respect to interests of persons other than Participants. Holders of the Notes who are not Participants, but who desire to purchase,
sell or otherwise transfer ownership of or other interests in the Notes, may do so only through Participants. The ability of a holder to pledge Notes or otherwise take action with respect to such
holder's interest in Notes (other than through a Participant) may be limited due to the lack of a physical certificate. See "Risk Factors Risks Relating to
the Notes There is no assurance that an active trading market will develop in the Notes." The Trustees shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer or exchange imposed under this Indenture or under applicable law with respect to any transfer or exchange of any interest in any
note (including any transfers between or among participants or other beneficial owners of interests in any Global Note) other than to require delivery of such certificates and other documentation or
evidence as are expressly required by, and to do so if and when expressly required by the terms of, the Indenture, and to examine the same to determine substantial compliance as to form with the
express requirements hereof.
Payments and Deliveries
As long as the Clearing Agency is the registered owner of the Notes, the Clearing Agency will be considered the sole owner of the Notes
for the purposes of receiving payments on the Notes. Payments of interest in respect of the Notes will be made by the UK Issuer to the Clearing Agency as the registered holder of the Notes and the UK
Issuer understands that such payments will be forwarded by the Clearing Agency to Participants in accordance with the applicable procedures of the Clearing Agency. As long as the Notes are held in the
Clearing Agency's book-entry only system, the responsibility and liability of the Trustees, the Company and/or the UK Issuer in respect of the Notes is limited to making payment of any amount due on
the Notes.
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UNDERWRITING
Wells Fargo Securities, LLC, BofA Securities, Inc., J.P. Morgan Securities LLC, Morgan
Stanley & Co. LLC and RBC Capital Markets, LLC are acting as the representatives (collectively, the "Representatives") to
the several underwriters (collectively, the "Underwriters") named in Schedule II to a certain underwriting agreement (the
"Underwriting Agreement") between the UK Issuer, the Company and the Representatives. Subject to the terms and conditions set forth in an Underwriting
Agreement, the UK Issuer has agreed to sell to the Underwriters, and each of the Underwriters has agreed, severally and not jointly, to purchase from the UK Issuer, the principal amount of Notes set
forth opposite its name below.
|
|
|
|
|
Underwriter
|
|
Principal Amount of Notes ($)
|
|
Wells Fargo Securities, LLC
|
|
$
|
36,000,000
|
|
BofA Securities, Inc.
|
|
|
36,000,000
|
|
J.P. Morgan Securities LLC
|
|
|
36,000,000
|
|
Morgan Stanley & Co. LLC
|
|
|
36,000,000
|
|
RBC Capital Markets, LLC
|
|
|
36,000,000
|
|
SMBC Nikko Securities America, Inc.
|
|
|
8,000,000
|
|
Deutsche Bank Securities Inc.
|
|
|
3,000,000
|
|
Citigroup Global Markets Inc.
|
|
|
3,000,000
|
|
Mizuho Securities USA LLC
|
|
|
3,000,000
|
|
MUFG Securities Americas Inc.
|
|
|
3,000,000
|
|
|
|
|
|
Total
|
|
$
|
200,000,000
|
|
|
|
|
|
Subject
to the terms and conditions set forth in the Underwriting Agreement, the Underwriters have agreed, severally and not jointly, to purchase all of the Notes sold
under the Underwriting Agreement (other than those covered by the Underwriters' Over-Allotment Option to purchase additional Notes described below) if any of these Notes are purchased. If an
Underwriter defaults, the Underwriting Agreement provides that the purchase commitments of the non-defaulting Underwriters may be increased or the Underwriting Agreement may be terminated.
The
offering price of $200,000,000 (less the Underwriters' fees) will be payable in cash to the UK Issuer against delivery on or about November 24, 2020.
If
the Underwriters sell more Notes than the total number set forth in the table above, we have granted to the Underwriters an Over-Allotment Option, exercisable for 30 days from
the date of this Prospectus Supplement, to purchase up to $30,000,000 aggregate principal amount of additional Notes at the offering price less the underwriting discount. To the extent the
Over-Allotment Option is exercised, each Underwriter must purchase a number of additional Notes approximately proportionate to that Underwriter's initial purchase commitment. Any Notes issued or sold
under the Over-Allotment Option will be issued and sold on the same terms and conditions as the other Notes that are the subject of this Offering.
The
UK Issuer and the Company have agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act and any Canadian securities laws, or
to contribute to payments the Underwriters may be required to make in respect of those liabilities.
The
Underwriters are offering the Notes, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal matters by their counsel, including the
validity of the Notes, and other conditions contained in the Underwriting Agreement, such as the receipt by the Underwriters of officer's certificates and legal opinions. The Underwriting Agreement
provides that the obligations of the Underwriters to purchase the Notes may be terminated at their discretion if there is a material adverse change in the financial markets which makes it
impracticable to proceed with the Offering and may also be terminated upon the occurrence of certain stated events. The Underwriters reserve the right to withdraw, cancel or modify offers to the
public and to reject orders in whole or in part. The offering price and the other terms of the Notes have been determined by negotiation between the UK Issuer, the Company and the Underwriters.
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This
Prospectus Supplement does not constitute an offer of the Notes, directly or indirectly, in Canada or to residents of Canada. Each Underwriter, severally and not jointly, has
represented and agreed that it has not offered or sold, directly or indirectly, and will not, directly or indirectly, offer, sell or deliver, any of the Notes in or from Canada or to any resident of
Canada.
Commissions and Discounts
The Representatives have advised the UK Issuer and the Company that the Underwriters propose initially to offer the Notes at the public
offering price set forth on the cover page of this Prospectus Supplement and may offer the Notes to dealers at that price less a concession not in excess of $0.15 per Note sold to institutional
investors and $0.50 per Note sold to retail investors. The Underwriters may allow, and those dealers may reallow, a discount not in excess of $0.45 per Note to certain other dealers. After the initial
offering, the public offering price, concession or any other term of the Offering may be changed.
The
following table shows the public offering price, underwriting commission and net proceeds from the Offering. These amounts are shown assuming both no exercise and full exercise of
the Underwriters' Over-Allotment Option.
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Note
|
|
Total (No
Exercise of
Over-Allotment
Option)(1)
|
|
Total (Full
Exercise of
Over-Allotment
Option)(2)
|
|
Public offering price
|
|
|
100
|
%
|
$
|
200,000,000.00
|
|
$
|
230,000,000.00
|
|
Underwriting commission
|
|
|
3.0855
|
%
|
$
|
6,171,000.00
|
|
$
|
7,116,000.00
|
|
Net Proceeds(3)
|
|
|
96.9145
|
%
|
$
|
193,829,000.00
|
|
$
|
222,884,000.00
|
|
-
(1)
-
Reflects
$6,000,000.00 principal amount of Notes sold to institutional investors, for which the Underwriters received an underwriting commission of $0.2500
per Note, and $194,000,000.00 principal amount of Notes sold to retail investors, for which the Underwriters received an underwriting commission of $0.7875 per Note.
-
(2)
-
Assumes
all of the additional $30,000,000 principal amount of Notes is sold to retail investors, for which the Underwriters would receive an underwriting
commission of $0.7875 per Note.
-
(3)
-
After
deducting the underwriting commission but before accounting for any additional expenses of the Offering paid or payable by the Company.
We
estimate that total expenses of the Offering, excluding the underwriting commission, will be approximately $700,000.
New Issue of Notes
The Notes are a new issue of securities with no established trading market. The UK Issuer intends to apply for listing of the Notes on
the NYSE. Listing will be subject to the UK Issuer fulfilling all the listing requirements of the NYSE. If approved for listing, trading on the NYSE is expected to commence within 30 days after
the Notes are first issued. The UK Issuer and the Company have been advised by the Underwriters that they presently intend to make a market in the Notes after completion of the Offering. However, they
are under no obligation to do so and may discontinue any market-making activities at any time without any notice. The UK Issuer and the Company cannot assure the liquidity of the trading market for
the Notes or that an active public market for the Notes will develop. If an active public trading market for the Notes does not develop, the market price and liquidity of the Notes may be adversely
affected. If the Notes are traded, they may trade at a discount from their initial offering price, depending on prevailing interest rates, the market for similar securities, the Company's operating
performance and financial condition, general economic conditions and other factors.
No Sales of Similar Securities
In the Underwriting Agreement, the UK Issuer and the Company have agreed that they will not, without the prior written consent of the
Representatives, offer, sell, contract to sell, pledge, or otherwise dispose of (or enter into any transaction which is designed to, or might reasonably be expected to, result in the disposition
(whether by actual disposition or effective economic disposition due to cash settlement or otherwise) by the UK
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Issuer,
the Company or any affiliate of the UK Issuer, the Company or any person in privity with the UK Issuer, the Company or any affiliate of the UK Issuer or the Company), directly or indirectly,
including the
filing (or participation in the filing) of a registration statement with the SEC in respect of, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position
within the meaning of Section 16 of the U.S. Exchange Act, any debt securities issued or guaranteed by the UK Issuer or the Company (other than the Notes) or publicly announce an intention to
effect any such transaction, until the closing of the Over-Allotment Option of the Notes. For the avoidance of doubt, this provision shall not prohibit the incurrence of indebtedness by the Company
under any commercial paper program or under the Company's revolving credit facilities in effect on the date of the Underwriting Agreement.
Price Stabilization, Short Positions
In connection with the Offering, the Underwriters may purchase and sell the Notes in the open market. These transactions may include
short sales, purchases on the open market to cover positions created by short sales, which may include purchases pursuant to the Underwriters' Over-Allotment Option, and stabilizing transactions.
Short sales involve the sale by the Underwriters of a greater principal amount of Notes than they are required to purchase in the Offering. The Underwriters must close out any short position by
purchasing Notes in the open market or by exercising the Over-Allotment Option. A short position is more likely to be created if the Underwriters are concerned that there may be downward pressure on
the price of the Notes in the open market after pricing that could adversely affect investors who purchase in the Offering. Stabilizing transactions consist of various bids for or purchases of Notes
made by the Underwriters in the open market to peg, fix or maintain the price of the Notes prior to the completion of the Offering.
Similar
to other purchase transactions, the Underwriters' purchases to cover the syndicate short sales may have the effect of raising or maintaining the market price of the Notes or
preventing or retarding a decline in the market price of the Notes. As a result, the price of the Notes may be higher than the price that might otherwise exist in the open market.
Neither
the UK Issuer, the Company nor any of the Underwriters make any representation or prediction as to the direction or magnitude of any effect that the transactions described above
may have on the price of the Notes. In addition, neither the UK Issuer, the Company nor any of the Underwriters make any representation that the Underwriters will engage in these transactions or that
these transactions, once commenced, will not be discontinued without notice.
Other Relationships
Some of the Underwriters and their affiliates have engaged in, and may in the future engage in, investment banking and other commercial
dealings in the ordinary course of business with the UK Issuer, the Company or its affiliates. They have received, or may in the future receive, customary fees and commissions for these transactions.
In particular, affiliates of certain of the Underwriters are lenders under the Company and its subsidiaries' credit facilities for which they have received, and in the future would receive, customary
fees.
In
addition, in the ordinary course of their business activities, the Underwriters and their affiliates may make or hold a broad array of investments and actively trade debt and equity
securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers. Such investments and securities activities
may involve securities and/or instruments of ours or our affiliates. Certain of the Underwriters or their affiliates have a lending relationship with the Company and routinely hedge, and certain other
of those Underwriters or their affiliates may hedge, their credit exposure to the Company consistent with their customary risk management policies. Typically, these underwriters and their affiliates
would hedge such exposure by entering into transactions which consist of either the purchase of credit default swaps or the creation of short positions in our securities, including potentially the
Notes. Any such credit default swaps or short positions could adversely affect future trading prices of the Notes. The Underwriters and their affiliates may also make investment recommendations and/or
publish or express independent research views in respect of such securities or financial instruments and may hold, or recommend to clients that they acquire, long and/or short positions in such
securities and instruments.
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Settlement
The UK Issuer and the Company expect that delivery of the Notes will be made against payment therefor on or about the date specified on
the cover page of this Prospectus Supplement, which will be the fifth business day following the date of pricing of the Notes (this settlement cycle being referred to as "T+5"). Under
Rule 15c6-1 of the U.S. Exchange Act, trades in the secondary market generally are required to settle in two business days, unless the parties to any such trade expressly agree otherwise.
Accordingly, purchasers who wish to trade the Notes prior to their delivery hereunder will be required, by virtue of the fact that the Notes initially will settle in T+5, to specify an alternate
settlement cycle at the time of any such trade to prevent a failed settlement. Purchasers of the Notes who wish to make such trades should consult their own advisor.
Selling Restrictions
Notice to Prospective Investors in the European Economic Area
The Notes are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made
available to any retail investor in the European Economic Area ("EEA") or in the United Kingdom (the
"UK"). For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of
Article 4(1) of MiFID II; or (ii) a customer within the meaning of Directive (EU)2016/97 (as amended), where that customer would not qualify as a professional client as defined in point
(10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in Directive 2017/1129 (as amended, the "Prospectus
Regulation"). Consequently no key information document required by Regulation (EU) No 1286/2014 (as amended or superseded, the "PRIIPs
Regulation") for offering or selling the Notes or otherwise making them available to retail investors in the EEA or in the UK has been prepared and therefore offering or
selling the Notes or otherwise making them available to any retail investor in the EEA or in the UK may be unlawful under the PRIIPs Regulation. This Prospectus has been prepared on the basis that any
offer of Notes in any Member State of the EEA will be made pursuant to an exemption under the Prospectus Regulation from the requirement to publish a prospectus for offers of Notes. This Prospectus is
not a prospectus for the purposes of the Prospectus Regulation.
References
to Regulations or Directives include, in relation to the UK, those Regulations or Directives as they form part of UK domestic law by virtue of the European Union (Withdrawal)
Act 2018 or have been implemented in UK domestic law, as appropriate.
The
above selling restrictions is in addition to any other selling restriction set out below.
Notice to Prospective Investors in the United Kingdom
In the UK, this Prospectus Supplement and the accompanying Base Shelf Prospectus is being distributed only to, and is directed only at,
and any offer subsequently made may only be directed at persons who (i) have professional experience in matters relating to investments and who qualify as investment professionals within the
meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the "Financial Promotion
Order"), (ii) are persons falling within Article 49(2)(a) to (d) ("high net worth companies, unincorporated associations, etc.") of the Financial Promotion
Order, (iii) are outside the UK, or (iv) are persons to whom an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial
Services and Markets Act 2000, as amended) in connection with the issue or sale of any notes may otherwise lawfully be communicated or caused to be communicated (all such persons together being
referred to as "relevant persons"). This Prospectus Supplement and the accompanying Base Shelf Prospectus is directed only at relevant persons and must
not be acted on or relied on in the UK by persons who are not relevant persons. In the UK, any investment or investment activity to which this Prospectus Supplement and the accompanying Base Shelf
Prospectus relates is available only to relevant persons and will be engaged in only with relevant persons.
Notice to Prospective Investors in Hong Kong
The Notes have not been offered or sold and will not be offered or sold in Hong Kong, by means of any document, other than
(a) to "professional investors" as defined in the Securities and Futures Ordinance
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(Cap. 571)
of Hong Kong and any rules made under that Ordinance; or (b) in other circumstances which do not result in the document being a "prospectus" as defined in the Companies
Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of that Ordinance. No advertisement, invitation or document relating to the Notes
has been or may be issued or has been or may be in the possession of any person for the purposes of issue, whether in Hong Kong or elsewhere, which is directed at, or the contents of which are likely
to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to the Notes which are or are intended to be disposed
of only to persons outside Hong Kong or only to "professional investors" as defined in the Securities and Futures Ordinance and any rules made under that Ordinance.
Notice to Prospective Investors in Japan
The Notes have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (the
"Financial Instruments and Exchange Law") and each Underwriter has agreed that it will not offer or sell any Notes, directly or indirectly, in Japan or
to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to
others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with,
the Financial Instruments and Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan.
Notice to Prospective Investors in Singapore
This Prospectus Supplement and the accompanying Base Shelf Prospectus have not been registered as a prospectus with the Monetary
Authority of Singapore. Accordingly, this Prospectus Supplement and the accompanying Base Shelf Prospectus and any other document or material in connection with the offer or sale, or invitation for
subscription or purchase, of the Notes may not be circulated or
distributed, nor may the Notes be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than
(i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the "SFA"),
(ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275, of the SFA,
or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.
Where
the Notes are subscribed or purchased under Section 275 of the SFA by a relevant person which is:
-
(a)
-
a
corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the
entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or
-
(b)
-
a
trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who
is an accredited investor,
securities
(as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries' rights and interest (howsoever described) in that trust shall not be transferred within six months
after that corporation or that trust has acquired the Notes pursuant to an offer made under Section 275 of the SFA except:
-
(a)
-
to
an institutional investor or to a relevant person defined in Section 275(2) of the SFA, or to any person arising from an offer referred to in
Section 275(1A) or Section 276(4)(i)(B) of the SFA;
-
(b)
-
where
no consideration is or will be given for the transfer;
-
(c)
-
where
the transfer is by operation of law;
-
(d)
-
as
specified in Section 276(7) of the SFA; or
-
(e)
-
as
specified in Regulation 32 of the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005 of Singapore.
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Singapore
Securities and Futures Act Product Classification Solely for the purposes of its obligations pursuant to sections 309B(1)(a) and 309B(1)(c) of the
SFA, the Company has determined, and hereby notifies all relevant persons (as defined in Section 309A of the SFA) that the Notes are "prescribed capital markets products" (as defined in the
Securities and Futures (Capital Markets Products) Regulations 2018) and Excluded Investment Products (as defined in MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS
Notice FAA-N16: Notice on Recommendations on Investment Products).
Notice to Prospective Investors in Canada
The Notes offered under this Prospectus Supplement and the accompanying Base Shelf Prospectus are not being, and may not be, offered or
sold, directly or indirectly, in Canada or to any resident of Canada.
Notice to Prospective Investors in Switzerland
The Notes may not be publicly offered, directly or indirectly, in Switzerland within the meaning of the Swiss Financial Services Act
("FinSA") and no application has or will be made to admit the Notes to trading on any trading venue (exchange or multilateral trading facility) in
Switzerland. Neither this document nor any other offering or marketing material relating to the Notes, constitutes or will constitute a prospectus pursuant to the FinSA, and neither this document nor
any other offering or marketing material relating to the Notes may be publicly distributed or otherwise made publicly available in Switzerland.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a general summary of certain U.S. federal income tax consequences generally applicable to the ownership and
disposition of Notes by a U.S. Holder (as defined below). This summary applies to you only if you acquire Notes in the Offering and you hold your Notes as capital assets for U.S. federal income tax
purposes. This section addresses only U.S. federal income taxation and does not address all of the tax consequences that may be relevant to you in light of your particular circumstances, including
estate and gift, foreign, state, or local tax consequences, and tax consequences arising under the Medicare contribution tax on net investment income or the alternative minimum tax. This section does
not apply to you if you are a holder subject to special rules, such as:
-
-
a dealer in securities;
-
-
a trader in securities that elects to use a mark-to-market method of accounting for your securities holdings;
-
-
a financial institution, real estate investment trust, or regulated investment company;
-
-
an insurance company;
-
-
a tax-exempt organization, qualified retirement plan, individual retirement account, or other tax-deferred account;
-
-
a person that directly, indirectly, or constructively (including through ownership of the shares of our indirect parent
company, BAM) owns 10% or more of the combined voting power of our voting stock or of the total value of our stock (including any instrument treated as equity for U.S. federal income tax purposes,
such as the Notes);
-
-
a person holding the Notes as part of a hedging transaction, "straddle," conversion transaction, constructive sale, or
other integrated transaction;
-
-
a U.S. expatriate;
-
-
a partnership or other entity classified as a partnership for U.S. federal income tax purposes, or a partner therein; or
-
-
a U.S. Holder whose functional currency for tax purposes is not the U.S. dollar.
If
you are an entity or arrangement classified as a partnership for U.S. federal income tax purposes, the U.S. federal income tax treatment of you and your partners generally will depend
on the status of the partners and
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your
activities. If you are a partnership owning the Notes or a partner in such a partnership, you are urged to consult your tax adviser as to the particular U.S. federal income tax consequences to
you of owning the Notes.
This
discussion is based on the Internal Revenue Code of 1986, as amended (the "Code"), final, temporary, and proposed Treasury
regulations thereunder (the "Treasury Regulations"), administrative pronouncements, and judicial decisions, all as in effect on the date hereof. All of
the foregoing authorities are subject to differing interpretations or change (possibly with retroactive effect), and any such differing interpretations or change may result in U.S. federal income tax
consequences to you that are materially different from those described herein. No ruling from the IRS has been or will be sought with respect to the matters described below, and the IRS, or a court,
may take a different view of the consequences described below.
This
discussion does not address any aspect of state, local, or non-U.S. taxation, or any taxes other than U.S. federal income taxes. You are urged to consult your tax adviser with
regard to the application of the U.S. federal tax laws to your particular situation, as well as any tax consequences arising under the laws of any state, local, or non-U.S. taxing jurisdiction.
For
purposes of this discussion, you are a "U.S. Holder" if you are a beneficial owner of a Note and you are, for U.S. federal income tax
purposes:
-
-
a citizen or individual who is a resident of the United States;
-
-
a corporation, or other entity treated as a corporation, created or organized in or under the laws of the United States,
any state thereof, or the District of Columbia;
-
-
an estate whose income is subject to U.S. federal income tax regardless of its source; or
-
-
a trust (i) if a U.S. court can exercise primary supervision over the trust's administration and one or more U.S.
persons are authorized to control all substantial decisions of the trust or (ii) that has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person.
The following discussion is for general information only and is not intended to be, nor should it be construed to be, legal or tax advice to any holder or
prospective holder of Notes, and no opinion or representation with respect to the U.S. federal income tax consequences to any such holder or prospective holder is made. No statutory, regulatory,
judicial, or administrative authority directly addresses how the Notes should be treated for U.S. federal income tax purposes. As a result, the U.S. federal income tax consequences of your investment
in the Notes are uncertain. U.S. Holders are urged to consult their tax advisers with respect to the U.S. federal, state, local, and non-U.S. tax consequences of the ownership and disposition of
Notes.
Characterization of the Notes for U.S. Federal Income Tax Purposes
No authority directly addresses the U.S. federal income tax treatment of an instrument with terms similar to the Notes. We believe, and
the discussion below assumes, that the Notes will be treated as equity of the UK Issuer for U.S. federal income tax purposes. This characterization will be binding on a holder of Notes, unless the
holder expressly discloses that it is adopting a contrary position on its U.S. federal income tax return. Our characterization, however, is not binding on the IRS.
Payments of Interest
In general, the gross amount of each payment of interest on the Notes (including any amounts withheld in respect of United Kingdom
taxes and, without duplication, any additional amounts paid with respect thereto) will be included in your gross income as a dividend to the extent paid out of the UK Issuer's current or accumulated
earnings and profits (as determined under U.S. federal income tax principles). Subject to the discussion below under " PFIC
Considerations," to the extent that the amount of any such payment exceeds the UK Issuer's current and accumulated earnings and profits, it will be treated first as a tax-free
return of your tax basis in the Notes, and to the extent the amount of such payment exceeds your tax basis, the excess will be treated as capital gain. The UK Issuer currently does not intend to
calculate its earnings and profits under U.S. federal income tax principles. Accordingly, you should expect that payments of interest will be reported as dividends for U.S. federal income tax
purposes.
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Interest
payments made with respect to the Notes that are treated as dividends for U.S. federal income tax purposes generally should be taxable to non-corporate U.S. Holders at the
preferential rates applicable to long-term capital gains if the dividends constitute "qualified dividend income." To be eligible for these reduced rates, such holders generally must hold the Notes for
more than 60 days during the 121-day period beginning 60 days before the applicable interest payment date and meet other holding period requirements. Assuming such holding period
requirements are met, a payment treated as a dividend generally will be qualified dividend income provided that, in the taxable year the payment is received, (i) the Notes are readily tradable
on an established securities market in the United States and (ii) the UK Issuer is not treated as a PFIC for such taxable year or for the preceding taxable year. See the discussion under
" PFIC Considerations." We intend to apply to list the Notes on the NYSE, and we therefore expect that payments with respect to the
Notes will be qualified dividend income, but there can be no assurance that the Notes will be listed and actively traded on the NYSE. Amounts we pay with respect to the Notes will not be eligible for
the dividends-received deduction generally allowed to U.S. corporations in respect of dividends received from other U.S. corporations.
Interest
payments with respect to the Notes that are treated as dividends generally will be income from sources outside the United States and generally will be "passive" income for
purposes of computing the foreign tax credit allowable to a U.S. Holder. Subject to applicable limitations, some of which vary depending upon a holder's particular circumstances, United Kingdom taxes
withheld from interest paid to a U.S. Holder who is not eligible for a reduction in or exemption from United Kingdom withholding tax (under an applicable income tax treaty or otherwise) will be
creditable against the U.S. federal income tax liability of the U.S. Holder of the Notes. The rules governing foreign tax credits are complex, and you are urged to consult your tax adviser regarding
the creditability of foreign taxes in your particular circumstances.
Sale or Disposition of the Notes
Subject to the discussion under " PFIC Considerations" below, you
generally will recognize capital gain or loss upon the sale, exchange, or other taxable disposition of your Notes in an amount equal to the difference between the U.S. dollar value of the amount
realized at such time and your adjusted tax basis in the Notes. In general, your tax basis in your Notes will be equal to the price you paid for them. Such capital gain or loss will be long-term
capital gain or loss if you held your Notes for more than one year. Long-term capital gain of a non-corporate U.S. Holder of the Notes generally is taxed at preferential rates. The deductibility of
capital losses is subject to limitations. Such gain or loss generally will be income or loss from sources within the United States for foreign tax credit limitation purposes. U.S. Holders generally
are expected to be subject to such capital gain or loss treatment upon a redemption of the Notes, except that a U.S. Holder that actually or constructively continues to own equity of the UK Issuer
following a redemption (including, for example, by reason of owning shares of our indirect parent company, BAM) may be subject to Section 302 of the Code, which could cause the redemption
proceeds to be treated as dividend income. Any such holder is urged to consult its tax adviser regarding the tax treatment of a redemption of the Notes.
Substitution or Variation
In certain circumstances, we may elect to substitute Qualifying Securities for the Notes, or to vary certain terms of the Notes with
the effect that they become or remain Qualifying Securities. See "Description of the Notes Redemption Provisions Substitution or
Variation." Because the terms of any such substituted or modified Notes are not currently known, U.S. Holders are urged to consult their tax advisers regarding the tax
consequences of any such substitution or variation, including the potential for any such substitution or variation to be a taxable event for U.S. federal income tax purposes, as well as the tax
consequences of owning or disposing of any substituted or modified Notes.
PFIC Considerations
In general, a non-U.S. corporation will be treated as a PFIC for any taxable year in which (i) 75% or more of its gross income
is "passive income" under the PFIC rules or (ii) 50% or more of the value of its assets, determined on the basis of a quarterly average, is attributable to assets that produce 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. Passive
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income
does not, however, include interest, dividends, rents, or royalties received or accrued from certain "related persons" to the extent such amounts are properly allocable to income of such
related persons that is not passive income. An instrument generating such income is not treated as passive to the extent that it generates non-passive income. If the UK Issuer is treated as a PFIC
with respect to you for any taxable year, it generally will continue to be treated as a PFIC with respect to you in all succeeding taxable years, regardless of whether it continues to meet the PFIC
requirements in such years, unless certain elections (discussed below) are made.
In
the absence of rules addressing the allocation of interest between passive and non-passive income for purposes of the "related person" rule described above, one approach generally
taken has been to allocate such income by analogy to the Treasury Regulations limiting the availability of foreign tax credits. Pursuant to these regulations, related person interest is allocated on
the basis of a "cream-skimming rule," whereby interest is first treated as passive income to the payee to the extent that the payor has passive income and only then treated as non-passive. However,
the U.S. Treasury Department has issued proposed Treasury Regulations that do not adopt the "cream-skimming rule." Instead, these regulations propose a rule under which payments of interest to a
related person are treated for PFIC purposes as passive or non-passive income to the payee on a ratable basis in proportion to the ratio of the payor's passive and non-passive income for its taxable
year to the payor's total income for the taxable year that ends with or within the taxable year of the payee. Taxpayers are permitted to rely on the proposed regulations until final regulations are
issued, provided they apply the rules consistently.
We
believe that under the rules set forth in the proposed Treasury Regulations a significant amount of the interest income the UK Issuer will receive from related persons is
properly allocable to income of such related persons that is not passive income and that the UK Issuer otherwise will not have (and will not be treated as having) passive income or assets that
generate passive income exceeding the applicable thresholds. Accordingly, based on the UK Issuer's expected income, assets, and activities, we do not expect the UK Issuer to be classified as a
PFIC for the current taxable year or for the foreseeable future with respect to U.S. Holders that apply the proposed regulations consistently. We have not determined, however, whether the
UK Issuer would be a PFIC under the "cream-skimming rule" if the proposed regulations are not applied. The proposed regulations could be withdrawn or
changed before they are finalized, and we cannot be certain that the UK Issuer would not be treated as a PFIC if that were to occur. Moreover, the determination of whether a non-U.S.
corporation such as the UK Issuer is a PFIC is based on the application of other complex U.S. federal income tax rules, which are subject to differing interpretations, and will depend on the
composition of the UK Issuer's income and assets from time to time and the nature of its activities. PFIC classification is factual in nature, and generally cannot be determined until the close
of the taxable year in question. Consequently, there can be no assurance regarding the PFIC status of the UK Issuer for the current or any future taxable year.
In
general, if the UK Issuer were a PFIC for any taxable year during a U.S. Holder's holding period for the Notes, then gain recognized by such U.S. Holder upon the sale or other taxable
disposition of the Notes would be allocated ratably over the U.S. Holder's holding period for the Notes. The amounts allocated to the taxable year of the sale or other taxable disposition and to any
year before the UK Issuer 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
Notes were to exceed 125% of the average of the annual distributions on
the Notes 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.
Certain
elections may be available to U.S. Holders to mitigate some of the adverse tax consequences resulting from PFIC treatment. If a U.S. Holder were to make an election to treat such
holder's interest in the UK Issuer as a "qualified electing fund" for the first year such holder were treated as holding such interest, then in lieu of the tax consequences described in the preceding
paragraph, the U.S. Holder would be required to include in income, for each taxable year that the UK Issuer were classified as a PFIC, a portion of the ordinary earnings and net capital gains of the
UK Issuer, even if not distributed to the holder. To make a qualified electing fund election, a U.S. Holder must, among other things, obtain a PFIC annual information statement and prepare and submit
IRS Form 8621 with such U.S. Holder's annual income tax return. To the extent reasonably practicable, we intend to make available the information necessary for U.S. Holders to make
S-46
Table of Contents
qualified
electing fund elections if, contrary to our expectations, we determine that the UK Issuer is classified as a PFIC.
In
lieu of making a qualified electing fund election, if the UK Issuer is a PFIC for any taxable year and the Notes are treated as "marketable stock" in such year, then you may avoid the
unfavorable rules described above by making a mark-to-market election with respect to your Notes. The Notes will be marketable if they are regularly traded on certain qualifying stock exchanges,
including the NYSE. The Notes will be considered to be regularly traded (i) during the current calendar year, if they are traded, other than in de minimis quantities, on at least five days
during the current calendar quarter or at least 1/6 of the days remaining in the current calendar quarter, whichever is greater, and (ii) during any other calendar year, if they
are traded, other than in de minimis quantities, on at least 15 days during each calendar quarter. In general, if you were to timely make the mark-to-market election, you would include as
ordinary income each year the excess, if any, of the fair market value of your Notes at the end of the taxable year over your adjusted basis in your Notes. You would also be allowed to take an
ordinary loss in respect of the excess, if any, of the adjusted basis of your Notes over their fair market value at the end of the taxable year (but only to the extent of the net amount of previously
included income as a result of the mark-to-market election). Your basis in the Notes would be adjusted to reflect any such income or loss. Any gain that you recognize on the sale or other disposition
of your Notes would be ordinary income and any loss would be an ordinary loss to the extent of the net amount of previously included income as a result of the mark-to-market election and, thereafter,
a capital loss. Once made, a mark-to-market election cannot be revoked without the consent of the IRS, unless the Notes cease to be marketable stock.
Subject
to certain exceptions, a U.S. person who 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 proposed Treasury Regulations discussed above have yet to be made final. You are urged to consult your tax adviser regarding the
application of the PFIC rules, including the foregoing filing requirements and
the proposed Treasury Regulations, as well as the advisability of making any available election under the PFIC rules, with respect to your ownership and disposition of the Notes.
Specified Foreign Financial Assets
Certain U.S. Holders that own "specified foreign financial assets" with an aggregate value exceeding certain thresholds generally are
required to report certain information regarding such assets by filing IRS Form 8938 with their U.S. federal income tax returns. "Specified foreign financial assets" include any financial
accounts held at a non-U.S. financial institution, as well as securities issued by a non-U.S. issuer (which may include Notes issued in certificated form) that are not held in accounts maintained by
financial institutions. U.S. Holders who fail to report the required information could be subject to substantial penalties. In addition, the statute of limitations for assessment of tax would be
suspended, in whole or part. Prospective investors are urged to consult their tax advisers concerning the application of these rules to their investment in the Notes.
Information Reporting and Backup Withholding
Payments on the Notes made to a U.S. Holder and proceeds from the sale or other disposition of the Notes may 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.
S-47
Table of Contents
CERTAIN UNITED KINGDOM TAX CONSIDERATIONS
Payment of Interest on the Notes
The following is a summary of the UK Issuer's and the Company's understanding of United Kingdom law and published HM Revenue and
Customs practice (as of the date of this Prospectus Supplement), relating only to the United Kingdom withholding tax treatment of payments of
interest and annual payments (as each term is understood for United Kingdom tax purposes) in respect of the Notes. The summary does not deal with any other United Kingdom taxation implications of
acquiring, holding or disposing of Notes. The United Kingdom tax treatment of prospective Noteholders depends on their individual circumstances and may be subject to change in the future. Prospective
Noteholders who may be subject to tax in a jurisdiction other than the United Kingdom or who may be unsure as to their tax position should seek their own professional advice immediately.
-
(A)
-
Payments
of interest on the Notes may be made without withholding or deduction for or on account of United Kingdom income tax provided that the Notes carry
a right to interest and the Notes are and continue to be listed on a "recognised stock exchange" within the meaning of Section 1005 of the Income Tax Act 2007. The UK Issuer intends to apply to
list the Notes on the NYSE, which is a recognised stock exchange for these purposes. Provided, therefore, that the Notes carry a right to interest and are, and remain, so listed on a "recognised stock
exchange," interest on the Notes will be payable without withholding or deduction for or on account of United Kingdom tax.
-
(B)
-
In
other cases an amount must generally be withheld from payments of interest on the Notes that have a United Kingdom source on account of United Kingdom
income tax at the basic rate (as of the date of this Prospectus Supplement, 20 per cent.), subject to any other available exemptions and reliefs. It is expected that payments of interest on the
Notes by the UK Issuer will have a United Kingdom source. However, where an applicable double tax treaty provides for a lower rate of withholding tax (or for no tax to be withheld) in relation to a
beneficial owner of Notes, HM Revenue and Customs can issue a notice to the Issuer to pay interest to the relevant Noteholder without deduction of tax (or for interest to be paid with tax deducted at
the rate provided for in the relevant double tax treaty).
-
(C)
-
The
United Kingdom withholding tax treatment of payments by the Company under the terms of the Guarantee which have a United Kingdom source is uncertain. In
particular, such payments by the Company may be treated as annual payments and not interest and therefore not be eligible for the exemption described in paragraph (A) above in relation to
payments of interest. Accordingly, if the Company makes any such payments, these may be subject to United Kingdom withholding tax at the basic rate.
Stamp duty and stamp duty reserve tax
The UK Issuer and the Company expect that no United Kingdom stamp duty or stamp duty reserve tax should be payable on issue of the
Notes or on a transfer of the Notes.
The proposed European Financial Transactions Tax ("FTT")
On February 14, 2013, the European Commission published a proposal (the "Commission's
Proposal") for a Directive for a common FTT in Belgium, Germany, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia (together, the
"participating Member States") and Estonia. However, Estonia has since stated that it will not participate.
The
Commission's Proposal has very broad scope and could, if introduced in the form proposed in 2013, apply to certain dealings in Notes (including secondary market transactions) in
certain circumstances. Primary market transactions referred to in Article 5(c) of Regulation (EC) No 1287/2006 are exempt. Under the Commission's Proposal, the FTT could apply in certain
circumstances to persons both within and outside of the participating Member States. Generally, it would apply to certain dealings in the Notes where at least one party is a financial institution, and
at least one party is established in a participating Member State.
A
financial institution may be, or be deemed to be, "established" in a participating Member State in a broad range of circumstances, including (a) by transacting with a person
established in a participating Member State or
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(b) where
the financial instrument which is subject to the dealings is issued in a participating Member State. However, the FTT proposal remains subject to negotiation between the participating
Member States. It may therefore be altered prior to any implementation, the timing of which remains unclear. Additional European Union Member States may decide to participate.
Prospective
holders of the Notes are advised to seek their own professional advice in relation to the FTT.
PRIOR SALES
No debt securities have been issued by the UK Issuer during the 12 months preceding the date of this Prospectus Supplement.
LEGAL MATTERS
Certain legal matters in connection with the Offering hereunder will be passed upon on behalf of the UK Issuer by Herbert Smith
Freehills LLP of London, United Kingdom, with respect to English legal matters and on behalf of the UK Issuer and the Company by Torys LLP of Toronto, Ontario and New York, New York with
respect to Canadian and U.S. legal matters. Certain legal matters in connection with the Offering hereunder will be passed upon on behalf of the Underwriters by Skadden, Arps, Slate, Meagher &
Flom LLP of Toronto, Ontario, with respect to U.S. and English legal matters, and Goodmans LLP of Toronto, Ontario, with respect to Canadian legal matters.
EXPERTS
The financial statements incorporated in this Prospectus by reference from the Company's Annual Report on Form 40-F
and the effectiveness of the Company'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.
Deloitte LLP
is independent with respect to the Company within the meaning of the Securities Act and the applicable rules and regulations thereunder adopted by the Securities and
Exchange Commission and the Public Company Accounting Oversight Board (United States) and within the meaning of the rules of professional conduct of the Chartered Professional Accountants
of Ontario.
EXPENSES
The following are the estimated expenses of the offering of the Notes, all of which have been or will be paid by the Company. All
amounts are estimates, other than the SEC registration fee.
|
|
|
|
|
SEC registration fee
|
|
$
|
25,093
|
|
Exchange listing fees
|
|
|
31,680
|
|
Trustees & transfer agent fees
|
|
|
40,000
|
|
Printing and engraving costs
|
|
|
22,000
|
|
Legal fees and expenses
|
|
|
527,000
|
|
Accounting fees and expenses
|
|
|
52,000
|
|
Miscellaneous
|
|
|
2,160
|
|
Total
|
|
$
|
699,933
|
|
S-49
Base Shelf Prospectus
This short form base shelf prospectus has been filed under legislation in each of the provinces of Canada that permits certain
information about these securities to be determined after this prospectus has become final and that permits the omission from this prospectus of that information. The legislation requires the delivery
to purchasers of a prospectus supplement containing the omitted information within a specified period of time after agreeing to purchase any of these
securities.
A registration statement relating to these securities has been filed with the U.S. Securities and Exchange Commission,
and the prospectus contained herein is not complete and may be changed. These securities may not be offered or sold prior to the time the registration statement becomes effective. This prospectus
shall not constitute an offer to sell in any U.S. state where the offer or sale is not permitted.
No securities regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise. This short form base shelf prospectus constitutes a
public offering of these securities only in those jurisdictions where they may be lawfully offered for sale and therein only by persons permitted to sell such securities. Information has been incorporated by reference
in this prospectus from documents filed with securities commissions or similar authorities in Canada. Copies of the documents incorporated herein by reference may be obtained on request without charge from the office of
the Corporate Secretary of the Company at Suite 300, Brookfield Place,
181 Bay Street, Toronto, Ontario, Canada, M5J 2T3, Telephone: (416) 363-9491, and are also available electronically at the Canadian Securities Administrators' Website at
www.sedar.com.
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New Issue
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October 6, 2020
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SHORT FORM BASE SHELF PROSPECTUS
US$3,500,000,000
BROOKFIELD ASSET
MANAGEMENT INC.
Debt Securities
Class A Preference Shares
Class A Limited Voting Shares
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BROOKFIELD FINANCE INC.
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BROOKFIELD FINANCE II INC.
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BROOKFIELD FINANCE LLC
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Debt Securities
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Debt Securities
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Debt Securities
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BROOKFIELD FINANCE II LLC
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BROOKFIELD FINANCE (AUSTRALIA) PTY LTD
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BROOKFIELD FINANCE I (UK) PLC
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Preferred Shares
(representing limited liability
company interests)
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Debt Securities
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Debt Securities
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During the 25-month period that this short form base shelf prospectus, including any amendments hereto (this "Prospectus"), remains
effective, (i) each of Brookfield Asset Management Inc. (the "Company" or "BAM"),
Brookfield Finance Inc. ("BFI"), Brookfield Finance LLC (the "US LLC Issuer"),
Brookfield Finance II Inc. ("BFI II"), Brookfield Finance (Australia) Pty Ltd (the "AUS
Issuer") and Brookfield Finance I (UK) PLC (the "UK Issuer," and together with BFI, the US LLC Issuer, BFI II
and the AUS Issuer, the "Finance Debt Issuers") may from time to time offer and issue senior or subordinated, as applicable, unsecured debt securities
(the "BAM Debt Securities", "BFI Debt Securities", "US LLC Debt
Securities", "BFI II Debt Securities", "AUS Issuer Debt Securities" and
"UK Issuer Debt Securities" respectively, and collectively the "Debt Securities"), (ii) the Company
may from time to time offer and issue Class A Preference Shares (the "BAM Preference Shares") and Class A Limited Voting Shares
(the "Class A Shares") and (iii) Brookfield Finance II LLC (the "US Pref
Issuer") (collectively with BAM, BFI, the US LLC Issuer, BFI II, the AUS Issuer and the UK Issuer, the "Issuers" and each an
"Issuer") may from time to time offer and issue preferred shares representing limited liability company interests (the "US
Preferred Shares", and together with the BAM Preference Shares, the "Preference Securities", and the Preference Securities,
Class A Shares and Debt Securities collectively referred to herein as the "Securities"). Each of the BFI Debt Securities, US LLC Debt
Securities, BFI II Debt Securities, AUS Issuer Debt Securities and UK Issuer Debt Securities will be fully and unconditionally guaranteed as to payment of principal, premium (if any) and
interest and certain other amounts by the Company, and the US Preferred Shares will be fully and unconditionally guaranteed as to the payment of distributions when due, the payment of amounts due on
redemption, and the payment of amounts due on the liquidation, dissolution or winding-up of the US Pref Issuer, in each case by the Company.
The Company, BFI and BFI II are permitted, under a multijurisdictional disclosure system adopted by the United States and Canada, to prepare this Prospectus in accordance
with the Canadian disclosure requirements. Prospective investors should be aware that such requirements are different from those of the United States. The financial statements included or
incorporated herein have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board and thus may not be comparable to
financial statements of U.S. companies.
Prospective investors should be aware that the acquisition of the Securities may have tax consequences both in the United States and in Canada. Such consequences for
investors who are residents in Canada or are residents in, or citizens of, the United States may not be described fully herein or in a Prospectus Supplement (as defined below).
Prospective investors should consult their own tax advisors with respect to their particular circumstances.
The enforcement by investors of civil liabilities under the U.S. federal securities laws may be affected adversely by the fact that the Company, BFI, BFI II, the AUS
Issuer and the UK Issuer are incorporated or organized under the laws of a foreign jurisdiction outside of the United States and that some or all of their officers and directors may be
residents of a foreign jurisdiction outside of the United States, that some or all of the underwriters or experts named or to be named in the registration statement may be residents of a
foreign jurisdiction outside of the United States and that all or a substantial portion of the assets of the Issuers and such persons may be located outside the
United States.
See "Cautionary Note Regarding Forward-Looking Information" and "Risk Factors" beginning on pages iii and 2 for a discussion of certain risks that you should
consider in connection with an investment in these Securities.
THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION"), ANY U.S. STATE SECURITIES COMMISSION, OR ANY
CANADIAN REGULATORY AUTHORITY, NOR HAS THE COMMISSION, ANY U.S. STATE SECURITIES COMMISSION OR ANY CANADIAN SECURITIES REGULATORY AUTHORITY PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Collectively,
the Issuers may offer and issue Securities either separately or together, in one or more offerings in an aggregate principal amount of up to US$3,500,000,000 (or the equivalent in
other currencies or currency units). Securities of any series may be offered in such amount and with such terms as may be determined in light of market conditions. The specific terms of the Securities
in respect of which this Prospectus is being delivered will be set forth in one or more prospectus supplements (each a "Prospectus Supplement") to be
delivered to purchasers together with this Prospectus, and may include, where applicable (i) in the case of Debt Securities, the specific designation, aggregate principal amount, denomination
(which may be in United States dollars, in any other currency or in units based on or relating to foreign currencies), maturity, interest rate (which may be fixed or variable) and time of
payment of interest, if any, any terms for redemption at the option of the Issuer or the holders, any terms for sinking fund payments, any listing on a securities exchange, the initial public offering
price (or the manner of determination thereof if offered on a non-fixed price basis), any exchange or conversion terms and any other specific terms, (ii) in the case of the BAM
Preference Shares, the designation of the particular class, series, aggregate principal amount, the number of shares offered, the issue price, the dividend rate, the dividend payment dates, any terms
for redemption at the option of the Company or the holder, any exchange or conversion terms and any other specific terms, (iii) in the case of Class A Shares, the number of shares
offered, the issue price and any other specific terms, and (iv) in the case of the US Preferred Shares, the designation of the particular class, series, aggregate principal amount, the number
of shares representing limited liability company interests offered, the issue price, the distribution rate, the distribution payment dates, any terms for redemption at the option of the US Pref Issuer
or the holder, any exchange or conversion terms and any other specific terms. Each such Prospectus Supplement will be incorporated by reference into this Prospectus for the purposes of securities
legislation as of the date of each such Prospectus Supplement and only for the purposes of the distribution of the Securities to which such Prospectus Supplement pertains. The Issuers have filed an
undertaking with the securities regulatory authorities in each of the provinces of Canada that they will not distribute, under this Prospectus, Securities that, at the time of distribution, are novel
without pre-clearing the disclosure to be contained in the Prospectus Supplement, pertaining to the distribution of such Securities, with the applicable regulator.
The
Company's, BFI's and BFI II's head and registered offices are at Suite 300, Brookfield Place, 181 Bay Street, P.O. Box 762, Toronto, Ontario, M5J 2T3. The
US LLC Issuer's and the US Pref Issuer's head and registered office is at Brookfield Place, 250 Vesey Street, 15th Floor, New York, New York, United States
10281-1023. The AUS Issuer's registered and head office is Level 22, 135 King Street, Sydney, NSW, Australia 2000. The UK Issuer's registered and head office is Level 25
One Canada Square, London, United Kingdom, E14 5AA.
The
Issuers may sell the Securities to or through underwriters or dealers or directly to investors or through agents. The Prospectus Supplement relating to each series of offered Securities will
identify each person who may be deemed to be an underwriter or agent with respect to such series and will set forth the terms of the offering of such series, including, to the extent applicable, the
initial public offering price, the proceeds to the applicable Issuer, the underwriting commissions or agent commissions, as applicable, and any other concessions to be allowed or reallowed to dealers.
The managing underwriter or underwriters with respect to each series sold to or through underwriters will be named in the related Prospectus Supplement.
In
connection with any underwritten offering of Securities, the underwriters or agents may over-allot or effect transactions which stabilize or maintain the market price of the Securities offered at a
level above that which might otherwise prevail in the open market. Such transactions, if commenced, may be discontinued at any time. See "Plan of Distribution".
The
outstanding BAM Preference Shares, Series 2, Series 4, Series 8, Series 9, Series 13, Series 17, Series 18, Series 24, Series 25,
Series 26, Series 28, Series 30, Series 32, Series 34, Series 36, Series 37, Series 38, Series 40, Series 42, Series 44,
Series 46 and Series 48 are listed on the Toronto Stock Exchange. The outstanding Class A Shares are listed for trading on the New York and Toronto stock exchanges.
The
US LLC Issuer, the US Pref Issuer, the AUS Issuer, the UK Issuer, certain directors of each of the Company, the AUS Issuer and the UK Issuer and certain managers of the US LLC Issuer
and the US Pref Issuer (collectively, the "Non-Residents") are incorporated, continued or otherwise organized under the laws of a non-Canadian
jurisdiction or reside outside of Canada, as applicable. Although each of the Non-Residents has appointed the Company, Suite 300, Brookfield Place, 181 Bay Street, Toronto, Ontario,
Canada, M5J 2T3, as its agent for service of process in Ontario, it may not be possible for investors to enforce judgments obtained in Canada against any person or company that is incorporated,
continued or otherwise organized under the laws of a non-Canadian jurisdiction or resides outside of Canada, even if the Non-Resident has appointed an agent for service of process. See "Agent for
Service of Process".
There is no market through which the Debt Securities or the Preference Securities may be sold and purchasers may not be able to resell Debt Securities or Preference Securities
purchased under this Prospectus. This may affect the pricing of the Debt Securities or the Preference Securities in the secondary market, the transparency and availability of trading prices, the
liquidity of the Debt Securities or the Preference Securities, and the extent of issuer regulation. See "Risk Factors".
TABLE OF CONTENTS
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Page
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DOCUMENTS INCORPORATED BY REFERENCE
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i
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AVAILABLE INFORMATION
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iii
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION
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iii
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SUMMARY
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1
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The Company
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1
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Brookfield Finance Inc.
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1
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Brookfield Finance LLC
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1
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BFI II
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1
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The AUS Issuer
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1
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The UK Issuer
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1
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The US Pref Issuer
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1
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The Offering
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2
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RISK FACTORS
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2
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CONSOLIDATING SUMMARY FINANCIAL INFORMATION AND SUPPLEMENTAL INFORMATION
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2
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USE OF PROCEEDS
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4
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DESCRIPTION OF CAPITAL STRUCTURE OF THE ISSUERS
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4
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DESCRIPTION OF THE BAM PREFERENCE SHARES
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5
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DESCRIPTION OF THE CLASS A SHARES
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6
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DESCRIPTION OF THE US PREF ISSUER PREFERRED SHARES
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6
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DESCRIPTION OF DEBT SECURITIES
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8
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PLAN OF DISTRIBUTION
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19
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EXEMPTIVE RELIEF
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20
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LEGAL MATTERS
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20
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EXPERTS
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20
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EXPENSES
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21
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DOCUMENTS FILED AS PART OF THE REGISTRATION STATEMENT
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21
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In
this Prospectus, unless the context otherwise indicates, references to the "Company" refer to Brookfield Asset Management Inc.
and references to "we", "us", "our" and
"Brookfield" refer to the Company and its direct and indirect subsidiaries including BFI, the US LLC Issuer, BFI II, the AUS Issuer, the UK
Issuer and the US Pref Issuer. All dollar amounts set forth in this Prospectus and any Prospectus Supplement are in U.S. dollars, except where otherwise indicated.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents, filed with the securities regulatory authorities in each of the provinces and territories of Canada, and filed
with, or furnished to, the Commission, are specifically incorporated by reference in this Prospectus:
i
Any
documents of the Company, and if applicable, the Finance Debt Issuers and the US Pref Issuer, of the type described in item 11.1 of
Form 44-101F1 Short Form Prospectus, and any "template version" of "marketing materials" (each as defined
in National Instrument 41-101 General Prospectus Requirements
("NI 41-101")), that are required to be filed by the Company, and if applicable, the Finance Debt Issuers and the US Pref Issuer with the
applicable securities regulatory authorities in Canada, after the date of this Prospectus and prior to the termination of the applicable offering of Securities shall be deemed to be incorporated by
reference into this Prospectus. Each annual report on Form 40-F filed by the Company will be incorporated by reference into this Prospectus and the U.S. registration statement on
Forms F-10 and F-3 of which it forms a part (the "Registration Statement"). In addition, any report on Form 6-K filed
by the Company with the Commission after the date of this Prospectus shall be deemed to be incorporated by reference into this Prospectus and the Registration Statement if and to the extent expressly
provided in such report. The Company's reports on Form 6-K and its annual report on Form 40-F are available at the Commission's website
at www.sec.gov.
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 document that 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
includes 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 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.
Upon
a new annual information form and new interim or annual financial statements being filed with and, where required, accepted by the applicable securities regulatory authorities
during the currency of this Prospectus, the previous annual information form, the previous interim or annual financial statements and all material change reports filed prior to the commencement of the
then current fiscal year will be deemed no longer to be incorporated by reference into this Prospectus for purposes of future offers and sales of Securities hereunder. Upon a new management
information circular in connection with an annual meeting being filed with the applicable securities regulatory authorities during the currency of this Prospectus, the management information circular
filed in connection with the previous annual meeting (unless such management information circular also related to a special meeting) will be deemed no longer to be incorporated by reference in this
Prospectus for purposes of future offers and sales of Securities hereunder.
A
Prospectus Supplement containing the specific terms of an offering of Securities will be delivered to purchasers of such Securities together with this Prospectus and will be deemed to
be incorporated into this Prospectus as of the date of such Prospectus Supplement but only for purposes of the offering of Securities covered by that Prospectus Supplement.
Prospective
investors should rely only on the information incorporated by reference or contained in this Prospectus or any Prospectus Supplement and on the other information included in
the Registration Statement relating to the Securities and of which this Prospectus is a part. The Issuers have not authorized anyone to provide different or additional information.
Copies
of the documents incorporated herein by reference may be obtained on request without charge from the office of the Corporate Secretary of the Company at Suite 300,
Brookfield Place, 181 Bay Street, Toronto, Ontario, Canada, M5J 2T3 telephone: (416) 363-9491, and are also available electronically on System for Electronic Document Analysis and
Retrieval ("SEDAR") at www.sedar.com.
ii
AVAILABLE INFORMATION
The Issuers have filed the Registration Statement with the Commission under the United States Securities Act of 1933, as amended
(the "Securities Act"). This Prospectus does not contain all of the information set forth in such Registration Statement, to which reference is
made for further information.
The
Company is subject to the informational requirements of the United States Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and, in accordance therewith, files reports and other information with the Commission. Under a multijurisdictional disclosure system adopted by the United States
and Canada, such reports and other information may be prepared in accordance with the disclosure requirements of Canada, which requirements are different from those of the United States. The
Commission maintains an Internet site (http://www.sec.gov) that makes available reports and other information that the Company files or furnishes electronically with it.
The Company's Internet site can be found at http://bam.brookfield.com. The information on our website is not incorporated by reference into this Prospectus and should not
be considered a part of this Prospectus, and the reference to our website in this Prospectus is an inactive textual reference only.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION
This Prospectus and the documents incorporated by reference herein contain forward-looking information and other "forward-looking
statements" within the meaning of Canadian and United States securities laws, including the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements include
statements that are predictive in nature, depend upon or refer to future events or conditions, including, but not limited to, statements that reflect management's expectations regarding the
operations, business, financial condition, expected financial results, performance, prospects, opportunities, priorities, targets, goals, ongoing objectives, strategies and outlook of Brookfield, as
well as the outlook for North American and international economies for the current fiscal year and subsequent periods.
The
words "expects," "likely", "anticipates," "plans," "believes," "estimates," "seeks," "intends," "targets," "projects," "forecasts" or negative versions thereof and other similar
expressions, or future or conditional verbs such as "may," "will," "should," "would" and "could", which are predictions of or indicate future events, trends or prospects, and which do not relate to
historical matters, identify forward-looking statements. Although Brookfield believes that the anticipated future results, performance or achievements expressed or implied by the forward-looking
statements and information are based upon reasonable assumptions and expectations, the reader should not place undue reliance on forward-looking statements and information because they involve known
and unknown risks, uncertainties and other factors, many of which are beyond Brookfield's control, including the ongoing and developing novel coronavirus pandemic
("COVID-19") and the global economic shutdown, which may cause the actual results, performance or achievements of Brookfield to differ materially from
anticipated future results, performance or achievement expressed or implied by such forward-looking statements and information.
Factors
that could cause actual results to differ materially from those contemplated or implied by forward-looking statements include, but are not limited to: investment returns that are
lower than target; the impact or unanticipated impact of general economic, political and market factors in the countries in which we do business or may do business, including as a result of COVID-19
and the global economic shutdown; changes in government regulation and legislation within the countries in which we operate and our failure to comply with regulatory requirements; governmental
investigations; the behaviour of financial markets, including fluctuations in interest and foreign exchange rates; the ability to transfer financial commitments entered into in support of our asset
management franchise; global equity and capital markets and the availability of equity and debt financing and refinancing within these markets; strategic actions including dispositions; the ability to
complete and effectively integrate acquisitions into existing operations and the ability to attain expected benefits; the ability to appropriately manage human capital; changes in tax laws; changes in
accounting policies and methods used to report financial condition (including uncertainties associated with critical accounting assumptions and estimates); the introduction, withdrawal, success and
timing of business initiatives and strategies; the failure of effective disclosure controls and procedures and internal controls over financial reporting; the effect of applying future accounting
changes; business competition; operational and reputational risks; health, safety and environmental risks; technological change; catastrophic events, such as earthquakes, hurricanes, and
iii
pandemics/epidemics,
including COVID-19; the failure of our information technology systems; litigation; the possible impact of international conflicts and other developments including terrorist acts
and cyberterrorism; the maintenance of adequate insurance coverage; the ability to collect amounts owed; the existence of information barriers between certain businesses within our asset management
operations; risks specific to our business segments, including our real estate, renewable power, infrastructure, private equity, credit and residential development activities; and other risks and
factors detailed in this Prospectus under the heading "Risk Factors" as well as in the AIF under the heading "Business Environment and Risks" and the MD&A under the heading
"Part 6 Business Environment and Risks" and the risks included in the Interim MD&A, each incorporated by reference in this Prospectus, as well as in
other documents filed by the Issuers from time to time with the securities regulators in Canada and the United States.
We
caution that the foregoing list of important factors that may affect future results is not exhaustive. Nonetheless, all of the forward-looking statements contained in this Prospectus
or in documents incorporated by reference herein are qualified by these cautionary statements. When relying on our forward-looking statements, investors and others should carefully consider the
foregoing factors and other uncertainties and potential events. Except as required by law, the Issuers undertake no obligation to publicly update or revise any forward-looking statements or
information, whether written or oral, that may need to be updated as a result of new information, future events or otherwise.
iv
SUMMARY
The Company
The Company is a global alternative asset manager with approximately US$550 billion in assets under management across real
estate, infrastructure, renewable power, private equity and credit. Brookfield offers a range of public and private investment products and services which leverage its expertise and experience. The
Company's Class A Shares are co-listed on the New York Stock Exchange and the Toronto Stock Exchange under the symbols "BAM" and "BAM.A", respectively.
Brookfield Finance Inc.
BFI was incorporated on March 31, 2015 under the Business Corporations Act
(Ontario) and is an indirect 100% owned subsidiary of the Company. BFI has issued or become an obligor under approximately US$4.9 billion of unsecured debt securities
(the "Existing Debt Securities") as of the date hereof. The Existing Debt Securities are fully and unconditionally guaranteed by
the Company.
Brookfield Finance LLC
The US LLC Issuer was formed on February 6, 2017 under the Delaware Limited Liability Company
Act and is an indirect 100% owned subsidiary of the Company. The US LLC Issuer has no significant assets or liabilities, no subsidiaries and no ongoing business
operations of its own, other than the issuance of US LLC Debt Securities and the investments it makes with the net proceeds of such US LLC Debt Securities. Any debt securities issued by
the US LLC Issuer are fully and unconditionally guaranteed by the Company. On March 10, 2017, the US LLC Issuer issued US$750 million of 4.00% notes due in 2024
(the "2024 Notes"). On December 31, 2018, as part of an internal reorganization, the 2024 Notes were transferred to BFI. On
February 21, 2020, the US LLC Issuer issued US$600 million of 3.50% notes due in 2050.
BFI II
BFI II was incorporated on September 24, 2020 under the Business Corporations
Act (Ontario) and is a direct 100% owned subsidiary of the Company. BFI II has no significant assets or liabilities, no subsidiaries and no ongoing business operations of
its own.
The AUS Issuer
The AUS Issuer was incorporated on September 24, 2020 under the Corporations Act 2001 (Commonwealth of Australia) and is an
indirect 100% owned subsidiary of the Company. The AUS Issuer has no significant assets or liabilities, no subsidiaries and no ongoing business operations of its own.
The UK Issuer
The UK Issuer was incorporated on September 25, 2020 under the UK Companies Act 2006 and is an indirect 100% owned subsidiary of
the Company. The registered number of the UK Issuer is 12904555. The UK Issuer has no significant assets or liabilities, no subsidiaries and no ongoing business operations of its own.
The US Pref Issuer
The US Pref Issuer was formed on September 24, 2020 under the Delaware Limited Liability Company
Act and is an indirect 100% owned subsidiary of the Company. The US Pref Issuer has no significant assets or liabilities, no subsidiaries and no ongoing business operations of
its own.
1
The Offering
The Securities described herein may be offered from time to time in one or more offerings utilizing a "shelf" process under Canadian
and U.S. securities laws. Under this shelf process, this Prospectus provides you with a general description of the Securities that we may offer. Each time we sell Securities, we will provide a
Prospectus Supplement that will contain specific information about the terms of that offering. The Prospectus Supplement may also add, update or change information contained in this Prospectus. You
should read both this Prospectus and any Prospectus Supplement together with additional information described under the heading "Available Information."
RISK FACTORS
An investment in the Securities is subject to a number of risks. Before deciding whether to invest in the Securities, investors should
consider carefully the risks described in the relevant Prospectus Supplement and the information incorporated by reference in this Prospectus (including subsequently filed documents incorporated by
reference). Specific reference is made to the section entitled "Part 6 Business Environment and Risks" in the MD&A, the section entitled "Business
Environment and Risks" in the AIF and the risks included in the Interim MD&A, each of which is incorporated by reference in this Prospectus.
For
further details concerning the impact of COVID-19 on the Company, please see "Part 6 Business Environment and Risks" in the MD&A and
the discussion included in the sections entitled "Part 2 Review of Consolidated Financial Results Overview" and
"Part 5 Accounting Policies and Internal Controls Accounting Policies, Estimates and
Judgements COVID-19" in the Interim MD&A. The Company continues to closely monitor developments associated with COVID-19 and the related global impact. No new
material facts in relation to the Company with regard to COVID-19 have occurred since the date of the Interim MD&A.
CONSOLIDATING SUMMARY FINANCIAL INFORMATION AND SUPPLEMENTAL INFORMATION
The following consolidating summary financial information is provided in compliance with the requirements of item 13.2 of
National Instrument 44-101F1 Short Form Prospectus.
The
tables below present summarized financial information for the years ended December 31, 2019 and 2018 and the three and six months ended June 30, 2020 and 2019 for
(i) the Company, (ii) BFI, (iii) the US LLC Issuer, (iv) BFI II, (v) the AUS Issuer, (vi) the UK Issuer, (vii) the US Pref Issuer,
(viii) the Company's subsidiaries, other than the Finance Debt Issuers and the US Pref Issuer, on a combined basis, (ix) consolidating adjustments, and (x) the Company and all of
its subsidiaries on a consolidated basis, in each case for the periods indicated. Such summary financial information is intended to provide investors with meaningful and comparable financial
information about the Company and its subsidiaries. This summarized financial information should be read in conjunction with the Company's audited consolidated financial statements as of
December 31, 2019 and 2018 and the Company's unaudited interim condensed and consolidated financial statements as at and for the three and six months ended June 30, 2020 and for the
three and six months ended June 30, 2019 which are incorporated by reference into this Prospectus.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AS AT AND FOR THE THREE MONTHS ENDED JUN. 30, 2020
(MILLIONS)
|
|
The
Company(1)
|
|
BFI
|
|
US LLC
Issuer
|
|
BFI II
|
|
AUS
Issuer
|
|
UK
Issuer
|
|
US
Pref
Issuer
|
|
Subsidiaries
of the
Company
Other than
the Finance
Debt Issuers
and the US
Pref Issuer(2)
|
|
Consolidating
Adjustments(3)
|
|
The
Company
Consolidated
|
|
Revenues
|
|
$
|
(8
|
)
|
$
|
138
|
|
$
|
8
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
13,943
|
|
$
|
(1,252
|
)
|
$
|
12,829
|
|
Net (loss) income attributable to shareholders
|
|
|
(656
|
)
|
|
87
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
667
|
|
|
(754
|
)
|
|
(656
|
)
|
Total assets
|
|
|
68,118
|
|
|
6,109
|
|
|
600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
330,774
|
|
|
(89,166
|
)
|
|
316,435
|
|
Total liabilities
|
|
|
36,048
|
|
|
4,611
|
|
|
596
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
196,896
|
|
|
(32,782
|
)
|
|
205,369
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AS AT DEC. 31, 2019 AND FOR THE THREE MONTHS ENDED JUN. 30, 2019
(MILLIONS)
|
|
The
Company(1)
|
|
BFI
|
|
US LLC
Issuer
|
|
BFI II
|
|
AUS
Issuer
|
|
UK
Issuer
|
|
US
Pref
Issuer
|
|
Subsidiaries
of the
Company
Other than
the Finance Debt
Issuers and
the US Pref Issuers(2)
|
|
Consolidating
Adjustments(3)
|
|
The
Company
Consolidated
|
|
Revenues
|
|
$
|
|
|
$
|
38
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
18,179
|
|
$
|
(1,293
|
)
|
$
|
16,924
|
|
Net (loss) income attributable to shareholders
|
|
|
399
|
|
|
30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
641
|
|
|
(671
|
)
|
|
399
|
|
Total assets
|
|
|
70,976
|
|
|
5,389
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
335,218
|
|
|
(87,614
|
)
|
|
323,969
|
|
Total liabilities
|
|
|
35,963
|
|
|
3,994
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
197,825
|
|
|
(30,659
|
)
|
|
207,123
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOR THE SIX MONTHS ENDED JUN. 30, 2020
(MILLIONS)
|
|
The
Company(1)
|
|
BFI
|
|
US LLC
Issuer
|
|
BFI II
|
|
AUS
Issuer
|
|
UK
Issuer
|
|
US
Pref
Issuer
|
|
Subsidiaries
of the
Company
Other than
the Finance Debt and
the US Pref Issuer(2)
|
|
Consolidating
Adjustments(3)
|
|
The
Company
Consolidated
|
|
Revenues
|
|
$
|
430
|
|
$
|
176
|
|
$
|
12
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
32,015
|
|
$
|
(3,218
|
)
|
$
|
29,415
|
|
Net (loss) income attributable to shareholders
|
|
|
(949
|
)
|
|
82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,090
|
|
|
(2,172
|
)
|
|
(949
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOR THE SIX MONTHS ENDED JUN. 30, 2019
(MILLIONS)
|
|
The
Company(1)
|
|
BFI
|
|
US LLC
Issuer
|
|
BFI II
|
|
AUS
Issuer
|
|
UK
Issuer
|
|
US
Pref
Issuer
|
|
Subsidiaries
of the
Company
Other than
the Finance Debt Issuers and
the US Pref Issuer(2)
|
|
Consolidating
Adjustments(3)
|
|
The
Company
Consolidated
|
|
Revenues
|
|
$
|
(21
|
)
|
$
|
72
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
35,358
|
|
$
|
(3,277
|
)
|
$
|
32,132
|
|
Net (loss) income attributable to shareholders
|
|
|
1,014
|
|
|
34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,985
|
|
|
(2,019
|
)
|
|
1,014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AS AT AND FOR THE YEAR ENDED DEC 31, 2019 (MILLIONS)
|
|
The Company(1)
|
|
BFI
|
|
US LLC
Issuer
|
|
BFI II
|
|
AUS
Issuer
|
|
UK
Issuer
|
|
US
Pref
Issuer
|
|
Subsidiaries
of the
Company
Other than
the Finance
Debt Issuers
and the US
Pref Issuer(2)
|
|
Consolidating
Adjustments(3)
|
|
The Company
Consolidated
|
|
Revenues
|
|
$
|
104
|
|
$
|
148
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
73,415
|
|
$
|
(5,841
|
)
|
$
|
67,826
|
|
Net (loss) income attributable to shareholders
|
|
|
2,807
|
|
|
40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,578
|
|
|
(3,618
|
)
|
|
2,807
|
|
Total assets
|
|
|
70,976
|
|
|
5,389
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
335,218
|
|
|
(87,614
|
)
|
|
323,969
|
|
Total liabilities
|
|
|
35,963
|
|
|
3,994
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
197,825
|
|
|
(30,659
|
)
|
|
207,123
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AS AT AND FOR THE YEAR ENDED DEC 31, 2018 (MILLIONS)
|
|
The Company(1)
|
|
BFI
|
|
US LLC
Issuer
|
|
BFI II
|
|
AUS
Issuer
|
|
UK
Issuer
|
|
US
Pref
Issuer
|
|
Subsidiaries
of the
Company
Other than
the Finance
Debt Issuers
and the US
Pref Issuer(2)
|
|
Consolidating
Adjustments(3)
|
|
The Company
Consolidated
|
|
Revenues
|
|
$
|
810
|
|
$
|
43
|
|
$
|
53
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
63,147
|
|
$
|
(7,282
|
)
|
$
|
56,771
|
|
Net (loss) income attributable to shareholders
|
|
|
3,584
|
|
|
(46
|
)
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,651
|
|
|
(4,604
|
)
|
|
3,584
|
|
Total assets
|
|
|
59,105
|
|
|
4,330
|
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
274,830
|
|
|
(81,997
|
)
|
|
256,281
|
|
Total liabilities
|
|
|
29,290
|
|
|
2,909
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
156,656
|
|
|
(29,730
|
)
|
|
159,131
|
|
-
(1)
-
This
column accounts for investments in all subsidiaries of the Company under the equity method.
-
(2)
-
This
column accounts for investments in all subsidiaries of the Company other than the Finance Debt Issuers and the US Pref Issers, on a
combined basis.
-
(3)
-
This
column includes the necessary amounts to present the Company on a consolidated basis.
The Company has elected to comply with Rule 13-01 of Regulation S-X, as adopted by the Commission on March 2, 2020 and set
forth in SEC Release No. 33-10762 (the "Adopting Release") in advance of the effective date of January 4, 2021. As permitted by the
Adopting Release, the Company is omitting financial disclosures with respect to the US LLC Issuer, the AUS Issuer, the UK Issuer and the US Pref Issuer because such subsidiaries have no
significant assets or liabilities, no subsidiaries, no ongoing business operations of their own, are direct or indirect wholly-owned subsidiaries of the Company, and the Company will fully and
unconditionally guarantee the debt or preferred securities issued by each such finance subsidiary issuer. Please see "Description of Debt Securities General"
and "Description of the US Pref Issuer Preferred Shares Guarantee" for additional information about the guarantees.
USE OF PROCEEDS
Unless otherwise indicated in a Prospectus Supplement, the net proceeds from the sale of Securities by the Issuers will be used for
general corporate purposes.
DESCRIPTION OF CAPITAL STRUCTURE OF THE ISSUERS
The Company's authorized share capital consists of an unlimited number of preference shares designated as Class A Preference
Shares, issuable in series, an unlimited number of preference shares designated as Class AA Preference Shares, issuable in series, an unlimited number of Class A Shares,
and 85,120 Class B Limited Voting Shares ("Class B Shares"). As of the date of this Prospectus, the Company had 10,457,685 Class A Preference Shares, Series 2;
3,995,910 Class A Preference Shares, Series 4; 2,476,185 Class A Preference Shares, Series 8; 5,515,981 Class A Preference Shares, Series 9; 9,640,096
Class A Preference Shares, Series 13; 2,000,000 Class A Preference Shares, Series 15; 7,840,204 Class A Preference Shares, Series 17; 7,866,749 Class A
Preference Shares, Series 18; 9,278,894 Class A Preference Shares, Series 24; 1,529,133 Class A Preference Shares, Series 25; 9,770,928 Class A Preference
Shares, Series 26; 9,233,927 Class A Preference Shares, Series 28; 9,787,090 Class A Preference Shares, Series 30; 11,750,299 Class A Preference Shares,
Series 32; 9,876,735 Class A Preference Shares, Series 34; 7,842,909 Class A Preference Shares, Series 36; 7,830,091 Class A Preference Shares,
Series 37; 7,906,132 Class A Preference Shares, Series 38; 11,841,025 Class A Preference Shares, Series 40; 11,887,500 Class A Preference Shares,
Series 42; 9,831,929 Class A Preference Shares, Series 44; 11,740,797 Class A Preference Shares, Series 46; 11,885,972 Class A Preference Shares,
Series 48; 1,575,004,153 Class A Shares; and 85,120 Class B Shares issued and outstanding.
BFI's
authorized share capital consists of an unlimited number of common shares, an unlimited number of preference shares designated as Class A Preference Shares, issuable in
series, and an unlimited number of preference shares designated as Class B Preference Shares, issuable in series. As of the date of this Prospectus, BFI had 389,181 common shares; 6,400,000
Class A Preference Shares, Series 1; and 54,262,400 Class B Preference Shares, Series 1 issued and outstanding.
4
The
US LLC Issuer's authorized share capital consists of an unlimited number of common shares representing limited liability company interests. As of the date of this Prospectus,
101 common shares of the US LLC Issuer are issued and outstanding.
BFI
II's authorized share capital consists of an unlimited number of common shares. As of the date of this Prospectus, 100 common shares of BFI II are issued and outstanding.
The
AUS Issuer's authorized share capital consists of an unlimited number of ordinary shares. As of the date of this Prospectus, 10 ordinary shares of the AUS Issuer are issued
and outstanding.
The
UK Issuer's share capital consists of ordinary shares. As of the date of this Prospectus, 50,000 ordinary shares of the UK Issuer are issued and outstanding.
The
US Pref Issuer's authorized share capital consists of an unlimited number of common shares and preferred shares representing limited liability company interests. As of the date of
this Prospectus, 100 common shares representing limited liability company interests of the US Pref Issuer are issued and outstanding.
DESCRIPTION OF THE BAM PREFERENCE SHARES
The following description sets forth certain general terms and provisions of the BAM Preference Shares. The particular terms and
provisions of a series of BAM Preference Shares offered by a Prospectus Supplement, and the extent to which the general terms and provisions described below may apply thereto, will be described in
such Prospectus Supplement.
Series
The BAM Preference Shares may be issued from time to time in one or more series. The board of directors of the Company will fix the
number of shares in each series and the provisions attached to each series before issue.
Priority
The BAM Preference Shares rank senior to the Class AA Preference Shares, the Class A Shares, the Class B Shares
and other shares ranking junior to the BAM Preference Shares with respect to priority in the payment of dividends and in the distribution of assets in the event of the liquidation, dissolution or
winding-up of the Company, whether voluntary or involuntary, or in the event of any other distribution of assets of the Company among its shareholders for the purpose of winding-up its affairs. Each
series of BAM Preference Shares ranks on a parity with every other series of BAM Preference Shares with respect to priority in the payment of dividends and in the distribution of assets in the event
of the liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, or in the event of any other distribution of assets of the Company among its shareholders for the
purpose of winding-up its affairs.
Shareholder Approvals
The Company shall not delete or vary any preference, right, condition, restriction, limitation or prohibition attaching to the BAM
Preference Shares as a class or create preference shares ranking in priority to or on parity with the BAM Preference Shares except by special resolution passed by at least 662/3% of the
votes cast at a meeting of the holders of the BAM Preference Shares duly called for that purpose, in accordance with the provisions of the articles of the Company. Each holder of BAM Preference Shares
entitled to vote at a class meeting of holders of BAM Preference Shares, or at a joint meeting of the holders of two or more series of BAM Preference Shares, has one vote in respect of each C$25.00 of
the issue price of each BAM Preference Share held by such holder.
5
DESCRIPTION OF THE CLASS A SHARES
The following description sets forth certain general terms and provisions of the Class A Shares. The particular terms and
provisions of Class A Shares offered by a Prospectus Supplement, and the extent to which the general terms and provisions described below may apply thereto, will be described in such Prospectus
Supplement.
Dividend Rights and Rights Upon Dissolution or Winding-Up
The Class A Shares rank on parity with the Class B Shares and rank after the BAM Preference Shares, the Class AA
Preference Shares and any other senior-ranking shares outstanding from time to time with respect to the payment of dividends (if, as and when declared by the board of directors of the Company) and
return of capital on 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.
Voting Rights
Except as set out below under " Election of Directors", each holder of a Class A Share and
Class B Shares is entitled to notice of, and to attend and vote at, all meetings of the Company's shareholders (except meetings at which only holders of another specified class or series of
shares are entitled to vote) and is entitled to cast one vote per share held, which results in the Class A Shares and Class B Shares each controlling 50% of the aggregate voting rights
of the Company. Subject to applicable law and in addition to any other required shareholder approvals, all matters approved by shareholders (other than the election of directors), must be approved by:
(i) a majority or, in the case of matters that require approval by a special resolution of shareholders, at least 662/3%, of the votes cast by holders of Class A Shares
who vote in respect of the resolution or special resolution, as the case may be, and (ii) a majority or, in the case of matters that require approval by a special resolution of shareholders, at
least 662/3%, of the votes cast by holders of Class B Shares who vote in respect of the resolution or special resolution, as the case may be.
Election of Directors
In the election of directors, holders of Class A Shares, together, in certain circumstances, with the holders of certain series
of BAM Preference Shares, are entitled to elect one-half of the board of directors of the Company, provided that if the holders of BAM Preference Shares, Series 2 become entitled to elect two
or three directors, as the case may be, the numbers of directors to be elected by holders of Class A Shares, together, in certain circumstances with the holders of BAM Preference Shares, shall
be reduced by the number of directors to be elected by holders of BAM Preference Shares, Series 2. Holders of Class B Shares are entitled to elect the other one-half of the board of
directors of the Company.
Each
holder of Class A Shares has the right to cast a number of votes equal to the number of Class A Shares held by the holder multiplied by the number of directors to be
elected by the holder and the holders of shares of the classes or series of shares entitled to vote with the holder of Class A Shares in the election of directors. A holder of Class A
Shares may cast all such votes in favour of one candidate or distribute such votes among its candidates in any manner the holder of Class A Shares sees fit. Where a holder of Class A
Shares has voted for more than one candidate without specifying the distribution of votes among such candidates, the holder of Class A Shares will be deemed to have divided the holder's votes
equally among the candidates for whom the holder of Class A Shares voted.
DESCRIPTION OF THE US PREF ISSUER PREFERRED SHARES
The US Pref Issuer's limited liability company agreement authorizes its board of managers to establish one or more series of US
Preferred Shares representing limited liability company interests of the US Pref Issuer. The US Pref Issuer's board of managers is able to determine, with respect to any series of US Preferred Shares,
the terms and rights of that series, including:
-
-
the designation of the series;
-
-
the number of preferred shares representing limited liability company interests of the series;
6
-
-
whether distributions, if any, will be cumulative or non-cumulative and the distribution rate of the series;
-
-
the dates at which distributions, if any, will be payable;
-
-
the redemption rights and price or prices, if any, for preferred shares representing limited liability company interests
of the series;
-
-
the terms and amounts of any sinking fund provided for the purchase or redemption of the preferred shares representing
limited liability company interests of the series;
-
-
the amounts payable on preferred shares representing limited liability company interests of the series in the event of our
liquidation or dissolution;
-
-
whether the preferred shares representing limited liability company interests of the series will be convertible into or
exchangeable for interests of any other class or series or any other security of our company or any other entity;
-
-
restrictions on the issuance of preferred shares representing limited liability company interests of the series or of any
shares representing limited liability company interests of any other class or series; and
-
-
the voting rights, if any, of the holders of the preferred shares representing limited liability interests of
the series.
Guarantee
All US Preferred Shares issued by the US Pref Issuer will be fully and unconditionally guaranteed by the Company. Set forth below is a
summary of information concerning the preferred share guarantees that the Company will execute and deliver for the benefit of the holders of any series of preferred shares representing limited
liability company interests offered by the US Pref Issuer. A prospectus supplement will contain more specific information about the terms of the preferred share guarantee.
Pursuant
to each preferred share guarantee, the Company will agree to pay in full, to the holders of US Preferred Shares issued by the US Pref Issuer, the guarantee payments, except to
the extent paid by the US Pref Issuer, as and when due, regardless of any defense, right of set-off or counterclaim which the US Pref Issuer may have or assert. The following payments, without
duplication, with respect to US Preferred Shares, to the extent not paid by the US Pref Issuer, will be subject to the preferred share guarantee:
-
-
any accumulated and unpaid distributions (as described in the applicable share designation) that have been declared
by the board of managers of the US Pref Issuer to be paid on the US Preferred Shares out of funds legally available for such distributions;
-
-
any redemption price (as described in the applicable share designation), plus all accrued and unpaid distributions
to the date of redemption with respect to any US Preferred Shares called for redemption by the US Pref Issuer or otherwise required to be redeemed by the terms of the applicable share
designation; and
-
-
upon a voluntary or involuntary dissolution, winding-up or liquidation of the US Pref Issuer, the aggregate stated
liquidation preference and all accumulated and unpaid distributions, whether or not declared, without regard to whether the US Pref Issuer has sufficient assets to make full payment as required
on liquidation.
The
Company's obligation to make a guarantee payment may be satisfied by direct payment of the required amounts by the Company to the holders of US Preferred Shares or by causing the US
Pref Issuer to pay the amounts to the holders. Each preferred share guarantee will be subordinated to all of the debt of the Company that is not stated to be pari passu or subordinate to the
guarantees and will rank senior to the Class A Shares.
7
DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general terms and provisions of the Debt Securities. The particular terms and provisions
of the series of Debt Securities offered by a Prospectus Supplement, and the extent to which the general terms and provisions described below may apply thereto, will be described in such Prospectus
Supplement.
The
BAM Debt Securities will be issued under an indenture dated as of September 20, 1995, as amended, restated, supplemented or replaced from time to time
(the "BAM Indenture"), between the Company, as issuer, and Computershare Trust Company of Canada (formerly, Montreal Trust Company of Canada)
("Computershare Canada"), as trustee (the "BAM Trustee"). The BFI Debt Securities will be issued
under an indenture dated as of June 2, 2016, as amended, restated, supplemented or replaced from time to time, between BFI, as issuer, the Company, as guarantor, and Computershare Canada, as
trustee (the "Existing BFI Indenture"), or pursuant to a separate subordinated indenture that the Company and BFI may enter into
(the "New BFI Indenture" and together with the Existing BFI Indenture, the "BFI
Indentures") with Computershare Canada or another trustee named therein (the "BFI Trustee"). The US LLC Debt
Securities will be issued under an indenture dated as of February 21, 2020, as amended, restated, supplemented or replaced from time to time (the "US LLC
Indenture"), between the US LLC Issuer, as issuer, the Company, as guarantor, Computershare Trust Company, N.A., as U.S. trustee
("Computershare U.S."), and Computershare Canada, as Canadian trustee, (the "US LLC
Trustees"). The BFI II Debt Securities will be issued pursuant to an indenture (the "BFI II Indenture") to be entered
into among BFI II, as issuer, the Company, as guarantor, and Computershare Canada or such other trustee named in the indenture, as trustee (the "BFI II
Trustee"). The AUS Issuer Debt Securities will be issued pursuant to an indenture (the "AUS Issuer Indenture") to be
entered into among the AUS Issuer, as issuer, the Company, as guarantor, and Computershare Canada as Canadian trustee and Computershare U.S. as U.S. trustee, or such other trustees named
in the indenture (together, the "AUS Issuer Trustees"). The UK Issuer Debt Securities will be issued pursuant to an indenture
(the "UK Issuer Indenture" and together with the New BFI Indenture, the US LLC Indenture, the BFI II Indenture, and the AUS Issuer
Indenture, the "2020 Indentures") to be entered into among the UK Issuer, as issuer, the Company, as guarantor, and Computershare Canada as Canadian
trustee and Computershare U.S. as U.S. trustee, or such other trustees named in the indenture (together, the "UK Issuer Trustees"). We
refer to the BAM Indenture, the Existing BFI Indenture and the 2020 Indentures as the "Indentures". The Debt Securities may be issued under such other
indentures as the Company, the applicable Finance Debt Issuer and the applicable trustee may enter into in the future. The indenture under which any Debt Securities are issued will be specified in the
applicable Prospectus Supplement.
The
BAM Indenture, the BFI Indentures and the BFI II Indenture are subject to the provisions of the Business Corporations Act (Ontario)
and, consequently, are exempt from the operation of certain provisions of the Trust Indenture Act of 1939 pursuant to Rule 4d-9 thereunder. The
US LLC Indenture, the AUS Issuer Indenture and the UK Issuer Indenture are subject to the Trust Indenture Act of 1939. Executed copies or forms
of the Indentures will or have been filed with the Commission as exhibits to the Registration Statement. Each Indenture is or will also be available on each Issuer's respective SEDAR profile at
www.sedar.com.
The
following statements with respect to the Indentures and the Debt Securities issued or to be issued thereunder are brief summaries of certain provisions of the Indentures and do not
purport to be complete; such statements are subject to the detailed referenced provisions of the applicable Indenture, including the definition of capitalized terms used under this caption. Wherever a
particular section or defined term of an Indenture is referred to, the statement is qualified in its entirety by such section or term. References to the
"Issuer" and "Indenture Securities" refer to the Company and each Finance Debt Issuer, as issuer, and
the Debt Securities issued or to be issued by it under the Indentures. References to the "Trustee" or
"Trustees" and any particular Indenture or Debt Securities refer to the BAM Trustee, the BFI Trustee, the US LLC Trustees, the BFI II Trustee,
the AUS Issuer Trustees or the UK Issuer Trustees as trustee or trustees under the applicable Indenture.
8
General
The Indentures do not limit the aggregate principal amount of Indenture Securities (which may include debentures, notes and other
unsecured evidences of indebtedness) which may be issued thereunder, and Indenture Securities may be issued under each Indenture from time to time in one or more series and may be denominated and
payable in foreign currencies or units based on or relating
to foreign currencies, including European currency units, pounds sterling and Australian dollars. Special Canadian and United States federal income tax considerations applicable to any
Indenture Securities so denominated will be described in the Prospectus Supplement relating thereto. Unless otherwise indicated in the applicable Prospectus Supplement, each Indenture permits the
Company and each Finance Debt Issuer to increase the principal amount of any series of Indenture Securities previously issued by it and to issue such increased principal amount. (Section 301 of
the BAM Indenture, and Section 3.1 of the Existing BFI Indenture and the 2020 Indentures) In the case of additional Debt Securities of a series under the US LLC Indenture, the AUS Issuer
Indenture and the UK Issuer Indenture, issued after the date of original issuance of Debt Securities of such series, if they are not fungible with the original Debt Securities of such series for
U.S. federal income tax purposes, then such additional Debt Securities will be issued with a separate CUSIP or ISIN number so that they are distinguishable from the original Debt Securities of
such series.
All
Debt Securities issued by BFI, the US LLC Issuer, BFI II, the AUS Issuer and the UK Issuer will be fully and unconditionally guaranteed by the Company.
The
applicable Prospectus Supplement will set forth the following terms relating to the particular offered Debt Securities: (1) the specific designation of the offered Debt
Securities and the Indenture under which they are issued; (2) any limit on the aggregate principal amount of the offered Debt Securities; (3) the date or dates, if any, on which the
offered Debt Securities will mature and the portion (if less than all of the principal amount) of the offered Debt Securities to be payable upon declaration of acceleration of maturity;
(4) the rate or rates per annum (which may be fixed or variable) at which the offered Debt Securities will bear interest, if any, the date or dates from which any such interest will accrue and
on which any such interest will be payable and the Regular Record Dates for any interest payable on the offered Debt Securities which are in registered form ("Registered Debt
Securities"); (5) any mandatory or optional redemption or sinking fund provisions, including the period or periods within which the price or prices at which and the
terms and conditions upon which the offered Debt Securities may be redeemed or purchased at the option of the Issuer or otherwise; (6) whether the offered Debt Securities will be issuable in
registered form or bearer form or both and, if issuable in bearer form, the restrictions as to the offer, sale and delivery of the offered Debt Securities in bearer form and as to exchanges between
registered and bearer form; (7) whether the offered Debt Securities will be issuable in the form of one or more registered global securities ("Registered Global
Securities") and, if so, the identity of the Depositary for such Registered Global Securities; (8) the denominations in which any of the offered Debt Securities will be
issuable if in other than denominations of $1,000 and any multiple thereof; (9) each office or agency where the principal of, and any premium and interest on, the offered Debt Securities will
be payable and each office or agency where the offered Debt Securities may be presented for registration of transfer or exchange; (10) if other than U.S. dollars, the foreign currency or
the units based on or relating to foreign currencies in which the offered Debt Securities are denominated and/or in which the payment of the principal of, and any premium and interest on, the offered
Debt Securities will or may be payable; (11) any applicable terms or conditions related to the addition of any co-obligor or additional guarantor in respect of any or all series of Debt
Securities; and (12) any other terms of the offered Debt Securities, including any applicable subordination provisions, exchange or conversion terms, covenants and additional Events of Default.
Special Canadian and United States federal income tax considerations applicable to the offered Debt Securities, the amount of principal thereof and any premium and interest thereon will be
described in the Prospectus Supplement relating thereto. Unless otherwise indicated in the applicable Prospectus Supplement, no Indenture affords the Holders the right to tender Indenture Securities
to the Issuer for repurchase, or provides for any increase in the rate or rates of interest per annum at which the Indenture Securities will bear interest, in the event the Company or any Finance Debt
Issuer should become involved in a highly leveraged transaction or in the event of a change in control of the Company or any Finance Debt Issuer. (Section 301 of the BAM Indenture, and
Section 3.1 of the Existing BFI Indenture and the 2020 Indentures.)
9
Indenture
Securities may be issued bearing no interest or interest at a rate below the prevailing market rate at the time of issuance, to be offered and sold at a discount below their
stated principal amount. The Canadian and United States federal income tax consequences and other special considerations applicable to any such discounted Indenture Securities or other
Indenture Securities offered and sold at par which are treated as having been issued at a discount for Canadian and/or United States federal income tax purposes will be described in the
Prospectus Supplement relating thereto. (Section 301 of the BAM Indenture, and Section 3.1 of the Existing BFI Indenture and the 2020 Indentures.)
The
Indenture Securities will be direct unsecured obligations of the Company and the Finance Debt Issuers and will be unsecured senior or subordinated, as applicable, indebtedness of
each of them as described in the applicable Prospectus Supplement. (Section 301 of the BAM Indenture, and Section 3.1 of the Existing BFI Indenture and the 2020 Indentures.)
The
Company's guarantee of the Indenture Securities issued by the Finance Debt Issuers will be unsecured senior or subordinated, as applicable, indebtedness of the Company, including the
Company's obligations under the Indenture Securities issued under the BAM Indenture.
The
guarantees will be unsecured general obligations of the Company and will rank equal in right of payment with, or junior to, other unsecured and senior or subordinated debt (other
than subordinated debt that has been further subordinated in accordance with its terms), as applicable, of the Company. The Debt Securities and the guarantees will be effectively subordinated to any
secured indebtedness of the applicable Issuer or to the Company to the extent of the value of the assets securing such indebtedness. The guarantee by the Company of the Indenture Securities will
guarantee the due and punctual payment of the principal of, premium, if any, and interest on the Indenture Securities issued by the applicable Issuer, when and as the same shall become due and
payable, whether at maturity, upon redemption, by acceleration or otherwise.
Form, Denomination, Exchange and Transfer
Unless otherwise indicated in the applicable Prospectus Supplement, Indenture Securities will be issued only in fully registered form
without coupons and in denominations of $1,000 or any integral multiple thereof. (Section 302 of the BAM Indenture, and Section 3.2 of the Existing BFI Indenture and 2020 Indentures.)
Indenture Securities may be presented for exchange and Registered Debt Securities may be presented for registration of transfer in the manner, at the places and, subject to the restrictions set forth
in the applicable Indenture and in the applicable Prospectus Supplement, without service charge, but upon payment of any taxes or the governmental charges due in connection therewith. Each Issuer has
or will
appoint, as applicable, their respective Trustees as Security Registrars under each Indenture. (Section 305 of the BAM Indenture, and Section 3.5 of the Existing BFI Indenture and 2020
Indentures.)
Payment
Unless otherwise indicated in the applicable Prospectus Supplement, payment of the principal of, and any premium and interest on,
Registered Debt Securities (other than a Registered Global Security) will be made at the office or agency of the applicable Trustee, in its capacity as paying agent, in Toronto, Canada (in the
case of the BAM Indenture) or New York, New York (in the case of the Existing BFI Indenture and the 2020 Indentures), except that, at the option of the particular Issuer, payment
of any interest may be made (i) by check mailed to the address of the Person entitled thereto at such address as shall appear in the applicable Security Register or (ii) by wire transfer
to an account maintained by the Person entitled thereto as specified in the applicable Security Register. (Sections 305, 307, and 1002 of the BAM Indenture, and Sections 3.5, 3.7
and 11.2 of the Existing BFI Indenture and the 2020 Indentures.) Unless otherwise indicated in the applicable Prospectus Supplement, payment of any interest due on Registered Debt Securities
will be made to the Persons in whose name such Registered Debt Securities are registered at the close of business on the Regular Record Date for such interest payment. (Section 307 of the BAM
Indenture, and Section 3.7 of the Existing BFI Indenture and 2020 Indentures.)
10
Registered Global Securities
The Registered Debt Securities of a particular series may be issued in the form of one or more Registered Global Securities which will
be registered in the name of, and deposited with, one or more Depositories or nominees, each of which will be identified in the Prospectus Supplement relating to such series. Unless and until
exchanged, in whole or in part, for Indenture Securities in definitive registered form, a Registered Global Security may not be transferred except as a whole by the Depositary for such Registered
Global Security to a nominee of such Depositary, by a nominee of such Depositary to such Depositary or another nominee of such Depositary or by such Depositary or any such nominee to a successor of
such Depositary or a nominee of such successor. (Section 305 of the BAM Indenture, and Section 3.5 of the Existing BFI Indenture and 2020 Indenture.)
The
specific terms of the depositary arrangement with respect to any portion of a particular series of Indenture Securities to be represented by a Registered Global Security will be
described in the Prospectus
Supplement relating to such series. We anticipate that the following provisions will apply to all depositary arrangements.
Upon
the issuance of a Registered Global Security, the Depositary therefor or its nominee will credit, on its book entry and registration system, the respective principal amounts of the
Indenture Securities represented by such Registered Global Security to the accounts of such persons having accounts with such Depositary or its nominee
("participants") as shall be designated by the underwriters, investment dealers or agents participating in the distribution of such Indenture Securities
or by the particular Issuer if such Indenture Securities are offered and sold directly by the Issuer. Ownership of beneficial interests in a Registered Global Security will be limited to participants
or persons that may hold beneficial interests through participants. Ownership of beneficial interests in a Registered Global Security will be shown on, and the transfer of such ownership will be
effected only through, records maintained by the Depositary therefor or its nominee (with respect to beneficial interests of participants) or by participants or persons that hold through participants
(with respect to interests of persons other than participants). The laws of some states in the United States require certain purchasers of securities to take physical delivery thereof in
definitive form. Such depositary arrangements and such laws may impair the ability to transfer beneficial interests in a Registered Global Security.
So
long as the Depositary for a Registered Global Security or its nominee is the registered owner thereof, such Depositary or such nominee, as the case may be, will be considered the
sole owner or Holder of the Indenture Securities represented by such Registered Global Security for all purposes under the applicable Indenture. Except as provided below, owners of beneficial
interests in a Registered Global Security will not be entitled to have Indenture Securities of the series represented by such Registered Global Security registered in their names, will not receive or
be entitled to receive physical delivery of Indenture Securities of such series in definitive form and will not be considered the owners or Holders thereof under the applicable Indenture.
Principal,
premium, if any, and interest payments on a Registered Global Security registered in the name of a Depositary or its nominee will be made to such Depositary or nominee, as the
case may be, as the registered owner of such Registered Global Security. None of the particular Issuer or Trustee or any paying agent for Indenture Securities of the series represented by such
Registered Global Security will have any responsibility or liability for any aspect of the records relating to, or payments made on account of, beneficial interests in such Registered Global Security
or for maintaining, supervising or reviewing any records relating to such beneficial interests.
We
expect that the Depositary for a Registered Global Security or its nominee, upon receipt of any payment of principal, premium or interest, will immediately credit participants'
accounts with payments in amounts proportionate to their respective beneficial interests in the principal amount of such Registered Global Security as shown on the records of such Depositary or its
nominee. We also expect that payments by participants to owners of beneficial interests in a Registered Global Security held through such participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of customers registered in "street name", and will be the responsibility of such participants.
No
Registered Global Security may be exchanged in whole or in part for Indenture Securities registered, and no transfer of a Registered Global Security in whole or in part may be
registered, in the name of any Person
11
other
than the Depositary for such Registered Global Security or a nominee thereof unless (A) such Depositary (i) has notified the particular Issuer that it is unwilling or unable to
continue as Depositary for such Registered Global Security or (ii) has ceased to be a clearing agency registered under the Exchange Act, and a successor securities Depositary is not obtained,
(B) there shall have occurred and be continuing an Event of Default with respect to such Registered Global Security, (C) the particular Issuer determines, in its sole discretion, that
the Securities of such series shall no longer be represented by such Registered Global Security and executes and delivers to the applicable Trustee(s) an Issuer order that such Registered Global
Security shall be so exchangeable and the transfer thereof so registerable or (D) there shall exist such circumstances, if any, in addition to or in lieu of the foregoing as have been specified
for this purpose as contemplated in the applicable Indenture. (Section 305 of the BAM Indenture, and Section 3.5.2 of the Existing BFI Indenture and the 2020 Indentures.)
Consolidation, Merger, Amalgamation and Sale of Assets
Pursuant to the BAM Indenture, the Company shall not enter into any transaction (whether by way of reorganization, reconstruction,
consolidation, amalgamation, merger, transfer, sale or otherwise) whereby all or substantially all of its undertaking, property and assets would become the property of any other Person
(the "BAM Successor Corporation") unless: (a) the Company and the BAM Successor Corporation shall have executed, prior to or
contemporaneously with the consummation of such transaction, such instruments and done such things as, in the opinion of counsel, are necessary or advisable to establish that, upon the consummation of
such transaction, (i) the BAM Successor Corporation will have assumed all the covenants and obligations of the Company under the BAM Indenture in respect of the Indenture Securities of every
series issued thereunder, and (ii) the Indenture Securities of every series issued under the BAM Indenture will be valid and binding obligations of the BAM Successor Corporation entitling the
Holders thereof, as against the BAM Successor Corporation, to all the rights of Holders of Indenture Securities under the BAM Indenture; and (b) such transaction shall be on such terms and
shall be carried out at such times and otherwise in such manner as shall not be prejudicial to the interests of the Holders of the Indenture Securities of each and every series or to the rights and
powers of the Trustee under the BAM Indenture. (Section 801 of the BAM Indenture.)
Pursuant
to the Existing BFI Indenture and the 2020 Indentures, neither the applicable Finance Debt Issuer nor the Company (in each case for purposes of this description, a
"Predecessor") shall enter into any transaction (whether by way of reorganization, reconstruction, consolidation, amalgamation, merger, transfer, sale
or otherwise) whereby all or substantially all of its undertaking, property and assets would become the property of any other Person (in each case for purposes of this description, a
"Successor") unless: (a) the Predecessor and the Successor shall have executed, prior to or contemporaneously with the consummation of such
transaction, such instruments and done such things as, in the opinion of counsel, are necessary or advisable to establish that, upon the consummation of such transaction, (i) the Successor will
have assumed all the covenants and obligations of the Predecessor under the applicable Indenture in respect of the Indenture Securities of every series issued thereunder, and in the case of the
Company, its guarantee of the Indenture Securities and, (ii) the Indenture Securities of every series issued by the Predecessor will be valid
and binding obligations of the Successor, entitling the Holders thereof, as against the Successor, to all the rights of Holders of Indenture Securities under the applicable Indenture; and
(b) such transaction shall be on such terms and shall be carried out at such times and otherwise in such manner as shall not be prejudicial to the interests of the Holders of applicable
Indenture Securities of each and every series or to the rights and powers of the applicable Trustee(s) under the applicable Indenture; provided, however, that such restrictions are not applicable to
any sale or transfer by the applicable Finance Debt Issuer or the Company to any one or more of their subsidiaries. (Section 9.1 of the Existing BFI Indenture and the 2020 Indentures.)
Events of Default
Unless otherwise indicated in any Prospectus Supplement, each Indenture provides that the following will constitute an Event of Default
under such Indenture (except subsection (f) below which is not an Event of Default under to the BAM Indenture) with respect to Indenture Securities of any series issued by the Company and each
Finance Debt Issuer: (a) failure to pay principal of, or any premium on, any Indenture Security of that series when due; (b) failure to pay any interest on any Indenture Securities of
that series when due, which failure
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continues
for 30 days; (c) default in the payment of principal and interest on any Indenture Security required to be purchased pursuant to an Offer to Purchase made pursuant to the terms
of the Indenture Securities of such series; (d) failure to deposit any sinking fund payment, when due, in respect of any Indenture Security of that series; (e) failure of any Finance
Debt Issuer and/or the Company to perform, as applicable, any other covenant in the relevant Indenture (other than a covenant included in such indentures solely for the benefit of a series other than
that series), which failure continues for 60 days after written notice has been given by the respective Trustee or the Holders of at least 25% in aggregate principal amount of Outstanding
Securities of that series, as provided in the relevant Indenture; (f) the Company's guarantee of all obligations related to that series shall, for any reason, cease to be, or the Company shall
assert in writing to the relevant Trustee or the Holders thereof that such guarantee is not in full force and effect and enforceable against the Company in accordance with its terms;
(g) certain events of bankruptcy, insolvency or reorganization affecting the Company and/or the Finance Debt Issuers; and (i) any other Events of Default provided with respect to the
Indenture Securities of such series, as described in the applicable Prospectus Supplement. (Section 501 of the BAM Indenture, and Section 6.1 of the Existing BFI Indenture and the 2020
Indentures.)
The
following also constitutes an Event of Default under the Existing BFI Indenture and the BAM Indenture: failure by the Company to make any payment of principal of, or interest on, any
obligation for borrowed money (other than an obligation payable on demand or maturing less than 12 months from the creation or issue thereof) when due or within any originally stated applicable
grace period having an outstanding principal amount in excess of 5% of the Company's Consolidated Net Worth in the aggregate at the time of default or any failure in the performance of any other
covenant of the Company contained in any instrument under which such obligations are created or issued and if the holders thereof, or a trustee, if any, for such holders declare such obligations to be
due and payable prior to the stated maturities thereof,
provided that if such default is waived by such holders or trustee, then the Event of Default under the Existing BFI Indenture and the BAM Indenture shall be deemed to be waived without further action
on the part of the applicable Trustee or the Holders. (Section 501 of the BAM Indenture and Section 6.1 of the Existing BFI Indenture.)
If
an Event of Default (other than an Event of Default related to certain events of bankruptcy, insolvency or reorganization affecting the Company and any Finance Debt Issuer, and the
Company in its capacity as guarantor under the applicable Indenture of each Finance Debt Issuer) with respect to the Indenture Securities of any series at the time outstanding shall occur and be
continuing either the applicable Trustee(s) or the Holders of at least 25% in aggregate principal amount of Outstanding Securities of that series by notice, as provided in the applicable Indenture,
may declare the principal amount of the Indenture Securities of that series to be due and payable immediately. If an Event of Default related to certain events of bankruptcy, insolvency or
reorganization affecting any Issuer occurs with respect to the Indenture Securities of any series at the time outstanding, the principal amount of all the Indenture Securities of that series will
automatically, and without any action by the applicable Trustee or any Holder, become immediately due and payable. After any such acceleration, but before a judgment or decree based on acceleration,
the Holders of a majority in aggregate principal amount of the Outstanding Securities of that series may, under certain circumstances, rescind and annul such acceleration if all Events of Default,
other than the non-payment of accelerated principal (or other specified amount), have been cured or waived as provided in the applicable Indenture. (Section 502 of the BAM Indenture,
Section 6.2 of the Existing BFI Indenture and the 2020 Indentures.) For information as to waiver of defaults, see " Modification and Waiver".
Each
Indenture provides that the applicable Trustee(s) will be under no obligation to exercise any of its rights or powers under the applicable Indenture (or, in the case of the Existing
BFI Indenture and the 2020 Indentures, commence or continue any act, action or proceeding for enforcing any rights of the Trustee(s)) at the request or direction of any of the applicable Holders,
unless such Holders shall have offered to such Trustee(s) reasonable indemnity (or, in the case of the Existing BFI Indenture and the 2020 Indentures, sufficient funds to commence or continue
compliance with such request and an indemnity to protect the Trustee(s) against losses suffered in compliance with such request). (Section 603 of the BAM Indenture, Section 7.5 of the
Existing BFI Indenture and the 2020 Indentures.) Subject to such provisions for the indemnification of the particular Trustee(s), the Holders of a majority in aggregate principal amount of the
Outstanding Securities of any series issued under the applicable Indenture will have the right to direct the time, method and place of conducting any proceeding for any remedy available to such
Trustee(s) or exercising any
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trust
or power conferred on such Trustee(s) with respect to the Indenture Securities of that series. (Section 512 of the BAM Indenture and Section 6.12 of the Existing BFI Indenture and
the 2020 Indentures.)
No
Holder of an Indenture Security of any series will have any right to institute any proceeding with respect to the particular Indenture, or for the appointment of a receiver or a
trustee, or for any other remedy thereunder, unless (i) such Holder has previously given to the applicable Trustee(s) written notice of a continuing Event of Default with respect to the
Indenture Securities of that series, (ii) the Holders of at least 25% in aggregate principal amount of the Outstanding Securities of that series have made a written request,
and such Holder or Holders have offered reasonable indemnity, or in the case of the US LLC Indenture, the AUS Issuer Indenture and the UK Issuer Indenture, indemnity reasonably satisfactory to
each Trustee, to the applicable Trustee(s) to institute such proceeding as trustee, and (iii) the applicable Trustee(s) has failed to institute such proceeding, and has not received from the
Holders of a majority in aggregate principal amount of the Outstanding Securities of that series a direction inconsistent with such request, within 60 days after such notice, request and
offer. (Section 507 of the BAM Indenture, Section 6.7 of the Existing BFI Indenture and the 2020 Indentures.) However, such limitations do not apply to a suit instituted by a Holder of
an Indenture Security for the enforcement of payment of the principal of, or of any premium or interest on, such Indenture Security on or after the applicable due date specified in such Indenture
Security. (Section 508 of the BAM Indenture, Section 6.8 of the Existing BFI Indenture and the 2020 Indentures.)
The
Company and each Finance Debt Issuer are each required to furnish to their respective Trustees a quarterly statement by certain of its officers as to whether or not each Issuer, as
applicable, to their knowledge, is in default in the performance or observance of any of the terms, provisions and conditions of the applicable Indenture and, if so, specifying all such known
defaults. (Section 1004 of the BAM Indenture, and Section 11.4 of the Existing BFI Indenture and 2020 Indentures.) In addition, the US LLC Issuer, AUS Issuer and UK Issuer are or
will be required to deliver an annual compliance certificates as required under the Trust Indenture Act. (Section 11.4(d) of the US LLC Indenture, AUS Issuer Indenture and the UK Issuer
Indenture.)
Defeasance
Each Indenture provides that, at the option of the applicable Issuer, the Issuer and, in the case of the Existing BFI Indenture and the
2020 Indentures, the Company will be discharged from any and all obligations in respect of any Outstanding Securities upon irrevocable deposit with the applicable Trustee(s), in trust, of money and/or
Government Obligations which will provide money in an amount sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of or premium, if any,
and each instalment of interest, if any, on such Outstanding Securities ("Defeasance"). Such trust may only be established if certain customary
conditions precedent are satisfied, including, among other things, confirmation that Holders will not recognize gain or loss for U.S. federal income tax purposes as a result of such Defeasance.
The Issuer may exercise its Defeasance option notwithstanding its prior exercise of its Covenant Defeasance (as defined below) option described in the following paragraph if the Issuer meets
the conditions precedent at the time the Issuer exercises the Defeasance option.
Each
Indenture provides that, at the option of the Issuer, unless and until the Issuer has exercised its Defeasance option described in the preceding paragraph, the Issuer may omit to
comply with certain restrictive covenants and such omission shall not be deemed to be an Event of Default under the Indenture and the Outstanding Securities upon irrevocable deposit with the
applicable Trustee(s), in trust, of money and/or Government Obligations which will provide money in an amount sufficient, in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of and premium, if any, and each instalment of interest, if any, on the Outstanding Securities of the Issuer ("Covenant
Defeasance"). In the event the Issuer exercises its Covenant Defeasance option, the obligations under the applicable Indenture (other than with respect to such covenants and
the Events of Default other than the Events of Default relating to such covenants above) shall remain in full force and effect. Such trust may only be established if certain customary conditions
precedent are satisfied, including, among other things,
confirmation that Holders will not recognize gain or loss for U.S. federal income tax purposes as a result of such Covenant Defeasance. (Article Thirteen of the BAM Indenture, Article Fourteen
of the Existing BFI Indenture and the 2020 Indentures.)
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Modification and Waiver
Modifications and amendments of an Indenture may be made by the Company, the Issuer (if other than the Company) and the
applicable Trustee(s) with the consent of the Holders of a majority in aggregate principal amount of the Outstanding Securities of each series of Indenture Securities affected by such modification or
amendment; provided, however, that no such modification or amendment may, without the consent of the Holder of each Outstanding Security affected thereby, (a) change the Stated Maturity of the
principal of, or any instalment of interest on, any Outstanding Security, (b) reduce the principal amount of (or the premium), or interest on, any Outstanding Security, (c) reduce
the amount of the principal of any Outstanding Security payable upon the acceleration of the maturity thereof, (d) change the place or currency of payment of principal of (or the
premium), or interest on, any Outstanding Security, (e) impair the right to institute suit for the enforcement of any payment on or with respect to any Outstanding Security, (f) reduce
the above-stated percentage of Outstanding Securities necessary to modify or amend the particular Indenture, (g) reduce the percentage of aggregate principal amount of Outstanding Securities
necessary for waiver of compliance with certain provisions of the particular Indenture or for waiver of certain defaults, (h) modify any provisions of the particular Indenture relating to the
modification and amendment of such Indenture or the waiver of past defaults or covenants, except as otherwise specified, (i) in the case of the New BFI Indenture, modify the provisions of the
indenture relating to subordination in a manner that adversely affects the rights of Holders of Indenture Securities, or (j) following the mailing of any Offer to Purchase, modify any Offer to
Purchase for such Outstanding Security required to be made pursuant to the terms of such Outstanding Security in a manner materially adverse to the Holders thereof. (Section 902 of the BAM
Indenture and Section 10.2 of the Existing BFI Indenture and 2020 Indentures.) In the case of the US LLC Indenture, AUS Issuer Indenture and the UK Issuer Indenture, no such modification
or waiver may, without consent of the Holder of each Outstanding Security affected thereby, (a) change the premium payable upon redemption thereof, or the dates or times fixed for redemption,
or (b) release the Company from its Guarantee under the US LLC Indenture, AUS Issuer Indenture or UK Issuer Indenture, respectively.
Each
Indenture provides that the Company or the Issuer (if other than the Company) may modify and amend such Indenture without the consent of any holder of Indenture Securities
for any of the following purposes: (a) to evidence the succession of another person to the Issuer or the Company, as applicable, and the assumption by any such successor of the covenants of the
Issuer or the Company, as applicable, under such Indenture and in the Indenture Securities; (b) in the case of the 2020 Indentures, to evidence the addition of a co-obligor or guarantor in
respect of any or all series of the Indenture Securities under the 2020 Indentures, as may be permitted in accordance with the terms of such Indenture Securities; (c) to add to the covenants of
the Finance Debt Issuer or the Company, as applicable, for the benefit of the holders of any series of Indenture Securities (and if such covenants are to be for the benefit of less than all
series of
Indenture Securities, stating that such covenants are expressly being included solely for the benefit of such series) or to surrender any right or power (but not, in the case of the
US LLC Indenture, the AUS Issuer Indenture and UK Issuer Indenture, any obligation, except any obligation concomitant to such right or power) in such Indenture conferred upon the Finance Debt
Issuer or the Company, as applicable; (d) to add any additional Events of Default for the benefit of the holders of all or any series of Indenture Securities (and if such additional
Events of Default are to be for the benefit of less than all series of Indenture Securities, stating that such additional Events of Default are expressly being included solely for the benefit of such
series); (e) to add to, change or eliminate any of the provisions of such Indenture in respect of one or more series of Indenture Securities, provided that any such addition, change or
elimination (i) shall neither (A) apply to any Indenture Security of any series created prior to the execution of the applicable supplemental indenture and entitled to the benefit of
such provision nor (B) modify the rights of the holder of any such Indenture Security with respect to such provision or (ii) shall become effective only when there is no such Indenture
Security outstanding; (f) to secure the Indenture Securities pursuant to the requirements of any provision in such Indenture or any indenture supplemental thereto or otherwise; (g) to
establish the form or terms of Indenture Securities of any series as permitted under the Indenture and, in the case of the Existing BFI Indenture and the 2020 Indentures, if required, to provide for
the appointment of a co-trustee; (h) to evidence and provide for the acceptance of appointment under such Indenture by a successor trustee with respect to the Indenture Securities of one or
more series and to add to or change any of the provisions in such Indenture as shall be necessary to provide for or facilitate the administration of the trusts thereunder by more than one trustee,
pursuant to the requirements of such
15
Indenture;
(i) to add to or change any of the provisions of such Indenture to such extent as shall be necessary to permit or facilitate the issuance of Indenture Securities in bearer form,
registrable or not registrable as to principal, and with or without interest coupons, or to permit or facilitate the issuance of Indenture Securities in uncertificated form; (j) in the case of
the US LLC Indenture, the AUS Issuer Indenture and the UK Issuer Indenture, to comply with any requirements of the Trust Indenture Legislation including without limitation in connection with
qualifying, or maintaining the qualification of, the US LLC Indenture, the AUS Issuer Indenture or the UK Issuer Indenture, as applicable, under the Trust Indenture Act
1939; or (k) to cure any ambiguity, to correct or supplement any provision in such Indenture which may be defective or inconsistent with any other provision therein, or
to make any other provisions with respect to matters or questions arising thereunder, provided that such action shall not adversely affect, in the case of the Existing BFI Indenture and the 2020
Indentures, in any material respect, the interests of the holders of Indentures Securities of any series. (Section 901 of the BAM Indenture and Section 10.1 of the Existing BFI Indenture
and the 2020 Indentures.)
The
Holders of a majority in aggregate principal amount of the Outstanding Securities of any series, on behalf of all Holders of Outstanding Securities of such series, may waive
compliance by the Issuer with certain restrictive provisions of the particular Indenture. (Section 1009 of the BAM Indenture, Section 11.10 of the Existing BFI Indenture and the 2020
Indentures.) Subject to certain rights of the particular Trustee, as provided in the applicable Indenture, the Holders of a majority in aggregate principal amount of the Outstanding Securities issued
under such Indenture, on behalf of all holders of Outstanding Securities of such series, may waive any past default under such Indenture, except a default in the payment of principal, premium or
interest or in respect of a covenant or provision of such Indenture which under the Indenture cannot be modified or amended without the consent of the Holder of each Outstanding Security of such
series affected. (Section 513 of the BAM Indenture, Section 6.13 of the Existing BFI Indenture and the 2020 Indentures.)
Consent to Jurisdiction and Service under BAM Indenture
The BAM Indenture provides that the Company irrevocably appoints CT Corporation System, 1633 Broadway, New York,
New York, 10019, as its agent for service of process in any suit, action or proceeding arising out of or relating to the BAM Indenture and the Indenture Securities and for actions brought under
federal or state securities laws brought in any federal or state court located in the Borough of Manhattan in the City of New York and submit to such jurisdiction.
Consent to Jurisdiction and Service under the Exiting BFI Indenture and the 2020 Indentures
The Existing BFI Indenture and the 2020 Indentures provide, or will provide, that the Finance Debt Issuers irrevocably appoint
Brookfield Asset Management LLC, Brookfield Place, 250 Vesey Street, 15th Floor, New York, NY 10281-1023, as their agent for service of process in any suit, action or
proceeding arising out of or relating to the relevant Indenture and the Indenture Securities and for actions brought under federal or state securities laws brought in any federal or state court
located in the Borough of Manhattan in the City of New York and submit to such jurisdiction.
Enforceability of Judgments against the Company
Since a substantial portion of the Company's assets are outside the United States, any judgment obtained in the
United States against the Company, including any judgment with respect to the payment of interest and principal on the Indenture Securities, may not be collectible within the
United States.
The
Company has been informed by its Canadian counsel, Torys LLP ("Torys"), that a court of competent jurisdiction in the Province
of Ontario would enforce a final and conclusive judgment in personam of a court sitting in the Borough of Manhattan, the City of New York,
New York (a "New York Court") that is subsisting and unsatisfied respecting the enforcement of any of the Indentures and the
Indenture Securities that is not impeachable as void or voidable under the internal laws of the State of New York for a sum certain if: (i) the court rendering such judgment had
jurisdiction over the judgment debtor, as recognized by the courts of the Province of Ontario (and submission by the Company in the Indenture to the jurisdiction of the New York Court
will be sufficient for the purpose); (ii) such judgment was not obtained by fraud or in a manner contrary to natural justice and the enforcement thereof would not be inconsistent with public
policy, as such term is
16
understood
under the laws of the Province of Ontario, or contrary to any order made by the Attorney General of Canada under the Foreign Extraterritorial Measures
Act (Canada); (iii) the enforcement of such judgment does not constitute, directly or indirectly, the enforcement of foreign revenue or penal laws; and (iv) the
action to enforce such judgment is commenced within the applicable limitation period. The Company has been advised by Torys that a monetary judgment of a New York Court predicated solely upon
the civil liability provisions of United States federal securities laws would likely be enforceable in the Province of Ontario if the New York Court had a basis for jurisdiction in the
matter that would be recognized by a court in Ontario for such purposes. There is no assurance that this will be the case. It is less certain that an action could be brought in the Province of Ontario
in the first instance on the basis of liability predicated solely upon such laws.
Governing Law
The Indentures, Indenture Securities and the rights, powers, duties or responsibility of Computershare U.S. will be governed by
the laws of the State of New York, except with respect to the rights, powers, duties or responsibility of the remaining Trustees (including Computershare Canada) which shall be governed by the
laws of the Province of Ontario and the federal laws of Canada applicable therein. (Section 113 of the BAM Indenture and Section 1.13 of the Existing BFI Indenture and the 2020
Indentures.)
The Trustees
Computershare Canada is currently, or is expected to be, the BAM Trustee, the BFI Trustee, the BFI II Trustee and the Canadian trustee
under the US LLC Indenture, the AUS Issuer Indenture and the UK Issuer Indenture. Computershare U.S. is, or is expected to be, the U.S. trustee under the US LLC Indenture,
the AUS Issuer Indenture and the UK Issuer Indenture.
Certain Definitions
Set forth below is a summary of certain of the defined terms used in the Indentures. Reference is made to each Indenture for the full
definition of each such term, as well as any other terms used herein for which no definition is provided. (Section 101 of the BAM Indenture and Section 1.1 of the Existing BFI Indenture
and the 2020 Indentures, as applicable)
"affiliate" of any Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common
control with such Person. For the purposes of this definition, "control", when used with respect to any Person, means the power to influence the
management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" having meanings correlative to the foregoing.
"Capital Lease Obligation" of any Person means the obligation to pay rent or other payment amounts under a lease of (or other Debt
arrangements conveying the right to use) real or personal property of such Person which is required to be classified and accounted for as a capital lease or a liability on the face of a balance sheet
of such Person in accordance with generally accepted accounting principles and which has a term of at least 36 months. The stated maturity of such obligation shall be the date of the last
payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty.
"Capital Stock" of any Person means any and all shares, interests, participations or other equivalents (however designated) of corporate
stock or other equity participations, including partnership interests whether general or limited, of such Person, and, in the case of the Existing BFI Indenture and 2020 Indentures including units of
such Person.
"Common Stock" of any Person means Capital Stock of such Person that does not rank prior, as to the payment of dividends or as to the
distribution of assets upon any voluntary or involuntary liquidation, dissolution or winding-up of such Person, to shares of Capital Stock of any other class of such Person.
"Consolidated Net Worth" of any Person means the consolidated stockholders' equity of such Person, determined on a consolidated basis in
accordance with Canadian generally accepted accounting principles, plus, without duplication, Qualifying Subordinated Debt and Deferred Credits; provided that with respect to the
17
BAM
Indenture, adjustments following the date of the BAM Indenture to the accounting books and records of the Company in accordance with U.S. Accounting Principles Board Opinions Nos. 16
and 17 (or successor opinions thereto), or comparable standards in Canada, or otherwise resulting from the acquisition of control of the Company by another Person shall not be
given effect.
"Debt" means (without duplication), with respect to any Person, whether recourse is to all or a portion of the assets of such Person and
whether or not contingent, (i) every obligation of such Person for money borrowed, (ii) every obligation of such Person evidenced by bonds, debentures, notes or other similar
instruments, including obligations incurred in connection with the acquisition of property, assets or businesses, (iii) every reimbursement obligation of such Person with respect to letters of
credit, bankers' acceptances or similar facilities issued for the account of such Person, (iv) every obligation of such Person issued or assumed as the deferred purchase price of property or
services (but excluding trade accounts payable or accrued liabilities arising in the ordinary course of business which are not overdue or which are being contested in good faith),
(v) every Capital Lease Obligation of such Person, (vi) every obligation that could not be considered as interest in accordance with Canadian generally accepted accounting principles
under Interest Rate or Currency Protection Agreements of such Person and (vii) every obligation of the type referred to in clauses (i) through (vi) of another Person and all
dividends of another Person the payment of which, in either case, such Person has Guaranteed or is responsible or liable for, directly or indirectly, as obligator, Guarantor or otherwise.
"Deferred Credits" means the deferred credits of the Company (or, in the case of the Existing BFI Indenture, any Person) and its
Subsidiaries determined on a consolidated basis in accordance with Canadian generally accepted accounting principles.
"Government Obligation" means (x) any security which is (i) a direct obligation of the government which issued the currency,
or a direct obligation of the Government of Canada issued in such currency, in which the Indenture Securities of a particular series are denominated for the payment of which its full faith and credit
is pledged or (ii) obligations of a Person the payment of which is unconditionally guaranteed as its full faith and credit obligation by such government which, in the case of either
subclause (i) or (ii) of this clause (x), is not callable or redeemable at the option of the issuer thereof and (y) any depositary receipt issued by a bank
(as defined in Section 3(a)(2) of the Securities Act, or, in the case of the Existing BFI Indenture and the 2020 Indentures, as defined in the Bank
Act (Canada)), as custodian with respect to any Government Obligation which is specified in clause (x) above and held by such bank for the account of the holder of such
depositary receipt, or with respect to any specific payment of principal of or interest on any Government Obligation which is so specified and held, provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to the holder of such depositary receipt from any amount received by the custodian in respect of the Government Obligation or
the specific payment of principal or interest evidenced by such depositary receipt.
"Guarantee" by any Person means any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Debt of any other Person (the "primary obligor") in any manner, whether directly or indirectly, and including, without
limitation, any obligation of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or to purchase (or to advance or supply
funds for the purchase of) any security for the payment of such Debt, (ii) to purchase
property, securities or services for the purpose of assuring the holder of such Debt of the payment of such Debt or (iii) to maintain working capital, equity capital or other financial
statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Debt (and "Guaranteed",
"Guaranteeing" and "Guarantor" shall have meanings correlative to the foregoing); provided, however,
that the Guarantee by any Person shall not include endorsements by such Person for collection or deposit, in either case, in the ordinary course of business.
"Holder" means a Person in whose name a Security is registered in the applicable Security Register.
"Interest Rate or Currency Protection Agreement" of any Person means any interest rate protection agreement (including, without
limitation, interest rate swaps, caps, floors, collars and similar agreements), and/or other types of interest hedging agreements, and any currency protection agreement (including foreign exchange
contracts, currency swap agreements or other currency hedging arrangements).
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"Qualifying Subordinated Debt" means Debt of the Company (i) which by its terms provides that the payment of principal of
(and premium, if any) and interest on and all other payment obligations in respect of such Debt shall be subordinate to the prior payment in full of the Company's obligations in respect of the
Indenture Securities to at least the extent that no payment of principal of (or premium, if any) or interest on or otherwise due in respect of such Debt may be made for so long as there exists
any default in the payment of principal (or premium, if any) or interest on the Indenture Securities or any other default that, with the passing of time or the giving of notice or both, would
constitute an event of default with respect to the Indenture Securities and (ii) which expressly by its terms gives the Company the right to make payments of principal in respect of such Debt
in Common Stock of the Company.
"Stated Maturity", when used with respect to any Indenture Security or any instalment of principal thereof or interest thereon, means the
date specified in such Indenture Security as the fixed date on which the principal of such Indenture Security or such instalment of principal or interest is due and payable.
"Trust Indenture Legislation" means, at any time, (i) the provisions of the Business Corporations
Act (Ontario) and regulations thereunder as amended or re-enacted from time to time, (ii) the provisions of any other statute of Canada or any province thereof and any
regulations thereunder and (iii) the U.S. Trust Indenture Act 1939 and regulations thereunder, but, in the case of (i) the BAM
Indenture and the Existing BFI Indenture, only to the extent applicable under Rule 4d-9 under the U.S. Trust Indenture Act 1939 and
(ii) the New BFI Indenture and the BFI II Indenture, only to the extend applicable to that indenture, in each case relating to trust indentures and to the rights, duties, and obligations
of trustees under trust indentures and of corporations issuing debt obligations under trust indentures.
PLAN OF DISTRIBUTION
The Issuers may sell Securities to or through underwriters or dealers and also may sell Securities directly to purchasers or
through agents.
The
distribution of Securities of any series may be effected from time to time in one or more transactions at a fixed price or prices, which may be changed, at market prices prevailing
at the time of sale, at prices related to such prevailing market prices or at prices to be negotiated with purchasers.
In
connection with the sale of Securities, underwriters may receive compensation from the Issuers or from purchasers of Securities for whom they may act as agents in the form of
concessions or commissions. Underwriters, dealers and agents that participate in the distribution of Securities may be deemed to be underwriters and any commissions received by them from the Issuers
and any profit on the resale of Securities by them may be deemed to be underwriting commissions under the Securities Act. Any such person that may be deemed to be an underwriter with respect to
Securities of any series will be identified in the Prospectus Supplement relating to such series.
The
Prospectus Supplement relating to each series of Securities will also set forth the terms of the offering of the Securities of such series, including, to the extent applicable,
(i) the names of any underwriters or agents, (ii) the purchase price or prices of the offered Securities, (iii) the initial offering price, (iv) the proceeds to the
applicable Issuer from the sale of the offered Securities, (v) the underwriting discounts and commissions and (vi) any discounts, commissions and concessions allowed or reallowed or paid
by any underwriter to other dealers.
Under
agreements which may be entered into by the Issuers, underwriters, dealers and agents who participate in the distribution of Securities may be entitled to indemnification by the
Issuers against certain liabilities, including liabilities under the Securities Act and Canadian provincial securities legislation, or to contribution with respect to payments which those
underwriters, dealers or agents may be required to make in respect thereof. Those underwriters, dealers and agents may be customers of, engage in transactions with or perform services for the Issuers
or their subsidiaries in the ordinary course of business. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of
the Issuers, the Issuers have 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 Issuers of expenses
19
incurred
or paid by a director, officer or controlling person of the Issuers 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 Issuers 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.
Unless
otherwise specified in a Prospectus Supplement, each series or class of Securities will be a new issue of securities with no established trading market. Unless otherwise specified
in a Prospectus Supplement relating to a series or class of Securities, the Securities will not be listed on any securities exchange. Certain broker-dealers may make a market in Securities but will
not be obligated to do so and may discontinue any market making at any time without notice. No assurance can be given that any broker-dealer will make a market in the Securities of any series or as to
the liquidity of the trading market for the Securities of any series.
In
connection with any underwritten offering of Securities, the underwriters or agents may over-allot or effect transactions which stabilize or maintain the market price of the
Securities offered at a level above that which might otherwise prevail in the open market. Such transactions, if commenced, may be discontinued at any time.
EXEMPTIVE RELIEF
Pursuant to a decision document dated October 18, 2011 issued by the applicable securities regulators, the Company was granted
exemptive relief from certain of the restricted securities requirements in National Instrument 51-102 Continuous Disclosure
Obligations, NI 41-101 and Ontario Securities Commission Rule 56-501 Restricted
Shares (collectively, the "restricted security provisions"), including the requirements to refer to the Class A Shares
and the Class B Shares using a prescribed restricted security term. The Class A Shares and Class B Shares may qualify as "restricted securities" under the restricted security
provisions because the Company's constating documents contain provisions that restrict the voting rights of such securities in any election of the board of directors of the Company. See "Description
of the Class A Shares".
LEGAL MATTERS
Unless otherwise specified in a Prospectus Supplement, certain matters of Canadian and United States law relating to the
validity of the Securities will be passed upon for the Company by Torys in Toronto, Ontario, and New York, New York, with respect to English law, by Herbert Smith Freehills LLP
("HSF") in London, England and with respect to Australian law, by King & Wood Mallesons ("KWM")
in Sydney, Australia. The partners and associates of Torys, as a group, the partners and associates of HSF, as a group, and the partners and associates of KWM, as a group, beneficially own, directly
or indirectly, less than one percent of the outstanding securities of the Company.
EXPERTS
The financial statements incorporated in this Prospectus by reference from the Company's Annual Report on Form 40-F
and the effectiveness of the Company'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.
Deloitte LLP
is independent with respect to the Company within the meaning of the Securities Act and the applicable rules and regulations thereunder adopted by the Securities and
Exchange Commission and the Public Company Accounting Oversight Board (United States) and within the meaning of the rules of professional conduct of the Chartered Professional Accountants of Ontario.
20
EXPENSES
The following are the estimated expenses of the offering of the Securities being registered under the Registration Statement, all of
which has been or will be paid by us.
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SEC registration fee
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$
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454,300
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Exchange listing fees
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|
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*
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|
Blue sky fees and expenses
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|
|
*
|
|
Trustee & transfer agent fees
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|
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*
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|
Printing and engraving costs
|
|
|
*
|
|
Legal fees and expenses
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|
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*
|
|
Accounting fees and expenses
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|
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*
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Miscellaneous
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*
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|
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Total
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$
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*
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|
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-
*
-
The
applicable Prospectus Supplement will set forth the estimated aggregate amount of expenses payable in respect of any offering of Securities.
DOCUMENTS FILED AS PART OF THE REGISTRATION STATEMENT
The following documents have been or will be filed with the Commission as part of the Registration Statement: (1) for purposes
of Form F-10: the documents referred to under "Documents Incorporated by Reference"; the consent of Deloitte LLP; the consent of Torys LLP; powers of attorney; the BAM, BFI, and
the US LLC Issuer indenture; the form of BFI subordinated indenture; and the forms of BFI II, the AUS Issuer and UK Issuer indentures; and (2) for purposes of Form F-3: the
underwriting agreement(s) in respect of offerings hereunder; the US LLC Issuer indenture and forms of the AUS Issuer and UK Issuer indentures; the certificate of formation and limited liability
company agreement of the US Pref Issuer; other forms of debt instruments of the US LLC Issuer, the AUS Issuer and the UK Issuer; the consent of Deloitte LLP; the opinions and consent of
Torys LLP, Herbert Smith Freehills LLP and King & Woods Mallesons; powers of attorney; and the Statements of Eligibility of Computershare Trust Company, N.A., as
U.S. trustee, on Forms T-1.
21
Table of Contents
Brookfield Finance I (UK) plc
US$200,000,000
4.50% Perpetual Subordinated Notes
Fully and unconditionally guaranteed, on a subordinated basis, by Brookfield Asset Management Inc.
Prospectus Supplement
Joint Book-Running Managers
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Wells Fargo
Securities
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BofA
Securities
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J.P.
Morgan
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Morgan
Stanley
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RBC Capital
Markets
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Co-Managers
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SMBC Nikko
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Citigroup
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Deutsche Bank Securities
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Mizuho Securities
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MUFG
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November 17,
2020
Brookfield Asset Managem... (NYSE:BAM)
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