Document:

exv4w14

 

Exhibit 4.14

GREAT LAKES POWER LIMITED

- and -

GREAT LAKES POWER TRANSMISSION LP

 

ASSET PURCHASE AGREEMENT

 

December 11, 2007

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	ARTICLE 1	 	 	 	 
	 	 	INTERPRETATION	 	 	1	 
	 
	 	1.1	 	Definitions	 	 	1	 
	 
	 	1.2	 	Schedules	 	 	5	 
	 
	 	1.3	 	Headings and Table of Contents	 	 	5	 
	 
	 	1.4	 	Gender and Number	 	 	5	 
	 
	 	1.5	 	Currency	 	 	5	 
	 
	 	1.6	 	Generally Accepted Accounting Principles	 	 	5	 
	 
	 	1.7	 	Invalidity of Provisions	 	 	5	 
	 
	 	1.8	 	Entire Agreement	 	 	5	 
	 
	 	1.9	 	Waiver, Amendment	 	 	6	 
	 
	 	1.10	 	Governing Law	 	 	6	 
	ARTICLE 2	 	 	 	 
	 	 	PURCHASED ASSETS	 	 	6	 
	 
	 	2.1	 	Agreement to Purchase and Sell Purchased Assets	 	 	6	 
	 
	 	2.2	 	Excluded Assets	 	 	6	 
	 
	 	2.3	 	Service Contracts	 	 	7	 
	 
	 	2.4	 	Assumption of Liabilities By the Purchaser	 	 	7	 
	 
	 	2.5	 	As is, Where is	 	 	7	 
	ARTICLE 3	 	 	 	 
	 	 	PURCHASE PRICE AND RELATED MATTERS	 	 	7	 
	 
	 	3.1	 	Purchase Price	 	 	7	 
	 
	 	3.2	 	Payment of the Purchase Price	 	 	7	 
	 
	 	3.3	 	Adjustments to Purchase Price	 	 	8	 
	 
	 	3.4	 	Estimated Purchase Price	 	 	8	 
	 
	 	3.5	 	Closing Date Audited Balance Sheet Statement	 	 	8	 
	 
	 	3.6	 	Determination of Purchase Price and Adjustment of Amount Paid on Closing Date	 	 	8	 
	 
	 	3.7	 	Allocation of Purchase Price for Tax Purposes	 	 	8	 
	ARTICLE 4	 	 	 	 
	 	 	REPRESENTATIONS AND WARRANTIES	 	 	9	 
	 
	 	4.1	 	By the Vendor	 	 	9	 
	 
	 	4.2	 	By the Purchaser	 	 	10	 
	 
	 	4.3	 	Survival of Covenants, Representations and Warranties	 	 	10	 
	ARTICLE 5	 	 	 	 
	 	 	CONDITIONS	 	 	10	 
	 
	 	5.1	 	Conditions for the Benefit of the Purchaser	 	 	10	 

 

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	 	5.2	 	Conditions for the Benefit of the Vendor	 	 	11	 
	ARTICLE 6	 	 	 	 
	 	 	ADDITIONAL AGREEMENTS OF THE PARTIES	 	 	12	 
	 
	 	6.1	 	Negative Covenant	 	 	12	 
	 
	 	6.2	 	Insurance	 	 	12	 
	 
	 	6.3	 	Obtaining of Consents and Approvals	 	 	12	 
	 
	 	6.4	 	Planning Act	 	 	12	 
	 
	 	6.5	 	Bulk Sales Act	 	 	12	 
	 
	 	6.6	 	Access of the Vendor to Records	 	 	12	 
	 
	 	6.7	 	Accounts Receivable	 	 	12	 
	 
	 	6.8	 	Employees	 	 	13	 
	 
	 	6.9	 	Cooperation	 	 	13	 
	ARTICLE 7	 	 	 	 
	 	 	INDEMNIFICATION	 	 	13	 
	 
	 	7.1	 	Indemnification by the Vendor	 	 	13	 
	 
	 	7.2	 	Maximum Liability of Vendor	 	 	13	 
	 
	 	7.3	 	Indemnification by the Purchaser	 	 	13	 
	ARTICLE 8	 	 	 	 
	 	 	CLOSING	 	 	14	 
	 
	 	8.1	 	Location and Time of the Closing	 	 	14	 
	 
	 	8.2	 	Deliveries by Vendor and Purchaser at the Closing	 	 	14	 
	 
	 	8.3	 	Deliveries by Purchaser at the Closing	 	 	15	 
	 
	 	8.4	 	Delivery of Books and Records	 	 	15	 
	ARTICLE 9	 	 	 	 
	 	 	GENERAL MATTERS	 	 	15	 
	 
	 	9.1	 	Risk of Loss	 	 	15	 
	 
	 	9.2	 	Expenses	 	 	15	 
	 
	 	9.3	 	Transfer and Sales Taxes	 	 	15	 
	 
	 	9.4	 	Goods and Services Tax	 	 	15	 
	 
	 	9.5	 	Assignment	 	 	16	 
	 
	 	9.6	 	Notices	 	 	16	 
	 
	 	9.7	 	Time of Essence	 	 	16	 
	 
	 	9.8	 	Further Assurances	 	 	16	 
	 
	 	9.9	 	Counterparts	 	 	16	 

 

 

ASSET PURCHASE AGREEMENT

THIS AGREEMENT is made as of the 11th day of December, 2007,

B E T W E E N:

GREAT LAKES POWER LIMITED

(the “Vendor”)

 - and -

GREAT LAKES POWER TRANSMISSION LP

(the “Purchaser”)

RECITALS:

	A.	 	The Vendor carries on the business of transmitting electric power and all matters incidental
and/or ancillary thereto in the Algoma District of Ontario (the “Business”).
	 
	B.	 	The Vendor wishes to sell, and the Purchaser wishes to purchase, all of the assets owned,
leased, licensed or used by the Vendor in connection with the Business on and subject to the
terms and conditions of this Agreement.

     NOW THEREFORE in consideration of the mutual covenants and agreements contained in this
Agreement and other good and valuable consideration (the receipt and sufficiency of which are
hereby acknowledged), the parties hereto agree as follows:

ARTICLE 1

INTERPRETATION

	 	 	 
	1.1

	 	Definitions

                        In this Agreement,

1.1.1 “Affiliate” has the meaning attributed to such term in the Business
Corporations Act (Ontario), as the same may be amended from time to time and any successor
legislation thereto, with the exception that for the purposes of this Agreement, references
in that act to “body corporate” and subsidiary will also be deemed to include partnerships,
wherever and however formed and the definitions of such terms will be construed mutatis
mutandis;

1.1.2 “Agreement” means this agreement and all schedules attached to this
agreement, in each case as they may be amended or supplemented from time to time, and the
expressions “hereof”, “herein”, “hereto”, “hereunder”, “hereby” and similar expressions refer
to this agreement and unless otherwise indicated, references to Articles and sections are to
Articles and sections in this agreement;

1.1.3 “Assignment of Contracts” means, collectively, one or more assignments of the
contracts forming part of the Purchased Assets, including assignments of all interconnection
agreements relating to the Business to which the Vendor is a party and assignments of all
Service Contracts (which Service Contracts will continue to be held and administered by the
Vendor for the benefit of the Purchaser in accordance with Section 2.3);

1.1.4 “Assumed Indebtedness” means all indebtedness, covenants, obligations and
liabilities of the Vendor under (i) a deed of trust to be entered into between the Vendor and
CIBC Mellon Trust Company,

 

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pursuant to which the Vendor will issue senior bonds in an aggregate principal amount equal
to $120,000,000, and (ii) all other agreements, certificates and instruments evidencing,
securing or otherwise relating to such deed of trust and/or bonds;

1.1.5 “Assumed Liabilities” means all indebtedness, covenants, obligations and
liabilities of the Vendor relating to or arising in connection with the Business or the
Purchased Assets, whether contingent or otherwise and whether existing or arising before or
after the date hereof, including the litigation described in Schedule 4.1.5 but excluding any
liabilities, claims or damages for which the Vendor has the right to seek indemnification or
reimbursement pursuant to a valid insurance policy;

1.1.6 “Business” has the meaning attributed to such term in recital A;

1.1.7 “Business Day” means any day, other than Saturday, Sunday or any statutory
holiday in the Province of Ontario;

1.1.8 “Charge” means any security interest, lien, charge, pledge, encumbrance,
mortgage, adverse claim or title retention agreement of any nature or kind;

1.1.9 “Closing” means the completion of the sale and purchase of the Purchased
Assets pursuant to this Agreement at the Time of Closing;

1.1.10 “Closing Date” means January 30, 2008 or such earlier or later date as may
be agreed upon in writing by the parties;

1.1.11 “Closing Date Audited Balance Sheet” has the meaning attributed to such term
in section 3.5;

1.1.12 “Closing Documents” has the meaning attributed to such term in section 8.2;

1.1.13 “Estimated Purchase Price” has the meaning attributed to such term in section 3.4;

1.1.14 “Excluded Assets” has the meaning attributed to such term in section 2.2;

1.1.15 “General Conveyance, Assignment and Assumption Agreement” means an agreement
pursuant to which the Vendor transfers and conveys to the Purchaser the Purchased Assets and
the Purchaser assumes all Assumed Liabilities and Assumed Indebtedness;

1.1.16 “Governmental Charges” means all taxes, levies, assessments, reassessments
and other charges together with all related penalties, interest and fines, payable on or
before the date hereof to any domestic or foreign government (federal, provincial, municipal
or otherwise) or to any regulatory authority, agency, commission or board of any domestic or
foreign government, or imposed by any court or any other law, regulation or rulemaking entity
having jurisdiction in the relevant circumstances;

1.1.17 “GST” means the goods and services tax imposed under the GST Legislation;

1.1.18 “GST Legislation” means Part IX of the Excise Tax Act (Canada);

1.1.19 “Improvements” means, collectively, all buildings, fixed machinery, plant,
equipment, apparatus and fittings, fixtures, sub-stations and other improvements;

1.1.20 “Intellectual Property” means trade marks and trade mark applications, trade
names, certification marks, patents and patent applications, copyrights, know-how, formulae,
processes, inventions, technical expertise, research data, trade secrets, industrial designs,
intellectual property (including software) and other similar property related to or used
primarily in connection with the Business or Purchased Assets, and all registrations and
applications for registration thereof, and includes computer software;

 

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1.1.21 “Lands” means the real property described in Schedule 1.1.21;

1.1.22 “Litigation Rights” means all causes of action, rights, claims and
Proceedings of the Vendor relating to or arising in respect of the Business, whether relating
to the period prior to or after the Closing Date, including, without limitation, the rights
of the Vendor under the proceedings and matters described in Schedule 4.1.5;

1.1.23 “Nominee” means a company to be incorporated by the Vendor solely for the
purposes of holding title to certain Real Estate Assets for the benefit of the Vendor
pursuant to the Nominee Agreement;

1.1.24 “Nominee Agreement” means a nominee and agency agreement to be entered into
between the Vendor and the Nominee pursuant to which the Nominee will agree to hold title to
any Real Estate Assets registered in its name as nominee and bare trustee for the Vendor;

1.1.25 “Operation, Maintenance and Administration Agreement” means an agreement
between the Vendor and the Purchaser pursuant to which the Vendor agrees to provide all
services required by the Purchaser in connection with its ownership, operation and
maintenance of the Business and the Purchased Assets;

1.1.26 “Permits” means all permits, licenses, approvals, consents, authorizations,
registrations, certificates, wire crossing agreements, or franchises which are used by the
Vendor to carry on the Business as presently conducted by it;

1.1.27 “Person” means any individual, partnership, limited partnership, joint
venture, syndicate, sole proprietorship, company or corporation with or without share
capital, unincorporated association, trust, trustee, executor, administrator or other legal
personal representative, regulatory body or agency, government or governmental agency,
authority or entity however designated or constituted;

1.1.28 “Proceedings” has the meaning attributed to such term in section 4.1.5;

1.1.29 “Property Rights” means all easements, leases, licenses, rights of
occupation and/or use, and other rights relating to or creating interests in land, in each
case that is used by the Vendor primarily in connection with the Business;

1.1.30 “Purchase Price” has the meaning attributed to such term in section 3.1;

1.1.31 “Purchased Assets” means, collectively, all assets, property, contracts,
permits, rights, licenses, franchises and undertaking of the Vendor, whether real, personal
or mixed, tangible or intangible, of every kind and description wherever located, that are
owned, leased or licensed by the Vendor and are primarily related to or used in respect of
the Business, excluding the Excluded Assets, but including, without limitation, all right,
title and interest of the Vendor in and to the following:

	 	(a)	 	the power transmission system operated by the Vendor as at the date hereof,
including the approximately 151 circuit km of 230 kV line, 564 circuit km of 155 kV
line and 11 circuit km of 44 kV line, all transmission stations, sub-stations, lines,
poles, wires, equipment, machinery, transformers, motor vehicles, computer hardware and
property used primarily in connection with the Business;
	 
	 	(b)	 	all interconnection lines and facilities linking the Vendor’s transmission
facilities to its customers and the Ontario power grid;
	 
	 	(c)	 	all Real Estate Assets;

 

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	 	(d)	 	all of the issued and outstanding shares of 1228185 Ontario Limited and the
Nominee and all rights of the Vendor under the Nominee Agreement;
	 
	 	(e)	 	all Improvements used primarily in connection with the Business and located on
the Real Estate Assets;
	 
	 	(f)	 	all warranties, claims, bonds, contracts, agreements and other legally binding
instruments relating to or which have been entered into by the Vendor in respect of the
Business, including all regulatory agreements and documentation, including all rights,
benefits, warranties and claims under or in respect of the Service Contracts to the
extent the same relate to the Business;
	 
	 	(g)	 	the Litigation Rights, Permits and Intellectual Property;
	 
	 	(h)	 	all trade accounts receivable and all trade debts due or accruing due to the
Vendor in respect of the Business or the Purchased Assets, and the full benefit of all
guarantees, security and indemnities related thereto;
	 
	 	(i)	 	all cash, deposits, marketable securities, prepaid expenses, security,
materials, supplies, inventories, work in process, raw materials, spare parts and other
similar property related to the Business;
	 
	 	(j)	 	all rights, benefits, entitlements, materials, correspondence, filings,
economic forecasts, budgets, technical drawings plans, research, work, reports,
studies, applications, documentation and material related to the Business or the
Purchased Assets;
	 
	 	(k)	 	all business and financial records and systems (whether or not recorded on
computer), including all accounting systems, customer lists and lists of suppliers, all
surveys, drawings, site plans, plans and specifications relating to the Business or
Purchased Assets, and all operating manuals and/or plans, engineering standards and
specifications and other information used or required to effectively conduct the
Business or operate the Purchased Assets or any of them; and
	 
	 	(l)	 	all goodwill related to the Business;

1.1.32 “Purchaser” means Great Lakes Power Transmission LP, and its successors and
permitted assigns;

1.1.33 “Real Estate Assets” means, collectively, all Lands and all Property Rights;

1.1.34 “Reciprocal Co-Operation Agreement” means an agreement between the Vendor
and the Purchaser pursuant to which each agrees, among other things, to provide to the other
such future access, services, easements, leases, rights or co-operation as the other may
reasonably require in order to ensure the efficient and continuous use, ownership, operation,
repair, improvement and maintenance of the Vendor’s generation and distribution businesses
and the Purchaser’s Business;

1.1.35 “Service Contracts” means all services and advisory contracts to which the
Vendor is a party in respect of the Business, provided that if any such services or advisory
contract relates to the Business and any other business or undertaking of the Vendor, only
the portion that relates to the Business will constitute a Service Contract for purposes of
this Agreement;

1.1.36 “Time of Closing” means 10:00 a.m., Toronto time, on the Closing Date or
such other time on the Closing Date as may be agreed upon in writing by the parties;

1.1.37 “Vendor” means Great Lakes Power Limited, and its successors and permitted
assigns; and

 

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1.1.38 “Working Capital” as means the current assets of the Vendor minus the
current liabilities of the Vendor as disclosed on the financial statements of the Vendor for
the Business prepared as at the Closing Date in the accordance with generally accepted
accounting principles and in a manner consistent with the Vendor’s annual audited financial
statements prepared for the Business for the period ending on December 31, 2006.

	 	 	 
	1.2

	 	Schedules

                        The following are the schedules attached to this Agreement:

                        Schedule 1.1.21  —  Lands

                        Schedule 4.1.5  —  Litigation and Other Proceedings

	 	 	 
	1.3

	 	Headings and Table of Contents

                      The inclusion of headings and a table of contents in this Agreement is for convenience of
reference only and will not affect the construction or interpretation hereof.

	 	 	 
	1.4

	 	Gender and Number

                      In this Agreement, unless the context otherwise requires, words importing the singular include
the plural and vice versa, words importing gender include all genders or the neuter, and words
importing the neuter include all genders.

	 	 	 
	1.5

	 	Currency

                      Except where otherwise expressly provided, all amounts in this Agreement are stated and will
be paid in Canadian currency.

	 	 	 
	1.6

	 	Generally Accepted Accounting Principles

                      In this Agreement, except to the extent otherwise expressly provided, references to “generally
accepted accounting principles” mean, for all principles stated in the Handbook of the Canadian
Institute of Chartered Accountants, such principles so stated.

	 	 	 
	1.7

	 	Invalidity of Provisions

                      Each of the provisions contained in this Agreement is distinct and severable and a declaration
of invalidity or unenforceability of any such provision or part thereof by a court of competent
jurisdiction will not affect the validity or enforceability of any other provision hereof. To the
extent permitted by applicable law, the parties waive any provision of law which renders any
provision of this Agreement invalid or unenforceable in any respect. The parties will engage in
good faith negotiations to replace any provision which is declared invalid or unenforceable with a
valid and enforceable provision, the economic effect of which comes as close as possible to that of
the invalid or unenforceable provision which it replaces.

	 	 	 
	1.8

	 	Entire Agreement

                      This Agreement constitutes the entire agreement between the parties pertaining to the subject
matter of this Agreement. There are no warranties, conditions, or representations (including any
that may be implied by statute) and there are no agreements in connection with such subject matter
except as specifically set forth or referred to in this Agreement. No reliance is placed on any
warranty, representation, opinion, advice or assertion of fact made either prior to,
contemporaneous with, or after entering into this Agreement, or any amendment or supplement
thereto, by any party to this Agreement or its directors, officers, employees or agents, to any
other party to this Agreement or its directors, officers, employees or agents, except to the extent
that the same has been reduced to writing and included as a term of this Agreement, and none of the
parties to this Agreement has

 

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been induced to enter into this Agreement or any amendment or supplement by reason of any such
warranty, representation, opinion, advice or assertion of fact. Accordingly, there will be no
liability, either in tort or in contract, assessed in relation to any such warranty,
representation, opinion, advice or assertion of fact, except to the extent contemplated above.

	 	 	 
	1.9

	 	Waiver, Amendment

                      Except as expressly provided in this Agreement, no amendment or waiver of this Agreement will
be binding unless executed in writing by the party to be bound thereby. No waiver of any provision
of this Agreement will constitute a waiver of any other provision nor will any waiver of any
provision of this Agreement constitute a continuing waiver unless otherwise expressly provided.

	 	 	 
	1.10

	 	Governing Law

                      This Agreement will be governed by and construed in accordance with the laws of the Province
of Ontario and the laws of Canada applicable therein.

ARTICLE 2

PURCHASED ASSETS

	 	 	 
	2.1

	 	Agreement to Purchase and Sell Purchased Assets

                      Subject to the terms of this Agreement, the Vendor will sell, and the Purchaser will purchase,
the Purchased Assets.

	 	 	 
	2.2

	 	Excluded Assets

                      The Purchased Assets will not include, subject to 6.2 hereof, the following assets
(collectively, the “Excluded Assets”):

2.2.1 all rights, property, assets and undertakings owned, leased, licensed,
operated or used by the Vendor in respect of its Sackville control centre located in Sault
Ste Marie, Ontario and all matters incidental and/or ancillary thereto;

2.2.2 any interest of the Vendor under any insurance policies, including any cash
surrender value thereof;

2.2.3 any easements, licenses, Permits, contracts, agreements and other rights
related primarily to the Business or the Purchased Assets that by their terms are not
assignable or transferable and in respect of which consent to the assignment or transfer to
the Purchaser has not been obtained as at the Closing; each of which will, after Closing,
continue to be held by the Vendor in trust for the benefit of the Purchaser to transfer and
assign the same as the Purchaser may from time to time direct;

2.2.4 debts due to the Vendor from any Affiliate, shareholder, director, officer or
employee of the Vendor, other than accounts receivable incurred in the ordinary course of
business;

2.2.5 any refundable taxes previously paid by the Vendor (including any taxes paid
under the GST Legislation) and any claim or right of the Vendor to any refund of taxes; and

2.2.6 for greater certainty, all rights, property, assets and undertaking owned,
leased, licensed, operated or used by the Vendor primarily in connection with its hydro
electric generating facilities and the sale of electricity therefrom, the distribution of
electricity and all matters incidental and/or ancillary thereto.

 

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	2.3

	 	Service Contracts

                      The parties agree that the Vendor will, on Closing, assign the benefit of all Service
Contracts to the Purchaser except that where any such Service Contract is not assignable or
transferable and consent to the assignment or transfer to the Purchaser has not been obtained as at
the Closing, the Vendor will continue to hold each such Service Contract in trust for the benefit
of the Purchaser, to transfer and assign the same as the Purchaser may from time to time direct.

                      In all cases, the Vendor will continue to be the party to each Service Contract as agent for
and on behalf of the Purchaser, and will administer and perform the services required to be
performed by the Vendor under the Service Contracts in respect of the Business for the benefit of
the Purchaser, and the Purchaser will be responsible for all costs, liabilities and expenses
incurred by the Vendor under or in respect of such Service Contracts.

	 	 	 
	2.4

	 	Assumption of Liabilities By the Purchaser

                      The Purchaser will, on the Closing Date, assume the Assumed Indebtedness and Assumed
Liabilities.

	 	 	 
	2.5

	 	As is, Where is

                      The Purchaser acknowledges that the Vendor is selling the Purchased Assets on an “as is, where
is” basis as they will exist on the Closing Date. The Purchaser further acknowledges that it will
conduct such inspections of the condition of and title to the Purchased Assets as it deems
appropriate and that it will satisfy itself with regard to these matters. No representation,
warranty or condition is expressed or can be implied as to title, encumbrances, description,
fitness and purpose, merchantability, condition, assignability, collectability, quantity,
outstanding amount, value or quality or in respect of any other matter or thing whatsoever
concerning the Purchased Assets or the right of the Vendor to sell same, save and except as
expressly represented or warranted in this Agreement. Without limiting the generality of the
foregoing, any and all conditions, warranties or representations expressed or implied pursuant to
the Sale of Goods Act (Ontario) or similar legislation in any other jurisdiction do not apply
hereto and have been waived by the Purchaser.

ARTICLE 3

PURCHASE PRICE AND RELATED MATTERS

	 	 	 
	3.1

	 	Purchase Price

                      Subject to the adjustments provided in section 3.3, the purchase price payable to the Vendor
for the Purchased Assets (the “Purchase Price”) will be equal to $210,400,000.

	 	 	 
	3.2

	 	Payment of the Purchase Price

                      The Purchase Price will be paid by the Purchaser as follows:

3.2.1 as to an amount equal to the aggregate of the amounts outstanding under the
Assumed Indebtedness as the Closing Date, by way of assumption thereof as contemplated in
section 2.3; and

3.2.2 as to the balance of the Purchase Price, by electronic transfer of funds to
the Vendor or as it may direct.

 

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	3.3

	 	Adjustments to Purchase Price

                      The parties acknowledge that the Purchase Price was determined by the parties on the basis
that the Working Capital of the Business will be $2,900,000 as at the Closing Date. The Purchase
Price will be adjusted to reflect the actual Working Capital as at the Closing Date. Accordingly,
the Purchase Price will be reduced by an amount by which the actual Working Capital is less than
$2,900,000, or increased by an amount by which the Working Capital exceeds $2,900,000.

	 	 	 
	3.4

	 	Estimated Purchase Price

                      The parties acknowledge that it is not possible to conclusively determine the Working Capital
until the Closing Date Audited Balance Sheet is available. Accordingly, the parties agree that, at
the Closing, the Purchaser will pay to the Vendor an amount which represents a reasonable estimate
of the Purchase Price, determined in accordance with the provisions of this section 3.4 (the
“Estimated Purchase Price”) less the amounts outstanding under the Assumed Indebtedness as at the
Closing Date, plus GST (if any) payable on the Estimated Purchase Price.

                      Note less than one Business Day before the Closing Date, the Vendor will deliver to the
Purchaser a balance sheet of the Business as at the Closing Date which reflects a good faith
estimate by the Vendor of the Working Capital.

	 	 	 
	3.5

	 	Closing Date Audited Balance Sheet Statement

                      Not later than ninety (90) days after the Closing Date, the Purchaser will cause a balance
sheet of the Business as at the Closing Date to be prepared and delivered to the Vendor, which
balance sheet will be prepared in a manner consistent with that prepared by the Vendor as at the
Closing Date and which will be audited by the Purchaser’s auditors (the “Closing Date Audited
Balance Sheet”).

                      If the Vendor notifies the Purchaser that it agrees with the Closing Date Audited Balance
Sheet within 21 days after receipt thereof or fails to deliver notice to the Purchaser of its
disagreement therewith within such 21 day period, the Closing Date Audited Balance Sheet will be
conclusive and binding on the Purchaser and the Vendor and the parties will be deemed to have
agreed thereto, in the first case, on the date the Purchaser receives the notice and, in the second
case, on such 21st day. If the Vendor notifies the Purchaser of its disagreement with
the Closing Date Audited Balance Sheet within such 21 day period, then the Purchaser and the Vendor
will attempt, in good faith, to resolve their differences with respect thereto within 15 days after
the Purchaser’s receipt of the Vendor’s notice of disagreement. Any disagreement over the Closing
Date Audited Balance Sheet that is not resolved by the Purchaser and the Vendor within such 15 day
period will be submitted to arbitration in accordance with the provisions of the Arbitration Act,
1991 (Ontario) unless otherwise agreed by the parties.

	 	 	 
	3.6

	 	Determination of Purchase Price and Adjustment of Amount Paid on Closing Date

                      On the second Business Day following the date on which the parties agree to the Closing Date
Audited Balance Sheet, the Purchase Price will be finally determined in accordance with section 3.3
and either (i) the Purchaser will pay to the Vendor any amount by which the final Purchase Price
exceeds the Estimated Purchase Price, or (ii) the Vendor will refund to the Purchaser any amount by
which the Estimated Purchase Price exceeds such final Purchase Price.

	 	 	 
	3.7

	 	Allocation of Purchase Price for Tax Purposes

                      The Purchaser and the Vendor, in filing their respective tax returns, will use such
allocations of the Purchase Price as they may agree to prior to Closing.

 

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ARTICLE 4

REPRESENTATIONS AND WARRANTIES

	 	 	 
	4.1

	 	By the Vendor

                      The Vendor represents and warrants to the Purchaser as follows and acknowledges that the
Purchaser is relying upon the following representations and warranties in connection with its
purchase of the Purchased Assets:

4.1.1 Incorporation and Status of the Vendor. The Vendor is duly incorporated and
validly existing under the laws of its jurisdiction of incorporation.

4.1.2 Corporate Power of the Vendor and Due Authorization. The Vendor has the
corporate power and capacity to enter into, and to perform its obligations under, this
Agreement. Each of this Agreement and each of the agreements, contracts and instruments
required by this Agreement to be delivered by the Vendor at the Closing has been duly
authorized. This Agreement has been duly executed and delivered by the Vendor and is a valid
and binding obligation of the Vendor, enforceable in accordance with its terms, subject to
the usual exceptions as to bankruptcy and the availability of equitable remedies. At the
Time of Closing, the Closing Documents to which the Vendor is a party will be duly executed
and delivered by the Vendor and will be valid and binding obligations of the Vendor,
enforceable in accordance with their respective terms, subject to the usual exceptions as to
bankruptcy and the availability of equitable remedies.

4.1.3 No Rights to Acquire Purchased Assets. To the Vendor’s knowledge, there are
no agreements, options or other rights pursuant to which the Vendor is, or may become,
obligated to sell any of the Purchased Assets.

4.1.4 Right to Sell, and Title to, Purchased Assets. The Vendor is the absolute
beneficial owner of the Real Estate Assets and is the absolute owner of all other Purchased
Assets, in each case, to the Vendor’s knowledge, free of all Charges other than Charges
securing the Assumed Indebtedness and Charges that would not materially adversely affect the
ability of the Purchaser to operate the Business or the Purchased Assets as a whole.

4.1.5 Litigation and Other Proceedings. To the Vendor’s knowledge, the only court,
administrative, regulatory or similar proceeding (whether civil, quasi-criminal or criminal);
arbitration or other dispute settlement procedure; investigation or inquiry by any
governmental, administrative, regulatory or similar body; or any similar matter or proceeding
(collectively “Proceedings”) against or involving the Vendor in respect of the Business or
the Purchased Assets is described in Schedule 4.1.5.

4.1.6 Vendor Resident of Canada. The Vendor is not a non-resident of Canada under
the Income Tax Act (Canada).

4.1.7 Goods and Services Tax. The Vendor is registered for purposes of the GST
Legislation. Following completion of this Agreement, the Purchaser will have ownership,
possession or use of all or substantially all of the property that can reasonably be regarded
as being necessary for the Purchaser to be able to carry on the Business.

4.1.8 Tax, etc. Matters. Except as set out in Schedule 4.1.5, to the best of the
Vendor’s knowledge, after appropriate inquiries and investigations, there are no Proceedings
either in progress, pending or threatened in connection with any Governmental Charges in
respect of the Business or the Purchased Assets. The Vendor has withheld or collected and
remitted all amounts required to be withheld or collected and remitted by it in respect of
any Governmental Charges.

4.1.9 Sufficiency of Asset. The Purchased Assets are sufficient to carry on the
Business as currently conducted.

 

-10-

	 	 	 
	4.2

	 	By the Purchaser

                      The Purchaser represents and warrants to the Vendor as follows and acknowledges that the
Vendor is relying upon the following representations and warranties in connection with its sale of
the Purchased Assets:

4.2.1 Creation and Status of the Purchaser. The Purchaser is duly organized and
validly existing under the laws of its jurisdiction of creation. The Purchaser is registered
for purposes of the GST Legislation.

4.2.2 Corporate Power of the Purchaser and Due Authorization. The Purchaser has
the power and capacity to enter into, and to perform its obligations under, this Agreement.
Each of this Agreement and each of the agreements, contracts and instruments required by this
Agreement to be delivered by the Purchaser at the Closing has been duly authorized by the
Purchaser. This Agreement has been duly executed and delivered by the Purchaser and is a
valid and binding obligation of the Purchaser, enforceable in accordance with its terms,
subject to the usual exceptions as to bankruptcy and the availability of equitable remedies.
At the Time of Closing, the Closing Documents to which the Purchaser is a party will be duly
executed and delivered and will be valid and binding obligations of the Purchaser,
enforceable in accordance with their respective terms, subject to the usual exceptions as to
bankruptcy and the availability of equitable remedies.

	 	 	 
	4.3

	 	Survival of Covenants, Representations and Warranties

                      To the extent that they have not been fully performed at or prior to the Time of Closing, the
covenants, representations and warranties contained in this Agreement and in all certificates and
documents delivered pursuant to or contemplated by this Agreement will survive the Closing and will
continue for 18 months.

ARTICLE 5

CONDITIONS

	 	 	 
	5.1

	 	Conditions for the Benefit of the Purchaser

                      The obligation of the Purchaser to complete the purchase of the Purchased Assets pursuant to
this Agreement is subject to the satisfaction of, or compliance with, at or prior to the Time of
Closing, each of the following conditions (each of which is acknowledged to be for the exclusive
benefit of the Purchaser):

5.1.1 Accuracy of Representations of Vendor and Compliance with Covenants. The
representations and warranties of the Vendor made in or pursuant to this Agreement will be
true and correct in all material respects at the Time of Closing with the same force and
effect as if made at and as of the Time of Closing; the covenants contained in this Agreement
to be performed by the Vendor at or prior to the Time of Closing will have been performed in
all material respects; and the Vendor will not be in breach of any agreement on its part
contained in this Agreement.

5.1.2 Closing Documents and Proceedings. The Purchaser will have received the
Closing Documents required to be delivered by the Vendor in form and substance satisfactory
to it, acting reasonably.

5.1.3 No Action to Restrain. No action or proceeding will be pending or threatened
by any Person to restrain or prohibit:

5.1.3.1 the purchase and sale of the Purchased Assets hereunder; or

5.1.3.2 the Vendor from carrying on the Business as such Business
is being carried on at the date hereof.

5.1.4 Consents and Approvals . The following consents and approvals will
have been obtained, in form and substance satisfactory to the Purchaser:

 

-11-

5.1.4.1 the Ontario Energy Board having approved the purchase and
sale of Purchased Assets as contemplated by this Agreement;

5.1.4.2 the Purchaser having acquired all material licenses that it
requires in order to own and operate the Purchased Assets and the Business;
and

5.1.4.3 all required consents having been obtained and
documentation entered into, on terms and conditions satisfactory to the
Purchaser, with respect to the assumption by the Purchaser of the Assumed
Indebtedness.

5.1.5 Title to Real Estate Assets. Title to the Real Estate Assets being held by
the Nominee or the Vendor being free of all Charges other than Charges securing the Assumed
Indebtedness and Charges that would not materially adversely affect the ability of the
Purchaser to operate the Business or the Purchased Assets as a whole.

                      If any of the conditions contained in this section 5.1 will not be fulfilled or performed at
or prior to the Time of Closing to the satisfaction of the Purchaser (acting reasonably), the
Purchaser may, by notice to the Vendor, terminate this Agreement and the obligations of the Vendor
and the Purchaser under this Agreement. Any condition may be waived in whole or in part by the
Vendor without prejudice to any claims it may have for breach of covenant, representation or
warranty.

	 	 	 
	5.2

	 	Conditions for the Benefit of the Vendor

                      The obligation of the Vendor to complete the sale of the Purchased Assets hereunder is subject
to the satisfaction of, or compliance with, at or before the Time of Closing, each of the following
conditions (each of which is acknowledged to be for the exclusive benefit of the Vendor):

5.2.1 Accuracy of Representations of Purchaser and Compliance with Covenants. The
representations and warranties of the Purchaser made in or pursuant to this Agreement will be
true and correct at the Time of Closing with the same force as if made at and as of the Time
of Closing; the covenants contained in this Agreement to be performed by the Purchaser at or
prior to the Time of Closing will have been performed; the Purchaser will not be in breach of
any agreement on its part contained in this Agreement; and the Vendor will have received a
certificate confirming the foregoing, signed for and on behalf of the Purchaser by senior
officers or directors of the Purchaser or other persons acceptable to the Vendor in form and
substance satisfactory to the Vendor and the Vendor’s Counsel.

5.2.2 Closing Documents and Proceedings. The Vendor will have received the Closing
Documents required to be delivered by the Purchaser in form and substance satisfactory to it,
acting reasonably; and

5.2.3 No Action to Restrain. No action or proceeding will be pending or threatened
by any Person to restrain or prohibit:

5.2.3.1 the purchase and sale of the Purchased Assets hereunder; or

5.2.3.2 the Vendor from carrying on the Business as such Business
is being carried on at the date hereof.

                      If any of the conditions contained in this section 5.2 will not be fulfilled or performed at
or prior to the Time of Closing to the satisfaction of the Vendor (acting reasonably), the Vendor
may, by notice to the Purchaser, terminate this Agreement and the obligations of the Vendor and the
Purchaser under this Agreement. Any condition may be waived in whole or in part by the Vendor
without prejudice to any claims it may have for breach of covenant, representation or warranty.

 

-12-

ARTICLE 6

ADDITIONAL AGREEMENTS OF THE PARTIES

	 	 	 
	6.1

	 	Negative Covenant

                      Except as expressly provided in this Agreement or except with the prior written consent of the
Purchaser, prior to the Time of Closing the Vendor will not transfer, lease, license, sell or
otherwise dispose of any of the Purchased Assets other than in the ordinary course of the Business,
consistent with past practice.

	 	 	 
	6.2

	 	Insurance

                      Until the Time of Closing, the Vendor will maintain in full force all policies and contracts
of insurance which are now in effect (or renewals thereof) and under which it or any of the
Purchased Assets are insured.

	 	 	 
	6.3

	 	Obtaining of Consents and Approvals

                      The Vendor will use reasonable efforts to deliver, at or prior to the Time of Closing, the
consents and approvals referred to in section 5.1.4 and the easements, sublicenses and subleases
referred to in section 8.2.7. If, notwithstanding such efforts, the Vendor is unable to obtain any
of such consents and approvals or grant any such easements, sublicenses or subleases, the Vendor
will not be liable to the Purchaser for any breach of covenant but will continue after the Closing
to use reasonable efforts as requested by the Purchaser from time to time in order to attempt to
obtain any such consent or approval.

	 	 	 
	6.4

	 	Planning Act

                      This Agreement will be effective to create an interest in the Real Estate Assets only if the
subdivision control provisions of the Planning Act (Ontario) or any successor or similar
legislation is complied with by the Vendor on or before the Closing and the Vendor will proceed
diligently at its own expense to obtain any necessary consent on or before the Closing. If
requested by the Purchaser, the Vendor will ensure that any deed or transfer of Real Property to be
delivered on the Closing will contain the statements contemplated by section 50(22) of the Planning
Act (Ontario).

	 	 	 
	6.5

	 	Bulk Sales Act

                      The Purchaser agrees that it will not require the Vendor to comply with the requirements of
the Bulk Sales Act (Ontario). The Vendor agrees to indemnify and save harmless the Purchaser from
and against all losses which the Purchaser may suffer or incur as a result of or arising out of
such non-compliance. This section 6.5 will not merge on, but will survive Closing.

	 	 	 
	6.6

	 	Access of the Vendor to Records

                      The Vendor will have access to, and the right to copy, at its expense, for bona fide business
purposes and during usual business hours, upon reasonable prior notice to the Purchaser, all books
and records relating to the Business and the Purchased Assets which are transferred and conveyed to
the Purchaser pursuant to this Agreement. The Purchaser will retain and preserve all such books
and records for at least a six (6) year period.

	 	 	 
	6.7

	 	Accounts Receivable

                      The Vendor agrees that the Purchaser will have the right after the Closing to endorse in its
name all payments received by the Purchaser in respect of any of the trade accounts receivable and
trade debts due in respect of the Business, and to deposit the same into the Purchaser’s bank
accounts. The Vendor will deliver at the Closing such resolutions or other documents as the
Purchaser may reasonably request in order to permit the implementation of the provisions of this
section.

 

-13-

	 	 	 
	6.8

	 	Employees

                      The Purchaser will not be required to offer employment to any employees of the Vendor either
before or after Closing.

	 	 	 
	6.9

	 	Cooperation

                      The parties will cooperate fully in good faith with each other and their respective legal
advisers, accountants and other representatives in connection with any steps required to be taken
as part of their respective obligations under this Agreement.

ARTICLE 7

INDEMNIFICATION

	 	 	 
	7.1

	 	Indemnification by the Vendor

                      The Vendor will indemnify and save the Purchaser harmless for and from:

7.1.1 all losses, costs and damages suffered by the Purchaser as a result of any
breach of representation, warranty or covenant on the part of the Vendor contained in this
Agreement or in any certificate, document or instrument delivered to the Purchaser hereunder;

7.1.2 all losses, costs and damages suffered by the Purchaser as a result of the
failure of the Vendor to perform any of its obligations relating to or in respect of any
Excluded Assets; and

7.1.3 all claims, demands, costs and expenses, including legal fees, in respect of the foregoing.

	 	 	 
	7.2

	 	Maximum Liability of Vendor

                      Notwithstanding anything to the contrary in this Agreement, the Purchaser acknowledges and
agrees that the aggregate liability of the Vendor in respect of any claim for breach of any
representation, warranty or covenant made by the Vendor in this Agreement or in any certificate,
document or instrument delivered by the Vendor hereunder, or any claim for indemnity made pursuant
to Section 7.1, will be limited to an amount equal to the Purchase Price.

	 	 	 
	7.3

	 	Indemnification by the Purchaser

                      The Purchaser will indemnify and save the Vendor harmless for and from:

7.3.1 all losses, costs and damages suffered by the Vendor as a result of any
breach of representation, warranty or covenant on the part of the Purchaser contained in this
Agreement or in any certificate, document or instrument delivered to the Vendor hereunder;

7.3.2 all losses, costs and damages suffered by the Vendor as a result of the
failure of the Purchaser to perform any of its obligations relating to or in respect of the
Assumed Indebtedness and Assumed Liabilities or arising out of action or inaction of the
Purchaser; and

7.3.3 all claims, demands, costs and expenses, including legal fees, in respect of
the foregoing.

 

-14-

ARTICLE 8

CLOSING

	 	 	 
	8.1

	 	Location and Time of the Closing

                      The Closing will take place at the Time of Closing on the Closing Date at the offices of
Purchaser’s Counsel.

	 	 	 
	8.2

	 	Deliveries by Vendor and Purchaser at the Closing

                      At the Time of Closing, the Vendor will prepare (or cause to be prepared) and the Vendor and
the Purchaser will execute (or cause to be executed) and deliver (or cause to be delivered) to the
other the following items, in each case on terms and conditions satisfactory to both parties
hereto, (collectively, the “Closing Documents”):

8.2.1 Registrable transfer/deeds of land and assignments in respect of all Lands
and Property Rights together with acknowledgements and directions authorizing the electronic
registration of the transfers and assignments;

8.2.2 Direction by the Vendor to the Nominee to hold legal interest in the Real
Estate Assets as agent and bare nominee for the Purchaser;

8.2.3 the General Conveyance, Assignment and Assumption Agreement;

8.2.4 the Assignment and Assumption Agreement;

8.2.5 the Reciprocal Co-Operation Agreement;

8.2.6 the Operation, Maintenance and Administration Agreement;

8.2.7 to the extent required for the continuous operation of the Business after
Closing, and to the extent that all necessary consents have been obtained, such sublicenses,
subleases, easements and other rights as the parties may agree to over the lands owned,
leased or licensed by the Vendor for the purposes of placing, maintaining and operating the
Improvements related to the Business on such lands, and all necessary subordinations and
postponements from the Vendor’s existing mortgagees with respect to such easements;

8.2.8 transfer by the Vendor to the Purchaser of all of the issued and outstanding shares
of 1228185 Ontario Limited and the Nominee, and delivery by the Vendor to the
Purchaser of original share certificates representing all such issued and outstanding shares;

8.2.9 a certificate by the Vendor to the effect that it is not a non-resident of
Canada within the meaning of the Income Tax Act (Canada);

8.2.10 a certificate by the Purchaser to the effect that it is a registrant under
the GST Legislation and an indemnity with respect to GST liability;

8.2.11 all assumptions, acknowledgements, agreements, opinions, certificates and
other documentation required by the lenders under the Assumed Indebtedness to evidence the
assumption by the Purchaser of the Vendor’s obligations under the Assumed Indebtedness and
all indentures, agreements, debentures, security agreements and other agreements evidencing,
security or relating to the Assumed Indebtedness, and the continuation of the security
created pursuant thereto against the Purchased Assets; and

8.2.12 all other deeds, documents of title, conveyances, bills of sale, transfers,
assignments, indentures, instruments, assignments, assumption agreements, consents and other
documents as the Purchaser may

 

-15-

reasonably require in order to effect the assignment, transfer and sale of the Purchased
Assets to the Purchaser and the assumption by the Purchaser of the Assumed Liabilities.

	 	 	 
	8.3

	 	Deliveries by Purchaser at the Closing

                      At the Time of Closing, in addition to delivering those Closing Documents to which it is
required to be a party, the Purchaser will pay the balance of the Estimated Purchase Price in
accordance with section 3.4.

	 	 	 
	8.4

	 	Delivery of Books and Records

                      At the Time of Closing, the Vendor will deliver to the Purchaser all books, records, lists of
suppliers and customers and other documents, files and data relating to the Business, all of which
will become the property of the Purchaser.

ARTICLE 9

GENERAL MATTERS

	 	 	 
	9.1

	 	Risk of Loss

                      The Purchased Assets will be and remain at the risk of the Purchaser from and after the date
of this Agreement. If, prior to the Time of Closing, all or any material part of the Purchased
Assets are destroyed or damaged by fire or any other casualty or will be expropriated, the
Purchaser will complete the purchase without reduction of the Purchase Price and all proceeds of
insurance or compensation for expropriation will be payable to the Purchaser and all right and
claim of the Vendor to any such amounts not paid by the Time of Closing will be assigned by the
Vendor to the Purchaser.

	 	 	 
	9.2

	 	Expenses

                      Each of the Vendor and the Purchaser will be responsible for the expenses (including fees and
expenses of legal advisers, accountants and other professional advisers) incurred by them,
respectively, in connection with the negotiation and settlement of this Agreement and the
completion of the transaction contemplated hereby.

	 	 	 
	9.3

	 	Transfer and Sales Taxes

                      The Purchaser will pay all land transfer taxes, federal and provincial sales taxes and all
other taxes or other like charges payable upon or in connection with the sale, assignment or
transfer of the Purchased Assets by the Vendor to the Purchaser.

	 	 	 
	9.4

	 	Goods and Services Tax

                      The parties agree to elect that no tax be payable pursuant to the GST Legislation with respect
to the sale under this Agreement. The Purchaser will file an election pursuant to the GST
Legislation, made jointly by the parties, in compliance with the requirements of the GST
Legislation.

                      The Purchaser covenants and agrees that it will on or prior to Closing provide the Vendor with
a certificate of a senior officer of the Purchaser (without personal liability) confirming the
registration number relating to the federal government’s goods and services tax under the GST
Legislation. The Purchaser further agrees to self-assess and remit the required amount (if any) in
accordance with the applicable statutory requirements and in connection with any other GST
calculations made by the Purchaser. The Purchaser further agrees to indemnify and save harmless the
Vendor from and against such GST together with any penalties and interest thereon which may arise
as a result of any failure by the Purchaser to pay such GST as aforesaid. The Purchaser shall
deliver on Closing an indemnity with respect to GST liability in form and content satisfactory to
the Vendor and the Purchaser, each acting reasonably.

 

-16-

	 	 	 
	9.5

	 	Assignment

                      No party may assign its rights or benefits under this Agreement without the prior written
consent of the other party.

	 	 	 
	9.6

	 	Notices

                      Any notice or other communication required or permitted to be given hereunder will be in
writing and will be given by prepaid mail, by facsimile or other means of electronic communication
or by hand-delivery to such address as the party may from time to time specify. Any such notice or
other communication, if mailed by prepaid mail at any time other than during a general
discontinuance of postal service due to strike, lockout or otherwise, will be deemed to have been
received on the fourth Business Day after the post-marked date thereof, or if sent by facsimile or
other means of electronic communication, will be deemed to have been received on the Business Day
following the sending, or if delivered by hand will be deemed to have been received at the time it
is delivered to the applicable address noted below either to the individual designated below or to
an individual at such address having apparent authority to accept deliveries on behalf of the
addressee.

	 	 	 
	9.7

	 	Time of Essence

                      Time is of the essence of this Agreement.

	 	 	 
	9.8

	 	Further Assurances

                      Each of the parties hereto will promptly do, make, execute or deliver, or cause to be done,
made, executed or delivered, all such further acts, documents and things as the other party hereto
may reasonably require from time to time for the purpose of giving effect to this Agreement and
will use reasonable efforts and take all such steps as may be reasonably within its power to
implement to their full extent the provisions of this Agreement.

	 	 	 
	9.9

	 	Counterparts

                      This Agreement may be signed in counterparts and each of such counterparts will constitute an
original document and such counterparts, taken together, will constitute one and the same
instrument.

[NEXT PAGE IS SIGNATURE PAGE]

 

-17-

     IN WITNESS WHEREOF the parties hereto have executed this Agreement.

	 	 	 	 	 	 	 
	 	 	GREAT LAKES POWER LIMITED
	 
	 	 	 	 	 	 
	 

	 	by:	 	 	 	 
	 	 	 	 	 
	 	 	 	 	Name:  Patricia
Bood
	 	 	 	 	Title:   Secretary
	 
	 	 	 	 	 	 
	 	 	GREAT LAKES POWER TRANSMISSION LP, by its

general partner, GREAT LAKES POWER

TRANSMISSION INC.
	 
	 	 	 	 	 	 
	 

	 	by:	 	 	 	 
	 	 	 	 	 
	 	 	 	 	Name:  Patricia
Bood
	 	 	 	 	Title:   Secretary

 

 

SCHEDULE 1.1.21

LANDS

THIRD LINE SUBSTATION (TARENTORUS 19)

PIN 31563-0092(LT) - Lot 66, Registrar’s Compiled Plan H739, Tarentorus Section 19, Sault Ste.
Marie.

FOURTH LINE PROPERTY 

PIN 31564-0058(LT) - Part of Lot 38, Registrar’s Compiled Plan H741, Tarentorus Section 18, as in
T220780 (Schedule A 14thly), Sault Ste. Marie.

FIFTH LINE PROPERTY (TARENTORUS 18)

PIN 31564-0101(LT) - Lot 54, Registrar’s Compiled Plan H741, Tarentorus Section 18, together with
T220780, Sault Ste. Marie.

TARENTORUS — SECTION 21 

PIN 31506-0125(LT) - Parcel 3329, Algoma West Section, being Part of Section 21, Tarentorus, as in
LT29593 amended by LT32324, except LT30035 and Lots 1, 4 and 6, Expropriation Plan M-258, subject
to LT40165 and LT70999, Sault Ste. Marie.

PIN 31506-0126(LT) - Parcel 3385, Algoma West Section, being Part of Section 21, Tarentorus, as in
LT30035, except Lot 2, Expropriation Plan M-258, Sault Ste. Marie.

PENNEFATHER

PIN 31350-0100(LT) - Part of Section 24, Township of Pennefather as in T220780.

FENWICK 

PIN 31346-0082(LT) - Lot 21, Registrar’s Compiled Plan H-812, subject to RB640 and T-15805,
District of Algoma.

TILLEY

PIN 31302-0339(LT) - Part of Section 36 Tilley, designated as Part 1 on Plan 1R-3450, subject to
BC97, District of Algoma

D.A. WATSON TRANSMISSION STATION HIGH FALLS SUBSTATION 

PIN 31176-0002(LT) - Parcel 423, Algoma Central Railway Lands, Township of Naveau, designated as
Parts 1, 2 and 3, Plan 1R-9587 except an area of land containing 11 acres more or less being a
right-of-way for power transmission line of the Great Lakes Power Company; subject to LT68364,
LT26454 and LT113588, Michipicoten.

GARTSHORE TRANSMISSION STATION

PIN 31231-0019(LT) - Surface rights only, all of location CL 13852, designated as Part 1, Plan
1R-11005, Township of Peever, District of Algoma as in Crown Patent AL18166.

ECHO RIVER TRANSMISSION STATION

PIN 31473-0101(LT) - Part of Lots 24 and 37, RCP H766, as in T266124 and Parts 1 and 2, Plan
1R-5849, Macdonald, Meredith, Aberdeen Additional.

 

 

SCHEDULE 4.1.5

LITIGATION AND OTHER PROCEEDINGS

A claim between Comstock Canada Ltd. versus the Vendor in the Ontario Superior Court of Justice
bearing Court File No. 06-CV-310517, arising out of a contract between the Vendor and Comstock
Canada Ltd. dated February 25, 2004, with respect to the Anjigami and Sault 230 kV Line
Reconstruction.

Numerous property tax reassessment applications or disputes initiated by the Vendor in respect of
real property taxes affecting the Purchased Assets, as disclosed to the Purchaserexv4w15

 

AGREEMENT RELATING TO THE INDIRECT ACQUISITION OF LONGVIEW

THIS AGREEMENT is made the 4th day of December, 2007

B E T W E E N:

Brookfield Infrastructure Corporation, a corporation existing under the laws
of the State of Delaware

(hereinafter called “BIC”)

- and -

Brookfield Asset Management Inc., a corporation incorporated under the laws
of the Province of Ontario

(hereinafter called “BAM”)

RECITALS:

	A.	 	Pursuant to agreements (collectively, the “Initial Agreement”) between Brascan (US)
Corporation and BIC and Brookfield Longview Holdings LLC dated as of November 20, 2007, BIC
will acquire common stock and an interest in the indebtedness of Longview Timber Holdings
Corp., which together represent a 30% (the “Initial Percentage”) interest in Longview Timber
Holdings Corp. as of the date hereof; and
	 
	B.	 	In the event that BAM contributes, directly or indirectly, all or a portion of its interest
in Longview Timber Holdings Corp. that is not transferred pursuant to the Initial Agreement
(the “Remaining Longview Interest”) to the Timberlands Partnership (as defined below), BIC
intends to participate in the Timberlands Partnership and thereby indirectly acquire a portion
of the Remaining Longview Interest, as contemplated in the prospectus and registration
statement of Brookfield Infrastructure Partners L.P. (“BIP”);

          NOW THEREFORE in consideration of the mutual covenants and agreements herein contained and
other good and valuable consideration (the receipt and sufficiency of which are hereby
acknowledged), the parties hereto agree as follows:

1. Interpretation

     1.1 Definitions

          In this Agreement, the following terms shall have the following meanings:

 

- 2 -

1.1.1 “Affiliate” means, with respect to a Person, any other Person that, directly
or indirectly, through one or more intermediaries, Controls or is Controlled by such
Person, or is under common Control of a third Person;

1.1.2 “Agreement” means this agreement as it may be amended or restated;

1.1.3 “BAM Group” has the meaning assigned thereto in the Master Services Agreement;

1.1.4 “BIP Group” has the meaning assigned thereto in the Master Services Agreement;

1.1.5 “Control” means the control of one Person of another Person in accordance with
the following: a Person (“A”) controls another Person (“B”) where A has the power to
determine the management and policies of B by contract or status (for example the
status of A being the General Partner of B) or by virtue of beneficial ownership of
a majority of the voting interests in B; and for certainty and without limitation,
if A owns shares to which more than 50% of the votes permitted to be cast in the
election of directors to the board of directors (or its equivalent) of B or A is the
General Partner of B, a limited partnership, then in each case A Controls B for this
purpose;

1.1.6 “Effective Date” means the date of the distribution by BAM of its interests in
BIP to the shareholders of BAM;

1.1.7 “Infrastructure Partnership” means Brookfield Infrastructure L.P.;

1.1.8 “Master Services Agreement” means the master management and administration
agreement dated as of the Effective Date among BAM, BIP, the Infrastructure
Partnership and others;

1.1.9 “Person” means any individual, partnership, limited partnership, joint
venture, syndicate, sole proprietorship, company or corporation with or without
share capital, unincorporated association, trust, trustee, executor, administrator
or other legal personal representative, regulatory body or agency, government or
governmental agency, authority or entity however designated or constituted;

 

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1.1.10 “Relationship Agreement” means the relationship agreement dated as of the
Effective Date among BAM, BIP, the Infrastructure Partnership and others; and

1.1.11 “Timberlands Partnership” means a timberlands focused partnership or other
acquisition vehicle or vehicles that would provide for the limited liability of the
investors or a series of contractual arrangements to be formed with BIC, on the one
hand, and institutional investors, on the other hand, to pursue the acquisition of
timberlands and timberlands related investments.

     1.2 Headings

          The inclusion of headings in this Agreement are for convenience of reference only and will not
affect the construction or interpretation hereof.

     1.3 Gender and Number

          In this Agreement, unless the context otherwise requires, words importing the singular include
the plural and vice versa, words importing gender include all genders or the neuter, and words
importing the neuter include all genders.

     1.4 Invalidity of Provisions

          Each of the provisions contained in this Agreement is distinct and severable and a declaration
of invalidity or unenforceability of any such provision or part thereof by a court of competent
jurisdiction will not affect the validity or enforceability of any other provision hereof. To the
extent permitted by applicable law, the parties waive any provision of law which renders any
provision of this Agreement invalid or unenforceable in any respect. The parties will engage in
good faith negotiations to replace any provision which is declared invalid or unenforceable with a
valid and enforceable provision, the economic effect of which comes as close as possible to that of
the invalid or unenforceable provision which it replaces.

     1.5 Currency

          Except where otherwise expressly provided, all amounts in this Agreement are stated and shall
be paid in United States dollars.

 

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     1.6 Waiver, Amendment

          Except as expressly provided in this Agreement, no amendment or waiver of this Agreement will
be binding unless executed in writing by the party to be bound thereby. No waiver of any provision
of this Agreement will constitute a waiver of any other provision nor will any waiver of any
provision of this Agreement constitute a continuing waiver unless otherwise expressly provided.

     1.7 Governing Law

          This Agreement shall be governed by and construed in accordance with the laws of the State of
New York.

2. Commitment to Timberlands Partnership

2.1 Subject to the terms and conditions of this Agreement, in the event that BAM, directly
or indirectly, agrees to contribute or transfer all or a portion of the Remaining Longview
Interest to the Timberlands Partnership, BIC will make a capital commitment of up to $600
million to the Timberlands Partnership (the “Commitment”).

2.2 The exact amount of the Commitment shall be determined upon the formation of the
Timberlands Partnership and shall in any event be no less than $400 million and, subject to
Section 2.1, may be increased to an amount that is equal to 30% of the aggregate commitments
to the Timberlands Partnership.

2.3 BAM will use reasonable commercial efforts to ensure that the structure of the
investment into the Timberlands Partnership shall contain typical provisions for
partnerships of this type including the establishment of parallel investment vehicles and
alternative investment vehicles where appropriate and flexibility for other members of the
BIP Group to provide the capital necessary to fulfill the Commitment.

3. Conditions in Favour of BIC

3.1 BIC’s obligations under Section 1.2 of this Agreement are subject to the satisfaction of
the following conditions:

 

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3.1.1 one or more institutional investors that are not Affiliates of, and are
otherwise acting at arm’s length from, BAM and BIC shall have entered into binding
agreements to participate in, and to make capital commitments of an aggregate amount
of at least $400 million to, Timberlands Partnership on terms and conditions that
are no more favorable to the investors than the terms and conditions of BIC’s
Commitment to and participation in Timberlands Partnership;

3.1.2 the purchase price payable to BAM by Timberlands Partnership for the Remaining
Longview Interest shall be equal to an amount that is no greater than the appraised
value (the “Appraised Value”) of the timberlands, and other real estate held by
Longview Timber Holdings Corp. plus working capital, less long term debt, at the
time of the completion of the acquisition of the Remaining Longview Interest
multiplied by one minus the Initial Percentage;

3.1.3 BIC shall be able to satisfy its commitment pursuant to Section 1.2 with
financing that is sufficient and suitable (including with respect to the composition
of equity versus debt) to maintain an appropriate liquidity position for BIC and the
Infrastructure Partnership following any contribution being made by BIC pursuant to
this commitment; and

3.1.4 the completion of the acquisition of the Remaining Longview Interest by
Timberlands Partnership shall be completed within 18 months from the Effective Date.

4. Conditions in Favour of BIC and BAM

          The obligations of each of BIC and BAM to complete the transactions contemplated by this
Agreement are subject to all applicable board approvals being obtained (including approval by the
board of directors of the general partner of the Infrastructure Partnership) and the appropriate
entities entering into (a) a definitive agreement (the “Partnership Agreement”) with respect to the
formation of Timberlands Partnership and (b) a definitive agreement (the “Acquisition Agreement”)
with respect to the acquisition of the Remaining Longview Interest by Timberlands Partnership, as
described more fully below.

4.1 The Partnership Agreement will contain the covenants, indemnifications and other
provisions which are customarily found in agreements of this nature, including the
following:

 

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4.1.1 Investment Objective: Timberlands Partnership will invest in
timberlands and timberlands related assets and operations.

4.1.2 Management: The general partner, managing partner, managing member or
similar Person that has the ability to manage and direct the affairs of the
Timberlands Partnership shall be a member of the BAM Group and shall, if requested,
acknowledge that it is subject to the Relationship Agreement.

4.1.3 Commitment Period: Provisions in the Partnership Agreement with
respect to the commitment period and any early termination of the commitment period
will be consistent with market practice, provided that BIC will be released from any
obligation with respect to unfunded commitments if the acquisition by Timberlands
Partnership of the Remaining Longview Interest is not completed within 18 months
from the Effective Date.

4.1.4 Management Fees and Carried Interest: The Timberlands Partnership
will be obligated, pursuant to the terms of the Partnership Agreement or any other
management or services agreement contemplated by the Partnership Agreement, to pay
management fees for services rendered to the Timberlands Partnership or any carried
interest or similar fees to a Person, which may be an Affiliate of BAM or BIC,
provided that (i) any such management fees, carried interest or similar fees are on
terms substantially consistent with market practice; (ii) BIC’s proportionate share
of such fees is no greater than any other investor’s in Timberlands Partnership; and
(iii) such fees are subject to the netting provisions contained in the Master
Services Agreement and the Agreement of Limited Partnership, as amended and restated
from time to time, of the Infrastructure Partnership.

4.2 The Acquisition Agreement will contain the representations and warranties described
below and other provisions such as covenants and indemnification that are acceptable to the
parties and are customarily found in agreements of this nature, including the following:

4.2.1 Purchase Price: The purchase price for the Remaining Longview
Interest will be as provided for under Section 3.1.2.

 

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4.2.2 Representations and warranties. The Acquisition Agreement will
contain representations and warranties concerning (i) organization and good
standing, (ii) the authorization, execution, delivery and enforceability of the
agreement and all agreements executed in connection therewith, and (iii) title to
the securities or assets being transferred to Timberlands Partnership.

4.2.3 Conditions to Closing. The completion of the closing of the
acquisition of the Remaining Longview Interest will be subject to, inter alia, the
satisfaction or waiver by the parties of the following conditions:

4.2.3.1 all consents and regulatory approvals having been obtained and
documentation entered into with respect to the transactions contemplated
hereby and thereby; and

4.2.3.2 there not having been threatened, instituted or pending any action
or proceeding by any governmental entity, or by any other person in any
jurisdiction before any governmental entity, challenging or seeking to make
illegal, or delay or otherwise directly or indirectly restrain or prohibit
the closing of the acquisition of the Remaining Longview Interest.

5. Appraisal

          The Appraised Value will be determined by one or more appraisers that are not Affiliates of,
and are otherwise acting at arm’s length from, BAM and BIC and are qualified to appraise the
timberlands, and, if applicable, real estate that has a higher and better use and working capital
held by Longview Timber Holdings Corp., as applicable, in the case of each appraiser.

6. Further Assurances

          Each of the parties hereto shall promptly do, make, execute or deliver, or cause to be done,
made, executed or delivered, all such further acts, documents and things as the other party hereto
may reasonably require from time to time for the purpose of giving effect to this Agreement and
shall use reasonable efforts and take all such steps as may be reasonably within its power to
implement to their full extent the provisions of this Agreement.

 

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7. Successors and Assigns

          No party may assign its right or benefits under this Agreement without the prior written
consent of the other party hereto. This provisions of this Agreement shall enure to the benefit of
and be binding on the parties to this Agreement and their respective successors and assigns.

8. Counterparts

          This Agreement may be signed in counterparts and each of such counterparts shall constitute an
original document and such counterparts, taken together, shall constitute one and the same
instrument.

[NEXT PAGE IS SIGNATURE PAGE]

 

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     IN WITNESS WHEREOF the parties hereto have executed this agreement.

	 	 	 	 	 
	 	BROOKFIELD INFRASTRUCTURE

CORPORATION

 	 
	 	By:  	 	 
	 	 	Name:  	Christopher Parker 	 
	 	 	Title:  	Treasurer 	 
	 
	 	BROOKFIELD ASSET MANAGEMENT INC.

 	 
	 	By:  	 	 
	 	 	Name:  	Alan Dean 	 
	 	 	Title:  	Senior Vice President and Secretary

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