prem14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the
Registrant o
Check the appropriate box:
þ Preliminary
Proxy Statement
o Confidential, For Use
of the Commission Only (as permitted by
Rule 14a-6(e)(2))
o Definitive Proxy
Statement
o Definitive Additional
Materials
o Soliciting Material
Pursuant to
§240.14a-12
Trizec Properties, Inc.
(Name of Registrant as Specified in
Its Charter)
(Name of Person(s) Filing Proxy
Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
o No fee required.
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(1)
and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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Common stock, par value $0.01 per share, of Trizec
Properties, Inc. (Trizec Common Stock)
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Class B common units of membership interests of Trizec
Holdings Operating LLC (Operating Company Units)
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(2)
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Aggregate number of securities to which transaction applies:
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96,541,041 shares of Trizec Common Stock (other than shares
of Trizec Common Stock owned by Trizec Canada Inc. and its
subsidiaries);
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3,177,111 shares of Trizec Common Stock issuable upon
exercise of outstanding
in-the-money
stock options to purchase Trizec Common Stock (Trizec
Options);
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382,500 shares of Trizec Common Stock issuable upon
exercise of outstanding
in-the-money
warrants to purchase Trizec Common Stock other than warrants
owned by Trizec Canada Inc. and its subsidiaries (Trizec
Warrants);
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810,066 restricted shares of Trizec Common Stock issuable under
the Trizec Properties, Inc. 2004 Outperformance Compensation
Program adopted under the Trizec Properties, Inc. 2002 Long-Term
Incentive Plan, as amended (OPP Shares);
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1,469,158 shares of Trizec Common Stock issuable pursuant
to restricted stock units and restricted stock rights (the
RSR);
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398,484 shares of Trizec Common Stock issuable pursuant to
deferred restricted stock units and deferred restricted stock
rights (the Deferred RSR, and together with the RSR,
the RSR Awards); and
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2,498,671 Operating Company Units.
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(3)
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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act
Rule 0-11:
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(a)
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$29.21, or $29.01 per share in base merger consideration
plus $0.20 per share, representing the full amount of a
normal quarterly dividend (or distribution) per each share of
outstanding Trizec Common Stock, each OPP Share and each
share of Trizec Common Stock issuable pursuant to the RSR
Awards, and each Operating Company Unit;
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(b)
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$16.72 (which is the difference between $29.21 and $12.49, the
weighted average exercise price per share for all Trizec
Options) per each share of Trizec Common Stock issuable upon
exercise of Trizec Options; and
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(c)
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$13.83 (which is the difference between $29.21 and $15.38, the
weighted average exercise price per share for all Trizec
Warrants) per each share of Trizec Common Stock issuable upon
exercise of Trizec Warrants.
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(4)
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Proposed maximum aggregate value of transaction:
$3,029,415,081.26
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(5)
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Total fee paid: $324,147.41
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Fee paid previously with preliminary materials:
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Check box if any part of the fee is offset as provided by
Exchange Act
Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its
filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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10 South Riverside Plaza, Suite 1100
Chicago, IL 60606
, 2006
Dear Stockholder,
You are cordially invited to attend a special meeting of
stockholders of Trizec Properties, Inc. to be held
on , 2006
at local time. The special meeting will take
place at . At the special meeting,
we will ask you to adopt the Agreement and Plan of Merger and
Arrangement Agreement, dated as of June 5, 2006, among
Trizec Properties, Inc., Trizec Holdings Operating LLC, Trizec
Canada Inc. and affiliates of Brookfield Properties Corporation,
pursuant to which Trizec Properties, Inc. would merge with a
subsidiary of Grace Holdings LLC, an entity to be jointly owned
by affiliates of Brookfield Properties Corporation and The
Blackstone Group.
If the merger is completed, all holders of shares of our common
stock (other than Trizec Canada Inc., its subsidiaries, the
acquiror and the affiliates of the acquiror) will be entitled to
receive $29.01 per share in cash plus an additional cash
amount that represents a pro rata portion of the regular
quarterly dividend payable on our common stock and allocable to
the quarter in which the merger closes, in each case without
interest and less applicable withholding taxes, as more fully
described in the enclosed proxy statement. This will be achieved
indirectly through the issuance to you in the merger of one
share of newly created and fully paid and non-asssesable
redeemable preferred stock of Trizec Properties, Inc. in
exchange for each share of common stock that you own, with the
redeemable preferred stock being redeemed immediately after the
merger for the cash consideration referred to above, without any
further action on your part.
In connection with the merger, pursuant to a plan of arrangement
to be conducted under Canadian law, an affiliate of Brookfield
Properties Corporation will acquire all of the outstanding
multiple voting shares and subordinate voting shares of Trizec
Canada Inc., which, together with its subsidiaries, owns
approximately % of our common stock and all of
our Class F convertible stock and special voting stock.
Upon the recommendation of a special committee of our board of
directors formed for the purpose of considering the merger, our
board of directors, after careful consideration, has approved
the merger, the merger agreement and the other transactions
contemplated by the merger agreement, and has declared the
merger, the merger agreement and the other transactions
contemplated by the merger agreement advisable, fair to and in
the best interests of Trizec Properties, Inc. and our
stockholders. Accordingly, our board of directors recommends
that you vote FOR the adoption of the merger
agreement.
The adoption of the merger agreement requires the approval of
the holders of at least a majority of the outstanding shares of
our common stock entitled to vote on such matter. Trizec Canada
Inc. has agreed, subject to certain exceptions, to vote or cause
to be voted all of the shares of our common stock that it and
its subsidiaries own or may acquire for the adoption of the
merger agreement. As of the record date, Trizec Canada Inc. and
its subsidiaries owned shares of our common stock that
represented approximately % of the voting
power of our common stock entitled to vote at the special
meeting. The proxy statement accompanying this letter provides
you with more specific information concerning the special
meeting, the merger, the merger agreement and the other
transactions contemplated by the merger agreement. We encourage
you to read carefully the enclosed proxy statement, including
the annexes. You may also obtain more information about Trizec
Properties, Inc. from us or from documents we have filed with
the Securities and Exchange Commission.
Your vote is very important regardless of the number of
shares of our common stock that you own. Whether or not you plan
to attend the special meeting, we request that you cast your
vote by either completing and returning the enclosed proxy card
in the postage-paid envelope as promptly as possible or
submitting your proxy or voting instructions by telephone or
Internet. The enclosed proxy card
contains instructions regarding voting. If you attend the
special meeting, your shares may continue to be voted as
instructed in the proxy, or you may withdraw your proxy at the
special meeting and vote your shares in person. If you fail to
vote by proxy or in person, fail to instruct your broker, bank
or other nominee how to vote or abstain from voting, it will
have the same effect as a vote against the adoption of the
merger agreement.
Thank you for your cooperation and continued support.
Very truly yours,
Peter Munk
Chairman of the Board of Directors
This proxy statement is dated , 2006 and is
first being mailed, along with the attached proxy card, to our
stockholders on or about , 2006.
10 South Riverside Plaza, Suite 1100
Chicago, IL 60606
NOTICE OF SPECIAL MEETING OF
STOCKHOLDERS
TO BE HELD ON , 2006
Dear Stockholder:
You are cordially invited to attend a special meeting of the
stockholders of Trizec Properties, Inc. on ,
2006, beginning at local time,
at . The special meeting is being held for the
purpose of acting on the following matters:
1. to consider and vote on a proposal to adopt the
Agreement and Plan of Merger and Arrangement Agreement, dated as
of June 5, 2006, which we refer to as the merger
agreement, by and among Trizec Properties, Inc., Trizec
Holdings Operating LLC, Trizec Canada Inc., Grace Holdings LLC,
Grace Acquisition Corporation, Grace OP LLC and 4162862 Canada
Limited, pursuant to which Grace Acquisition Corporation would
merge with and into Trizec Properties, Inc., all as more fully
described in the enclosed proxy statement;
2. to consider and vote on a proposal to approve any
adjournments of the special meeting for the purpose of
soliciting additional proxies if there are not sufficient votes
at the special meeting to adopt the merger agreement; and
3. to consider any other business that properly comes
before the special meeting and any postponements or any
adjournments of the special meeting.
Upon the recommendation of a special committee of our board
of directors formed for the purpose of considering the merger,
our board of directors, after careful consideration, has
approved the merger, the merger agreement and the other
transactions contemplated by the merger agreement, and has
declared the merger, the merger agreement and the other
transactions contemplated by the merger agreement advisable,
fair to and in the best interests of Trizec Properties, Inc. and
our stockholders. Our board of directors recommends that you
vote FOR the adoption of the merger agreement and
FOR the approval of any adjournments of the special
meeting for the purpose of soliciting additional proxies.
Only holders of record of our common stock and special voting
stock as of the close of business on the record date, which
was , 2006, are entitled to receive notice of
and attend the special meeting or any postponements or any
adjournments of the special meeting. However, only holders of
record of our common stock as of the close of business on the
record date are entitled to vote at the special meeting or any
postponements or adjournments of the special meeting. Holders of
our special voting stock are not entitled to vote on the
proposal to adopt the merger agreement or adjournments of the
special meeting for the purpose of soliciting additional
proxies, and their votes are not being solicited. In addition,
holders of our Class F convertible stock are not entitled
to receive notice of or to attend the special meeting or to vote
on any matter that may come before the special meeting. A list
of stockholders will be available for inspection by stockholders
of record during normal business hours at Trizec Properties,
Inc., 10 South Riverside Plaza, Suite 1100, Chicago,
IL 60606, for ten days prior to the date of the special meeting
and will also be available at the special meeting.
The adoption of the merger agreement requires the approval of
the holders of at least a majority of the outstanding shares of
our common stock entitled to vote on such proposal.
Accordingly, regardless of the number of shares that you own,
your vote is important. Even if you plan to attend the
special meeting in person, we request that you cast your vote by
either marking, signing, dating and promptly returning the
enclosed proxy card in the postage-paid envelope or submitting
your proxy or voting instructions by telephone
or Internet. If you fail to return your proxy card or fail to
submit your proxy by telephone or Internet and do not attend the
special meeting in person, your shares will not be counted for
purposes of determining whether a quorum is present at the
special meeting, and, if a quorum is present, such failure will
have the same effect as a vote against adoption of the merger
agreement. In addition, any adjournments of the special meeting
for the purpose of soliciting additional proxies must be
approved by the affirmative vote of the holders of at least a
majority of the outstanding shares of our common stock who are
present in person or represented by proxy and entitled to vote
on such proposal. If you fail to return your proxy card, you
will not be considered present in person or represented by proxy
for the purpose of this proposal and such failure will have no
effect on the proposal to approve any adjournments of the
special meeting for the purpose of soliciting additional
proxies. Trizec Canada Inc. has agreed, subject to certain
exceptions, to vote or cause to be voted all of the shares of
our common stock that it and its subsidiaries own or may acquire
for the adoption of the merger agreement. As of the record date,
Trizec Canada Inc. and its subsidiaries owned shares of our
common stock that represented approximately %
of the voting power of our common stock entitled to vote at the
special meeting.
You may revoke your proxy at any time prior to its exercise by
delivering a properly executed, later-dated proxy card, by
submitting your proxy or voting instructions by telephone or
Internet at a later date than your previously submitted proxy,
by filing a written revocation of your proxy with our Corporate
Secretary at our address set forth above or by voting in person
at the special meeting.
Stockholders of Trizec Properties, Inc. who do not vote for the
adoption of the merger agreement have the right to seek
appraisal of the fair value of their shares if the merger is
completed, but only if they submit a written demand for
appraisal to Trizec Properties, Inc. before the vote is taken on
the merger agreement and they comply with all requirements of
Delaware law, which are summarized in the enclosed proxy
statement.
We encourage you to read the enclosed proxy statement and the
annexes carefully. If you have any questions or need assistance
voting your shares, please call our proxy
solicitor, , toll-free
at . In addition, you may obtain
information about us from certain documents that we have filed
with the Securities and Exchange Commission and from our website
at www.trz.com. Information contained on our website is not part
of, or incorporated in, the enclosed proxy statement.
By Order of the Board of Directors,
Ted R. Jadwin
Senior Vice President, General Counsel and
Corporate Secretary
, 2006
TABLE OF
CONTENTS
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ANNEXES
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Annex A Agreement
and Plan of Merger and Arrangement Agreement
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A-1
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Annex B J.P. Morgan
Securities Inc. Fairness Opinion
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B-1
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Annex C Section 262
of Delaware General Corporation Law
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C-1
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SUMMARY
This summary highlights only selected information from this
proxy statement relating to (1) the merger of Grace
Acquisition Corporation with and into Trizec Properties, Inc.,
which we refer to as the merger, and (2) the
merger of Grace OP LLC with and into Trizec Holdings Operating
LLC, which we refer to as the operating company
merger. References to the mergers refer to
both the merger and the operating company merger. This summary
also highlights, to a limited extent, the proposed acquisition
by 4162862 Canada Limited and its affiliates of all of the
outstanding multiple voting shares and subordinate voting shares
of Trizec Canada Inc. in a separate transaction, which we refer
to as the arrangement, that is expected to close at
or about the same time as the mergers. However, this proxy
statement does not constitute any solicitation of votes of the
shareholders of Trizec Canada Inc. with respect to the
arrangement. This summary does not contain all of the
information about the mergers and related transactions
contemplated by the merger agreement that is important to you.
As a result, to understand the mergers and the related
transactions fully and for a more complete description of the
legal terms of the mergers and related transactions, you should
read carefully this proxy statement in its entirety, including
the annexes and the other documents to which we have referred
you, including the merger agreement, attached as
Annex A. Each item in this summary includes a page
reference directing you to a more complete description of that
item in this proxy statement.
The
Parties to the Mergers and the Arrangement
(page 24)
Trizec Properties, Inc.
10 South Riverside Plaza, Suite 1100
Chicago, Illinois 60606
(312) 798-6000
Trizec Properties, Inc., which we refer to as we,
us, our, the company,
our company or Trizec, is a Delaware
corporation and one of the largest fully integrated,
self-managed, publicly traded real estate investment trusts, or
REITs, in the United States. We are engaged in the
business of owning and managing office properties in the United
States. Our office properties are concentrated in the
metropolitan areas of seven major U.S. markets: Atlanta,
Chicago, Dallas, Houston, Los Angeles-San Diego, New York,
and Washington, D.C. As of June 15, 2006, we had
ownership interests in 53 consolidated office properties
comprising approximately 32.2 million square feet. In
addition, as of June 15, 2006, we also had ownership
interests in eight unconsolidated real estate joint venture
office properties comprising approximately 7.4 million
square feet of total area and one unconsolidated real estate
development joint venture. Our common stock is listed on the New
York Stock Exchange under the symbol TRZ.
Trizec Holdings Operating LLC
10 South Riverside Plaza, Suite 1100
Chicago, Illinois 60606
(312) 798-6000
Trizec Holdings Operating LLC, which we refer to as our
operating company, is a Delaware limited liability
company through which we conduct substantially all of our
business and own substantially all of our assets. We serve as
the sole managing member of our operating company and, as of
June 15, 2006, owned approximately 98.4% of the outstanding
common units of limited liability company interest in our
operating company. In addition, we owned all of the outstanding
Class SV units and Class F units of limited liability
company interest in our operating company.
Trizec Canada Inc.
BCE Place
181 Bay Street
Suite 3820
Toronto, ON, Canada M5J2T3
(416) 682-8600
1
Trizec Canada Inc., which we refer to as Trizec
Canada, is a Canadian corporation and, together with its
subsidiaries, owns approximately % of our
outstanding common stock and all of our outstanding special
voting stock and Class F convertible stock. Mr. Peter
Munk, chairman of our board of directors, is also chairman of
the board of directors and chief executive officer of Trizec
Canada, and on 2006, Mr. Munk owned,
through a wholly owned corporation, multiple
voting shares and subordinate voting shares of
Trizec Canada which as of such date represented
approximately % of the aggregate voting power
of the multiple voting shares and subordinate voting shares that
are eligible to be voted at the special meeting of the
shareholders of Trizec Canada to consider the arrangement.
Trizec Canada is listed on the Toronto Stock Exchange under the
symbol TZC.
Grace Holdings LLC
c/o Brookfield Properties Corporation
Three World Financial Center,
11th Floor
New York, New York 10281
(212) 417-7195
Grace Holdings LLC, which we refer to as Parent, is
a Delaware limited liability company newly formed by Brookfield
Properties Corporation, or Brookfield Properties, in
connection with the mergers. We have been advised by Brookfield
Properties that Parent will be jointly owned by affiliates of
Brookfield Properties and Blackstone Real Estate Partners V L.P.
Brookfield Properties is a Canadian corporation and one of North
Americas largest commercial real estate companies.
Brookfield Properties owns, develops and manages a portfolio of
premier office properties that comprises 59 commercial
properties totaling approximately 47 million square feet
and ten development properties totaling approximately eight
million square feet in the downtown cores of New York, Boston,
Washington, D.C., Toronto, Calgary and Ottawa. Landmark
properties include the World Financial Center in New York City
and BCE Place in Toronto. Brookfield Properties is listed on the
New York Stock Exchange and the Toronto Stock Exchange under the
symbol BPO.
The principal business of Blackstone Real Estate Partners V L.P.
consists of making various real estate related investments.
Blackstone Real Estate Partners V L.P. is an affiliate of The
Blackstone Group, a global private investment firm founded in
1985 with offices in New York, Atlanta, Boston, Los Angeles,
London, Hamburg, Mumbai and Paris. The Blackstone Groups
real estate group has raised approximately $13 billion for
real estate investing and has a long track record of investing
in office buildings, hotels and other commercial properties. In
addition to real estate, The Blackstone Groups core
businesses include private equity, corporate debt investing,
marketable alternative asset management, mergers and
acquisitions advisory, and restructuring and reorganization
advisory. We refer to Blackstone Real Estate Partners V
L.P. and The Blackstone Group collectively as
Blackstone.
Grace Acquisition Corporation
c/o Brookfield Properties Corporation
Three World Financial Center,
11th Floor
New York, New York 10281
(212) 417-7195
Grace Acquisition Corporation, which we refer to as
MergerCo, is a newly formed Delaware corporation and
a wholly owned subsidiary of Parent. MergerCo was formed by
Parent in connection with the mergers.
Grace OP LLC
c/o Brookfield Properties Corporation
Three World Financial Center,
11th Floor
New York, New York 10281
(212) 417-7195
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Grace OP LLC, which we refer to as Merger Operating
Company, is a newly formed Delaware limited liability
company and a wholly owned subsidiary of MergerCo. Merger
Operating Company was formed by Brookfield Properties in
connection with the mergers.
4162862 Canada Limited
c/o Brookfield Properties Corporation
Three World Financial Center,
11th Floor
New York, New York 10281
(212) 417-7195
4162862 Canada Limited, which we refer to as
AcquisitionCo, is a newly formed Canadian
corporation and an affiliate of Brookfield Properties.
AcquisitionCo was formed by Brookfield Properties in connection
with the arrangement and the acquisition of all of the
outstanding multiple voting shares and subordinate voting shares
of Trizec Canada. We refer to Parent, MergerCo, Merger Operating
Company and AcquisitionCo in this proxy statement collectively
as the Buyer Parties.
The
Special Meeting (page 26)
The
Proposals
The special meeting of our stockholders will be held
at local time,
on , 2006
at . At the special meeting, you will be
asked, by proxy or in person, to adopt the merger agreement and
to approve any adjournments of the special meeting for the
purpose of soliciting additional proxies if there are not
sufficient votes at the special meeting to adopt the merger
agreement.
The persons named in the enclosed proxy card will also have
discretionary authority to vote upon other business, if any,
that properly comes before the special meeting and any
postponements or any adjournments of the special meeting.
Record
Date, Notice and Quorum
Only holders of record of our common stock and our special
voting stock as of the close of business on the record date,
which was , 2006, are entitled to receive
notice of and to attend the special meeting or any postponements
or adjournments of the special meeting. However, only holders of
record of our common stock as of the close of business on the
record date are entitled to vote at the special meeting or any
postponements or adjournments of the special meeting. On the
record date, shares of our common stock were
outstanding and entitled to vote at the special meeting or any
postponements or adjournments of the special meeting. In
addition, holders of our Class F convertible stock are not
entitled to receive notice of or to attend the special meeting
or vote on any matter that may come before the special meeting.
You will have one vote for each share of our common stock that
you owned as of the record date.
The holders of a majority of the shares of our common stock that
were outstanding and entitled to vote on the record date,
present in person or represented by proxy, will constitute a
quorum for purposes of the special meeting.
Required
Vote for the Proposals
The adoption of the merger agreement requires the approval of
the holders of at least a majority of the outstanding shares of
our common stock entitled to vote on such proposal. Because
the required vote to adopt the merger agreement is based on the
number of shares of our common stock outstanding rather than on
the number of shares of our common stock present in person or
represented by proxy at the special meeting and entitled to
vote, failure to vote your shares of our common stock (including
as a result of broker non-votes) and abstentions will have the
same effect as voting against adoption of the merger
agreement.
In addition, the proposal to approve any adjournments of the
special meeting for the purpose of soliciting additional proxies
requires the approval of the holders of at least a majority of
the outstanding shares of our common stock present in person or
represented by proxy and entitled to vote on such proposal. For
the
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purpose of this proposal, if you are a record holder and fail to
return your proxy card or do not attend the special meeting in
person, you will not be considered present in person or
represented by proxy. As a result, such failure will not have
any effect on the outcome of this proposal. Similarly, broker
non-votes will not be considered present in person or
represented by proxy and entitled to vote and will not have any
effect on the outcome of this proposal. However, abstentions are
considered present in person or represented by proxy and
entitled to vote and will have the same effect as voting against
the proposal to approve any adjournments of the special meeting
for the purpose of soliciting additional proxies.
Voting
by Our Directors and Executive Officers; Voting
Agreements
As of the record date, excluding the shares of our common stock
that are owned by Trizec Canada and its subsidiaries and deemed
to be beneficially owned by Mr. Munk due to his control
over Trizec Canada, our directors and executive officers
beneficially owned an aggregate of
approximately shares of our common stock,
entitling them to exercise approximately % of
the voting power of our common stock entitled to vote at the
special meeting. Our executive officers and directors, other
than Mr. Munk, have informed us that they intend to vote
the shares of our common stock that they beneficially own for
the adoption of the merger agreement and for the approval of any
adjournments of the special meeting for the purpose of
soliciting additional proxies.
Concurrently with the execution of the merger agreement, Trizec
Canada entered into a support agreement with Parent and
MergerCo, which we refer to as the Trizec voting
agreement, pursuant to which Trizec Canada has agreed to
vote all shares of our common stock that Trizec Canada and its
subsidiaries own (including any shares of our common stock that
may be acquired by them after the date of the merger agreement)
for the adoption of the merger agreement, subject to the terms
and conditions contained in the Trizec voting agreement. As of
the record date, Trizec Canada and its subsidiaries
owned shares of our common stock, representing
approximately % of the voting power of our
common stock entitled to vote at the special meeting.
In addition, P.M. Capital Inc., or PMCI, a
corporation that is wholly owned by Mr. Munk and through
which Mr. Munk owns multiple voting shares and subordinate
voting shares of Trizec Canada, has entered into a support
agreement with Parent and AcquisitionCo, which we refer to as
Trizec Canada voting agreement, pursuant to which
PMCI has agreed to vote all shares that it owns (including any
shares that may be acquired by PMCI after the date of the merger
agreement) for the arrangement, subject to the terms and
conditions in the Trizec Canada voting agreement. We have been
advised by Trizec Canada that on ,
2006, PMCI owned multiple voting shares
and subordinate voting shares of Trizec
Canada, which as of such date represented
approximately % of the aggregate
voting power of the multiple voting shares and subordinate
voting shares that are eligible to be voted at the special
meeting of the shareholders of Trizec Canada to consider the
arrangement. Under the Trizec Canada voting agreement,
Mr. Munk may not acquire directly or indirectly shares of
Trizec Canada, Parent, Brookfield Properties or its affiliates
other than pursuant to or as contemplated by the arrangement for
a period of 12 months following the closing of the arrangement.
The covenants in the Trizec Canada voting agreement are subject
to the ability of PMCI to convert into subordinate voting shares
and transfer up to 3.0 million multiple voting shares of
Trizec Canada held by PMCI. In addition, PMCI, Mr. Munk,
Trizec Canada and CIBC Mellon Trust Company, as trustee,
are parties to a voting trust agreement, dated
April 23, 2002, which we refer to as the voting trust
agreement in this proxy statement, pursuant to which PMCI
agreed not to vote more than the number of multiple voting
shares which in the aggregate represent a simple majority of all
votes entitled to be cast on a matter by all holders of voting
securities of Trizec Canada.
Proxies
and Revocation
Any of our common stockholders of record entitled to vote at the
special meeting may vote by returning the enclosed proxy card,
submitting the proxy or voting instructions by telephone or
Internet, or by appearing and voting at the special meeting in
person. If the shares of our common stock that you own are held
in street name by your broker, bank or other
nominee, you should instruct your broker, bank or other nominee
on how to vote your shares using the instructions provided by
your broker.
4
You may revoke your proxy at any time prior to its exercise by
delivering a properly executed, later-dated proxy card by mail,
by submitting your proxy or voting instructions by telephone or
Internet or instructing your broker, bank or other nominee at a
later date than your previously submitted proxy, by filing a
written revocation of your proxy with our Corporate Secretary or
by voting in person at the special meeting.
Attendance at the special meeting will not by itself revoke a
previously granted proxy. Also, if you elect to vote in person
at the special meeting and your shares are held by a broker,
bank or other nominee, you must bring to the special meeting a
legal proxy from the broker, bank or other nominee authorizing
you to vote your shares of our common stock.
The
Mergers and the Arrangement (page 29)
Pursuant to the merger agreement, on the closing date of the
merger, the following transactions will occur:
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MergerCo will merge with and into us, with us surviving the
merger and with Parent owning all of our common stock not owned
by Trizec Canada and its subsidiaries (we use the term
surviving corporation in this proxy statement to
describe Trizec as the surviving entity following the merger);
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Merger Operating Company will merge with and into our operating
company, with our operating company surviving the operating
company merger and continuing to exist as a subsidiary of the
surviving corporation (we use the term surviving operating
company in this proxy statement to refer to our operating
company as the surviving operating company following the
operating company merger); and
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in addition, AcquisitionCo and its affiliates will acquire all
of the outstanding multiple voting shares and subordinate voting
shares of Trizec Canada in the arrangement.
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After the consummation of the merger and the arrangement, Parent
will own approximately 62% of the outstanding shares of our
common stock, and AcquisitionCo and its affiliates will own,
indirectly through their 100% ownership of shares of Trizec
Canada, the remaining outstanding shares of our common stock.
The effective time of the merger will occur at the time the
certificate of merger is executed and filed with the Secretary
of State of the State of Delaware or such later time agreed to
by the parties. We refer to this time as the merger
effective time in this proxy statement. The effective time
of the operating company merger will occur at the time the
certificate of merger (relating to the operating company merger)
is executed and filed with the Secretary of State of the State
of Delaware or such later time agreed to by the parties. We
refer to this time as the operating company merger
effective time in this proxy statement. The arrangement
will become effective upon the issuance of a certificate of
arrangement and at the time designated as the effective time in
the plan of arrangement relating to the arrangement. We refer to
this time as the arrangement effective time in this
proxy statement.
The
Merger
At the merger effective time, MergerCo will merge with and into
Trizec, with Trizec continuing as the surviving corporation. In
the merger, each share of our common stock issued and
outstanding immediately prior to the merger effective time
(other than shares held in the treasury and shares owned by
Trizec Canada, its subsidiaries, Parent and affiliates of
Parent, and shares held by stockholders who properly exercise
appraisal rights under Delaware law) will be converted into, and
canceled in exchange for, one share of newly created and fully
paid and non-assessable redeemable preferred stock of the
surviving corporation. Immediately after the completion of the
merger, each share of redeemable preferred stock will be
redeemed without further action on the part of the holder for
the right to receive $29.01 in cash plus an additional cash
amount that represents a pro rata portion of the regular
quarterly dividend payable on our common stock and allocable to
the quarter in which the merger closes, in each case without
interest and less applicable withholding taxes. In this proxy
statement, we refer to the cash consideration that our common
stockholders (other than Trizec Canada and its subsidiaries)
will ultimately receive with respect to each share of our common
stock as a result of the merger as the common stock merger
consideration.
5
The
Operating Company Merger
Immediately after the merger effective time, Merger Operating
Company will merge with and into our operating company, with our
operating company continuing as the surviving operating company.
Trizec, as the surviving corporation, will be the sole managing
member of the surviving operating company. In the operating
company merger, each common unit of limited liability company
interest (other than units held by us or any of our
subsidiaries, which units will remain outstanding as units of
limited liability company interest in the surviving operating
company) issued and outstanding immediately prior to the
operating company merger effective time will be converted into,
and canceled in exchange for, one newly created and fully paid
redeemable preferred unit. In lieu of retaining this redeemable
preferred unit, holders of redeemable preferred units may elect
to (a) redeem each such redeemable preferred unit at any
time (including immediately after the operating company merger
effective time) in exchange for an amount per unit equal to the
amount of the common stock merger consideration plus all accrued
and unpaid distributions on such redeemable preferred units, or
(b) convert each such redeemable preferred unit on a
one-for-one
basis within 15 days following the merger effective time
into a continuing common unit in the surviving operating
company, subject to the terms and conditions of the amended and
restated operating agreement of the surviving operating company
that will be adopted in connection with the operating company
merger. This proxy statement does not constitute any
solicitation of consents in respect of the operating company
merger and does not constitute an offer to convert the operating
company units that you may own for or into newly issued
preferred units or continuing common units in the surviving
operating company.
The
Arrangement
At or about the merger effective time, pursuant to a plan of
arrangement relating to the arrangement and at the arrangement
effective time, AcquisitionCo and its affiliates will acquire
all of the outstanding multiple voting shares and subordinate
voting shares of Trizec Canada for $30.97 per share in cash
plus an additional cash amount that represents a pro rata
portion of the regular quarterly dividend payable on the
multiple voting shares and subordinate voting shares and
allocable to the quarter in which the arrangement closes. The
$30.97 per share that Trizec Canadas shareholders
will receive in the arrangement represents $29.01 per share
attributable to the shares of our common stock that Trizec
Canada and its subsidiaries own plus an additional
$1.96 per share which reflects the agreed value of Trizec
Canadas assets and liabilities other than its interest in
Trizec, which are primarily cash and marketable securities and
which we refer to as net other assets in this proxy
statement. We refer to this aggregate cash consideration to be
received by holders of Trizec Canadas multiple voting
shares and subordinate voting shares in connection with the
arrangement as the Trizec Canada arrangement
consideration.
6
The following charts show our organizational structure
immediately prior to, and after, the proposed mergers:
Recommendation
of Our Board of Directors and the Special Committee
(page 43)
Upon the recommendation of a special committee of our board of
directors formed for the purpose of considering the merger,
which we refer to as the special committee, our
board of directors, after careful consideration:
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has determined that the merger, the merger agreement and the
other transactions contemplated by the merger agreement are
advisable, fair to and in the best interests of us and our
stockholders;
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has determined separately, on behalf of our operating company,
in our capacity as the sole managing member of our operating
company, that the operating company merger, the merger agreement
and the other transactions contemplated by the merger agreement
are advisable, fair to and in the best interests of our
operating company and the holders of limited liability company
interests in our operating company;
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has approved the merger, the merger agreement and the other
transactions contemplated by the merger agreement, and directed
that the merger agreement be submitted to our common
stockholders for approval at a special meeting of stockholders;
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recommends that you vote FOR the adoption of
the merger agreement; and
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recommends that you vote FOR the approval of
any adjournments of the special meeting.
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7
Opinion
of Our Financial Advisor (page 43)
In deciding to approve the merger, the merger agreement and the
other transactions contemplated by the merger agreement, our
board of directors and the special committee considered the oral
opinion, delivered on June 4, 2006 and subsequently
confirmed in writing, of our financial advisor, J.P. Morgan
Securities Inc., or JPMorgan, that, as of that date,
and based upon and subject to the various considerations and
assumptions described in the opinion, the merger consideration
to be received by (a) the holders of our common stock in
connection with the proposed merger involving us was fair, from
a financial point of view, to such holders (other than Trizec
Canada and its controlling shareholders), and (b) the
holders of Class B common units of our operating company in
the proposed operating company merger was fair, from a financial
point of view, to such holders (assuming all such holders
elected to redeem their preferred units and receive the cash
consideration), other than us and our subsidiaries.
JPMorgans opinion, which sets forth the assumptions made,
procedures followed, matters considered and limits on the
opinion and the review undertaken by JPMorgan in connection with
rendering its opinion, is attached as Annex B to
this proxy statement. We encourage you to read this opinion
carefully. The opinion of JPMorgan is not a recommendation as to
how you should vote with respect to the merger agreement.
Pursuant to our engagement letter with JPMorgan, we have agreed
to pay JPMorgan a transaction fee of $10.0 million, all of
which is payable upon consummation of the merger.
Financing
Commitment and Guarantee (pages 49 and 50)
In connection with the mergers, Parent will cause approximately
$ billion in the aggregate to be paid to our
stockholders (other than Trizec Canada, its subsidiaries, Parent
and affiliates of Parent), the members of our operating company
(assuming none of the members of our operating company retain
preferred units or elect to receive continuing common units in
the surviving operating company, in each case, in lieu of
redeeming their redeemable preferred units for cash
consideration) and the holders of our outstanding stock options,
restricted stock, restricted stock units and rights, deferred
restricted stock units and rights and warrants. These payments
are expected to be funded by a combination of equity
contributions to Parent and debt financing.
In connection with the execution and delivery of the merger
agreement, Parent obtained a debt commitment letter from Merrill
Lynch Mortgage Lending, Inc., or Merrill Lynch,
providing for a commitment of debt financing in an aggregate
principal amount of up to $3.6 billion, provided that if
additional Trizec properties are financed under the debt
commitment letter, the amount will be increased by 75% of the
allocated value of such properties. Merrill Lynch has been
joined in its commitment by Bear Stearns Commercial Mortgage,
Inc., Morgan Stanley Mortgage Capital Inc., Deutsche Bank
Securities, Inc.s affiliate German American Capital
Corporation and Royal Bank of Canada. The debt commitment letter
terminates on December 31, 2006, unless extended in
accordance with the debt commitment letter and is conditioned on
the completion of the mergers and other customary conditions.
The lenders have the right to terminate the debt commitment
letter under certain circumstances, including if Parent is
entitled to terminate the merger agreement due to a breach of
certain representations and warranties by us or Trizec Canada or
a material adverse effect with respect to us or Trizec Canada.
The merger agreement does not contain a financing condition.
Under the terms of the merger agreement, Parent agreed to use
its reasonable best efforts to arrange its debt financing on the
terms and conditions described in the debt commitment letter.
If all other closing conditions have been satisfied or waived
but Parent fails to obtain adequate financing to complete the
mergers, such failure will constitute a breach of Parents
covenants under the merger agreement. In that event, so long as
we, our operating company and Trizec Canada are not in material
breach of each of our respective obligations under the merger
agreement, we and Trizec Canada would be entitled to terminate
the merger agreement and receive from Parent an amount equal to
all reasonable expenses incurred by us and Trizec Canada in
connection with the proposed transactions, up to
$15.5 million for us and up to $9.5 million for Trizec
Canada. In addition, we may take legal action against Brookfield
Properties to seek damages of up to a maximum of
$1.1 billion less the amount of any actual expense
reimbursements that we have received under a guarantee provided
by Brookfield Properties of such amount.
8
Treatment
of Special Voting Stock and Class F Convertible Stock
(page 62)
Immediately after the merger, each share of our special voting
stock and Class F convertible stock will remain outstanding
as a share of special voting stock and Class F convertible
stock, respectively, of the surviving corporation.
Treatment
of Stock Options, Restricted Stock, Restricted Stock Units and
Rights, Deferred Restricted Stock Units and Rights, Warrants and
OPP Awards (page 62)
The merger agreement provides that, immediately prior to the
merger effective time, all of our outstanding stock options,
restricted stock, restricted stock units and rights, and
deferred restricted stock units and rights will become fully
vested, payable or exercisable, as the case may be, and all
outstanding restricted stock, restricted stock units and rights,
and deferred restricted stock units and rights will be
considered outstanding shares of our common stock for the
purposes of the merger agreement, including the right to receive
the common stock merger consideration.
In connection with the merger:
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all unexercised stock options, whether vested or unvested, will
be canceled and converted into the right to receive a single
lump sum cash payment, without interest and less applicable
withholding taxes, equal to the product of:
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the aggregate number of shares of our common stock underlying
such stock option immediately prior to the merger effective
time, multiplied by
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the excess, if any, of the common stock merger consideration
over the exercise price per share of our common stock subject to
such stock option;
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each share of restricted stock, restricted stock unit or right,
and deferred restricted stock unit or right will become fully
vested and automatically will be considered an outstanding share
of common stock, entitling the holder to receive the common
stock merger consideration, without interest and less applicable
withholding taxes; and
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each outstanding warrant to purchase shares of our common stock
will be adjusted to provide that from and after the merger
effective time, each warrant will entitle the holder thereof,
upon exercise of such warrant and payment of the exercise price
thereof, to receive a single lump sum cash payment, without
interest and less applicable withholding taxes, equal to the
product of:
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the aggregate number of shares of our common stock underlying
such warrant immediately prior to the merger effective time,
multiplied by
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the common stock merger consideration.
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In addition, shares of our restricted common stock will be
awarded to participants under the Trizec Properties, Inc. 2004
Outperformance Compensation Program adopted under the Trizec
Properties, Inc. 2002 Long-Term Incentive Plan, as amended, or
OPP, in accordance with the terms of the OPP, based
on the requisite performance criteria for a performance period
from October 20, 2004 and ending on the date of the merger
agreement having been attained, which shares will become fully
vested and free of any forfeiture or holding restrictions
immediately prior to the merger effective time and will be
considered outstanding shares of common stock for purposes of
the merger agreement, including the right to receive the common
stock merger consideration, without interest and less applicable
withholding taxes. We refer to such shares of our restricted
common stock that will be awarded under the OPP as the OPP
awards in this proxy statement.
Interests
of Our Directors and Executive Officers in the Mergers and the
Arrangement (page 50)
Our directors and executive officers may have interests in the
merger that are different from, or in addition to, yours,
including the following:
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all unvested stock options owned by our directors and executive
officers will become fully vested and exercisable immediately
prior to the merger effective time, and all stock options held
by our directors and executive officers and not exercised prior
to the merger effective time, will be canceled and converted
into the right to receive a cash payment in respect of each
share of common stock underlying
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the stock options equal to the excess, if any, of the common
stock merger consideration over the exercise price per share of
common stock subject to such stock options, without interest and
less applicable withholding taxes;
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shares of restricted common stock, restricted stock units and
rights, and deferred restricted stock units and rights owned by
our directors and executive officers will become fully vested
and free of any forfeiture restrictions immediately prior to the
merger effective time and will be considered outstanding shares
of common stock for purposes of the merger agreement, including
the right to receive the common stock merger consideration,
without interest and less applicable withholding taxes;
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in accordance with the terms of the OPP, shares of restricted
common stock will be awarded under the OPP to our executive
officers based on the requisite performance criteria in
connection with the merger for a performance period from
October 20, 2004 and ending on the date of the merger
agreement having been attained, which shares of restricted
common stock will become fully vested and free of any forfeiture
or holding restrictions immediately prior to the merger
effective time and will be considered outstanding shares of
common stock for purposes of the merger agreement, including the
right to receive the common stock merger consideration, without
interest and less applicable withholding taxes;
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warrants to purchase shares of our common stock owned by our
directors and executive officers will be adjusted in accordance
with their terms to provide that, as of the merger effective
time, upon exercise of each such warrant and payment of the
applicable exercise price, the holder of such warrant will be
entitled to receive a cash payment in respect of each share of
common stock underlying his or her warrants equal to the common
stock merger consideration, without interest and less applicable
withholding taxes;
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under his employment agreement, Mr. Timothy H. Callahan,
our President and Chief Executive Officer, will be entitled to
receive severance benefits in certain circumstances, including
(a) an annual incentive bonus for the fiscal year in which
his termination or resignation occurs, prorated over the number
of days employed during such fiscal year and based on the
average of the annual incentive bonuses paid to
Mr. Callahan during the immediately preceding two fiscal
years, which we refer to as the average bonus,
(b) three times the sum of his base salary (at the rate in
effect on the date of Mr. Callahans termination or
resignation) and the average bonus, and (c) an additional
tax gross-up
payment if any severance payment or benefit made or provided to
him in connection with the merger would be subject to the excise
tax imposed under Section 4999 of the Internal Revenue Code
of 1986, as amended (the Code);
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under the terms of our Change in Control Severance Pay Plan, or
the severance plan, each of Messrs. Michael C.
Colleran, our Executive Vice President and Chief Financial
Officer, Brian K. Lipson, our Executive Vice President and Chief
Investment Officer, William R.C. Tresham, our Executive Vice
President and Chief Operating Officer, and Ted R. Jadwin, our
Senior Vice President, General Counsel and Corporate Secretary,
will be entitled to receive severance benefits in certain
circumstances, including (a) a pro rata annual bonus (with
respect to the greater of such officers 2005 annual bonus
paid or 2006 target bonus), (b) a pro rata amount in
respect of the value of accrued stock incentive awards,
(c) two times (one time in the case of Mr. Jadwin) the
sum of such officers annual base salary and the greater of
such officers 2005 annual bonus paid or 2006 target bonus,
and (d) an additional tax-gross up payment to be made if
any severance payments made or benefits provided in connection
with the merger would be subject to the excise tax imposed by
Section 4999 of the Code;
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under the terms of our Retention Bonus Program, or the
retention plan, each of Messrs. Callahan,
Colleran, Lipson, Tresham and Jadwin is entitled to receive a
retention bonus amount based on his years of service and weekly
base salary amount if he remains actively employed by the
surviving corporation on the
90th day
following the closing date of the merger (or if the merger does
not occur, if he remains employed by us on June 1, 2007),
or if he is terminated without cause or resigns for
good reason (as such terms are defined in the
severance plan) prior to the end of such
90-day
period; and
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our directors and executive officers are entitled to continued
indemnification arrangements and directors and
officers insurance coverage for a period of six years
following the merger effective time.
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10
In addition, in connection with the arrangement, Mr. Munk
will receive with respect to each multiple voting share and each
subordinate voting share of Trizec Canada that he owns through
PMCI, a corporation wholly owned by him, the Trizec Canada
arrangement consideration. We have been advised by Trizec Canada
that as of , Mr. Munk owned, through
PMCI, multiple voting shares
and subordinate voting shares of Trizec Canada
and owned options to purchase subordinate
voting shares. In addition, certain of our other directors and
two of our executive officers also owned subordinate voting
shares of Trizec Canada and options to purchase subordinate
voting shares as of the record date.
Our board of directors was fully aware of the foregoing
interests of our directors and executive officers in the merger
and the arrangement, and considered them carefully prior to
approving the merger, the merger agreement, and the other
transactions contemplated by the merger agreement.
No
Solicitation of Transactions (page 71)
The merger agreement contains restrictions on our ability to
solicit or engage in discussions or negotiations with a third
party regarding specified transactions involving us, our
subsidiaries, Trizec Canada or its subsidiaries. Notwithstanding
these restrictions, under certain circumstances and subject to
certain conditions, our board of directors and the board of
directors of Trizec Canada may respond to an unsolicited written
acquisition proposal or terminate the merger agreement and enter
into an acquisition agreement with respect to a superior
proposal. Upon entering into an agreement for a transaction that
constitutes a superior proposal, we will be obligated to pay a
breakup fee to Parent as described below under Termination
Fees and Expenses.
Conditions
to the Mergers (page 74)
Completion of the mergers and the arrangement depends upon the
satisfaction or waiver of a number of conditions, including,
among others:
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the adoption of the merger agreement by Trizecs
stockholders;
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the approval of the arrangement by Trizec Canadas
shareholders;
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the approval of the arrangement by the Ontario Superior Court of
Justice;
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the termination, expiration or waiver of the waiting period for
(a) the mergers under the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, or the
HSR Act, and (b) the arrangement under the
Competition Act (Canada), or the Competition Act;
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no action by any governmental authority that would prohibit the
consummation of the mergers or the arrangement;
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our, our operating companys and Trizec Canadas
representations and warranties being true and correct, except
where the failure of such representations and warranties to be
true and correct in all respects without regard to any
materiality or material adverse effect qualifications (other
than the representations relating to the absence of any material
adverse effect) does not and would not reasonably be expected to
have, individually or in the aggregate, a material adverse
effect;
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the performance in all material respects by us, our operating
company and Trizec Canada of our, our operating companys
and Trizec Canadas obligations under the merger agreement
and compliance, in all material respects, with the agreements
and covenants to be performed or complied with under the merger
agreement prior to the arrangement effective time;
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on the closing date, there shall not exist an event, change or
occurrence that, individually or in the aggregate, has had a
material adverse effect; and
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the receipt of a tax opinion of our counsel, Hogan &
Hartson LLP, or Hogan & Hartson, opining
that we have been organized and have operated in conformity with
the requirements for qualification as a REIT under the Code.
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Termination
of the Merger Agreement (page 75)
The merger agreement may be terminated and the mergers and the
arrangement may be abandoned at any time prior to the merger
effective time or the arrangement effective time even after
Trizecs stockholders have adopted the merger agreement and
Trizec Canadas shareholders have approved the arrangement:
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by mutual written consent of the parties;
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by any of Parent, us and our operating company, or Trizec Canada
if:
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the merger has not occurred on or before December 31, 2006,
provided that this right will not be available to a party whose
failure to fulfill any obligation under the merger agreement
materially contributed to the failure of the merger to occur by
this date;
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any governmental authority shall have enacted, issued,
promulgated, enforced or entered any injunction, order, decree
or ruling or taken any other action which has the effect of
making consummation of the mergers or the arrangement illegal or
would otherwise prevent or prohibit the consummation of the
mergers or the arrangement and is final and
non-appealable; or
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the requisite vote of (a) our common stockholders to adopt
the merger agreement is not obtained, or (b) Trizec
Canadas shareholders to approve the arrangement is not
obtained;
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none of Parent, MergerCo and AcquisitionCo is in material breach
of its respective obligations under the merger agreement, and
(a) any of our, our operating companys or Trizec
Canadas representations and warranties is or becomes
untrue or incorrect such that the closing condition pertaining
to our, our operating companys and Trizec Canadas
representations and warranties would be incapable of being
satisfied by December 31, 2006, or (b) there has been
a breach of any of our, our operating companys or Trizec
Canadas covenants and agreements under the merger
agreement such that the closing condition pertaining to our, our
operating companys or Trizec Canadas performance and
compliance with covenants or agreements would be incapable of
being satisfied by December 31, 2006;
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our board of directors or a special committee of our board of
directors (a) withdraws, modifies or amends its
recommendation that our stockholders vote to adopt the merger
agreement, (b) publicly approves or recommends a different
acquisition proposal, (c) within ten business days after it
is commenced, fails to recommend the rejection of a tender offer
or exchange offer relating to our outstanding common stock that
constitutes a different acquisition proposal, or
(d) publicly announces the intention to do any of the
foregoing; or
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Trizec Canadas board of directors (a) withdraws,
modifies or amends its recommendation that Trizec Canadas
shareholders vote to approve the arrangement, (b) publicly
approves or recommends a different Trizec Canada acquisition
proposal, (c) within ten business days after it is
commenced, fails to recommend the rejection of a tender offer or
exchange offer relating to the outstanding shares of Trizec
Canada that constitutes a different Trizec Canada acquisition
proposal, or (d) publicly announces the intention to do any
of the foregoing;
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by us and our operating company, or Trizec Canada if:
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none of us, our operating company and Trizec Canada is in
material breach of its respective obligations under the merger
agreement, and (a) any of Parents, MergerCos or
AcquisitionCos representations and warranties is or
becomes untrue or incorrect such that the closing condition
pertaining to their representations and warranties would be
incapable of being satisfied by December 31, 2006, or
(b) there has been a breach of any of Parents,
MergerCos or AcquisitionCos covenants and agreements
under the merger agreement such that the closing condition
pertaining to their performance and compliance with covenants
and agreements would be incapable of being satisfied by
December 31, 2006; or
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by us and our operating company, and Trizec Canada if:
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our board of directors or a special committee of our board of
directors and Trizec Canadas board of directors approve
and authorize us and Trizec Canada, respectively, to enter into
a definitive agreement with respect to a combined superior
proposal, but only so long as:
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the requisite stockholder vote for us (in connection with the
merger) and shareholder vote for Trizec Canada (in connection
with the arrangement) have not been obtained;
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we, our operating company and Trizec Canada are not, or have not
been, in breach of our obligations under the merger agreement
with regard to prohibitions on soliciting different acquisition
proposals in any material respect;
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we and Trizec Canada have first given Parent at least three
business days notice that we intend to terminate the merger
agreement (attaching the most current version of the agreement
or agreements relating to such combined superior proposal);
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during the three business days following the receipt by Parent
of the termination notice, (a) we have offered to negotiate
with, and if accepted, have negotiated in good faith with,
Parent to make adjustments to the terms and conditions of the
merger agreement to enable us to proceed with the merger and
(b) our board of directors or a special committee of our
board of directors has determined in good faith, after the end
of such three business day period, after considering the results
of such negotiations and any amendment to the merger agreement
entered into, or for which Parent has irrevocably covenanted to
enter into, that the superior proposal giving rise to such
notice continues to be a superior proposal;
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during the three business days following the receipt by Parent
of the termination notice, (a) Trizec Canada has offered to
negotiate with, and if accepted, has negotiated in good faith
with, Parent to make adjustments to the terms and conditions of
the merger agreement to enable Trizec Canada to proceed with the
arrangement, and (b) Trizec Canadas board of
directors has determined in good faith, after the end of such
three business day period, after considering the results of such
negotiations and any amendment to the merger agreement entered
into, or for which Parent has irrevocably covenanted to enter
into, that the superior proposal giving rise to such notice
continues to be a superior proposal; and
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we pay to Parent the termination fee and reasonable transaction
expenses in accordance with the merger agreement concurrently
with or prior to the termination of the merger agreement.
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Termination
Fee and Expenses (page 77)
We and Trizec Canada have agreed to pay to Parent a termination
fee and to reimburse Parents transaction expenses up to a
maximum of $25.0 million if the merger agreement is
terminated under certain circumstances. There are three
alternative termination fees under the merger agreement:
(a) the Trizec termination fee, which is equal
to $71.3 million; (b) the Trizec Canada
termination fee, which is equal to $43.7 million; and
(c) the full termination fee, which is the sum
of the Trizec termination fee and the Trizec Canada termination
fee, or $115.0 million.
Trizec
We will pay to Parent the full termination fee and the full
amount of its expenses (subject to the $25.0 million limit)
in the event that:
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we and Trizec Canada have terminated the merger agreement
because we and Trizec Canada enter into an agreement to
implement a combined superior proposal;
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Parent has terminated the merger agreement because our board of
directors or the special committee has withdrawn, modified or
amended its recommendation that our stockholders vote to adopt
the merger agreement, publicly approved or recommended a
different acquisition proposal, failed to recommend the
rejection of a tender offer or exchange offer relating to our
common stock that constitutes a different acquisition proposal
within ten business days of its commencement or publicly
announced the intention to do any of the foregoing;
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we, our operating company, Trizec Canada or Parent has
terminated the merger agreement because the requisite
stockholder vote to adopt the merger agreement upon a vote being
taken has not been
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obtained and (a) at or prior to the later of the meeting of
our stockholders to approve the adoption of the merger agreement
or termination, a different acquisition proposal has been made
to us, or otherwise publicly announced, and
(b) concurrently with the termination or within
12 months following the termination date we enter into a
contract with respect to or consummate a different acquisition
proposal.
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We or our operating company will also pay to Parent an amount
equal to 62% of Parents expenses, subject to certain
limitations, if:
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Parent has terminated the merger agreement because (a) our
or our operating companys respective representations and
warranties are or become untrue or incorrect, or (b) we or
our operating company breach any of our or our operating
companys respective covenants or agreements, in each case
that would be incapable of being satisfied by December 31,
2006.
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In addition, if the merger agreement is terminated under the
circumstances described with respect to Trizec Canada in the
first two bullets below and, within 12 months of the
termination date, we enter into a contract with respect to or
consummate a different acquisition proposal, if and when we
consummate such acquisition proposal, we will be required to pay
to Parent an amount equal to the Trizec termination fee plus the
remaining 62% of Parents expenses that are not paid by
Trizec Canada under such circumstances, subject to certain
limitations.
Trizec
Canada
Trizec Canada will pay to Parent the Trizec Canada termination
fee and 38% of Parents expenses (subject to the
$25.0 million limit) in the event that:
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Parent has terminated the merger agreement because Trizec
Canadas board of directors has (a) withdrawn,
modified or amended its recommendation that Trizec Canadas
shareholders vote to approve the arrangement, (b) publicly
recommended or approved a different Trizec Canada acquisition
proposal or (c) failed to recommend the rejection of a
tender offer or exchange offer relating to the shares of Trizec
Canada that constitutes a different Trizec Canada acquisition
proposal within ten business days of its commencement,
(d) or publicly announced the intention to do any of the
foregoing; or
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we, Trizec Canada or Parent has terminated the merger agreement
because the requisite shareholder vote to approve the
arrangement upon a vote being taken has not been obtained and
(a) at or prior to the later of the meeting of Trizec
Canadas shareholders or the termination date, a different
Trizec Canada acquisition proposal, or otherwise publicly
announced and (b) concurrently with the termination or
within 12 months following the merger agreement termination
date, Trizec Canada consummates an acquisition proposal.
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Trizec Canada will pay to Parent an amount equal to 38% of
Parents expenses, subject to certain limitations, if:
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Parent has terminated the merger agreement because
(a) Trizec Canadas representations and warranties are
or become untrue or incorrect or (b) Trizec Canada breaches
any of its covenants or agreements that would be incapable of
being satisfied by December 31, 2006.
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Parent
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If we, our operating company and Trizec Canada are not in
material breach of each of our or its obligations under the
merger agreement, Parent will pay us and Trizec Canada all
reasonable
out-of-pocket
costs and expenses up to an aggregate maximum of
$15.5 million and $9.5 million, respectively, if the
merger agreement is terminated by us or Trizec Canada because
either (a) any of the representations and warranties of
Parent, MergerCo or AcquisitionCo is or becomes untrue or
incorrect or (b) Parent, MergerCo or AcquisitionCo breaches
any of their respective covenants or agreements that would be
incapable of being satisfied by December 31, 2006.
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14
Voting
Agreements (page 56)
Concurrently with the execution of the merger agreement, Trizec
Canada entered into the Trizec voting agreement with Parent and
MergerCo pursuant to which Trizec Canada has agreed to vote or
cause to be voted all of the shares of our common stock that
Trizec Canada and its subsidiaries own (including any shares of
our common stock that may be acquired after the execution of the
merger agreement) for the adoption of the merger agreement,
subject to the terms and conditions contained in the Trizec
voting agreement. As of the record date, Trizec Canada and its
subsidiaries owned approximately shares of our
common stock, entitling them to exercise
approximately % of the voting power of our
common stock entitled to vote at the special meeting.
In addition, PMCI, a corporation that is wholly owned by
Mr. Munk and through which Mr. Munk owns multiple
voting shares and subordinate voting shares of Trizec Canada,
has entered into the Trizec Canada voting agreement with Parent
and AcquisitionCo pursuant to which PMCI has agreed to vote all
multiple voting shares and subordinate voting shares that it
owns (including any shares that may be acquired by PMCI after
the date of the merger agreement) for the arrangement, subject
to the terms and conditions contained in such voting agreement.
We have been advised by Trizec Canada that
on , 2006,
PMCI owned multiple voting shares
and subordinate voting shares of Trizec Canada,
which as of such date represented
approximately % of the aggregate voting power
of the multiple voting shares and subordinate voting shares that
are eligible to be voted at the special meeting of the
shareholders of Trizec Canada to consider the arrangement. Under
the Trizec Canada voting agreement, Mr. Munk may not
acquire directly or indirectly shares of Trizec Canada, Parent,
Brookfield Properties or its affiliates other than pursuant to
or as contemplated by the arrangement for a period of 12 months
following the closing of the arrangement. The covenants in the
Trizec Canada voting agreement are subject to the ability of
PMCI to convert into subordinate voting shares and transfer up
to 3.0 million multiple voting shares of Trizec Canada held
by PMCI. In addition, pursuant to the voting trust agreement,
PMCI agreed not to vote more than the number of multiple voting
shares which in the aggregate represent a simple majority of all
votes entitled to be cast on a matter by all holders of voting
securities of Trizec Canada.
Regulatory
Approvals (page 57)
The HSR Act provides that transactions such as the merger may
not be completed until certain information has been submitted to
the Federal Trade Commission and the Antitrust Division of the
U.S. Department of Justice, or the Antitrust
Division, and certain waiting period requirements have
been satisfied. On , 2006, Trizec and
Brookfield Properties each filed a Notification and Report Form
with the Antitrust Division and the Federal Trade Commission and
requested an early termination of the waiting period. If the
early termination is not granted and a request for additional
information by the relevant authorities is not made, the waiting
period will expire at 11:59 p.m. on ,
2006.
The Competition Act provides that transactions such as the
arrangement may not be completed until certain information has
been submitted to the Commissioner of Competition and certain
waiting periods have been satisfied. It is anticipated that the
required information will be submitted to the Commissioner of
Competition by , 2006. If the information is
submitted by that date, and the Commissioner of Competition does
not ask for additional information, the waiting period will end
on , 2006
Other than the HSR Act and Competition Act filings, we are
unaware of any other material federal, state or foreign
regulatory requirements or approvals that are required for the
execution of the merger agreement or the completion of the
mergers, other than the filing of a certificate of merger by
each of us and our operating company with the Secretary of State
of the State of Delaware. However, the completion of the mergers
is conditioned upon, among other things, the filing of the plan
of arrangement by Trizec Canada relating to the arrangement with
the Ontario Superior Court of Justice, approval and issuance of
a final order by such court approving the arrangement and the
transactions contemplated by the plan of arrangement, and
sending to the director appointed under the Canada Business
Corporations Act, for endorsement and filing by such director,
the articles of arrangement and such other documents as may be
required under the Canada Business Corporations Act to give
effect to the arrangement.
15
Dissenters
Rights of Appraisal (page 85)
Under the Delaware General Corporation Law, or the
DGCL, holders of our common stock who do not vote
for the adoption of the merger agreement have the right to seek
appraisal of the fair value of their shares as determined by the
Delaware Court of Chancery if the merger is completed, but only
if such holders of our common stock comply with all requirements
of Delaware law, which are summarized in this proxy statement.
This appraisal amount could be more than, the same as, or less
than the amount a common stockholder would be entitled to
receive under the terms of the merger agreement. Any holder of
our common stock intending to exercise its appraisal rights,
among other things, must submit a written demand for appraisal
to us prior to the vote on the adoption of the merger agreement
and must not vote or otherwise submit a proxy for the adoption
of the merger agreement. Your failure to follow exactly the
procedures specified under Delaware law will result in the loss
of your appraisal rights.
Litigation
Relating to the Merger (page 57)
On June 6, 2006, two substantially identical purported
stockholder class action lawsuits related to the merger
agreement were filed by the same counsel in the Circuit Court of
Cook County, Illinois, Doris Staehr v. Trizec
Properties, et al. (Case No. 06CH11226) and
Hubert Van Gent v. Trizec Properties, et al.
(Case No. 06CH11571), naming us and each of our directors
as defendants. The lawsuits allege, among other things, that our
directors were conflicted, unjustly enriched and engaged in
self-dealing, and violated their fiduciary duties to our
stockholders in approving the merger, the merger agreement and
the other transactions contemplated by the merger agreement.
The lawsuits seek to enjoin the completion of the merger and the
related transactions. Additionally, among other things, the
lawsuits seek class action status, rescission of, to the extent
already implemented, the merger, voting agreements, and the
termination fees, and costs and disbursements incurred in
connection with the lawsuits, including attorneys and
experts fees. We intend to vigorously defend the actions.
However, even if these lawsuits are determined to be without
merit, they may potentially delay or, if the delay is
substantial enough to prevent the consummation of the merger by
December 31, 2006, potentially prevent the closing of the
merger.
Material
United States Federal Income Tax Consequences
(page 58)
The receipt of the common stock merger consideration for each
share of our common stock pursuant to the merger agreement will
be a taxable transaction for United States federal income tax
purposes. Generally, for United States federal income tax
purposes, you will recognize gain or loss as a result of the
merger measured by the difference, if any, between the common
stock merger consideration per share and your adjusted tax basis
in that share. In addition, under certain circumstances, we may
be required to withhold a portion of your common stock merger
consideration payable to you under applicable tax laws. Tax
matters can be complicated, and the tax consequences of the
merger to you will depend on your particular tax situation. We
encourage you to consult your tax advisor regarding the tax
consequences of the merger to you.
Delisting
and Deregistration of Our Common Stock (page 60)
If the merger is completed, shares of our common stock will no
longer be listed on the New York Stock Exchange and will be
deregistered under the Securities Exchange Act of 1934, as
amended, or the Exchange Act. Our special voting
stock and Class F convertible stock are not listed on the
New York Stock Exchange and are not registered under the
Exchange Act.
Market
Price of Our Common Stock (page 80)
Our common stock, par value $0.01 per share, is listed on
the New York Stock Exchange under the symbol TRZ. On
June 2, 2006, the last trading day prior to the date of the
public announcement of the merger agreement, the closing price
of our common stock on the New York Stock Exchange was
$24.60 per share. On , 2006, the last
trading day before the date of this proxy statement, the closing
price of our common stock on the New York Stock Exchange was
$ per share. You are encouraged to obtain
current market quotations for our common stock.
16
QUESTIONS
AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGERS
The following questions and answers address briefly some
questions you may have regarding the special meeting and the
proposed mergers and, in certain cases, the arrangement. These
questions and answers may not address all questions that may be
important to you as a stockholder. Please refer to the more
detailed information contained elsewhere in this proxy
statement, as well as the additional documents referred to or
incorporated by reference in this proxy statement, including the
merger agreement, a copy of which is attached as
Annex A.
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What is the proposed transaction? |
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The proposed transaction is the acquisition of us and our
operating company by Parent pursuant to the merger agreement. If
our stockholders approve the proposal to adopt the merger
agreement and the other closing conditions under the merger
agreement have been satisfied or waived, including the approvals
of the arrangement by Trizec Canadas shareholders and the
Ontario Superior Court of Justice and any applicable regulatory
approvals, MergerCo will merge with and into us, with Trizec
surviving the merger and with Parent owning all of our
outstanding common stock not owned by Trizec Canada and its
subsidiaries. In addition, Merger Operating Company will merge
with and into our operating company, with our operating company
surviving the operating company merger and continuing to exist
as a subsidiary of the surviving corporation. In addition, on
the closing date of the merger, AcquisitionCo and its affiliates
will acquire all of Trizec Canadas outstanding multiple
voting shares and subordinate voting shares pursuant to the
arrangement. After the consummation of the merger and the
arrangement, Parent will own approximately 62% of the
outstanding shares of our common stock, and AcquisitionCo and
its affiliates will own, indirectly through their 100% ownership
of the outstanding shares of Trizec Canada, the remaining
outstanding shares of our common stock. These transactions are
expected to occur contemporaneously. For additional information
about the mergers, please review the merger agreement attached
to this proxy statement as Annex A and incorporated
by reference into this proxy statement. We encourage you to read
the merger agreement carefully and in its entirety, as it is the
principal document governing the mergers. |
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As a common stockholder of Trizec, what will I receive as
a result of the merger? |
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Holders of shares of our common stock at the merger effective
time, other than Trizec Canada and its subsidiaries, will
receive for each share of our common stock that they own one
share of redeemable preferred stock which will be redeemed
immediately after the merger, without any further action by you,
for the common stock merger consideration, which is $29.01 in
cash plus an additional cash amount equal to a pro rata portion
of the regular quarterly dividend payable on our common stock
and allocable to the quarter in which the merger closes, in each
case without interest and less applicable withholding taxes. |
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Will I receive any regular quarterly dividends with
respect to the shares of common stock that I own? |
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Yes. Under the merger agreement, prior to the merger effective
time we are permitted to continue to declare and pay to our
common stockholders regular quarterly dividends of up to
$0.20 per share of our common stock. |
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What will the shareholders of Trizec Canada receive in the
arrangement? |
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For each outstanding multiple voting share or subordinate voting
share held by a shareholder of Trizec Canada immediately prior
to the plan of arrangement effective time, such shareholder will
receive the Trizec Canada arrangement consideration, which is an
amount equal to the sum of $30.97 per share in cash plus an
additional cash amount that represents a pro rata portion of the
regular quarterly dividend payable on the multiple voting shares
and subordinate voting shares and allocable to the quarter in
which the arrangement is completed. The $30.97 per share
that the shareholders of Trizec Canada will receive in the
arrangement represents $29.01 per share attributable to the
shares of our common stock that Trizec Canada and its
subsidiaries own, plus an additional $1.96 per share, which
represents the agreed value of Trizec Canadas net other
assets. |
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Will my vote be required in connection with the
arrangement and will I receive anything in the
arrangement? |
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No. The arrangement relates to Trizec Canada and its
shareholders. Accordingly, unless you are a shareholder of
Trizec Canada in addition to being a stockholder of Trizec, you
will not be entitled to vote on the arrangement nor is your vote
in respect of the arrangement being sought by this proxy
statement, and you will not receive the Trizec Canada
arrangement consideration. |
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If you own multiple voting shares or subordinate voting shares
of Trizec Canada, however, Trizec Canada will mail to you a
separate management information circular regarding the
arrangement. This proxy statement does not constitute any
solicitation of votes in respect of the arrangement.
Information about the arrangement and Trizec Canada is being
provided in this proxy statement only to the extent that it is
relevant to, and to assist your understanding of, the merger and
the merger agreement. |
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When do you expect the mergers to be completed? |
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We are working toward completing the mergers as quickly as
possible and we anticipate that they will be completed during
the third or fourth quarter of 2006. If Trizecs
stockholders vote to adopt the merger agreement, Trizec
Canadas shareholders vote to approve the arrangement, and
the other conditions to the mergers are satisfied or waived, it
is anticipated that the mergers will become effective as soon as
practicable following the special meeting. |
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If the merger is completed, when can I expect to receive
the common stock merger consideration for my shares of common
stock? |
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Promptly after the completion of the merger, you will receive a
letter of transmittal and instructions describing how you
exchange your shares of common stock for the common stock merger
consideration. You should not send your share certificates to us
or anyone else until you receive these instructions. |
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When and where is the special meeting? |
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The special meeting of stockholders will take place
on , 2006
at local time, at . |
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Who can vote and attend the special meeting? |
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All of our common and special voting stockholders of record as
of the close of business on , 2006, the record
date for the special meeting, are entitled to receive notice of
and attend the special meeting or any postponements or any
adjournments of the special meeting. However, only common
stockholders are entitled to vote at the special meeting or any
postponements or any adjournments of the special meeting. Each
share of our common stock entitles you to one vote on each
matter properly brought before the special meeting. The vote of
our special voting stockholders is not required to adopt the
merger agreement or any adjournments of the special meeting for
the purpose of soliciting additional proxies, and is not being
solicited. Our Class F convertible stockholders are not
entitled to receive notice of or to attend the special meeting
or to vote on any matter at the special meeting. |
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What vote of common stockholders is required in connection
with the proposals? |
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The adoption of the merger agreement requires the affirmative
vote of the holders of at least a majority of the outstanding
shares of our common stock entitled to vote on such proposal.
Because the required vote is based on the number of shares of
our common stock that are outstanding rather than on the number
of shares of our common stock present in person or represented
by proxy at the special meeting and entitled to vote, failure to
vote your shares (including as a result of broker non-votes) and
abstentions will have the same effect as voting against the
adoption of the merger agreement. |
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The approval of any adjournments of the special meeting for the
purpose of soliciting additional proxies requires the
affirmative vote of the holders of at least a majority of the
outstanding shares of our common stock present in person or
represented by proxy and entitled to vote on such proposal. For
the purpose of this proposal, if you are a record holder and
fail to return your proxy card or do not attend the special
meeting in person, you will not be considered present in person
or represented by proxy. As a result, such failure will not have
any effect on the outcome of this proposal. Similarly, broker
non-votes will not be considered present in person or
represented by proxy and entitled to vote on the adjournment
proposal and will not have any effect on the outcome of this
proposal. However, abstentions are considered present in person
or represented by proxy and entitled to vote, and therefore will
have the |
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same effect as voting against the proposal to approve any
adjournments of the special meeting for the purpose of
soliciting additional proxies. |
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What is required to adjourn the special meeting? |
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Under our bylaws, the presiding officer of the special meeting
may adjourn the special meeting without the approval of our
stockholders under certain circumstances, including if there is
no quorum present for the adoption of the merger agreement, the
board of directors determines that adjournment is necessary or
appropriate to enable the stockholders to consider fully
information that our board of directors determines has not been
made sufficiently or timely available to our stockholders, or
our board of directors determines that adjournment is otherwise
in our best interests. Notwithstanding this provision in our
bylaws that provides the presiding officer of the special
meeting the discretion to adjourn the meeting in such
circumstances, we will not adjourn the special meeting for the
purpose of soliciting additional proxies without having obtained
the requisite approval by our stockholders for the proposal to
approve any adjournments of the special meeting for the purpose
of soliciting additional proxies. |
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How does the common stock merger consideration compare to
the market price of our common stock? |
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The cash consideration of $29.01 that our common stockholders
will receive in connection with and in respect of each share of
our common stock represents an approximate 17.9% premium over
the closing price of our common stock on June 2, 2006, the
last trading day before the public announcement of our entering
into the merger agreement, and an approximate 20.5% premium to
the weighted average closing price of our common stock for the
year-to-date period ended June 2, 2006. Over the
12-month
period ended June 2, 2006, the low price of our common
stock was $19.70 per share and the high price of our common
stock was $26.39 per share, which also represents the
all-time high share price for our common stock since the
commencement of trading on the New York Stock Exchange on
May 8, 2002 and prior to June 2, 2006. |
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How does our board of directors recommend that I
vote? |
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Upon the recommendation of the special committee and after
careful consideration, our board of directors recommends that
our common stockholders vote for the adoption of the merger
agreement and the approval of any adjournments of the special
meeting for the purpose of soliciting additional proxies if
there are not sufficient votes at the special meeting to adopt
the merger agreement. |
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Do any of the companys executive officers and
directors or any other persons have any interest in the merger
or other transactions that is different than mine? |
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Yes. Our executive officers and directors may have interests in
the merger that are different from, or in addition to, yours,
including the consideration that they would receive in
connection with the merger with respect to their stock options,
restricted stock awards, restricted stock units and rights,
deferred stock units and rights, warrants and, with respect to
our executive officers, such officers OPP awards. Our
executive officers also are entitled to certain severance
payments and benefits and retention bonuses following the
closing of the merger in certain circumstances. Additionally,
Mr. Munk, as the indirect holder of multiple voting shares
and subordinate voting shares and options to purchase
subordinate voting shares of Trizec Canada, will receive the
Trizec Canada arrangement consideration with respect to such
shares and options in connection with the arrangement, and
certain of our other directors and two of our executive officers
also own subordinate voting shares of Trizec Canada and options
to purchase subordinate voting shares in respect of which they
will receive the Trizec Canada arrangement consideration. We
have been advised by Trizec Canada that, on ,
2006, Mr. Munk owned, through a wholly owned
corporation, multiple voting shares
and subordinate voting shares of Trizec Canada
which as of such date represented
approximately % of the aggregate voting power
of the multiple voting shares and subordinate voting shares that
are eligible to be voted at the special meeting of the
shareholders of Trizec Canada to consider the arrangement.
Please see The Mergers and the
Arrangement Interests of Our Directors and
Executive Officers in the Mergers and the Arrangement on
page 50 for additional information about possible interests that
our directors and executive officers may have in the merger, the
arrangement and other transactions that are different from, or
in addition to, yours. |
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How do I cast my vote if I am a record holder? |
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If you are a common stockholder of record on the record date,
you may vote in person at the special meeting, or by submitting
your proxy by mail, telephone or Internet. If you wish to mail
your proxy, you can submit your proxy by completing, signing,
dating and returning the enclosed proxy card in the accompanying
pre-addressed, postage-paid envelope. If you wish to submit your
proxy by telephone or Internet, you may do so by following the
instructions on your proxy card. |
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How do I cast my vote if my shares of common stock are
held of record in street name? |
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If you hold your shares of common stock in street
name through a broker, bank or other nominee, your broker,
bank or other nominee will not vote your shares unless you
provide instructions on how to vote. You must obtain a proxy
form from your broker, bank or other nominee that is the record
holder of your shares and provide the record holder of your
shares with instructions on how to vote your shares in
accordance with the voting directions provided by your broker,
bank or nominee. The inability of your record holder to vote
your shares is often referred to as a broker
non-vote. A broker non-vote will have the same effect as a
vote against the adoption of the merger agreement but will not
have an effect on the outcome of the proposal to approve any
adjournments of the special meeting for the purpose of
soliciting additional proxies. If your shares are held in
street name, please refer to the voting instruction
card used by your broker, bank or other nominee, or contact them
directly, to see if you may submit voting instructions by
telephone or Internet. |
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What will happen if I abstain from voting or fail to
vote? |
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With respect to the proposal to adopt the merger agreement, if
you abstain from voting or fail to vote, or fail to instruct
your broker, bank or other nominee to vote if your shares are
held in street name, it will have the same effect as
a vote against the adoption of the merger agreement. |
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With respect to the proposal to approve any adjournments of the
special meeting for the purpose of soliciting additional
proxies, if you abstain from voting, it will have the same
effect as a vote against that proposal. However, if you fail to
instruct your broker, bank or other nominee to vote if your
shares are held in street name, it will not have any
effect on the outcome of such proposal. |
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How will proxy holders vote my shares? |
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If you properly submit a proxy prior to the special meeting,
your shares of common stock will be voted as you direct. If you
submit a proxy but no direction is otherwise made, your shares
of common stock will be voted FOR the
adoption of the merger agreement and FOR the
approval of any adjournments of the special meeting for the
purpose of soliciting additional proxies. |
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Have any stockholders already agreed to the adoption of
the merger agreement? |
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Yes. Parent, MergerCo and Trizec Canada have entered into the
Trizec voting agreement pursuant to which Trizec Canada has
agreed to vote or cause to be voted all shares of our common
stock that Trizec Canada and its subsidiaries own (including any
shares of our common stock that may be acquired after the
execution of the merger agreement) for the adoption of the
merger agreement, subject to the terms and conditions contained
in the Trizec voting agreement. As of the record date, Trizec
Canada and its subsidiaries owned shares of our
common stock that represented approximately %
of the voting power of our common stock entitled to vote. See
The Mergers and the Arrangement Voting
Agreements on page 56. |
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What happens if I sell my shares before the special
meeting? |
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If you held your shares of common stock on the record date but
sell or transfer them prior to the merger effective time, you
will retain your right to vote at the special meeting, but not
the right to receive the common stock merger consideration in
respect of those shares. The right to receive this cash
consideration will pass to the person who owns the shares you
previously owned at the time that the merger becomes effective. |
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Can I change my vote after I have mailed my proxy
card? |
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Yes. If you own shares of our common stock as a record holder,
you may revoke a previously granted proxy at any time before it
is exercised by filing with our Corporate Secretary a notice of
revocation or a |
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duly executed proxy bearing a later date or voting again by
telephone or Internet or by attending the meeting and voting in
person. Attendance at the meeting will not, in itself,
constitute revocation of a previously granted proxy. If you have
instructed your broker, bank or nominee to vote your shares, the
above described options for changing your vote do not apply and
instead you should follow the instructions received from your
broker, bank or other nominee to change your vote. |
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Is the merger expected to be taxable to me? |
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Yes. The receipt of the common stock merger consideration for
each share of our common stock as a result of the merger will be
a taxable transaction for United States federal income tax
purposes. Generally, for United States federal income tax
purposes, you will recognize gain or loss as a result of the
merger measured by the difference, if any, between the common
stock merger consideration per share and your adjusted tax basis
in that share. In addition, under certain circumstances, we may
be required to withhold a portion of your common stock merger
consideration under applicable tax laws. You should read
The Mergers and the Arrangement Material
United States Federal Income Tax Consequences on page 58
for a more complete discussion of the United States federal
income tax consequences of the merger. Tax matters can be
complicated and the tax consequences of the merger to you will
depend on your particular tax situation. We encourage you to
consult your tax advisor regarding the tax consequences of the
merger to you. |
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Should I send in my common stock certificates now? |
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No. Shortly after the merger is completed, you will receive
a letter of transmittal with instructions informing you how to
send your stock certificates to the paying agent in order to
receive the common stock merger consideration. You should use
the letter of transmittal to exchange stock certificates for the
common stock merger consideration to which you are entitled as a
result of the merger. DO NOT SEND ANY STOCK CERTIFICATES WITH
YOUR PROXY. |
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What rights do I have if I oppose the merger? |
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Under the DGCL, holders of our common stock who do not vote for
the adoption of the merger agreement have the right to seek
appraisal of the fair value of their shares as determined by the
Delaware Court of Chancery if the merger is completed, but only
if they comply with all requirements of Delaware law, which are
summarized in this proxy statement. This appraisal amount could
be more than, the same as, or less than the amount a stockholder
would be entitled to receive under the terms of the merger
agreement. Any holder of our common stock intending to exercise
its appraisal rights, among other things, must submit a written
demand for appraisal to us prior to the vote on the adoption of
the merger agreement and must not vote or otherwise submit a
proxy in favor of adoption of the merger agreement. Your failure
to follow exactly the procedures specified under Delaware law
will result in the loss of your appraisal rights. Because of the
complexity of the Delaware law relating to appraisal rights, if
you are considering exercising your appraisal right, we
encourage you to seek the advice of your own legal counsel. See
Dissenters Rights of Appraisal on page 85. |
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What will happen to the shares of common stock that I
currently own after completion of the merger? |
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Following the completion of the merger, your shares will be
canceled and will represent only the right to receive the common
stock merger consideration. Trading in shares of our common
stock on the New York Stock Exchange will cease. Price
quotations for our common stock will no longer be available and
we will cease filing periodic reports with the Securities and
Exchange Commission, or the SEC. |
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Where can I find more information about the
company? |
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We file certain information with the SEC. You may read and copy
this information at the SECs public reference facilities.
You may call the SEC at
1-800-SEC-0330
for information about these facilities. This information is also
available at the Internet site the SEC maintains at www.sec.gov
and on our website at www.trz.com. Information contained on our
website is not part of, or incorporated in, this proxy
statement. You can also request copies of these documents from
us. See Where You Can Find More Information on page
88. |
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Who will solicit and pay the cost of soliciting
proxies? |
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We will bear the cost of soliciting proxies for the special
meeting. Our board of directors is soliciting your proxy on our
behalf. Our officers, directors and employees may solicit
proxies by telephone, facsimile, mail or Internet or in person.
They will not be paid any additional cash amounts for soliciting
proxies. We have retained to assist us in the
solicitation of proxies, and will pay approximately
$ , plus reimbursement of
out-of-pocket
expenses, to for its services. We will also
request that banking institutions, brokerage firms, custodians,
directors, nominees, fiduciaries and other like parties forward
the solicitation materials to the beneficial owners of shares of
common stock held of record by such person, and we will, upon
request of such record holders, reimburse forwarding charges and
out-of-pocket
expenses. |
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Who can help answer my other questions? |
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If you have more questions about the special meeting or the
mergers, you should contact our proxy solicitation
agent, , as follows: |
If you hold our shares of common stock through a broker, bank or
other nominee, you should also call your broker, bank or other
nominee for additional information.
22
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Information both included and incorporated by reference in this
proxy statement may contain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. Forward-looking statements, which are based on various
assumptions and describe our future plans, strategies and
expectations, are generally identified by our use of words such
as intend, plan, may,
should, will, project,
estimate, anticipate,
believe, expect, continue,
potential, opportunity and similar
expressions, whether in the negative or affirmative. We cannot
guarantee that we actually will achieve these plans, intentions
or expectations, including completing the mergers on the terms
summarized in this proxy statement. All statements regarding our
expected financial position, business and financing plans are
forward-looking statements. Factors which could have a material
adverse effect on our operations and future prospects or the
completion of the mergers include, but are not limited to:
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the satisfaction of the conditions to consummate the mergers and
the arrangement, including our stockholders adoption of
the merger agreement and Trizec Canadas shareholders
approval of the arrangement;
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the actual terms of certain financings that will be obtained for
the mergers and the arrangement;
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the occurrence of any event, change or other circumstances that
could give rise to the termination of the merger agreement;
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the outcome of the legal proceedings that have been or may be
instituted against us or Trizec Canada following announcement of
the mergers and the arrangement;
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the failure of the mergers or the arrangement to close for any
other reason;
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the amount of the costs, fees, expenses and charges related to
the mergers and the arrangement;
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changes in national and local economic conditions, including
those economic conditions in our seven core markets;
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the extent, duration and strength of any economic recovery;
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our ability to maintain occupancy and to timely lease or
re-lease office space;
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the extent of any tenant bankruptcies and insolvencies;
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our ability to sell our non-core office properties in a timely
manner;
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our ability to acquire office properties selectively in our core
markets;
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our ability to integrate and realize the full benefits from our
acquisitions, including our recently completed acquisition of
certain office properties and undeveloped land parcels formerly
owned by Arden Realty, Inc.;
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our ability to maintain REIT qualification;
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changes to U.S. tax laws that affect REITs;
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material increases in the amount of special dividends payable to
affiliates of Trizec Canada on shares of our special voting
stock as a result of increases in the applicable cross-border
withholding tax rates;
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Canadian tax laws that affect treatment of investment in
U.S. real estate companies;
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the competitive environment in which we operate;
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the cost and availability of debt and equity financing;
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the effect of any impairment charges associated with changes in
market conditions;
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the sale or other disposition of shares of our common stock
owned by Trizec Canada;
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our ability to obtain, at a reasonable cost, adequate insurance
coverage for catastrophic events, such as earthquakes and
terrorist acts; and
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other risks and uncertainties detailed from time to time in our
filings with the SEC.
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These risks and uncertainties, along with the risk factors
discussed under Item 1A. Risk
Factors in our Annual Report on
Form 10-K
for the year ended December 31, 2005 and our Quarterly
Report on
Form 10-Q
for the quarter ended March 31, 2006, should be considered
in evaluating any forward-looking statements contained in this
proxy statement. All forward-looking statements speak only as of
the date of this proxy statement. All subsequent written and
oral forward-looking statements attributable to us or any person
acting on our behalf are qualified by the cautionary statements
in this section.
23
THE
PARTIES TO THE MERGERS AND THE ARRANGEMENT
Trizec Properties, Inc.
10 South Riverside Plaza, Suite 1100
Chicago, Illinois 60606
(312) 798-6000
We are a Delaware corporation and one of the largest fully
integrated, self-managed, publicly traded REITs in the United
States. We are engaged in the business of owning and managing
office properties in the United States. Our office properties
are concentrated in the metropolitan areas of seven major
U.S. markets: Atlanta, Chicago, Dallas, Houston, Los
Angeles-San Diego, New York, and Washington, D.C. As
of July 5, 2006, we had ownership interests in 53
consolidated office properties comprising approximately
32.2 million square feet. In addition, as of July 5,
2006, we also had ownership interests in eight unconsolidated
real estate joint venture office properties comprising
approximately 7.4 million square feet of total area and one
unconsolidated real estate development joint venture. Additional
information about us is available on our website at
http://www.trz.com. The information contained on our website is
not incorporated in, and does not form a part of, this proxy
statement or any other report or document on file with or
furnished to the SEC. Our common stock is listed on the New York
Stock Exchange under the symbol TRZ. For additional
information about us and our business, please refer to
Where You Can Find More Information on page 88.
Trizec Holdings Operating LLC
10 South Riverside Plaza, Suite 1100
Chicago, Illinois 60606
(312) 798-6000
Our operating company is a Delaware limited liability company
through which we conduct substantially all of our business and
own substantially all of our assets. We serve as the sole
managing member of our operating company and, as of July 5,
2006, owned approximately 98.4% of the outstanding common units
of limited liability company interest in our operating company.
In addition, we owned all of the outstanding Class SV units
and Class F units of limited liability company interest in
our operating company.
Trizec Canada Inc.
BCE Place
181 Bay Street
Suite 3820
Toronto, ON, Canada M5J2T3
(416) 682-8600
Trizec Canada is a Canadian corporation and, together with its
subsidiaries, owns approximately % of our
outstanding common stock and all of our outstanding special
voting stock and Class F convertible stock. Mr. Peter
Munk, chairman of our board of directors, is also chairman of
the board of directors and chief executive officer of Trizec
Canada, and on 2006, Mr. Munk owned, through a
wholly owned corporation, multiple voting
shares and subordinate voting shares of Trizec
Canada, which as of such date represented % of
the aggregate voting power of the multiple voting shares and
subordinate voting shares that are eligible to be voted at the
special meeting of the shareholders of Trizec Canada to consider
the arrangement. Trizec Canada is listed on the Toronto Stock
Exchange under the symbol TZC.
Grace Holdings LLC
c/o Brookfield Properties Corporation
Three World Financial Center,
11th Floor
New York, New York 10281
(212) 417-7262
Parent is a Delaware limited liability company newly formed by
Brookfield Properties in connection with the mergers. We have
been advised by Brookfield Properties that Parent will be
jointly owned by affiliates of Brookfield Properties and
Blackstone Real Estate Partners V L.P.
Brookfield Properties is a Canadian corporation and one of North
Americas largest commercial real estate companies.
Brookfield Properties owns, develops and manages a portfolio of
premier office properties
24
that comprises 59 commercial properties totaling approximately
47 million square feet and ten development properties
totaling approximately eight million square feet in the downtown
cores of New York, Boston, Washington, D.C., Toronto, Calgary
and Ottawa. Landmark properties include the World Financial
Center in New York City and BCE Place in Toronto. Brookfield
Properties is listed on the New York Stock Exchange and Toronto
Stock Exchange under the symbol BPO.
The principal business of Blackstone Real Estate Partners V L.P.
consists of making various real estate related investments.
Blackstone Real Estate Partners V L.P. is an affiliate of The
Blackstone Group, a global private investment firm founded in
1985 with offices in New York, Atlanta, Boston, Los Angeles,
London, Hamburg, Mumbai and Paris. The Blackstone Groups
real estate group has raised approximately $13 billion for
real estate investing and has a long track record of investing
in office buildings, hotels and other commercial properties. In
addition to real estate, The Blackstone Groups core
businesses include private equity, corporate debt investing,
marketable alternative asset management, mergers and
acquisitions advisory, and restructuring and reorganization
advisory.
Grace Acquisition Corporation
c/o Brookfield Properties Corporation
Three World Financial Center,
11th Floor
New York, New York 10281
(212) 417-7195
MergerCo is a newly formed Delaware corporation and a wholly
owned subsidiary of Parent. MergerCo was formed by Parent in
connection with the mergers.
Grace OP LLC
c/o Brookfield Properties Corporation
Three World Financial Center,
11th Floor
New York, New York 10281
(212) 417-7195
Merger Operating Company is a newly formed Delaware limited
liability company and a wholly owned subsidiary of MergerCo.
Merger Operating Company was formed by Brookfield Properties in
connection with the mergers.
4162862 Canada Limited
c/o Brookfield Properties Corporation
Three World Financial Center,
11th Floor
New York, New York 10281
(212) 417-7195
AcquisitionCo is a newly formed Canadian corporation and an
affiliate of Brookfield Properties. AcquisitionCo was formed by
Brookfield Properties in connection with the arrangement and the
acquisition of all of the outstanding multiple voting shares and
subordinate voting shares of Trizec Canada.
25
THE
SPECIAL MEETING
Date,
Time and Purpose of the Special Meeting
This proxy statement is being furnished to our stockholders in
connection with the solicitation of proxies from our common
stockholders by our board of directors for use at the special
meeting to be held on , 2006,
at local time. The special meeting will take
place at . The purpose of the special meeting
is for you to:
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consider and vote upon a proposal to adopt the merger agreement;
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approve any adjournments of the special meeting for the purpose
of soliciting additional proxies; and
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transact any other business that may properly come before the
special meeting.
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Our common stockholders must adopt the merger agreement for the
merger to occur. A copy of the merger agreement is attached as
Annex A to this proxy statement, which we encourage
you to read carefully in its entirety.
Record
Date, Notice and Quorum
Only holders of record of our common stock and our special
voting stock as of the close of business on the record date,
which was , 2006, are entitled to receive
notice of and to attend the special meeting or any postponements
or adjournments of the special meeting. However, only holders of
our common stock at the close of business on the record date are
entitled to vote at the special meeting or any postponements or
adjournments of the special meeting. On the record
date, shares of our common stock were
outstanding and entitled to vote at the special meeting or any
postponements or adjournments of the special meeting. In
addition, holders of our Class F convertible stock are not
entitled to receive notice of or attend the special meeting or
vote on any matter that may come before the special meeting.
The holders of a majority of the shares of our common stock that
were outstanding as of the close of business on the record date,
present in person or represented by proxy, will constitute a
quorum for purposes of the special meeting. A quorum is
necessary to hold the special meeting. Abstentions and broker
non-votes will be counted as shares present in person or
represented by proxy for the purposes of determining the
presence of a quorum. Broker non-votes result when the
beneficial owners of shares of our common stock do not provide
specific voting instructions to their brokers, bank or other
nominee. Under the rules of the New York Stock Exchange, brokers
are precluded from exercising their voting discretion with
respect to the approval of non-routine matters, such as the
adoption of the merger agreement.
Required
Vote and Voting Agreement
Adoption of the merger agreement. The adoption
of the merger agreement requires the affirmative approval of the
holders of a majority of the outstanding shares of our common
stock entitled to vote on such proposal. Each share of our
common stock that was outstanding on the record date entitles
the holder to one vote at the special meeting. Because the
required vote to adopt the merger agreement is based on the
number of shares of our common stock outstanding rather than on
the number of votes present in person or represented by proxy at
the special meeting and entitled to vote, failure to vote shares
of our common stock that you own (including as a result of
broker non-votes and abstentions) will have the same effect as
voting against the adoption of the merger agreement.
Approval of any adjournments of the special meeting for the
purpose of soliciting additional proxies. The
proposal to approve any adjournments of the special meeting for
the purpose of soliciting additional proxies requires the
approval of the holders of at least a majority of outstanding
shares of our common stock present in person or represented by
proxy and entitled to vote on such proposal. For the purpose of
this proposal, if you are a record holder of our common stock
and fail to return your proxy card or do not attend the special
meeting in person, you will not be considered present in person
or represented by proxy. As a result, such failure will not have
any effect on the outcome of this proposal. Similarly, broker
non-votes will not be considered present in person or
represented by proxy and entitled to vote on the adjournment
proposal and will not have any effect on the outcome of this
proposal. However, abstentions are considered present in person
or represented by proxy and entitled to vote and therefore will
have the same effect as voting against
26
the proposal to approve any adjournments of the special meeting
for the purpose of soliciting additional proxies.
Holders of our special voting stock and Class F convertible
stock are not entitled to vote on either of the two proposals or
any other matter that may come before the special meeting.
If you hold your shares of our common stock in your own name as
of the record date and want your shares of our common stock to
be included in the vote, you must either vote your shares of our
common stock by returning the enclosed proxy card or by
submitting your proxy or voting instructions by telephone or
Internet or voting in person at the special meeting.
Record holders may cause their shares of common stock to be
voted using one of the following methods:
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mark, sign, date and return the enclosed proxy card by mail;
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submit your proxy or voting instructions by telephone or by
Internet by following the instructions included with your proxy
card; or
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appear and vote in person by ballot at the special meeting.
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Regardless of whether you plan to attend the special meeting, we
request that you complete and return a proxy for your shares of
our common stock as described above as promptly as possible. If
you own shares of our common stock through a broker, bank or
other nominee in street name, you must provide
voting instructions in accordance with the instructions on the
voting instruction card that your broker, bank or other nominee
provides to you. You should instruct your broker, bank or other
nominee as to how to vote your shares of our common stock,
following the directions contained in such voting instruction
card. If you have not received such voting instructions or
require further information regarding such voting instructions,
contact your broker, bank or other nominee, who can give you
directions on how to vote your shares of our common stock.
As of the record date, excluding the shares of our common stock
that are owned by Trizec Canada and its subsidiaries and deemed
to be beneficially owned by Mr. Munk, our directors and
executive officers owned an aggregate of
approximately shares of our common stock,
entitling them to exercise approximately % of
the voting power of our common stock entitled to vote at the
special meeting. Our executive officers and directors, other
than Mr. Munk, have informed us that they intend to vote their
shares of our common stock for adoption of the merger agreement
and in favor of approval of any adjournments of the special
meeting for the purpose of soliciting additional proxies.
Concurrently with the execution of the merger agreement, Trizec
Canada entered into the Trizec voting agreement with Parent and
MergerCo pursuant to which Trizec Canada has agreed to vote or
cause to be voted all shares of our common stock that Trizec
Canada and its subsidiaries own (including any shares of our
common stock that may be acquired by them after the date of the
merger agreement) in favor of the adoption of the merger
agreement, subject to the terms and conditions contained in the
Trizec voting agreement. As of the record date, Trizec Canada
and its subsidiaries owned shares of our common
stock, representing approximately % of the
aggregate voting power of our common stock entitled to vote at
the special meeting.
Proxies
and Revocation
If you submit a proxy, your shares of our common stock will be
voted at the special meeting as you indicate on your proxy. If
no instructions are indicated on your signed proxy card, your
shares of our common stock will be voted FOR
the adoption of the merger agreement and FOR
the approval of any adjournments of the special meeting for
the purpose of soliciting additional proxies.
You may revoke your proxy at any time, but only before the proxy
is voted at the special meeting, in any of three ways:
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by delivering, prior to the date of the special meeting, a
written revocation of your proxy dated after the date of the
proxy that is being revoked to our Corporate Secretary, at our
executive offices located at 10 S. Riverside Plaza,
Suite 1100, Chicago, Illinois 60606;
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by delivering to our Corporate Secretary a later-dated, duly
executed proxy or by submitting your proxy or voting
instructions by telephone or by Internet at a date after the
date of the previously submitted proxy relating to the same
shares; or
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by attending the special meeting and voting in person by ballot.
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Attendance at the special meeting will not, in itself,
constitute revocation of a previously granted
proxy. If you own shares of our common stock in
street name, you may revoke or change a previously
granted proxy by following the instructions provided by your
broker, bank or other nominee that is the registered owner of
your shares of our common stock.
We do not expect that any matter other than the adoption of the
merger agreement and the approval of any adjournments of the
special meeting for the purpose of soliciting additional proxies
will be brought before or at the special meeting. If, however,
such a matter is properly presented before or at the special
meeting or any postponements or any adjournments of the special
meeting, the persons appointed as proxies will have
discretionary authority to vote the shares represented by duly
executed proxies in accordance with their discretion and
judgment.
We will pay the costs of soliciting proxies for the special
meeting. Our officers, directors and employees may solicit
proxies by telephone and facsimile, by mail, by Internet or in
person. They will not be paid any additional amounts for
soliciting proxies. We will also request that individuals and
entities holding shares of our common stock in their names, or
in the names of their nominees that are beneficially owned by
others, send proxy materials to and obtain proxies from those
beneficial owners, and will reimburse those holders for their
reasonable expenses in performing those services upon request.
We have retained to assist us in the
solicitation of proxies, and will pay fees of approximately
$ , plus reimbursement of
out-of-pocket
expenses, to for their services. In addition,
our arrangement with includes provisions
obligating us to indemnify it for certain liabilities that could
arise in connection with its solicitation of proxies on our
behalf.
Adjournments
Although it is not currently expected, the special meeting may
be adjourned for the purpose of soliciting additional proxies if
we have not received sufficient votes to adopt the merger
agreement at the special meeting.
Under our bylaws, the presiding officer of the special meeting
may adjourn the special meeting without the approval of our
stockholders under certain circumstances, including if there is
no quorum present for the adoption of the merger agreement, our
board of directors determines that adjournment is necessary or
appropriate to enable the stockholders to consider fully
information that the board of directors determines has not been
made sufficiently or timely available to our stockholders, or
our board of directors determines that adjournment is otherwise
in our best interests. Notwithstanding this provision in our
bylaws that provides the presiding officer of the special
meeting the discretion to adjourn the meeting in such
circumstances, we will not adjourn the special meeting for the
purpose of soliciting additional proxies without having obtained
the requisite approval by our stockholders for the proposal to
approve any adjournments of the special meeting for the purpose
of soliciting additional proxies.
If such proposal is approved and we decide to adjourn the
special meeting for the purpose of soliciting additional proxies
if we have not received sufficient votes to adopt the merger
agreement, we will make an announcement at the special meeting.
Any adjournment of the special meeting for the purpose of
soliciting additional proxies will allow stockholders who have
already sent in their proxies to revoke them at any time prior
to their use. See Proxies and Revocation
on page 27 for additional information about revocation.
Postponements
At any time prior to convening the special meeting, as permitted
by our bylaws, our board of directors may postpone the special
meeting for any reason without the approval of our stockholders.
Although it is not currently expected, our board of directors
may postpone the special meeting for the purpose of soliciting
additional proxies if we have not received sufficient proxies to
constitute a quorum or sufficient votes for the adoption of the
merger agreement. Similar to adjournments, any postponement of
the special meeting for the purpose of soliciting additional
proxies will allow stockholders who have already sent in their
proxies to revoke them at any time prior to their use.
28
THE
MERGERS AND THE ARRANGEMENT
General
Description of the Mergers and the Arrangement
Under the terms of the merger agreement, affiliates of Parent
will acquire Trizec and our operating company. To accomplish
this, pursuant to the merger agreement, on the closing date of
the merger the following transactions will occur:
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MergerCo will merge with and into us, with us surviving the
merger and with Parent, after the immediate redemption of the
redeemable preferred stock following the merger, owning all of
our common stock not owned by Trizec Canada and its subsidiaries;
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Merger Operating Company will merge with and into our operating
company, with our operating company surviving the operating
company merger and continuing to exist as a subsidiary of the
surviving corporation; and
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in addition, AcquisitionCo and its affiliates will acquire all
of the outstanding multiple voting shares and subordinate voting
shares of Trizec Canada pursuant to the arrangement.
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After the consummation of the merger and the arrangement, Parent
will own approximately 62% of the outstanding shares of our
common stock and AcquisitionCo will own, indirectly through its
100% ownership of the outstanding shares of Trizec Canada, the
remaining outstanding shares of our common stock.
We, on our own behalf and as the sole managing member of our
operating company, have already taken all actions necessary to
approve the operating company merger and no further approvals of
any of the members of our operating company are required to
complete the operating company merger. This proxy statement
does not constitute any solicitation of consents in respect of
the operating company merger and does not constitute an offer to
exchange or convert operating company units that you may own for
or into newly issued preferred units or continuing common units
in the surviving operating company, as the case may be.
Background
of the Mergers and the Arrangement
Prior to May 8, 2002, Trizec was a subsidiary of Trizec
Hahn Corporation, a Canadian corporation. On May 8, 2002,
Trizec Hahn Corporation implemented a corporate reorganization,
or the 2002 Restructuring, pursuant to which Trizec
became a separate,
U.S.-based
publicly traded real estate investment trust, or
REIT, owning primarily the U.S. real estate
assets previously owned by Trizec Hahn Corporation and its
subsidiaries. As part of the 2002 Restructuring, Trizec Canada
was formed to acquire the shares of Trizec Hahn Corporation
which retained a significant interest in Trizec. As
of , 2006, Trizec Canada and its subsidiaries
collectively owned approximately % of
Trizecs common stock.
In addition to owning a significant number of shares of
Trizecs common stock, Trizec Canada and its subsidiaries
own all of the outstanding shares of Trizecs Class F
convertible stock and special voting stock. The Class F
convertible stock is convertible into Trizec common stock in
certain circumstances so that Trizec Canada and its
subsidiaries, on the one hand, and Trizecs other
stockholders, on the other hand, may share ratably certain
future taxes that Trizec Canada or its subsidiaries may incur in
those specified circumstances. The special voting stock entitles
Trizec Canada to receive dividends from Trizec that, when
aggregated with dividends received by Trizec Canada on
Trizecs common stock and after deducting related
non-Canadian taxes, including certain withholding taxes, will
equal the dividends received by Trizecs
U.S. stockholders on Trizecs common stock on a per
share basis. The special voting stock also entitles Trizec
Canada and its subsidiaries to votes that when aggregated with
votes of shares of common stock held by Trizec Canada and its
subsidiaries, represent a majority of the votes in elections of
Trizecs board of directors. Trizec Canada also currently
has additional assets and liabilities other than its interest in
Trizec, primarily cash and marketable securities, which we refer
to sometimes as Trizec Canadas net other
assets.
Trizecs certificate of incorporation contains an ownership
limitation that is designed to enable it to qualify in the
future as a domestically-controlled REIT within the
meaning of Section 897(h)(4)(B) of the Internal Revenue
Code of 1986, as amended. This limitation restricts any person
that is not a qualifying U.S. person (as
defined in Trizecs certificate of incorporation) from
beneficially owning Trizecs capital stock if that
persons holdings, when aggregated with shares of Trizec
capital stock beneficially owned by all
29
other persons that are not qualifying
U.S. persons, would exceed 45% by value of
Trizecs issued and outstanding capital stock.
From time to time since the 2002 Restructuring, Trizecs
board of directors and senior management team have discussed
current valuations of office property portfolios generally, as
well as the projected value of Trizecs assets and business
on a net asset and equity market value basis over the near- and
mid-term, taking into account Trizecs strategic growth,
asset allocation and portfolio repositioning initiatives. In
that regard, Trizecs board of directors and senior
management also have discussed the possibility that market
conditions might present an opportunity to enhance stockholder
value through a strategic transaction. In these discussions,
Trizecs board of directors and senior management
acknowledged that Trizec faced various challenges that other
office property owners and operators like Trizec face, including
interest rate volatility, high capital costs associated with
attracting and retaining tenants, difficulty of making accretive
acquisitions in an extremely competitive investment environment
and limitations on the use of leverage when operating as a
public company. Trizecs board of directors and senior
management also recognized certain challenges faced by Trizec
that were unique to Trizec, including certain limitations
imposed upon Trizec arising out of the 2002 Restructuring.
Trizec Canadas board of directors and senior management
have engaged in similar discussions from time to time since the
2002 Restructuring, taking into consideration the fact that the
principal asset of Trizec Canada is its interest in Trizec.
Beginning in the summer of 2004, members of Trizecs senior
management team began to explore the possibility of pursuing a
variety of transactions, including joint ventures, fund
formations and debt and equity issuances, as well as a merger,
asset sale or other business combination or strategic
transaction. They had informal discussions with representatives
of JPMorgan, about Trizec and its business. During these
discussions, members of Trizecs senior management team and
representatives of JPMorgan also discussed that, given Trizec
Canadas ownership of a significant percentage of shares of
Trizecs common stock and the potential tax impact on
Trizec if Trizec Canada were to sell those shares prior to the
latter part of 2007, any business combination or strategic
transaction involving Trizec would have to consider tax and
other implications for both Trizec and Trizec Canada.
In September 2004, a private investment company, a diversified
public company and a real estate fund manager separately
contacted representatives of JPMorgan and expressed interest in
pursuing a potential transaction with Trizec and Trizec Canada,
and Trizec and Trizec Canada entered into confidentiality
agreements with each of them. In the case of the private
investment company and the diversified public company, the
discussions were very preliminary in nature and did not result
in the submission of an indicative price for, or an offer to
purchase, Trizec
and/or
Trizec Canada.
Beginning in late 2004 and continuing into early 2005, members
of Trizecs senior management team, together with Trizec
Canadas senior management team, engaged in preliminary
discussions with the real estate fund manager from time to time.
In February 2005, at a meeting with Trizecs board of
directors, Trizecs senior management team informed
Trizecs board of directors of the status of these
discussions. At this meeting, Trizecs board of directors
also was informed by representatives of Hogan & Hartson
of its fiduciary duties in connection with potential strategic
transactions. Due to the unique structure of the potential
strategic transaction, Trizecs board of directors
subsequently decided to form a special committee to further
analyze the possibility of a strategic transaction involving
this company, and the special committee authorized senior
management to continue discussions with this company regarding
this potential transaction. At subsequent meetings,
Trizecs senior management and the special committees
advisors provided the special committee with in-depth analyses
regarding Trizec and its operations and business prospects.
Trizec Canadas senior management team similarly informed
Trizec Canadas board of directors of the status of these
discussions in February 2005. Due to the unique structure of the
potential strategic transaction, Trizec Canadas board of
directors subsequently decided to form a special committee to
further analyze the possibility of a strategic transaction
involving this company, and the special committee authorized
senior management and the special committees advisors to
continue discussions regarding this potential transaction. At
subsequent meetings, Trizec Canadas senior management team
and the special committees advisors
30
provided the special committee with in-depth analyses regarding
Trizec Canada and its operations and business prospects.
Between February and July 2005, this real estate fund manager
and its financial and legal advisors conducted substantial due
diligence regarding Trizec and Trizec Canada, and members of
Trizecs senior management team and Trizecs financial
and legal advisors (including JPMorgan and Morgan
Stanley & Co. Incorporated, or Morgan
Stanley), as well as members of Trizec Canadas
senior management team and its financial and legal advisors
(including RBC Capital Markets, or RBC), had
substantial discussions regarding a potential business
combination or strategic transaction involving Trizec, Trizec
Canada and this company. These discussions involved, among other
things, the consideration to be paid by this company in any such
transaction, the source of its financing, the structure of the
proposed transaction and continuing due diligence efforts.
During this period, Trizecs special committee and Trizec
Canadas special committee each met several times, during
which the potential transaction, long-term growth prospects and
other matters were discussed at length.
At various points in time, in non-binding conversations or term
sheets, this company proposed cash consideration ranging from
$18.50 to $22.50 per share for shares of Trizecs
common stock and the shares of Trizec Canada. No specific
proposal was made with respect to Trizec Canadas net other
assets. However, in July 2005, Trizec and Trizec Canada
terminated discussions with this company because, among other
things, the respective special committees believed that the
proposed price ultimately was not sufficient and there were
concerns, based on discussions with this company, that it did
not have committed equity capital to finance any proposed
transaction. Neither Trizec nor Trizec Canada had any
substantive conversations with this company regarding a proposed
transaction after July 2005.
During the latter part of 2005 and the early part of 2006,
neither Trizecs management nor representatives of JPMorgan
or Morgan Stanley had any substantive discussions with any third
parties regarding a potential business combination or strategic
transaction. During this period, Trizec operated in an office
property market that continued to recover at a slow pace and
provided Trizecs management with challenges as Trizec
attempted to carry out Trizecs strategic plan. In
September 2005, Trizec became aware that Arden Realty, Inc., or
Arden, an office REIT that had a significant
presence in the Southern California market, was potentially for
sale and that there existed a possible opportunity for Trizec to
acquire Arden in its entirety or a significant Southern
California portfolio of office properties as part of the
potential sale of Arden. In December 2005, Trizec entered into
an agreement with General Electric Capital Corporation, which
ultimately acquired Arden by merger, to acquire 13 of
Ardens Southern California office properties for
approximately $1.6 billion. Trizecs senior management
believed that this significant increase in Trizecs
presence in Southern California would be beneficial to
Trizecs long-term business prospects, because this market
was a stable and attractive office rental market, and that the
acquired properties would complement and enhance Trizecs
existing portfolio.
During this period, Trizecs senior management provided
Trizecs board of directors with periodic updates at
regular board meetings regarding the state of the capital
markets in general, the state of the office property market in
particular and other factors affecting Trizecs short-term
and long-term business prospects. At these meetings,
Trizecs board of directors discussed the various factors
that would materially affect Trizecs long-term strategic
plan. During this period, Trizec Canadas senior management
provided Trizec Canadas board of directors with similar
periodic updates.
Also during this period, acquisition activity in the REIT
industry, including the office REIT sector, continued to
increase. Trizecs senior management team viewed the
increase in activity as potentially indicative of market
conditions that could support attractive valuations for REITs
focused on office properties. In Trizecs senior management
teams view, market dynamics at that time were such that
buyers might value Trizec at pricing levels sufficiently
attractive to warrant further exploration of strategic
alternatives. Exploring such alternatives, Trizecs senior
management team believed, would be consistent with the view of
Trizecs board of directors that Trizec should consider
favorable market conditions that might present an opportunity to
enhance stockholder value through a strategic transaction. These
beliefs were shared with Trizec Canadas senior management.
31
In February 2006, representatives of a private real estate
company, which is referred to as Company A, approached Peter
Munk, the chairman of Trizec and the chairman and chief
executive officer of Trizec Canada, and expressed an interest in
pursuing a transaction with Trizec Canada and, potentially,
Trizec. Following very preliminary discussions, on
February 13, 2006, Company A entered into a
confidentiality agreement with Trizec Canada, and on
February 23, 2006, representatives of Company A and
its legal advisors met with senior management of Trizec Canada
and representatives of Trizec Canadas outside legal
advisor, Davies Ward Phillips & Vineberg LLP, or
Davies Ward, to explore certain structural issues
relating to a possible transaction involving Trizec Canada,
Trizec and Company A. Beginning March 1, 2006,
Company A was given access to due diligence materials on
Trizec Canada. Conceptual discussions continued through late
March but did not result in an offer from Company A, and
Trizec Canada terminated Company As access to due
diligence information on March 21, 2006.
In March 2006, representatives of several investment banking
firms, including Morgan Stanley and JPMorgan, approached Trizec
and held discussions with Mr. Timothy Callahan, Trizecs
president and chief executive officer, and Mr. Michael Colleran,
Trizecs chief financial officer, regarding the current
office REIT market, the current capital markets, REIT valuation
trends and the general merger market outlook. Additionally, the
possibility of Trizec pursuing potential mergers, asset sales or
other business combination or strategic transactions was
discussed, including a discussion of other recent transactions
involving publicly traded REITs and the likely interest of third
parties in pursuing a transaction with Trizec.
On March 23, 2006, representatives of Morgan Stanley met
with Mr. Munk, and generally discussed the same topics that
were discussed with Messrs. Callahan and Colleran.
Mr. Munk informally briefed members of Trizec Canadas
board on the matters discussed at this meeting.
During March and April 2006, Mr. Munk was contacted by
three companies regarding the possibility of pursuing potential
mergers, asset sales or other business combination or strategic
transactions with Trizec and Trizec Canada. The three companies
included Company A, a private real estate investment fund,
which is referred to as Company B, and a diversified public
company, which is referred to as Company C. In addition,
Mr. Callahan was contacted by another private real estate
company, which is referred to as Company D. These
discussions generally consisted of informal discussions about
Trizec, Trizec Canada and the companies respective
businesses based upon publicly available information. The
discussions between Mr. Munk
and/or
Mr. Callahan and these entities remained at a very
preliminary level and did not at that time result in the
submission of an indicative purchase price for, or an offer to
purchase, Trizec
and/or
Trizec Canada. During this same period of time, senior
management of Trizec Canada involved representatives of Davies
Ward and RBC in considering possible transaction structures to
address the treatment of Trizec Canadas net other assets
in the event a third party were to make a proposal to acquire
Trizec and Trizec Canada.
On April 20, 2006, senior management of Trizec Canada and
representatives of Davies Ward and RBC met with representatives
of Morgan Stanley to discuss possible transaction structures to
address the treatment of Trizec Canadas net other assets
in the event Trizec Canada were to engage in a transaction
involving the acquisition of Trizec Canada and Trizec, together
with related issues.
On April 26, 2006, representatives of Morgan Stanley met
with Messrs. Munk and Callahan. The general topics of this
meeting were market conditions and the level of interest by
third parties in pursuing a business combination or strategic
transaction with Trizec and Trizec Canada, particularly in light
of the discussions that Messrs. Munk
and/or
Callahan had had with Company A, Company B,
Company C and Company D during March and April.
Representatives of Morgan Stanley indicated that they believed
there was significant interest by certain third parties in
pursuing a transaction with Trizec and Trizec Canada, and that
current market conditions were favorable to consummate such a
transaction at an attractive price to Trizec, Trizecs
stockholders, Trizec Canada and Trizec Canadas
shareholders. At this meeting, Messrs. Munk and Callahan
concluded that representatives of Morgan Stanley should meet
with Trizecs board of directors to provide the board with
an update of current market conditions.
On May 1, 2006, representatives of Morgan Stanley updated
Trizecs board of directors on the state of the REIT market
generally and, more specifically, office REITs. Morgan
Stanleys representatives also discussed recent strategic
and business combination transactions involving other REITs,
including the acquisitions of CarrAmerica Realty Corporation and
Arden by Blackstone and General Electric Capital
32
Corporation, respectively. Morgan Stanleys representatives
also updated Trizecs board of directors regarding
discussions that Messrs. Munk
and/or
Callahan had had with Company A, Company B,
Company C and Company D. Morgan Stanleys
representatives discussed with Trizecs board of directors
overall structural issues related to Trizec Canada, and how
these issues could affect any business combination or strategic
transaction involving Trizec and Trizec Canada. After such
discussion, Trizecs board of directors authorized
representatives of Morgan Stanley to continue to analyze the
feasibility of a transaction involving Trizec, and to begin to
compile due diligence information and other materials that would
likely be requested by a third party bidder.
On May 2, 2006, members of Trizec Canadas board of
directors and its senior management and legal advisors were
informally briefed by Mr. Munk on the matters discussed at
Trizecs May 1 board meeting.
On May 3, 2006 and May 9, 2006, members of
Trizecs senior management team and the senior management
of Trizec Canada, as well as representatives of Morgan Stanley,
Hogan & Hartson, RBC and Davies Ward met to discuss
structural issues related to a possible transaction and
coordinating Trizecs efforts with those of Trizec Canada
in considering any such possible transaction.
On May 9, 2006, Trizecs board of directors met again.
Representatives of Morgan Stanley and Hogan & Hartson
participated in this meeting. Representatives of Morgan Stanley
reported on market-related developments since the May 1,
2006 meeting of Trizecs board of directors, and discussed
their views on the likelihood of Trizec being able to consummate
a business combination or strategic transaction at an attractive
price. Morgan Stanleys representatives presented their
view that, given the current market conditions, such a
transaction at an attractive price could be consummated. After
discussion among the board members, Trizecs board of
directors authorized representatives of Morgan Stanley,
Trizecs senior management team and Hogan &
Hartson to commence discussions with potential business
combination partners and to make non-public information
available to interested parties for due diligence purposes,
subject to entering into suitable confidentiality agreements.
Six potential business combination partners were identified by
Morgan Stanley and Trizecs senior management as most
likely to be willing and able to acquire Trizec at an attractive
price Blackstone, Brookfield Properties,
Company A, Company B, Company C and
Company D.
On May 10, 2006, Trizec Canadas board of directors
met. After discussion among the board members, Trizec
Canadas board of directors determined that, although no
decision had been made to engage in any strategic transaction,
RBC should be formally engaged to assist Trizec Canada in
assessing the various alternatives which could be considered by
Trizec Canada should any proposed transaction be brought forward
by Trizec. Trizec Canadas board of directors also
authorized members of Trizec Canadas senior management and
Trizec Canadas advisors to coordinate with Trizec and
Trizecs advisors in order to assist Trizec and its
advisors in Trizecs informal discussions with potential
bidders, and authorized senior management of Trizec Canada to
make non-public information available to interested potential
business combination partners for due diligence purposes,
subject to entering into suitable confidentiality agreements.
Following these meetings, representatives of Morgan Stanley,
Hogan & Hartson, Davies Ward and RBC, as well as
members of senior management of both Trizec and Trizec Canada,
began to gather and compile due diligence information and other
materials about Trizec and Trizec Canada. Between May 10
and May 15, 2006, Trizecs advisors held conversations
with representatives of each of Blackstone, Brookfield
Properties, Company A, Company B, Company C and
Company D concerning these entities respective
interests in pursuing a potential business combination or
strategic transaction with Trizec and Trizec Canada. The
potential bidders were informed that they would be given a
specified period of time in which to conduct their due
diligence, and that more specific instructions for submitting
offers regarding a potential acquisition would be provided at a
later date by representatives of Morgan Stanley. Trizec and
Trizec Canada entered into confidentiality agreements with each
of Blackstone, Brookfield Properties, Company A, Company B,
Company C and Company D at various times between May 12 and
May 19, 2006.
Trizec Canadas board of directors met again on
May 15, 2006. Representatives of RBC and Davies Ward
participated in this meeting. RBC provided a presentation on the
current state of the capital markets and the real estate
investment market in general, and office property companies and
REITs in particular, recent consolidation activity involving
U.S. office REITs, shareholder value considerations for
Trizec Canada in the context of a potential business combination
or strategic transaction, including considerations relating to
Trizec
33
Canadas net other assets, and potential transaction
structures and process considerations for a potential business
combination or strategic transaction involving Trizec Canada.
Following a discussion among the members of Trizec Canadas
board of directors and with the representatives of both RBC and
Davies Ward, Trizec Canadas board of directors authorized
Trizec Canadas senior management and Trizec Canadas
advisors to continue to cooperate with Trizec and its advisors
in Trizecs discussions with the potential bidders and to
evaluate the interests expressed by the potential bidders in
these discussions.
Also on May 15, 2006, representatives of Morgan Stanley
activated an electronic data room containing due diligence
information about Trizec, and, once confidentiality agreements
were executed, each of the bidders obtained access to such data
room and started to review the due diligence material.
On May 18, 2006, Trizecs board of directors held a
special meeting during which representatives of Morgan Stanley
provided the board with an update of the meetings and
discussions they had had with the various potential bidders up
to that date. During this meeting, the members of Trizecs
board of directors and representatives of Hogan &
Hartson discussed the potential conflicts that Mr. Munk
might have as a result of the involvement of Trizec Canada in a
potential transaction and Mr. Munks control over
Trizec Canada (in light of his roles as the chairman of
Trizecs board of directors and chairman of the board,
chief executive officer and the controlling shareholder of
Trizec Canada). After discussion, Trizecs board of
directors resolved to form a special committee of the board that
would consist of all of the directors other than Mr. Munk,
and proceeded to appoint such directors as the members of the
special committee. The special committee was given broad
authority to, among other things, evaluate and consider offers
of interest and determine the advisability of any transaction,
negotiate the terms of any potential transaction with any
prospective purchaser and take any other action in connection
with such transaction as the special committee determined was
necessary or appropriate. Mr. Glenn J. Rufrano was
appointed as the chairman of the special committee. At this
meeting, the special committee also authorized the engagement of
Hogan & Hartson as legal counsel to the special
committee and Morgan Stanley and JPMorgan as co-financial
advisors to the special committee and Trizec. In making this
decision, the special committee considered that Morgan Stanley
had indicated that one or more of its affiliates would be
prepared to offer financing to all potential purchasers and that
such financing could enhance the bid process. The special
committee, after considering the potential conflict of interest
that might arise from allowing Morgan Stanley to offer such
financing and the potential benefits thereof, determined that it
would be desirable to retain JPMorgan to consider the fairness
of any proposed transaction. Representatives of Hogan &
Hartson also discussed with the special committee at this
meeting its fiduciary duties in considering any proposals
relating to an acquisition of Trizec.
Also on May 18, 2006, the compensation committee of
Trizecs board of directors met. At this meeting, the
compensation committee discussed the possibility of adopting a
broader severance plan that would provide enhanced severance
payments to Trizecs executive officers, other than
Mr. Callahan, and would provide enhanced severance payments
for additional members of Trizecs management team under
certain circumstances if they were terminated or if they
resigned for good reason within a specified period
following the consummation of a change in control transaction.
The compensation committee also discussed the possibility of
adopting a retention bonus plan that would provide both
professional and hourly employees a financial incentive to
continue to remain employees of Trizec through the closing date
of any transaction that Trizec might pursue and during a
specified transition period following the closing of such a
transaction. No formal action was taken at this meeting
approving any of these arrangements.
Between May 16 and May 22, 2006, representatives of
Morgan Stanley, Hogan & Hartson and Davies Ward held
various meetings and telephone calls with representatives of the
potential bidders and their respective advisors to discuss a
potential transaction, including due diligence and structural
matters. Members of Trizecs and Trizec Canadas
senior management teams also participated in due diligence calls
with potential bidders. Representatives of Morgan Stanley,
Hogan & Hartson and Davies Ward periodically advised
members of Trizecs and Trizec Canadas senior
management teams of the progress of the discussions with the
bidders during this time, and Mr. Callahan periodically
updated Mr. Rufrano as to the progress of these
discussions. Specifically, representatives of Morgan Stanley met
or had substantive calls with Company A and Company B on
May 17, 2006, with Brookfield Properties on May 18,
2006, with Blackstone and Company D on May 19, 2006 and
with Company C on May 22, 2006. At each of these meetings,
representatives of
34
Morgan Stanley provided each of the bidders additional
information about the potential transaction, including an
overview of a potential structure of the transaction.
On May 23, 2006, representatives of Morgan Stanley
distributed formal bid instruction letters to representatives of
Blackstone, Brookfield Properties, Company A,
Company B, Company C and Company D. The potential
bidders were requested, in these letters and in subsequent
communications between Morgan Stanley and such potential
bidders, to return by May 31, 2006 indications of interest
in a potential strategic transaction with Trizec and Trizec
Canada, including a price and proposed structure for any such
transaction, as well as comments to a draft merger and
arrangement agreement that would be provided. On May 26,
2006, a draft merger and arrangement agreement prepared by
Hogan & Hartson and Davies Ward was distributed by
Morgan Stanley to the various potential bidders.
Between May 23 and May 31, 2006, the potential bidders
continued to perform due diligence on Trizec and Trizec Canada,
and representatives of the various potential bidders also had
numerous conversations with representatives of Morgan Stanley,
Hogan & Hartson and Trizecs senior management
team. Representatives of the various potential bidders also had
numerous conversations with representatives of the senior
management team of Trizec Canada and with representatives of
Davies Ward.
On May 25, 2006, Trizec Canadas board of directors
met and received a report from senior management of Trizec
Canada on, and discussed, the efforts underway to explore
possible strategic alternatives involving Trizec Canada and
Trizec. Also on May 25, 2006, Davies Ward activated an
electronic data room and, subsequently, granted access to
physical data rooms containing additional due diligence
information about Trizec Canada.
On May 31, 2006, representatives of Morgan Stanley and RBC
received written preliminary indications of interest from
Brookfield Properties, Blackstone, Company A and
Company B (which presented a joint bid with a financial
partner). Neither Company C nor Company D submitted a
written preliminary indication of interest, and no further
discussions took place with Company C or Company D
after May 31. On May 31, 2006, copies of the bid
letters, along with a summary of the various bids, were
distributed to Trizecs special committee and Trizec
Canadas board of directors.
Brookfield Properties non-binding letter of interest
proposed an all cash offer of (i) $28.50 per share to
acquire Trizec shares (other than shares of Trizecs
capital stock held by Trizec Canada and its subsidiaries), and
(ii) CDN $33.50 per share for the outstanding shares of
Trizec Canada. The price offered for the shares of Trizec Canada
implicitly included an amount attributable to the value of
Trizec Canadas net other assets. This amount, based on the
then prevailing exchange rate, and after deducting
$28.50 per share for Trizec Canadas interest in
Trizec, was calculated by RBC to be between approximately
$116 million and $117 million. Brookfield
Properties offer also contemplated a purchase of 100% of
the outstanding units of interest in Trizecs operating
company, although Brookfield Properties indicated it would be
willing to allow the holders of such units to continue to hold
their interests in Trizecs operating company, subject to
an amended operating company agreement. Brookfield
Properties offer also indicated that it was prepared to
discuss providing an option for Trizec Canada shareholders to
receive preferred stock of Brookfield Properties in order to
facilitate rollover treatment for Trizec Canada
shareholders. Brookfield Properties letter indicated that
Brookfield Properties remaining due diligence would be
limited and that Brookfield Properties still needed to finalize
arrangements with one or more U.S. equity participants in
order to provide certainty that Trizec would continue to be
treated as a domestically controlled REIT.
Brookfield Properties letter did not specify a timeframe
for when it would be in a position to submit a binding proposal,
but indicated that Brookfield Properties would continue to
allocate all resources necessary to expeditiously complete the
transaction. Accompanying Brookfield Properties letter
were written comments to the merger and arrangement agreement
from Brookfield Properties and its legal counsel, Goodwin
Procter LLP, or Goodwin Procter.
Blackstones non-binding letter of interest proposed an all
cash offer of $26.50 per share to acquire Trizec shares
(other than shares of Trizecs capital stock held by Trizec
Canada and its subsidiaries). In its letter, Blackstone did not
provide any specific details regarding its proposed treatment of
the outstanding shares and net other assets of Trizec Canada,
although it did acknowledge that it would pay additional
consideration to reflect the value of such shares and assets.
Blackstone also indicated its willingness to purchase 100% of
the outstanding units of interest in Trizecs operating
company or allow the holders of such interests to roll
over
35
into a new preferred security. Blackstones letter
indicated that Blackstone was prepared to work toward executing
transaction documents on or before June 7, 2006. While
Blackstone did not submit a formal
mark-up of
the merger and arrangement agreement, it and its legal counsel,
Simpson Thacher & Bartlett LLP, or Simpson
Thacher, submitted a memorandum which listed specified
points in the merger and arrangement agreement that Blackstone
expected would need to be negotiated prior to consummating a
transaction.
Company As non-binding letter of interest proposed an all
cash offer of (i) a range of $26.00 to $28.00 per
share to acquire Trizec shares (other than shares of
Trizecs capital stock held by Trizec Canada and its
subsidiaries), and (ii) a range of $26.00 to
$28.00 per share for the outstanding shares of Trizec
Canada. Company As letter did not propose a specific
value for the net other assets of Trizec Canada, but stated that
any cash reserves of Trizec Canada, to the extent not used to
satisfy liabilities, would be distributed to Trizec
Canadas shareholders after applicable statutory periods
for claims had expired. Company As offer also
contemplated a purchase of 100% of the outstanding units of
interest in Trizecs operating company, although Company A
indicated it would be willing to allow the holders of such units
to continue to hold their interests in Trizecs operating
company, subject to an amended operating company agreement.
Company A provided a list of additional due diligence
information that it indicated it needed to review in order to
finalize its offer, and stated that it would be in a position to
submit a binding proposal by June 15, 2006. Company A
and its legal advisors also submitted comments to the merger and
arrangement agreement together with Company As letter.
Finally, Company Bs non-binding letter of interest
proposed an all cash offer of (i) $28.00 per share to
acquire Trizec shares (other than shares of Trizecs
capital stock held by Trizec Canada and its subsidiaries), and
(ii) $28.00 per share for the outstanding shares of
Trizec Canada, plus approximately $105 million for the net
other assets of Trizec Canada. Company Bs offer also
contemplated a purchase of 100% of the outstanding units of
interest in Trizecs operating company, although Company B
indicated it would be willing to allow the holders of such units
to continue to hold their interests in Trizecs operating
company, subject to an amended operating company agreement.
Company Bs letter indicated that Company B was
prepared to work immediately toward negotiating and executing
the merger and arrangement agreement and that it was confident
of its ability to complete the process on or before the open of
business on June 5, 2006. Company B and its legal
advisors also submitted comments to the merger and arrangement
agreement together with Company Bs letter.
On June 1, 2006, Trizecs special committee convened a
special telephonic meeting for the purpose of discussing these
written proposals, the principal terms and related financing
issues, and the respective comments to the draft merger and
arrangement agreement. Representatives of Morgan Stanley,
JPMorgan and Hogan & Hartson participated in this
meeting. Representatives of Morgan Stanley reviewed the key
terms of the proposals and provided the directors with
background information related to each of the bidders, their
financing plans and, if known, financing sources, the general
business strategy of each bidder and a summary of events leading
up to the receipt of the proposals, as well as a summary of
discussions that representatives of Morgan Stanley had had with
the bidders up to that date. Representatives of Morgan Stanley
also updated the special committee with respect to the amount of
due diligence that each of the bidders had performed up to that
date, and the proposed process for inviting bidders whose
initial proposals were sufficiently attractive into a second
round of bids. The special committee discussed the key terms of
the proposals in the letters, including the price, the
probabilities and risks of increases and decreases in such
pricing, the execution risk and other potential factors and
events that could affect the likelihood of closing a transaction
with any one of the bidders, in order to determine which
bidders initial proposals, if any, were sufficiently
attractive to warrant being invited to submit second round bids.
Hogan & Hartson also presented to the special committee
its views with respect to the respective comments to the draft
merger and arrangement agreement. During this meeting,
representatives of Hogan & Hartson discussed with the
special committee members their fiduciary duties in connection
with a transaction such as the one contemplated.
At the meeting on June 1, 2006, Trizecs special
committee discussed whether to continue discussions with
specific bidders given the terms of their respective bid
letters, offer prices and comments to the draft merger and
arrangement agreement. The special committee considered certain
of the proposals attractive enough to warrant further
exploration of a possible strategic transaction. In order to
coordinate with Trizec Canada the responses to the various
bidders, the special committee authorized Mr. Rufrano, as
chairman of the
36
special committee, to discuss the preliminary conclusions
reached by the special committee with Mr. Donald Lenz, the
lead director appointed by Trizec Canadas board of
directors (as described below). At this meeting, the special
committee also discussed a possible amendment to the Trizec
Properties, Inc. 2004 Outperformance Compensation Plan, or
OPP, to provide that the valuation date for
considering whether awards have been earned under the OPP should
be the date of any merger agreement, as opposed to the closing
date of any transaction. No formal action was taken at this
meeting approving this amendment.
Also on June 1, 2006, Trizec Canadas board of
directors, with Mr. Munk recusing himself, convened a
special telephonic meeting for the purpose of discussing the
written proposals, their principal terms and related financing
issues, and comments to the draft merger and arrangement
agreement. Representatives of Morgan Stanley, RBC and Davies
Ward participated in this meeting. Representatives of Morgan
Stanley provided Trizec Canadas board of directors with
the same general report that was provided to Trizecs board
of directors and engaged in a discussion of the various
proposals with the board members before leaving the meeting. RBC
then made a presentation to Trizec Canadas board of
directors regarding the financial elements of each proposal and
certain factors the board should consider in its deliberations.
Davies Ward also presented to Trizec Canadas board of
directors its views with respect to the respective comments to
the draft merger and arrangement agreement and certain other
legal matters. Trizec Canadas board of directors discussed
in detail the key terms of the proposals in the letters,
including the price, the probabilities and risks of increases
and decreases in such pricing, the execution risk and other
potential factors and events that could affect the likelihood of
closing a transaction with any one of the bidders, in order to
determine which bidders initial proposals, if any, were
sufficiently attractive to warrant being invited to submit
second round bids. Trizec Canadas board of directors
considered certain of the proposals to be attractive enough to
warrant further exploration of a possible strategic transaction.
At this meeting, Trizec Canadas board also appointed and
authorized Mr. Donald Lenz as its lead director to discuss
the preliminary conclusions reached by the Trizec Canada board
with Mr. Rufrano, as chairman of Trizecs special
committee.
Later that day, Messrs. Lenz and Rufrano, certain of the
respective legal and financial advisors to Trizec and Trizec
Canada and Trizecs and Trizec Canadas senior
management teams discussed the views of the Trizec special
committee and Trizec Canadas board of directors with
regard to the bids received, and a consensus was reached as to
the following mutual conclusions regarding the merits of the
bids and the strategy for proceeding with second round bids.
Brookfield Properties had submitted a bid with a price that was
the highest of the bids that were submitted, both for
Trizecs common stock and for Trizec Canadas shares
and net other assets. However, concerns were expressed that
Brookfield Properties did not yet have a significant
U.S. equity partner, an element that was considered
necessary in light of the need for Trizec to continue to qualify
as a domestically controlled REIT for tax purposes
following any merger transaction. Taking into consideration the
advice received from the respective legal and financial
advisors, it was decided that Brookfield Properties would be
invited to submit a second round bid, with the reservation that
Brookfield Properties would need to provide more details
regarding its source of U.S. equity capital to finance a
transaction in order to ultimately be considered a viable bidder.
With respect to Blackstone, it was decided that representatives
of Morgan Stanley should convey to Blackstone that its offer was
not sufficient, both with respect to the $26.50 per share offer
price for Trizecs common stock and the lack of specificity
with respect to the proposed treatment of Trizec Canadas
shares and net other assets. Blackstones experience in
successfully completing acquisitions of public real estate
companies was discussed, and it was noted that, notwithstanding
that Blackstone had not submitted detailed comments to the
merger and arrangement agreement, Blackstone had displayed in
the past its ability to execute similar transactions in a swift
manner. However, taking into consideration the advice received
from the respective legal and financial advisors, it was decided
that Blackstone would need to increase its offer price and
submit a detailed
mark-up to
the merger and arrangement agreement in order to ultimately be
considered a viable bidder and be invited into the second round
for submitting bids.
With respect to Company A, taking into consideration the advice
received from the respective legal and financial advisors, it
was decided that Company A would not be invited to submit a
second round bid unless it submitted a specific price and
materially increased its offer price. This decision was based on
a number of
37
factors, including the insufficiency of the price being offered
(it being noted that the low end of the range of prices being
offered by Company A for Trizec shares and for Trizec
Canadas shares, at $26.00 per share, was the lowest bid
out of the four bids that were received), the proposed treatment
of Trizec Canadas net other assets that was considered
unacceptable by Trizec Canadas board of directors, the
remaining due diligence that Company A indicated that it
still needed to complete and the relatively lengthy time Company
A stated it would need to be in a position to execute a
definitive merger and arrangement agreement.
The proposal made by Company B, jointly with a financial
partner, was generally considered to be attractive in that,
while not the highest, it was in the upper range of offer prices
for Trizecs common stock and Trizec Canadas shares,
it addressed (although at a price that Trizec Canadas
board of directors believed was at the low end of the acceptable
range) the value of Trizec Canadas net other assets, and
that Company B appeared to have done a substantial amount
of due diligence on both Trizec and Trizec Canada. The fact that
Company B was willing to proceed very quickly toward
signing a definitive merger and arrangement agreement was viewed
positively. After taking into consideration the advice received
from the respective legal and financial advisors, it was decided
that Company B would be invited to submit a second round
bid.
It was further determined by Trizecs special committee and
Trizec Canadas board of directors that the proposals of
Brookfield Properties and Company B were sufficiently
attractive to warrant such bidders being invited to submit
second round bids in order to explore in more depth the
possibility of a strategic transaction. Later in the day on
June 1, 2006, representatives of Morgan Stanley reported
back to Blackstone and Company A that their offers were not
sufficiently attractive to warrant being invited to submit
second round bids. They also reported back to Brookfield
Properties and Company B that their offers warranted being
invited to submit second round bids, with instructions that each
party should continue negotiating the merger and arrangement
agreement and resolving other issues so that it would be in a
position to execute a definitive merger and arrangement
agreement as soon as possible.
In the evening of June 1, 2006, during their discussions
with Blackstone regarding the lack of competitiveness of
Blackstones bid, representatives of Morgan Stanley and
Blackstone discussed the prospect of Blackstone teaming with
Brookfield Properties, especially in light of the fact that
Brookfield Properties, as a Canadian corporation, still needed
to identify a U.S. equity financing source. On June 2,
2006, representatives of Blackstone contacted representatives of
Morgan Stanley and indicated that Brookfield Properties and
Blackstone were in discussions regarding possibly moving forward
together in the bid process. In the evening of June 2,
2006, representatives of Brookfield Properties and Blackstone
contacted representatives of Morgan Stanley and confirmed that
Brookfield Properties and Blackstone were, in fact, prepared to
move forward together at a price of $28.50 per share for
Trizecs common stock and CDN $33.50 per share for the
outstanding shares of Trizec Canada. Brookfield Properties and
Blackstone indicated that they would continue together based on
Brookfield Properties proposal letter and comments on the
merger and arrangement agreement.
During the period of time after the conclusion of the meetings
of the special committee and Trizec Canadas board of
directors on June 1, 2006 and the night of June 3,
2006, representatives of Hogan & Hartson and Davies
Ward continued to negotiate the terms of the merger and
arrangement agreement with Goodwin Procter and Simpson Thacher
(jointly) and the legal advisors of Company B, and
Brookfield Properties and Blackstone (jointly) and
Company B continued their due diligence efforts. During
this period of time, representatives of Morgan Stanley held a
series of telephone calls with Brookfield Properties,
Blackstone, Company B and their respective financial
advisors regarding issues that had been raised by Trizecs
special committee and Trizec Canadas board of directors
concerning their respective proposals, including the proposed
price, financing and other terms. The parties also began to
negotiate a proposed structure and amendment to the operating
agreement of Trizecs operating company, in light of the
fact that both remaining bidders expressed a willingness to
allow the current holders of interests in Trizecs
operating company to continue to hold such interests, subject to
an amended operating company agreement.
In the evening of June 3, 2006, representatives of Morgan
Stanley contacted Brookfield Properties, Blackstone and
Company B, and told them that best and final offers, as
well as final comments to the merger and arrangement agreement,
would be due no later than 12:00 noon on Sunday, June 4. As
directed by Trizecs special
38
committee and Trizec Canadas board of directors,
representatives of Morgan Stanley also advised the bidders that
they should consider assigning a value of at least
$117 million to the net other assets of Trizec Canada.
Through the night of June 3, 2006 and into the afternoon of
June 4, 2006, representatives of Hogan & Hartson
and Davies Ward continued to negotiate the terms of a merger and
arrangement agreement with Goodwin Procter, Simpson Thacher and
the legal advisors of Company B, and Brookfield Properties,
Blackstone and Company B continued their due diligence
efforts. In the early afternoon of June 4, 2006, Brookfield
Properties submitted a final and best offer, indicating it had
secured Blackstone as a participant in such offer, and Company B
also submitted a final and best offer. Company B informed
Mr. Callahan that its offer would expire at 8:00 a.m.
on June 5, 2006. Both of the remaining bidders also
submitted revised mark-ups to the merger and arrangement
agreement.
The final offer from Brookfield Properties and Blackstone
proposed an all cash offer of (i) $29.01 per share of
Trizecs common stock to acquire Trizec (other than shares
of Trizecs capital stock held by Trizec Canada and its
subsidiaries), and (ii) $30.97 per share for the
outstanding shares of Trizec Canada (representing an implied
value of approximately $119 million for the net other
assets of Trizec Canada). The offer of Brookfield Properties and
Blackstone also included a right pursuant to which Brookfield
Properties could propose to Trizec Canadas shareholders an
option to receive part of the consideration in the form of
Brookfield Properties preferred shares.
Company Bs final offer proposed an all cash offer of
(i) $28.50 per share to acquire Trizec shares (other
than shares of Trizecs capital stock held by Trizec Canada
and its subsidiaries), and (ii) $28.50 per share to
acquire the outstanding shares of Trizec Canada, plus
approximately $117 million for the net other assets of
Trizec Canada.
On June 4, 2006, prior to the special committee meeting,
the compensation committee of Trizecs board of directors
met and reviewed certain proposals regarding compensation for
Trizecs executive officers and other employees that had
been previously discussed at the May 18, 2006 compensation
committee meeting and the June 1, 2006 special committee
meeting. The compensation committee recommended that
Trizecs board of directors approve (i) a change in
control severance pay plan under which certain employees of
Trizec (including Trizecs executive officers other than
Mr. Callahan) and its subsidiaries would be entitled to
severance payments under certain circumstances if they were
terminated or if they resigned for good reason
within one year following the consummation of a change in
control transaction, (ii) a retention bonus program for the
benefit of certain professional employees of Trizec (including
Trizecs executive officers) and its subsidiaries, and a
retention bonus program for the benefit of certain hourly
employees of Trizec, to provide additional incentive to such
employees to continue to remain employees of Trizec through the
closing date of any merger that Trizec might pursue and during a
specified transition period following the closing of such a
merger, and (iii) an amendment to the OPP to provide that
the awards made under the OPP to all participants, including
Trizecs executive officers, would vest in full and the
participants would be entitled to receive payments under the OPP
in the form of restricted stock immediately prior to the closing
of any merger that Trizec might pursue (but contingent on the
closing), based on the total return to common stockholders for
the period beginning on October 20, 2004 and ending on the
date of any merger agreement. Immediately following the
conclusion of the compensation committees meeting,
Trizecs board of directors convened a meeting and, upon
the recommendation of the compensation committee, approved the
change in control severance pay plan, the retention bonus
programs and the amendment to the OPP as recommended.
In the evening of June 4, 2006, Trizecs special
committee convened a special telephonic meeting for the purpose
of discussing the final offers submitted by Brookfield
Properties and Blackstone and Company B. Representatives of
Morgan Stanley, JPMorgan and Hogan & Hartson
participated in this meeting. In advance of the meeting, each
committee member received, among other things, current drafts of
the merger and arrangement agreements submitted by the two
bidders and related documents. At the meeting, representatives
of Morgan Stanley and JPMorgan reviewed the financial analysis
of the proposed merger with the members of Trizecs special
committee, summarized the final bids submitted by the remaining
bidders and updated the special committee on the negotiations
that had taken place over the course of the prior three days
since the special committees last meeting.
39
Representatives of Hogan & Hartson reviewed with the
special committee its fiduciary duties and the terms of the
proposed merger and arrangement agreements submitted by
Brookfield Properties and Blackstone and Company B.
Hogan & Hartson summarized in detail the principal
terms of the merger and arrangement agreements and ancillary
documents, including the representations and warranties,
operating covenants, the provisions regarding non-solicitation
of competing acquisition proposals, closing conditions and the
absence of a financing contingency, termination provisions,
termination fees and expense reimbursement provisions, the
guarantees and the structure and financing of the proposed
transaction. While it was noted by Hogan & Hartson that
the merger and arrangement agreements presented by the two
remaining bidding parties were similar in many respects, the
merger and arrangement agreement submitted by Brookfield
Properties and Blackstone, as compared to the merger and
arrangement agreement submitted by Company B, included a
higher guarantee and a lower termination fee. Hogan &
Hartson also discussed the terms of the support agreements that
would be entered into by Trizec Canada and an affiliate of
Mr. Munk in connection with the transaction. Considerable
discussion concerning the proposed transaction and the strengths
and weaknesses of the two bids then ensued. JPMorgan rendered
its oral opinion, which was later confirmed in writing, to
Trizecs special committee that, as of June 4, 2006
and based upon and subject to the various considerations and
assumptions described therein, the proposed merger consideration
to be received by Trizecs common stockholders (other than
Trizec Canada and its controlling shareholders) pursuant to the
merger and arrangement agreement submitted by Brookfield
Properties and Blackstone was fair, from a financial point of
view, to such stockholders. Further discussion of the proposed
transaction followed, and after its deliberations, Trizecs
special committee recommended approving the merger, the merger
and arrangement agreement and other transactions contemplated by
the merger and arrangement agreement.
Trizecs board of directors then immediately convened a
meeting. Mr. Munk did not participate in this meeting.
JPMorgan rendered to Trizecs board of directors its
opinion that, as of June 4, 2006 and based upon and subject
to the various considerations and assumptions described therein,
the proposed merger consideration to be received by
Trizecs common stockholders (other than Trizec Canada and
its controlling shareholders) pursuant to the merger and
arrangement agreement submitted by Brookfield Properties and
Blackstone was fair, from a financial point of view, to such
stockholders. Trizecs board of directors then, upon the
recommendation of the special committee, approved the merger,
the merger and arrangement agreement and the other transactions
contemplated by the merger and arrangement agreement, and
declared the merger, the merger and arrangement agreement and
the other transactions contemplated by the merger and
arrangement agreement advisable, fair to and in the best
interests of Trizec and its stockholders. The principal factors
considered by Trizecs board of directors are described in
greater detail under the heading Reasons for the
Merger.
Trizec Canadas board of directors (with Mr. Munk
recusing himself) reconvened its meeting in the evening of
June 4, 2006 for the purpose of discussing the final
proposals submitted by Brookfield Properties and Blackstone and
Company B. In advance of the meeting, each director
received, among other things, the drafts of the merger and
arrangement agreements and related documents for each of
Brookfield Properties and Blackstone on the one hand and
Company B on the other. Representatives of RBC and Davies
Ward participated in this meeting and representatives of Morgan
Stanley were present for part of the meeting. At the meeting,
representatives of Morgan Stanley summarized the final bids
submitted by the two remaining bidders and updated Trizec
Canadas board of directors on the negotiations that had
taken place over the course of the prior three days since the
boards last meeting.
Representatives of Davies Ward reviewed with the members of
Trizec Canadas board of directors their fiduciary duties
in the context of the proposals submitted by Brookfield
Properties and Blackstone and Company B and summarized in
detail for Trizec Canadas board of directors the principal
terms of the merger and arrangement agreements, including the
representations and warranties, operating covenants, the
provisions regarding non-solicitation of competing acquisition
proposals, closing conditions and the absence of a financing
contingency, termination provisions, termination fees and
expense reimbursement provisions, the guarantees and the
structure and financing of the proposed transaction, noting
their similarities and distinctions. Specific note was made that
the Brookfield Properties and Blackstone proposal included a
higher guarantee and a lower termination fee. Representatives of
Davies Ward also described for Trizec Canadas board of
directors the ancillary agreements and discussed the proposed
support agreements sought from Trizec Canada in connection
40
with the merger and from P.M. Capital in connection with the
arrangement. Considerable discussion concerning the transaction
then ensued as to the merits and weaknesses of each proposal.
RBC provided a detailed presentation of its financial assessment
of the proposals before rendering its oral opinion, which was
later confirmed in writing, to Trizec Canadas board of
directors that, as of June 4, 2006 and based upon and
subject to the factors and assumptions set forth therein, RBC
was of the opinion that the price of $30.97 per share for the
outstanding shares of Trizec Canada offered in the arrangement
proposed by Brookfield Properties was fair from a financial
point of view to Trizec Canadas shareholders. Trizec
Canadas board of directors, among other things, approved
the merger and arrangement agreement and recommended that the
arrangement be approved by the holders of shares of Trizec
Canada. Trizec Canadas board of directors also adopted
resolutions regarding the payment of discretionary performance
related bonuses and the meeting then concluded.
In the evening of June 4, 2006, Mr. Callahan made a
telephone call to representatives of Company B to inform
Company B that Trizec and Trizec Canada would not seek to
consummate a transaction with Company B.
Through the night of June 4, 2006 and into the morning of
June 5, 2006, representatives of Hogan & Hartson
and Davies Ward continued to finalize the terms of the merger
and arrangement agreement and related documents with Goodwin
Procter and Simpson Thacher. Trading in the common stock of
Trizec, the subordinate voting shares of Trizec Canada and the
common shares of Brookfield Properties did not open initially on
the morning of June 5, 2006 pending the execution of the
merger and arrangement agreement. On June 5, 2006, the
parties executed the merger and arrangement agreement and issued
press releases announcing the proposed merger and arrangement.
Reasons
for the Merger
In reaching its decision to approve the merger, the merger
agreement and the other transactions contemplated by the merger
agreement and to recommend the adoption of the merger agreement
to our common stockholders, the special committee and our board
of directors consulted with our senior management team, as well
as our outside legal and financial advisors, and considered a
number of factors, including the following material factors
which the special committee and our board of directors viewed as
supporting their decision to approve the merger, the merger
agreement and the other transactions contemplated by the merger
agreement and to recommend adoption of the merger agreement:
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the current and historical market prices of the shares of our
common stock and the fact that the cash consideration of $29.01
that our common stockholders will receive in respect of each
share of our common stock represented an approximate 17.9%
premium over the closing price of our common stock on
June 2, 2006, the last trading day before the public
announcement of our entering into the merger agreement, an
approximate 21.8% premium to the weighted average closing price
of our common stock for the
30-day
period ended immediately prior to the announcement of the
merger, an approximate 18.8% premium to the weighted average
closing price of our common stock for the
60-day
period ended immediately prior to the announcement of the
merger, an approximate 19.7% premium to the weighted average
closing price of our common stock for the
90-day
period ended immediately prior to the announcement of the
merger, and an approximate 20.5% premium to the weighted average
closing price of our common stock for the
year-to-date
period ended immediately prior to the announcement of the
merger, and that over the
12-month
period ended June 2, 2006, the last trading day before the
announcement of the merger agreement on June 5, 2006, the
low price of our common stock was $19.70 per share and the
high price was $26.39 per share, which also represents the
all-time high price for our common stock since the commencement
of trading on the New York Stock Exchange on May 8, 2002
and prior to June 2, 2006;
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despite our past success in implementing our strategic plans,
our belief that the merger provides a better alternative to our
stockholders than pursuing our strategic plans on an ongoing
basis as a result of the risks and uncertainties associated with
the successful implementation of our strategic plans, including:
(a) high cost of acquisitions due to low capitalization
rates in real estate properties generally and possible increases
in interest rates; and (b) risks and uncertainties in
continuing to implement our strategic plans;
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the high multiples of funds from operations at which shares of
REITs have been trading recently and the risk that those
multiples might not be sustained, which could result in a
decline in the trading price of our common stock regardless of
our performance;
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favorable conditions for sale transactions in the real estate
markets generally and the office sector specifically, including
high prices for real estate assets and low capitalization rates,
the relatively low interest rate environment and the number of
large portfolio acquisitions and public real estate mergers in
recent years;
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the possibility that Trizec Canada and its subsidiaries may
dispose of all or substantially all of shares of our common
stock that they own as a result of the potential exercise by
certain Trizec Canada shareholders of their right to redeem
their shares of Trizec Canada after August 15, 2007, and
the potentially adverse impact that such disposition may have on
our stock price;
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the potentially dilutive effect that our recent acquisitions of
office properties, including the Arden portfolio, and future
acquisition activities may have on our near-term funds from
operations despite our senior managements belief that such
acquisitions and capital recycling plan would likely produce
attractive long-term results for our stockholders and the
possibility that our stock price may not fully reflect such
long-term benefits;
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the high probability that the mergers would be completed based
on, among other things, Brookfield Properties Properties
and Blackstones proven ability to complete large
acquisition transactions on the agreed terms and Brookfield
Properties and Blackstones extensive experience in
the real estate industry;
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the lack of a financing condition, and Brookfield
Properties guarantee of up to $1.1 billion of the
Buyer Parties obligations under the merger agreement;
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the fact that the merger represents a transaction that provided
the highest price to our stockholders we had been offered after
pursuing other potential transactions (see
Background of the Mergers and the
Arrangement on page 29);
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the terms and conditions of the merger agreement, which were
reviewed by the special committee and our board of directors in
consultation with our financial and legal advisors, and the fact
that such terms were derived from arms-length negotiations
among the parties;
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the terms and conditions of the arrangement, including that our
stockholders (other than Trizec Canada and its subsidiaries) are
receiving the same consideration as the portion of the
consideration Trizec Canada shareholders are receiving that is
attributable to the shares of our common stock that Trizec
Canada owns;
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the financial analysis of JPMorgan, and its oral opinion,
delivered to our board of directors on June 4, 2006 and
subsequently confirmed in writing that, as of such date and
based upon and subject to the various considerations and
assumptions described in the opinion, the merger consideration
to be received by (i) our common stockholders (other than
Trizec Canada and its controlling shareholders) as a result of
the proposed merger involving us was fair, from a financial
point of view, to our stockholders, and (ii) the holders of
Class B common units of our operating company (other than
us and our subsidiaries) in the proposed operating company
merger was fair, from a financial point of view, to such
unitholders (assuming all such holders elected to redeem their
preferred units and receive the cash consideration) (see
Opinion of Our Financial Advisor on page
44);
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our ability under certain circumstances, pursuant to the merger
agreement to consider and respond to a different unsolicited
written acquisition proposal, and if, after consultation with
our financial advisors, each of our board of directors and
Trizec Canadas board of directors determines in good faith
that such acquisition proposal is a superior proposal for each
of us and Trizec Canada, respectively, and determines in good
faith, after consultation with legal counsel, that failure to
take such action would be inconsistent with such board of
directors fiduciary duties to its stockholders under
applicable law, and Parent chooses not to negotiate improvements
to the merger agreement to make it superior, our and Trizec
Canadas ability to terminate the merger agreement upon the
payment of a termination fee of $115.0 million, plus
reimbursement of Parents expenses up to a maximum of
$25.0 million;
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42
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the fact that the common stock merger consideration will provide
our stockholders with immediate fair value, in cash, for their
investment in our stock; and
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the merger is subject to the approval of our common stockholders.
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Our board of directors also considered the following potentially
negative factors in its deliberations concerning the merger
agreement and the merger:
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the merger would preclude our stockholders from having an
opportunity to participate in the future performance of our
assets, future earnings growth, future appreciation of our
common stock value or future dividends that could be expected if
our strategic plans were successfully implemented;
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the significant costs involved in connection with entering into
and completing the merger and the substantial time and effort of
our management required to consummate the merger and related
disruptions to the operation of our business;
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the restrictions on the conduct of our business prior to the
completion of the merger, which could delay or prevent us from
undertaking business opportunities that may arise pending
completion of the merger;
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the pending merger or failure to complete the merger may cause
substantial harm to relationships with our employees and may
divert management and employee attention away from the
day-to-day
operation of our business;
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our inability to solicit different acquisition proposals and the
possibility that the $115.0 million termination fee and up
to $25.0 million expense reimbursement payable by us upon
the termination of the merger agreement under the circumstances
described in the merger agreement could discourage other
potential bidders from making a competing bid to acquire us;
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that because the requisite approval of the Trizec Canada
shareholders is a closing condition our ability to consummate
the transaction is tied in effect to the completion of the
arrangement by Trizec Canada;
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the fact that an all cash merger would be taxable to our
stockholders for U.S. federal income tax purposes;
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our inability to take action to cause specific performance or
require Parent, MergerCo, Merger Operating Company or
AcquisitionCo to complete the mergers, and our exclusive remedy
for such failure to complete the mergers is to seek damages up
to the amount of Brookfield Properties $1.1 billion
guarantee; and
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some of our directors and executive officers may have interests
in the mergers and the arrangement that are different from, or
in addition to, those of our common stockholders (see
Interests of Our Directors and Executive
Officers in the Mergers and the Arrangement on page 50).
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The foregoing discussion of the factors considered by the
special committee and our board of directors is not intended to
be exhaustive, but rather includes the material factors
considered by the special committee and our board of directors.
In reaching its decision to approve the merger, the merger
agreement and the other transactions contemplated by the merger
agreement, neither the special committee nor our board of
directors quantified or assigned any relative weights to the
factors considered and individual directors may have given
different weights to different factors. In the event that the
merger is not completed for any reason, we expect to continue to
pursue our strategic plans with the intention of delivering
further improvement in our financial results and enhanced
stockholder value.
Recommendation
of Our Board of Directors
After careful consideration and upon the recommendation of
the special committee, our board of directors (with
Mr. Munk recusing himself) has (a) determined that the
merger, the merger agreement and the other transactions
contemplated by the merger agreement are advisable, fair to and
in the best interests of us and our stockholders, and
(b) approved the merger, the merger agreement and the other
transactions contemplated by the merger agreement. Our board of
directors recommends that you vote FOR the adoption
of the merger agreement.
43
Opinion
of Our Financial Advisor
Pursuant to an engagement letter, we retained JPMorgan as our
financial advisor in connection with the proposed mergers.
At the meetings of the special committee and our board of
directors on June 4, 2006, JPMorgan rendered its oral
opinion, subsequently confirmed in writing, to the special
committee and our board of directors that, as of such date and
based upon and subject to the various considerations and
assumptions described in the opinion, the merger consideration
to be received by (i) the holders of our common stock,
other than Trizec Canada and its controlling shareholders, in
the proposed merger involving Trizec was fair, from a financial
point of view, to such holders, and (ii) the holders of
Class B common units of our operating company, other than
us and our subsidiaries, in the proposed merger involving our
operating company was fair, from a financial point of view, to
such holders (assuming all such holders elected to redeem their
redeemable preferred units and receive the cash consideration).
No limitations were imposed by the special committee or our
board of directors upon JPMorgan with respect to the
investigations made or procedures followed by it in rendering
its opinion.
The full text of the written opinion of JPMorgan, dated
June 4, 2006, which sets forth, among other things, the
assumptions made, procedures followed, matters considered and
limits on the opinion and the review undertaken in connection
with rendering the opinion, is attached as Annex B to this
proxy statement and is incorporated herein by reference. You are
urged to read the opinion in its entirety.
JPMorgans written opinion is addressed to the special
committee and our board of directors in connection with, and for
the purposes of, their evaluation of the mergers and
JPMorgans opinion does not constitute a recommendation to
our stockholders as to how such stockholders should vote with
respect to the mergers or any other matter. The summary of
JPMorgans opinion set forth in this proxy statement is
qualified in its entirety by reference to the full text of such
opinion.
In arriving at its opinion, JPMorgan undertook a number of
investigations and analyses, including, but not limited to, the
following:
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reviewed a draft of the Agreement and Plan of Merger and
Arrangement Agreement dated June 4, 2006 among us, Trizec
Holdings Operating LLC, Trizec Canada Inc., Grace Holdings LLC,
Grace Acquisition Corporation, 4162862 Canada Limited and Grace
OP LLC;
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reviewed certain publicly available business and financial
information concerning us and the industries in which we
operate, including our annual and quarterly reports filed with
the SEC;
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compared the proposed financial terms of the mergers with the
publicly available financial terms of certain transactions
involving companies that JPMorgan deemed relevant and the
consideration received for such companies;
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compared our financial and operating performance with publicly
available information concerning certain other companies that
JPMorgan deemed relevant and reviewed the current and historical
market prices of our common stock and certain publicly traded
securities of such other companies;
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reviewed certain internal financial analyses and forecasts
prepared by our management relating to our business; and
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performed such other financial studies and analyses and
considered such other information as JPMorgan deemed appropriate
for the purposes of its opinion.
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JPMorgan also held discussions with certain members of our
management with respect to certain aspects of the mergers and
our past and current business operations, our financial
condition, results of operations and future prospects and
operations, and certain other matters JPMorgan believed
necessary or appropriate to its inquiry. In giving its opinion,
JPMorgan relied upon and assumed, without assuming
responsibility or liability for independent verification of the
accuracy and completeness of all information that was publicly
available or that was furnished to or discussed with JPMorgan by
us or otherwise reviewed by or for JPMorgan. JPMorgan did not
conduct and was not provided with any valuation or appraisal of
our individual assets or liabilities, nor did JPMorgan evaluate
our solvency or that of MergerCo under any state or federal laws
relating to bankruptcy, insolvency or similar matters. In
relying on financial analyses and forecasts provided to it,
44
JPMorgan assumed that such analyses and forecasts were
reasonably prepared based on assumptions reflecting the best
currently available estimates and judgments by our management as
to the expected future results of our operations and financial
condition to which such analyses or forecasts relate. JPMorgan
expressed no view as to such analyses or forecasts or the
assumptions on which they were based. We do not publicly
disclose internal management projections of the type provided to
JPMorgan in connection with its analysis of the mergers, and
such projections were not prepared with a view toward public
disclosure. These projections were based on numerous variables
and assumptions that are inherently uncertain and may be beyond
the control of our management, including, without limitation,
factors relating to general economic and competitive conditions
and prevailing interest rates. Accordingly, actual results could
vary significantly from those set forth in such projections.
JPMorgan also assumed that the mergers and the other
transactions contemplated by the merger agreement will be
consummated as described in the merger agreement, and that the
definitive merger agreement would not be different in any
material respects from the draft provided to JPMorgan. JPMorgan
relied as to all legal matters relevant to rendering its opinion
upon the advice of its counsel. JPMorgan further assumed that
all material governmental, regulatory or other consents and
approvals necessary for the consummation of the mergers will be
obtained without any adverse effect on us.
JPMorgans opinion is necessarily based on economic, market
and other conditions as in effect on, and the information made
available to JPMorgan as of, June 4, 2006. It should be
understood that subsequent developments may affect
JPMorgans opinion and that JPMorgan does not have any
obligation to update, revise or reaffirm its opinion.
JPMorgans opinion is limited to the fairness, from a
financial point of view, of the merger consideration to be
received by (i) the holders of our common shares, other
than Trizec Canada and its controlling shareholders, in the
proposed merger involving Trizec, and (ii) the holders of
Class B common units of our operating company (assuming all
such holders elected to redeem their preferred units and receive
the cash consideration), other than us and our subsidiaries, in
the proposed merger involving the operating company. JPMorgan
expressed no opinion as to the fairness of the mergers to, or
any consideration of, the holders of any other class of
securities, creditors or other constituencies of us or our
operating company or as to the underlying decision by us and our
operating company to engage in the mergers. JPMorgans
opinion did not address the relative merits of the mergers or
other actions contemplated by the merger agreement compared with
other business strategies or transactions that may have been
considered by our management, our board of directors or any of
its committees.
In accordance with customary investment banking practice,
JPMorgan employed generally accepted valuation methods in
reaching its opinion. The following is a summary of the material
financial analyses utilized by JPMorgan in connection with
providing its opinion. In calculating per share values, JPMorgan
assumed outstanding common units had been converted into or
redeemed for shares of common stock in accordance with the
existing terms of such common units, unless otherwise indicated.
Share Trading History Analysis. JPMorgan
reviewed the publicly available historical trading prices for
our common stock, as reported by SNL Financial and Bloomberg
L.P., and noted that over the
12-month
period ended June 2, 2006, the low price was
$19.70 per share and the high price was $26.39 per
share, which also represents the all-time high share price for
our common stock since the commencement of trading on the New
York Stock Exchange on May 8, 2002 and prior to
June 2, 2006.
The value of cash consideration of $29.01 per share
represents an approximate 17.9% premium over the closing price
per share of our common stock of $24.60 on June 2, 2006.
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Premium Paid To:
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Share Price:
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Premium:
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June 2, 2006
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$
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24.60
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17.9
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%
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52 week low
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$
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19.70
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47.3
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%
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52 week high
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$
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26.39
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9.9
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%
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All-time high
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$
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26.39
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9.9
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%
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45
Comparable Public Companies Analysis. Using
publicly available information, JPMorgan compared our selected
financial data with similar data for selected publicly traded
companies engaged in businesses which JPMorgan judged to be
analogous to ours. The companies selected by JPMorgan were:
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Boston Properties, Inc.
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Brandywine Realty Trust
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Brookfield Properties Corporation
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Crescent Real Estate Equities Company
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Equity Office Properties Trust
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Kilroy Realty Corp.
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Maguire Properties, Inc.
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Reckson Associates Realty Corporation
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SL Green Realty Corp.
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These companies were selected, among other reasons, because of
their specialization in the office REIT sector, geographic
location, asset quality, market capitalization and capital
structure. None of the companies utilized in the analysis,
however, were identical to us. Accordingly, a complete analysis
of the results of the following calculations cannot be limited
to a quantitative review of such results and involves complex
considerations and judgments concerning the differences in the
financial and operating characteristics of the comparable
companies and other factors that could affect the public trading
value of the comparable companies, as well as our potential
trading value.
JPMorgan analyzed publicly available financial performance data
for the comparable companies listed above. JPMorgan calculated
the multiples of current share price as of June 2, 2006 to
equity analysts estimates for 2007 consensus funds from
operations, referred to in this proxy statement as
FFO, as reported by I/B/E/S, for each of the
comparable companies to determine the estimated 2007 FFO trading
multiples. Based on its judgment, JPMorgan selected a range of
2007 FFO multiples of 15.0x to 17.0x. The selected multiples
were then applied to the companys 2007 FFO estimates,
based on managements projections, yielding implied trading
values for the common stock for the 2007 estimate of
approximately $25.20 to $28.56 per share.
46
Precedent Transactions Analysis. Using
publicly available information, JPMorgan examined selected
transactions within both our industry segment and the overall
REIT industry. Specifically, JPMorgan reviewed the following
transactions:
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Date Announced
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Acquirer
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Target
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03/06/2006
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The Blackstone Group
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CarrAmerica Realty Corporation
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02/10/2006
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LBA Realty LLC
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Bedford Property Investors, Inc.
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12/22/2005
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GE Real Estate
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Arden Realty
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12/19/2005
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Morgan Stanley Real
Estate &
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Town and Country Trust
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Onex Real Estate
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12/07/2005
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CalEast Industrial Investors, LLC
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Centerpoint Properties Trust
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10/24/2005
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Morgan Stanley Real Estates
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AMLI Residential Properties Trust
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Prime Property Fund
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10/03/2005
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Brandywine Realty Trust
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Prentiss Properties Trust
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09/06/2005
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DRA Advisors LLC
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Capital Automotive REIT
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06/17/2005
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DRA Advisors LLC
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CRT Properties, Inc.
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06/07/2005
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ING Clarion Partners
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Gables Residential Trust
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06/06/2005
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ProLogis
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Catellus Development Corporation
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02/17/2005
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Lightstone Group LLC
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Prime Group Realty Trust
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12/20/2004
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Centro Properties Group &
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Kramont Realty Trust
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Watt Commercial Properties
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10/25/2004
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Colonial Properties Trust
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Cornerstone Realty Income Trust,
Inc.
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10/04/2004
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Camden Property Trust
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Summit Properties Inc.
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08/25/2004
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Kimco Realty Corporation &
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Price Legacy Corporation
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DRA Advisors LLC
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08/20/2004
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General Growth Properties, Inc.
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The Rouse Company
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06/21/2004
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Simon Property Group, Inc.
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Chelsea Property Group, Inc.
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05/03/2004
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ProLogis &
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Keystone Property Trust
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Eaton Vance Management
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JPMorgan selected these precedent transactions because these
precedent transactions were recent deals in similar industry
sectors and had other relevant similarities for comparison,
including equity and total market capitalization, property
characteristics and asset quality and portfolio size. Based on
its judgment, JPMorgan selected a range of one-year forward FFO
multiples of 15.5x to 17.5x per share. JPMorgan applied the
range of multiples derived from such analysis to our
managements 2007 FFO per share estimate. JPMorgan
discounted the implied equity values resulting from this
analysis by one year using an estimated equity cost of capital
of 9.0% and arrived at an implied range of equity values for the
common stock of $23.89 to $26.97 per share.
Dividend Discount Model Analysis. JPMorgan
performed a dividend discount analysis for us based upon
projections and assumptions provided by our management for
projected FFO per share and projected annual dividend payouts
per share for the quarter ending December 31, 2006 and the
years ending December 31, 2007 to December 31, 2010.
Under the dividend discount model methodology, implied equity
values are determined by discounting dividends per share for the
quarter ending December 31, 2006 and the years 2007 through
2010 using discount rates reflecting an expected equity total
return. JPMorgan calculated a range of terminal values of Trizec
at the end of 2010 by applying a perpetual growth rate ranging
from 3.5% to 4.5% to the projected dividend of the company in
2010. The projected annual dividends and range of terminal
values were then discounted to present values using a range of
discount rates from 8.5% to 9.5%. JPMorgan selected these ranges
of discount rates and perpetual growth rates based on
JPMorgans estimate of expected investor total returns,
discussions with our management as well as other qualitative
factors, such as characteristics of our properties and asset
class. The present value of the dividends and the range of
terminal
47
values per share were added together to determine an estimated
range of equity values for the common stock of $18.23 to
$26.74 per share.
Adjusted NAV Per Share Analysis. Using
information provided by our management, JPMorgan calculated the
adjusted net asset value, referred to in this proxy statement as
NAV, per share. For this analysis, JPMorgan applied
a range of blended capitalization rates from 6.07% to 6.57% to
our managements projected 2006 net operating income,
as adjusted to include full-year pro forma net operating income
for our acquisition of certain assets from Arden Realty, Inc. in
May 2006, and to exclude certain corporate adjustments. To this
result, JPMorgan added the value of our other assets, including
our interest in joint ventures and other assets in order to
determine gross asset value. From gross asset value, JPMorgan
deducted our outstanding mortgages and other debt and our other
liabilities to arrive at adjusted NAV. The adjusted NAV per
share was then calculated by dividing adjusted NAV by the number
of shares of common stock outstanding on a fully diluted basis.
This analysis indicated an implied range for the price of our
common stock of $24.98 to $29.12 per share. The
capitalization rates used in the adjusted NAV per share analysis
were derived from historical data for comparable asset sales
from published sources, discussions with our management and real
estate brokers, and an evaluation of market data from various
market data services. The capitalization rates were adjusted to
account for current market conditions and property specific
circumstances within the asset portfolio. JPMorgan made certain
adjustments in its calculation of adjusted NAV that JPMorgan
deemed necessary, taking into account discussions with our
management regarding our properties and co-investments.
The summary set forth above does not purport to be a complete
description of the analyses or data presented by JPMorgan, but
describes in summary form JPMorgans material analyses
in connection with its opinion. The preparation of a fairness
opinion is a complex process and is not necessarily susceptible
to partial analysis or summary description. JPMorgan believes
that the summary set forth above and its analyses must be
considered as a whole and that selecting portions thereof,
without considering all of its analyses, could create an
incomplete view of the processes underlying its analyses and the
opinion. JPMorgan based its analyses on assumptions that it
deemed reasonable, including assumptions concerning general
business and economic conditions and industry-specific factors.
The other principal assumptions upon which JPMorgan based its
analyses are set forth above under the description of each such
analysis. JPMorgans analyses are not necessarily
indicative of actual values or actual future results that might
be achieved, which values may be higher or lower than those
indicated. Moreover, JPMorgans analyses are not and do not
purport to be appraisals or otherwise reflective of the prices
at which businesses actually could be bought or sold.
As a part of its investment banking business, JPMorgan and its
affiliates are continually engaged in the valuation of
businesses and their securities in connection with mergers and
acquisitions, investments for passive and control purposes,
negotiated underwritings, secondary distributions of listed and
unlisted securities, private placements, and valuations for
estate, corporate and other purposes. JPMorgan was selected to
advise us with respect to the mergers and deliver an opinion to
the special committee and our board of directors with respect to
the mergers on the basis of such experience and its familiarity
with Trizec.
JPMorgan has acted as a financial advisor to us with respect to
the proposed mergers and will receive a fee of approximately
$10 million from us for its services only if the proposed
mergers are consummated. In addition, we have agreed to
reimburse JPMorgan for its expenses incurred in connection with
its services, and will indemnify JPMorgan for certain
liabilities arising out of its engagement.
JPMorgan and its affiliates have provided financial advisory
services and other investment banking services to us over the
past two years for which they have received aggregate fees of
approximately $2.1 million, including acting as
co-documentation agent on our $750.0 million unsecured
credit facility, lender on our $381.0 million commercial
mortgage-backed securities refinancing of the Grace Building in
New York and lender on the $219.0 million refinancing of
the World Apparel Center. In the ordinary course of business,
JPMorgan and its affiliates may actively trade our debt and
equity securities for their own account or for the accounts of
customers and, accordingly, they may at any time hold long or
short positions in such securities.
48
Financing
In connection with the mergers, Parent will cause approximately
$ billion to be paid to our stockholders (other than
Trizec Canada, its subsidiaries, Parent and affiliates of
Parent), the members of our operating company (assuming none of
the members of our operating company elect to receive preferred
units or continuing common units in the surviving operating
company in lieu of redeeming their redeemable preferred units
for cash consideration) and the holders of our outstanding stock
options, restricted stock, restricted stock units and rights,
deferred restricted stock units and rights and warrants. These
payments are expected to be funded by a combination of equity
contributions to Parent and debt financing. Our revolving credit
facility and our bridge loan will also be repaid and our
mortgage loan agreements, secured debt and letters of credit
will be repaid or remain outstanding. As of March 31, 2006,
we had an aggregate of approximately $2.1 billion of
outstanding indebtedness under our revolving credit facility,
mortgage loan agreements, secured debt and letters of credit.
In connection with the execution and delivery of the merger
agreement, Parent obtained a debt commitment letter from Merrill
Lynch providing for a commitment of debt financing in an
aggregate principal amount of up to $3.6 billion provided,
that if additional Trizec properties are financed under the debt
commitment letter, the amount of the commitment will be
increased by 75% of the allocated values of such properties.
Merrill Lynch has been joined in its commitment by Bear Stearns
Commercial Mortgage, Inc., Morgan Stanley Mortgage Capital Inc.,
Deutsche Bank Securities, Inc.s affiliate German American
Capital Corporation and Royal Bank of Canada. In addition to the
payment of the common stock merger consideration, the funds to
be borrowed pursuant to the debt commitment letter will be used
for purposes such as reserves, refinancing some of our existing
debt, and for other costs and expenses related to the mergers.
The funds to be borrowed under the debt commitment letter are to
be secured by, among other things, a first priority mortgage
lien on certain office complexes which are wholly owned or
ground leased by us and certain other collateral required by the
lenders.
The debt commitment letter terminates on December 31, 2006,
unless extended, in accordance with the debt commitment letter
and is conditioned on the completion of the mergers and other
customary conditions. The lenders have the right to terminate
the debt commitment letter under certain circumstances,
including if Parent is entitled to terminate the merger
agreement due to a breach of certain representations and
warranties by us or Trizec Canada or a material adverse effect
with respect to us or Trizec Canada.
The merger agreement does not contain a financing condition.
Under the terms of the merger agreement, Parent has agreed to
use its reasonable best efforts to arrange its debt financing on
the terms and conditions described in the debt commitment
letter. In the event that any portion of Parents debt
financing becomes unavailable on the terms and conditions
contemplated in the debt commitment letter, Parent is obligated
to use its reasonable best efforts to obtain that portion from
alternative sources. Parent is obligated to keep us informed of
the status of its efforts to arrange debt financing and to give
us prompt notice of any material breach by any party of the debt
commitment letter or of any termination of the debt commitment
letter. Before it permits any material amendment or modification
to be made to, or any waiver of any material provision or remedy
under, the debt commitment letter which would or would be
reasonably expected to materially and adversely affect or delay
in any material respect Parents ability to consummate the
mergers, Parent must first obtain our written consent. With
certain exceptions, we have agreed to provide, and to cause our
and our subsidiaries and our and their representatives to
provide, all reasonable cooperation in connection with the
arrangement of the debt financing as may be reasonably requested
by Parent.
If all other closing conditions have been satisfied or waived
but Parent fails to obtain adequate financing to complete the
mergers, such failure will constitute a breach of its covenants
under the merger agreement. In that event, so long as we, our
operating company and Trizec Canada are not in material breach
of each of our respective obligations under the merger
agreement, we and Trizec Canada would be entitled to terminate
the merger agreement and receive from Parent an amount equal to
all reasonable expenses incurred by us and Trizec Canada in
connection with the proposed transactions, up to
$15.5 million for us and $9.5 million for Trizec
Canada. In addition, we may take legal action against Brookfield
Properties to seek damages of up to a
49
maximum of $1.1 billion less the amount of any actual
expense reimbursements that we have received under a guarantee
provided by Brookfield Properties of such amount.
Guarantee
and Remedies
In connection with the merger agreement, Brookfield Properties
has agreed unconditionally to guarantee the prompt and complete
payment when due of the payment obligations and the timely
performance when required of all other obligations of Parent,
MergerCo and AcquisitionCo that arise under the merger
agreement, in an amount, in the aggregate not to exceed,
$1.1 billion. The guarantee is not subject to an escrow of
any funds supporting it and will terminate on the earlier of
(a) the closing of the merger and payment of all
obligations due by the Parent, MergerCo and AcquisitionCo under
the merger agreement at such time, or (b) termination of
the merger agreement by mutual written consent.
We cannot seek specific performance to require the Buyer Parties
to complete the mergers, and our exclusive remedy for the
failure of the Buyer Parties to complete the mergers is to seek
damages up to the amount of the $1.1 billion guarantee.
Interests
of Our Directors and Executive Officers in the Mergers and the
Arrangement
Our directors and executive officers may have interests in the
merger and the arrangement that are different from, or in
addition to, yours. These potentially differing interests are
described below.
Stock
Options, Restricted Stock, Restricted Stock Units and Rights,
Deferred Restricted Stock Units and Rights, Warrants and OPP
Awards
As of the record date, there were
approximately shares of our common stock
subject to stock options, of which
approximately were unvested,
approximately unvested restricted stock units
and rights, and approximately deferred
restricted stock units and rights were granted to our directors
and executive officers under our equity award plans. In
addition, as of the record date, there were
approximately shares of our common stock
subject to warrants, all of which were exercisable as of the
record date, held by our directors and executive officers.
Under the terms of the merger agreement, immediately prior to
the merger effective time, all of our outstanding stock options,
restricted stock units and rights, and deferred restricted stock
units and rights, including those held by our directors and
executive officers, whether or not exercisable, payable or
vested, as the case may be, will become fully exercisable,
payable or vested, as the case may be, and, in the case of
restricted stock units and rights and deferred restricted stock
units and rights, free of any forfeiture restrictions.
Specifically, under the merger agreement:
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all unvested stock options owned by our directors and executive
officers will become fully vested and exercisable immediately
prior to the merger effective time and all stock options held by
our directors and executive officers and not exercised prior to
the merger effective time, will be canceled and converted into
the right to receive a cash payment in respect of each share of
common stock underlying their stock options equal to the excess,
if any, of the common stock merger consideration over the
exercise price per share of common stock subject to such stock
options, without interest and less applicable withholding taxes;
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shares of restricted common stock, restricted stock units and
rights, and deferred restricted stock units and rights owned by
our directors and executive officers will become fully vested
and free of any forfeiture restrictions immediately prior to the
merger effective time and will be considered outstanding shares
of common stock for purposes of the merger agreement, including
the right to receive the common stock merger consideration,
without interest and less applicable withholding taxes; and
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warrants to purchase shares of our common stock owned by our
directors and executive officers will be adjusted in accordance
with their terms to provide that, as of the merger effective
time, upon exercise of each such warrant and payment of the
applicable exercise price, the holder of such warrant will be
entitled to receive a cash payment in respect of each share of
common stock underlying his or her warrants equal to the common
stock merger consideration, without interest and less applicable
withholding taxes.
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50
In addition, in accordance with the terms of the OPP, shares of
restricted common stock will be awarded under the OPP to
participants, including our executive officers, based on the
requisite performance criteria for the period beginning on
October 20, 2004 and ending on the date of the merger
agreement having been attained. Such shares of restricted common
stock will be awarded to our executive officers immediately
prior to the closing of the merger (and contingent on the
consummation of the merger), will become fully vested and free
of any forfeiture restrictions immediately prior to the merger
effective time and will be considered outstanding shares of
common stock for purposes of the merger agreement, including the
right to receive the common stock merger consideration. The
number of shares of restricted common stock that will be issued
to each of our executive officers has been calculated by
dividing the dollar value allocated to each such executive
officer under the OPP at its adoption by the dollar value of the
transaction consideration per share of common stock payable in
connection with the proposed merger, or $29.01 in the case of
the merger. None of our non-employee directors participates in
the OPP.
The following table sets forth:
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(a) the number of shares of our common stock that are
subject to vested and unvested stock options with exercise
prices of less than the common stock merger consideration,
(b) the number of unvested restricted stock units and
rights, (c) the number of deferred restricted stock units
and rights, and (d) the number of shares of our common
stock that are subject to vested and unvested warrants to
purchase shares of our common stock with exercise prices of less
than the common stock merger consideration, in each case held by
each of our directors and executive officers as of July 5,
2006;
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the dollar value of the restricted common stock award that will
be awarded to each of our executive officers under the OPP upon
consummation of the merger; and
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the aggregate consideration that each of our directors and
executive officers will receive pursuant to the merger agreement
with respect to their stock options, restricted stock units and
rights, deferred restricted stock units and rights, warrants and
the OPP awards.
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For the purposes of this table, we have assumed that the amount
of the common stock merger consideration is $29.01 per
share and have excluded the additional cash amount that
represents a pro rata portion of the regular quarterly dividend
payable on the common stock and allocable to the quarter in
which the merger closes since it is not determinable at this
time. The actual amount will differ depending on the date of the
closing of the merger.
51
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Weighted
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Weighted
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No. of
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Average
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Unvested
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Average
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Shares
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Exercise
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Restricted
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Exercise
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Underlying
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Price of
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Stock
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Deferred
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Vested
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Price of
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Vested and
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Vested and
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Units
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Restricted
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and
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Vested and
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Aggregate
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Unvested
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Unvested
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and
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Stock Units
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Unvested
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Unvested
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Dollar Value of
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Resulting
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Name
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Options
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Options(1)
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Rights
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and Rights
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Warrants
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Warrants(1)
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OPP Award ($)
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Consideration
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Executive Officers:
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Timothy H. Callahan
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1,500,000
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$
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10.8300
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717,403
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158,532
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$
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6,250,000
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$
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58,930,874
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Michael C. Colleran
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45,000
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10.9800
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86,060
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37,058
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3,500,000
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7,883,003
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Brian K. Lipson
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25,814
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3,500,000
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4,248,864
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William R.C. Tresham
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221,458
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12.2100
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82,912
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37,935
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3,500,000
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10,726,266
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Ted R. Jadwin
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8,333
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8.6100
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32,349
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16,307
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750,000
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2,331,504
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Directors:
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Peter Munk(2)
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350,000
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$
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15,4500
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4,746,000
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L. Jay Cross
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8,582
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248,964
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The Right Honourable Brian Mulroney
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45,625
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16.2784
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10,137
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(3)
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6,250
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14,5800
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965,141
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James J. OConnor
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4,469
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129,646
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Glenn J. Rufrano
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45,625
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16.2784
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7,320
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6,250
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14,5800
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883,420
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Richard M. Thomson
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11,064
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(3)
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320,967
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Polyvios C. Vintiadis
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7,320
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212,353
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(1) |
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The weighted average exercise prices of options and warrants
have been rounded to the nearest one-hundredth. |
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(2) |
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Does not include shares of our common stock and warrants to
acquire our common stock that are owned by Trizec Canada and its
subsidiaries that may be deemed beneficially owned by
Mr. Munk as a result of his position as the chairman of the
board of directors and chief executive officer of Trizec Canada
and indirect owner of all of the multiple voting shares and
approximately % of the subordinate voting
shares of Trizec Canada. Such shares of our common stock and
warrants will continue to remain outstanding after the merger
and no common stock merger consideration will be paid in respect
of such shares and warrants. Mr. Munk will receive certain
consideration in connection with the arrangement as a result of
his ownership of multiple voting shares and subordinate voting
shares of Trizec Canada and options to purchase subordinate
voting shares. See below under Interests of
Our Directors and Executive Officers in the Arrangement. |
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(3) |
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Represents deferred compensation rights credited to the account
of the non-employee director under the Trizec Properties, Inc.
Non-Employee Directors Deferred Compensation Plan that are
payable to such person in cash, based on the common stock
consideration of $29.01 per share of our common stock. |
52
Change
in Control Severance Benefits and Retention
Payments
Severance
Benefits under Timothy H. Callahans Employment
Agreement
Pursuant to the terms of Mr. Callahans employment
agreement, if we terminate him without cause or he
resigns with good reason (as each term is defined in
his employment agreement), at any time within six months prior
to, or within two years following the merger, he will be
entitled to receive an aggregate lump sum payment, within 15
business days after such termination or resignation, equal to
the sum of (a) any unpaid base salary through the date of
such termination or resignation, (b) earned but unpaid
annual incentive bonus for a previously completed fiscal year,
(c) reimbursement for any unreimbursed business expenses
incurred prior to the date of termination or resignation,
(d) payment for vacation time accrued as of the date of
termination or resignation, (e) any other amounts or
benefits that are required to be paid or provided by law or
under any plan, program, policy or practice of Trizec, and
(f) an annual incentive bonus for the fiscal year in which
his termination or resignation occurs, prorated over the number
of days employed during such fiscal year and based on the
average of the annual incentive bonuses paid to
Mr. Callahan during the immediately preceding two fiscal
years, which we refer to as the average bonus. In
addition, Mr. Callahan is entitled to receive
(x) three times the sum of his base salary (at the rate in
effect on the date of Mr. Callahans termination or
resignation) and the average bonus, which payment is required to
be made in a lump sum cash payment within 15 business days after
such date of termination or resignation and (y) continued
participation under our medical insurance plans and programs as
in effect for senior executive officers for a period of three
years following the date of Mr. Callahans termination
or resignation or until such date as Mr. Callahan becomes
eligible to participate in the plans of a subsequent employer.
We also will make an additional tax
gross-up
payment to Mr. Callahan if any payment or benefit made or
provided to him in connection with a change in control would be
subject to the excise tax imposed under Section 4999 of the
Code.
Severance
Benefits for Our Other Executive Officers Under the Trizec
Properties, Inc. Change in Control Severance Pay Plan
Under the terms of our severance plan, Messrs. Colleran,
Lipson, Tresham and Jadwin are entitled to severance payments if
they are terminated or if they are constructively terminated
within one year following the consummation of the merger. In the
case of Messrs. Colleran, Lipson and Tresham, each such
officer will be entitled to receive a severance payment equal to
two times the sum of (a) such officers annual base
salary and (b) the greater of such officers 2005
annual bonus paid or 2006 target bonus. In the case of
Mr. Jadwin, he will be entitled to receive a severance
payment equal to one times the sum of (x) his annual base
salary and (y) the greater of his 2005 annual bonus paid or
2006 target bonus. In addition, each such officer will be
entitled to receive (i) professional outplacement services
as selected by us consistent with such officers duties or
profession and of a type and level customary for his position,
(ii) continued benefits under our health plans for two
years in the case of Messrs. Colleran, Lipson and Tresham
and one year in the case of Mr. Jadwin, (iii) a pro rata
annual bonus (with respect to the greater of such officers
2005 annual bonus paid or 2006 target bonus), based on the
number of days the officer was employed during the fiscal year
in which his employment is terminated, (iv) the value of
the stock incentive awards accrued to the officer through the
date of termination, to the extent not yet paid, (v) any
accrued but unpaid vacation pay, (vi) the officers
annual base salary through the date of termination to the extent
not yet paid, (vii) any compensation previously deferred by
the officer (together with any accrued interest or earnings
thereon), and (viii) any other amounts or benefits required
to be paid or provided or which the officer is entitled to
receive under any plan, program, policy, practice, contract or
agreement of Trizec and its subsidiaries. Furthermore, the
severance plan provides for an additional tax-gross up payment
to be made if any payments made or benefits provided in
connection with the merger would be subject to the excise tax
imposed by Section 4999 of the Code. The severance plan
benefits described here are in lieu of the severance benefits
that Messrs. Colleran, Lipson, Tresham and Jadwin are
entitled to under their respective employment agreements.
Retention
Bonus Program
Under the terms of our retention plan, a retention bonus based
on each employees years of service and weekly base salary
amount is payable to each active, exempt professional employee
or non-union, active hourly employee who continues to be
actively employed with our successor for the
90-day
period following
53
the date of closing of the merger. If an eligible employee is
terminated prior to the end of this
90-day
period under circumstances that would entitle him or her to a
severance benefit under the severance plan (described above), he
or she will be paid the retention bonus within ten business days
of termination of employment. If the eligible employee resigns
or is terminated before the end of this
90-day
period under circumstances that do not entitle him or her to
severance benefits under the severance plan, he or she will not
be paid any retention bonus. Different payment schedules apply
for eligible professional and hourly employees.
As eligible professional employees, each of
Messrs. Callahan, Colleran, Lipson, Tresham and Jadwin is
entitled to receive a lump sum retention bonus amount if he
remains actively employed by our successor on the 90th day
following the closing date of the merger (or, if the merger does
not occur, if he remains employed by the Company on June 1,
2007), or if he is terminated without cause or
resigns for good reason (as such terms are defined
for purposes of the severance plan) prior to such date. Their
retention bonus amounts shall be calculated as follows:
(i) if the executive has less than three years of service,
three weeks of base salary plus two weeks of base salary per
year of service; (ii) if the executive has at least three
years of service but less than seven years, seven weeks of base
salary plus two weeks of base salary per year of service;
(iii) if the executive has at least seven years of service
but less than ten years, nine weeks of base salary plus two
weeks of base salary per year of service; or (iv) if the
executive has ten or more years of service, 11 weeks of
base salary plus two weeks of base salary per year of service.
For purposes of this retention bonus calculation, years of
service means the employees most recent continuous
years and fractional years of service with us and our
subsidiaries. Any fractional year of service will be rounded to
the nearest month.
The following table sets forth an estimate of the potential cash
severance payments that could be payable as described above in
the event our executive officers become entitled to such
severance amounts pursuant to their employment agreements
and/or the
severance plan (described above) following the merger (assuming
for illustrative purposes that the executive officers
employment is terminated on September 30, 2006 and
utilizing current base salaries and the bonus compensation
amounts provided for in the agreements). In addition, the
following table sets forth the estimated tax
gross-up payment (described above), if applicable,
that may be paid to our executive officers and potential
retention bonus payments that could be payable to our executive
officers assuming that each of our executive officers remains
employed with us through September 30, 2006. The table does
not include an amount referable to the value of the continued
health and welfare benefits to be received by the executive
officers, which aggregate amount is estimated to be $180,000.
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Amount of
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Amount of
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Amount of Potential
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Potential Tax
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Potential
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Cash Severance
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Gross-Up
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Retention Bonus
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Name
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Payment(1)
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Payment
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Payment
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Executive Officers
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Timothy H. Callahan
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$
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10,627,826
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$
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13,764,173
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$
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323,808
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Michael C. Colleran
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3,141,033
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3,745,503
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111,317
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Brian K. Lipson
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2,438,549
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2,585,219
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51,591
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William R.C. Tresham
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2,828,845
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3,480,410
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278,538
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Ted R. Jadwin
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791,660
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922,792
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81,808
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(1) |
The amounts in this column include pro rata annual bonus and the
pro rata value of equity compensation payable in respect of the
employment termination year.
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Operating
Company Units
None of our directors and executive officers owns any operating
company units. As a result, they will not receive any
consideration in connection with the operating company merger.
Interests
of Our Directors and Executive Officers in the
Arrangement
In connection with the arrangement, the shareholders of Trizec
Canada will receive, with respect to each multiple voting share
or subordinate voting share of Trizec Canada that they own, the
Trizec Canada arrangement consideration, which is $30.97 in cash
plus an additional cash amount that represents a pro rata
54
portion of the regular quarterly dividend payable on the
multiple voting shares and subordinate voting shares and
allocable to the quarter in which the arrangement closes. We
have been advised by Trizec Canada that,
on , 2006,
PMCI, a Canadian corporation that is wholly owned by
Mr. Munk owned multiple voting shares
and subordinate voting shares of Trizec Canada
which as of such date represented
approximately % of the aggregate voting power
of the outstanding multiple voting shares and subordinate voting
shares that are eligible to be voted at the special meeting of
the shareholders of Trizec Canada to consider the arrangement.
In addition, we have been advised by Trizec Canada that
Mr. Munk owned, as of July 5, 2006 options to purchase
550,000 subordinate voting shares of Trizec Canada. Further,
certain of our other directors and two of our executive officers
owned, as of the record date, subordinate voting shares
and/or
options to purchase subordinate voting shares in Trizec Canada.
The following table sets forth:
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the number of subordinate voting shares of Trizec Canada that
are subject to vested and unvested stock options with exercise
prices of less than the Trizec Canada arrangement consideration
and (b) the number of multiple voting shares and
subordinate voting shares of Trizec Canada, in each case held by
each of our directors and executive officers as of July 5,
2006; and
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the aggregate consideration that each of our directors and
executive officers will receive pursuant to the arrangement with
respect to the foregoing interests.
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For the purposes of this table, we have assumed that the amount
of the Trizec Canada arrangement consideration is
$30.97 per share and have excluded the additional cash
amount that represents a pro rata portion of the regular
quarterly dividend payable on the multiple voting shares and
subordinate voting shares and allocable to the quarter in which
the arrangement closes since it is not determinable at this
time. The actual amount will differ depending on the date of the
closing of the arrangement.
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No. of
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Weighted
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Shares
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Average
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Underlying
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Exercise Price
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Vested and
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of Vested and
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No. of
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No. of
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Aggregate
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Unvested
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Unvested
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Multiple Voting
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Subordinate
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Resulting
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Name
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Options
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Options (US$)(1)
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Shares
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Voting Shares
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Consideration
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Executive Officers:
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Timothy H. Callahan
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Michael C. Colleran
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Brian K. Lipson
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823
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$
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25,488
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William R.C. Tresham
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4,167
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$
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21.969272
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7,500
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$
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269,781
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Ted R. Jadwin
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Directors:
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Peter Munk
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550,000
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$
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21.650087
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7,522,283
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1,972,435
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$
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299,177,368
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L. Jay Cross
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The Right Honourable Brian Mulroney
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9,125
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$
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21.905795
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448
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$
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96,585
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James J. OConnor
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Glenn J. Rufrano
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9,125
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$
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21.905795
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$
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82,711
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Richard M. Thomson
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9,125
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$
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21.874912
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2,692
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$
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166,364
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Polyvios C. Vintiadis
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(1) |
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The weighted average exercise prices of options have been
rounded to the nearest one-hundredth. The exercise prices in
this table are presented in U.S. dollars based on the
exchange rate between U.S. dollar and Canadian dollar in
effect as of July 5, 2006 of US$0.900380 to CAN$1.00. |
Indemnification
of Our Directors and Officers
The merger agreement provides that for a period of at least six
years after the merger effective time, the organizational
documents of the surviving corporation will contain
indemnification provisions that are no less
55
favorable than the indemnification provisions in our existing
charter and bylaws, and that those provisions will not be
modified during that period in any manner that would affect
adversely the rights of any person who at or prior to the merger
effective time were our or our subsidiaries directors,
officers, trustees, employees, agents, or fiduciaries or
fiduciaries with respect to any of our or our subsidiaries
employee benefit plans, except as required by law and then only
to the minimum extent required by law.
Parent and the surviving corporation have agreed to indemnify,
to the fullest extent permitted by applicable laws, persons who
were at the date of the merger agreement or during the period
between the signing of the merger agreement and the closing date
serving as a director, officer or trustee, or as a fiduciary
under or with respect to any of our or our subsidiaries
employee benefit plans, with respect to any legal action, suit
or proceeding, or any inquiry or investigation arising out of or
relating to such service occurring at or prior to the merger
effective time and, subject to certain conditions, shall pay or
advance related reasonable legal fees, costs, obligations and
expenses incurred by them.
The merger agreement requires that, with respect to claims
arising from facts or events that occurred on or prior to the
merger effective time, the surviving corporation maintain in
effect, for a period of at least six years after the merger
effective time, our and our subsidiaries current
directors and officers liability insurance policies;
provided, however, that the surviving corporation may instead
substitute policies of at least the same coverage and amounts
containing terms and conditions which are, in the aggregate, no
less advantageous to the insured. This requirement is subject to
a maximum cost per year of coverage of 300% of the annual
premiums we paid for such insurance prior to the date we signed
the merger agreement. If the cost per year of insurance coverage
exceeds such maximum amount, the surviving corporation must
obtain as much comparable insurance as possible for an annual
premium equal to 300% of the annual premiums we paid prior to
the date we signed the merger agreement.
Parent and MergerCo have agreed that all rights to
indemnification and exculpation from liabilities for acts or
omissions occurring at or prior to the merger effective time now
existing in favor of the current or former directors, officers,
trustees, employees, agents or fiduciaries of us or our
subsidiaries as provided in our existing charter and bylaws (or,
as applicable, the charter, bylaws, partnership agreement,
limited liability company agreement or other organizational
documents of any of our subsidiaries) and certain
indemnification agreements of us or our subsidiaries will be
assumed by the surviving corporation and will continue in full
force and effect.
The merger agreement provides that Parent shall have the right
to participate in the defense or settlement of any stockholder
or member litigation against us, our directors or officers, or
the operating company relating to the mergers or the other
transactions contemplated by the merger agreement; provided,
however, that no such settlement will be agreed to without
Parents consent, which consent will not be unreasonably
withheld.
The obligations described above regarding directors and
officers indemnification, and directors and
officers liability insurance must be assumed by any
successor entity to the surviving corporation as a result of any
consolidation, merger or transfer of all or substantially all of
its properties and assets.
Voting
Agreements
Concurrently with the execution of the merger agreement, Trizec
Canada entered into the Trizec voting agreement with Parent and
MergerCo pursuant to which Trizec Canada has agreed to vote or
cause to be voted all of the shares of our common stock that
Trizec Canada and its subsidiaries own (including any shares of
our common stock that may be acquired after the date of the
merger agreement) for the adoption of the merger agreement,
subject to the terms and conditions contained in the Trizec
voting agreement. As of the record date, Trizec Canada and its
subsidiaries owned shares of our common stock,
entitling them to exercise approximately % of
the aggregate voting power of our common stock entitled to vote
at the special meeting.
In addition, PMCI, a corporation that is wholly owned by
Mr. Munk and through which Mr. Munk owns multiple
voting shares and subordinate voting shares of Trizec Canada,
has entered into the Trizec Canada voting agreement with Parent
and AcquisitionCo pursuant to which PMCI has agreed to vote all
shares that it owns (including any shares that may be acquired
by PMCI after the date of the merger agreement) for the
arrangement, subject to the terms and conditions contained in
the Trizec Canada voting agreement. We have
56
been advised by Trizec Canada that on , 2006,
PMCI owned multiple voting shares
and subordinate voting shares of Trizec Canada
which as of such date represented
approximately % of the aggregate voting power
of the outstanding multiple voting shares and subordinate voting
shares that are eligible to be voted at the special meeting of
the shareholders of Trizec Canada to consider the arrangement.
Under the Trizec Canada voting agreement, Mr. Munk may not
acquire directly or indirectly shares of Trizec Canada, Parent,
Brookfield Properties or its affiliates other than pursuant to
or as contemplated by the arrangement for a period of 12 months
following the closing of the arrangement. The covenants in the
Trizec Canada voting agreement are subject to the ability of
PMCI to convert into subordinate voting shares and transfer up
to 3.0 million multiple voting shares of Trizec Canada held
by PMCI. In addition, pursuant to the voting trust agreement,
PMCI agreed not to vote more than the number of multiple voting
shares which in the aggregate represent a simple majority of all
votes entitled to be cast on a matter by all holders of voting
securities of Trizec Canada.
Regulatory
Approvals
The HSR Act provides that transactions such as the merger may
not be completed until certain information has been submitted to
the Federal Trade Commission and the Antitrust Division and
certain waiting period requirements have been satisfied.
On , 2006, Trizec and Brookfield Properties
each filed a Notification and Report Form with the Antitrust
Division and the Federal Trade Commission and requested an early
termination of the waiting period. If the early termination is
not granted and a request for additional information by the
relevant authorities is not made, the waiting period will expire
at 11:59 p.m. on , 2006.
The Competition Act provides that transactions such as the
arrangement may not be completed until certain information has
been submitted to the Commissioner of Competition and certain
waiting periods have been satisfied. It is anticipated that the
required information will be submitted to the Commissioner of
Competition by , 2006. If the information is
submitted by that date, and the Commissioner of Competition does
not ask for additional information, the waiting period will end
on , 2006.
Other than the HSR Act and Competition Act filings, we are
unaware of any other material federal, state or foreign
regulatory requirements or approvals that are required for the
execution of the merger agreement or the completion of either of
the mergers, other than the filing of a certificate of merger by
each of us and our operating company with the Secretary of State
of the State of Delaware. However, the completion of the mergers
is conditioned upon, among other things, the filing of the plan
of arrangement by Trizec Canada relating to the arrangement with
the Ontario Superior Court of Justice, approval and issuance of
a final order by such court approving the arrangement and the
transactions contemplated by the plan of arrangement, and
sending to the director appointed under the Canada Business
Corporations Act, for endorsement and filing by such director,
the articles of arrangement and such other documents as may be
required under the Canada Business Corporations Act to give
effect to the arrangement.
Under the terms of the merger agreement, us, our operating
company, Trizec Canada and the Buyer Parties have agreed to make
promptly their respective filings and any other required
submissions under the HSR Act with respect to the merger,
and under the Competition Act with respect to the merger and the
arrangement. In addition, us, our operating company, Trizec
Canada and the Buyer Parties have agreed to use their reasonable
best efforts to take all appropriate actions and do all things
necessary, proper or advisable under applicable laws of the
United States and Canada to consummate and make effective the
merger and the arrangement as promptly as practicable, including
using their reasonable best efforts to obtain all permits,
consents, approvals, authorizations, qualifications and orders
of governmental authorities as are necessary for the
consummation of the transactions contemplated by the merger
agreement and to fulfill conditions to the merger and the
arrangement as promptly as practicable.
Litigation
Relating to the Mergers
On June 6, 2006, two substantially identical purported
stockholder class action lawsuits related to the merger
agreement were filed by the same counsel in the Circuit Court of
Cook County, Illinois, Doris Staehr v.
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Trizec Properties, et al. (Case No. 06CH11226)
and Hubert Van Gent v. Trizec Properties,
et al. (Case No. 06CH11571), naming us and each of
our directors as defendants. The lawsuits allege, among other
things, that our directors were conflicted, unjustly enriched,
and engaged in self-dealing, and violated their fiduciary duties
to our stockholders in approving the merger, the merger
agreement and the other transactions contemplated by the merger
agreement.
The lawsuits seek to enjoin the completion of the merger and the
related transactions. Additionally, among other things, the
lawsuits seek class action status, rescission of, to the extent
already implemented, the merger, voting agreements, and the
termination fees, and costs and disbursements incurred in
connection with the lawsuits, including attorneys and
experts fees. We intend to vigorously defend the actions.
However, even if these lawsuits are determined to be without
merit, they may potentially delay or, if the delay is
substantial enough to prevent the consummation of the mergers by
December 31, 2006, potentially prevent the closing of the
mergers.
Material
United States Federal Income Tax Consequences
The following is a summary of the material United States federal
income tax consequences of the merger to holders of our common
stock whose shares are surrendered in the merger and who receive
the common stock merger consideration. This summary is based on
current law, is for general information only and is not tax
advice. This summary is based on the Code, applicable Treasury
Regulations, and administrative and judicial interpretations
thereof, each as in effect as of the date hereof, all of which
are subject to change or different interpretations, possibly
with retroactive effect. We have not requested, and do not plan
to request, any rulings from the Internal Revenue Service, or
the IRS, concerning our tax treatment or the tax
treatment of the merger, and the statements in this proxy are
not binding on the IRS or any court. We can provide no assurance
that the tax consequences contained in this discussion will not
be challenged by the IRS, or if challenged, will be sustained by
a court.
This summary assumes that our common stock is held as a capital
asset within the meaning of Section 1221 of the Code and
does not address all aspects of taxation that may be relevant to
particular holders in light of their personal investment or tax
circumstances or to persons that are subject to special tax
rules and does not address the tax consequences of the merger to
holders of stock options, restricted stock units, restricted
stock awards, deferred restricted stock units or rights. In
addition, this summary does not address the tax treatment of
special classes of holders of our common stock, including, for
example:
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banks and other financial institutions;
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insurance companies;
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tax-exempt entities;
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mutual funds;
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subchapter S corporations;
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dealers in securities or currencies;
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traders in securities that elect to use a
mark-to-market
method of accounting for their securities holdings;
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persons whose functional currency is not the United States
dollar;
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persons holding shares of our common stock as part of a hedging
or conversion transaction or as part of a straddle
or a constructive sale;
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U.S. expatriates;
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persons subject to the alternative minimum tax;
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holders who acquired our common stock through the exercise of
employee stock options or warrants or otherwise as compensation;
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holders that are properly classified as partnerships or
otherwise as pass-through entities under the Code;
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holders that hold 5% or more of our common stock; and
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non-U.S. holders,
as defined below.
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This summary also does not discuss any state, local, foreign or
other tax considerations that may be relevant to any person.
58
If any entity that is treated as a partnership for United States
federal tax purposes holds shares of our common stock, the tax
treatment of its partners or members generally will depend upon
the status of the partner or member and the activities of the
entity. If you are a partner of a partnership or a member of a
limited liability company or other entity classified as a
partnership for United States federal tax purposes and that
entity is holding our common stock, you should consult your tax
advisor.
For purposes of this section, a U.S. holder
means a beneficial owner of shares of our common stock that is
for United States federal income tax purposes one of the
following:
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a citizen or resident of the United States;
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a corporation or other entity treated as a corporation for
United States federal income tax purposes created or organized
in or under the laws of the United States or any state thereof
or the District of Columbia;
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a trust (a) the administration of which is subject to the
primary supervision of a United States court and which has one
or more United States persons who have the authority to control
all substantial decisions of the trust, or (b) that was in
existence on August 20, 1996, was treated as a United
States person on the previous day, and elected to continue to be
so treated; or
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an estate the income of which is subject to United States
federal income taxation regardless of its source.
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As used in this section, a
non-U.S. holder
means a beneficial owner of shares of our common stock that is
an individual, corporation, estate or trust that is not a
U.S. holder as described in the bullets above. Because our
certificate of incorporation effectively prohibits the ownership
of our common stock by
non-U.S. holders,
other than by Trizec Canada and its subsidiaries, we assume to
that no such
non-U.S. holders
own any of our common stock and thus no summary of the
U.S. federal income tax consequences of the mergers to such
holders is provided.
Consequences
of the Merger to U.S. Holders of Our Common
Stock
General. The receipt of cash by
U.S. holders as a result of the merger will be a taxable
transaction for United States federal income tax purposes (and
also may be a taxable transaction under applicable state, local
and foreign income and other tax laws). In general, a
U.S. holder of our common stock will recognize gain or loss
for United States federal income tax purposes equal to the
difference between:
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the amount of the common stock merger consideration received in
exchange for our common stock; and
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the U.S. holders adjusted tax basis in our common
stock.
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Gain or loss will be calculated separately for each block of
shares, with a block consisting of shares acquired at the same
cost in a single transaction. Assuming that the shares
constitute capital assets in the hands of the U.S. holder,
this gain or loss will be capital gain or loss and will be
long-term capital gain or loss if at the time of the merger the
shares have been held for more than one year. An individual
U.S. holder will be subject to tax on net capital gain at a
maximum federal income tax rate of 15%. Capital gains of
corporate U.S. holders generally are taxable at the regular
tax rates applicable to corporations. The deductibility of a
capital loss recognized in the exchange is subject to
limitations under the Code. In addition, the IRS has the
authority to prescribe, but has not yet prescribed, regulations
that would apply a tax rate of 25% to a portion of capital gain
realized by a noncorporate stockholder on the sale of REIT
shares that would correspond to the REITs
unrecaptured Section 1250 gain.
As described more fully below under the caption The Merger
Agreement Treatment of Common Stock, Stock
Options, Restricted Stock, Restricted Stock Units and Rights,
Deferred Restricted Stock Units and Rights, Warrants and OPP
Awards Common Stock, each share of our
common stock held by holders other than Trizec Canada and its
subsidiaries and Parent and AcquisitionCo will be converted
into, and canceled in exchange for, one share of redeemable
preferred stock of the surviving corporation. Immediately
thereafter, the redeemable preferred stock will be redeemed for
the right to receive $29.01 in cash plus an additional cash
amount that represents the pro rata portion of the regular
quarterly dividend payable on our common stock and allocable to
the quarter in which the merger closes, in each case without
interest and less applicable withholding taxes. Although the
matter is not free from doubt, we believe that the issuance of
the redeemable preferred stock and its immediate redemption
should be treated as transitory steps and disregarded for
U.S. federal income tax purposes, and the foregoing summary
is based upon that intended characterization. We also believe,
however, that even if issuance and immediate redemption of the
redeemable preferred stock were not disregarded for
59
U.S. federal income tax purposes, the tax consequences
described above generally should apply in the specific
circumstances of the proposed transactions for holders of our
common stock who will not have a continuing interest in the
surviving corporation, directly or indirectly, following
consummation of the merger.
Special Rule for U.S. Holders Who Have Held
Shares Less than Six Months. A
U.S. holder who has held our common stock for six months or
less at the merger effective time, taking into account the
holding period rules of Section 246(c)(3) and (4) of
the Code, and who recognizes a loss on the exchange of our
common stock in the merger will be treated as recognizing a
long-term capital loss to the extent of any capital gain
dividends received from us, or such holders share of any
designated retained capital gains, with respect to such shares
of common stock.
Information
Reporting and Backup Withholding
Backup withholding, presently at a rate of 28%, and information
reporting may apply to the cash received pursuant to the
exchange of our common stock in the merger. Backup withholding
will not apply, however, to a holder who:
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in the case of a U.S. holder, furnishes a correct taxpayer
identification number and certifies that it is not subject to
backup withholding on the substitute IRS
Form W-9
or successor form;
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in the case of a
non-U.S. holder,
furnishes an applicable IRS
Form W-8
or successor form; or
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is otherwise exempt from backup withholding and complies with
other applicable rules and certification requirements.
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Backup withholding is not an additional tax and any amount
withheld under these rules may be credited against the
holders United States federal income tax liability and may
entitle the holder to a refund if required information is timely
furnished to the IRS.
THE FOREGOING DOES NOT PURPORT TO BE A COMPLETE ANALYSIS OF
THE POTENTIAL TAX CONSIDERATIONS RELATING TO THE MERGER AND IS
NOT TAX ADVICE. THEREFORE, HOLDERS OF OUR COMMON STOCK ARE
STRONGLY URGED TO CONSULT THEIR TAX ADVISORS AS TO THE SPECIFIC
TAX CONSEQUENCES TO THEM OF THE MERGER, INCLUDING THE
APPLICABILITY AND EFFECT OF UNITED STATES FEDERAL, STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS IN THEIR PARTICULAR CIRCUMSTANCES.
Delisting
and Deregistration of Our Common Stock
If the merger is completed, our common stock will no longer be
traded on the New York Stock Exchange and will be deregistered
under the Exchange Act.
60
THE
MERGER AGREEMENT
The following summarizes material provisions of the merger
agreement, a copy of which is attached to this proxy statement
as Annex A and which we incorporate by reference
into this proxy statement. This summary may not contain all of
the information about the merger agreement that is important to
you. Therefore, we recommend that you read carefully the merger
agreement attached to this proxy statement as Annex A
in its entirety, as the rights and obligations of the
parties are governed by the express terms of the merger
agreement and not by this summary or any other information
contained in this proxy statement.
The merger agreement contains representations and warranties
made by, and to, us, our operating company, Trizec Canada,
Parent, MergerCo, AcquisitionCo and Merger Operating Company.
These representations and warranties, which are set forth in the
merger agreement attached to this proxy statement as
Annex A, were made for the purposes of negotiating
and entering into the merger agreement between the parties. In
addition, these representations and warranties were made as of
specified dates, may be subject to standards of materiality
different from what may be viewed as material to stockholders,
or may have been used for the purpose of allocating risk between
the parties instead of establishing such matters as facts.
Moreover, information concerning the subject matter of the
representations and warranties, which do not purport to be
accurate as of the date of this proxy statement, may have
changed since the date of the merger agreement and subsequent
developments or new information qualifying a representation or
warranty may have been included in this proxy statement.
As used in the summary of the material terms of the merger
agreement below and elsewhere in this proxy statement, unless
the context requires otherwise, references to our
subsidiaries do not include certain joint venture
entities in which we, directly or indirectly, through our
subsidiaries own interests.
Structure
The
Merger
At the merger effective time, MergerCo will merge with and into
Trizec, MergerCos separate corporate existence will cease,
and we will survive the merger, with Parent owning all of our
common stock not owned by Trizec Canada and its subsidiaries.
All of our and MergerCos properties, assets and
liabilities will become those of the surviving corporation.
Following the completion of the merger, our common stock will be
delisted from the New York Stock Exchange and deregistered under
the Exchange Act and will no longer be publicly traded.
The
Operating Company Merger
Immediately after the merger effective time, at the operating
company merger effective time, Merger Operating Company will
merge with and into our operating company, Merger Operating
Companys separate existence will cease and our operating
company will survive the operating company merger and continue
to exist with the surviving corporation being the sole managing
member of the surviving operating company. All of our operating
companys and Merger Operating Companys properties,
assets and liabilities will become those of the surviving
operating company.
The
Arrangement
At or about the merger effective time, pursuant to the plan of
arrangement and at the arrangement effective time, AcquisitionCo
and its affiliates will acquire all of the outstanding multiple
voting shares and subordinate voting shares of Trizec Canada in
connection with the arrangement for $30.97 per share in
cash plus an additional cash amount that represents a pro rata
portion of the regular quarterly dividend payable on the
multiple voting shares and subordinate voting shares and
allocable to the quarter in which the arrangement closes. The
$30.97 per share that Trizec Canadas shareholders
will receive in the arrangement represents $29.01 per share
attributable to the shares of our common stock that Trizec
Canada and its subsidiaries own plus an additional
$1.96 per share which reflects the agreed value of Trizec
Canadas net other assets.
Effective
Times
The merger effective time will occur under all applicable laws
upon (a) the time the certificate of merger is executed and
filed with the Secretary of State of the State of Delaware or
(b) such later time agreed to by
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the parties to the merger agreement and designated in the
certificate of merger. The closing will occur as promptly as
practicable, but in no event earlier than the tenth nor later
than the twentieth business day after all of the conditions set
forth in the merger agreement have been satisfied or waived,
unless the parties otherwise agree. In addition, in the event
that the final order with respect to the arrangement is
appealed, the closing of the merger will occur no earlier than
the first business day following the date of such appeal is
denied or withdrawn.
The operating company merger effective time will occur under
applicable law at (a) the time the certificate of merger
(relating to the operating company merger) is executed and filed
with the Secretary of State of the State of Delaware or
(b) such later time agreed to by the parties to the merger
agreement and designated in the certificate of merger. It is the
intention of the parties that the operating company merger
effective time will occur immediately after the merger effective
time.
At or about the merger effective time, Trizec Canada will send
to the director appointed under the Canada Business Corporations
Act, for endorsement and filing by such director, the articles
of arrangement and such other documents as may be required under
the Canada Business Corporations Act to give effect to the
arrangement. The arrangement effective time will occur effective
upon the issuance of a certificate of arrangement and at the
time designated as the effective time in the plan of
arrangement. It is the intention of the parties that the
arrangement effective time will occur at or about the merger
effective time.
Organizational
Documents
Our certificate of incorporation, as amended at the merger
effective time (as required by the merger agreement), will be
the certificate of incorporation of the surviving corporation,
and our bylaws, as in effect immediately prior to the merger
effective time will be the bylaws of the surviving corporation,
in each case until amended in accordance with applicable law.
The certificate of formation of our operating company, as in
effect immediately prior to the operating company merger
effective time, will be the certificate of formation of the
surviving operating company until amended in accordance with
applicable law. The limited liability company operating company
agreement of our operating company, as amended at the operating
company merger effective time (to the extent required to
implement the terms of the redeemable preferred units and as
required by the merger agreement, as discussed below), will be
the limited liability company operating company agreement of the
surviving operating company, until amended in accordance with
applicable law.
Directors
and Officers
The directors of MergerCo immediately prior to the merger
effective time will be the initial directors of the surviving
corporation, and the officers of Trizec immediately prior to the
merger effective time will be the initial officers of the
surviving corporation. The managing member of our operating
company immediately prior to the operating company merger
effective time will be the managing member of the surviving
operating company following the operating company merger
effective time.
Treatment
of Special Voting Stock and Class F Convertible
Stock
Immediately after the merger effective time, each share of our
special voting stock and Class F convertible stock will
continue to remain outstanding as a share of special voting
stock and Class F convertible stock, respectively, of the
surviving corporation.
Treatment
of Common Stock, Stock Options, Restricted Stock, Restricted
Stock Units and Rights, Deferred Restricted Stock Units and
Rights, Warrants and the OPP Awards
Common
Stock
At the merger effective time, each share of our common stock
issued and outstanding immediately prior to the merger effective
time (other than shares held in treasury and shares owned by
Trizec Canada, its subsidiaries, Parent and affiliates of
Parent, and shares held by stockholders who properly exercise
appraisal rights under Delaware law) will be converted and
exchanged into one share of redeemable preferred stock and,
immediately after the completion of the merger, each share of
redeemable preferred stock will be redeemed, without further
action on the part of the holder, for the right to receive cash
in the amount of $29.01 per share
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plus an amount that represents a pro rata portion of the regular
quarterly dividend and allocable to the quarter in which the
merger closes, without interest and less applicable withholding
taxes. The foregoing does not apply to (a) shares held in
treasury, by our subsidiaries or MergerCo, which in each case
will be automatically canceled and retired and cease to exist
with no payment being made with respect thereto, (b) shares
of common stock held by Trizec Canada or any of Trizec
Canadas subsidiaries, Parent and AcquisitionCo, which
shares will continue to remain outstanding shares of common
stock of the surviving corporation, and (c) shares in
respect of which appraisal rights have been perfected, which
will be treated as described in the section entitled
Dissenters Right of Appraisal.
Stock
Options, Restricted Stock, Restricted Stock Units and Rights and
Deferred Restricted Stock Units and Rights
Immediately prior to the merger effective time, all of our
outstanding stock options, restricted stock, restricted stock
units, restricted stock rights, deferred restricted stock units
and deferred restricted stock rights, whether or not exercisable
or vested, as the case may be, will become fully vested and
exercisable or payable, as the case may be, and, in the case of
the restricted stock, restricted stock units, restricted stock
rights, deferred restricted stock units, and deferred restricted
stock rights, free of forfeiture restrictions. Immediately prior
to the merger effective time, as discussed below, all
outstanding restricted stock, restricted stock units, restricted
stock rights, deferred restricted stock units and deferred
restricted stock rights will be considered outstanding shares of
our common stock for the purposes of the merger agreement,
including the right to receive the common stock merger
consideration.
Each stock option to purchase shares of our common stock that
remains outstanding immediately prior to the merger effective
time, whether vested or unvested, will be canceled and converted
into the right to receive immediately prior to the merger
effective time a single lump sum cash payment, without interest
and less applicable withholding taxes, equal to the product of:
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the aggregate number of shares of our common stock underlying
such stock option immediately prior to the merger effective
time, multiplied by
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the excess, if any, of the common stock merger consideration
over the exercise price per share of our common stock subject to
such stock option.
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If the exercise price of any stock option is equal to or greater
than the common stock merger consideration, such option will be
canceled without any cash payment being made in respect thereof.
As of the date of this proxy statement, none of our outstanding
stock options had an exercise price equal to, or greater than,
the common stock merger consideration.
Under the terms of the merger agreement, immediately prior to
the merger effective time, each share of restricted stock that
remains unvested will become fully vested and will be considered
an outstanding share of common stock for purposes of the merger
agreement, including the right to receive the common stock
merger consideration, without interest and less applicable
withholding taxes.
Under the terms of the merger agreement, immediately prior to
the merger effective time, each restricted stock unit,
restricted stock right, deferred restricted stock unit and
deferred restricted stock right automatically will become fully
vested and will be considered outstanding shares of common
stock, for purposes of the merger agreement, including the right
to receive the common stock merger consideration, without
interest and less applicable withholding taxes. The amount of
cash payable with respect to stock options, restricted stock,
restricted stock units, restricted stock rights, deferred
restricted stock units and deferred restricted stock rights,
will be reduced by the amount of any applicable taxes required
to be withheld. All stock options, restricted stock, restricted
stock units, restricted stock rights, deferred restricted stock
units and deferred restricted stock rights, will be canceled and
all of our stock option plans and employee stock purchase plans
will terminate at the merger effective time.
Warrants
Immediately prior to the merger effective time, the terms of
each outstanding warrant to purchase shares of our common stock
will be adjusted to provide that, from and after the merger
effective time, each warrant
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will entitle the holder thereof, upon exercise of such warrant
and payment of the exercise price thereof, a single lump sum
cash payment, without interest and less applicable withholding
taxes, equal to the product of:
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the aggregate number of shares of our common stock underlying
such warrant immediately prior to the merger effective time,
multiplied by
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the common stock merger consideration.
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OPP
Awards
In addition, shares of restricted common stock will be awarded
to participants under the OPP in accordance with the terms of
the OPP based on the requisite performance criteria in
connection with the merger for a performance period from
October 20, 2004 and ending on the date of the merger
agreement having been attained, which shares of restricted
common stock will become fully vested and free of any forfeiture
or holding restrictions immediately prior to the merger
effective time and will be considered outstanding shares of
common stock for purposes of the merger agreement, including the
right to receive the common stock merger consideration, without
interest and less applicable withholding taxes.
Treatment
of Operating Company Units
In connection with the operating company merger, at the
operating company merger effective time, each Class A and
Class B operating company unit issued and outstanding
immediately prior to the operating company merger effective time
(other than units owned directly or indirectly by us) will be
converted into, and canceled in exchange for, one fully paid
redeemable preferred unit. Prior to the operating company
merger, holders of Class B operating company units (in
their capacity as holders of redeemable preferred units) will be
given an opportunity to elect to (a) redeem each such
redeemable preferred unit at any time (including immediately
after the operating company merger effective time) in exchange
for an amount per unit equal to the common stock merger
consideration plus all accrued and unpaid distributions on such
preferred units, (b) retain each such redeemable preferred
unit or (c) convert each such redeemable preferred unit on
a
one-for-one
basis within 15 days following the completion of the merger
into a Class B common unit in the surviving operating
company, subject to the terms and conditions of the amended and
restated operating agreement of the surviving operating company
that will be adopted in connection with the operating company
merger. The foregoing does not apply to units held by us or our
subsidiaries, which will remain outstanding as units of the
surviving operating company.
In general, preferred units in the surviving operating company
will have the following terms:
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each preferred unit will have a stated liquidation preference of
$29.01 and will be entitled to distributions of legally
available assets by the surviving operating company when, as and
if made by the surviving operating company, in preference to all
holders of other classes of interests in the surviving operating
company, equal to 6% per annum on the stated liquidation
preference;
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the preferred units will be redeemable for cash equal to the
liquidation preference plus any accrued and unpaid distributions:
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at the holders option commencing on the closing date of
the operating company merger, and
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at the surviving operating companys option commencing on
the first anniversary of the closing date of the operating
company merger, subject to the operating company paying any
required amounts due under the applicable tax protection
agreements with holders of the operating company units. Under
certain circumstances, if the surviving operating company
exercises this redemption right prior to May 2, 2016 with
respect to certain holders of operating company units, the cash
amount paid to such holders will reflect an additional amount
determined pursuant to a separate agreement previously entered
into among such holders, us and certain other parties; and
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holders of preferred units will generally have no voting or
other consent rights in the surviving operating company, other
than the right to consent to material and adverse amendments to
certain provisions of the operating company agreement relating
to rights, preferences, privileges or voting powers applicable
to the preferred units, and to limited other amendments.
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This proxy statement does not constitute any solicitation of
consents in respect of the operating company merger, and does
not constitute an offer to convert the operating company units
that you may own for or into continuing common units in the
surviving operating company.
No
Further Ownership Rights
At the merger effective time, holders of our common stock will
cease to be, and have no rights as, our stockholders, other than
the right to receive the common stock merger consideration.
Exchange
and Payment Procedures
On or before the operating company merger effective time, Parent
will cause to be deposited the cash in respect of the
consideration to be paid to the holders of our common stock,
stock options, restricted stock, restricted stock units,
restricted stock rights, deferred restricted stock units,
deferred restricted stock rights, warrants and operating company
units, respectively, with a paying agent selected by us and that
is reasonably satisfactory to Parent. Promptly after the merger
effective time, Parent and the surviving corporation will cause
the paying agent to mail a letter of transmittal and, if
applicable, instructions for surrendering certificates for our
common stock and warrants to each holder thereof. The letter of
transmittal and instructions will tell you how to surrender your
common stock certificates and warrant certificates, as
applicable, in exchange for the applicable merger consideration.
You should not return your certificates with the enclosed
proxy card, and you should not forward your certificates to the
paying agent without a letter of transmittal.
You will not be entitled to receive the merger consideration
until you surrender your certificate or certificates to the
paying agent, together with a duly completed and executed letter
of transmittal and any other documents as the paying agent may
reasonably require. The merger consideration may be paid to a
person other than the person in whose name the corresponding
certificate is registered if the certificate is properly
endorsed or is otherwise in the proper form for transfer. In
addition, the person requesting payment must either pay any
applicable stock transfer taxes or establish to the satisfaction
of Parent that such stock transfer taxes have been paid or are
not applicable.
No interest will be paid or will accrue on the cash payable upon
surrender of the certificates. Each of the paying agent, the
surviving corporation and Trizec will be entitled to deduct and
withhold any applicable taxes from the merger consideration.
At the merger effective time, our stock transfer books will be
closed and there will be no further registration of transfers of
our shares of common stock.
None of the paying agent, Parent, MergerCo, AcquisitionCo, us or
our operating company or any respective employees, officers,
directors, stockholders, partners, agents or affiliates will be
liable to any person for any cash merger consideration delivered
to a public official pursuant to any applicable abandoned
property, escheat or similar law. Any portion of the merger
consideration deposited with the paying agent that remains
undistributed to the holders of shares of our common stock,
restricted stock, restricted stock units, restricted stock
rights, deferred restricted stock units, deferred restricted
stock rights or warrants for 12 months after the merger
effective time will be delivered to the surviving corporation.
Holders of our common stock, stock options, restricted stock,
restricted stock units, restricted stock rights, deferred
restricted stock units, deferred restricted stock rights or
warrants prior to the merger who have not complied with the
exchange and payment procedures contained in the merger
agreement within 12 months after the merger effective time may
only look to the surviving corporation for the payment of the
merger consideration.
If you have lost a certificate, or if it has been stolen or
destroyed, then before you are entitled to receive the merger
consideration, you will be required to deliver an affidavit
stating that fact and, if required by Parent or paying agent, to
post a bond in the form and amount reasonably required by Parent
or the paying agent as indemnity against any claim that may be
made against Parent and the paying agent on account of the
alleged loss, theft or destruction of such certificate.
Representations
and Warranties
We and our operating company made customary representations and
warranties in the merger agreement that are subject, in some
cases, to specified exceptions and qualifications contained in
the merger agreement or
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in the disclosure schedules delivered in connection therewith.
These representations and warranties relate to, among other
things:
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due organization, valid existence, good standing and power and
authority to carry on the businesses of each of us, our
operating company, our other subsidiaries and, in some cases,
other entities in which we own equity interests (which we refer
to as our joint ventures);
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our charter and bylaws and the similar organizational documents
of our operating company, our other subsidiaries and certain of
our joint ventures;
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our capitalization and the capitalization of our operating
company and, in some cases, our ownership in our other
subsidiaries and joint ventures and the absence of any
encumbrances on our ownership of the equity interests of our
subsidiaries and our joint ventures;
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our and our operating companys power and authority to
execute and deliver, and to perform our and our operating
companys obligations under, the merger agreement and to
consummate the transactions contemplated by the merger agreement;
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the enforceability of the merger agreement against us and our
operating company;
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the vote of our stockholders required in connection with the
approval of the merger and the other transactions contemplated
by the merger agreement and the approval of us as the sole
managing member of our operating company;
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the absence of conflicts with, or breaches or violations of,
our, our operating companys, or certain of our
subsidiaries organizational documents, and laws, permits
and certain contracts applicable to us, our operating company or
our other subsidiaries as a result of entering into the merger
agreement or performing our or their respective obligations
under the merger agreement;
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consents and approvals of governmental entities required as a
result of executing and delivering the merger agreement and
performing our and our operating companys obligations
under the merger agreement;
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possession of all permits necessary to operate our, our
subsidiaries and certain of our joint ventures
properties and carry on our, our subsidiaries and certain
of our joint ventures businesses and the absence of any
conflict with, or default, breach or violation of, applicable
laws or such permits other than as would not be reasonably
expected to have a material adverse effect with respect to us;
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our SEC filings since May 8, 2002 and the financial
statements contained therein;
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the absence of liabilities required to be recorded on a balance
sheet under generally accepted accounting principles as applied
in the United States, or GAAP other than as would not be
reasonably expected to have a material adverse effect with
respect to us;
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the absence of any event, occurrence, effect or circumstance
that has resulted or would reasonably be expected to result
material adverse effect and certain other changes and events
since December 31, 2005;
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the absence of litigation or orders against us or our
subsidiaries other than as would not be reasonably expected to
have a material adverse effect with respect to us;
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the nature, extent and scope of our and our subsidiaries
employee benefit plans;
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labor matters affecting us and our subsidiaries;
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the accuracy and completeness of information we and our
operating company have supplied for inclusion in this proxy
statement or any other document to be filed with the SEC in
connection with the transactions contemplated by the merger
agreement;
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real property owned and leased by us, our subsidiaries and
certain of our joint ventures; our, our subsidiaries and
certain of our joint ventures leases, ground leases and
participation agreements;
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personal property owned by us and our subsidiaries;
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intellectual property used by, owned by or licensed by us and
our subsidiaries;
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tax matters affecting us and our subsidiaries;
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environmental matters affecting us, our subsidiaries and certain
of our joint ventures;
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our, our subsidiaries and certain of our joint
ventures material contracts and the absence of any breach
or violation of, or default under, any material contract;
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the absence of any undisclosed brokers or finders
fees;
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the receipt by us of a fairness opinion from JPMorgan to the
effect that, as of the date of the merger agreement, the merger
consideration to be received by holders of our common stock is
fair from a financial point of view to such holders;
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our and our subsidiaries insurance policies;
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interested party transactions and compliance with the
Sarbanes-Oxley Act of 2002; and
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our and our subsidiaries status as an investment company
under the Investment Company Act of 1940, as amended.
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Additionally, Trizec Canada made customary representations and
warranties in the merger agreement that are subject, in some
cases, to specified exceptions and qualifications contained in
the merger agreement or in the disclosure schedules delivered in
connection therewith. These representations and warranties are
substantially the same as those described above relating to
Trizec.
For the purposes of the merger agreement, material adverse
effect means any effect, event, development or change
that, individually or in the aggregate with all other effects,
events, developments or changes, is materially adverse to us,
our subsidiaries, Trizec Canadas and Trizec
Canadas subsidiaries assets, business, results of
operations or financial condition taken as a whole.
A material adverse effect will not have occurred,
however, as a result of effects, events, developments or changes
arising out of or resulting from:
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changes in conditions in the U.S., Canadian or global economy or
capital or financial markets generally, including changes in
interest or exchange rates;
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changes in general legal, tax, regulatory, political or business
conditions that, in each case, generally affect the geographic
regions or industries in which we, our subsidiaries, our joint
ventures, Trizec Canada and Trizec Canadas subsidiaries
conduct business (unless and only to the extent such effect,
event, development or change affects us, our subsidiaries, our
joint ventures, Trizec Canada and Trizec Canadas
subsidiaries in a disproportionate manner as compared to other
persons or participants in the industries in which we, our
subsidiaries, our joint ventures, Trizec Canada and Trizec
Canadas subsidiaries conduct business and that operate in
the geographic regions affected by such effect, event,
development or change);
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changes in GAAP or Canadian GAAP;
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the negotiation, execution, announcement or performance of the
merger agreement or the transactions contemplated by the merger
agreement or the consummation of the transactions contemplated
by the merger agreement, including the impact thereof on
relationships, contractual or otherwise, with tenants,
suppliers, lenders, investors, venture partners or employees;
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acts of war, armed hostilities, sabotage or terrorism, or any
escalation or worsening of any such acts of war, armed
hostilities, sabotage or terrorism threatened or underway as of
June 5, 2006 (unless and only to the extent such effect,
event, development or change affects us, our subsidiaries, our
joint ventures, Trizec Canada and Trizec Canadas
subsidiaries in a disproportionate manner as compared to other
persons or participants in the industries in which we, our
subsidiaries, our joint ventures, Trizec Canada and Trizec
Canadas subsidiaries conduct business and that operate in
the geographic regions affected by such effect, event,
development or change);
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earthquakes, hurricanes or other natural disasters (unless and
only to the extent such effect, event, development or change
affects us, our subsidiaries, our joint ventures, Trizec Canada
and Trizec Canadas subsidiaries in a disproportionate
manner as compared to other persons or participants in the
industries in which we, our subsidiaries, our joint ventures,
Trizec Canada and Trizec Canadas
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subsidiaries conduct business and that operate in the geographic
regions affected by such effect, event, development or change);
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any suit, claim, action or proceedings brought, asserted or
threatened by or on behalf of any holder or holders of capital
stock or other equity interests in Trizec, Trizecs
subsidiaries, Trizec Canada or Trizec Canadas
subsidiaries, arising out of or relating to the transactions
contemplated by the merger agreement; or
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any action taken by us or our operating company or Trizec Canada
at the request or with the consent of Parent, MergerCo or
AcquisitionCo.
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Under the merger agreement, the mere fact that there has been a
decrease in the market price of our common stock or Trizec
Canadas subordinate voting shares will not itself
constitute a material adverse effect. However, any effect,
event, development or change underlying such price decrease will
be considered in determining whether there has been a material
adverse effect.
The merger agreement also contains customary representations and
warranties made by Parent, MergerCo and AcquisitionCo that are
subject, in some cases, to specified exceptions and
qualifications. The representations and warranties relate to,
among other things:
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their due organization, valid existence, good standing and power
and authority to carry on their businesses;
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the ownership of MergerCo and AcquisitionCo and absence of prior
conduct of activities or business of MergerCo and the
AcquisitionCo;
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their power and authority to execute and deliver, and to perform
their obligations under, the merger agreement and to consummate
the transactions contemplated by the merger agreement;
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the enforceability of the merger agreement against them;
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the absence of conflicts with, or breaches or violations of,
their organizational documents, laws or certain contracts as a
result of entering into the merger agreement or consummating the
mergers;
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consents and approvals of governmental entities required as a
result of executing and delivering the merger agreement and
performing their obligations under the merger agreement;
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the accuracy and completeness of information they have supplied
for inclusion in this proxy statement or any other document to
be filed with the SEC or in the Trizec Canada circular in
connection with the transactions contemplated by the merger
agreement;
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the absence of litigation or orders against them;
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their capital resources, including in particular the equity
funding and the debt financing which will provide Parent with
acquisition financing at the merger effective time and operating
company merger effective time sufficient to consummate the
mergers;
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the guarantee executed by Brookfield Properties;
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their ownership of our common stock or any other securities of
ours and our subsidiaries; and
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clarification that no brokers or finders fees are
payable based upon arrangements made by or on behalf of Parent,
MergerCo or the AcquisitionCo.
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The representations and warranties of each of the parties to the
merger agreement will expire upon the closing of the mergers.
Conduct
of Our Business Pending the Mergers
Under the merger agreement, we have agreed that, subject to
certain exceptions in the merger agreement and the disclosure
schedules delivered in connection therewith, between
June 5, 2006 and the merger effective time, we and our
subsidiaries will:
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conduct our business only in the ordinary course of business
consistent with past practice; and
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use commercially reasonable efforts to preserve substantially
intact our and our subsidiaries business organization, to
preserve the goodwill and current relationships with our and our
subsidiaries lessees
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and other persons with whom we or any of our subsidiaries have
significant business relations, and take all actions, or refrain
from taking all actions, as are necessary to ensure we qualify
as a REIT for our taxable year in which the merger closes.
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We also have agreed that during the same time period, subject to
certain exceptions as fully described in the merger agreement or
unless Parent either gives its prior written consent or does not
object within five business days from the date we request such
consent, we and our subsidiaries will not, among other things:
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amend our or our operating companys organizational
documents;
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subject to certain exceptions, authorize for issuance, issue or
sell, pledge, dispose of or subject to any lien or agree or
commit to any of the foregoing in respect of, any shares of any
class of capital stock or other equity interest of us or any of
our subsidiaries or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of
such capital stock, or any other equity interest, of us or any
of our subsidiaries; repurchase, redeem or otherwise acquire any
securities or equity equivalent; or reclassify, combine, split
or subdivide any capital stock or other equity interest of us or
any of our subsidiaries;
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repurchase, redeem or otherwise acquire any security or equity
equivalents except in connection with the cashless exercise of
stock options, the vesting of restricted stock rights or
restricted stock, the lapse of restrictions on restricted stock
rights or restricted stock, or the redemption of the operating
company units pursuant to the limited liability company
operating agreement of our operating company;
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declare, set aside, make or pay dividends or other
distributions, other than (a) dividends paid by our direct
or indirect wholly owned subsidiaries, (b) the quarterly
dividend payment on our common stock not to exceed
$0.20 per share, (c) dividends on our special voting
stock, (d) dividend equivalents paid with respect to our
restricted stock rights, and (e) dividends on our
Class F convertible stock;
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acquire (by merger, consolidation, acquisition of equity
interests or assets, or any other business combination) any
corporation, partnership, limited liability company, joint
venture or other business organization or any property (other
than real property) or asset for consideration in excess of
$500,000 (other than as set forth in our 2006 budget), or
acquire, or enter into any option, commitment or agreement to
acquire, any real property (other than certain commitments set
forth in the merger agreement);
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incur any indebtedness or issue any debt securities or assume,
guarantee or endorse, or otherwise as an accommodation become
responsible for, the obligations of any person (other than a
subsidiary) for indebtedness;
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materially amend or terminate any material contract or enter
into any new material contract;
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increase compensation or benefits payable to our directors,
officers or non-executive employees, or grant to any of our or
our subsidiaries directors, officers, employees or
independent contractors any new severance, change of control or
termination pay;
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grant any increase in, or alter or amend, any right to receive
any severance, change of control or termination pay or benefits
or establish, adopt, enter into or amend any collective
bargaining, bonus, profit-sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred
compensation, employment, loan, retention, consulting,
indemnification, termination, severance or other similar plan,
agreement, trust, fund, policy or arrangement with any director,
officer, employee or independent contractor;
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prepay any of our long-term indebtedness other than (a) in
the ordinary course of business or (b) prepayments in an
amount not to exceed $10.0 million in the aggregate for us
and our subsidiaries, or pay, discharge or satisfy any material
claims, liabilities or obligations;
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materially change our financial accounting principles or
policies except as recommended by our audit committee or
independent auditors or as required by the SEC or changes in
GAAP;
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enter into a new lease or terminate, materially modify or amend
any lease that relates to in excess of 100,000 square feet
or net rentable area at any of our, our subsidiaries and
our joint ventures properties, or enter into, terminate or
materially modify or amend any ground lease;
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authorize or enter into any commitment for any new material
capital expenditure other than certain permitted expenditures;
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waive, release, assign, settle or compromise any material legal
actions or material liabilities or certain securities-related
legal actions;
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make, change or rescind any material tax election or change a
material method of tax accounting, amend any material tax
return, settle or compromise any material federal, state, local
or foreign income tax liability, audit, claim or assessment, or
enter into any material closing agreement related to taxes, or
knowingly surrender any right to claim a material tax refund,
other than as required by applicable law or necessary to
preserve our status as a REIT under the Code, or to qualify or
preserve the status of any subsidiary as a partnership for
federal income tax purposes or as a qualified REIT subsidiary or
a taxable REIT subsidiary under the Code, as the case may be
(provided that in such events we shall notify Parent of such
election and shall not fail to make such election in a timely
manner);
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enter into, amend or modify any tax protection agreements, or
take any action that would, or could reasonably be expected to,
violate any tax protection agreement or otherwise give rise to
any liability of us or any of our subsidiaries under such
agreements;
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amend any term of any outstanding security of us or any of our
subsidiaries;
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sell or otherwise dispose of, or subject to any encumbrance, any
of our, our subsidiaries or our joint ventures
properties or other material assets other than pending sales
pursuant to definitive agreements executed prior to June 5,
2006;
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adopt a plan of complete or partial liquidation or dissolution
or resolutions providing for or authorizing such liquidation or
dissolution;
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fail to maintain in full force and effect existing insurance
policies or to replace such insurance policies with comparable
insurance policies covering us, our subsidiaries, and our and
our subsidiaries properties, assets and businesses;
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take any action that would cause any of our representations or
warranties contained in the merger agreement to become
inaccurate in any material respect or any of our covenants to be
breached in any material respect or result in the failure to be
satisfied of any of the conditions to closing set forth in the
merger agreement;
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enter into, or amend or modify, any material agreement or
arrangement with any of our directors or executive officers, or
with Trizec Canada or certain of its subsidiaries, without prior
written consent of Parent and the approval of a majority of the
independent members of our board; or
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announce an intention, enter into an agreement or otherwise make
a commitment to do any of the foregoing.
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In addition, under the merger agreement, Trizec Canada has
agreed that, subject to certain exceptions in the merger
agreement and the disclosure schedules delivered in connection
therewith, between June 5, 2006 and the merger effective
time, Trizec Canada and its subsidiaries will conduct their
business only in the ordinary course of business consistent with
past practice, and use commercially reasonable efforts to
preserve substantially intact their businesses. Trizec Canada
also has agreed that during the same time period, subject to
certain exceptions as fully described in the merger agreement or
unless Parent either gives its prior written consent or does not
object within five business days from the date Trizec Canada
requests such a consent, Trizec Canada and its subsidiaries will
not take certain actions, which actions are substantially the
same as those described above with respect to Trizec.
Further, under the merger agreement, Trizec and Parent have
agreed to engage in the marketing and sale of certain of
Trizecs properties as the second step of reverse
like-kind exchange transactions. Any such sale of these
properties will occur on or before October 27, 2006 and
will not affect the common stock merger consideration to be
received by holders of our common stock in the merger. The
completion of the sale of these properties is not a condition to
the completion of the merger.
70
No
Solicitation of Transactions
We have agreed that, between June 5, 2006 and the merger
effective time and subject to specified exceptions described
below, we, Trizec Canada and our respective subsidiaries will
not, nor shall any of us knowingly permit our respective
representatives to:
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initiate, solicit, knowingly encourage or knowingly facilitate
(including by way of furnishing nonpublic information or
assistance) any inquiries or the making of any proposal or other
action that constitutes, or may reasonably be expected to lead
to, any Trizec acquisition proposal;
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enter into discussions or negotiate with any person in
furtherance of those inquiries or to obtain a Trizec acquisition
proposal; or
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enter into any agreement in principle, contract or agreement
(other than a confidentiality agreement entered into in
accordance with the merger agreement) relating to a Trizec
acquisition proposal.
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For purposes of the merger agreement, Trizec acquisition
proposal means any proposal or offer (other than the
mergers or any of the other transactions contemplated by the
merger agreement, or any merger or similar transaction solely
among us and our subsidiaries, or among our subsidiaries) for
any:
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merger, consolidation or similar transaction involving us or any
of our subsidiaries representing 20% or more of our and our
subsidiaries assets or income, taken as a whole;
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sale or other disposition, directly or indirectly, by merger,
consolidation, share exchange or any similar transaction, of 20%
or more of our and our subsidiaries assets, taken as a
whole;
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issue, sale or other disposition by us of securities
representing 20% or more of the voting power of our voting
equity securities;
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tender offer or exchange offer in which any person or group
offers to acquire beneficial ownership, or the right to acquire
beneficial ownership, of 20% or more of our common stock; or
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other transaction which is similar in form, substance or purpose
to any of the foregoing transactions.
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Prior to the approval of the merger by our stockholders,
following the receipt of an unsolicited bona fide written
Trizec acquisition proposal, our board of directors or the
special committee may contact such person and its advisors
solely for the purpose of clarifying the proposal and any
material terms thereof and the conditions to and likelihood of
consummation, to determine whether such Trizec acquisition
proposal is, or is reasonably likely to lead to, a Trizec
superior proposal and, if our board of directors or the special
committee determines in good faith, after consultation with its
legal and financial advisors, that such Trizec acquisition
proposal is, or is reasonably likely to lead to, a Trizec
superior proposal and determines in good faith, after
consultation with legal counsel, that failure to take such
action would be inconsistent with its fiduciary duties under
applicable law, our board of directors or the special committee
may:
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furnish non-public information with respect to us and our
subsidiaries to such person who made such proposal, provided
that we have caused such person to enter into a confidentiality
agreement with us containing terms that are at least as
favorable to us as those contained in the confidentiality
agreement we signed with Parent and we concurrently disclose the
same non-public information to Parent if not previously
disclosed;
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participate in negotiations regarding such Trizec acquisition
proposal; or
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following receipt of a proposal that constitutes both a Trizec
superior proposal and a Trizec Canada superior proposal, which
we refer to as a combined superior proposal,
terminate the merger agreement to accept such proposal pursuant
to the relevant termination provisions described under
Termination below.
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For purposes of the merger agreement, Trizec superior
proposal means a written Trizec acquisition proposal:
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that relates to more than 50% of our common stock or all or
substantially all of our and our subsidiaries assets,
taken as a whole;
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which our board of directors or the special committee determines
in its good faith judgment, after consultation with its outside
financial and legal advisors, to be more favorable from a
financial point of view to our stockholders than the
merger; and
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for which financing, to the extent required, is then committed
or, in the good faith judgment of our board of directors, is
reasonably likely to be available.
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We and our operating company have agreed to promptly notify
Parent (but no less than 24 hours after initial receipt) of
our receipt of any Trizec acquisition proposal. In our notice to
Parent, we have agreed to provide a copy of such Trizec
acquisition proposal and any relevant details, including the
identity of parties making the proposal. We and our operating
company also have agreed to keep Parent informed on a prompt
basis of the status of and any material developments regarding
any such Trizec acquisition proposal. Under the merger
agreement, we may not, and may not permit any of our
subsidiaries to, terminate, waive, amend or modify any provision
of any existing standstill or confidentiality agreement to which
we or our subsidiaries are a party and we have agreed to, and to
cause each of our subsidiaries to, enforce the provisions of any
such agreements. We also agreed to, and to cause each of our
subsidiaries to, terminate or cause to be terminated any
existing discussions, negotiations or communications with any
parties regarding any Trizec acquisition proposal.
We also agreed not to take any action to exempt any person from
the ownership restrictions in Article IV of our charter or
otherwise cause such restrictions not to apply.
We are obligated to call and hold a meeting of our stockholders
for the purpose of voting upon the adoption of the merger
agreement. In connection with such meeting, (a) our board
of directors will recommend to our stockholders to adopt the
merger agreement, and (b) we will use our reasonable best
efforts to solicit from our stockholders proxies for the
adoption of the merger agreement and to take all other action
necessary or advisable to secure the approval of the
stockholders of the adoption of the merger agreement. However,
our board of directors or the special committee may determine
not to make, or may determine to change or withdraw its
recommendation and not solicit such proxies from our
stockholders or take such other necessary or advisable action in
favor of the adoption of the merger agreement if, after
consultation with its legal counsel, our board of directors or
the special committee determines in good faith that the failure
to take such actions would be inconsistent with its fiduciary
duties under applicable law. In the event that we receive a
bona fide written unsolicited Trizec acquisition
proposal, we may delay the mailing of this proxy statement or
the meeting of our stockholders for a reasonable period of time
as would allow our board of directors or the special committee
to consider such Trizec acquisition proposal and to determine
the effect, if any, on the recommendation of our board of
directors (but in any event not longer than ten days). If there
is an insufficient number of shares of common stock represented
in person or by proxy at the meeting of our stockholders to
constitute a quorum or to adopt the merger agreement, we may
adjourn or postpone the meeting for up to ten business days, so
long as, during such period, we use our reasonable best efforts
to obtain a quorum and the requisite vote to adopt the merger
agreement as promptly as practicable. However, unless the merger
agreement is terminated in accordance with its terms, we are
obligated to hold the stockholders meeting notwithstanding
that our board may have changed its recommendation. Trizec
Canada has agreed to substantially similar provisions with
respect to its stockholders meeting and the approval of
the arrangement.
In addition, Trizec Canada has agreed, pursuant to the merger
agreement, to take, or refrain from taking, substantially the
same actions with respect to a different acquisition proposal to
purchase Trizec Canada and with respect to its stockholder
approval process, as described more fully in the merger
agreement. The merger agreement also contains definitions of
Trizec Canada acquisition proposal and Trizec
Canada superior proposal. These definitions are
substantially similar to the definitions of Trizec
acquisition proposal and Trizec superior
proposal set forth above.
Employee
Benefits
For a period of one year following the closing date, Parent has
agreed that it will cause the surviving corporation to provide
all employees employed by us or our subsidiaries as of the
merger effective time and who continue to be employed by the
surviving corporation or successors or assigns or any of their
72
subsidiaries, whom we refer to as active employees,
with base salary, cash incentive compensation and the value of
any equity-based incentive or other compensation in an amount at
least equal to the same level that was provided to each active
employee, or to which such active employee was entitled, prior
to the merger effective time, and benefits (other than
equity-based benefits) that are no less favorable in the
aggregate as those provided under our benefit plans in effect
immediately prior to the merger effective time.
Parent has agreed to honor all severance, change of control and
similar plans and agreements in accordance with their terms as
in effect immediately prior to the merger effective time.
In addition, Parent has agreed to:
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provide each of our active employees with credit for service
with us and our subsidiaries with respect to any employee
benefit plans established by Parent or its subsidiaries under
which our active employees may be eligible to participate after
the merger effective time, or the new plans, to the
same extent as such active employee was entitled to credit for
such service under the respective Trizec benefit plans, provided
that such crediting of service shall not operate to duplicate
any benefits and shall not be counted for the purpose of
crediting benefit accrual under any defined benefit
plan; and
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for purposes of each new plan providing health benefits to any
active employee, cause such active employee to receive credit
for all amounts paid by such active employee for purposes of
satisfying all deductible, co-payments and
out-of-pocket
maximums as though such amounts had been paid in accordance with
the terms and conditions of the parallel plan, program or
arrangement of Parent or the surviving corporation.
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Parent also has agreed to provide similar benefits with respect
to the employees of Trizec Canada, as described more fully in
the merger agreement.
Pre-Closing
Transactions
Parent may request that, immediately prior to the closing, we or
Trizec Canada, among other things, use commercially reasonable
efforts to (a) convert any subsidiary organized as a
corporation or limited partnership into a limited liability
company, (b) sell the stock, partnership interests or
limited liability interests owned by us in any subsidiary at a
price designated by Parent, (c) sell any of our or our
subsidiaries assets at a price designated by Parent,
(d) effect certain reorganizations of our, our operating
companys and Trizec Canadas business, and
(e) cooperate with AcquisitionCo to structure and implement
any such reorganization. These rights of Parent are limited,
however, in that, among other things (i) the foregoing
transactions will not delay or prevent completion of the mergers
or arrangement, (ii) the transactions will be implemented
as close to the merger effective time as possible and Parent has
either waived or confirmed all conditions to the mergers and the
arrangement have been satisfied, (iii) Parent may not
require us or Trizec Canada to take any action that contravenes
applicable law or the organizational documents or a material
contract, (iv) any such actions or transactions would be
contingent upon our confirmation from Parent confirming that
Parent, MergerCo and AcquisitionCo are prepared to proceed
immediately with the closing and any other evidence reasonably
requested by us that the closing will occur, (v) these
actions (or the inability to complete them) will not affect or
modify the obligations of Parent, MergerCo and AcquisitionCo
under the merger agreement, and (vi) we, Trizec Canada and
our and their subsidiaries will not be required to take any
action that could adversely affect our classification as a REIT
within the meaning of the Code or Trizec Canadas
qualification as a mutual fund corporation or that
could result in any additional United States federal, state or
local income tax being imposed on the equity holders of us and
Trizec Canada. Parent shall advance to us and Trizec Canada, or
reimburse us and Trizec Canada for, all reasonable
out-of-pocket
costs incurred, and Parent, MergerCo and AcquisitionCo shall
indemnify us and Trizec Canada from all liabilities relating to
these pre-closing transactions that are undertaken by us or
Trizec Canada at Parents request.
Agreement
to Take Further Action
Subject to the terms and conditions of the merger agreement and
in accordance with applicable law, each party to the merger
agreement has agreed to use its reasonable best efforts to take,
or to cause to be taken, all appropriate actions and to do, or
to cause to be done, all things necessary, proper or advisable
under applicable law to consummate the mergers, the arrangement
and the transactions contemplated by the merger
73
agreement, including using its reasonable best efforts to obtain
all permits, consents, approvals, authorizations, qualifications
and orders of governmental authorities and parties to contracts
necessary for the consummation of the transactions contemplated
by the merger agreement and to fulfill the conditions to the
mergers and the other transactions contemplated by the merger
agreement as promptly as practicable.
Each party to the merger agreement has agreed to cooperate and
use its reasonable best efforts to defend through litigation on
the merits any legal action, including administrative or
judicial action, asserted by any party in order to avoid the
entry of, or to have vacated, lifted, reversed, terminated or
overturned any decree, judgment, injunction or other order that
in whole or in part restricts, delays, prevents or prohibits
consummation of the mergers or the arrangement, including by
vigorously pursuing all available avenues of administrative and
judicial appeal.
Conditions
to the Mergers
The obligations of the parties to complete the mergers and the
arrangement are subject to the following mutual conditions:
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the approval of the merger agreement by Trizecs
stockholders shall have been obtained;
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the approval of the arrangement by Trizec Canadas
shareholders shall have been obtained;
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the approval of the arrangement by the Ontario Superior Court of
Justice shall have been obtained;
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the applicable Canadian regulatory approval with respect to the
arrangement shall have been obtained;
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any waiting period applicable to (a) the consummation of
the mergers under the HSR Act and (b) the arrangement under
the Competition Act must have expired or terminated, and any
approvals required under such laws must have been obtained; and
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no governmental authority shall have enacted, issued,
promulgated, enforced or entered any injunction, order, decree
or ruling that would make the consummation of the mergers or the
arrangement illegal or otherwise prohibit the consummation of
the mergers or the arrangement.
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The obligations of Parent, MergerCo and AcquisitionCo to
complete the mergers and the arrangement are subject to the
following additional conditions:
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our, our operating companys and Trizec Canadas
representations and warranties that (a) are not made as of
a specific date shall be true and correct as of the date of the
merger agreement and as of the closing, as though made on and as
of the closing, and (b) are made as of a specific date
shall be true and correct as of such date, except where the
failure of our, our operating companys and Trizec
Canadas representations and warranties to be true and
correct in all respects without regard to any materiality or
material adverse effect qualifications (other than the
representations relating to the absence of any material adverse
effect) does not and would not reasonably be expected to have,
individually or in the aggregate, a material adverse effect;
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the performance, in all material respects, by us, our operating
company and Trizec Canada of our, our operating companys
and Trizec Canadas obligations under the merger agreement
and compliance by us, our operating company and Trizec Canada,
in all material respects, with the agreements and covenants to
be performed or complied with by us, our operating company and
Trizec Canada under the merger agreement on or prior to the
arrangement effective time;
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the receipt by Parent of (a) a certificate signed by one of
our officers with respect to the truth and correctness of our
and our operating companys representations and warranties,
the performance of our and our operating companys
obligations under the merger agreement and compliance, in all
material respects, with the agreements and covenants to be
performed or complied with under the merger agreement and,
(b) a similar certificate with respect to Trizec Canada
signed by an officer of Trizec Canada;
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on the closing date, there shall not exist an event, change or
occurrence that, individually or in the aggregate, has had a
material adverse effect; and
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the receipt of a tax opinion of our counsel, Hogan &
Hartson, opining that we have been organized and have operated
in conformity with the requirements for qualification as a REIT
under the Code.
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74
The obligations of us, our operating company and Trizec Canada
to complete the mergers and the arrangement are subject to the
following additional conditions:
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the representations and warranties of Parent, MergerCo and
AcquisitionCo that (a) are not made as of a specific date
shall be true and correct as of the date of the merger agreement
and as of the closing, as though made on and as of the closing,
and (b) are made as of a specific date shall be true and
correct as of such date, except where the failure of their
representations and warranties to be true and correct in all
respects without regard to any materiality or Parent material
adverse effect qualifications does not have and would not
reasonably be expected to have, individually or in the
aggregate, a Parent material adverse effect;
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the performance, in all material respects, by Parent of its
obligations under the merger agreement and compliance by Parent,
in all material respects, with the agreements and covenants to
be performed or complied with by Parent under the merger
agreement on or prior to the merger effective time; and
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the receipt by us and Trizec Canada of an officers
certificate with respect to the truth and correctness of the
representations and warranties of Parent, MergerCo and
AcquisitionCo and the performance of Parents obligations
under the merger agreement and compliance, in all material
respects, with the agreements and covenants to be performed or
complied with under the merger agreement.
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For the purposes of the merger agreement, Parent material
adverse effect means an event, circumstance, change or
effect that could reasonably be expected to prevent or
materially hinder or delay Parent, MergerCo or AcqusitionCo from
consummating the mergers, the arrangement or the other
transactions contemplated by the merger agreement.
Termination
The merger agreement may be terminated and the mergers and the
arrangement may be abandoned at any time prior to the merger
effective time or the arrangement effective time, as the case
may be, even after Trizecs stockholders have adopted the
merger agreement and Trizec Canadas shareholders have
approved the arrangement, as follows:
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by mutual written consent of the parties;
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by any of Parent, us and our operating company, or Trizec Canada
if:
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the merger has not occurred on or before December 31, 2006,
provided that this right will not be available to a party whose
failure to fulfill any obligation under the merger agreement
materially contributed to the failure of the merger to occur by
such date;
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any governmental authority shall have enacted, issued,
promulgated, enforced or entered any injunction, order, decree
or ruling or taken any other action which has the effect of
making consummation of the mergers or the arrangement illegal or
otherwise prevents or prohibits the consummation of the mergers
or the arrangement and is final and non-appealable; or
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the requisite vote of (a) our common stockholders to adopt
the merger agreement upon a vote being taken at a duly convened
stockholders meeting is not obtained, or (b) Trizec
Canadas shareholders to approve the arrangement upon a
vote being taken of a duly convened shareholders meeting is not
obtained;
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none of Parent, MergerCo and AcquisitionCo is in material breach
of its obligations under the merger agreement, and (a) any
of our, our operating companys or Trizec Canadas
representations and warranties is or becomes untrue or incorrect
such that the closing condition pertaining to our, our operating
companys or Trizec Canadas representations and
warranties would be incapable of being satisfied by
December 31, 2006, or (b) there has been a breach of
any of our, our operating companys or Trizec Canadas
covenants and agreements under the merger agreement such that
the closing condition pertaining to our, our operating
companys or Trizec Canadas performance and
compliance with covenants or agreements would be incapable of
being satisfied by December 31, 2006;
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our board of directors or a special committee of our board of
directors (a) withdraws, modifies or amends its
recommendation that our stockholders vote to adopt the merger
agreement, (b) publicly approves or recommends a Trizec
acquisition proposal, (c) within ten business days after it
is commenced, fails to recommend the rejection of a tender offer
or exchange offer relating to our outstanding common stock that
constitutes a Trizec acquisition proposal or (d) publicly
announces the intention to do any of the foregoing; or
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Trizec Canadas board of directors (a) withdraws,
modifies or amends its recommendation that Trizec Canadas
shareholders vote to approve the arrangement, (b) publicly
approves or recommends a Trizec Canada acquisition proposal,
(c) within ten business days after it is commenced, fails
to recommend the rejection of a tender offer or exchange offer
relating to the outstanding shares of Trizec Canada that
constitutes a Trizec Canada acquisition proposal or
(d) Trizec Canada or its board of directors publicly
announces the intention to do any of the foregoing;
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by us and our operating company, or Trizec Canada if:
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none of us, our operating company and Trizec Canada is in
material breach of its respective obligations under the merger
agreement, and (a) any of Parents, MergerCos or
AcquisitionCos representations and warranties is or
becomes untrue or incorrect such that the closing condition
pertaining to their representations and warranties would be
incapable of being satisfied by December 31, 2006, or
(b) there has been a breach of any of Parents,
MergerCos or AcquisitionCos covenants and agreements
under the merger agreement such that the closing condition
pertaining to their performance and compliance with covenants
and agreements would be incapable of being satisfied by
December 31, 2006; or
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by us and our operating company and Trizec Canada if:
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our board of directors or a special committee of our board of
directors and Trizec Canadas board of directors approves
and authorizes us and Trizec Canada, respectively, to enter into
a definitive agreement with respect to a combined superior
proposal but only so long as:
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the requisite stockholder vote for us (in connection with the
merger) and the requisite shareholder vote for Trizec Canada (in
connection with the arrangement) have not been obtained;
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we, our operating company and Trizec Canada are not or have not
been, in breach of our obligations under the merger agreement
with regard to prohibitions on soliciting acquisition proposals
in any material respect;
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we and Trizec Canada have first given Parent at least three
business days notice that we intend to terminate the merger
agreement (attaching the most current version of the agreement
relating to such other proposal);
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during the three business days following the receipt by Parent
of the termination notice, (a) we have offered to negotiate
with, and if accepted, have negotiated in good faith with,
Parent to make adjustments to the terms and conditions of the
merger agreement to enable us to proceed with the merger and
(b) our board of directors or a special committee of our
board of directors has determined in good faith, after the end
of such three business day period, after considering the results
of such negotiations and any amendment to the merger agreement
entered into, or for which Parent has irrevocably covenanted to
enter into, that the Trizec superior proposal giving rise to
such notice continues to be a Trizec superior proposal;
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during the three business days following the receipt by Parent
of the termination notice, (a) Trizec Canada has offered to
negotiate with, and if accepted, has negotiated in good faith
with, Parent to make adjustments to the terms and conditions of
the merger agreement to enable Trizec Canada to proceed with the
arrangement, and (b) Trizec Canadas board of
directors has determined in good faith, after the end of such
three business day period, after considering the results of such
negotiations and any amendment to the merger agreement entered
into, or for which Parent has irrevocably covenanted to enter
into, that the Trizec Canada superior proposal giving rise to
such notice continues to be a Trizec Canada superior
proposal; and
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76
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we pay to Parent the termination fee and reasonable transaction
expenses in accordance with the merger agreement concurrently
with or prior to the termination of the merger agreement.
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Termination
Fee and Expenses
We and Trizec Canada have agreed to pay to Parent a termination
fee and to reimburse Parents transaction expenses up to a
maximum of $25.0 million if the merger agreement is
terminated under certain circumstances. Under the merger
agreement, there are three alternative termination fees:
(a) the Trizec termination fee, which is equal
to $71.3 million; (b) the Trizec Canada
termination fee, which is equal to $43.7 million; and
(c) the full termination fee, which is an
amount equal to the Trizec termination fee plus the Trizec
Canada termination fee, or $115.0 million.
Trizec
We will pay to Parent the full termination fee and the full
amount of its expenses (subject to the $25.0 million limit)
in the event that:
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we and Trizec Canada have terminated the merger agreement
because we and Trizec Canada enter into an agreement to
implement a combined superior proposal;
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Parent has terminated the merger agreement because our board of
directors or the special committee has withdrawn, modified or
amended its recommendation that stockholders vote to adopt the
merger agreement, publicly recommended or approved a Trizec
acquisition proposal, failed to recommend the rejection of a
tender offer or exchange offer relating to our common stock
within ten business days of its commencement or publicly
announced the intention to do any of the foregoing; or
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we, our operating company, Trizec Canada or Parent has
terminated the merger agreement because the requisite
stockholder vote to adopt the merger agreement upon a vote being
taken has not been obtained at a duly convened meeting, and
(a) at or prior to the later of the meeting of our
stockholders and the termination date, a Trizec acquisition
proposal has been made to us, or otherwise publicly announced,
and (b) concurrently with the termination or within
12 months following the termination we enter into a
contract with respect to or consummate any Trizec acquisition
proposal (with reference to 20% in the definition of
Trizec acquisition proposal above being deemed to be
references to 50%).
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We will also pay to Parent an amount equal to 62% of
Parents expenses, subject to certain limitations, if:
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Parent has terminated the merger agreement because (a) our
or our operating companys respective representations and
warranties are or become untrue or incorrect or (b) we or
our operating company breach any of our or our operating
companys respective covenants or agreements that would be
incapable of being satisfied by December 31, 2006.
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In addition, if and when we consummate a Trizec acquisition
proposal, if the merger agreement is terminated under the
circumstances described in the two bullets below and, within
12 months of the termination date, we enter into a contract
with respect to or consummate a Trizec acquisition proposal
(with reference to 20% in the definition of Trizec
acquisition proposal above being deemed to be references
to 50%), we will be required to pay to Parent an amount equal to
the Trizec termination fee plus the remaining 62% of
Parents expenses that are not paid by Trizec Canada under
such circumstances, subject to certain limitations.
Trizec
Canada
Trizec Canada will pay to Parent the Trizec Canada termination
fee and 38% of Parents expenses (subject to the
$25.0 million limit) in the event that:
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Parent has terminated the merger agreement because Trizec
Canadas board of directors has withdrawn, modified or
amended its recommendation that Trizec Canadas
shareholders vote to approve the arrangement, publicly
recommended or approved a Trizec Canada acquisition proposal,
failed to recommend the rejection of a tender offer or exchange
offer relating to the shares of Trizec Canada that constitutes a
Trizec Canada acquisition proposal within ten business days of
its commencement, or publicly announced the intention to do any
of the foregoing; or
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77
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we, Trizec Canada or Parent has terminated the merger agreement
because the requisite stockholder vote to approve the
arrangement upon a vote being taken has not been obtained and
(a) at or prior to later of the meeting of Trizec
Canadas shareholders or the termination date, a Trizec
Canada acquisition proposal has been made to Trizec Canada, or
otherwise publicly announced, and (b) concurrently with the
termination or within 12 months following the merger agreement
termination, Trizec Canada consummates any Trizec Canada
acquisition proposal (with reference to 20% in the definition of
Trizec Canada acquisition proposal being deemed to
be references to 50%).
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Trizec Canada will pay to Parent an amount equal to 38% of
Parents expenses, subject to certain limitations, if:
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Parent has terminated the merger agreement because
(a) Trizec Canadas representations and warranties are
or become untrue or incorrect or (b) Trizec Canada breaches
any of its covenants or agreements that would be incapable of
being satisfied by December 31, 2006.
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Parent
If we, our operating company and Trizec Canada are not in
material breach of each of our respective obligations under the
merger agreement, Parent will pay us and Trizec Canada all
reasonable
out-of-pocket
costs and expenses up to an aggregate maximum of
$15.5 million and $9.5 million, respectively, if the
Merger Agreement is terminated by us or Trizec Canada because
either (a) any of the representations and warranties of
Parent, MergerCo or AcquisitionCo is or becomes untrue or
incorrect or (b) Parent, MergerCo or AcquisitionCo breaches
any of its respective covenants or agreements that would be
incapable of being satisfied by December 31, 2006.
The parties also have agreed that in the event that either of
them fails to pay the termination fee or any termination
expenses when due, we, Trizec Canada or Parent, as the case may
be, will reimburse the other party for all reasonable costs and
expenses actually incurred or accrued by such party in
connection with the collection under and enforcement of relevant
provisions of the merger agreement.
Amendment
and Waiver
The merger agreement may be amended by mutual agreement of the
parties in writing, whether before or after our stockholders
have approved the merger agreement, provided that after any such
stockholder approval, no amendment shall be made which, by law
or the rules of the New York Stock Exchange, requires further
stockholder approval without first obtaining such stockholder
approval. The merger agreement also provides that, at any time
prior to the merger effective time, we, our operating company
and Trizec Canada, on the one hand, and the Buyer Parties, on
the other hand, may extend the time for the performance of any
obligations of the other party, waive any inaccuracy in the
representations and warranties of the other party or waive
compliance with any agreement or condition to its obligations
contained in the merger agreement.
78
ADJOURNMENTS
AND POSTPONEMENTS OF THE SPECIAL MEETING
Proposal
for Adjournments
Under our bylaws, the presiding officer of the special meeting
may adjourn the special meeting without the approval of our
common stockholders under certain circumstances, including if
there is no quorum present for the adoption of the merger
agreement, our board of directors determines that adjournment is
necessary or appropriate to enable our common stockholders to
consider fully information that our board of directors
determines has not been made sufficiently or timely available to
our common stockholders, or our board of directors determines
that adjournment is otherwise in our best interests.
Notwithstanding this provision in our bylaws, we are asking our
common stockholders to vote on a proposal to approve any
adjournments of the special meeting for the purpose of
soliciting additional proxies if there are not sufficient votes
at the special meeting to adopt the merger agreement. As a
result, we will not adjourn the special meeting for the purpose
of soliciting additional proxies without having obtained the
requisite approval by our common stockholders for the proposal
to approve any adjournments of the special meeting.
Our board of directors recommends that you vote
FOR the approval of any adjournments of the special
meeting for the purpose of soliciting additional proxies.
Postponements
of the Special Meeting
At any time prior to convening the special meeting, our board of
directors may postpone the special meeting for any reason
without the approval of our stockholders. If postponed, as
required by law, we will provide at least ten days notice
of the new meeting date.
79
MARKET
PRICE OF OUR COMMON STOCK
Our common stock is traded on the New York Stock Exchange under
the symbol TRZ. As of , 2006, there
were stockholders of record. The following
table sets forth the high and low sale prices of our common
stock as reported on the New York Stock Exchange Composite Tape
(rounded to the nearest cent) and the dividends paid per share
of our common stock for each quarterly period for the past two
years and for the first, second and third quarterly periods
(through July , 2006) of the
fiscal year ending December 31, 2006.
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Market Price Range
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High
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Low
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Dividend
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Fiscal Year Ending
December 31, 2006:
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Third Quarter (through
July 7, 2006)
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$
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28.73
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$
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28.60
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$
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Second Quarter
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$
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28.77
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$
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22.34
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$
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0.20
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(1)
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First Quarter
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26.39
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22.62
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0.20
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Fiscal Year Ended
December 31, 2005:
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Fourth Quarter
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$
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23.50
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$
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20.45
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$
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0.20
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Third Quarter
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23.75
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20.40
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0.20
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Second Quarter
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20.61
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18.65
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0.20
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First Quarter
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19.85
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17.26
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0.20
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Full Year
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23.75
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17.26
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0.80
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Fiscal Year Ended
December 31, 2004:
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Fourth Quarter
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$
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19.05
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$
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15.75
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$
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0.20
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Third Quarter
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17.55
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15.80
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0.20
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Second Quarter
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17.38
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13.50
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0.20
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First Quarter
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17.15
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14.98
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0.20
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Full Year
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19.05
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13.50
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0.80
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(1) |
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The second quarter dividend was declared on June 13, 2006
and is payable on July 17, 2006 to our common stockholders
of record as of close of business on June 30, 2006. |
On June 2, 2006, the last trading day prior to the date of
the public announcement of our entering into the merger
agreement, the closing price of our common stock on the New York
Stock Exchange was $24.60 per share. On ,
2006, the last trading day before the date of this proxy
statement, the closing price of our common stock on the New York
Stock Exchange was $ per share. You
are encouraged to obtain current market quotations for our
common stock.
Under the merger agreement, we are permitted to declare and pay
to our common stockholders prior to the merger effective time
regular quarterly dividends of up to $0.20 per share of our
common stock.
80
SECURITIES
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the
beneficial ownership of shares of our common stock as of
July 5, 2006 for:
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each person known by us to be the beneficial owner of more than
5% of the outstanding shares of our common stock;
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each of our current directors;
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each of our Chief Executive Officer and our four other most
highly compensated executive officers; and
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all of our directors and executive officers as a group.
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For purposes of the following table, the number of shares of our
common stock that is beneficially owned by each of the persons
named below represents the aggregate of (a) shares of our
common stock such person holds, (b) deferred compensation
rights payable to such person in shares of our common stock
within 60 days of July 5, 2006, and (c) shares of
our common stock that may be issued to such person upon exercise
of options or warrants that are exercisable through
September 3, 2006, the 60th day from July 5,
2006. The extent to which a person holds shares of our common
stock, deferred compensation rights payable in shares of our
common stock and options or warrants to purchase our common
stock is set forth in the footnotes. As of July 5, 2006,
the number of shares of our common stock deemed outstanding was
157,388,162. Except as otherwise noted, the persons or entities
in this table have sole voting and investment power with respect
to all of the shares of common stock beneficially owned by them,
subject to community property laws, where applicable.
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Number of Shares
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Percent
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Beneficial Owner
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Beneficially Owned
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of All Shares(1)
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More than 5% Beneficial
Owner
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Peter Munk
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61,169,921
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(2)(3)
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38.6
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%
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c/o Trizec Canada
BCE Place, 181 Bay Street
Suite 3820, Box 800
Toronto, ON M5J 2T3
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Trizec Canada
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60,819,921
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(2)(4)
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38.4
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%
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BCE Place, 181 Bay Street
Suite 3820, Box 800
Toronto, ON M5J 2T3
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FMR Corp.
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12,569,150
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(5)
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8.0
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%
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82 Devonshire Street
Boston, MA 02109
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Barclays Global Investors, NA
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9,443,102
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(6)
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6.0
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%
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45 Fremont Street
San Francisco, CA 94105
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Directors
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Peter Munk
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61,169,921
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(2)(3)
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38.6
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%
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Timothy H. Callahan
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1,542,220
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(7)
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1.0
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%
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L. Jay Cross
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8,582
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(8)
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*
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Brian Mulroney
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49,475
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(9)
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*
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James J. OConnor
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11,688
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(10)
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*
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Glenn J. Rufrano
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68,795
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(11)
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*
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Richard M. Thomson
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(12)
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*
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Polyvios C. Vintiadis
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25,320
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(13)
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*
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81
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Number of Shares
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Percent
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Beneficial Owner
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Beneficially Owned
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of All Shares(1)
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Executive Officers
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Michael C. Colleran
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45,000
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(14)
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*
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Brian K. Lipson
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8,693
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*
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William R.C. Tresham
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307,701
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(15)
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*
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Ted R. Jadwin
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38,149
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(16)
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*
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Directors and executive officers
as a group (12 individuals)
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63,275,544
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(17)
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39.4
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%
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* |
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Represents less than one percent. |
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(1) |
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For the purpose of calculating the percentage of class of voting
stock held by a person, shares of our common stock outstanding
as of July 5, 2006, together with shares of our common
stock that may be issued only to such person upon exercise of
options or warrants that are exercisable within 60 days
from July 5, 2006 and upon settlement of deferred
compensation rights payable in shares of our common stock within
60 days of July 5, 2006, are deemed outstanding, and
no other shares of our common stock that may be issued to any
other person upon exercise of options or warrants that are
exercisable within 60 days from July 5, 2006 or upon
settlement of deferred compensation rights payable in shares of
our common stock within 60 days of July 5, 2006 are
deemed outstanding. |
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(2) |
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Because Mr. Munks beneficial ownership of Trizec
Canadas multiple voting shares gives him voting control
over Trizec Canada, beneficial ownership of shares of our common
stock that are beneficially owned by Trizec Canada, directly or
indirectly, is attributable to Mr. Munk pursuant to
Rule 13d-3
under the Exchange Act. |
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(3) |
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According to a Schedule 13D/A filed by Mr. Munk, he
beneficially owns with shared voting power and shared
dispositive power 60,819,921 shares of our common stock
that are also beneficially owned by Trizec Canada, and with sole
voting power and sole dispositive power 350,000 shares of
our common stock, which amounts include warrants to purchase
1,247,542 shares of our common stock that are currently
exercisable and held by Trizec Canada
and/or
Mr. Munk. |
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(4) |
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According to a Schedule 13D/A filed by Trizec Canada, it
beneficially owns with shared voting power and shared
dispositive power 60,819,921 shares of our common stock,
which amount includes warrants to purchase 897,542 shares
of our common stock that are currently exercisable. |
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(5) |
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According to a Schedule 13G/A filed by FMR Corp., or
FMR, and Edward C. Johnson III, Chairman of
FMR, with the SEC, (A) FMR has sole dispositive power with
respect to 12,469,050 of the listed shares and sole voting power
with respect to 914,100 of the listed shares, (B) Edward C.
Johnson III has sole dispositive power over 12,469,050 of the
listed shares and sole voting power with respect to 914,100 of
the listed shares and (C) these shares represented
(i) 11,554,950 shares beneficially owned by Fidelity
Management & Research Company, or Fidelity,
a wholly owned subsidiary of FMR, as a result of acting as
investment advisor to various investment companies, or
Funds, (ii) 914,100 shares beneficially
owned by Fidelity Management Trust Company, a wholly owned
subsidiary of FMR, as a result of its serving as investment
manager of certain institutional accounts and
(iii) 100,100 shares beneficially owned by Fidelity
International Limited, or FIL, a Bermuda joint stock
company of which a partnership controlled predominantly by
Mr. Johnson and his family members owns shares with the
right to cast approximately 38% of the total votes that may be
cast by all holders of FIL voting stock. The voting power with
respect to the 11,554,950 shares beneficially owned by
Fidelity is held by the Funds Boards of Trustees.
Mr. Johnson and FMR each has sole dispositive power and
sole voting power over the 914,100 shares beneficially
owned by Fidelity Management Trust Company. |
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(6) |
|
According to a Schedule 13G filed by Barclays Global
Investors, N.A., Barclays Global Fund Advisors, Barclays
Global Investors, Ltd. and Barclays Global Investors Japan Trust
and Banking Company Limited, the reporting entities, taken as a
whole, had sole voting and sole dispositive power as to
8,984,498 shares and 9,443,102 shares, respectively,
and did not have shared power as to any shares. According to the
Schedule 13G, (i) Barclays Global Investors, NA has
sole voting power with respect to 7,768,906 of the shares and
sole dispositive power with respect to 8,213,154 of the shares;
(ii) Barclays Global Fund Advisors has sole voting and
dispositive power with respect to 650,633 of the shares; |
82
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(iii) Barclays Global Investors, Ltd has sole voting power
with respect to 564,959 of the shares and sole dispositive power
with respect to 579,315 of the shares. In the Schedule 13G,
the reporting entities do not affirm the existence of a group. |
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(7) |
|
Includes beneficial ownership of 1,500,000 shares,
representing options exercisable for 1,500,000 shares that
may be acquired within 60 days of July 5, 2006. Also
includes 34,797 shares held by a trust for the benefit of
Mr. Callahan, for which Mr. Callahan serves as
trustee. Does not include 158,532 shares of common stock
underlying restricted stock rights that have vested or will vest
within 60 days of July 5, 2006, but for which receipt
has been deferred under the Trizec Properties, Inc. Deferred
Compensation Plan such that Mr. Callahan could not receive
such shares of common stock within 60 days of July 5,
2006 by terminating service with Trizec. |
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(8) |
|
Includes 8,582 shares of common stock underlying deferred
compensation rights credited to the account of Mr. Cross
under the Trizec Properties, Inc. Non-Employee Directors
Deferred Compensation Plan. The deferred compensation rights are
payable solely in shares of our common stock, for which receipt
has been deferred such that Mr. Cross could receive the
shares within 60 days of July 5, 2006 by terminating
service with Trizec. |
|
(9) |
|
Includes beneficial ownership of 49,475 shares,
representing options exercisable for 43,225 shares and
warrants exercisable for 6,250 shares that may be acquired
within 60 days of July 5, 2006. Due to restrictions in
our certificate of incorporation that prohibit
non-qualifying U.S. persons from holding shares of
our common stock, Mr. Mulroney, as a Canadian resident,
must immediately sell any shares that he acquires upon exercise
of such options and warrants. This number does not include
10,137 deferred compensation rights credited to the account of
Mr. Mulroney under the Trizec Properties, Inc. Non-Employee
Directors Deferred Compensation Plan that are payable to
Mr. Mulroney solely in cash, based on the share price of
our common stock on the date of payment, in lieu of shares of
our common stock. |
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(10) |
|
Includes 4,469 shares of common stock underlying deferred
compensation rights credited to the account of
Mr. OConnor under the Trizec Properties, Inc.
Non-Employee Directors Deferred Compensation Plan. The deferred
compensation rights are payable solely in shares of our common
stock, for which receipt has been deferred such that
Mr. OConnor could receive the shares within
60 days of July 5, 2006 by terminating service with
Trizec. |
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(11) |
|
Includes beneficial ownership of 49,475 shares,
representing options exercisable for 43,225 shares and
warrants exercisable for 6,250 shares that may be acquired
within 60 days of July 5, 2006. Also includes
1,000 shares of common stock held in trust for
Mr. Rufranos son, for which Mr. Rufrano serves as
trustee, and 1,000 shares of common stock held in trust for
his daughter, for which Mr. Rufrano serves as trustee. This
number also includes 7,320 shares of common stock
underlying deferred compensation rights credited to the account
of Mr. Rufrano under the Trizec Properties, Inc.
Non-Employee Directors Deferred Compensation Plan. The deferred
compensation rights are payable solely in shares of our common
stock, for which receipt has been deferred such that
Mr. Rufrano could receive the shares within 60 days of
July 5, 2006 by terminating service with Trizec. |
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(12) |
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Does not include 11,064 deferred compensation rights credited to
the account of Mr. Thomson under the Trizec Properties,
Inc. Non-Employee Directors Deferred Compensation Plan that, due
to restrictions in our certificate of incorporation that
prohibit non-qualifying U.S. persons from
holding shares of our common stock, are payable to
Mr. Thomson, a Canadian resident, solely in cash, based on
the share price of our common stock on the date of payment, in
lieu of shares of our common stock. |
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(13) |
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Includes 7,320 shares of common stock underlying deferred
compensation rights credited to the account of
Mr. Vintiadis under the Trizec Properties, Inc.
Non-Employee Directors Deferred Compensation Plan. The deferred
compensation rights are payable solely in shares of our common
stock, for which receipt has been deferred such that
Mr. Vintiadis could receive the shares within 60 days
of July 5, 2006 by terminating service with Trizec. |
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(14) |
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Includes beneficial ownership of 45,000 shares,
representing options exercisable for 45,000 shares of our
common stock that may be acquired within 60 days of
July 5, 2006. It does not include 37,058 shares of
common stock underlying restricted stock rights that have vested
or will vest within 60 days of July 5, 2006, but for
which receipt has been deferred under the Trizec Properties,
Inc. Deferred Compensation |
83
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Plan such that Mr. Colleran could not receive such shares
of common stock within 60 days of July 5, 2006 by
terminating service with Trizec. |
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(15) |
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Includes beneficial ownership of 221,458 shares,
representing options exercisable for 221,458 shares of our
common stock that may be acquired within 60 days of
July 5, 2006. It does not include 37,935 shares of
common stock underlying restricted stock rights that have vested
or will vest within 60 days of July 5, 2006, but for
which receipt has been deferred under the Trizec Properties,
Inc. Deferred Compensation Plan such that Mr. Tresham could
not receive such shares of common stock within 60 days of
July 5, 2006 by terminating service with Trizec. |
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(16) |
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Includes beneficial ownership of 8,333 shares, representing
options exercisable for 8,333 shares of our common stock
that may be acquired within 60 days of July 5, 2006.
It does not include 16,307 shares of common stock
underlying restricted stock rights that have vested or will vest
within 60 days of July 5, 2006, but for which receipt
has been deferred under the Trizec Properties, Inc. Deferred
Compensation Plan such that Mr. Jadwin could not receive
such shares of common stock within 60 days of July 5,
2006 by terminating service with Trizec. |
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(17) |
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The amount of shares beneficially owned by all directors and
executive officers as a group includes options exercisable for
1,861,241 shares of our common stock, warrants exercisable
for 1,260,042 shares of our common stock and
27,691 shares of common stock underlying deferred
compensation rights, as further described in the other notes to
this table. |
84
DISSENTERS
RIGHTS OF APPRAISAL
Under the Delaware General Corporation Law, or DGCL,
you have the right to dissent from the merger and to receive
payment in cash for the fair value of your shares of our common
stock as determined by the Delaware Court of Chancery, or the
Chancery Court, together with a fair rate of
interest, if any, as determined by the Chancery Court, in lieu
of the consideration you would otherwise be entitled to pursuant
to the merger agreement. These rights are known as appraisal
rights. Trizec stockholders electing to exercise appraisal
rights must comply with the provisions of Section 262, of
the DGCL or Section 262, the full text of which
appears in Annex C to this proxy statement, in order
to perfect their rights. We will require strict compliance with
the Delaware statutory procedures.
The following is intended as a brief summary of the material
provisions of the Delaware statutory procedures required to be
followed by a stockholder in order to dissent from the merger
and to perfect appraisal rights. This summary, however, is not a
complete statement of all applicable requirements and is
qualified in its entirety by reference to Section 262.
Failure to precisely follow any of the statutory procedures set
forth in Section 262 may result in a termination or waiver
of your appraisal rights.
Section 262 requires that stockholders be notified that
appraisal rights will be available not less than 20 days
before the stockholders meeting to vote on the merger. A
copy of Section 262 must be included with such notice. This
proxy statement constitutes Trizecs notice to its
stockholders of the availability of appraisal rights in
connection with the merger in compliance with the requirements
of Section 262. If you wish to consider exercising your
appraisal rights, you should carefully review the text of
Section 262 contained in Annex C since failure
to timely and properly comply with the requirements of
Section 262 will result in the loss of your appraisal
rights under Delaware law.
If you elect to demand appraisal of your shares, you must
satisfy each of the following conditions:
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You must deliver to Trizec a written demand for appraisal of
your shares before the vote with respect to the merger is taken.
This written demand for appraisal must be in addition to and
separate from any proxy or vote abstaining from or voting
against the adoption of the merger agreement. Voting against or
failing to vote for the adoption of the merger agreement by
itself does not constitute a demand for appraisal within the
meaning of Section 262.
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You must not vote in favor of the adoption of the merger
agreement. A vote in favor of the adoption of the merger
agreement, by proxy, by Internet, by telephone or in person,
will constitute a waiver of your appraisal rights in respect of
the shares so voted and will nullify any previously filed
written demands for appraisal. A proxy card which is signed and
does not contain voting instructions will, unless revoked, be
voted FOR the adoption of the merger agreement and
will nullify any previous written demand for appraisal.
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If you fail to comply with either of these conditions and the
merger is completed, you will be entitled to receive the cash
payment for your shares of Trizec common stock as provided for
in the merger agreement, but you will have no appraisal rights
with respect to your shares of Trizec common stock.
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All demands for appraisal should be addressed to Trizec
Properties, Inc., 10 South Riverside Plaza, Suite 1100,
Chicago, Illinois 60606, Attention: Corporate Secretary, and
must be delivered before the vote on the merger agreement is
taken at the special meeting, and should be executed by, or on
behalf of, the record holder of the shares of Trizec common
stock. The demand must reasonably inform Trizec of the identity
of the stockholder and the intention of the stockholder to
demand appraisal of such stockholders shares.
To be effective, a demand for appraisal by a holder of
Trizecs common stock must be made by, or in the name of,
such registered stockholder, fully and correctly, as the
stockholders name appears on the stock certificate(s).
Beneficial owners who are not record holders may not directly
make appraisal demands to Trizec. The beneficial holder must, in
such cases, have the registered owner, such as a broker, bank or
other nominee or other nominee, submit the required demand in
respect of those shares. If shares are owned of record in a
fiduciary capacity, such as by a trustee, guardian or custodian,
execution of a demand for appraisal should be made by or for the
fiduciary; and if the shares are owned of record by more than
one person, as in a joint tenancy or tenancy in common, the
demand should be executed by or for all joint owners. An
authorized agent, including an authorized agent for two or more
joint owners, may execute the demand for appraisal for a
85
stockholder of record; however, the agent must identify the
record owner or owners and expressly disclose the fact that, in
executing the demand, he or she is acting as agent for the
record owner. A record owner, such as a broker, who holds shares
as a nominee for others, may exercise his or her right of
appraisal with respect to the shares held for one or more
beneficial owners, while not exercising this right for other
beneficial owners. In that case, the written demand should state
the number of shares as to which appraisal is sought. Where no
number of shares is expressly mentioned, the demand will be
presumed to cover all shares held in the name of the record
owner.
If you hold your shares of Trizec common stock in a brokerage
account or in other nominee form and you wish to exercise
appraisal rights, you should consult with your broker, bank or
other nominee to determine the appropriate procedures for the
making of a demand for appraisal by the nominee.
Within ten days after the merger effective time, the surviving
corporation must give written notice that the merger has become
effective to each Trizec stockholder who has properly filed a
written demand for appraisal and who did not vote in favor of
the merger agreement. At any time within 60 days after the
effective time, any stockholder who has demanded an appraisal
has the right to withdraw the demand and to accept the cash
payment specified by the merger agreement for his or her shares
of Trizec common stock. Within 120 days after the effective
date of the merger, the surviving corporation or any stockholder
who has complied with Section 262 shall, upon written
request to the surviving corporation, be entitled to receive a
written statement setting forth the aggregate number of shares
not voted in favor of the merger agreement and with respect to
which demands for appraisal rights have been received and the
aggregate number of holders of such shares. Within 120 days
after the effective time, either the surviving corporation or
any stockholder who has complied with the requirements of
Section 262 may file a petition in the Chancery Court
demanding a determination of the fair value of the shares held
by all stockholders entitled to appraisal. Upon the filing of
the petition by a stockholder, service of a copy of such
petition shall be made upon the surviving corporation. The
surviving corporation has no obligation to file such a petition
in the event there are dissenting stockholders. Accordingly, the
failure of a stockholder to file such a petition within the
period specified could nullify the stockholders previously
written demand for appraisal.
If a petition for appraisal is duly filed by a stockholder and a
copy of the petition is delivered to the surviving corporation,
the surviving corporation will then be obligated, within
20 days after receiving service of a copy of the petition,
to provide the Chancery Court with a duly verified list
containing the names and addresses of all stockholders who have
demanded an appraisal of their shares and with whom agreements
as to the value of their shares have not been reached by the
surviving corporation. After notice to dissenting stockholders
who demanded appraisal of their shares, the Chancery Court is
empowered to conduct a hearing upon the petition, and to
determine those stockholders who have complied with
Section 262 and who have become entitled to the appraisal
rights provided thereby. The Chancery Court may require the
stockholders who have demanded payment for their shares to
submit their stock certificates to the Register in the Chancery
Court for notation thereon of the pendency of the appraisal
proceedings, and if any stockholder fails to comply with that
direction, the Chancery Court may dismiss the proceedings as to
that stockholder.
After determination of the stockholders entitled to appraisal of
their shares of Trizec common stock, the Chancery Court will
appraise the shares, determining their fair value exclusive of
any element of value arising from the accomplishment or
expectation of the merger, together with a fair rate of
interest, if any. When the value is determined, the Chancery
Court will direct the payment of such value, with interest
thereon accrued during the pendency of the proceeding, if the
Chancery Court so determines, to the stockholders entitled to
receive the same, upon surrender by such holders of the
certificates representing those shares.
In determining fair value, the Chancery Court is required to
take into account all relevant factors. You should be aware that
the fair value of your shares as determined under
Section 262 could be more, the same or less than the value
that you are entitled to receive under the terms of the merger
agreement.
Costs of the appraisal proceeding may be imposed upon the
surviving corporation and the stockholders participating in the
appraisal proceeding by the Chancery Court as the Chancery Court
deems equitable in the circumstances. Upon the application of a
stockholder, the Chancery Court may order all or a portion of
the expenses incurred by any stockholder in connection with the
appraisal proceeding, including, without limitation, reasonable
attorneys fees and the fees and expenses of experts, to be
charged pro rata against the
86
value of all shares entitled to appraisal. Any stockholder who
had demanded appraisal rights will not, after the merger
effective time, be entitled to vote shares subject to that
demand for any purpose or to receive payments of dividends or
any other distribution with respect to those shares, other than
with respect to payment as of a record date prior to the
effective time; however, if no petition for appraisal is filed
within 120 days after the merger effective time, or if the
stockholder delivers a written withdrawal of his or her demand
for appraisal and an acceptance of the terms of the merger
within 60 days after the merger effective time, then the
right of that stockholder to appraisal will cease and that
stockholder will be entitled to receive the cash payment for
shares of our common stock held by such stockholder pursuant to
the merger agreement. Any withdrawal of a demand for appraisal
made more than 60 days after the merger effective time may
only be made with the written approval of the surviving
corporation and must, to be effective, be made within
120 days after the effective time.
Failure to comply with all of the procedures set forth in
Section 262 will result in the loss of a stockholders
statutory appraisal rights. In view of the complexity of
Section 262, Trizec stockholders who may wish to dissent
from the merger and pursue appraisal rights should consult their
legal advisors.
87
SUBMISSION
OF STOCKHOLDER PROPOSALS
We intend to hold an annual meeting in 2007 only if the mergers
are not completed. Proposals of stockholders pursuant to
Rule 14a-8
of the Exchange Act that are intended to be presented at the
2007 annual meeting of stockholders, if such meeting is held,
must be received by us at our executive offices in Chicago,
Illinois, on or before December 11, 2006 to be eligible for
inclusion in our proxy statement and form of proxy relating to
that meeting and to be introduced for action at the meeting. In
accordance with our bylaws, for business to be properly brought
before a meeting, but not included in the proxy statement
pursuant to
Rule 14a-8
of the Exchange Act, a stockholder must submit a proposal,
including nominations for the board of directors, not earlier
than January 18, 2007 and not later than March 4, 2007.
OTHER
MATTERS
We currently know of no other business that will be presented
for consideration at the special meeting. Nevertheless, the
enclosed proxy card confers discretionary authority to vote with
respect to matters described in
Rule 14a-4(c)
under the Exchange Act, including matters that our board of
directors does not know of at this time, if such matters are
presented within a reasonable time before proxy solicitation. If
any of these matters are presented at the special meeting, then
the proxy agents named in the enclosed proxy card will have
discretionary authority to vote the shares represented by duly
executed proxies in accordance with their discretion and
judgment.
WHERE YOU
CAN FIND MORE INFORMATION
We file certain reports and information with the SEC under the
Exchange Act, including annual, quarterly and current reports
and proxy statements. You may obtain copies of this information
in person or by mail from the public reference room at the SEC,
100 F Street, N.E., Room 1580, Washington, D.C. 20549,
at prescribed rates. You may obtain information on the operation
of the public reference room by calling the SEC at
(800) SEC-0330 or
(202) 942-8090.
The SEC also maintains an Internet website that contains
reports, proxy statements and other information about issuers
like Trizec, which file electronically with the SEC. The address
of that site is http://www.sec.gov. The information contained on
the SECs website is expressly not incorporated by
reference into this proxy statement. Our public filings are also
available on our website at www.trz.com under Investor
Relations SEC Filings.
Reports, proxy statements or other information concerning us may
also be inspected at the offices of the New York Stock Exchange
at:
20 Broad Street
New York, New York 10005
Any person, including any beneficial owner, to whom this proxy
statement is delivered may request copies of reports, proxy
statements or other information concerning us, without charge,
by written or telephonic request directed to us at Investor
Relations, Trizec Properties, Inc., 10 South Riverside Plaza,
Suite 1100, Chicago, Illinois 60606. If you would like to
request documents, please do so by , 2006, in
order to receive them before the special meeting.
We are incorporating by reference information into this proxy
statement, meaning that we are disclosing important information
to you by referring you to another document filed separately
with the SEC. The information incorporated by reference is
considered to be part of this proxy statement, except to the
extent that the information is superseded by information in this
proxy statement.
The following documents contain important information about us
and our financial condition and operating results, and are
hereby incorporated by reference:
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Annual Report on
Form 10-K
for the year ended December 31, 2005, filed with the SEC on
March 14, 2006;
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Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2006, filed with the SEC on
May 5, 2006; and
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Current Reports on
Form 8-K
dated February 6, 2006, March 1, 2006, March 24,
2006, May 2, 2006, June 5, 2006, June 4, 2006 and
June 16, 2006, as filed with the SEC on February 10,
2006, March 7, 2006, March 24, 2006, May 4, 2006,
June 5, 2006, June 8, 2006 and June 16, 2006,
respectively.
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We also incorporate by reference any documents filed by us
pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act after the date of this proxy statement and prior to
the date of the special meeting. The information contained in
any of these documents will be considered part of this proxy
statement from the date these documents are filed.
No persons have been authorized to give any information or to
make any representations other than those contained in this
proxy statement and, if given or made, such information or
representations must not be relied upon as having been
authorized by us or any other person. This proxy statement is
dated , 2006. You should not assume that the
information contained in this proxy statement is accurate as of
any date other than that date, and the mailing of this proxy
statement to stockholders shall not create any implication to
the contrary.
89
Annex A
AGREEMENT
AND PLAN OF MERGER
AND
ARRANGEMENT AGREEMENT
Among
TRIZEC PROPERTIES, INC.
TRIZEC HOLDINGS OPERATING LLC,
TRIZEC CANADA INC.,
GRACE HOLDINGS LLC,
GRACE ACQUISITION CORPORATION
GRACE OP LLC
and
4162862 CANADA LIMITED
Dated as of June 5, 2006
TABLE OF
CONTENTS
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Page
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ARTICLE I
DEFINITIONS
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A-2
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Section 1.01.
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Definitions. For purposes of this
Agreement:
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A-2
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Section 1.02.
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Interpretation and Rules of
Construction
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A-11
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ARTICLE II THE MERGERS AND
THE ARRANGEMENT
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A-12
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Section 2.01.
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Mergers and Arrangement
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A-12
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Section 2.02.
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Charter and Bylaws; Limited
Liability Company Agreement
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A-13
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Section 2.03.
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Effective Times of the Mergers and
Arrangement
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A-13
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Section 2.04.
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Closing
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A-13
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Section 2.05.
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Directors and Officers of the
Surviving Corporation
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A-14
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Section 2.06.
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Operating Company Matters
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A-14
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Section 2.07.
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Other Transactions
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A-14
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ARTICLE III EFFECTS OF THE
MERGER AND THE ARRANGEMENT
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A-15
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Section 3.01.
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Effects of the Trizec Merger on
Trizec Securities
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A-15
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Section 3.02.
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Effects of the Trizec Merger on
MergerCo Securities
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A-17
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Section 3.03.
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Effects on Operating Company
Securities
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A-17
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Section 3.04.
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Effects of the Arrangement
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A-18
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Section 3.05.
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Surrender of Trizec Shares; Stock
Transfer Books
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A-18
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Section 3.06.
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Employee Stock Purchase Plan of
Trizec
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A-20
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Section 3.07.
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Termination of Trizecs DRIP
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A-20
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Section 3.08.
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Trizec Dissenting Shares
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A-20
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Section 3.09.
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Withholding Rights
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A-21
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ARTICLE IV REPRESENTATIONS
AND WARRANTIES OF THE TRIZEC PARTIES
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A-21
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Section 4.01.
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Organization and Qualification;
Subsidiaries; Authority
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A-21
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Section 4.02.
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Organizational Documents
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A-22
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Section 4.03.
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Capitalization
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A-22
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Section 4.04.
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Authority Relative to this
Agreement, Validity and Effect of Agreements
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A-23
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Section 4.05.
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No Conflict; Required Filings and
Consents
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A-24
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Section 4.06.
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Permits; Compliance with Laws
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A-24
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Section 4.07.
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SEC Filings; Financial Statements
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A-25
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Section 4.08.
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Absence of Certain Changes or
Events
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A-25
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Section 4.09.
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Absence of Litigation
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A-25
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Section 4.10.
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Employee Benefit Plans
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A-26
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Section 4.11.
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Labor Matters
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A-27
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Section 4.12.
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Information Supplied
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A-27
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Section 4.13.
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Property and Leases
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A-28
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Section 4.14.
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Intellectual Property
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A-29
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Section 4.15.
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Taxes
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A-30
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Section 4.16.
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Environmental Matters
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A-32
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Section 4.17.
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Material Contracts
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A-33
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Section 4.18.
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Insurance
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A-33
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Section 4.19.
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Interested Party Transactions
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A-34
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Section 4.20.
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Brokers
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A-34
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A-i
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Page
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Section 4.21.
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Opinion of Financial Advisor
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A-34
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Section 4.22.
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Investment Company Act of 1940
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A-34
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ARTICLE V REPRESENTATIONS
AND WARRANTIES OF TZ CANADA
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A-34
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Section 5.01.
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Organization and Qualification;
Subsidiaries; Authority
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A-34
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Section 5.02.
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Organizational Documents
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A-35
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Section 5.03.
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Capitalization
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A-35
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Section 5.04.
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Authority Relative to this
Agreement, Validity and Effect of Agreement
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A-36
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Section 5.05.
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No Conflict; Required Filings and
Consents
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A-36
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Section 5.06.
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Permits; Compliance with Law
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A-37
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Section 5.07.
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Securities Filings; Financial
Statements
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A-37
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Section 5.08.
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Absence of Certain Changes or
Events
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A-38
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Section 5.09.
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Absence of Litigation
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A-38
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Section 5.10.
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Employee Benefit Plans
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A-38
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Section 5.11.
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Labor Matters
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A-38
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Section 5.12.
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Information Supplied
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A-38
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Section 5.13.
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Ownership of Trizec Common Shares
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A-39
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Section 5.14.
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Intellectual Property
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A-39
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Section 5.15.
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Taxes
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A-39
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Section 5.16.
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Mutual Fund Status
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A-39
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Section 5.17.
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Environmental Matters
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A-40
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Section 5.18.
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Material Contracts
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A-40
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Section 5.19.
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Insurance
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A-41
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Section 5.20.
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Interested Party Transactions
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A-41
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Section 5.21.
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Brokers
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A-41
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Section 5.22.
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Opinion of Financial Advisor
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A-42
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ARTICLE VI REPRESENTATIONS
AND WARRANTIES OF THE BUYER PARTIES
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A-42
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Section 6.01.
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Organization
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A-42
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Section 6.02.
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Ownership of MergerCo and
AcquisitionCo; No Prior Activities
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A-42
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Section 6.03.
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Power and Authority
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A-42
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Section 6.04.
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No Conflict; Required Filings and
Consents
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A-42
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Section 6.05.
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Information Supplied
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A-43
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Section 6.06.
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Absence of Litigation
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A-43
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Section 6.07.
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Available Funds; Guaranty
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A-43
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Section 6.08.
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No Ownership of Trizec Capital
Stock
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A-44
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Section 6.09.
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Other Agreements or Understandings
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A-44
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Section 6.10.
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Brokers
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A-44
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ARTICLE VII CONDUCT OF
BUSINESS PENDING THE MERGERS AND ARRANGEMENT
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A-44
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Section 7.01.
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Conduct of Business by Trizec
Pending the Trizec Merger
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A-44
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Section 7.02.
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Sale of 1031 Assets
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A-48
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Section 7.03.
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Conduct of Business by TZ Canada
Pending the Arrangement
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A-48
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A-ii
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Page
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Section 7.04.
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Conduct of Business by Buyer
Parties Pending the Trizec Merger
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A-50
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Section 7.05.
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Advise of Changes
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A-50
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ARTICLE VIII ADDITIONAL
AGREEMENTS
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A-50
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Section 8.01.
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Trizec Proxy Statement; Other
Filings; Stockholders Meeting
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A-50
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Section 8.02.
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TZ Canada Circular
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A-52
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Section 8.03.
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Access to Information;
Confidentiality
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A-53
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Section 8.04.
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No Solicitation of Transactions by
Trizec Parties
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A-54
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Section 8.05.
|
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No Solicitation of Transactions by
TZ Canada
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A-55
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Section 8.06.
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Employee Benefits Matters
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A-56
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Section 8.07.
|
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Directors and Officers
Indemnification and Insurance of the Surviving Corporation
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A-58
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Section 8.08.
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Directors and Officers
Indemnification and Insurance of TZ Canada
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A-59
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Section 8.09.
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Financing; Cooperation with
Financing
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A-62
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Section 8.10.
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Tax Matters
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A-62
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Section 8.11.
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Further Action; Reasonable Efforts
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A-63
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Section 8.12.
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Transfer Taxes
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A-63
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Section 8.13.
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Trizec Indebtedness
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A-64
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Section 8.14.
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Public Announcements
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A-64
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Section 8.15.
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Operating Company Merger
|
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A-64
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ARTICLE IX CONDITIONS TO
THE MERGER
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A-64
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Section 9.01.
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Conditions to the Obligations of
Each Party
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A-64
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Section 9.02.
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Conditions to the Obligations of
Parent, MergerCo and AcquisitionCo
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A-65
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Section 9.03.
|
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Conditions to the Obligations of
the Trizec Parties and TZ Canada
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A-65
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ARTICLE X TERMINATION,
AMENDMENT AND WAIVER
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A-66
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Section 10.01.
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Termination
|
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A-66
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Section 10.02.
|
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Effect of Termination
|
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A-68
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Section 10.03.
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Fees and Expenses
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A-68
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Section 10.04.
|
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Escrow of Trizec Expenses
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A-70
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Section 10.05.
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Waiver
|
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A-71
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ARTICLE XI GENERAL
PROVISIONS
|
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A-71
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Section 11.01.
|
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Non-Survival of Representations
and Warranties
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A-71
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Section 11.02.
|
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Notices
|
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A-71
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Section 11.03.
|
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Severability
|
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A-72
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Section 11.04.
|
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Amendment
|
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A-72
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Section 11.05.
|
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Entire Agreement; Assignment
|
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A-73
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Section 11.06.
|
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Remedies
|
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A-73
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Section 11.07.
|
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Specific Performance
|
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A-73
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Section 11.08.
|
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Reserved
|
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A-
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Section 11.09.
|
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Parties in Interest
|
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A-73
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Section 11.10.
|
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Governing Law; Forum
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A-73
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Section 11.11.
|
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Waiver of Jury Trial
|
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A-74
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Section 11.12.
|
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Headings
|
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A-74
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A-iii
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Page
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Section 11.13.
|
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Counterparts
|
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A-74
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Section 11.14.
|
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Waiver
|
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A-74
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EXHIBITS
|
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Exhibit A
|
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Plan of Arrangement
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Exhibit B
|
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Knowledge of Trizec and the
Operating Company
|
Exhibit C
|
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Knowledge of Parent, MergerCo and
AcquisitionCo
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Exhibit D
|
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Knowledge of TZ Canada
|
Exhibit E
|
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Terms of Redeemable Preferred Units
|
Exhibit F
|
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Surviving Corporation Charter
|
Exhibit G
|
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Form of Guaranty
|
Exhibit H
|
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1031 Asset Dispositions
|
Exhibit I
|
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Form of Hogan & Hartson
L.L.P. Tax Opinion
|
A-iv
AGREEMENT
AND PLAN OF MERGER
AND
ARRANGEMENT AGREEMENT
THIS AGREEMENT AND PLAN OF MERGER AND ARRANGEMENT AGREEMENT,
dated as of June 5, 2006 (this
Agreement), is by and among Trizec
Properties, Inc., a Delaware corporation
(Trizec), Trizec Holdings Operating LLC, a
Delaware limited liability company (the Operating
Company, and together with Trizec, the Trizec
Parties), Trizec Canada Inc., a Canadian corporation
(TZ Canada), Grace Holdings LLC, a Delaware
limited liability company (Parent), Grace
Acquisition Corporation, a Delaware corporation and a
wholly-owned subsidiary of Parent (MergerCo),
4162862 Canada Limited, a Canadian corporation and an affiliate
of Parent (AcquisitionCo), and Grace OP LLC,
a Delaware limited liability company (Merger Operating
Company, and together with Parent, MergerCo and
AcquisitionCo, the Buyer Parties).
WHEREAS, the parties wish to effect a business combination
through a merger of MergerCo with and into Trizec (the
Trizec Merger) on the terms and subject to
the conditions set forth in this Agreement and in accordance
with Section 251 of the Delaware General Corporation Law
(the DGCL);
WHEREAS, the parties also wish to effect a merger of the Merger
Operating Company with and into the Operating Company (the
Operating Company Merger) on the terms and
subject to the conditions set forth in this Agreement and in
accordance with the applicable provisions of the Delaware
Limited Liability Company Act (the DLLCA);
WHEREAS, the parties also wish to effect an arrangement
involving TZ Canada pursuant to Section 192 of the Canada
Business Corporations Act (the CBCA)(the
Arrangement), on the terms and subject to the
conditions set forth in the Plan of Arrangement, substantially
in the form attached hereto as Exhibit A (the
Plan of Arrangement), subject to any
amendments or variations made thereto pursuant to, or by the
parties to, this Agreement or at the direction of the Superior
Court of Justice (Ontario)(the Court), pursuant to
which, subject to the provisions of this Agreement, among other
things, AcquisitionCo will acquire all of the outstanding shares
of TZ Canada.
WHEREAS, the board of directors of Trizec (the Trizec
Board), on the recommendation of a special committee
of the disinterested directors of the Trizec Board (the
Special Committee), and the boards of
directors of each of Parent and MergerCo deem it advisable and
in the best interests of their respective stockholders to
consummate the Trizec Merger on the terms and subject to the
conditions set forth in this Agreement, and each of the Trizec
Board and the boards of directors of Parent and MergerCo have
approved this Agreement and declared its advisability and, in
the case of the Trizec Board, recommended that this Agreement be
adopted by Trizecs stockholders;
WHEREAS, the board of directors of TZ Canada (the TZ
Canada Board) and the board of directors of
AcquisitionCo deem it advisable and in the best interests of
their respective companies (and in the case of TZ Canada, fair
to the TZ Canada Shareholders (as defined herein)) to consummate
the Arrangement on the terms and subject to the conditions set
forth in this Agreement and the Plan of Arrangement and have
approved this Agreement and the Arrangement and, in the case of
the TZ Canada Board, recommended that the Arrangement be
approved by the TZ Canada Shareholders;
WHEREAS, the Trizec Board, on behalf of Trizec, in its capacity
as the sole managing member of the Operating Company, has
approved this Agreement and deemed it advisable and in the best
interests of the Operating Company and the members of the
Operating Company for the Operating Company to enter into this
Agreement;
WHEREAS, concurrently herewith, Parent and TZ Canada are
entering into a support agreement, dated as of the date hereof,
providing that, among other things, TZ Canada will vote, or
cause to be voted, its Trizec Common Shares (as defined herein)
(including such shares held by its subsidiary Emerald Blue
Szolgálttó Korlátolt Felelõsségü
Társaság (TZ Hungary) in favor of
this Agreement, the Trizec Merger and the other transactions
contemplated by this Agreement; and
A-1
WHEREAS, concurrently herewith, Parent and P.M. Capital Inc., a
Canadian corporation incorporated under the laws of Ontario
(PMCI), have entered into a support
agreement, dated as of the date hereof, providing that, among
other things, PMCI will vote, or cause to be voted, its TZ
Canada Shares (as defined herein) in favor of the Arrangement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be
legally bound hereby, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. For
purposes of this Agreement:
Action means any claim, action, suit,
proceeding, arbitration, mediation or other investigation as to
which written notice has been provided to the applicable party.
Affiliate or
affiliate of a specified person means a
person who, directly or indirectly through one or more
intermediaries, controls, is controlled by, or is under common
control with, such specified person.
Acquisition Proposal means a Trizec
Acquisition Proposal or a TZ Canada Acquisition Proposal.
Articles of Arrangement means the
articles of arrangement of TZ Canada in respect of the
transactions contemplated by the Plan of Arrangement that are
required by the CBCA to be filed with the Director appointed
under the CBCA after the Final Order is made in order to effect
the transactions contemplated by the Plan of Arrangement.
beneficial owner or
beneficial ownership, with respect to any
Trizec Common Shares, has the meaning ascribed to such term
under
Rule 13d-3(a)
of the Exchange Act.
Business Day or business
day means any day on which the principal offices
of the SEC in Washington, D.C. and the principal offices of
the Ontario Securities Commission are open to accept filings and
on which banks are not required or authorized to close in either
New York, New York or Toronto, Ontario.
Canadian GAAP means generally accepted
accounting principles as applied in Canada.
Canadian Law means any Canadian
federal, provincial, municipal or local statute, law, ordinance,
regulation, rule, code, executive order, injunction, judgment,
decree or other order.
Canadian Securities Laws means the
securities laws of each Canadian province and the rules and
regulations promulgated in connection therewith.
Combined Superior Proposal means an
Acquisition Proposal that is both a Trizec Superior Proposal and
a TZ Canada Superior Proposal, where the amount by which such
Acquisition Proposal is more favorable than the Mergers and
Arrangement, respectively, is substantially equivalent.
control (including the terms
controlled by and under common
control with) means the possession, directly or
indirectly of the power to direct or cause the direction of the
management and policies of a person, whether through the
ownership of voting securities, as trustee or executor, by
contract or credit arrangement or otherwise.
CSA means the Canadian Securities
Administration.
Disclosure Schedule means,
collectively, the Trizec Disclosure Schedule, the TZ Canada
Disclosure Schedule and the Parent Disclosure Schedule.
DLLCA means the Delaware Limited
Liability Company Act, as amended.
A-2
Environmental Laws means any
applicable (A) Law in existence on or before the date
hereof relating to (i) releases or threatened releases of
Hazardous Substances; (ii) the manufacture, handling,
transport, use, treatment, storage or disposal of Hazardous
Substances; or (iii) pollution or protection of the
environment, health, safety or natural resources, and
(B) in the case of TZ Canada, Canadian Law in existence on
or before the date hereof relating to (i) releases or
threatened releases of Hazardous Substances; (ii) the
manufacture, handling, transport, use, treatment, storage or
disposal of Hazardous Substances; or (iii) pollution or
protection of the environment, health, safety or natural
resources.
Final Order means the final order of
the Court approving the transactions contemplated by the Plan of
Arrangement as such order may be amended by the Court at any
time prior to the Closing Date or, if appealed, then, unless
such appeal is withdrawn or denied, as affirmed or as amended on
appeal.
GAAP means generally accepted
accounting principles as applied in the United States.
Governmental Authority means
(i) any national, state, provincial, municipal or local
government, governmental, regulatory or administrative
authority, agency, instrumentality or commission, or
(ii) any court, tribunal, or judicial or arbitral body.
Hazardous Substances means
(A) (i) those substances defined in or regulated under
the following United States federal statutes and their state
counterparts, as each has been amended from time to time, and
all regulations thereunder in effect prior to the date hereof,
including the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response, Compensation and Liability
Act, the Clean Water Act, the Safe Drinking Water Act, the
Atomic Energy Act, and the Clean Air Act; (ii) petroleum
and petroleum products, including crude oil and any fractions
thereof; (iii) polychlorinated biphenyls, asbestos and
radon; and (iv) any other contaminant, substance, material
or waste regulated by any Governmental Authority pursuant to any
Environmental Law, and (B) in the case of TZ Canada,
(i) petroleum and petroleum products, including crude oil
and any fractions thereof; (ii) polychlorinated biphenyls,
asbestos and radon and (iii) any other contaminant,
substance, material or waste regulated by any Governmental
Authority pursuant to any Environmental Law.
Intellectual Property means
(i) United States, Canadian and international patents,
patent applications and invention registrations of any type,
(ii) trademarks, service marks, trade dress, logos, trade
names, domain names, corporate names and other source
identifiers, and registrations and applications for registration
thereof, (iii) copyrightable works, copyrights, and
registrations and applications for registration thereof, and
(iv) confidential and proprietary information, including
trade secrets and know-how.
Interim Order means the interim order
of the Court, as the same may be amended, in respect of the
transactions contemplated by the Plan of Arrangement, as
contemplated by this Agreement.
knowledge of Trizec and the Operating
Company means the actual knowledge of those
individuals listed on Exhibit B.
knowledge of Parent, MergerCo and
AcquisitionCo means the actual knowledge of those
individuals listed on Exhibit C.
knowledge of TZ Canada means the
actual knowledge of those individuals listed on
Exhibit D.
Law means any applicable national,
federal, state, provincial, municipal or local statute, law,
ordinance, regulation, rule, code, executive order, injunction,
judgment, decree or other order.
Liens means with respect to any asset
(including any security), any mortgage, claim, lien, pledge,
charge, security interest or encumbrance of any kind in respect
to such asset.
Material Adverse Effect means, with
respect to Trizec or TZ Canada, an effect, event, development or
change that, is materially adverse to the assets, business,
results of operations or financial condition of Trizec and the
Trizec Subsidiaries and TZ Canada and the TZ Canada
Subsidiaries, taken as a whole, other than any effect, event,
development or change arising out of or resulting from
(a) changes in conditions in the U.S., Canadian or global
economy or capital or financial markets generally, including
A-3
changes in interest or exchange rates, (b) changes in
general legal, tax, regulatory, political or business conditions
that, in each case, generally affect the geographic regions or
industries in which Trizec, the Trizec Subsidiaries, the Trizec
JV Entities, TZ Canada and the TZ Canada Subsidiaries
(collectively, the Group) conduct their respective
businesses (unless, and only to the extent, such effect, event,
development or change affects such entity or entities in a
materially disproportionate manner as compared to other persons
or participants in the industries in which such entity or
entities conduct their business and that operate in the
geographic regions affected by such effect, event, development
or change), (c) changes in GAAP or Canadian GAAP,
(d) the negotiation, execution, announcement or performance
of this Agreement or the transactions contemplated hereby or the
consummation of the transactions contemplated by this Agreement,
including the impact thereof on relationships, contractual or
otherwise, with tenants, suppliers, vendors, lenders, investors,
venture partners or employees, (e) acts of war, armed
hostilities, sabotage or terrorism, or any escalation or
worsening of any such acts of war, armed hostilities, sabotage
or terrorism threatened or underway as of the date of this
Agreement (unless, and only to the extent, such effect, event,
development or change affects any of the entity or entities in
the Group in a materially disproportionate manner as compared to
other persons or participants in the industries in which such
entity or entities conduct their business and that operate in
the geographic regions affected by such effect, event,
development or change), (f) earthquakes, hurricanes,
floods, or other natural disasters (unless, and only to the
extent, such effect, event, development or change affects any of
the entity or entities in the Group in a materially
disproportionate manner as compared to other persons or
participants in the industries in which such entity or entities
conduct their business and that operate in the geographic
regions affected by such effect, event, development or change),
(g) any suit, claim, Action or proceedings brought,
asserted or threatened by or on behalf of any holder or holders
of capital stock or other equity interests in Trizec, the Trizec
Subsidiaries, TZ Canada or the TZ Canada Subsidiaries, arising
out of or relating to the transactions contemplated by this
Agreement or (h) any action taken by the Trizec Parties or
TZ Canada at the request or with the consent of any of the Buyer
Parties. The parties agree that the mere fact of a decrease in
the market price of the Trizec Common Shares or TZ Canada SVS
shall not, in and of itself, constitute a Material Adverse
Effect, but any effect, event, development or change underlying
such decrease shall be considered in determining whether there
has been a Material Adverse Effect.
Material Trizec JV Entities means the
Trizec JV Entities set forth in Section 4.01(d)(ii) of the
Trizec Disclosure Schedule.
Mergers means the Trizec Merger and
the Operating Company Merger.
Operating Company LLC Agreement means
the Limited Liability Company Agreement of the Operating
Company, dated as of December 22, 2004, as amended through
the date hereof.
Parent Disclosure Schedule means the
disclosure schedule delivered by Parent, MergerCo and
AcquisitionCo to the Trizec Parties and TZ Canada concurrently
with the execution of this Agreement for which the disclosure of
any fact or item in any section of such disclosure schedule
shall, should the existence of such fact or item be relevant to
any other section, be deemed to be disclosed with respect to
that other section so long as the relevance of such disclosure
to such other section is readily apparent from the nature of
such disclosure.
Parent Material Adverse Effect means
any event, circumstance, change or effect that would reasonably
be expected to prevent, or materially hinder or delay Parent,
MergerCo or AcquisitionCo from consummating the Trizec Merger,
the Arrangement or any of the other transactions contemplated by
this Agreement.
Permitted Liens means (i) Liens
for Taxes not yet delinquent and Liens for Taxes being contested
in good faith and for which there are adequate reserves on the
financial statements of Trizec or TZ Canada, as applicable (if
such reserves are required pursuant to GAAP, in the case of
Trizec, and Canadian GAAP, in the case of TZ Canada),
(ii) inchoate mechanics and materialmens Liens
for construction in progress, (iii) inchoate
workmens, repairmens, warehousemens and
carriers Liens arising in the ordinary course of business
of Trizec, any Trizec Subsidiary, TZ Canada or any TZ Canada
A-4
Subsidiary, (iv) zoning restrictions, survey exceptions,
utility easements, rights of way and similar Liens that are
imposed by any Governmental Authority having jurisdiction
thereon or otherwise are typical for the applicable property
type and locality, (v) with respect to real property, any
title exception disclosed in any Trizec Title Insurance
Policy provided or made available to Parent (whether material or
immaterial), Liens and obligations arising under or in
connection with the Trizec Material Contracts or TZ Canada
Material Contracts, as applicable (including but not limited to
any Lien securing mortgage debt disclosed in the Trizec
Disclosure Schedule or TZ Canada Disclosure Schedule, as
applicable), Trizec Leases and any other Lien that does not
interfere materially with the current use of such property
(assuming its continued use in the manner in which it is
currently used) or materially adversely affect the value or
marketability of such property, (vi) matters that would be
disclosed on current title reports or surveys that arise or have
arisen in the ordinary course of business,
and/or
(vii) other Liens being contested in good faith in the
ordinary course of business.
person or
Person means an individual,
corporation, partnership, limited partnership, limited liability
company, syndicate, person (including a person as
defined in Section 13(d)(3) of the Exchange Act), trust,
association or entity or Governmental Authority, but shall
exclude Trizec Subsidiaries, Trizec Material Subsidiaries,
Trizec Joint Ventures, TZ Canada Subsidiaries and TZ Canada
Joint Ventures.
Redeemable Preferred Shares means
shares of Redeemable Preferred Stock, par value $.01, of the
Surviving Corporation.
Redeemable Preferred Units means the
redeemable preferred units of limited liability company
interests of the Surviving Operating Company, the rights and
terms of which are generally described in Exhibit E
attached hereto.
subsidiary or
subsidiaries of Trizec, TZ Canada, Parent
or any other person means a corporation, limited liability
company, partnership, joint venture or other organization of
which: (a) such party or any other subsidiary of such party
is a general partner, managing member or functional equivalent;
(b) voting power to elect a majority of the board of
directors or others performing similar functions with respect to
such organization is held by such party or by any one or more of
such partys subsidiaries; or (c) at least 50% of the
equity interests is controlled, directly or indirectly, by such
party; provided, however, that for purposes
of this Agreement, TZ Canadas subsidiaries shall not
include Trizec or any subsidiary of Trizec.
Taxes means any and all taxes,
charges, fees, levies and other assessments, including income,
gross receipts, excise, property, sales, withholding (including
dividend withholding and withholding required pursuant to
Sections 1445 and 1446 of the Code), social security,
occupation, use, service, license, payroll, franchise, transfer
and recording taxes, fees and charges, including estimated
taxes, imposed by the United States, Canadian or any other
taxing authority (domestic or foreign), whether computed on a
separate, consolidated, unitary, combined or any other basis,
and similar charges of any kind (together with any and all
interest, penalties, additions to tax and additional amounts
imposed with respect thereto) imposed by any government or
taxing authority including any of the foregoing imposed upon any
other person but for which TZ Canada, the Trizec Parties or any
of their subsidiaries may be liable by operation of law, as a
successor or by contract.
Tax Protection Agreement means any
written or oral agreement to which Trizec or any Subsidiary is a
party pursuant to which: (a) any liability to holders of
Operating Company Common Units relating to Taxes may arise,
whether or not as a result of the consummation of the
transactions contemplated by this Agreement; (b) in
connection with the deferral of income Taxes of a holder of
Operating Company Common Units, Trizec or the Trizec
Subsidiaries have agreed to (i) maintain a minimum level of
debt or continue a particular debt, (ii) retain or not
dispose of assets for a period of time that has not since
expired, (iii) make or refrain from making Tax elections,
and/or
(iv) only dispose of assets in a particular manner;
and/or
(c) holders of the Operating Company Common Units (other
than Trizec) have guaranteed debt of a Trizec Subsidiary
and/or
(d) any other agreement that would require the managing
member of the Operating Company to consider separately the
interests of holders of the Operating Company Common Units as
they relate to Taxes. For greater certainty, the parties
acknowledge that the Tax Co-
A-5
operation Agreement dated May 8, 2002 between Trizec and
TrizecHahn Office Properties Ltd. (a predecessor to TZ Canada)
is not a Tax Protection Agreement.
Tax Returns means all reports,
returns, declarations, statements or other information required
to be supplied to a taxing authority in connection with Taxes.
Trizec Acquisition Proposal means any
proposal or offer for, whether in one transaction or a series of
related transactions, any (a) merger, consolidation or
similar transaction involving Trizec or any Trizec Subsidiary
that would constitute a significant subsidiary (as
defined in
Rule 1-02
of
Regulation S-X,
but substituting 20% for references to 10% therein),
(b) sale or other disposition, directly or indirectly, by
merger, consolidation, share exchange or any similar
transaction, of any assets of Trizec or the Trizec Subsidiaries
representing 20% or more of the consolidated assets of Trizec
and the Trizec Subsidiaries, (c) issue, sale or other
disposition by Trizec of (including by way of merger,
consolidation, share exchange or any similar transaction)
securities (or options, rights or warrants to purchase, or
securities convertible into, such securities) representing 20%
or more of the votes associated with the outstanding voting
equity securities of Trizec, (d) tender offer or exchange
offer in which any Person or group (as such term is
defined under the Exchange Act) offers to acquire beneficial
ownership (as such term is defined in
Rule 13d-3
under the Exchange Act), or the right to acquire beneficial
ownership, of 20% or more of the outstanding Trizec Common
Shares, or (e) transaction which is similar in form,
substance or purpose to any of the foregoing transactions;
provided, however, that the term Trizec
Acquisition Proposal shall not include (i) the Trizec
Merger, the Arrangement or any of the other transactions
contemplated by this Agreement (including, without limitation,
the sale of one or more of the 1031 Assets pursuant to
Section 7.02), or (ii) any merger, consolidation,
business combination, reorganization, recapitalization or
similar transaction solely among Trizec and one or more Trizec
Subsidiaries or among Trizec Subsidiaries.
Trizec Charter means the Fourth
Amended and Restated Certificate of Incorporation of Trizec
dated as of February 8, 2002, as amended.
Trizec Common Shares means shares of
common stock, par value $.01 per share, of Trizec.
Trizec Disclosure Schedule means the
disclosure schedule delivered by the Trizec Parties to Parent
concurrently with the execution of this Agreement for which the
disclosure of any fact or item in any Section of such disclosure
schedule shall, should the existence of such fact or item be
relevant to any other section, be deemed to be disclosed with
respect to that other Section so long as the relevance of such
disclosure to such other Section is reasonably apparent from the
nature of such disclosure. Nothing in the Trizec Disclosure
Schedule is intended to broaden the scope of any representation
or warranty of the Trizec Parties made herein.
Trizec Superior Proposal means a
Trizec Acquisition Proposal (on its most recently amended and
modified terms, if amended and modified) made by a Third Party
(i) that relates to more than 50% of the Trizec Common
Shares or all or substantially all of the assets of Trizec and
the Trizec Subsidiaries, taken as a whole, and (ii) which
the Trizec Board or Special Committee determines in its good
faith judgment (after consultation with its outside financial
and legal advisors) to be more favorable to the stockholders of
Trizec (in their capacities as stockholders) than the Trizec
Merger from a financial point of view, and (iii) for which
financing, to the extent required, is then committed or, in the
good faith judgment of the Trizec Board, is reasonably likely to
be available.
TZ Canada Acquisition Proposal means
any proposal or offer for, whether in one transaction or a
series of related transactions, any (a) sale or other
disposition, directly or indirectly, by amalgamation,
consolidation, share exchange or any similar transaction, of any
assets of TZ Canada or the TZ Canada Subsidiaries representing
20% or more of the consolidated assets of TZ Canada and the TZ
Canada Subsidiaries, (b) issue, sale or other disposition
by TZ Canada of (including by way of plan of arrangement,
amalgamation, consolidation, share exchange or any similar
transaction) securities (or options, rights or warrants to
purchase, or securities convertible into, such securities)
representing 20% or more of the votes associated with the
outstanding TZ Canada Shares, (c) take-over bid, tender
offer or
A-6
other offer or proposal pursuant to which any Person or group of
Persons acting jointly or in concert within the meaning of
Section 91 of Securities Act (Ontario) proposes to acquire
beneficial ownership (as determined in accordance with
Part XX of the Securities Act (Ontario)) of TZ Canada
Shares representing 20% or more of the votes associated with the
outstanding TZ Canada Shares, or (d) transaction which is
similar in form, substance or purpose to any of the foregoing
transactions; provided, however, that the term
TZ Canada Acquisition Proposal shall not include
(i) the Trizec Merger, the Arrangement or any of the other
transactions contemplated by this Agreement (including, without
limitation, the sale of one or more of the 1031 Assets pursuant
to Section 7.02), or (ii) any amalgamation,
consolidation, business combination, reorganization,
recapitalization or similar transaction solely among TZ Canada
and one or more TZ Canada Subsidiaries or among TZ Canada
Subsidiaries.
TZ Canada Articles means the articles
of amalgamation of TZ Canada dated January 1, 2006.
TZ Canada Bylaws means the by-laws of
TZ Canada as in effect immediately prior to the Plan of
Arrangement Effective Time.
TZ Canada Circular means the
management information circular of TZ Canada to be sent to TZ
Canada Shareholders in connection with the transactions
contemplated by the Plan of Arrangement.
TZ Canada Disclosure Schedule means
the disclosure schedule delivered by TZ Canada to Parent
concurrently with the execution of this Agreement for which the
disclosure of any fact or item in any Section of such disclosure
schedule shall, should the existence of such fact or item be
relevant to any other section, be deemed to be disclosed with
respect to that other Section so long as the relevance of such
disclosure to such other Section is reasonably apparent from the
nature of such disclosure. Nothing in the TZ Canada Disclosure
Schedule is intended to broaden the scope of any representation
or warranty of TZ Canada made herein.
TZ Canada Dissent Rights means the
rights of dissent described in the Plan of Arrangement.
TZ Canada MVS means the multiple
voting shares in the capital of TZ Canada.
TZ Canada Shareholders means holders
of TZ Canada Shares.
TZ Canada Shares means the TZ Canada
MVS and the TZ Canada SVS.
TZ Canada Superior Proposal means a TZ
Canada Acquisition Proposal (on its most recently amended and
modified terms, if amended and modified) made by a Third Party
(i) that relates to more than 50% of the TZ Canada Shares
or all or substantially all of the assets of TZ Canada and the
TZ Canada Subsidiaries, taken as a whole, and (ii) which
the TZ Canada Board determines in its good faith judgment (after
consultation with its outside financial and legal advisors) to
be more favorable to TZ Canada Shareholders (in their capacities
as shareholders) than the Arrangement from a financial point of
view, and (iii) and for which financing, to the extent
required, is then committed or, in the good faith judgment of
the TZ Canada Board, is reasonably likely to be available.
TZ Canada SVS means the subordinate
voting shares in the capital of TZ Canada.
TZ Canada Transaction Resolution means
the special resolution of TZ Canada Shareholders approving the
transactions contemplated by the Plan of Arrangement.
US Law means any United States
federal, state, municipal or local statute, law, ordinance,
regulation, rule, code, executive order, injunction, judgment,
decree or other order.
Voting Debt shall mean bonds,
debentures, notes or other indebtedness having the right to vote
(or convertible into, or exchangeable for, securities having the
right to vote) on any matters on which holders of equity
interests in Trizec, any Trizec Subsidiary, TZ Canada or any TZ
Canada Subsidiary (as applicable), may vote.
A-7
(a) the following terms have the meaning set forth in the
Sections set forth below:
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Defined Term
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Location of Definition
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2006 Budget
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§ 7.01(b)
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AcquisitionCo
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Preamble
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Additional Filings
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§ 5.12
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Agreement
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Preamble
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Amended Operating Agreement
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§ 2.02(c)
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Arden Section 1031 Properties
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§ 4.15(e)
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Arrangement
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Recitals
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Blue Sky Laws
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§ 4.05(b)
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Buyer Parties
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Preamble
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Capital Expenditures
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§ 7.01(i)
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CBCA
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Recitals
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CERCLA
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§ 4.16(c)
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Claim
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§ 8.07(a)
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Closing
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§ 2.04
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Closing Date
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§ 2.04
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Code
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§ 4.10(b)
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Commitment
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§ 7.01(b)
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Confidentiality Agreement
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§ 8.03(b)
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Continuing Employees
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§ 8.05(b)
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Contract
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§ 4.17(a)
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Court
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Recitals
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Debt Commitment Letter
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§ 6.07(b)
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Delaware Courts
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§ 11.10
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DGCL
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Recitals
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DLLCA
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Recitals
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DRIP
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§ 3.07
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DSOS
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§ 2.03(a)
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Election
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§ 3.03(d)
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Environmental Permits
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§ 4.16(a)
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ERISA
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§ 4.10(a)
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ERISA Affiliate
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§ 4.10(g)
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ESPP
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§ 3.06
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ESPP Date
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§ 3.06
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Exchange Act
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§ 4.05(b)
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Existing Units
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§ 3.03
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Expenses
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§ 8.07(a)
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Financing
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§ 6.07(b)
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Financing Commitments
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§ 6.07(b)
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Full Termination Fee
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§ 10.03(c)
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Form of Election
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§ 3.03(d)(i)
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Governmental Order
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§ 10.01(c)
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Guaranty
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§ 6.07(c)
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HSR Act
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§ 4.05(b)
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A-8
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Defined Term
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Location of Definition
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Incentive Plans
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§ 3.01(f)
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Indemnified Parties
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§ 8.07(a)
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Indemnitors
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§ 8.07(a)
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IRS
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§ 4.10(a)
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Lenders
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§ 6.07(b)
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Loan Activities
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§ 8.13
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Material Trizec Leases
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§ 4.13(e)
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Material Trizec Subsidiary
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§ 4.01(b)
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Merger Operating Company
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Preamble
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Merger Shares
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§ 3.01(c)
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MergerCo
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Preamble
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Multiemployer Plan
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§ 410(d)
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Non-Qualified Account Plans
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§ 8.06(d)
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NYSE
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§ 4.05(b)
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OPP
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§ 3.01(g)
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Operating Company
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Preamble
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Operating Company Certificate of
Merger
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§ 2.03(c)
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Operating Company Class F
Units
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§ 4.01(c)
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Operating Company Merger
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Recitals
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Operating Company Merger
Consideration
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§ 3.03
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Operating Company Common Units
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§ 4.01(c)
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Operating Company Merger
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Preamble
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Operating Company Merger Effective
Time
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§ 2.03(c)
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Operating Company SV Units
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§ 4.01(c)
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Organizational Documents
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§ 4.02
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Other Filings
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§ 4.12
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Outside Date
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§ 10.01(b)
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Parent
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Preamble
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Parent Expenses
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§ 10.03(c)
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Participation Agreement
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§ 4.13(i)
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Participation Interest
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§ 4.13(i)
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Participation Party
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§ 4.13(i)
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Permits
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§ 4.06(a)
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Permitted Activities
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§ 2.07
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Plan of Arrangement
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Recitals
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Plan of Arrangement Effective Time
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§ 2.03(b)
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Plans
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§ 4.10(a)
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PMCI
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Recitals
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Pre-Acquisition Reorganization
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§ 2.07
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Proxy Statement
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§ 4.05(b)
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Post Signing Returns
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§ 8.10(b)
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Qualifying Income
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§ 10.04(a)
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Redemption Amount
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§ 3.01(c)
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REIT
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§ 2.07
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A-9
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Defined Term
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Location of Definition
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REIT Certificate
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§ 9.02(e)
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Representatives
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§ 8.04(a)
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Sarbanes-Oxley Act
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§ 4.07(d)
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SEC
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§ 4.05(b)
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Section 16
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§ 8.06(c)
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Section 262
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§ 3.05(d)
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Securities Act
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§ 4.05(b)
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Seller Party Expenses
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§ 10.03(d)
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Special Committee
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Recitals
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Special Committee Recommendation
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§ 4.04(c)
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Surviving Corporation
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§ 2.01(a)
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Surviving Corporation Bylaws
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§ 2.02(b)
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Surviving Corporation Charter
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§ 2.02(a)
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Surviving Corporation
Redemption Fund
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§ 3.05(b)
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Surviving Operating Company
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§ 2.01(c)
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Surviving Operating Company
Redemption Fund
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§ 3.05(b)
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Termination Date
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§ 10.01
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Third Party
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§ 4.13(g)
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Transfer Taxes
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§ 8.12
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Trizec
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Preamble
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Trizec Board
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Recitals
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Trizec Bylaws
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§ 2.02(b)
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Trizec Certificate of Merger
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§ 2.03(a)
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Trizec Change in Recommendation
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§ 8.01(b)
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Trizec Class F Stock
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§ 3.01(e)
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Trizec Common Share Certificates
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§ 3.05(a)
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Trizec Common Share Merger
Consideration
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§ 3.01(c)
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Trizec Consideration
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§ 3.03
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Trizec Dissenting Shares
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§ 3.08(a)
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Trizec Employees
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§ 8.06(b)
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Trizec Expenses
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§ 10.03(d)
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Trizec Financial Advisors
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§ 4.20
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Trizec Ground Lease
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§ 4.13(f)
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Trizec Ground Leases
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§ 4.13(f)
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Trizec Intellectual Property
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§ 4.14
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Trizec JV Entities
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§ 4.01(d)
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Trizec Leases
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§ 4.13(e)
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Trizec Material Contract
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§ 4.17
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Trizec Merger
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Recitals
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Trizec Merger Effective Time
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§ 2.03(a)
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Trizec Option Consideration
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§ 3.01(f)
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Trizec Parties
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Preamble
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Trizec Paying Agent
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§ 3.05(b)
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Trizec Preferred Shares
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§ 4.03(a)
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A-10
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Defined Term
|
|
Location of Definition
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|
Trizec Properties
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§ 4.13(a)
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Trizec Property
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§ 4.13(a)
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Trizec Property Restrictions
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§ 4.13(a)
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Trizec Recommendation
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§ 8.01(b)
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Trizec Restricted Shares
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§ 3.01(g)
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Trizec Restricted Share Rights
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§ 3.01(h)
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Trizec SEC Reports
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§ 4.07(a)
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Trizec Special Voting Stock
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§ 3.01(d)
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Trizec Stock Awards
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§ 4.03(c)
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Trizec Stock Options
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§ 3.01(f)
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Trizec Stockholder Approval
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§ 4.04(a)
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Trizec Stockholders
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§ Recitals
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Trizec Stockholders Meeting
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§ 8.01(b)
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Trizec Subsidiaries/Subsidiary
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§ 4.01(b)
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Trizec Termination Fee
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§ 10.03(c)
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Trizec Title Insurance Policy
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§ 4.13(c)
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Trizec Warrant Consideration
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§ 3.01(i)
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Trizec Warrants
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§ 3.01(i)
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TZ Canada
|
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Preamble
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TZ Canada Board
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Recitals
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TZ Canada Change in Recommendation
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§ 8.02(b)
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TZ Canada Employees
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§ 8.06(f)
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TZ Canada Expenses
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§ 10.03(d)
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TZ Canada Financial Advisor
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§ 5.21
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TZ Canada Indemnified Parties
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§ 8.08(a)
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TZ Canada Intellectual Property
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§ 5.14
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TZ Canada JV Entities
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§ 5.01(c)
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TZ Canada Material Contract
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§ 5.18
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TZ Canada Options
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§ 5.03(c)
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TZ Canada Plans
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§ 5.10(a)
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TZ Canada Reports
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§ 5.07(a)
|
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TZ Canada Recommendation
|
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§ 8.02(b)
|
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TZ Canada Shareholder Approval
|
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§ 5.04(a)
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TZ Canada Shareholder Meeting
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§ 8.02(b)
|
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TZ Canada Subsidiaries
|
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|
§ 5.01(b)
|
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TZ Canada Termination Fee
|
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|
§ 10.03(c)
|
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TZ Hungary
|
|
|
Recitals
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WARN
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§ 4.11(b)
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Section 1.02. Interpretation
and Rules of Construction.
In this Agreement, except to the extent otherwise provided or
that the context otherwise requires:
(a) when a reference is made in this Agreement to an
Article, Section, Exhibit or Schedule, such reference is to an
Article or Section of, or an Exhibit or Schedule to, this
Agreement unless otherwise indicated;
A-11
(b) the table of contents and headings for this Agreement
are for reference purposes only and do not affect in any way the
meaning or interpretation of this Agreement;
(c) whenever the words include,
includes or including are used in this
Agreement, they are deemed to be followed by the words
without limitation;
(d) the words hereof, herein and
hereunder and words of similar import, when used in
this Agreement, refer to this Agreement as a whole and not to
any particular provision of this Agreement;
(e) references to any statute, rule or regulation are to
the statute, rule or regulation as amended, modified,
supplemented or replaced from time to time (and, in the case of
statutes, include any rules and regulations promulgated under
said statutes) and to any section of any statute, rule or
regulation include any successor to said section;
(f) all terms defined in this Agreement have the defined
meanings when used in any certificate or other document made or
delivered pursuant hereto, unless otherwise defined therein;
(g) the definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such
terms;
(h) references to a person are also to its successors and
permitted assigns;
(i) the use of or is not intended to be
exclusive unless expressly indicated otherwise;
(j) references to monetary amounts are to the lawful
currency of the United States;
(k) words importing the singular include the plural and
vice versa and words importing gender include all genders;
(l) time is of the essence in the performance of the
parties respective obligations; and
(m) time periods within or following which any payment is
to be made or act is to be done shall be calculated by excluding
the day on which the period commences and including the day on
which the period ends and by extending the period to the next
Business Day following if the last day of the period is not a
Business Day.
ARTICLE II
THE
MERGERS AND THE ARRANGEMENT
Section 2.01. Mergers
and Arrangement.
(a) Subject to the terms and conditions of this Agreement,
and in accordance with Section 251 of the DGCL, at the
Trizec Merger Effective Time, MergerCo and Trizec shall
consummate the Trizec Merger pursuant to which (i) MergerCo
shall be merged with and into Trizec and the separate existence
of MergerCo shall thereupon cease and (ii) Trizec shall be
the surviving corporation in the Trizec Merger (the
Surviving Corporation). The Trizec Merger
shall have the effects specified in the DGCL, including
Section 261 thereof.
(b) Subject to the terms and conditions of this Agreement,
pursuant to the Plan of Arrangement and in accordance with the
CBCA, at the Plan of Arrangement Effective Time, TZ Canada will
effect the Arrangement pursuant to which, among other things,
AcquisitionCo, or one or more affiliates designated by
AcquisitionCo, will acquire all of the outstanding shares
of TZ Canada. AcquisitionCo shall have the right to include,
upon reasonable consultation with TZ Canada, in the Plan of
Arrangement provisions entitling the holders of TZ Canada
Shares, whether or not upon conditions, to elect, at their sole
option, to receive securities of AcquisitionCo or an affiliate
of AcqusitionCo in lieu of cash for some or all of their shares
of TZ Canada.
(c) Subject to the terms and conditions of this Agreement
and in accordance with applicable provisions of the DLLCA, at
the Operating Company Merger Effective Time, the Merger
Operating Company and the Operating Company shall consummate the
Operating Company Merger pursuant to which (i) the Merger
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Operating Company shall be merged with and into the Operating
Company and the separate existence of the Merger Operating
Company shall thereupon cease and (ii) Operating Company
shall be the surviving limited liability company in the
Operating Company Merger (the Surviving Operating
Company). The Operating Company Merger shall have the
effects specified in the DLLCA.
Section 2.02. Charter
and Bylaws; Limited Liability Company Agreement.
(a) At the Trizec Merger Effective Time, the Trizec Charter
shall be amended to read in its entirety in the form attached
hereto as Exhibit F, and, as so amended, such certificate
of incorporation shall be the certificate of incorporation of
the Surviving Corporation until thereafter further amended as
provided therein or by Law (the Surviving Corporation
Charter).
(b) The Amended and Restated Bylaws of Trizec dated as of
May 8, 2002, as in effect immediately prior to the Trizec
Merger Effective Time (the Trizec Bylaws),
shall be the bylaws of the Surviving Corporation until
thereafter amended as provided by law, by the Trizec Charter or
by such bylaws (the Surviving Corporation
Bylaws).
(c) At the Operating Company Merger Effective Time, the
Limited Liability Company Agreement of the Operating Company
shall be amended to the extent required to implement the terms
provided in Exhibit E with respect to the Redeemable
Preferred Units (as so amended, the Amended Operating
Agreement). From and after the Operating Company
Merger Effective Time, the certificate of limited liability
company of the Operating Company, as in effect immediately prior
to the Operating Company Merger Effective Time, shall be the
certificate of limited liability company of the Surviving
Operating Company until thereafter amended as provided by law.
From and after the Operating Company Merger Effective Time, the
Amended Operating Agreement shall be the limited liability
company agreement of the Surviving Operating Company until
thereafter amended as provided by law or by such limited
liability company agreement.
Section 2.03. Effective
Times of the Mergers and Arrangement.
(a) At the Closing, Trizec shall duly execute and file a
certificate of merger with respect to the Trizec Merger, in such
form as is required by, and executed in accordance with, the
relevant provisions of the DGCL (the Trizec Certificate
of Merger), with the Secretary of State of the State
of Delaware (the DSOS) in accordance with the
DGCL. The Trizec Merger shall become effective upon such time as
the Trizec Certificate of Merger has been filed with the DSOS,
or such later time which the parties hereto shall have agreed
upon and designated in such filing in accordance with the DGCL
as the effective time of the Trizec Merger (the Trizec
Merger Effective Time).
(b) At the Closing, immediately after the Trizec Merger
Effective Time and redemption of the Redeemable Preferred Shares
in accordance with Section 3.01(c), TZ Canada shall send to
the Director appointed under the CBCA, for endorsement and
filing by the Director, the Articles of Arrangement and such
other documents as may be required in connection therewith under
the CBCA to give effect to the Arrangement. The Arrangement
shall become effective upon the issuance of a certificate of
arrangement and as at the Effective Time as such
term is defined in the Plan of Arrangement (the Plan of
Arrangement Effective Time).
(c) At the Closing, immediately after the Trizec Merger
Effective Time, the Operating Company shall duly execute and
file a certificate of merger with respect to the Operating
Company Merger, in such form as is required by, and executed in
accordance with, the relevant provisions of the DLLCA (the
Operating Company Certificate of Merger),
with the DSOS in accordance with the DLLCA. The Operating
Company Merger shall become effective upon such time as the
Operating Company Certificate of Merger has been filed with the
DSOS, or such later time which the parties hereto shall have
agreed upon and designated in such filing in accordance with the
DLLCA, as the effective time of the Operating Company Merger
(the Operating Company Merger Effective Time).
Section 2.04. Closing. Unless
this Agreement shall have been terminated in accordance with
Section 10.01, the closings of the Mergers and the
Arrangement (the Closing) shall occur as
promptly as practicable (but in no event earlier than the tenth
(10th) and no event later than the twentieth (20th) Business
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Day) after all of the conditions set forth in Article IX
(other than conditions which by their terms are required to be
satisfied or waived at the Closing, but subject to the
satisfaction or waiver of such conditions) shall have been
satisfied or waived by the party entitled to the benefit of the
same, or at such other time and on a date as agreed to by the
parties; provided that, in the event the Final Order is
appealed, such date shall be no earlier than the first (1st)
Business Day following the date such appeal is denied or
withdrawn (the Closing Date). The Closing
shall take place at the offices of Hogan & Hartson
L.L.P., 555
13th Street,
N.W., Washington, D.C., or at such other place as agreed to
by the parties hereto.
Section 2.05. Directors
and Officers of the Surviving
Corporation. The directors of MergerCo as of
immediately prior to the Trizec Merger Effective Time shall be
the initial directors of the Surviving Corporation and the
officers of Trizec as of immediately prior to the Trizec Merger
Effective Time shall be the initial officers of the Surviving
Corporation, in each case, until their respective successors are
duly elected or appointed and qualified, or until the earlier of
their death, resignation or removal.
Section 2.06. Operating
Company Matters. The managing member of the
Operating Company immediately prior to the Operating Company
Merger Effective Time shall be the managing member of the
Surviving Operating Company following the Operating Company
Merger Effective Time.
Section 2.07. Other
Transactions. Parent may request by
reasonable notice given to TZ Canada or Trizec, as applicable,
that each of TZ Canada and Trizec, as the case may be, shall use
commercially reasonable efforts to, immediately prior to the
Closing, (u) convert or cause the conversion of one or more
Subsidiaries that are organized as corporations into limited
liability companies and one or more Subsidiaries that are
organized as limited partnerships into limited liability
companies, on the basis of organizational documents as
reasonably requested by Parent, (v) sell or cause to be
sold all of the stock, partnership interests or limited
liability interests owned, directly or indirectly, by Trizec in
one or more Subsidiaries at a price designated by Parent, and
(w) sell or cause to be sold any of the assets of Trizec or
one or more Subsidiaries at a price designated by Parent
(clauses (u) through (w) being Permitted
Activities), (x) effect, immediately prior to the
Plan of Arrangement Effective Time in the case of TZ Canada, and
immediately prior to the Trizec Merger Effective Time in the
case of Trizec, a reorganization of such companys
business, assets, operations and subsidiaries (the
Pre-Acquisition Reorganization),
(y) cooperate with AcquisitionCo and its advisers to
determine the nature of the Pre-Acquision Reorganization and the
manner in which it most effectively could be implemented, and
(z) work cooperatively with AcquisitionCo and use
reasonable commercial efforts to prepare all documentation and
do all such other acts and things prior to the Plan of
Arrangement Effective Time (in the case of TZ Canada) or the
Trizec Merger Effective Time (in the case of Trizec) as are
necessary or desirable to give effect to the Pre-Acquision
Reorganization. TZ Canada and Trizec shall consider any such
request in good faith having regard to the following:
(i) any Permitted Activities, Pre-Acquisition
Reorganization or Loan Activities (as defined herein) shall
not delay or prevent the completion of the Arrangement or the
Mergers; (ii) Permitted Activities, any Pre-Acquision
Reorganization or Loan Activities shall be implemented as
close as possible to the last moment of the day preceding the
Plan of Arrangement Effective Time or the Trizec Merger
Effective Time, as applicable (but after Parent shall have
waived or confirmed that all conditions to the consumation of
the Mergers and the Arrangement have been satisfied),
(iii) neither TZ Canada nor Trizec shall be required to
take any action in contravention of any Laws, Canadian Laws,
organizational document, TZ Canada Material Contract or Trizec
Material Contract, (iv) any such Permitted Activities,
Pre-Acquisition Reorganization or Loan Activities shall be
contingent upon Parent confirming that the Buyer Parties are
prepared to proceed immediately with the Closing and any other
evidence reasonably requested by TZ Canada or Trizec that the
Closing will occur (it being understood that in any event the
Permitted Activities, Pre-Acquisition Reorganization or
Loan Activities will be deemed to have occurred immediately
prior to the Closing), (v) the Permitted Activities,
Pre-Acquisition Reorganization or Loan Activities (or the
inability to complete the Permitted Activities, Pre-Acquisition
Reorganization or Loan Activities) shall not affect or
modify in any respect the obligations of the Buyer Parties under
this Agreement, including payment of the Trizec Common Share
Merger Consideration and the Arrangement Consideration (as
defined in the Plan of Arrangement), (vi) none of TZ
Canada, Trizec or any Trizec Subsidiary or TZ Canada Subsidiary
shall be required to take any action that could adversely affect
the classification of Trizec as a real estate investment
trust (a REIT) within the meaning of
Section 856 of the
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Code, (viii) none of TZ Canada or any TZ Canada Subsidiary
shall be required to take any action that could adversely affect
the qualification of TZ Canada as a mutual fund
corporation and (ix) none of TZ Canada, Trizec or any
TZ Canada Subsidiary or Trizec Subsidiary shall be required to
take any action that could result in any Taxes being imposed on,
or any adverse Tax or other consequences to, any shareholder or
other equity interest holder of Trizec or TZ Canada
incrementally greater than the Taxes or other consequences to
such party in connection with the consummation of this Agreement
in the absence of such action taken pursuant to this
Section 2.07. Parent shall upon request by TZ Canada or
Trizec advance to TZ Canada or Trizec, as applicable, all
reasonable
out-of-pocket
costs to be incurred by TZ Canada or Trizec or, promptly upon
request by TZ Canada or Trizec, reimburse TZ Canada or Trizec
for all reasonable
out-of-pocket
costs incurred by TZ Canada or Trizec in connection with any
actions taken by TZ Canada (or any TZ Canada Subsidiary) or
Trizec (or any Trizec Subsidiary) in accordance with this
Section 2.07, (including reasonable fees and expenses of
its Representatives). The Buyer Parties shall, on a joint and
several basis, indemnify and hold harmless TZ Canada, Trizec,
the TZ Canada Subsidiaries and the Trizec Subsidiaries and each
of their respective Representatives from and against any and all
liabilities, losses, damages, claims, costs, expenses, interest,
awards, judgments and penalties suffered or incurred by them in
connection with or as a result of taking such actions. Without
limiting the foregoing, none of the representations, warranties
or covenants of TZ Canada or of the Trizec Parties shall be
deemed to apply to, or deemed breached or violated by, any of
the transactions requested by Parent pursuant to this
Section 2.07.
ARTICLE III
EFFECTS
OF THE MERGER AND THE ARRANGEMENT
Section 3.01. Effects
of the Trizec Merger on Trizec Securities. At
the Trizec Merger Effective Time, by virtue of the Trizec Merger
and without any action on the part of Trizec or the holders of
any capital stock of Trizec (other than the requisite approval
of the Trizec Merger by the stockholders of Trizec in accordance
with DGCL):
(a) Each Trizec Common Share held in treasury and not
outstanding and each Trizec Common Share that is owned by
MergerCo immediately prior to the Trizec Merger Effective Time
shall be cancelled and retired and shall cease to exist, without
any conversion thereof and no payment or distribution shall be
made with respect thereto.
(b) Each Trizec Common Share held by TZ Canada or any TZ
Canada Subsidiaries, Parent, and AcquisitionCo immediately prior
to the Trizec Merger Effective Time shall continue to remain an
issued and outstanding share of common stock of the Surviving
Corporation, without any conversion thereof and no payment or
distribution shall be made with respect thereto.
(c) Each Trizec Common Share issued and outstanding
immediately prior to the Trizec Merger Effective Time (other
than Trizec Dissenting Shares and Trizec Common Shares to be
cancelled in accordance with Section 3.01(a) and Trizec
Common Shares remain issued and outstanding in accordance with
Section 3.01(b)), shall be converted and exchanged
automatically into one fully paid and non-assessable Redeemable
Preferred Share of the Surviving Corporation (the
Trizec Common Share Merger Consideration, and
the Trizec Common Shares that are to be so converted into the
Trizec Common Share Merger Consideration are referred to herein
as the Merger Shares). Immediately after the
completion of the Trizec Merger, in accordance with the terms of
the Surviving Corporation Charter, the Surviving Corporation
shall cause each Redeemable Preferred Share to be redeemed for
the right to receive cash in the amount of
(i) $29.01 per share, plus (ii) an amount equal
to $0.20 multiplied by the quotient obtained by dividing
(x) the number of days between the last day of the quarter
for which a full quarterly dividend on the Trizec Common Shares
has been declared and the Closing Date (including the Closing
Date), by (y) the total number of days in the quarter in
which the Closing Date occurs, without interest (the
Redemption Amount), without interest
subject to any applicable Taxes required to be withheld in
accordance with Section 3.09 with respect to such payment
and payable upon surrender, in the manner provided in
Section 3.05, of the certificate evidencing the Trizec
Common Shares that are to
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be so converted into the Trizec Common Share Merger
Consideration (the Trizec Common Share
Certificates).
(d) Each share of special voting stock, par value
$0.01 per share, of Trizec (Trizec Special Voting
Stock) issued and outstanding immediately prior to the
Trizec Merger Effective Time shall continue to remain issued and
outstanding as a share of special voting stock, par value
$0.01 per share, of the Surviving Corporation.
(e) Each share of Class F convertible stock, par value
$0.01 per share, of Trizec (Trizec Class F
Stock) issued and outstanding immediately prior to the
Trizec Merger Effective Time shall continue to remain issued and
outstanding as a share of Class F convertible stock, par
value $0.01 per share, of the Surviving Corporation.
(f) Immediately prior to the Trizec Merger Effective Time,
each outstanding qualified or nonqualified option to purchase
Trizec Common Shares (Trizec Stock Options)
under the 2002 Trizec Properties, Inc. Long-Term Incentive Plan,
as amended and restated, and any employee or director share
option or compensation plan or arrangement of Trizec
(collectively, Incentive Plans), shall become
fully vested and exercisable or payable, as the case may be
(whether or not then vested or subject to any performance
condition that has not been satisfied, and regardless of the
exercise price thereof). At the Trizec Merger Effective Time,
each Trizec Share Option not theretofore exercised shall be
cancelled in exchange for the right to receive a single lump sum
cash payment, equal to the product of (i) the number of
Trizec Common Shares subject to such Trizec Share Option
immediately prior to the Trizec Merger Effective Time, whether
or not vested or exercisable, and (ii) the excess, if any,
of the Redemption Amount over the exercise price per share
of such Trizec Share Option, without interest (the
Trizec Option Consideration), subject to any
applicable Taxes required to be withheld in accordance with
Section 3.09 with respect to such payment. If the exercise
price per share of any such Trizec Share Option is equal to or
greater than the Redemption Amount, such Trizec Share
Option shall be cancelled without any cash payment being made in
respect thereof.
(g) All restricted share awards (Trizec Restricted
Shares) granted pursuant to the Incentive Plans or
otherwise that remain unvested, including any awards of Trizec
Restricted Shares that may be awarded pursuant to, or in
connection with, the Trizec 2004 Long-Term Outperformance
Company Program (the OPP), automatically
shall become fully vested and free of any forfeiture or holding
restrictions immediately prior to the Trizec Merger Effective
Time, and each Trizec Restricted Share shall be considered an
outstanding Trizec Common Share for all purposes of this
Agreement, including the right to receive the Common Share
Merger Consideration.
(h) All restricted share unit, deferred restricted share
unit, restricted share rights and deferred restricted share
rights awards (collectively, Trizec Restricted Share
Rights) granted pursuant to the Incentive Plans or
otherwise automatically shall become fully vested and free of
any forfeiture restrictions immediately prior to the Trizec
Merger Effective Time, and each Trizec Restricted Share Right
shall be considered an outstanding Trizec Common Share for all
purposes of this Agreement, including the right to receive the
Common Share Merger Consideration. Payment of the Common Share
Merger Consideration in respect of any Trizec Restricted Share
Rights shall be performed in accordance with
Section 8.06(d).
(i) Immediately prior to the Trizec Merger Effective Time,
the terms of each outstanding warrant to purchase Trizec Common
Shares (Trizec Warrants) (other than such
Trizec Warrants that are held by TZ Canada or any TZ Canada
Subsidiaries immediately prior to the Trizec Merger Effective
Time), shall be adjusted in accordance with Section Eight
of the warrant agreement with respect to each Trizec Warrant, to
provide that from and after the Trizec Merger Effective Time,
each such Trizec Warrant shall entitle the holder thereof upon
exercise of such Trizec Warrant and payment of the exercise
price thereof to receive solely, in full satisfaction thereof, a
single lump sum cash payment, equal to the product of
(i) the number of Trizec Common Shares subject to such
Trizec Warrant immediately prior to the Trizec Merger Effective
Time, whether or not vested or exercisable, and (ii) the
Redemption Amount, without interest (the Trizec
Warrant Consideration), and subject to any applicable
Taxes required to be withheld
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in accordance with Section 3.09 with respect to such
payment. If the exercise price per share of any such Trizec
Warrant is equal to or greater than the Redemption Amount,
such Trizec Warrant shall be cancelled without any cash payment
being made in respect thereof. Trizec Warrants that are held by
TZ Canada or any TZ Canada Subsidiaries immediately prior to the
Trizec Merger Effective Time shall continue to remain issued and
outstanding of the Surviving Corporation.
Section 3.02. Effects
of the Trizec Merger on MergerCo
Securities. At the Trizec Merger Effective
Time, by virtue of the Trizec Merger and without any action on
the MergerCo or Parent, as the holder of all outstanding capital
stock of MergerCo (other than the requisite approval by Parent
as a stockholder of MergerCo in accordance with DGCL, which
approval has been obtained), all outstanding shares of common
stock, par value $0.01 per share, of MergerCo issued and
outstanding immediately prior to the Trizec Merger Effective
Time shall collectively be converted into such aggregate number
of shares of common stock, par value $0.01, of the Surviving
Corporation in an amount equal to the aggregate number of Trizec
Common Shares (other than the Trizec Common Shares held by TZ
Canada and any TZ Canada Subsidiaries) outstanding immediately
prior to the Trizec Merger Effective Time, including Trizec
Common Shares deemed to be outstanding pursuant to
Section 3.01(g) and 3.01(h).
Section 3.03. Effects
on Operating Company Securities.
(a) At the Operating Company Merger Effective Time, by
virtue of the Operating Company Merger and without any action on
the part of the holder of any limited liability company interest
of Operating Company or Merger Operating Company, each
Class A and Class B common unit of limited liability
company interest in the Operating Company issued and outstanding
immediately prior to the Operating Company Merger Effective Time
(the Existing Units) (other than any Existing
Units held by Trizec or any of Trizec Subsidiaries, which
Existing Units shall remain outstanding and unchanged as units
of limited liability company interest in the Surviving Operating
Corporation), shall be converted and exchanged automatically
into one fully-paid Redeemable Preferred Unit of the Surviving
Operating Company (the Operating Company Merger
Consideration, and together with the
Redemption Amount, Trizec Option Consideration and the
Trizec Warrant Consideration, the Trizec
Consideration).
(b) At the Operating Company Merger Effective Time, the
limited liability company interests of Operating Company held by
Trizec shall remain outstanding and unchanged as limited
liability company interests in the Surviving Operating Company,
entitling the holder thereof to such rights, duties and
obligations as are more fully set forth in the Amended Operating
Agreement.
(c) At the Operating Company Merger Effective Time, without
any action of any Person, the limited liability company
interests in the Merger Operating Company shall be converted and
exchanged automatically into limited liability company interests
in the Surviving Operating Company commensurate with their value.
(d) Each holder of Class B Common Units of the
Operating Company shall be afforded the opportunity to make an
unconditional election, prior to the Closing Date, to exercise
the Preferred Redemption Right (as defined in
Section F(i) of Exhibit G) or the Preferred
Conversion Right (as defined in Section H(i) of
Exhibit G) relating to the Redeemable Preferred Units
that such holder will receive in the Operating Company Merger,
effective immediately following the Operating Company Merger
Effective Time, (an Election) as follows:
(i) Parent shall prepare and deliver to the Operating
Company, as promptly as practicable following the date of this
Agreement, and the Operating Company shall mail to the holders
of Class B Common Units, a form of election, which form
shall be subject to the reasonable approval of Trizec, in its
capacity as the managing member of the Operating Company (the
Form of Election). The Form of Election shall
set forth the procedures, reasonably acceptable to Trizec, for
holders of Class B Common Units to make an election to
exercise the Preferred Redemption Right and the Preferred
Conversion Right, including the deadline for making Elections
and the procedures (if any) for revoking an Election.
(ii) The Trizec Parties agree to reasonably cooperate with
Parent in preparing any disclosure statement or other disclosure
information to accompany the Form of Election, including
information applicable to an offering of securities exempt from
registration under the Securities Act.
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Section 3.04. Effects
of the Arrangement. The Articles of
Arrangement shall provide, with such other matters as are
necessary to effect the transactions contemplated hereby, for
the implementation of the Plan of Arrangement.
Section 3.05. Surrender
of Trizec Shares; Stock Transfer Books.
(a) From and after the Trizec Merger Effective Time, for
all purposes of determining the record holders of the Redeemable
Preferred Shares, the holders of Merger Shares as of immediately
prior to the Trizec Merger Effective Time shall be deemed to be
holders of the Redeemable Preferred Shares. No share
certificates shall be issued in respect of the Redeemable
Preferred Shares, and such shares shall be evidenced by the
certificates representing the Merger Shares (the Trizec
Common Share Certificates). Promptly after the
completion of the Trizec Merger, the holders of Merger Shares as
of immediately prior to the Trizec Merger Effective Time shall
be entitled to receive a payment representing the aggregate
Redemption Amount payable in respect of the Redeemable
Preferred Shares into which their Trizec Common Shares were
converted, upon surrender of the Trizec Common Share
Certificates (which at and after the Trizec Merger Effective
Time will represent Redeemable Preferred Shares) in accordance
with this Section 3.05.
(b) Prior to the Trizec Merger Effective Time, Trizec shall
appoint a bank or trust company reasonably satisfactory to
Parent (the Trizec Paying Agent) and enter
into a paying agent agreement with such Trizec Paying Agent for
the payment of the Redemption Amount. Immediately following
completion of the Trizec Merger, the redemption of the
Redeemable Preferred Shares and the cancellation of the Trizec
Stock Options and applicable Trizec Warrants, Parent shall cause
to be deposited with the Trizec Paying Agent, (i) by the
Surviving Corporation for the benefit of the holders of
Redeemable Preferred Shares, Trizec Stock Options, Trizec
Restricted Shares, Trizec Restricted Share Rights and applicable
Trizec Warrants, cash in an amount sufficient to pay the
aggregate Trizec Consideration required to be paid (such cash
being hereinafter referred to as the Surviving
Corporation Redemption Fund) and (ii) by
the Surviving Operating Company for the benefit of Existing
Units, certificates or other evidence of the Redeemable
Preferred Units (the Surviving Operating Company
Redemption Fund), and to cause the Trizec Paying
Agent to make, and the Trizec Paying Agent shall make, payments
of the Trizec Consideration out of the Surviving Corporation
Redemption Fund or the Surviving Operating Company
Redemption Fund, as applicable, to the holders of
Redeemable Preferred Shares, Trizec Stock Options, Trizec
Restricted Shares, Trizec Restricted Share Rights, applicable
Trizec Warrants and Existing Units in accordance with this
Agreement. If applicable, each of the Surviving Corporation
Redemption Fund and the Surviving Operating Company
Redemption Fund shall be invested by the Trizec Paying
Agent as directed by and for the benefit of the Surviving
Corporation and the Surviving Operating Company, respectively;
provided, however, that no gain or loss thereon
shall affect the amounts payable to the holders of Redeemable
Preferred Shares, Trizec Stock Options, Existing Units and
applicable Trizec Warrants following completion of the Trizec
Merger pursuant to this Article III. Any and all interest
and other income earned on the Surviving Corporation Redemption
Fund and the Surviving Operating Company Redemption Fund
shall promptly be paid to the Surviving Corporation.
(c) As promptly as practicable after the Trizec Merger
Effective Time, Parent and the Surviving Corporation shall cause
the Trizec Paying Agent to mail to each person who was, as of
immediately prior to the Trizec Merger Effective Time, a holder
of record of the Merger Shares, Trizec Warrants and Existing
Units: (i) a letter of transmittal (which shall be in
customary form and shall specify that delivery shall be
effected, and risk of loss and title to, if applicable, the
Trizec Common Share Certificates, Existing Unit certificates or
Trizec Warrant certificates shall pass, only upon proper
delivery of, if applicable, the Trizec Common Share
Certificates, Existing Unit certificates or Trizec Warrant
certificates to the Trizec Paying Agent) and
(ii) instructions for effecting the surrender of, if
applicable, the Trizec Common Share certificates, Existing Unit
certificates or Trizec Warrant certificates in exchange for the
Trizec Consideration. Upon surrender to the Trizec Paying Agent
of Trizec Common Share Certificates or, Existing Unit
certificates or Trizec Warrant certificates for cancellation,
together with such letter of transmittal, duly completed and
validly executed in accordance with the instructions thereto,
and such other documents as may be required pursuant to such
instructions, the holder of such Trizec Common Share
Certificate, Existing Unit certificates or Trizec Warrant
certificate shall be entitled to receive in exchange therefor,
in cash, or units, as applicable, the Redemption Amount in
respect of the Redeemable Preferred Shares issued in the Trizec
Merger and redeemed
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immediately following the Trizec Merger, the right to receive
the Trizec Warrant Consideration or the right to receive the
Operating Company Merger Consideration, as applicable, and the
Trizec Common Share Certificate or Trizec Warrant certificate so
surrendered shall forthwith be cancelled. In the event of a
transfer of ownership of Merger Shares or Trizec Warrants that
is not registered in the transfer records of Trizec, payment of
the Redemption Amount in respect of the Redeemable
Preferred Shares redeemed immediately following the Trizec
Merger or cash amount in respect of the Trizec Warrants issued
in the Trizec Merger may be made to a person other than the
person in whose name the Trizec Common Share Certificate or
Trizec Warrant certificate so surrendered is registered if such
Trizec Common Share Certificate or Trizec Warrant certificate
shall be properly endorsed or otherwise be in proper form for
transfer and the person requesting such payment shall pay any
transfer or other taxes required by reason of the payment of the
Redemption Amount in respect of the Redeemable Preferred
Shares issued in the Trizec Merger and redeemed immediately
following the Trizec Merger or the payment of the Trizec Warrant
Consideration to a person other than the registered holder of
such Trizec Common Share Certificate or Trizec Warrant
certificate or establish to the reasonable satisfaction of the
Surviving Corporation that such tax has been paid or is not
applicable. Until surrendered as contemplated by this
Section 3.05, each Trizec Common Share Certificate,
Existing Unit certificate and Trizec Warrant certificate shall
be deemed at all times after the Trizec Merger Effective Time to
represent only the right to receive upon such surrender the
applicable Trizec Consideration and, at all times after the
redemption of the Redeemed Preferred Shares, the
Redemption Amount to which the holder of such Trizec Common
Share Certificate is entitled following redemption of the
Redeemable Preferred Shares, or the Trizec Warrant Consideration
or Operating Company Merger Consideration, as applicable. No
interest shall be paid or will accrue on any cash payable to
holders of Trizec Common Share Certificates, Existing Unit
certificates or the Trizec Warrant Consideration pursuant to the
provisions of this Article III.
(d) Any portion of the Surviving Corporation
Redemption Fund deposited with the Trizec Paying Agent
pursuant to Section 3.05(a) to pay for Merger Shares that
become Trizec Dissenting Shares shall be delivered to the
Surviving Corporation upon demand; provided,
however, that the Surviving Corporation shall remain
liable for payment of the Redemption Amount for the Trizec
Common Share Merger Consideration in respect of Trizec Common
Shares held by any stockholder who shall have failed to perfect
or who otherwise shall have withdrawn or lost such
stockholders rights to appraisal of such shares under
Section 262 of the DGCL
(Section 262).
(e) Any portion of the Surviving Corporation
Redemption Fund that remains undistributed to the holders
of Redeemable Preferred Shares for one year after the Trizec
Merger Effective Time shall be delivered to the Surviving
Corporation, upon demand, and any holders of Redeemable
Preferred Shares who have not theretofore complied with this
Article III shall thereafter look only to the Surviving
Corporation for, and the Surviving Corporation shall remain
liable for, payment of their claim for the
Redemption Amount. Any portion of the Surviving Corporation
Redemption Fund remaining unclaimed by holders of
Redeemable Preferred Shares as of a date which is immediately
prior to such time as such amounts would otherwise escheat to or
become property of any Governmental Authority shall, to the
extent permitted by applicable Law, become the property of the
Surviving Corporation free and clear of any claims or interest
of any person previously entitled thereto. None of Parent, the
Trizec Paying Agent or the Surviving Corporation shall be liable
to any holder of Redeemable Preferred Shares for any such shares
(or dividends or distributions with respect thereto), or cash
delivered to a public official pursuant to any abandoned
property, escheat or similar Law.
(f) If any Trizec Common Share Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of
that fact by the person claiming such Trizec Common Share
Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such person of a bond,
in such reasonable amount as the Surviving Corporation may
direct, as indemnity against any claim that may be made against
it with respect to such Trizec Common Share Certificate, the
Trizec Paying Agent shall pay in respect of Redeemable Preferred
Shares into which the Trizec Common Shares were converted in the
Trizec Merger to which such lost, stolen or destroyed Trizec
Common Share Certificate relate the Redemption Amount to
which the holder thereof is entitled.
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(g) At the Trizec Merger Effective Time, the stock transfer
books of Trizec shall be closed and there shall be no further
registration of transfers of Merger Shares or Redeemable
Preferred Shares thereafter on the records of Trizec. From and
after the Trizec Merger Effective Time, the holders of Trizec
Common Share Certificates representing Merger Shares outstanding
immediately prior to the Trizec Merger Effective Time shall
cease to have any rights with respect to such Shares, except as
otherwise provided in this Agreement, the certificate of
incorporation of the Surviving Corporation, or by Law. From and
after the redemption of the Redeemable Preferred Shares
immediately following the completion of the Trizec Merger, any
Trizec Common Share Certificates presented to the Trizec Paying
Agent or the Surviving Corporation for any reason shall be
cancelled against delivery of the Redemption Amount to
which the holders thereof are entitled.
(h) At the Operating Company Merger Effective Time, the
Unit transfer books of the Operating Company shall be closed and
there shall be no further registration or transfer of the
Operating Company or the Surviving Operating Company of Existing
Units. From and after the Operating Company Effective Time, the
holders of Existing Units outstanding immediately prior to the
Operating Company Effective Time shall cease to have rights with
respect to such Existing Units, except as otherwise provided for
herein.
Section 3.06. Employee
Stock Purchase Plan of Trizec. Trizec shall
take all actions necessary to terminate its 2003 Employee Stock
Purchase Plan, as amended and restated (the
ESPP) at the end of the current
Offering Period (as such term is defined in the
ESPP) which is scheduled to end on June 30, 2006 (the
ESPP Date). As of the ESPP Date, no new
offering or purchasing periods shall be commenced. In addition,
Trizec shall take all actions as may be necessary in order to
freeze the rights of the participants in the ESPP, effective as
of the date of this Agreement, to existing participants and (to
the extent permissible under the ESPP) existing participation
levels.
Section 3.07. Termination
of Trizecs DRIP. Trizec shall take all
actions necessary to terminate its Dividend Reinvestment and
Share Purchase Plan (the DRIP), effective as
soon as possible after the date of this Agreement, and ensure
that no purchase or other rights under the DRIP enable the
holder of such rights to acquire any interest in the Surviving
Corporation or any other Trizec Party or Buyer Party as a result
of such purchase or the exercise of such rights at or after such
date.
Section 3.08. Trizec
Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the
contrary and to the extent available under the DGCL, Trizec
Common Shares that are outstanding immediately prior to the
Trizec Merger Effective Time and that are held by any
stockholder who is entitled to demand and properly demands the
appraisal for such Shares (the Trizec Dissenting
Shares) pursuant to, and who complies in all respects
with, the provisions of Section 262 shall not be converted
into, or represent the right to receive, the Trizec Common Share
Merger Consideration or the Redemption Amount. Any such
stockholder shall instead be entitled to receive payment of the
fair value of such stockholders Trizec Dissenting Shares
in accordance with the provisions of Section 262;
provided, however, that all Trizec Dissenting
Shares held by any stockholder who shall have failed to perfect
or who otherwise shall have withdrawn, in accordance with
Section 262, or lost such stockholders rights to
appraisal of such Shares under Section 262 shall thereupon
be deemed to have been converted into, and to have become
exchangeable for, as of the Trizec Merger Effective Time, the
right to receive the Trizec Common Share Merger Consideration
and the Redemption Amount (upon redemption of such
stockholders Redeemable Preferred Shares pursuant to
Section 3.01(c) hereof, without any interest thereon, upon
surrender of the Certificate or Certificates that formerly
evidenced such Shares in the manner provided in
Section 3.05(b) or, if a portion of the Surviving
Corporation Redemption Fund deposited with the Trizec
Paying Agent to pay for Shares that become Trizec Dissenting
Shares has been delivered to the Surviving Corporation in
accordance with Section 3.05(d), upon demand to the
Surviving Corporation.
(b) Trizec shall give Parent (i) prompt notice of any
demands received by Trizec for appraisal of any Trizec Common
Shares, withdrawals of such demands and any other instruments
served pursuant to the DGCL and received by Trizec and
(ii) the opportunity to participate in and direct all
negotiations and proceedings with respect to demands for
appraisal under the DGCL. Trizec shall not, except with the
prior written consent of Parent, make any payment or agree to
make any payment with respect to any demands for appraisal or
offer to settle or settle any such demands.
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Section 3.09. Withholding
Rights. Trizec, the Surviving Corporation,
the Surviving Operating Company or the Trizec Paying Agent, as
applicable, shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to
any holder of Trizec Common Shares, Trizec Stock Options, Trizec
Restricted Share Rights, Trizec Warrants, Trizec Dissenting
Shares and Existing Units who will receive the Operating Company
Merger Consideration such amounts as it is required to deduct
and withhold with respect to the making of such payment under
the Code, and the rules and regulations promulgated thereunder,
or any provision of state, local or foreign tax law. To the
extent that amounts are so withheld by Trizec, the Surviving
Corporation, or the Trizec Paying Agent, as applicable, such
withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Merger
Shares, Redeemable Preferred Trizec Common Shares, Trizec Stock
Options, Trizec Restricted Share Rights, Trizec Warrants, or
Trizec Dissenting Shares in respect of which such deduction and
withholding was made by the Trizec, the Surviving Corporation or
the Trizec Paying Agent, as applicable.
ARTICLE IV
REPRESENTATIONS
AND WARRANTIES OF THE TRIZEC PARTIES
Except as set forth in the Trizec Disclosure Schedule the Trizec
Parties hereby jointly and severally represent and warrant to
the Buyer Parties as follows:
Section 4.01. Organization
and Qualification; Subsidiaries; Authority.
(a) Trizec is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware. Trizec is duly qualified or licensed to do business as
a foreign corporation and is in good standing under the laws of
each jurisdiction in which the character of the properties
owned, leased or operated by it therein or in which the
transaction of its business makes such qualification or
licensing necessary, except where the failure to be so
qualified, licensed or in good standing would not, individually
or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Trizec has all requisite corporate power and
authority to own, operate, lease and encumber its properties and
carry on its business as now conducted.
(b) Each of Trizecs subsidiaries (the Trizec
Subsidiaries, and each of the Trizec Subsidiaries with
net quarterly revenue greater than 5% of the consolidated net
revenue of Trizec for the quarter ended March 31, 2006
being set forth on Section 4.01(b) of the Trizec Disclosure
Schedule, a Material Trizec Subsidiary),
together with the jurisdiction of organization of each such
subsidiary, the percentage of the outstanding equity of each
such subsidiary owned by Trizec and each other subsidiary of
Trizec, is set forth on Section 4.01(b) of the Trizec
Disclosure Schedule. Except as set forth in
Sections 4.01(b) and 4.01(c) of the Trizec Disclosure
Schedule, Trizec does not own, directly or indirectly, any
shares of stock of, or other equity interest in, any
corporation, partnership, limited liability company, joint
venture or other business association or entity. Each Trizec
Subsidiary is a corporation, partnership, limited liability
company or trust duly incorporated or organized, validly
existing and in good standing under the laws of the jurisdiction
of its incorporation or organization, except where the failure
to be so incorporated, organized, validly existing or in good
standing would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect. Each of the
Material Trizec Subsidiaries has the requisite corporate,
limited partnership, limited liability company or similar power
and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted, except where
the failure to have such power and authority would not,
individually or in the aggregate, be reasonably expected to have
a Material Adverse Effect. Each of the Trizec Subsidiaries is
duly qualified or licensed to do business, and is in good
standing (to the extent applicable), in each jurisdiction where
the character of the properties owned, leased or operated by it
or the conduct or nature of its business makes such
qualification or licensing necessary, except for jurisdictions
in which the failure to be so qualified, licensed or in good
standing would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
(c) Trizec is the sole managing member of the Operating
Company. As of June 2, 2006 Trizec directly owned
157,199,870 Class A common units of limited liability
company interest of the Operating Company, which represented
approximately 98.4% of the outstanding Class A and
Class B common units of limited
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liability company interest of the Operating Company (the
Operating Company Common Units) as of such
date, 100 SV Units of the Operating Company (the
Operating Company SV Units), representing
100% of the outstanding SV Units as of such date, and 100,000
Class F Convertible Units of the Operating Company (the
Operating Company Class F Units),
representing 100% of the outstanding Class F Units as of
such date. Section 4.01(c) of the Trizec Disclosure
Schedule sets forth, as of June 2, 2006, a list of all
holders of units of limited liability company interest of the
Operating Company, including the name of the Person holding each
such unit, and the number and type (e.g., general, limited,
etc.). Except as set forth in the Operating Company LLC
Agreement or Section 4.01(c) of the Trizec Disclosure
Schedule, there are no existing options, warrants, calls,
subscriptions, convertible securities, or other rights,
agreements or commitments that obligate the Operating Company to
issue, repurchase, redeem, transfer or sell any limited
liability company interests of the Operating Company. Except as
set forth in Section 4.01(c) of the Trizec Disclosure
Schedule, the limited liability company interests in the
Operating Company that are owned by Trizec are subject only to
the restrictions on transfer set forth in the Operating Company
LLC Agreement, and those imposed by applicable securities laws.
(d) A correct and complete list of entities that are not
Trizec Subsidiaries and in which Trizec or any Trizec Subsidiary
has a direct or indirect interest (the Trizec JV
Entities), together with the jurisdiction of
organization of each Trizec JV Entity, the names of the other
members and partners in each Trizec JV Entity and the respective
percentage interests of each such member or partner in each
Trizec JV Entity is set forth in Section 4.01(d)(i) of the
Trizec Disclosure Schedule.
Section 4.02. Organizational
Documents. Trizec has previously provided or
made available complete copies of the Trizec Charter and Trizec
Bylaws, the Operating Company LLC Agreement and the certificate
of formation of the Operating Company (and in each case, all
amendments thereto) and all organizational documents of the
Trizec JV Entities that own one or more Trizec Properties as set
forth in Section 4.02 of the Trizec Disclosure Schedule as
in effect on the date of this Agreement (collectively, the
Organizational Documents). All Organizational
Documents are in full force and effect and no dissolution,
revocation or forfeiture proceedings regarding Trizec, any
Trizec Subsidiaries, the Operating Company or, to the knowledge
of Trizec, the Material Trizec JV Entities have been commenced.
Section 4.03. Capitalization.
(a) The authorized capital stock of Trizec consists of
500,000,000 Trizec Common Shares, 100 shares of Trizec
Special Voting Stock, 100,000 shares of Trizec Class F
Stock, and 50,000,000 shares of preferred stock, par value
$0.01 per share (Trizec Preferred
Shares). As of June 2, 2006, (i) 157,199,870
Trizec Common Shares, 100 shares of Trizec Special Voting
Stock and 100,000 shares of Trizec Class F Stock were
issued and outstanding, all of which are validly issued, fully
paid and nonassessable and (ii) 61,545 Trizec Common Shares
were held in the treasury of Trizec. As of the date of this
Agreement, no Trizec Preferred Shares are issued and outstanding.
(b) Each outstanding share of capital stock of, or other
equity interest in, a Trizec Subsidiary owned by Trizec or by
another Trizec Subsidiary is owned free and clear of all Liens
except as set forth on Section 4.03(b) of the Trizec
Disclosure Schedule.
(c) As of June 2, 2006, 6,466,000 Shares were
reserved for future issuance pursuant to outstanding Trizec
Stock Options, Trizec Restricted Share Rights, Trizec Warrants,
and other purchase rights and stock awards granted pursuant to
the Incentive Plan, the ESPP and DRIP (collectively, the
Trizec Stock Awards). As of June 2,
2006, 2,498,671 Trizec Common Shares have been reserved for
issuance upon the redemption of the Operating Company Common
Units. Except as set forth in Section 4.03(c) of the Trizec
Disclosure Schedule, the Trizec Charter and the Operating
Company LLC Agreement, there are no options, warrants or other
rights, agreements, arrangements or commitments of any character
relating to the issued or unissued capital stock of Trizec or
any Trizec Subsidiary or obligating Trizec or any Trizec
Subsidiary to issue or sell any shares of capital stock of, or
other equity interests in, Trizec or any Trizec Subsidiary.
Trizec has made available to Parent accurate and complete copies
of all Incentive Plans pursuant to which Trizec has granted
Trizec Stock Awards that are currently outstanding and the form
of all stock award agreements evidencing such Trizec Stock
Awards. All Trizec Common Shares subject to issuance as
aforesaid, upon issuance on the terms and
A-22
conditions specified in the instruments pursuant to which they
are issuable, will be duly authorized, validly issued, fully
paid and nonassessable.
(d) Except as set forth in Section 4.03(d) of the
Trizec Disclosure Schedule, there are no outstanding contractual
obligations of, or other equity interest in, Trizec to
repurchase, redeem or otherwise acquire any shares of capital
stock of Trizec.
(e) Except as set forth in Section 4.03(e) of the
Trizec Disclosure Schedule, Trizec is under no obligation,
contingent or otherwise, by reason of any agreement to register
the offer and sale or resale of any of its securities under the
Securities Act.
(f) Except as set forth in Trizec Charter, there are no
agreements or understandings to which Trizec or any Trizec
Subsidiary is a party with respect to the voting of any shares
of capital stock of Trizec or which restrict the transfer of any
such shares, nor does Trizec have knowledge of any third party
agreements or understandings with respect to the voting of any
such shares or which restrict the transfer of any such shares.
(g) There is no Voting Debt of Trizec or any Trizec
Subsidiary outstanding.
(h) Except as set forth on Section 4.03(h) of the
Trizec Disclosure Schedule, all dividends or distributions on
securities of Trizec or any Trizec Subsidiary that have been
declared or authorized prior to the date of this Agreement have
been paid in full.
Section 4.04. Authority
Relative to this Agreement, Validity and Effect of
Agreements.
(a) Trizec has all necessary corporate power and authority
to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions
contemplated by this Agreement. Except for the approvals
described in the following sentence, the execution, delivery and
performance by Trizec of this Agreement and the consummation of
the transactions contemplated by this Agreement have been duly
and validly authorized by all necessary corporate action on
behalf of Trizec. No other corporate proceedings on the part of
Trizec are necessary to authorize this Agreement or to
consummate the transactions contemplated by this Agreement other
than (i) the approval and adoption of this Agreement by the
holders of a majority of outstanding Trizec Common Shares
entitled to vote thereon at a meeting of the stockholders of
Trizec duly called and held for such purpose (the
Trizec Stockholder Approval) and
(ii) the filing and recordation of the Trizec Certificate
of Merger and other appropriate merger documents as required by
the DGCL. This Agreement has been duly and validly executed and
delivered by Trizec, and the Operating Company and the Merger
Operating Company, assuming the due authorization, execution and
delivery by each of TZ Canada, Parent, MergerCo, Merger
Operating Company and AcquisitionCo, constitutes a legal, valid
and binding obligation of Trizec, enforceable against Trizec in
accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and similar Laws of general
applicability relating to or affecting creditors rights or
by general equity principles.
(b) The Operating Company (through Trizec, as its sole
managing member) has all necessary limited liability company
power and authority to execute and deliver this Agreement, to
perform its obligations hereunder and to consummate the
transactions contemplated by this Agreement. The execution,
delivery and performance by the Operating Company of this
Agreement and the consummation by the Operating Company of the
transactions contemplated by this Agreement have been duly and
validly authorized by all necessary limited liability company
action on behalf of the Operating Company, including by all
necessary action of Trizec as the sole managing member of the
Operating Company, and no other limited liability company
proceedings on the part of any of them are necessary to
authorize this Agreement or to consummate the transactions
contemplated by this Agreement. This Agreement has been duly and
validly executed and delivered by the Operating Company and,
assuming the due authorization, execution and delivery by each
of TZ Canada, Parent, MergerCo and AcquisitionCo, constitutes a
legal, valid and binding obligation of the Operating Company,
enforceable against it in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and
similar Laws of general applicability relating to or affecting
creditors rights or by general equity principles.
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(c) The Special Committee, by resolutions duly adopted at
meetings duly called and held, has duly (i) determined that
this Agreement and the Trizec Merger are fair to and in the best
interests of Trizec and its stockholders (excluding TZ Canada
and its affiliates), (ii) determined that this Agreement
should be approved and declared advisable, and
(iii) resolved to recommend that the Trizec Board approve
and declare the advisability of this Agreement (collectively,
the Special Committee Recommendation). The
Trizec Board, by resolutions duly adopted at meetings duly
called and held, has duly (i) determined that this
Agreement and the Trizec Merger are fair to and in the best
interests of Trizec and its stockholders, (ii) approved
this Agreement and declared its advisability,
(iii) recommended that the stockholders of Trizec adopt
this Agreement, and (iv) directed that this Agreement be
submitted for consideration by the stockholders of Trizec at the
Trizec Stockholders Meeting.
Section 4.05. No
Conflict; Required Filings and Consents.
(a) Except as set forth in Section 4.05(a) of the
Trizec Disclosure Schedule, subject to the receipt of the
consents, approvals and other authorizations described in
Section 4.05(b), the execution and delivery by the Trizec
Parties of this Agreement do not, and the performance of its
obligations hereunder and thereunder will not, (i) conflict
with or violate (1) Trizec Charter, Trizec Bylaws, the
Operating Company LLC Agreement or the certificate of formation
of the Operating Company, or (2) the certificate or
articles of incorporation or bylaws or equivalent organizational
documents of any Material Trizec Subsidiary, as amended or
supplemented, (ii) assuming that all consents, approvals,
authorizations and other actions described in
subsection (b) of this Section 4.05 have been
obtained and all filings and obligations described in
subsection (b) of this Section 4.05 have been
made, conflict with or violate any Law applicable to Trizec or
any Trizec Subsidiary or by which any property or asset of
Trizec or any Trizec Subsidiary, is bound, or (iii) require
any consent or result in any violation or breach of or
constitute (with or without notice or lapse of time or both) a
default (or give to others any right of termination, amendment,
acceleration or cancellation) under, or result in the triggering
of any payments or result in the creation of a Lien or other
encumbrance on any property or asset of Trizec or any Trizec
Subsidiary, pursuant to, any of the terms, conditions or
provisions of any Permit, Material Trizec Lease or Trizec
Material Contract to which Trizec or any Trizec Subsidiary is a
party or by which it or any of its respective properties or
assets may be bound, except, with respect to clauses (ii)
and (iii), such triggering of payments, Liens, encumbrances,
filings, notices, permits, authorizations, consents, approvals,
violations, conflicts, breaches or defaults which would not,
individually or in the aggregate, (A) prevent or materially
delay consummation of the Trizec Merger and the other
transactions contemplated by this Agreement or
(B) reasonably be expected to have a Material Adverse
Effect.
(b) Except as set forth in Section 4.05(b) of the
Disclosure Schedule, the execution and delivery by the Trizec
Parties of this Agreement does not, and the performance of its
obligations hereunder will not, require any consent, approval,
authorization or permit of, or filing with or notification to,
any Governmental Authority, except (i) for
(A) applicable requirements, if any, of the Securities Act
of 1933, as amended (the Securities Act), the
Securities Exchange Act of 1934, as amended (the
Exchange Act), state securities or blue
sky laws (Blue Sky Laws), (B) if
applicable, the pre-merger notification requirements of the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the
HSR Act), (C) the filing with the
Securities and Exchange Commission (the SEC)
of a proxy statement relating to the Trizec Merger to be sent to
Trizecs stockholders (as amended or supplemented from time
to time, the Proxy Statement) and other
written communications that may be deemed soliciting
materials under
Rule 14a-12,
(D) any filings required under the rules and regulations of
the New York Stock Exchange (the NYSE),
(E) the approval of Canadian securities regulatory agency
(including the CSA), (F) the filing of the appropriate
merger documents as required by the DGCL and the DLLCA, and
(ii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or
notifications would not, individually or in the aggregate,
(A) prevent or materially delay consummation of the Trizec
Merger and the other transactions contemplated by this Agreement
or (B) reasonably be expected to have a Material Adverse
Effect.
Section 4.06. Permits;
Compliance with Laws.
(a) Each of Trizec and the Trizec Subsidiaries and, to the
knowledge of Trizec, the Material Trizec JV Entities, are in
possession of all franchises, grants, authorizations, licenses,
permits, consents, certificates,
A-24
approvals and orders of any Governmental Authority necessary for
them to own, lease and operate their assets or to carry on their
business as it is now being conducted (collectively, the
Permits), and all such Permits are valid and
in full force and effect, except where the failure to obtain and
maintain the Permits, or the suspension or cancellation of, any
of the Permits would not, individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect.
(b) None of Trizec, any of the Trizec Subsidiaries, or to
the knowledge of Trizec, any of the Material Trizec JV Entities
is in violation of any Laws or Permits applicable to Trizec or
any Trizec Subsidiary, or by which any property or asset of
Trizec or any Trizec Subsidiary is bound, except for any such
violations which would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
Section 4.07. SEC
Filings; Financial Statements.
(a) Trizec has filed all forms, reports and documents
(including all exhibits) required to be filed by it with the SEC
since May 8, 2002 (the Trizec SEC
Reports). The Trizec SEC Reports, each as amended
prior to the date hereof, (i) have been prepared in all
material respects in accordance with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the
rules and regulations promulgated thereunder, and (ii) did
not, when filed as amended prior to the date hereof, contain any
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make
the statements made therein, in the light of the circumstances
under which they were made, not misleading.
(b) Each of the consolidated financial statements
(including, in each case, any notes thereto) contained in or
incorporated by reference into the Trizec SEC Reports, each as
amended prior to the date hereof, was prepared in accordance
with GAAP applied on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto),
complied in all material respects with applicable accounting
requirements and the rules and regulations of the SEC and each
fairly presented, in all material respects, the consolidated
financial position, results of operations and cash flows of
Trizec and its consolidated Trizec Subsidiaries as of the
respective dates thereof and for the respective periods
indicated therein except as otherwise noted therein (subject, in
the case of unaudited statements, to normal and recurring year
end adjustments).
(c) Except (i) as set forth in Section 4.07(c) of
the Trizec Disclosure Schedule, (ii) to the extent set
forth on the consolidated balance sheet of Trizec as of
December 31, 2005 (including notes thereto) included in
Trizecs
Form 10-K
for the fiscal year ended December 31, 2005,
(iii) liabilities incurred on behalf of Trizec or any
Trizec Subsidiary in connection with this Agreement, and
(iv) liabilities incurred in the ordinary course of
business consistent with past practice since December 31,
2005, none of Trizec or the Trizec Subsidiaries had any
liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) required by GAAP to be set
forth in a consolidated balance sheet of Trizec or in the notes
thereto, except for such liabilities or obligations which would
not, individually or in the aggregate, have a Material Adverse
Effect.
(d) Since the enactment of the Sarbanes Oxley Act of 2002
(the Sarbanes Oxley Act), Trizec has been and
is in compliance in all material respects with (i) the
applicable provisions of the Sarbanes Oxley Act and the rules
and regulations promulgated thereunder, and (ii) the
applicable listing and corporate governance rules and
regulations of the NYSE. Since Trizec became subject to the
provisions of Rule 404 of the Sarbanes-Oxley Act, it has
complied in all material respects with such provisions.
Section 4.08. Absence
of Certain Changes or Events. Except as
disclosed in the Trizec SEC Reports or as set forth in
Section 4.08 of the Trizec Disclosure Schedule, since
December 31, 2005 through the date hereof, (a) Trizec
has conducted its business in the ordinary course consistent
with past practice and (b) there has not been an event,
occurrence, effect or circumstance that has resulted or would
reasonably be expected to result in a Material Adverse Effect.
Section 4.09. Absence
of Litigation. As of the date hereof, except
(i) as listed in Section 4.09 of the Trizec Disclosure
Schedule, (ii) as set forth in Trizec SEC Reports, each as
amended to the date hereof, filed prior to the date of this
Agreement, or (iii) for suits, claims, Actions, proceedings
or investigations arising from the ordinary course of operations
of Trizec and Trizec Subsidiaries involving (A) eviction or
collection matters, (B) personal injury or other tort
litigation which are covered by insurance (subject to customary
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deductibles) or for which all material costs and liabilities
arising therefrom are reimbursable pursuant to common area
maintenance or similar agreements, or (C) claims for which
Trizec is indemnified by a tenant or service provider of Trizec,
there is no Action pending or, to the knowledge of Trizec,
threatened in writing against Trizec or any of Trizec
Subsidiaries or any of its or their respective properties or
assets except as would not, individually or in the aggregate,
(x) prevent or materially delay consummation of the Trizec
Merger and the other transactions contemplated by this Agreement
or (y) has or reasonably be expected to have a Material
Adverse Effect. As of the date hereof, none of Trizec or any of
Trizec Subsidiaries is subject to any order, judgment, writ,
injunction or decree, except as would not, individually or in
the aggregate, have or reasonably be expected to have a Material
Adverse Effect.
Section 4.10. Employee
Benefit Plans.
(a) Section 4.10(a) of the Trizec Disclosure Schedule
lists all employee benefit plans (as defined in
Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended (ERISA)) and all material
bonus, stock option, stock purchase, restricted stock,
incentive, deferred compensation, retiree medical or life
insurance, supplemental retirement, severance, or other benefit
plans, programs or arrangements, and all employment,
termination, severance or other contracts or agreements to which
Trizec or any ERISA Affiliate is a party, with respect to which
Trizec or any ERISA Affiliate has any obligation or which are
maintained, contributed to or sponsored by Trizec or any Trizec
Subsidiary for the benefit of any current or former employee,
officer, director or consultant of Trizec or any ERISA Affiliate
(collectively, the Plans). Except as set
forth in Section 4.10(a) of the Trizec Disclosure Schedule,
Trizec has made available to Parent copies, which are correct
and complete in all material respects, of the following:
(i) the Plans, (ii) the annual report
(Form 5500) filed with the Internal Revenue Service
(IRS) for the last three plan years,
(iii) the most recently received IRS determination letter,
if any, relating to a Plan, (iv) the most recently prepared
actuarial report or financial statement, if any, relating to a
Plan, (v) the most recent summary plan description for such
Plan (or other descriptions of such Plan provided to employees)
and all modifications thereto, and (vi) all material
correspondence with the Department of Labor or the IRS.
(b) Each Plan has been operated in all material respects in
accordance with its terms and the requirements of all applicable
Laws, including ERISA and the Internal Revenue Code of 1986, as
amended, (the Code), except for such
noncompliance that would not, individually or in the aggregate,
have a Material Adverse Effect. Each Plan that is a
nonqualified deferred compensation plan (as defined
in Section 409A(d)(1) of the Code) has been operated since
January 1, 2005 in good faith compliance with
Section 409A of the Code, IRS Notice 2005-1 and Proposed
Regulation Sections 1.409A-1 through 1.409A-6 inclusive. No
Action is pending or, to the knowledge of Trizec, threatened
with respect to any Plan (other than claims for benefits in the
ordinary course) that would, individually or in the aggregate,
have a Material Adverse Effect.
(c) Each Plan that is intended to be qualified under
Section 401(a) of the Code or Section 401(k) of the
Code has received a favorable determination letter from the IRS,
or is entitled to rely on a favorable opinion issued by the IRS,
and to the knowledge of Trizec no fact or event has occurred
since the date of such determination letter or letters from the
IRS to adversely affect the qualified status of any such Plan or
the exempt status of any such trust.
(d) Neither Trizec nor any ERISA Affiliate sponsors or has
sponsored any employee benefit plan that is subject to the
provisions of Title IV of ERISA, is an employee stock
ownership plan within the meaning of Section 4975(e)(7) of
the Code, a voluntary employee beneficiary association or is a
multiemployer plan within the meaning of Section 3(37) of
ERISA. Neither Trizec nor any ERISA Affiliate sponsors, has
sponsored or has any obligation with respect to any employee
benefit plan that provides for any post-employment or
post-retirement health or medical or life insurance benefits for
retired, former or current employees of Trizec or any ERISA
Affiliate, except as required by Section 4980B of the Code.
Except as set forth on Section 4.10(d)(i) of the Trizec
Disclosure Schedule, neither Trizec nor any ERISA Affiliate has
any obligation with respect to any multiemployer plan as defined
in Section 4001(a)(3) of ERISA (each, a
Multiemployer Plan). Neither Trizec nor any
ERISA Affiliate has had a complete or partial withdrawal from
any Multiemployer Plan, and, except as set forth on
Section 4.10(d)(ii) of the Trizec Disclosure Schedule,
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neither Trizec nor any ERISA Affiliate would become subject to
any liability under ERISA if Trizec or any such ERISA Affiliate
were to withdraw (in whole or in part) from any such
Multiemployer Plan.
(e) Full payment has been made, or otherwise properly
accrued on the books and records of Trizec and any ERISA
Affiliate, of all amounts that Trizec and any ERISA Affiliate
are required under the terms of the Plans to have paid as
contributions to such Plans on or prior to the date hereof
(excluding any amounts not yet due) and the contribution
requirements, on a prorated basis, for the current year have
been made or otherwise properly accrued on the books and records
of Trizec through the Closing Date.
(f) Except as set forth in Section 4.10(f)(i) of the
Trizec Disclosure Schedule or as contemplated in
Article III of this Agreement, neither the execution or
delivery of this Agreement nor the consummation of the Merger
and the transactions contemplated hereby will (either alone or
in conjunction with any other event) result in, cause the
vesting, exercisability or delivery of, or increase in the
amount or value of, any payment, right or other benefit to any
employee, officer, director or other service provider of Trizec
or any ERISA Affiliate. Except as set forth in
Section 4.10(f)(ii) of the Trizec Disclosure Schedule, no
Plan, either individually or collectively, provides for any
payment by Trizec or any ERISA Affiliate that would constitute a
parachute payment within the meaning of
Section 280G of the Code after giving effect to the
transactions contemplated by this Agreement (either alone or in
conjunction with any other event).
(g) For purposes of this Section 4.10, an entity is an
ERISA Affiliate of Trizec if it would have
ever been considered a single employer with Trizec under 4001(b)
of ERISA or part of the same controlled group as Trizec for
purposes of Section 302(d)(8)(C) of ERISA.
Section 4.11. Labor
Matters.
(a) Except as would not, individually or in the aggregate,
have a Material Adverse Effect or as set forth in
Section 4.11(a) of the Trizec Disclosure Schedule,
(i) neither Trizec nor any Trizec Subsidiary is a party to
any collective bargaining agreement or other labor union
contract applicable to persons employed by Trizec or any Trizec
Subsidiary, (ii) neither Trizec nor any Trizec Subsidiary
has breached or otherwise failed to comply with any provision of
any such agreement or contract, and there are no grievances
outstanding against Trizec or any Trizec Subsidiary under such
agreement or contract, and (iii) there is no strike,
slowdown, work stoppage or lockout by or with respect to any
employees of Trizec or any Trizec Subsidiary.
(b) Trizec and each of the Trizec Subsidiaries is in
compliance in all material respects with all applicable Laws
relating to employment or labor, including all applicable Laws
relating to wages, hours, collective bargaining, employment
discrimination, civil rights, safety and health, workers
compensation, pay, equity and the collection and payment of
withholding
and/or
social security taxes. Except as set forth on
Section 4.11(b) of the Trizec Disclosure Schedule, neither
Trizec nor any of the Trizec Subsidiaries has incurred any
liability or obligation under the Worker Adjustment and
Retraining Notification Act (WARN) or any
similar state or local Law within the last six months which
remains unsatisfied.
Section 4.12. Information
Supplied. The information supplied by Trizec
relating to Trizec and Trizec Subsidiaries to be contained in
the Proxy Statement or any other document to be filed with the
SEC in connection herewith (the Other
Filings) will not, in the case of the Proxy Statement,
at the date it is first mailed to Trizecs stockholders or
at the time of Trizec Stockholders Meeting or at the time
of any amendment or supplement thereto, or, in the case of any
Other Filing, at the date it is first mailed to Trizecs
stockholders or at the date it is first filed with the SEC,
contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they are made, not misleading, except
that no representation is made (or omitted to be made) by Trizec
or any Trizec Subsidiary with respect to statements made or
incorporated by reference therein based on information supplied
by Parent or MergerCo in connection with the preparation of the
Proxy Statement or the Other Filings for inclusion or
incorporation by reference therein. All documents that Trizec is
responsible for filing with the SEC in connection with the
Trizec Merger, or the other transactions contemplated by this
Agreement, will comply as to form and substance in all material
respects with the applicable requirements of the Securities Act
and the rules and regulations thereunder and the Exchange Act
and the rules and regulations thereunder.
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Section 4.13. Property
and Leases.
(a) Section 4.13(a) of the Trizec Disclosure Schedule
sets forth a correct and complete list and address of all real
property interests owned or held by Trizec, the Trizec
Subsidiaries and the Material Trizec JV Entities, including fee
interests, ground leasehold interests and mortgage loans held as
lender (all such real property interests, together with all
buildings, structures and other improvements and fixtures
located on or under such real property and all easements, rights
and other appurtenances to such real property, are individually
referred to herein as Trizec Property and
collectively referred to herein as the Trizec
Properties). As of the date hereof, each of the Trizec
Properties is owned or leased by Trizec and the Material Trizec
JV Entities or a Trizec Subsidiary or a Material Trizec JV
Entity, as indicated in Section 4.13(a) of the Trizec
Disclosure Schedule. As of the date hereof, Trizec, the Trizec
Subsidiaries or, to the knowledge of Trizec, the Material Trizec
JV Entities own or, if so indicated in Section 4.13(a) of
the Trizec Disclosure Schedule, lease each of the Trizec
Properties, in each case, free and clear of any Liens, title
defects, covenants or reservations of interests in title
(collectively, Trizec Property Restrictions),
except for Permitted Liens and any other limitations of any
kind, if any, that would not have or would not reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect.
(b) Except as set forth on Section 4.13(b) of the
Trizec Disclosure Schedule, as of the date hereof, none of
Trizec, the Trizec Subsidiaries or to the knowledge of Trizec,
any of the Material Trizec JV Entities has received
(i) written notice that any certificate, permit or license
from any Governmental Authority having jurisdiction over any
Trizec Properties or that any agreement, easement or other right
of an unlimited duration that is necessary to permit the lawful
use and operation of the buildings and improvements on any
Trizec Properties or that is necessary to permit the lawful use
and operation of all utilities, parking areas, detention ponds,
driveways, roads and other means of egress and ingress to and
from any Trizec Properties is not in full force and effect,
except for such failures that would not reasonably be expected
to have a Material Adverse Effect, or of any pending written
threat of modification or cancellation of any of same, that
would reasonably be expected to have a Material Adverse Effect
or (ii) written notice of any uncured violation of any Laws
affecting any of Trizec Properties or operations which would
reasonably be expected to have a Material Adverse Effect.
(c) Except as provided for in Section 4.13(c) of the
Trizec Disclosure Schedule, policies of title insurance (each a
Trizec Title Insurance Policy) have been
issued insuring, as of the effective date of each such Trizec
Title Insurance Policy, Trizecs and any Trizec
Subsidiarys (or the applicable predecessors or
acquirors) title to or leasehold interest in Trizec
Properties, subject to the matters disclosed on Trizec Title
Insurance Policies and Permitted Liens. A copy of each Trizec
Title Insurance Policy has been previously made available to
Parent.
(d) Except as provided for in Section 4.13(d) of the
Trizec Disclosure Schedule, as of the date hereof, none of
Trizec or any of the Trizec Subsidiaries has received any
written notice to the effect that any condemnation or rezoning
proceedings are pending with respect to any of the Trizec
Properties (and to the knowledge of Trizec, no such proceeding
is threatened) that would, individually or in the aggregate,
have a Material Adverse Effect.
(e) Except as provided in Section 4.13(e) of the
Trizec Disclosure Schedule and except for immaterial
discrepancies or omissions, the rent rolls for Trizec Properties
dated as of May 1, 2006 which have previously been made
available to Parent, list each lease that was in effect as of
May 1, 2006 and to which Trizec, any Trizec
Subsidiary is or, to the knowledge of Trizec, any of the
Material Trizec JV Entities is a party as landlord with respect
to each of the applicable Trizec Properties (such leases,
together with all amendments, modifications, supplements,
renewals, extensions and guarantees related thereto, the
Trizec Leases). Except as set forth on
Schedule 4.13(e), Trizec has made available to Parent
copies of all Trizec Leases that relate to in excess of
50,000 square feet of net rentable area (the
Material Trizec Leases), in effect as of the
date hereof, which copies are correct and complete in all
material respects. Except as set forth in Section 4.13(e)
of the Trizec Disclosure Schedule, none of Trizec, any Trizec
Subsidiary or to the knowledge of Trizec, the Material Trizec JV
Entities has received written notice that it is in default under
any Material Trizec Lease, except for violations or defaults
that have been cured in any material respect or are disclosed in
the rent rolls.
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Except as provided in Section 4.13(e) of the Trizec
Disclosure Schedule, no tenant under a Material Trizec Lease is
in monetary or, to the knowledge of Trizec, material
non-monetary default under such Material Trizec Lease.
(f) Section 4.13(f) of the Trizec Disclosure Schedule
sets forth a correct and complete list as of the date of this
Agreement of each ground lease pursuant to which Trizec or any
Trizec Subsidiary, or to the knowledge of Trizec, any Material
Trizec JV Entity is a lessee (individually, a Trizec
Ground Lease and collectively, Trizec Ground
Leases). Each Trizec Ground Lease is in full force and
effect and neither Trizec nor any Trizec Subsidiary or to the
knowledge of Trizec, any Material Trizec JV Entity has received
a written notice that it is in default in any material respect
under any Trizec Ground Lease which remains uncured. Trizec has
made available to Parent copies of each Trizec Ground Lease and
all amendments thereto, which copies are correct and complete in
all material respects. Except as would not reasonably be
expected to have a Material Adverse Effect, neither Trizec, nor
any Trizec Subsidiary is and, to the knowledge of Trizec, no
other party is in breach or violation of, or default under, any
Trizec Ground Lease (in each case, with or without notice or
lapse of time or both) and each Trizec Ground Lease is valid,
binding and enforceable in accordance with its terms and is in
full force and effect with respect to Trizec or the Trizec
Subsidiaries and, to the knowledge of Trizec, with respect to
the other parties thereto.
(g) Except as set forth in Section 4.13(g) of the
Trizec Disclosure Schedule or as contemplated by, or provided
in, Trizec Leases, as of the date hereof, there are no unexpired
option agreements or rights of first refusal with respect to the
purchase of a Trizec Property or any portion thereof that is
owned by Trizec or any Trizec Subsidiary, or any other unexpired
rights in favor of any party other than Trizec or any Trizec
Subsidiary (a Third Party) to purchase or
otherwise acquire a Trizec Property or any portion that is owned
by Trizec or any Trizec Subsidiary or entered into any contract
for sale, ground lease or letter of intent to sell or ground
lease any Trizec Property or any portion thereof that is owned
by Trizec any Trizec Subsidiary.
(h) Trizec has provided or made available to Parent each
agreement pursuant to which Trizec, any Trizec Subsidiary, or to
the knowledge of Trizec, a Material Trizec JV Entity manages,
acts as leasing agent for or provides development services for
any real property for any Third Party and any other contract
which otherwise produces fee income to Trizec, any of the Trizec
Subsidiaries or, to the knowledge of Trizec, any of the Material
Trizec JV Entities in excess of $500,000 per year, which
agreements are correct and complete in all material respects.
(i) Except for those contracts or agreements set forth in
Section 4.13(i) of the Trizec Disclosure Schedule or as
contemplated by, or provided in, Trizec Leases, none of Trizec,
any of the Trizec Subsidiaries or, to the knowledge of Trizec,
any of the Material Trizec JV Entities has entered into any
contract or agreement (collectively, the Participation
Agreements) with any Third Party or any employee,
consultant, Affiliate or other person (the
Participation Party) that provides for a
right of such Participation Party to participate, invest, join,
partner, or have any interest in whatsoever (whether
characterized as a contingent fee, profits interest, equity
interest or otherwise) or have the right to any of the foregoing
in any proposed or anticipated investment opportunity, joint
venture, partnership or any other current or future transaction
or property in which Trizec or any Trizec Subsidiary has or will
have an interest, including but not limited to those
transactions or properties identified, sourced, produced or
developed by such Participation Party (a Participation
Interest).
Section 4.14. Intellectual
Property. Except as individually or in the
aggregate would not reasonably be expected to have a Material
Adverse Effect, (a) to the knowledge of Trizec, the conduct
of the business of Trizec and the Trizec Subsidiaries as
currently conducted does not infringe the Intellectual Property
rights of any Third Party and (b) with respect to
Intellectual Property owned by or licensed to Trizec or any
Trizec Subsidiary that is material to the conduct of the
business of Trizec and the Trizec Subsidiaries, taken as a
whole, as currently conducted (Trizec Intellectual
Property), Trizec or such Trizec Subsidiary has the
right to use such Trizec Intellectual Property in the continued
operation of its business as currently conducted.
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Section 4.15. Taxes. Except
as set forth on Section 4.15 of the Trizec Disclosure
Schedule:
(a) Each of Trizec and the Trizec Subsidiaries (i) has
timely filed (or had filed on their behalf) all Tax Returns, as
defined below, required to be filed by any of them (after giving
effect to any filing extension granted by a Governmental
Authority) and (ii) has paid (or had paid on their behalf)
or will timely pay all material Taxes (whether or not shown on
such Tax Returns) that are required to be paid by it, and such
Tax Returns are true, correct and complete in all material
respects. The most recent financial statements contained in the
Trizec SEC Reports filed prior to the date hereof reflect an
adequate reserve (excluding any reserve for deferred Taxes
established to reflect timing differences between book and Tax
income) for all Taxes payable by Trizec and the Trizec
Subsidiaries for all taxable periods and portions thereof
through the date of such financial statements, and Taxes payable
by Trizec and Trizec Subsidiaries through the Closing Date will
not exceed such reserve as adjusted through the Closing Date in
accordance with the past custom and practice of Trizec and the
Trizec Subsidiaries in filing their Tax Returns. True, correct
and complete copies of all federal Tax Returns for Trizec and
the Trizec Subsidiaries with respect to the taxable years
commencing on or after January 2001 have been delivered or made
available to representatives of Parent. Neither Trizec nor any
of the Trizec Subsidiaries has executed or filed with the IRS or
any other taxing authority any agreement, waiver or other
document or arrangement extending the period for assessment or
collection of material Taxes (including, but not limited to, any
applicable statute of limitation), and no power of attorney with
respect to any Tax matter is currently in force with respect to
Trizec or any of its Trizec Subsidiaries.
(b) Trizec, (i) for all taxable years commencing with
Trizecs taxable year ending December 31, 2001 through
December 31, 2005, has been subject to taxation as a REIT
within the meaning of Section 856 of the Code and has
satisfied all requirements to qualify as a REIT for such years,
(ii) has operated since December 31, 2005 to the date
hereof in a manner that will permit it to qualify as a REIT for
the taxable year that includes the date hereof, and
(iii) intends to continue to operate in such a manner as to
permit it to continue to qualify as a REIT for the taxable year
of Trizec that will include the Trizec Merger. No challenge to
Trizecs status as a REIT is pending or has been threatened
in writing by any Governmental Authority. No Trizec Subsidiary
is a corporation for U.S. federal income tax purposes,
other than a corporation that qualifies as a qualified
REIT Subsidiary, within the meaning of
Section 856(i)(2) of the Code, or as a taxable REIT
Subsidiary, within the meaning of Section 856(1) of
the Code.
(c) Each Trizec Subsidiary that is a partnership, joint
venture, or limited liability company (i) has been since
its formation treated for U.S. federal income tax purposes as a
partnership or disregarded entity, as the case may be, and not
as a corporation or an association taxable as a corporation and
(ii) has not since the later of its formation or the
acquisition by Trizec of a direct or indirect interest therein
owned any assets (including, without limitation, securities)
that have caused Trizec to violate Section 856(c)(4) of the
Code or would cause Trizec to violate Section 856(c)(4) of
the Code on the last day of any calendar quarter after the date
hereof.
(d) Section 4.15(d) of the Trizec Disclosure Schedule
sets forth each asset of Trizec or any Trizec Subsidiary which
would be subject to rules similar to Section 1374 of the
Code. With respect to each such asset, Section 4.15(d) of
the Trizec Disclosure Schedule sets forth the amount of gain
that could be subject to tax pursuant to such rules, based upon
Trizecs estimate of the value of such asset at the
relevant date that a determination thereof is required to be
made under such rules.
(e) Since January 1, 2002, neither Trizec nor any
Trizec Subsidiary has recognized taxable gain or loss from the
disposition of any property that was reported as a like
kind exchange under Section 1031 of the Code, except
to the extent of any gain that was required to be recognized
under Section 1031(b) of the Code and that was timely
reported on the Tax Returns of Trizec. The properties set forth
on Schedule 4.15(e) of the Trizec Disclosure Schedule (the
Arden Section 1031 Properties) are held
pursuant to a qualified exchange accommodation
arrangement (as defined in Revenue Procedure 2000-37) in
compliance with Section 1031 of the Code and the Safe
Harbor contained in Revenue Procedure 2000-37 (2000-2 C.B. 308).
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(f) Trizec and the Trizec Subsidiaries have not incurred
any liability for material Taxes under sections 857(b),
857(f), 860(c) or 4981 of the Code which have not been
previously paid. To the knowledge of Trizec, neither Trizec nor
any Trizec Subsidiary (other than a taxable REIT
Subsidiary or any Trizec Subsidiary of a taxable
REIT Subsidiary) has engaged at any time in any
prohibited transactions within the meaning of
Section 857(b)(6) of the Code. To the knowledge of Trizec,
neither Trizec nor any Trizec Subsidiary has engaged in any
transaction that would give rise to redetermined rents,
redetermined deductions and excess interest described in
section 857(b)(7) of the Code. No event has occurred, and
no condition or circumstances exists, which presents a material
risk that any material Tax described in the preceding sentences
will be imposed on Trizec or any Trizec Subsidiary.
(g) All deficiencies asserted or assessments made with
respect to Trizec or any Trizec Subsidiary as a result of any
examinations by the IRS or any other taxing authority of the Tax
Returns of or covering or including Trizec or any Trizec
Subsidiary have been fully paid, and, to the knowledge of
Trizec, there are no other audits, examinations or other
proceedings relating to any Taxes of Trizec or any Trizec
Subsidiary by any taxing authority in progress. Neither Trizec
nor any Trizec Subsidiary has received any written notice from
any taxing authority that it intends to conduct such an audit,
examination or other proceeding in respect to Taxes or make any
assessment for Taxes. Neither Trizec nor any Trizec Subsidiary
is a party to any litigation or pending litigation or
administrative proceeding relating to Taxes (other than
litigation dealing with appeals of property tax valuations).
(h) Trizec and the Trizec Subsidiaries have complied, in
all materials respects, with all applicable laws, rules and
regulations relating to the payment and withholding of Taxes
(including withholding of Taxes pursuant to Sections 1441,
1442, 1445, 1446, and 3402 of the Code or similar provisions
under any foreign laws) and have duly and timely withheld and
have paid over to the appropriate taxing authorities all
material amounts required to be so withheld and paid over on or
prior to the due date thereof under all applicable Laws.
(i) To the knowledge of Trizec, no claim has been made in
writing by a taxing authority in a jurisdiction where Trizec or
any Trizec Subsidiary does not file Tax Returns that Trizec or
any such Trizec Subsidiary is or may be subject to taxation by
that jurisdiction.
(j) Neither Trizec nor any other Person on behalf of Trizec
or any Trizec Subsidiary has requested any extension of time
within which to file any material Tax Return, which material Tax
Return has not yet been filed.
(k) Neither Trizec nor any Trizec Subsidiary is a party to
any Tax sharing or similar agreement or arrangement other than
any agreement or arrangement solely between Trizec and any
Trizec Subsidiary, pursuant to which it will have any obligation
to make any payments after the Closing.
(l) Neither Trizec nor any Trizec Subsidiary has requested
a private letter ruling from the IRS or comparable rulings from
other taxing authorities.
(m) Neither Trizec nor any Trizec Subsidiary (A) is or
has ever been a member of an affiliated group (other than a
group the common parent of which is Trizec or a directly or
indirectly wholly-owned Trizec Subsidiary) filing a consolidated
federal income tax return and (B) has any liability for the
Taxes of another person other than Trizec and the Trizec
Subsidiaries under Treasury
regulation 1.1502-6
(or any similar provision of state, local or foreign law), as a
transferee or successor, by contract, or otherwise.
(n) There are no Liens for Taxes (other than Taxes not yet
due and payable for which adequate reserves have been made in
accordance with GAAP) upon any of the assets of Trizec or any
Trizec Subsidiary.
(o) To the knowledge of Trizec, foreign persons (as
determined for purposes of Section 897(h)(4)(B) of the
Code) have not owned directly or indirectly fifty percent or
more in value of Trizecs outstanding capital stock at any
time since August 8, 2002.
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(p) There are no Tax Protection Agreements currently in
force and no person has raised in writing, or to the knowledge
of Trizec threatened to raise, a material claim against Trizec
or any Trizec Subsidiary for any breach of any Tax Protection
Agreement.
(q) Neither Trizec nor any of the Trizec Subsidiaries is a
party to any understanding or arrangement described in
Section 6662(d)(2)(C)(ii) or Treasury Regulations
Section 1.6011-4(b)
or is a material advisor as defined in Section 6111(b) of
the Code.
(r) Neither Trizec nor any of the Trizec Subsidiaries has
entered into any closing agreement as described in
Section 7121 of the Code (or any corresponding or similar
provision of state, local or foreign income Tax law).
(s) Trizec has not had as of the end of any taxable year
commencing with the taxable year ended December 31, 2001,
any undistributed earnings and profits (as computed for tax
purposes) attributable to any C corporation year of
Trizec or attributable to any other C corporation.
(t) Since January 1, 2001, all distributions by Trizec
have been made in accordance with the rights of its shareholders
set forth in Trizecs organizational documents and Trizec
has not made any preferential dividends within the
meaning of Section 562(c) of the Code.
Section 4.16. Environmental
Matters. Section 4.16 of the Trizec
Disclosure Schedule sets forth a list of all reports related to
the environmental condition of Trizec Property that have been
provided to Parent. Except as set forth in such reports as would
not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect:
(a) each of Trizec, the Trizec Subsidiaries and, to the
knowledge of Trizec, the Material Trizec JV Entities
(i) are in compliance with all Environmental Laws,
(ii) hold all permits, approvals, identification numbers,
licenses and other authorizations required under any
Environmental Law to own or operate their assets as currently
owned and operated (Environmental Permits)
and (iii) are in compliance with all of, and have not
violated any of, their respective Environmental Permits;
(b) neither Trizec nor any Trizec Subsidiary has released,
and to the knowledge of Trizec, no other person has released,
Hazardous Substances on any real property owned, leased or
operated by Trizec or the Trizec Subsidiaries, and, to the
knowledge of Trizec, no Hazardous Substances or other conditions
are present at any other location that could reasonably be
expected to result in liability of or adversely affect Trizec,
any Trizec Subsidiary or any Material Trizec JV Entity under or
related to any Environmental Law;
(c) neither Trizec nor any Trizec Subsidiary nor, to the
knowledge of Trizec, any Material Trizec JV Entity has received
any written notice alleging that Trizec or any Trizec Subsidiary
may be in violation of, or liable under, or a potentially
responsible party pursuant to, the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980
(CERCLA) or any other Environmental Law and
to the knowledge of Trizec, there is no basis for any such
notice or claim;
(d) neither Trizec nor any Trizec Subsidiary (i) has
entered into or agreed to any consent decree or order or is a
party to any judgment, decree or judicial order relating to
compliance with Environmental Laws, Environmental Permits or the
investigation, sampling, monitoring, treatment, remediation,
removal or cleanup of Hazardous Substances and, to the knowledge
of Trizec, no investigation, litigation or other proceeding is
pending or threatened with respect thereto or (ii) has
assumed, by contract or operation of law, any liability under
any Environmental Law or relating to any Hazardous Substances,
or is an indemnitor in connection with any threatened or
asserted claim by any third-party indemnitee for any liability
under any Environmental Law or relating to any Hazardous
Substances; and
(e) notwithstanding any other provision of this Agreement,
this Section 4.16 sets forth Trizecs sole and
exclusive representations and warranties with respect to
Hazardous Substances, Environmental Laws or other environmental
matters.
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Section 4.17. Material
Contracts. Other than any material
contract (as such term is defined in Item 601(b)(10)
of
Regulation S-K
under the Securities Act) filed as an exhibit to the Trizec SEC
Reports, Section 4.17 of the Trizec Disclosure Schedule
lists each of the following written contracts and agreements
(and all amendments, modifications and supplements thereto and
all side letters to which Trizec, any Trizec Subsidiary or, to
the knowledge of Trizec, any Material Trizec JV Entity is a
party affecting the obligations of any party thereunder) to
which Trizec, any Trizec Subsidiary or, to the knowledge of
Trizec, any Material Trizec JV Entity is a party or by which any
of their respective properties or assets are bound (each such
agreement and contract, a Trizec Material
Contract):
(a) any note, bond, mortgage, indenture, contract (written
or oral), agreement, lease, license, permit, franchise or other
binding commitment, instrument or obligation (each, a
Contract) (other than among consolidated
Trizec Subsidiaries) relating to (i) indebtedness for
borrowed money and having an outstanding principal amount in
excess of $5,000,000 or (ii) conditional sale arrangements,
obligations secured by a Lien, or interest rate or currency
hedging activities, in each case in connection with which the
aggregate actual or contingent obligations of Trizec, the Trizec
Subsidiaries or Material Trizec JV Entity under such Contract
are greater than $5,000,000;
(b) any Contract that purports to limit the right of Trizec
or the Trizec Subsidiaries (i) to engage or compete in any
line of business or (ii) to compete with any person or
operate in any location, in the case of each of (i) and
(ii), in any respect material to the business of Trizec and the
Trizec Subsidiaries, taken as a whole;
(c) any Contract for the acquisition or disposition,
directly or indirectly (by merger or otherwise), of interests in
real property, assets or capital stock or other equity interests
of another person for aggregate consideration under such
Contract in excess of $3,500,000;
(d) any Contract which by its terms calls for annual
aggregate payments by Trizec and the Trizec Subsidiaries under
such Contract of more than $3,500,000 over the remaining term of
such Contract;
(e) any indemnification agreements entered into by and
between Trizec and any director or officer of Trizec (other than
the organizational documents of Trizec or the Trizec
Subsidiaries);
(f) any acquisition or disposition Contract pursuant to
which Trizec or any of Trizec Subsidiaries has continuing
indemnification, earn-out or other contingent
payment obligations, in each case, that would reasonably be
expected to result in payments in excess of $3,500,000; and
(g) any material partnership, limited liability company
agreement, joint venture or similar agreement entered into with
any Third Party.
Notwithstanding anything in this Section 4.17,
Trizec Material Contract shall not include
any Contract that (i) is terminable upon 90 days
or less notice without a penalty-premium, (ii) will be
fully performed or satisfied as of or prior to Closing,
(iii) is a Trizec Lease, (iv) is a Trizec Ground
Lease, or (v) is solely between Trizec and one or more
Trizec Subsidiaries or is solely between Trizec Subsidiaries.
Except as would not reasonably be expected to have a Material
Adverse Effect, (i) neither Trizec nor any Trizec
Subsidiary is and, to the knowledge of Trizec, no other party is
in breach or violation of, or default under, any Material
Contract, none of Trizec nor any Trizec Subsidiary has received
any claim of default under any such agreement, and no event has
occurred which would result in a breach or violation of, or a
default under, any Material Contract (in each case, with or
without notice or lapse of time or both). Each Material Contract
is valid, binding and enforceable in accordance with its terms
and is in full force and effect with respect to Trizec or Trizec
Subsidiaries, as applicable, and, to the knowledge of Trizec,
with respect to the other parties hereto.
Section 4.18. Insurance. Section 4.18
of the Trizec Disclosure Schedule sets forth a list that is
correct and complete in all material respects of the insurance
policies, other than Trizec Title Insurance Policies, held
by, or for the benefit of, Trizec or any of the Trizec
Subsidiaries, including the underwriter of such policies and the
amount of coverage thereunder. Trizec and each of the Trizec
Subsidiaries have paid, or caused to be paid, all premiums due
under such policies and have not received written notice that
they are in default with
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respect to any obligations under such policies other than as
would not have, individually or in the aggregate, a Material
Adverse Effect. Neither Trizec nor any Trizec Subsidiary has
received any written notice of cancellation or termination with
respect to any existing insurance policy set forth in
Section 4.18 of the Trizec Disclosure Schedule that is held
by, or for the benefit of, any of Trizec or any of Trizec
Subsidiaries, other than as would not have, individually or in
the aggregate, a Material Adverse Effect.
Section 4.19. Interested
Party Transactions. Except as set forth in
Section 4.19 of the Trizec Disclosure Schedule or in Trizec
SEC Reports, each as amended to the date hereof, there are no
Material Contracts, agreements or loans between Trizec or any
Trizec Subsidiary, on the one hand, and (a) any officer or
director of Trizec, (b) TZ Canada or any of TZ Canada
Subsidiaries, (c) any record or beneficial owner of five
percent (5%) or more of the voting securities of Trizec, or
(d) any affiliate of any such officer, director or record
or beneficial owner, on the other hand.
Section 4.20. Brokers. No
broker, finder or investment banker or other Person (other than
Morgan Stanley & Co. Inc. and J.P. Morgan
Securities Inc. (collectively, the Trizec Financial
Advisors)) is entitled to any brokerage, finders
or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by
or on behalf of Trizec or any Trizec Subsidiary. Trizec has made
available to Parent a correct and complete copy of all
agreements between Trizec, on the one hand, and the Trizec
Financial Advisors, on the other hand, under which the Trizec
Financial Advisors would be entitled to any payment in
connection with the Mergers or other transactions contemplated
by this Agreement.
Section 4.21. Opinion
of Financial Advisor. J.P. Morgan
Securities Inc. has delivered to Trizec the written opinion of
J.P. Morgan Securities Inc. (or oral opinion to be
confirmed in writing) to the effect that, as of the date hereof,
the merger consideration to be received by the holders of Merger
Shares is fair from a financial point of view to such holders.
Trizec shall make any such opinion received by it available to
Parent promptly following the execution of this Agreement.
Section 4.22. Investment
Company Act of 1940. None of Trizec or any
Trizec Subsidiary is, or at the Trizec Merger Effective Time
will be, required to be registered as an investment company
under the Investment Company Act of 1940, as amended.
ARTICLE V
REPRESENTATIONS
AND WARRANTIES OF TZ CANADA
Except as set forth in the TZ Canada Disclosure Schedule, TZ
Canada hereby represents and warrants to the Buyer Parties as
follows:
Section 5.01. Organization
and Qualification; Subsidiaries; Authority.
(a) TZ Canada is a corporation duly organized, validly
existing and in good standing under the laws of Canada. TZ
Canada is duly qualified or licensed to do business as a foreign
or extra-provincial corporation and is in good standing under
the laws of each jurisdiction in which the character of the
assets owned, leased or operated by it therein or in which the
transaction of its business makes such qualification or
licensing necessary, except where the failure to be so
qualified, licensed or in good standing would not, individually
or in the aggregate, reasonably be expected to have a Material
Adverse Effect. TZ Canada has all requisite corporate power and
authority to own, operate, lease and encumber its assets and
carry on its business as now conducted.
(b) Each of TZ Canadas subsidiaries (the TZ
Canada Subsidiaries), together with the jurisdiction
of organization of each such subsidiary, the percentage of the
outstanding equity of each such subsidiary owned by TZ Canada
and each other TZ Canada Subsidiary, is set forth on
Section 5.01(b) of the TZ Canada Disclosure Schedule.
Except as set forth in Sections 5.01(b) of the TZ Canada
Disclosure Schedule, TZ Canada does not own, directly or
indirectly, any shares of, or other equity interest in, any
corporation, partnership, limited liability company, joint
venture or other business association or entity. Each TZ Canada
Subsidiary is a corporation, partnership, limited liability
company or trust duly incorporated or organized, validly
existing and in good standing under the laws of the jurisdiction
of its incorporation or organization,
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except where the failure to be so incorporated, organized,
validly existing or in good standing would not, individually or
in the aggregate, reasonably be expected to have a Material
Adverse Effect. Each of the TZ Canada Subsidiaries has the
requisite corporate, limited partnership, limited liability
company or similar power and authority to own, lease and operate
its assets and to carry on its business as it is now being
conducted, except where the failure to have such power and
authority would not, individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect. Each of
the TZ Canada Subsidiaries is duly qualified or licensed to do
business, and is in good standing (to the extent applicable), in
each jurisdiction where the character of the assets owned,
leased or operated by it or the conduct or nature of its
business makes such qualification or licensing necessary, except
for jurisdictions in which the failure to be so qualified,
licensed or in good standing would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect.
(c) Other than Trizec, the Trizec Subsidiaries and the
Material Trizec JV Entities, there are no entities that are not
TZ Canada Subsidiaries in which TZ Canada or any TZ Canada
Subsidiary has a direct or indirect equity interest greater than
5%.
Section 5.02. Organizational
Documents. TZ Canada has previously provided
or made available complete copies of the TZ Canada Articles and
the TZ Canada Bylaws, and all organizational documents of the TZ
Canada Subsidiaries (and in each case, all amendments thereto)
and all such documents, except as set forth on
Section 5.01(b) of the TZ Canada Disclosure Schedule, are
in full force and effect and no dissolution, revocation or
forfeiture proceedings regarding TZ Canada or any TZ Canada
Subsidiaries have been commenced.
Section 5.03. Capitalization.
(a) The authorized capital of TZ Canada consists of an
unlimited number of TZ Canada SVS and 7,522,283 TZ Canada MVS.
As of June 4, 2006, 52,400,097 TZ Canada SVS and 7,522,283
TZ Canada MVS were issued and outstanding, all of which are
validly issued, fully paid and nonassessable.
(b) Each outstanding share of, or other equity interest in,
a TZ Canada Subsidiary owned by TZ Canada or by another TZ
Canada Subsidiary is owned free and clear of all Liens except as
set forth on Section 5.03(b) of the TZ Canada Disclosure
Schedule.
(c) As of June 4, 2006, 784,042 TZ Canada SVS were
reserved for future issuance pursuant to outstanding options to
purchase TZ Canada SVS (TZ Canada Options)
granted pursuant to TZ Canadas 2002 stock option plan.
Except as set forth in Section 5.03(c) of the TZ Canada
Disclosure Schedule, there are no options, warrants or other
rights, agreements, arrangements or commitments of any character
relating to the issued or unissued shares of TZ Canada or any TZ
Canada Subsidiary or obligating TZ Canada or any TZ Canada
Subsidiary to issue or sell any shares of, or other equity
interests in, TZ Canada or any TZ Canada Subsidiary. TZ Canada
has made available to Parent accurate and complete copies of all
TZ Canada stock plans pursuant to which TZ Canada has granted
the TZ Canada Options that are currently outstanding and the
form of all option award agreements evidencing the award of such
TZ Canada Options. All TZ Canada SVS subject to issuance as
aforesaid, upon issuance on the terms and conditions specified
in the instruments pursuant to which they are issuable, will be
duly authorized, validly issued, fully paid and nonassessable.
(d) Except as set forth in Section 5.03(d) of the TZ
Canada Disclosure Schedule, there are no outstanding contractual
obligations of, or other equity interest in, TZ Canada to
repurchase or otherwise acquire any TZ Canada Shares.
(e) Except as set forth in Section 5.03(e) of the TZ
Canada Disclosure Schedule, TZ Canada is under no obligation,
contingent or otherwise, by reason of any agreement to file a
prospectus or similar document in respect of the offer and sale
or resale of any of its securities under any applicable Law.
(f) Except as set forth in Section 5.03(f) of the TZ
Canada Disclosure Schedule, there are no agreements or
understandings to which TZ Canada or any TZ Canada Subsidiary is
a party with respect to the voting of any TZ Canada Shares or
which restrict the transfer of any such shares, nor does TZ
Canada have knowledge
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of any third party agreements or understandings with respect to
the voting of any such shares or which restrict the transfer of
any such shares.
(g) Except as set forth in Section 5.03(g) of the TZ
Canada Disclosure Schedule, there is no Voting Debt of TZ Canada
or any TZ Canada Subsidiary outstanding.
(h) Except as set forth in Section 5.03(h) of the TZ
Canada Disclosure Schedule, all dividends or distributions on
securities of TZ Canada or any TZ Canada Subsidiary that have
been declared or authorized prior to the date of this Agreement
and that are due have been paid in full.
Section 5.04. Authority
Relative to this Agreement, Validity and Effect of
Agreement.
(a) TZ Canada has all necessary corporate power and
authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions
contemplated by this Agreement. Except for the approvals
described in the following sentence, the execution, delivery and
performance by TZ Canada of this Agreement and the consummation
of the transactions contemplated by this Agreement have been
duly and validly authorized by all necessary corporate action on
behalf of the TZ Canada. No other corporate proceedings on the
part of TZ Canada are necessary to authorize this Agreement or
to consummate the transactions contemplated by this Agreement
(i) other than the requisite affirmative vote of the TZ
Canada Shareholders in accordance with the TZ Canada Articles,
the Interim Order and applicable Canadian Law (the TZ
Canada Shareholder Approval) and (ii) the
approval by the TZ Canada Board of the TZ Canada Circular and
other matters relating thereto. This Agreement has been duly and
validly executed and delivered by TZ Canada and, assuming the
due authorization, execution and delivery by each of Trizec,
Operating Company, Parent, MergerCo, Parent Acquisition LLC and
AcquisitionCo, constitutes a legal, valid and binding obligation
of TZ Canada, enforceable against TZ Canada in accordance with
its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and similar Laws of general applicability relating to
or affecting creditors rights or by general equity
principles.
(b) The TZ Canada Board, by resolutions duly adopted at
meetings duly called and held, has duly (i) determined that
the Arrangement is fair to the TZ Canada Shareholders and in the
best interests of TZ Canada, (ii) approved this Agreement
and the Arrangement, (iii) determined as of June 4,
2006 to recommend that the TZ Canada Shareholders vote in favor
of the TZ Canada Transaction Resolution, and (iv) directed
that the TZ Canada Transaction Resolution be submitted for
consideration by TZ Canada Shareholders at the TZ Canada
Shareholders Meeting.
Section 5.05. No
Conflict; Required Filings and Consents.
(a) Except as set forth in Section 5.05(a) of the TZ
Canada Disclosure Schedule, subject to the receipt of the
consents, approvals and other authorizations described in
Section 5.05(b), the execution and delivery by TZ Canada of
this Agreement does not, and the performance of its obligations
hereunder and thereunder will not, (i) conflict with or
violate (1) the TZ Canada Articles or the TZ Canada Bylaws,
or (2) the certificate or articles of incorporation or
bylaws or equivalent organizational documents of any TZ Canada
Subsidiary, as amended or supplemented, (ii) assuming that
all consents, approvals, authorizations and other actions
described in subsection (b) of this Section 5.05
have been obtained and all filings and obligations described in
subsection (b) of this Section 5.05 have been
made, conflict with or violate any Canadian Law applicable to TZ
Canada or any TZ Canada Subsidiary or by which any property or
asset of TZ Canada or any TZ Canada Subsidiary, is bound, or
(iii) require any consent or result in any violation or
breach of or constitute (with or without notice or lapse of time
or both) a default (or give to others any right of termination,
amendment, acceleration or cancellation) under, or result in the
triggering of any payments or result in the creation of a Lien
or other encumbrance on any property or asset of TZ Canada or
any TZ Canada Subsidiary, pursuant to, any of the terms,
conditions or provisions of any Permit or TZ Canada Material
Contract to which TZ Canada or any TZ Canada Subsidiary is a
party or by which it or any of its respective properties or
assets may be bound, except, with respect to clauses (ii)
and (iii), such triggering of payments, Liens, encumbrances,
filings, notices, permits, authorizations, consents, approvals,
violations, conflicts, breaches or defaults which would not,
individually or in the aggregate, (A) prevent or materially
delay consummation of the Arrangement and
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the other transactions contemplated by this Agreement or
(B) reasonably be expected to have a Material Adverse
Effect.
(b) The execution and delivery by TZ Canada of this
Agreement does not, and the performance of its obligations
hereunder will not, require any consent, approval, authorization
or permit of, or filing with or notification to, any
Governmental Authority, except (i) for (A) any
approvals required by the Interim Order, (B) the Final
Order, (C) filings under the CBCA contemplated by this
Agreement and the Interim Order, (D) applicable
requirements, if any, of the Competition Act (Canada) and the
Investment Canada Act, (E) filings under Canadian
Securities Laws, (F) filings under the rules and
regulations of the TZ Canada Stock Exchange, (G) applicable
requirements, if any, of the Securities Act, the Exchange Act
and Blue Sky Laws, (H) if applicable, the pre-merger
notification requirements of the HSR Act, or (I) if
applicable, the filing with the SEC of written communications
that may be deemed soliciting materials under
Rule 14a-12,
and (ii) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or
notifications would not, individually or in the aggregate,
(A) prevent or materially delay consummation of the
Arrangement and the other transactions contemplated by this
Agreement or (B) reasonably be expected to have a Material
Adverse Effect.
Section 5.06. Permits;
Compliance with Law.
(a) TZ Canada and the TZ Canada Subsidiaries are in
possession of all Permits necessary for them to own, lease and
operate their assets or to carry on their business as it is now
being conducted, and all such Permits are valid and in full
force and effect, except where the failure to obtain and
maintain the Permits, or the suspension or cancellation of, any
of the Permits would not, individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect.
(b) None of TZ Canada or any TZ Canada Subsidiary is in
violation of any Law or Permits applicable to TZ Canada or any
TZ Canada Subsidiary, or by which any property or asset of TZ
Canada or any TZ Canada Subsidiary is bound, except for any such
violations which would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
Section 5.07. Securities
Filings; Financial Statements.
(a) TZ Canada has filed all forms, reports and documents
(including all exhibits) required to be filed by it under
Canadian Securities Law since May 8, 2002 (the
TZ Canada Reports). The TZ Canada Reports,
each as amended prior to the date hereof, (i) have been
prepared in all material respects in accordance with the
requirements of Canadian Securities Law, and (ii) did not,
when filed or as amended prior to the date hereof, contain any
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make
the statements made therein, in the light of the circumstances
under which they were made, not misleading.
(b) Each of the consolidated financial statements
(including, in each case, any notes thereto) contained in the TZ
Canada Reports, each as amended or restated prior to the date
hereof, was prepared in accordance with Canadian GAAP applied on
a consistent basis throughout the periods indicated (except as
may be indicated in the notes thereto) and each fairly
presented, in all material respects, the consolidated financial
position, results of operations and cash flows of TZ Canada and
its consolidated subsidiaries as of the respective dates thereof
and for the respective periods indicated therein except as
otherwise noted therein (subject, in the case of unaudited
statements, to normal and recurring year end adjustments).
(c) Except (i) as set forth in Section 5.07(c) of
the TZ Canada Disclosure Schedule, (ii) to the extent set
forth on the consolidated balance sheet of TZ Canada as of
December 31, 2005 (including notes thereto),
(iii) liabilities incurred on behalf of TZ Canada or any TZ
Canada Subsidiary in connection with this Agreement, and
(iv) liabilities incurred in the ordinary course of
business consistent with past practice since December 31,
2005, none of TZ Canada or the TZ Canada Subsidiaries had any
liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) required by Canadian GAAP to
be set forth in a consolidated balance sheet of TZ Canada or in
the notes thereto, except for any such liabilities or
obligations which would not, individually or in the aggregate,
have a Material Adverse Effect.
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Section 5.08. Absence
of Certain Changes or Events. Except as
disclosed in the TZ Canada Reports or as set forth in
Section 5.08 of the TZ Canada Disclosure Schedule, since
December 31, 2005 through the date hereof, (a) TZ
Canada has conducted its business in the ordinary course
consistent with past practice and (b) there has not been an
event, occurrence, effect or circumstance that has resulted or
would reasonably be expected to result in a Material Adverse
Effect.
Section 5.09. Absence
of Litigation. As of the date hereof, except
(i) as listed in Section 5.09 of the TZ Canada
Disclosure Schedule, (ii) as set forth in the TZ Canada
Reports, each as amended to the date hereof, filed prior to the
date of this Agreement, or (iii) for suits, claims,
Actions, proceedings or investigations arising from the ordinary
course of operations of TZ Canada and the TZ Canada Subsidiaries
involving collection matters or personal injury or other tort
litigation which are covered by insurance (subject to customary
deductibles) or for which all material costs and liabilities
arising therefrom are reimbursable pursuant to common area
maintenance or similar agreements, there is no Action pending
or, to the knowledge of TZ Canada, threatened in writing against
TZ Canada or any of the TZ Canada Subsidiaries or any of its or
their respective properties or assets except as would not,
individually or in the aggregate, (x) prevent or materially
delay consummation of the Arrangement and the other transactions
contemplated by this Agreement or (y) have or reasonably be
expected to have a Material Adverse Effect. As of the date
hereof, none of TZ Canada nor any TZ Canada Subsidiary is
subject to any order, judgment, writ, injunction or decree,
except as would not, individually or in the aggregate, have or
reasonably be expected to have a Material Adverse Effect.
Section 5.10. Employee
Benefit Plans.
(a) Section 5.10(a) of the TZ Canada Disclosure
Schedule lists all employee benefit plans and all material
bonus, stock option, stock purchase, restricted stock,
incentive, deferred compensation, retiree medical or life
insurance, supplemental retirement, severance, change in control
or other benefit plans, programs or arrangements, and all
employment, termination, severance, change in control or other
contracts or agreements to which TZ Canada is a party, with
respect to which TZ Canada has any obligation or which are
maintained, contributed to or sponsored by TZ Canada or any TZ
Canada Subsidiary for the benefit of any current or former
employee, officer, director or consultant of TZ Canada
(collectively, the TZ Canada Plans). TZ
Canada has made available to Parent copies, which are correct
and complete in all material respects, of the following:
(i) the TZ Canada Plans, (ii) the most recently
prepared actuarial report or financial statement, if any,
relating to a TZ Canada Plan, and (iii) the most recent
summary plan description for such TZ Canada Plan (or other
descriptions of such TZ Canada Plan provided to employees) and
all modifications thereto.
(b) Each TZ Canada Plan has been operated in all material
respects in accordance with its terms and the requirements of
all applicable Canadian Laws, except for such noncompliance that
would not, individually or in the aggregate, have a Material
Adverse Effect. No Action is pending or, to the knowledge of TZ
Canada, threatened with respect to any TZ Canada Plan (other
than claims for benefits in the ordinary course) that would,
individually or in the aggregate, have a Material Adverse Effect.
(c) Full payment has been made of all amounts that TZ
Canada is required under the terms of the TZ Canada Plans to
have paid as contributions to such TZ Canada Plans on or prior
to the date hereof (excluding any amounts not yet due) and the
contribution requirements, on a prorated basis, for the current
year will be made through the Closing Date.
Section 5.11. Labor
Matters. Except as would not, individually or
in the aggregate, have a Material Adverse Effect,
(i) neither TZ Canada nor any TZ Canada Subsidiary is a
party to any collective bargaining agreement or other labor
union contract applicable to persons employed by TZ Canada or
any TZ Canada Subsidiary, (ii) neither TZ Canada nor any TZ
Canada Subsidiary has breached or otherwise failed to comply
with any provision of any such agreement or contract, and there
are no grievances outstanding against TZ Canada or any TZ Canada
Subsidiary under such agreement or contract, and
(iii) there is no strike, slowdown, work stoppage or
lockout by or with respect to any employees of TZ Canada or any
TZ Canada Subsidiary.
Section 5.12. Information
Supplied. The information supplied by TZ
Canada relating to TZ Canada and the TZ Canada Subsidiaries to
be contained in the TZ Canada Circular and all other documents
and instruments required under applicable Canadian Law (the
Additional Filings) will not, in the case of
the TZ
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Canada Circular, at the date it is first mailed to TZ Canada
Shareholders or at the time of the TZ Canada Shareholders
Meeting or at the time of any amendment or supplement thereto,
or, in the case of an Additional Filing, at the date it is first
mailed to TZ Canada Shareholders or at the date it is first
filed with an applicable securities regulator, contain any
untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they are made, not misleading, except
that no representation is made (or omitted to be made) by TZ
Canada or any TZ Canada Subsidiary with respect to statements
made or incorporated by reference therein based on information
supplied by Parent, AcquisitionCo or Trizec in connection with
the preparation of the TZ Canada Circular for inclusion or
incorporation by reference therein. All documents that TZ Canada
is responsible for filing with the CSA in connection with the
Arrangement, or the other transactions contemplated by this
Agreement, will comply as to form and substance in all material
respects with the applicable requirements of the Securities Act
(Ontario).
Section 5.13. Ownership
of Trizec Common Shares. Except as disclosed
in section 5.13 of the TZ Canada Disclosure Schedule, as of
the date hereof, TZ Canada and TZ Canada Subsidiaries are the
record owners of, and on the Closing Date will be the record
owners of 59,922,379 Trizec Common Shares, free and clear of all
security interests, claims, Liens, equities or other
encumbrances.
Section 5.14. Intellectual
Property. Except as individually or in the
aggregate would not reasonably be expected to have a Material
Adverse Effect, (a) to the knowledge of TZ Canada, the
conduct of the business of TZ Canada and the TZ Canada
Subsidiaries as currently conducted does not infringe the
Intellectual Property rights of any Third Party, and
(b) with respect to Intellectual Property owned by or
licensed to TZ Canada or any TZ Canada Subsidiary that is
material to the conduct of the business of TZ Canada and the TZ
Canada Subsidiaries, taken as a whole, as currently conducted
(TZ Canada Intellectual Property), TZ Canada
or such TZ Canada Subsidiary has the right to use such TZ Canada
Intellectual Property in the continued operation of its business
as currently conducted.
Section 5.15. Taxes. Except
as set forth in Section 5.15 of the TZ Canada Disclosure
Schedule or except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect, to the knowledge of TZ Canada (i) each of TZ Canada
and each TZ Canada Subsidiary has timely filed all Tax Returns
required to be filed by it and has paid and discharged all Taxes
shown as due thereon and has paid all of such other Taxes as are
due, other than such payments as are being contested in good
faith by appropriate proceedings as set forth in
Section 5.15 of the TZ Canada Disclosure Schedule;
(ii) neither TZ Canada nor any TZ Canada Subsidiary has
received any written notice from any taxing authority or agency,
domestic or foreign, asserting or threatening to assert against
TZ Canada or any TZ Canada Subsidiary any deficiency or claim
for additional Taxes; (iii) no claim has been made in
writing by a taxing authority in a jurisdiction where TZ Canada
or a TZ Canada Subsidiary does not file Tax Returns that TZ
Canada or any such TZ Canada Subsidiary is or may be subject to
taxation by that jurisdiction (iv) no currently effective
waiver of any statute of limitations with respect to, or any
extension of a period for the assessment of, any federal,
provincial, local or foreign income Tax has been granted by TZ
Canada or any TZ Canada Subsidiary; (v) the most recent
financial statements contained in TZ Canada Reports filed prior
to the date hereof reflect an adequate reserve (excluding any
reserve for deferred Taxes established to reflect timing
differences between book and Tax income) in accordance with
Canadian GAAP with respect to Taxes for taxable periods or
portions of taxable periods through the date thereof;
(vi) TZ Canada and each TZ Canada Subsidiary has withheld
or collected and paid over to the appropriate Governmental
Authority or is properly holding for such payment all Taxes
required by Law to be so withheld or collected; and
(vii) there are no Liens for Taxes upon the assets of TZ
Canada or any TZ Canada Subsidiary, other than Liens for Taxes
that are being contested in good faith by appropriate
proceedings.
Section 5.16. Mutual
Fund Status. To the knowledge of TZ
Canada, on the date hereof, TZ Canada is a mutual fund
corporation as that term is defined in the Income Tax Act
(Canada).
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Section 5.17. Environmental
Matters. Except (i) as set forth in
Section 5.17 of the TZ Canada Disclosure Schedule or
(ii) as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect:
(a) TZ Canada and the TZ Canada Subsidiaries (i) are
in compliance with all Environmental Laws, (ii) hold all
Environmental Permits required under any Environmental Law to
own or operate their assets as currently owned and operated and
(iii) are in compliance with all of, and have not violated
any of, their respective Environmental Permits;
(b) except as set forth in such environmental reports,
neither TZ Canada nor any TZ Canada Subsidiary has released, and
no other person has released, Hazardous Substances on any real
property owned, leased or operated by TZ Canada or the TZ Canada
Subsidiaries and, to the knowledge of TZ Canada, no Hazardous
Substances or other conditions are present at any other
locations that could reasonably be expected to result in
liability of or adversely affect TZ Canada or any TZ Canada
Subsidiary under or related to any Environmental Law;
(c) neither TZ Canada nor any TZ Canada Subsidiary has
received any written notice alleging that TZ Canada or any TZ
Canada Subsidiary may be in violation of, or liable under, or a
potentially responsible party pursuant to, any Environmental Law
and to the knowledge of TZ Canada, there is no basis for any
such notice or claim;
(d) neither TZ Canada nor any TZ Canada Subsidiary
(i) has entered into or agreed to any consent decree or
order or is a party to any judgment, decree or judicial order
relating to compliance with Environmental Laws, Environmental
Permits or the investigation, sampling, monitoring, treatment,
remediation, removal or cleanup of Hazardous Substances and, to
the knowledge of TZ Canada, no investigation, litigation or
other proceeding is pending or threatened with respect thereto
or (ii) has assumed by contract or operation of law, any
liability under any Environmental Law or relating to any
Hazardous Substances, or is an indemnitor in connection with any
threatened or asserted claim by any third-party indemnitee for
any liability under any Environmental Law or relating to any
Hazardous Substances; and
(e) notwithstanding any other provision of this Agreement,
this Section 5.16 sets forth TZ Canadas sole and
exclusive representations and warranties with respect to
Hazardous Substances, Environmental Laws or any other
environmental matters.
Section 5.18. Material
Contracts. Other than any material
contract identified as such in the TZ Canada Reports,
Section 5.18 of the Disclosure Schedule lists each of the
following written contracts and agreements (and all amendments,
modifications and supplements thereto and all side letters to
which TZ Canada or any TZ Canada Subsidiary is a party affecting
the obligations of any party thereunder) to which TZ Canada or
any TZ Canada Subsidiary is a party or by which any of their
respective properties or assets are bound (each such contract
and agreement, including any material contract
identified as such in the TZ Canada Reports, being a TZ
Canada Material Contract):
(a) any Contract (other than among consolidated TZ Canada
Subsidiaries) relating to (A) indebtedness for borrowed
money and having an outstanding principal amount in excess of
$1,500,000 or (B) conditional sale arrangements,
obligations secured by a Lien, or interest rate or currency
hedging activities, in each case in connection with which the
aggregate actual or contingent obligations of TZ Canada and the
TZ Canada Subsidiaries under such contract are greater than
$1,500,000;
(b) any Contract that purports to limit the right of TZ
Canada or any TZ Canada Subsidiary (A) to engage or compete
in any line of business or (B) to compete with any person
or operate in any location, in the case of each of (A) and
(B), in any respect material to the business of TZ Canada and
the TZ Canada Subsidiaries, taken as a whole;
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(c) any Contract for the acquisition or disposition,
directly or indirectly (by merger or otherwise), of assets or
capital stock or other equity interests of another person for
aggregate consideration under such contract in excess of
$1,500,000;
(d) any Contract which by its terms calls for annual
aggregate payments by TZ Canada and the TZ Canada Subsidiaries
under such contract of more than $1,500,000 over the remaining
term of such contract;
(e) any indemnification agreements entered into by and
between TZ Canada and any director or officer of TZ Canada
(other than the organizational documents of TZ Canada or any TZ
Canada Subsidiary);
(f) any acquisition or disposition Contract pursuant to
which TZ Canada or any TZ Canada Subsidiary has continuing
indemnification, earn-out or other contingent
payment obligations, in each case, that would reasonably be
expected to result in payments in excess of $1,500,000; and
(g) any material partnership, limited liability company
agreement, joint venture or similar agreement entered into with
any Third Party.
Notwithstanding anything in this Section 5.18, TZ
Canada Material Contract shall not include any
Contract that (i) is terminable upon 90 days or
less notice without a penalty premium, (ii) will be fully
performed or satisfied as of or prior to Closing or
(iii) is solely between TZ Canada and one or more TZ Canada
Subsidiaries or is solely between TZ Canada Subsidiaries.
Except as would not reasonably be expected to have a Material
Adverse Effect, (i) neither TZ Canada nor any TZ Canada
Subsidiary is and, to the knowledge of TZ Canada, no other party
is in breach or violation of, or default under, any TZ Canada
Material Contract, (ii) none of TZ Canada nor any TZ Canada
Subsidiary has received any claim of default under any such
agreement, and (iii) no event has occurred which would
result in a breach or violation of, or a default under, any TZ
Canada Material Contract (in each case, with or without notice
or lapse of time or both). Except as would not reasonably be
expected to have a Material Adverse Effect, each TZ Canada
Material Contract is valid, binding and enforceable in
accordance with its terms and is in full force and effect with
respect to TZ Canada or its TZ Canada Subsidiaries, as
applicable, and, to the knowledge of TZ Canada, with respect to
the other parties hereto.
Section 5.19. Insurance. Section 5.19
of the TZ Canada Disclosure Schedule sets forth a list that is
correct and complete in all material respects of the insurance
policies held by, or for the benefit of, TZ Canada or any TZ
Canada Subsidiary, including the underwriter of such policies
and the amount of coverage thereunder. TZ Canada and each of the
TZ Canada Subsidiaries have paid, or caused to be paid, all
premiums due under such policies and have not received written
notice that they are in default with respect to any obligations
under such policies other than as would not have, individually
or in the aggregate, a Material Adverse Effect. Neither TZ
Canada nor any TZ Canada Subsidiary has received any written
notice of cancellation or termination with respect to any
existing insurance policy set forth in Section 5.19 of the
TZ Canada Disclosure Schedule that is held by, or for the
benefit of, any of TZ Canada or any of its TZ Canada Subsidiary,
other than as would not have, individually or in the aggregate,
a Material Adverse Effect.
Section 5.20. Interested
Party Transactions. Except as set forth in
Section 5.20 of the TZ Canada Disclosure Schedule or in the
TZ Canada Reports, each as amended to the date hereof, there are
no TZ Canada Material Contracts, agreements or loans between TZ
Canada or any TZ Canada Subsidiary, on the one hand, and
(a) any officer or director of TZ Canada, (b) any
record or beneficial owner of five percent (5%) or more of the
voting securities of TZ Canada or (c) any affiliate of any
such officer, director or record or beneficial owner, on the
other hand.
Section 5.21. Brokers. No
broker, finder or investment banker or other Person (other than
RBC Capital Markets (the TZ Canada Financial
Advisor)) is entitled to any brokerage, finders
or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by
or on behalf of TZ Canada or any TZ Canada Subsidiary. TZ Canada
has made available to Parent a correct and complete copy of all
agreements between TZ Canada, on the one hand, and the TZ Canada
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Financial Advisor, on the other hand, under which the TZ Canada
Financial Advisor would be entitled to any payment in connection
with the mergers or other transactions contemplated by this
Agreement.
Section 5.22. Opinion
of Financial Advisor. The TZ Canada Financial
Advisor has delivered to TZ Canada the written opinion of the TZ
Canada Financial Advisor (or oral opinion to be confirmed in
writing) to the effect that, as of the date hereof, the TZ
Canada Cash Consideration (as such term is defined
in the Plan of Arrangement) to be received by holders of TZ
Canada Shares is fair from a financial point of view to such
holders. TZ Canada has made available to Parent a complete and
correct copy of such opinion (or, if not delivered in writing to
TZ Canada prior to the date hereof, TZ Canada will promptly make
such opinion available to Parent upon receipt).
ARTICLE VI
REPRESENTATIONS
AND WARRANTIES OF THE BUYER PARTIES
Parent, MergerCo and AcquisitionCo hereby jointly and severally
represent and warrant to the Trizec Parties and TZ Canada as
follows:
Section 6.01. Organization. Each
of the Buyer Parties has been duly organized and is validly
existing and in good standing under the laws of the jurisdiction
of its incorporation and has the requisite corporate power and
authority and all necessary governmental approvals to own, lease
and operate its properties and to carry on its business as it is
now being conducted, except where the failure to be so
organized, existing or in good standing or to have such power,
authority and governmental approvals would not have a Parent
Material Adverse Effect.
Section 6.02. Ownership
of MergerCo and AcquisitionCo; No Prior
Activities. Each of MergerCo and
AcquisitionCo was formed solely for the purpose of engaging in
the transactions contemplated by this Agreement and has not
engaged in any business activities or conducted any operations
other than in connection with the transactions contemplated by
this Agreement. All the issued and outstanding shares of capital
stock of MergerCo and AcquisitionCo are, and as of the Closing
Date will be, owned of record and beneficially by Parent.
Section 6.03. Power
and Authority. Each of the Buyer Parties has
all necessary corporate or limited liability company power and
authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions
contemplated by this Agreement. The execution and delivery of
this Agreement by each of the Buyer Parties and the consummation
by the Buyer Parties of the transactions contemplated by this
Agreement have been duly and validly authorized by all necessary
corporate action, and no other corporate proceedings on the part
of the Buyer Parties are necessary to authorize this Agreement
or to consummate the transactions contemplated by this
Agreement. This Agreement has been duly and validly executed and
delivered by the Buyer Parties and, assuming due authorization,
execution and delivery by the Trizec Parties and TZ Canada,
constitutes a legal, valid and binding obligation of each of the
Buyer Parties enforceable against each of the Buyer Parties in
accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and similar Laws of general
applicability relating to or affecting creditors rights or
by general equity principles.
Section 6.04. No
Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by each of
the Buyer Parties do not, and the performance of each of the
Buyer Parties obligations hereunder will not,
(i) conflict with or violate the articles of incorporation
or bylaws of Parent, the articles of incorporation or bylaws of
MergerCo or AcquisitionCo, (ii) assuming that all consents,
approvals, authorizations and other actions described in
subsection (b) of this Section 6.04 have been
obtained and all filings and obligations described in
subsection (b) of this Section 6.04 have been
made, conflict with or violate any Law applicable to any of the
Buyer Parties, or by which any of its properties or assets is
bound, or (iii) result in any breach of, or constitute a
default (or an event which, with notice or lapse of time or
both, would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation
of, or result in the creation of a Lien
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or other encumbrance on any of its properties or assets pursuant
to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or
obligation to which it is a party or by which it or any of its
properties or assets is bound, except, with respect to
clauses (ii) and (iii) for any such conflicts,
violations, breaches, defaults or other occurrences that would
not prevent or delay consummation of the Trizec Merger or the
Arrangement or otherwise prevent it from performing its
obligations under this Agreement.
(b) The execution and delivery of this Agreement by each of
the Buyer Parties does not, and the performance of each of the
Buyer Parties obligations hereunder and thereunder will
not, require any consent, approval, authorization or permit of,
or filing with, or notification to, any Governmental Authority,
except (i) for (A) applicable requirements, if any, of
the Exchange Act, Blue Sky Laws, state take-over Laws and
Canadian Securities Law, (B) if applicable, filings under
the rules and regulations of the Toronto Stock Exchange,
(C) applicable requirements, if any, of the Competition Act
(Canada) and the Investment Canada Act, (D) if applicable,
the pre-merger notification requirements of the HSR Act,
(E) the filing with the SEC of the Proxy Statement, and
(F) the filing and recordation of appropriate merger
documents as required by the DGCL, and (ii) where the
failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not
prevent or delay consummation of the Trizec Merger or the
Arrangement, or otherwise prevent Parent from performing its
obligations under this Agreement.
Section 6.05. Information
Supplied. None of the information supplied by
the Buyer Parties or any affiliate of Parent for inclusion or
incorporation by reference in the Proxy Statement, the TZ Canada
Circular, the Other Filings or the Additional Filings will, in
the case of the Proxy Statement, at the date it is first mailed
to Trizecs stockholders or at the time of Trizec
Stockholders Meeting or at the time of any amendment or
supplement thereto, in the case of any Other Filing, at the date
it is first mailed to Trizecs stockholders or, at the date
it is first filed with the SEC, in the case of the TZ Canada
Circular, at the date it is first mailed to TZ Canada
Shareholders or at the time of TZ Canada Shareholders Meeting or
at the time of any amendment or supplement thereof, or in the
case of any Additional Filing, at the date it is first mailed to
TZ Canada Shareholders or at the date it is first filed with the
applicable securities regulator, contain any untrue statement of
a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are
made, not misleading. No representation is made by the Buyer
Parties with respect to statements made or incorporated by
reference therein based on information supplied by Trizec or TZ
Canada in connection with the preparation of the Proxy
Statement, the TZ Canada Circular, the Other Filings or
Additional Filings for inclusion or incorporation by reference
therein. All Other Filings and Additional Filings that are filed
by the Buyer Parties will comply as to form in all material
respects with the requirements of applicable Law.
Section 6.06. Absence
of Litigation. As of the date hereof, there
is no Action pending or, to the knowledge of Parent, threatened
in writing against Parent or any of its subsidiaries or any of
its or their respective properties or assets except as would
not, individually or in the aggregate, (A) prevent or
materially delay consummation of the Trizec Merger and the other
transactions contemplated by this Agreement or (B) have or
reasonably be expected to have a Parent Material Adverse Effect.
As of the date hereof, None of Parent and its subsidiaries is
subject to any order, judgment, writ, injunction or decree,
except as would not, individually or in the aggregate, have or
reasonably be expected to have a Parent Material Adverse Effect.
Section 6.07. Available
Funds; Guaranty.
(a) Parent will have provided sufficient funds at the
Closing to (i) pay the aggregate Trizec Consideration
payable hereunder and aggregate Cash Consideration under the
Plan of Arrangement and (ii) pay any and all fees and
expenses in connection with the Trizec Merger, the Arrangement
and the financing thereof.
(b) Parent has provided to Trizec and TZ Canada a true,
complete and correct copy of each executed commitment letter
(individually and collectively, the Debt Commitment
Letter or the Financing Commitment)
from Merrill Lynch (the Lender) pursuant to
which, and subject to the terms and conditions thereof, the
Lender has committed to provide Parent
and/or an
equity partner of Parent with financing in an aggregate amount
of $3,600,000,000 (the Debt Financing or the
Financing). The Financing Commitment is a
legal, valid and binding obligation of Parent
and/or an
equity partner of Parent and, to the knowledge of
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Parent, each of the other parties thereto. The Financing
Commitment has not been amended or modified prior to the date of
this Agreement, and as of the date hereof the respective
commitments contained in the Financing Commitment have not been
withdrawn or rescinded in any respect. As of the date hereof,
the Financing Commitment is in full force and effect. Except for
the payment of customary fees, there are no conditions precedent
or other contingencies related to the funding of the full amount
of the Financing, other than as set forth in or contemplated by
the Financing Commitment. As of the date hereof, no event has
occurred which, with or without notice, lapse of time or both,
would constitute a default or breach on the part of the Parent
or such equity partner of Parent or, to the knowledge of the
Parent, any other parties thereto, under the Financing
Commitment. As of the date hereof, the Parent has no reason to
believe that any of the conditions to the Financing contemplated
by the Financing Commitment will not be satisfied or that the
Financing will not be made available to Parent
and/or such
equity partner of Parent on the Closing Date. Parent will
provide to Trizec and TZ Canada any amendments to the Debt
Commitment Letter, or any notices given in connection therewith,
as promptly as possible (but in any event within twenty-four
(24) hours).
(c) Concurrently with the execution of this Agreement,
Parent has delivered to Trizec and TZ Canada a guaranty (the
Guaranty) executed by Brookfield Properties
Corporation substantially in the form attached as
Exhibit G to this Agreement.
Section 6.08. No
Ownership of Trizec Capital Stock. Except as
set forth on Section 5.01 of the Parent Disclosure
Schedule, neither Parent nor any of its subsidiaries (including
MergerCo and AcquisitionCo) own any Trizec Common Shares or
other securities of (i) Trizec or any of the Trizec
Subsidiaries or (ii) TZ Canada or any TZ Canada Subsidiary.
Section 6.09. Other
Agreements or Understandings. Parent has
disclosed to Trizec and TZ Canada all contracts, arrangements or
understandings (and, with respect to those that are written,
Parent has furnished to Trizec and TZ Canada correct and
complete copies thereof) between or among Parent, MergerCo,
AcquisitionCo, or any affiliate of Parent, on the one hand, and
any member of the management of Trizec and TZ Canada or any
person that owns 5% or more of the share or of the outstanding
capital stock of Trizec or TZ Canada, on the other hand.
Section 6.10. Brokers. No
broker, finder or investment banker is entitled to any
brokerage, finders or other fee or commission in
connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Parent,
MergerCo, AcquisitionCo or any of their subsidiaries.
ARTICLE VII
CONDUCT
OF BUSINESS PENDING THE MERGERS AND ARRANGEMENT
Section 7.01. Conduct
of Business by Trizec Pending the Trizec
Merger. Trizec agrees that, between the date
of this Agreement and the Trizec Merger Effective Time, except
as required, permitted or otherwise contemplated by this
Agreement (including, without limitation, Section 7.02 hereof
with respect to the sale of 1031 Assets) or as set forth in
Section 7.01 of the Trizec Disclosure Schedule and except
with the prior written consent of Parent, which consent shall
not be unreasonably withheld or delayed, the businesses of
Trizec and the Trizec Subsidiaries shall be conducted in, and
Trizec and the Trizec Subsidiaries shall not take any action,
except in the ordinary course of business consistent with past
practice; Trizec shall use its commercially reasonable efforts
to preserve substantially intact the business organization of
Trizec and the Trizec Subsidiaries and to preserve the current
relationships of Trizec and the Trizec Subsidiaries with lessees
and other persons with which Trizec or any Trizec Subsidiary has
significant business relations; and Trizec and the Trizec
Subsidiaries shall take all actions, and refrain from taking all
actions, as are necessary to ensure that Trizec will qualify as
a REIT for the taxable year of Trizec that includes the Trizec
Merger Effective Time. Except as required, permitted or
otherwise contemplated by this Agreement or as set forth in
Section 7.01 of the Trizec Disclosure Schedule, neither
Trizec nor any Trizec Subsidiary shall, between the date of this
Agreement and the Trizec Merger Effective Time, do any of the
following without the prior written consent of Parent, which
consent shall not be unreasonably withheld or delayed; provided,
however,
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that consent of Parent shall be deemed to have been given if
Parent does not object within five (5) business days from
the date on which request for such consent is provided by Trizec
to Parent:
(a) amend or otherwise change any provision of the Trizec
Charter, Trizec Bylaws, Operating Company LLC Agreement,
certificate of formation of the Operating Company, or similar
organizational or governance documents;
(b) authorize for issuance, issue or sell, pledge, dispose
of or subject to any Lien or agree or commit to any of the
foregoing in respect of any shares of any class of capital stock
or other equity interest of Trizec or any Trizec Subsidiary or
any options, warrants, convertible securities or other rights of
any kind to acquire any shares of such capital stock, or any
other equity interest, of Trizec or any Trizec Subsidiary, other
than (A) the issuance of Trizec Common Shares issuable
pursuant to Trizec Stock Awards outstanding on the date hereof,
(B) the issuance of Trizec Common Shares in exchange for
Operating Company Common Units pursuant to the Operating Company
LLC Agreement, (C) the issuance of Trizec Common Shares in
connection with the ESPP and DRIP, and (D) the issuance of
Trizec Common Shares in accordance with the terms of the Trizec
Class F Stock; (ii) repurchase, redeem or otherwise
acquire any securities or equity equivalents except in
connection with the cashless exercise of Trizec Stock Options,
the vesting of Trizec Restricted Share Rights or Trizec
Restricted Stock Shares, the lapse of restrictions on Trizec
Restricted Share Rights or Trizec Restricted Stock Shares, or
the redemption of Operating Company LLC Units pursuant to the
Operating Company LLC Agreement; (iii) declare, set aside
or pay any dividends on, or make any other actual, constructive
or deemed distributions (whether in cash, shares, property or
otherwise) in respect of, any shares of Trizecs capital
stock or the shares of stock or other equity interests in any
Trizec Subsidiary that is not directly or indirectly
wholly-owned by Trizec, except for (A) dividends by any
direct or indirect wholly owned Trizec Subsidiary to Trizec or
any other Trizec Subsidiary, (B) regular quarterly
dividends not in excess of $.20 per Trizec Common Share on
Trizec Common Shares (including, without limitation, pursuant to
the DRIP) declared and paid in cash at times consistent with
past practice, (C) special dividends on the Trizec Special
Voting Stock declared and paid in accordance with the terms of
the Trizec Special Voting Stock as set forth in Trizec Charter,
and (D) dividend equivalents paid with respect to Trizec
Restricted Share Rights and (E) dividends on the Trizec
Class F Stock declared and paid in accordance with the
terms of the Class F Stock set forth in the Trizec Charter;
or (iv) split, subdivide, combine or reclassify any shares,
stock or other equity interests of Trizec or any Trizec
Subsidiary or issue or authorize the issuance of any securities
in respect of, in lieu of or in substitution for shares of such
shares, stock or other equity interests;
(c) (i) acquire (by merger, consolidation, acquisition
of equity interests or assets, or any other business
combination) any corporation, partnership, limited liability
company, joint venture or other business organization (or
division thereof) or any property exceeding $500,000 other than
as identified in Trizecs Argus model under the line item
Capital, as provided to Parent (the 2006
Budget) (other than real property) or
(ii) acquire, enter into any option to acquire, or exercise
an option or other right or election or enter into any other
commitment or agreement (each, a Commitment)
for the acquisition of any real property, other than
(A) any Commitment referred to in Section 7.01(c)(ii)
of the Trizec Disclosure Schedule or (B) acquisitions of
the office properties listed in Section 7.01(c)(ii) of the
Trizec Disclosure Schedule;
(d) except as set forth in Section 7.01(d) of the
Trizec Disclosure Schedule, incur any indebtedness for borrowed
money or issue any debt securities or assume, guarantee or
endorse, or otherwise as an accommodation become responsible
for, the obligations of any person (other than a Trizec
Subsidiary) for borrowed money, except for:
(i) indebtedness for borrowed money incurred under
Trizecs line of credit facility or other existing similar
lines of credit, including draws under existing construction
loans, in the ordinary course of business; (ii) refinancing
of mortgage indebtedness secured by one or more Trizec
Properties as such loans become due and payable in accordance
with their terms; (iii) indebtedness for borrowed money
with a maturity of not more than one year in a principal amount
not in excess of $10,000,000 in the aggregate for Trizec and the
Trizec Subsidiaries taken as a whole; (iv) indebtedness in
connection with the acquisition of real properties as
contemplated by Section 7.01(c) of the Trizec
A-45
Disclosure Schedule; or (v) indebtedness for borrowed money
incurred in order for (A) Trizec to pay regular cash
dividends per share of the Trizec Common Shares, declared and
paid quarterly, in accordance with past practice, (B) the
Operating Company to make corresponding regular quarterly
distributions payable to holders of Operating Company LLC Units,
(C) Trizec to pay special dividends on the Trizec Special
Voting Stock declared and paid in accordance with the terms of
the Trizec Special Voting Stock as set forth in Trizec Charter,
and (D) the Operating Company to make corresponding special
distributions payable to holders of Operating Company SV Units;
(e) except as set forth in Section 7.01(e) of the
Trizec Disclosure Schedule, materially amend or terminate any
Material Contract or enter into any new contract or agreement
that, if entered into prior to the date of this Agreement, would
have been required to be listed in Section 4.17 of the
Trizec Disclosure Schedule as a Material Contract;
(f) except as set forth in Section 7.01(f) of the
Trizec Disclosure Schedule or except as required by the
contractual commitments or corporate policies with respect to
severance or termination pay in existence on the date of this
Agreement, (i) increase the compensation or benefits
payable to its directors, officers or non-executive employees,
except for increases in the ordinary course of business
consistent with past practice in salaries, wages, bonuses,
incentives or benefits of non-executive employees of Trizec or
any Trizec Subsidiary or (ii) grant to any director,
officer, employee or independent contractor of Trizec or of any
Trizec Subsidiary any new severance, change of control or
termination pay, grant any increase in, or otherwise adopt,
alter or amend, any right to receive any severance, change of
control or termination pay or benefits or establish, adopt,
enter into or amend any collective bargaining, bonus,
profit-sharing, thrift, compensation, stock option, restricted
stock, pension, retirement, deferred compensation, employment,
loan, retention, consulting, indemnification, termination,
severance, welfare or other similar plan, agreement, trust,
fund, policy or arrangement with any director, officer, employee
or independent contractor;
(g) pre-pay any long-term debt, except (i) in the
ordinary course of business (which shall be deemed to include,
without limitation, pre-payments or repayments of lines of
credit facilities or other similar lines of credit, payments
made in respect of any termination or settlement of any interest
rate swap or other similar hedging instrument relating thereto,
or prepayments of mortgage indebtedness secured by one or more
Trizec Properties in accordance with their terms, as such loans
become due and payable) and (ii) prepayments in an amount
not to exceed $10,000,000 in the aggregate for Trizec and the
Trizec Subsidiaries taken as a whole, or pay, discharge or
satisfy any material claims, liabilities or obligations
(absolute, accrued, contingent or otherwise), except in the
ordinary course of business consistent with past practice and in
accordance with their terms;
(h) except as required by the SEC or changes in GAAP which
become effective after the date of this Agreement, or as
recommended by Trizecs audit committee or independent
auditors, in which case Trizec shall notify the Parent,
materially change any of its accounting policies (whether for
financial accounting or Tax purposes);
(i) except as set forth in Section 7.01(i) or in
connection with a right being exercised by a tenant under an
existing Trizec Lease (and in accordance with the terms and
conditions thereof), enter into any new lease (including
renewals) for in excess of 100,000 square feet of net
rentable area at a Trizec Property, (ii) except in
connection with a right being exercised by a tenant under an
existing Trizec Lease (and in accordance with the terms and
conditions thereof), terminate or materially modify or amend any
Trizec Lease that relates to in excess of 100,000 square
feet of net rentable area, or (iii) terminate or materially
modify or amend any Trizec Ground Lease;
(j) authorize, or enter into any commitment for, any new
material capital expenditure (such authorized or committed new
material capital expenditures being referred to hereinafter as
the Capital Expenditures) relating to Trizec
Properties other than (i) Capital Expenditures to be made
in connection with Trizec Leases that Trizec is permitted to
enter into pursuant to Section 7.01(i), (ii) Capital
Expenditures identified in the 2006 Budget, (iii) any other
individual Capital Expenditure not exceeding $5,000,000 in the
aggregate, (iv) Capital Expenditures in the ordinary course
of business and consistent
A-46
with past practice necessary to maintain the physical and
structural integrity of Trizec Properties and as reasonably
determined by Trizec to be necessary to keep Trizec Properties
in working order to comply with Laws, and to repair
and/or
prevent damage to any of Trizec Properties as is necessary in
the event of an emergency situation, and (v) tenant
improvements required under existing Trizec Leases and any
leases that Trizec is permitted to enter into pursuant to
Section 7.01(i);
(k) except as set forth in Section 7.01(k) of the
Trizec Disclosure Schedule, waive, release, assign, settle or
compromise any pending or threatened action or claim other than
settlements or compromises for litigation where the amount paid
(after reduction by any insurance proceeds actually received)
exceeds $500,000 in the aggregate; provided that neither Trizec
nor any Trizec Subsidiary shall waive, settle or compromise any
pending or threatened action or claim relating to this
Agreement, the Mergers or any of the transactions contemplated
by the Agreement or any pending or threatened action or claim
brought by or on behalf of Trizecs shareholders without
the prior consent of Parent, which consent shall not be
unreasonably withheld;
(l) make, change or rescind any material Tax election or
change a material method of Tax accounting, amend any material
Tax Return, or settle or compromise any material federal, state,
local or foreign income Tax liability, audit, claim or
assessment, or enter into any material closing agreement related
to Taxes, or knowingly surrender any right to claim any material
Tax refund unless in each case such action is required by law or
necessary (i) to preserve the status of the Trizec as a
REIT under the Code, or (ii) to qualify or preserve the
status of any Trizec Subsidiary as a partnership for federal
income tax purposes or as a qualified REIT subsidiary or a
taxable REIT subsidiary the applicable provisions of
Section 856 of the Code, as the case may be (provided that
in such events the Trizec shall notify Parent of such election
and shall not fail to make such election in a timely manner);
(m) enter into, amend, supplement or modify any Tax
Protection Agreement, or take any action that would, or could
reasonably be expected to, violate any Tax Protection Agreement
or otherwise give rise to any liability of Trizec or any Trizec
Subsidiary with respect thereto;
(n) amend any term of any outstanding security of Trizec or
any Trizec Subsidiary;
(o) sell or otherwise dispose of, or subject to any Lien,
any of Trizec Properties other than (i) pending sales of
Trizec Properties pursuant to definitive agreements executed
prior to the date hereof, or (ii) the sale of Trizec
Properties currently being marketed for sale, in each case as
identified on Section 7.01(o) of the Trizec Disclosure
Schedule;
(p) adopt a plan of complete or partial liquidation or
dissolution or adopt resolutions providing for or authorizing
such liquidation or dissolution;
(q) fail to maintain in full force and effect the existing
insurance policies or to replace such insurance policies with
comparable insurance policies covering Trizec, Trizec
Properties, Trizec Subsidiaries and their respective properties,
assets and businesses;
(r) take any action that would cause any of the
representation or warranties of Trizec contained herein to
become inaccurate in any material respect or any of the
covenants of Trizec to be breached in any material respect or
result in the failure to be satisfied of any of the conditions
set forth in Section 9.02;
(s) fail to maintain in full force and effect the existing
insurance policies or to replace such insurance policies with
comparable policies covering Trizec or Trizec Subsidiaries and
their respective properties, assets and businesses.
(t) enter into, or amend or modify, any material agreement
or arrangement with any of Trizecs directors or executive
officers, or TZ Canada or TZ Hungary, without the prior written
consent of Parent and the approval of a majority of the
independent members of the Trizec Board; and
(u) announce an intention, enter into any agreement or
otherwise make a commitment, to do any of the foregoing.
A-47
Section 7.02. Sale
of 1031 Assets. Trizec and Parent agree to
engage in the sale of certain Trizec Properties as the second
step of reverse like-kind exchange transactions
intended to comply with Section 1031 of the Code, on the
terms and conditions set forth on Exhibit H hereto.
Section 7.03. Conduct
of Business by TZ Canada Pending the
Arrangement. TZ Canada agrees that, between
the date of this Agreement and the Plan of Arrangement Effective
Time, except as required, permitted or otherwise contemplated by
this Agreement or as set forth in Section 7.03(b) through
Section 7.03(n) of the TZ Canada Disclosure Schedule and
except with the prior written consent of Parent, which consent
shall not be unreasonably withheld or delayed, the businesses of
TZ Canada and the TZ Canada Subsidiaries shall be conducted in,
and TZ Canada and the TZ Canada Subsidiaries shall not take any
action, except in the ordinary course of business consistent
with past practice, and TZ Canada shall use its commercially
reasonable efforts to preserve substantially intact the business
organization of TZ Canada and the TZ Canada Subsidiaries and to
preserve the current relationships of TZ Canada and the TZ
Canada Subsidiaries with persons with which TZ Canada or any TZ
Canada Subsidiary has significant business relations. Except as
required, permitted or otherwise contemplated by this Agreement
or as set forth in Section 7.03 of the TZ Canada Disclosure
Schedule, neither TZ Canada nor any TZ Canada Subsidiary shall,
between the date of this Agreement and the Plan of Arrangement
Effective Time, do any of the following without the prior
written consent of Parent, which consent shall not be
unreasonably withheld or delayed; provided,
however, that consent of Parent shall be deemed to have
been given if Parent does not object within five
(5) business days from the date on which request for such
consent is provided by TZ Canada to Parent:
(a) amend or otherwise change any provision of the TZ
Canada Articles or TZ Canada Bylaws;
(b) except as set forth in Section 7.03(b) of the TZ
Canada Disclosure Schedule, (i) authorize for issuance,
issue or sell, pledge, dispose of or subject to any lien or
agree or commit to any of the foregoing in respect of any shares
of any class of capital stock of TZ Canada or any TZ Canada
Subsidiary or any options, warrants, convertible securities or
other rights of any kind to acquire any shares of such capital
stock, or any other equity interest, of TZ Canada or any TZ
Canada Subsidiary, other than the issuance of TZ Canada SVS
issuable pursuant to the TZ Canada Options outstanding on the
date hereof or pursuant to the TZ Canada Articles;
(ii) repurchase, redeem or otherwise acquire any
securities, or equity equivalents, (iii) reclassify,
combine, split, or subdivide any shares in the capital of TZ
Canada; or (iv) declare, set aside or pay any dividends on,
or make any other actual, constructive or deemed distributions
(whether in cash, shares, property or otherwise) in respect of,
any shares in the capital of TZ Canada or the shares or other
equity interests in any TZ Canada Subsidiary that is not
directly or indirectly wholly-owned by TZ Canada, except for
(A) dividends by any direct or indirect wholly-owned TZ
Canada Subsidiary to TZ Canada or any other TZ Canada Subsidiary
and (B) regular quarterly dividends not in excess of
$0.20 per TZ Canada Share;
(c) except as set forth in Section 7.03(c) of the TZ
Canada Disclosure Schedule, sell or agree to sell, transfer,
dispose, assign or otherwise encumber any shares of Trizec
directly or indirectly owned by it, including Trizec Common
Shares, or any other property other than in connection with
management of assets in a manner consistent with past practice.
(d) except as set forth in Section 7.03(d) of the TZ
Canada Disclosure Schedule, incur any indebtedness for borrowed
money or issue any debt securities or assume, guarantee or
endorse, or otherwise as an accommodation become responsible
for, the obligations of any person (other than a TZ Canada
Subsidiary) for borrowed money, except for:
(i) indebtedness for borrowed money incurred under TZ
Canadas line of credit facility or other existing similar
lines of credit in the ordinary course of business;
(ii) indebtedness for borrowed money with a maturity of not
more than one year in a principal amount not in excess of
$4,000,000 in the aggregate for TZ Canada and the TZ Canada
Subsidiaries taken as a whole; (iii) indebtedness for
borrowed money incurred under TZ Canadas existing lines of
credit in order for TZ Canada to pay regular cash dividends per
share of the TZ Canada SVS and the TZ Canada MVS, declared and
paid quarterly, in accordance with past practice; or
(iv) as between TZ Canada and any TZ Canada Subsidiary or
as between TZ Canada Subsidiaries;
A-48
(e) except as set forth in Section 7.03(e) of the TZ
Canada Disclosure Schedule, materially amend or terminate any TZ
Canada Material Contract or enter into any new contract or
agreement that, if entered into prior to the date of this
Agreement, would have been required to be listed in
Section 5.18 of the TZ Canada Disclosure Schedule as a TZ
Canada Material Contract;
(f) except as set forth in Section 7.03(f) of the TZ
Canada Disclosure Schedule or except as required by the
contractual commitments with respect to severance or termination
pay in existence on the date of this Agreement,
(i) increase the compensation or benefits payable to its
directors, officers or non-executive employees, except for
increases in the ordinary course of business consistent with
past practice in salaries, wages, bonuses, incentives or
benefits of directors, officers or employees of TZ Canada or any
TZ Canada Subsidiary or (ii) grant to any director,
officer, employee or independent contractor of TZ Canada or of
any TZ Canada Subsidiary any new severance, change of control or
termination pay, grant any increase in, or otherwise adopt,
alter or amend, any right to receive any severance, change of
control or termination pay or benefits or establish, adopt,
enter into or amend any collective bargaining, bonus,
profit-sharing, thrift, compensation, stock option, restricted
stock, pension, retirement, deferred compensation, employment,
loan, retention, consulting, indemnification, termination,
severance, welfare or other similar plan, agreement, trust,
fund, policy or arrangement with any director, officer, employee
or independent contractor;
(g) except as set forth in Section 7.03(g) of the TZ
Canada Disclosure Schedule, pre-pay any long-term debt (other
than inter-corporate debt), except in the ordinary course of
business (which shall be deemed to include, without limitation,
pre-payments or repayments of lines of credit facilities or
other similar lines of credit, payments made in respect of any
termination or settlement of any interest rate swap or other
similar hedging instrument relating thereto) in an amount not to
exceed $4,000,000 in the aggregate for TZ Canada and the TZ
Canada Subsidiaries taken as a whole, or pay, discharge or
satisfy any material claims, liabilities or obligations
(absolute, accrued, contingent or otherwise), except in the
ordinary course of business consistent with past practice and in
accordance with their terms;
(h) except as required by changes in Canadian GAAP which
become effective after the date of this Agreement, or as
recommended by TZ Canadas independent auditors, in which
case TZ Canada shall notify the Parent, materially change any of
its accounting policies (whether for financial accounting or Tax
purposes);
(i) except as set forth in Section 7.03(i) of the TZ
Canada Disclosure Schedule, waive, release, assign, settle or
compromise any pending or threatened action or claim other than
settlements or compromises for litigation where the amount paid
(after reduction by any insurance proceeds actually received)
exceeds $500,000 in the aggregate; provided that neither TZ
Canada nor any TZ Canada Subsidiary shall waive, settle or
compromise any pending or threatened action or claim relating to
this Agreement, the Mergers or any of the transactions
contemplated by the Agreement or any pending or threatened
action or claim brought by or on behalf of TZ Canadas
shareholders without the prior consent of Parent, which consent
shall not be unreasonably withheld.
(j) except as set forth in Section 7.03(j) of the TZ
Canada Disclosure Schedule, make, change or rescind any material
Tax election or change a material method of Tax accounting,
amend any material Tax Return or settle or compromise any
material federal, provincial, local or foreign income Tax
liability, audit, claim or assessment unless such action is
required by law or necessary to preserve any status of TZ Canada
or any TZ Canada Subsidiary for Tax purposes;
(k) except as set forth in Section 7.03(k) of the TZ
Canada Disclosure Schedule, amend any term of any outstanding
security of TZ Canada;
(l) in respect of TZ Canada, adopt a plan of complete or
partial liquidation or dissolution or adopt resolutions
providing for or authorizing such liquidation or dissolution;
(m) except as set forth in Section 7.03(m) of the TZ
Canada Disclosure Schedule, take any action that would cause any
of the representation or warranties of TZ Canada contained
herein to become
A-49
inaccurate in any material respect or any of the covenants of TZ
Canada to be breached in any material respect or result in the
failure to be satisfied of any of the conditions set forth in
Section 9.02;
(n) (i) acquire or invest in (by merger,
consolidation, acquisition of equity interests or assets, or any
other business combination) any corporation, partnership,
limited liability company, joint venture or other business
organization (or division thereof) or any property or
(ii) enter into any option to acquire or invest in, or
exercise an option or other right or election or enter into any
other commitment or agreement for the acquisition or investment
of any property, other than any commitment referred to in
Section 7.03(n) of the TZ Canada Disclosure Schedule or in
connection with management of assets by TZ Canada in a manner
consistent with past practice.
(o) fail to maintain in full force and effect the existing
insurance policies or to replace such insurance policies with
comparable policies covering TZ Canada or TZ Canada subsidiaries
and their respective properties, assets and businesses.
(p) enter into, or materially amend or modify, any material
agreement or arrangement with any of TZ Canadas directors
or executive officers without the prior written consent of
Parent and the approval of a majority of the members of the TZ
Canada Board; and
(q) announce an intention, enter into any agreement or
otherwise make a commitment, to do any of the foregoing.
Section 7.04. Conduct
of Business by Buyer Parties Pending the Trizec
Merger. The Buyer Parties agree that, between
the date of this Agreement and the Trizec Merger Effective Time,
except as contemplated by this Agreement, they shall not,
directly or indirectly, without the prior written consent of
Trizec and TZ Canada, take or cause to be taken any action that
(a) could be expected to materially delay or impair the
consummation of the transactions contemplated by this Agreement,
or propose, announce an intention, enter into any agreement or
otherwise make a commitment to take any such action, or
(b) would cause any of the representations or warranties of
the Buyer Parties contained herein to become inaccurate in any
material respect or any of the covenants of the Buyer Parties to
be breached in any material respect or result in the failure to
be satisfied of any of the conditions set forth in
Section 9.03.
Section 7.05. Advise
of Changes. Each of Trizec and TZ Canada
shall promptly advise Parent of any event, effect, development
or change that, individually or in the aggregate, has had or
would reasonably be expected to have a Material Adverse Effect
on such party and Parent shall promptly advise Trizec and TZ
Canada of any event, effect, development or change that,
individually or in the aggregate, has materially delayed or
impaired, or would reasonably be expected to materially delay or
impair, consummation of the transactions contemplated by this
Agreement. Each of Trizec and TZ Canada shall give prompt notice
to Parent, and Parent shall give prompt notice to Trizec and TZ
Canada, of (i) any representation or warranty made by it
contained in this Agreement that is qualified as to materiality
becoming untrue or inaccurate in any respect or any such
representation or warranty that is not so qualified becoming
untrue or inaccurate in any material respect or (ii) the
failure by it to comply with or satisfy in any material respect
any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement; provided, however, that no
such notification shall affect the covenants or agreements of
the parties or the conditions to the obligations of the parties
under this Agreement.
ARTICLE VIII
ADDITIONAL
AGREEMENTS
Section 8.01. Trizec
Proxy Statement; Other Filings; Stockholders
Meeting.
(a) As promptly as practicable following the date of this
Agreement, Trizec shall prepare and, after consultation with
Parent, file with the SEC the preliminary Proxy Statement and
each of Trizec and Parent shall, or shall cause their respective
affiliates to, prepare and, after consultation with each other,
file with the SEC all Other Filings that are required to be
filed by such party in connection with the transactions
contemplated hereby. Each of Trizec, TZ Canada and Parent shall
furnish all information concerning itself and
A-50
its affiliates that is required to be included in the Proxy
Statement or, to the extent applicable, the Other Filings, or
that is customarily included in proxy statements prepared in
connection with transactions of the type contemplated by this
Agreement. Each of Trizec, TZ Canada and Parent shall use its
reasonable best efforts to respond as promptly as practicable to
any comments of the SEC with respect to the Proxy Statement or
the Other Filings, and Trizec shall use its reasonable best
efforts to cause the definitive Proxy Statement to be cleared by
the SEC and mailed to Trizecs stockholders as promptly as
reasonably practicable following clearance from the SEC. Trizec
shall promptly notify TZ Canada and Parent upon the receipt of
any comments from the SEC or its staff or any request from the
SEC or its staff for amendments or supplements to the Proxy
Statement or the Other Filings and shall promptly provide TZ
Canada and Parent with copies of all correspondence between
Trizec and its representatives, on the one hand, and the SEC and
its staff, on the other hand, relating to the Proxy Statement or
the Other Filings. If at any time prior to the Trizec
Stockholders Meeting, any information relating to Trizec,
TZ Canada or the Buyer Parties or any of their respective
affiliates, officers, members or directors, should be discovered
by Trizec, TZ Canada or Parent which should be set forth in an
amendment or supplement to the Proxy Statement or the Other
Filings, so that the Proxy Statement or the Other Filings shall
not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading, the
party which discovers such information shall promptly notify the
other parties, and an appropriate amendment or supplement
describing such information shall be filed with the SEC and, to
the extent required by applicable Law, disseminated to the
stockholders of Trizec. Notwithstanding anything to the contrary
stated above, prior to filing or mailing the Proxy Statement or
filing the Other Filings (or any amendment or supplement
thereto) or responding to any comments of the SEC with respect
thereto, Trizec shall provide Parent a reasonable opportunity to
review and comment on such document or response and will in good
faith consider such comments, and to the extent practicable,
Trizec will provide TZ Canada and Parent with the opportunity to
participate in any substantive calls between Trizec, or any of
its representatives, and the SEC concerning the Proxy Statement.
(b) Trizec shall duly call, give notice of, convene and
hold a meeting of its stockholders (including any adjournments
or postponements thereof, the Trizec Stockholders
Meeting), as promptly as practicable after the date of
this Agreement, for the purpose of voting upon the adoption of
this Agreement. Subject to the following sentence, (i) the
Trizec Board shall recommend to holders of the Shares that they
adopt this Agreement (the Trizec
Recommendation), and include such recommendation in
the Proxy Statement, and (ii) Trizec will use its
reasonable best efforts to solicit from its stockholders proxies
in favor of the adoption of this Agreement and will use its
reasonable best efforts to take all other action necessary or
advisable to secure the Trizec Stockholder Approval.
Notwithstanding anything in this Agreement to the contrary, the
Trizec Board or the Special Committee may determine (1) not
to make or to withdraw, modify or change such recommendation (a
Trizec Change in Recommendation), and
(2) not to use such efforts to solicit proxies or take such
other necessary or advisable actions in favor of the adoption of
this Agreement if, in the case of both clauses (1) and (2),
it has determined in good faith, after consultation with its
outside legal counsel, that failure to take such action would be
inconsistent with its fiduciary duties under applicable Law.
Unless this Agreement has been terminated in accordance with
Section 10.01, Trizec shall hold the Trizec
Stockholders Meeting regardless of whether the Trizec
Board has made a Trizec Change in Recommendation. If there are
an insufficient number of Trizec Common Shares represented in
person or by proxy at the Trizec Stockholders Meeting to
constitute a quorum or to adopt this Agreement, Trizec may
adjourn or postpone, as applicable, the Trizec
Stockholders Meeting for up to ten (10) business days
so long as, during such period, Trizec uses its reasonable best
efforts to obtain a quorum and the requisite vote to adopt this
Agreement as promptly as practicable. Trizec may, if it receives
a bona fide written unsolicited Trizec Acquisition
Proposal, delay the mailing of the Proxy Statement or the
holding of the Trizec Stockholders Meeting, in each case
for such reasonable period as would provide a reasonable
opportunity for the Trizec Board
and/or the
Special Committee to consider such Trizec Acquisition Proposal
and to determine the effect, if any, on the Trizec
Recommendation (but in any event not longer than ten
(10) days).
A-51
Section 8.02. TZ
Canada Circular
(a) TZ Canada shall, as soon as reasonably practicable,
apply under the CBCA for an order of the Court approving the
Arrangement and, in connection with such application, TZ Canada
shall file and diligently prosecute an application for an
Interim Order providing for the calling and holding of the TZ
Canada Shareholders Meeting for the purpose of considering, and
if deemed advisable, approving the Plan of Arrangement. The
application shall request that the Interim Order provide
(i) for the class of Persons to whom notice is to be
provided in respect of the Plan of Arrangement and the TZ Canada
Shareholders Meeting and for the manner in which such notice is
to be provided, (ii) that the requisite approval for the TZ
Canada Transaction Resolution shall be
662/3%
of the votes cast on the TZ Canada Transaction Resolution by the
TZ Canada Shareholders present in person or by proxy at the TZ
Canada Shareholders Meeting, (iii) that, in all other
respects, the terms, restrictions and conditions of the By-laws
and Articles of TZ Canada, including quorum requirements and all
other matters, shall apply in respect of the TZ Canada
Shareholders Meeting, and (iv) for the grant of the TZ
Canada Dissent Rights.
(b) Subject to Section 8.02(a), TZ Canada shall duly
call, give notice of, convene and hold a meeting of its
shareholders (including any adjustments or postponements
thereof, the TZ Canada Shareholders Meeting)
for the purpose of considering the TZ Canada Transaction
Resolution. Subject to the following sentence, (i) the TZ
Canada Board shall recommend to the TZ Canada Shareholders that
they approve the TZ Canada Transaction Resolution (the
TZ Canada Recommendation) and include each
recommendation in the TZ Canada circular, and (ii) TZ
Canada will use its reasonable best efforts to solicit from the
TZ Canada Shareholders proxies in favor of the approval of the
TZ Canada Transaction Resolution and will use its reasonable
best efforts to take all other action necessary or advisable to
secure the TZ Canada Shareholder Approval. Notwithstanding the
foregoing or anything in this Agreement to the contrary, the TZ
Canada Board may determine (1) not to make or may withdraw,
modify or change such recommendation (a TZ Canada
Change in Recommendation), and (2) not to use
such efforts to solicit proxies or take such other necessary or
advisable actions in favor of the approval of the TZ Canada
Transaction Resolution if, in the case of both clauses (1)
and (2), it has determined in good faith, after consultation
with its outside legal counsel, that failure to take such action
would be inconsistent with its fiduciary duties under applicable
Canadian Law. Unless this Agreement has been terminated in
accordance with Section 10.01, TZ Canada shall hold the TZ
Canada Shareholders Meeting regardless whether the TZ
Canada Board has made a TZ Canada Change in Recommendation. If
there are an insufficient number of TZ Canada Shares represented
in person or by proxy at the TZ Canada Shareholders
Meeting to constitute a quorum or to adopt this Agreement, TZ
Canada may adjourn or postpone, as applicable, the TZ Canada
Shareholders Meeting for up to ten (10) business days
so long as, during such period, TZ Canada uses its reasonable
best efforts to obtain a quorum and the requisite vote to adopt
this Agreement as promptly as practicable. TZ Canada may, if it
receives an unsolicited TZ Canada Acquisition Proposal, delay
the mailing of the TZ Canada Circular or the holding of the TZ
Canada Shareholders Meeting, in each case for such reasonable
period as would provide a reasonable opportunity for the TZ
Canada Board to consider such TZ Canada Acquisition Proposal and
to determine the effect, if any, on the TZ Canada Recommendation
(but in any event not longer than ten (10) days).
(c) TZ Canada shall, subject to obtaining the approvals as
are required by the Interim Order, use commercially reasonable
efforts to diligently prosecute the application to the Court for
the Final Order.
(d) As promptly as practicable following the date of this
Agreement, TZ Canada shall prepare, in consultation with Parent,
the TZ Canada Circular and Trizec and Parent shall prepare and
file, in consultation with TZ Canada, any Additional Filings
that are required to be made with any securities regulator in
connection with the transactions contemplated hereby. Each of
Trizec, TZ Canada and Parent shall furnish all information
concerning itself and its affiliates that is required to be
included in the TZ Canada Circular or, to the extent applicable,
the Additional Filings, or that is customarily included in proxy
statements prepared in connection with transactions of the type
contemplated by the Plan of Arrangement. If applicable, each of
Trizec, TZ Canada and Parent shall use its reasonable best
efforts to respond as promptly as practicable to any comments of
applicable securities regulators with respect to the TZ Canada
Circular or the Additional Filings. TZ Canada shall promptly
notify Trizec and Parent upon the receipt of any comments from
any applicable securities regulator or its staff or any request
from any applicable securities regulator or its staff for
A-52
amendments or supplements to the TZ Canada Circular or the
Additional Filings and shall promptly provide Trizec and Parent
with copies of all correspondence between TZ Canada and its
representatives, on the one hand, and the applicable securities
regulator and its staff, on the other hand, relating to the TZ
Canada Circular or the Additional Filings. If at any time prior
to the TZ Canada Shareholders Meeting, any information relating
to Trizec, TZ Canada or the Buyer Parties or any of their
respective affiliates, officers, members or directors, should be
discovered by Trizec, TZ Canada or Parent which should be set
forth in an amendment or supplement to the TZ Canada Circular or
the Additional Filings, so that the TZ Canada Circular or the
Additional Filings shall not contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are
made, not misleading, the party which discovers such information
shall promptly notify the other parties, and an appropriate
amendment or supplement describing such information shall be
filed with the applicable securities regulator and, to the
extent required by applicable Law, disseminated to the TZ Canada
Shareholders. Notwithstanding anything to the contrary stated
above, prior to filing or mailing the TZ Canada Circular or
filing the Additional Filings (or any amendment or supplement
thereto) or responding to any comments of an applicable
securities regulator with respect thereto, TZ Canada shall
provide Trizec and Parent a reasonable opportunity to review and
comment on such document or response and will in good faith
consider such comments, and to the extent practicable, TZ Canada
will provide Trizec and Parent with the opportunity to
participate in any substantive calls between TZ Canada, or any
of its representatives, and the applicable securities regulator
concerning the TZ Canada Circular.
Section 8.03. Access
to Information; Confidentiality.
(a) Subject to applicable Law and confidentiality
agreements, from the date hereof until the Trizec Merger
Effective Time, the Trizec Parties and TZ Canada shall, and
shall cause their respective subsidiaries and the officers,
directors, employees, auditors and agents of the Trizec Parties
and TZ Canada and their respective subsidiaries to afford Parent
and its financing sources, legal counsel, accountants and other
representatives, following notice from Parent to the Trizec
Parties and TZ Canada in accordance with this Section 8.03,
reasonable access during normal business hours to the officers,
employees, agents, properties, offices, plants and other
facilities, books and records of the Trizec Parties and TZ
Canada and each of their respective subsidiaries, and all other
financial, operating and other data and information as Parent
may reasonably request. Notwithstanding the foregoing, neither
Parent nor any of its representatives shall (i) contact or
have any discussions with any of the Trizec Parties or TZ
Canadas or either of their subsidiaries employees,
agents, or representatives, unless in each case Parent obtains
the prior written consent of the Trizec Parties or TZ Canada, as
applicable, which shall not be unreasonably withheld,
(ii) contact or have any discussions with any of the
landlords/sub landlords, tenants/subtenants, or licensees or
franchisees of the Trizec Parties and TZ Canada or their
respective subsidiaries, unless in each case Parent obtains the
prior written consent of the Trizec Parties or TZ Canada, as
applicable, which shall not be unreasonably withheld,
(iii) damage any property or any portion thereof, or
(iv) perform any onsite procedure or investigation
(including any onsite environmental investigation or study)
without the Trizec Parties or TZ Canadas, as
applicable, prior written consent. Parent shall schedule and
coordinate all inspections with the Trizec Parties and TZ Canada
and shall give the Trizec Parties and TZ Canada at least three
(3) Business Days prior written notice thereof, setting
forth the inspection or materials that Parent or its
representatives intend to conduct or review, as applicable, and
Parent is required to give the Trizec Parties and TZ Canada such
written notice at least one (1) Business Day prior to the
date that any tenant of a Trizec Property which Parent wishes to
inspect is entitled to receive notice of any such inspection
under the applicable Trizec Lease. The Trizec Parties and TZ
Canada shall be entitled to have representatives present at all
times during any such inspection. Notwithstanding the foregoing,
neither the Trizec Parties and TZ Canada nor any of their
respective subsidiaries shall be required to provide access to
or to disclose information where such access or disclosure would
jeopardize the attorney-client privilege of the Trizec Parties
or TZ Canada or any of their respective subsidiaries or
contravene any Law or binding agreement entered into prior to
the date of this Agreement.
(b) Prior to the Trizec Merger Effective Time, all
information obtained by Parent pursuant to this
Section 8.03 shall be kept confidential in accordance with
the confidentiality agreement dated May 15, 2006 between
Brookfield Properties Corporation, Trizec and TZ Canada (the
Confidentiality Agreement).
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Section 8.04. No
Solicitation of Transactions by Trizec Parties.
(a) During the term of this Agreement, none of the Trizec
Parties, any Trizec Subsidiary, TZ Canada or any TZ Canada
Subsidiary shall, nor shall it authorize or knowingly permit,
directly or indirectly, any officer, trustee, director,
employee, investment banker, financial advisor, attorney,
broker, finder or other agent, representative or affiliate
(each, a Representative) of the Trizec
Parties, any Trizec Subsidiary, TZ Canada or any TZ Canada
Subsidiary to, (x) initiate, solicit, knowingly encourage
or knowingly facilitate (including by way of furnishing
nonpublic information or assistance) any inquiries or the making
of any proposal or other action that constitutes, or may
reasonably be expected to lead to, any Trizec Acquisition
Proposal, (y) enter into discussions or negotiate with any
Person in furtherance of such inquiries or to obtain a Trizec
Acquisition Proposal, or (z) enter into any agreement in
principle, contract or agreement (other than a confidentiality
agreement entered into in accordance with the provisions of this
Section 8.04) with respect to a Trizec Acquisition
Proposal. Notwithstanding the foregoing or any other provision
of this Agreement to the contrary, at any time prior to the
receipt of the Trizec Stockholder Approval, following the
receipt by the Trizec Parties or any Trizec Subsidiary of a
bona fide written Trizec Acquisition Proposal (that was
not solicited, encouraged or facilitated in violation of, or did
not otherwise result from a breach of, this
Section 8.04(a)), the Trizec Board or the Special Committee
may (directly or through Representatives) (i) contact such
Person and its advisors solely for the purpose of clarifying the
proposal and any material terms thereof and the conditions to
and likelihood of consummation, so as to determine whether such
proposal is, or is reasonably likely to lead to, a Trizec
Superior Proposal and (ii) if (x) the Trizec Board or
the Special Committee determines in good faith after
consultation with its outside legal and financial advisors that
such Trizec Acquisition Proposal is, or is reasonably likely to
lead to, a Trizec Superior Proposal and (y) the Trizec
Board or the Special Committee determines in good faith, after
consultation with its outside legal counsel, that failure to
take such action would be inconsistent with its fiduciary duties
under applicable Law, the Trizec Board or the Special Committee
may (A) furnish non-public information with respect to the
Trizec Parties and the Trizec Subsidiaries to the Person who
made such proposal (provided that Trizec (1) has previously
furnished or concurrently furnishes such information to Parent
and (2) shall furnish such information pursuant to a
confidentiality agreement which is at least as favorable to
Trizec as the Confidentiality Agreement), (B) participate
in negotiations regarding such proposal and (C) following
receipt of a Combined Superior Proposal, terminate this
Agreement pursuant to, and subject to compliance with,
Section 10.01(h).
(b) The Trizec Parties shall take, and shall cause the
Trizec Subsidiaries to take, all actions reasonably necessary to
cause their respective Representatives to immediately cease any
discussions, negotiations or communications with any party or
parties with respect to any Trizec Acquisition Proposal;
provided, however, that nothing in this
Section 8.04 shall preclude Trizec, any Trizec Subsidiary
or their respective Representatives from contacting any such
party or parties solely for the purpose of complying with the
provisions of the last sentence of this Section 8.04(b).
Trizec, the Trizec Subsidiaries and TZ Canada shall promptly
request each Person that has heretofore executed a
confidentiality agreement in connection with its consideration
of a Trizec Acquisition Proposal, if any, to return or destroy
all confidential information heretofore furnished to such person
by or on behalf of Trizec, the Trizec Subsidiaries and TZ Canada.
(c) The Trizec Parties shall promptly notify Parent (but in
no event less than twenty-four (24) hours following the
initial receipt) of any Trizec Acquisition Proposal, including
the relevant details relating to a Trizec Acquisition Proposal
(including the identity of the parties, all material terms
thereof and a copy of such Trizec Acquisition Proposal) which
any of the Trizec Parties or any Trizec Subsidiary or any of
their Representatives receive after the date hereof, and shall
keep Parent informed on a prompt basis as to the status of and
any material developments regarding any such proposal. None of
TZ Canada, Trizec or any Trizec Subsidiary shall, after the date
of this Agreement, enter into any confidentiality agreement that
would prohibit them from providing such information to Parent.
None of TZ Canada, Trizec or any Trizec Subsidiary shall, and
such parties shall not permit any of their subsidiaries to,
terminate, waive, amend or modify any provision of any existing
standstill or confidentiality agreement to which TZ Canada,
Trizec or any Trizec Subsidiary is a party and TZ Canada, Trizec
or any Trizec Subsidiary shall, and shall cause each of their
Subsidiaries to, enforce the provisions of any such agreement.
A-54
(d) Nothing in this Section 8.04 or elsewhere in this
Agreement shall prevent the Trizec Board or the Special
Committee from disclosing any information required to be
disclosed under applicable Law or from complying with
Rule 14d-9
or
Rule 14e-2(a)
promulgated under the Exchange Act with respect to a Trizec
Acquisition Proposal; provided, however, that
neither Trizec nor the Trizec Board shall be permitted to
recommend that the Trizec Stockholders tender any securities in
connection with any tender or exchange offer (or otherwise
approve, endorse or recommend any Trizec Acquisition Proposal)
or withdraw or modify the Trizec Recommendation, unless in each
case, to the extent applicable, the requirements of
Sections 8.01(b) and 8.04(a) have been satisfied. In
addition, nothing in this Section 8.04 or this Agreement
shall prohibit Trizec Parties from taking any action that any
court of competent jurisdiction orders Trizec Parties to take.
(e) Trizec shall not take any action to exempt any Person
from the restrictions contained in Article IV of the Trizec
Charter or otherwise cause any of such restrictions not to apply
unless such actions are taken in connection with a termination
of this Agreement in accordance with Section 10.01(h).
Section 8.05. No
Solicitation of Transactions by TZ Canada.
(a) During the term of this Agreement, none of TZ Canada or
any TZ Canada Subsidiary shall, nor shall it authorize or
knowingly permit, directly or indirectly, any Representative of
the Trizec Parties, any Trizec Subsidiary, TZ Canada or any TZ
Canada Subsidiary to, (x) initiate, solicit, knowingly
encourage or knowingly facilitate (including by way of
furnishing nonpublic information or assistance) any inquiries or
the making of any proposal or other action that constitutes, or
may reasonably be expected to lead to, any TZ Canada Acquisition
Proposal, (y) enter into discussions or negotiate with any
Person in furtherance of such inquiries or to obtain a TZ Canada
Acquisition Proposal, or (z) enter into any agreement in
principle, contract or agreement (other than a confidentiality
agreement entered into in accordance with the provisions of this
Section 8.05) with respect to a TZ Canada Acquisition
Proposal. Notwithstanding the foregoing or any other provision
of this Agreement to the contrary, at any time prior to the
receipt of the TZ Canada Shareholder Approval, following the
receipt by TZ Canada or any TZ Canada Subsidiary of a bona
fide written TZ Canada Acquisition Proposal (that was not
solicited, encouraged or facilitated in violation or did not
otherwise result from a breach of, this Section 8.05(a)),
the TZ Canada Board may (directly or through Representatives)
(i) contact such Person and its advisors solely for the
purpose of clarifying the proposal and any material terms
thereof and the conditions to and likelihood of consummation, so
as to determine whether such proposal is, or is reasonably
likely to lead to, a TZ Canada Superior Proposal and
(ii) if (x) the TZ Canada Board determines in good
faith after consultation with its outside legal and financial
advisors that such TZ Canada Acquisition Proposal is, or is
reasonably likely to lead to, a TZ Canada Superior Proposal and
(y) the TZ Canada Board determines in good faith, after
consultation with its outside legal counsel, that failure to
take such action would be inconsistent with its fiduciary duties
under applicable Canadian Law, the TZ Canada Board may
(A) furnish non-public information with respect to TZ
Canada and the TZ Canada Subsidiaries to the Person who made
such proposal (provided that TZ Canada (1) has previously
furnished or concurrently furnishes such information to Parent
and (2) shall furnish such information pursuant to a
confidentiality agreement which is at least as favorable to TZ
Canada as the Confidentiality Agreement), (B) participate
in negotiations regarding such proposal and (C) following
receipt of a Combined Superior Proposal, terminate this
Agreement pursuant to, and subject to compliance with,
Section 10.01(h).
(b) TZ Canada shall take, and shall cause the TZ Canada
Subsidiaries to take, all actions reasonably necessary to cause
their respective officers, trustees, directors, employees,
investment bankers, financial advisors, attorneys, brokers,
finders and any other agents, representatives or affiliates to
immediately cease any discussions, negotiations or
communications with any party or parties with respect to any TZ
Canada Acquisition Proposal; provided, however,
that nothing in this Section 8.05 shall preclude TZ Canada,
any TZ Canada Subsidiary or their respective Representatives
from contacting any such party or parties solely for the purpose
of complying with the provisions of the last sentence of this
Section 8.05(b). TZ Canada and the TZ Canada Subsidiaries
shall promptly request each Person that has heretofore executed
a confidentiality agreement in connection with its consideration
of a TZ Canada Acquisition Proposal, if any, to return or
destroy all confidential information heretofore furnished to
such person by or on behalf of TZ Canada and the TZ Canada
Subsidiaries.
A-55
(c) TZ Canada shall promptly notify Parent (but in no event
less than twenty-four (24) hours following the initial
receipt) of any TZ Canada Acquisition Proposal including all of
the relevant details relating to a TZ Canada Acquisition
Proposal (including the identity of the parties, all material
terms thereof and a copy of such TZ Canada Acquisition Proposal)
which any of TZ Canada or any TZ Canada Subsidiary or any of
their Representatives may receive after the date hereof, and
shall keep Parent informed on a prompt basis as to the status of
and any material developments regarding any such proposal. None
of TZ Canada or any TZ Canada Subsidiary shall, after the date
of this Agreement, enter into any confidentiality agreement that
would prohibit them from providing such information to Parent.
None of TZ Canada, Trizec, or the Operating Company shall, and
such parties shall not permit any of their Subsidiaries to,
terminate, waive, amend or modify any provision of any existing
standstill or confidentiality agreement to which TZ Canada,
Trizec or any Trizec Subsidiary is a party and TZ Canada, Trizec
or the Operating Company shall, and shall cause each of their
Subsidiaries to, enforce the provisions of any such agreement.
(d) Nothing in this Section 8.05 or elsewhere in this
Agreement shall prevent the TZ Canada Board from disclosing any
information required to be disclosed under applicable Canadian
Law; provided, however, that neither TZ Canada nor
the TZ Canada Board shall be permitted to recommend that TZ
Canada Shareholders tender any securities in connection with any
tender or exchange offer (or otherwise approve, endorse or
recommend any TZ Canada Acquisition Proposal) or withdraw or
modify the TZ Canada Recommendation, unless in each case, to the
extent applicable, the requirements of Sections 8.02(b) and
8.05(a) have been satisfied. In addition, nothing in this
Section 8.05(d) or this Agreement shall prevent TZ Canada
from taking any action that any court of competent jurisdiction
orders TZ Canada to take.
Section 8.06. Employee
Benefits Matters.
(a) From and after the Trizec Merger Effective Time, Parent
shall honor in accordance with their terms all severance,
change-of-control
and similar obligations of Trizec and the Trizec Subsidiaries,
and Parent shall pay on the Closing Date to any applicable
director, officer or employee of Trizec or any Trizec Subsidiary
any amounts with respect to such severance,
change-in-control
and similar obligations that are payable by their terms upon
consummation of the Trizec Merger at the Trizec Merger Effective
Time or on the Closing Date, all of which are listed in
Section 8.06 of the Trizec Disclosure Schedule. From and
after the effective time, Parent shall honor in accordance with
their terms any other employment related contracts, agreements,
arrangements and commitments of Trizec and the Trizec
Subsidiaries in effect immediately prior to the Trizec Merger
Effective Time that are applicable to any current or former
employees, officers or directors of Trizec or any Trizec
Subsidiary or any of their predecessors.
(b) For a period of not less than twelve (12) months
after the Closing Date, except as required by any applicable
collective bargaining agreement, with respect to each employee
of Trizec or any Trizec Subsidiary (collectively, the
Trizec Employees) who remains an employee of
Surviving Corporation or its successors or assigns or any of
their subsidiaries (collectively, the Continuing
Employees), Parent shall provide the Continuing
Employees with (i) (A) base salary, (B) cash
incentive compensation and (C) the value of any equity
based incentive or other compensation (whether in the form of
cash or equity), in each case in an amount at least equal to the
same level that was provided to each such Continuing Employee or
to which such Continuing Employee was entitled immediately prior
to the Trizec Merger Effective Time, and (ii) employee
benefits (other than equity awards) that are no less favorable
in the aggregate than those provided to such Continuing
Employees immediately prior to the Trizec Merger Effective Time.
Each Continuing Employee will be credited with his or her years
of service with Trizec and the Trizec Subsidiaries (and any
predecessor entities thereof) before the Closing Date under the
parallel employee benefit plan of Parent or the Trizec
Subsidiaries to the same extent as such employee was entitled,
before the Trizec Merger Effective Time, to credit for such
service under the respective Plan (except to the extent such
credit would result in the duplication of benefits and except
with respect to benefit accrual under a defined benefit plan).
In addition, with respect to each health benefit plan, during
the calendar year that includes the Closing Date, each
Continuing Employee shall be given credit for amounts paid by
the employee under the respective Plan for purposes of applying
deductibles, co-payments and
out-of-pocket
maximums as though such amounts had been paid in accordance with
the terms and conditions of the parallel plan, program or
arrangement of Parent or Surviving Corporation. Nothing herein
shall detract from the existing right of any Trizec employee.
A-56
(c) Prior to the Trizec Merger Effective Time, the Trizec
Board, or an appropriate committee of non-employee directors
thereof, shall adopt a resolution consistent with the
interpretive guidance of the SEC so that the disposition by any
officer or director of Trizec who is a covered person of Trizec
for purposes of Section 16 of the Exchange Act and the
rules and regulations thereunder
(Section 16) of Trizec Common Shares or
Trizec Stock Options to acquire Trizec Common Shares (or Trizec
Common Shares acquired upon the vesting of any Trizec Restricted
Share Rights or Trizec Restricted Stock) pursuant to this
Agreement and the Trizec Merger shall be an exempt transaction
for purposes of Section 16.
(d) Prior to the Trizec Merger Effective Time, the Trizec
Board shall take such actions as are necessary to terminate
Trizecs share of investment-based non-qualified deferred
compensation account-based arrangements (collectively, the
Non-Qualified Account Plans). Such action
shall be contingent upon, and effective as of, the Trizec Merger
Effective Time. Payment of the Non-Qualified Account Plans shall
be in cash to the participants in the Non-Qualified Account
Plans in a single lump-sum payment by Surviving Corporation
immediately following the Trizec Merger Effective Time;
provided, however, that payment shall be delayed
to the date six (6) months following a participants
separation from service in the event, and to the extent, prior
to the Trizec Merger Effective Time the Trizec Board determines
that such delay is necessary to comply with the requirements of
Section 409A of the Code.
(e) From and after the Plan of Arrangement Effective Time,
Parent shall honor in accordance with their terms all severance,
change-of-control
and similar obligations of TZ Canada and the TZ Canada
Subsidiaries, and Parent shall pay on the Closing Date to any
applicable director, officer or employee of TZ Canada or any TZ
Canada Subsidiary any amounts with respect to such severance,
change-in-control
and similar obligations that are payable by their terms upon
consummation of the Arrangement at the Plan of Arrangement
Effective Time or on the Closing Date, all of which are listed
in Section 8.06 of the TZ Canada Disclosure Schedule. From
and after the Plan of Arrangement Effective Time, Parent shall
honor in accordance with their terms any other employment
related contracts, agreements arrangements and commitments of TZ
Canada and the TZ Canada Subsidiaries in effect immediately
prior to the Plan of Arrangement Effective Time that are
applicable to any current or former employees, officers or
directors of TZ Canada or any TZ Canada Subsidiary or any of
their predecessors.
(f) For a period of not less than twelve (12) months
after the Closing Date, except as required by any applicable
collective bargaining agreement, with respect to each employee
of TZ Canada or any TZ Canada Subsidiary (collectively, the
TZ Canada Employees) who remains an employee of TZ
Canada or its successors or assigns or any of their subsidiaries
(collectively, the Continuing Employees), Parent
shall provide the Continuing Employees with
(i) (A) base salary, (B) cash incentive
compensation and (C) the value of any equity based
incentive or other compensation (whether in the form of cash or
equity), in each case in an amount at least equal to the same
level that was provided to each such Continuing Employee or to
which such Continuing Employee was entitled immediately prior to
the Plan of Arrangement Effective Time, and (ii) employee
benefits (excluding any equity-based awards) that are no less
favorable in the aggregate than those provided to such
Continuing Employees immediately prior to the Plan of
Arrangement Effective Time. Each Continuing Employee will be
credited with his or her years of service with TZ Canada and the
TZ Canada Subsidiaries (and any predecessor entities thereof)
before the Closing Date under the parallel employee benefit plan
of Parent or the TZ Canada Subsidiaries to the same extent as
such employee was entitled, before the Plan of Arrangement
Effective Time, to credit for such service under the respective
Plan (except to the extent such credit would result in the
duplication of benefits and except with respect to benefit
accrual under a defined benefit plan). In addition, with respect
to each health benefit plan, during the calendar year that
includes the Closing Date, each Continuing Employee shall be
given credit for amounts paid by the employee under the
respective Plan for purposes of applying deductibles,
co-payments and
out-of-pocket
maximums as though such amounts had been paid in accordance with
the terms and conditions of the parallel plan, program or
arrangement of Parent or TZ Canada. Nothing herein shall detract
from the existing rights of any TZ Canada employee.
A-57
Section 8.07. Directors
and Officers Indemnification and Insurance of the
Surviving Corporation.
(a) Without limiting any additional rights that any
director, officer, trustee, or fiduciary under or with respect
to any employee benefit plan (within the meaning of
Section 3(3) of ERISA) may have under any employment or
indemnification agreement or under the Trizec Charter, Trizec
Bylaws or this Agreement or, if applicable, similar
organizational documents or agreements of any of the Trizec
Subsidiaries, from and after the Trizec Merger Effective Time,
Parent and Surviving Corporation (the
Indemnitors) shall: (i) indemnify and
hold harmless each person who is at the date hereof or during
the period from the date hereof through the Closing Date serving
as a director, officer or trustee, or as a fiduciary under or
with respect to any employee benefit plan (within the meaning of
Section 3(3) of ERISA) of Trizec or Trizec Subsidiaries
(collectively, the Indemnified Parties) to
the fullest extent authorized or permitted by applicable law, as
now or hereafter in effect, in connection with any Claim and any
judgments, fines, penalties and amounts paid in settlement
(including all interest, assessments and other charges paid or
payable in connection with or in respect of such judgments,
fines, penalties or amounts paid in settlement) resulting
therefrom; and (ii) promptly pay on behalf of or, within
thirty (30) days after any request for advancement, advance
to each of the Indemnified Parties, to the fullest extent
authorized or permitted by applicable law, as now or hereafter
in effect, any Expenses incurred in defending, serving as a
witness with respect to or otherwise participating in any Claim
in advance of the final disposition of such Claim, including
payment on behalf of or advancement to the Indemnified Party of
any Expenses incurred by such Indemnified Party in connection
with enforcing any rights with respect to such indemnification
and/or
advancement, in each case without the requirement of any bond or
other security. The indemnification and advancement obligations
of the Indemnitors pursuant to this Section 8.07(a) shall
extend to acts or omissions occurring at or before the Trizec
Merger Effective Time and any Claim relating thereto (including
with respect to any acts or omissions occurring in connection
with the approval of this Agreement and the consummation of the
transactions contemplated hereby, including the consideration
and approval thereof and the process undertaken in connection
therewith and any Claim relating thereto), and all rights to
indemnification and advancement conferred hereunder shall
continue as to a person who continues to be or who has ceased to
be a director, officer or trustee of Trizec, Trizec or any
Trizec Subsidiary or fiduciary under or with respect to any
employee benefit plan (within the meaning of Section 3(3)
of ERISA) of Trizec or any Trizec Subsidiary after the date
hereof and shall inure to the benefit of such persons
heirs, executors and personal and legal representatives. As used
in this Section 8.07(a): (x) the term
Claim means any threatened, asserted, pending
or completed Action, suit or proceeding, or any inquiry or
investigation, whether instituted by any party hereto, any
Governmental Authority or any other party, that any Indemnified
Party in good faith believes might lead to the institution of
any such Action, suit or proceeding, whether civil, criminal,
administrative, investigative or other, including any
arbitration or other alternative dispute resolution mechanism,
arising out of or pertaining to matters that relate to such
Indemnified Party in his or her capacity as a director, officer
or trustee of Trizec or any of the Trizec Subsidiaries or
fiduciary under or with respect to any employee benefit plan
(within the meaning of Section 3(3) of ERISA) or any other
person at or prior to the Trizec Merger Effective Time at the
request of Trizec or any of Trizec Subsidiaries; and
(y) the term Expenses means reasonable
attorneys fees and all other reasonable costs, expenses
and obligations (including, without limitation, experts
fees, travel expenses, court costs, retainers, transcript fees,
duplicating, printing and binding costs, as well as
telecommunications, postage and courier charges) paid or
incurred in connection with investigating, defending, being a
witness in or participating in (including on appeal), or
preparing to investigate, defend, be a witness in or participate
in, any Claim for which indemnification is authorized pursuant
to this Section 8.07(a), including any Action relating to a
claim for indemnification or advancement brought by an
Indemnified Party. Neither Parent nor Surviving Corporation
shall settle, compromise or consent to the entry of any judgment
in any Claim in respect of which indemnification has been or
could be sought by such Indemnified Party hereunder unless such
settlement, compromise or judgment includes an unconditional
release of such Indemnified Party from all liability arising out
of such Claim or such Indemnified Party otherwise consents
thereto.
(b) Without limiting the foregoing, Parent and MergerCo
agree that all rights to indemnification and exculpation from
liabilities for acts or omissions occurring at or prior to the
Trizec Merger Effective Time now existing in favor of the
current or former directors, officers, trustees, employees,
agents, or fiduciaries of Trizec or any of the Trizec
Subsidiaries as provided in Trizec Charter and Trizec Bylaws
(or, as applicable,
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the charter, bylaws, partnership agreement, limited liability
company agreement, or other organizational documents of any of
the Subsidiaries) and indemnification agreements of Trizec or
any of the Trizec Subsidiaries identified on
Section 8.07(b) of the Trizec Disclosure Schedule shall be
assumed by Surviving Corporation in the Trizec Merger, without
further action, at the Trizec Merger Effective Time and shall
survive the Trizec Merger and shall continue in full force and
effect in accordance with their terms.
(c) For a period of six (6) years from the Trizec
Merger Effective Time, the organizational documents of Surviving
Corporation shall contain provisions no less favorable with
respect to indemnification than are set forth in Trizec Charter
and Trizec Bylaws, which provisions shall not be amended,
repealed or otherwise modified for a period of six
(6) years from the Trizec Merger Effective Time in any
manner that would affect adversely the rights thereunder of
individuals who, at or prior to the Trizec Merger Effective
Time, were directors, officers, trustees, employees, agents, or
fiduciaries of Trizec or any of Trizec Subsidiaries or with
respect to any Employee benefit plans (within the meaning of
Section 3(3) of ERISA, unless such modification shall be
required by Law and then only to the minimum extent required by
Law.
(d) Surviving Corporation shall maintain for a period of at
least six (6) years the current policies of directors
and officers liability insurance maintained by Trizec and
the Trizec Subsidiaries with respect to claims arising from
facts or events that occurred on or before the Trizec Merger
Effective Time, including, without limitation, in respect of the
transactions contemplated by this Agreement; provided, that
(i) that Surviving Corporation may substitute therefor
policies of at least the same coverage and amounts containing
terms and conditions which are, in the aggregate, no less
advantageous to the insured, provided that such substitution
shall not result in gaps or lapses of coverage with respect to
matters occurring before the Trizec Merger Effective Time;
(ii) in no event shall Surviving Corporation be required to
expend pursuant to this Section 8.07(d) more than an amount
per year of coverage equal to three hundred percent (300%) of
the current annual premiums paid by Trizec for such insurance.
In the event that, but for the proviso to the immediately
preceding sentence, Surviving Corporation would be required to
expend more than three hundred percent (300%) of the current
annual premiums paid by Trizec, Surviving Corporation shall
obtain the maximum amount of such insurance obtainable by
payment of annual premiums equal to three hundred percent (300%)
of the current annual premiums paid by Trizec. Parent shall, and
shall cause Surviving Corporation or its successors or assigns
to, maintain such policies in full force and effect, and
continue to honor all obligations thereunder.
(e) If Surviving Corporation or any of its respective
successors or assigns (i) consolidates with or merges with
or into any other person and shall not be the continuing or
surviving limited liability company, partnership or other entity
of such consolidation or merger or (ii) transfers or
conveys all or substantially all of its properties and assets to
any person, then, and in each such case, proper provision shall
be made so that the successors and assigns of Surviving
Corporation assumes the obligations set forth in this
Section 8.07.
(f) Parent shall cause Surviving Corporation to perform all
of the obligations of Surviving Corporation under this
Section 8.07 and the parties acknowledge and agree that
Parent guarantees the payment and performance of Surviving
Corporations obligations pursuant to this
Section 8.07.
(g) This Section 8.07 is intended for the irrevocable
benefit of, and to grant third party rights to, the Indemnified
Parties and shall be binding on all successors and assigns of
Trizec, the Operating Company, Parent and Surviving Corporation.
Each of the Indemnified Parties shall be entitled to enforce the
covenants contained in this Section 8.07.
(h) Parent shall have the right to participate in the
defense or settlement of any shareholder or member litigation
against Trizec, its directors or officers, or the Operating
Company relating to the Mergers or the other transactions
contemplated by this Agreement, provided, however, that no such
settlement shall be agreed to without Parents consent,
which consent will not be unreasonably withheld.
Section 8.08. Directors
and Officers Indemnification and Insurance of TZ
Canada.
(a) Without limiting any additional rights that any
director, officer or trustee may have under any employment or
indemnification agreement or under the TZ Canada Articles, TZ
Canada Bylaws or this Agreement or, if applicable, similar
organizational documents or agreements of any of the TZ Canada
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Subsidiaries, from and after the Plan of Arrangement Effective
Time, Parent and TZ Canada shall: (i) indemnify and hold
harmless each person who is at the date hereof or during the
period from the date hereof through the Closing Date serving as
a director, officer or trustee of TZ Canada or the TZ Canada
Subsidiaries (collectively, the TZ Canada Indemnified
Parties) to the fullest extent authorized or permitted
by applicable law, as now or hereafter in effect, in connection
with any Claim and any judgments, fines, penalties and amounts
paid in settlement (including all interest, assessments and
other charges paid or payable in connection with or in respect
of such judgments, fines, penalties or amounts paid in
settlement) resulting therefrom; and (ii) promptly pay on
behalf of or, within thirty (30) days after any request for
advancement, advance to each of the TZ Canada Indemnified
Parties, to the fullest extent authorized or permitted by
applicable law, as now or hereafter in effect, any Expenses
incurred in defending, serving as a witness with respect to or
otherwise participating in any Claim in advance of the final
disposition of such Claim, including payment on behalf of or
advancement to the TZ Canada Indemnified Party of any Expenses
incurred by such TZ Canada Indemnified Party in connection with
enforcing any rights with respect to such indemnification
and/or
advancement, in each case without the requirement of any bond or
other security. The indemnification and advancement obligations
of Parent and TZ Canada pursuant to this Section 8.08(a)
shall extend to acts or omissions occurring at or before the
Plan of Arrangement Effective Time and any Claim relating
thereto (including with respect to any acts or omissions
occurring in connection with the approval of this Agreement and
the consummation of the transactions contemplated hereby,
including the consideration and approval thereof and the process
undertaken in connection therewith and any Claim relating
thereto), and all rights to indemnification and advancement
conferred hereunder shall continue as to a person who continues
to be or who has ceased to be a director, officer, trustee,
employee, agent, or fiduciary of TZ Canada or the TZ Canada
Subsidiaries after the date hereof and shall inure to the
benefit of such persons heirs, executors and personal and
legal representatives. As used in this Section 8.08(a):
(x) the term Claim means any threatened,
asserted, pending or completed Action, suit or proceeding, or
any inquiry or investigation, whether instituted by any party
hereto, any Governmental Authority or any other party, that any
TZ Canada Indemnified Party in good faith believes might lead to
the institution of any such Action, suit or proceeding, whether
civil, criminal, administrative, investigative or other,
including any arbitration or other alternative dispute
resolution mechanism, arising out of or pertaining to acts or
omissions of such TZ Canada Indemnified Party in his or her
capacity as a director, officer or trustee of TZ Canada, or any
of the TZ Canada Subsidiaries; and (y) the term
Expenses means reasonable attorneys
fees and all other reasonable costs, expenses and obligations
(including, without limitation, experts fees, travel
expenses, court costs, retainers, transcript fees, duplicating,
printing and binding costs, as well as telecommunications,
postage and courier charges) paid or incurred in connection with
investigating, defending, being a witness in or participating in
(including on appeal), or preparing to investigate, defend, be a
witness in or participate in, any Claim for which
indemnification is authorized pursuant to this
Section 8.08(a), including any Action relating to a claim
for indemnification or advancement brought by a TZ Canada
Indemnified Party. TZ Canada shall have the right to defend each
TZ Canada Indemnified Party in any proceeding which may give
rise to the payment of amounts hereunder; provided, however,
that TZ Canada shall notify such TZ Canada Indemnified Party of
any such decision to defend within ten (10) calendar days
of receipt of notice of any such proceeding, and, provided
further, that TZ Canada shall not, without the prior written
consent of such Indemnified Party, consent to the entry of any
judgment against such TZ Canada Indemnified Party or enter into
any settlement or compromise which (A) includes an
admission of fault of such TZ Canada Indemnified Party or
(B) does not include, as an unconditional term thereof, the
full release of such TZ Canada Indemnified Party from all
liability in respect of such proceeding, which release shall be
in form and substance reasonably satisfactory to such TZ Canada
Indemnified Party and (C) notwithstanding
clause (B) above, if in a proceeding to which a TZ
Canada Indemnified Party is a party by reason of the TZ Canada
Indemnified Partys service as a director, officer, or
trustee of TZ Canada or any of the TZ Canada Subsidiaries,
(I) such TZ Canada Indemnified Party reasonably concludes
that he or she may have separate defenses or counterclaims to
assert with respect to any issue which may not be consistent
with the position of other defendants in such proceeding,
(II) a conflict of interest or potential conflict of
interest exists between such TZ Canada Indemnified Party and TZ
Canada, or (III) if TZ Canada fails to assume the defense
of such proceeding in a timely manner, such TZ Canada
Indemnified Party shall be entitled to be represented by
separate legal counsel of such Indemnified Partys choice
at the expense of TZ Canada; provided, however, that TZ Canada
shall not be liable for any settlement effected without its
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prior written consent (which consent shall not be unreasonably
withheld, conditioned or delayed); and provided further that TZ
Canada shall have no obligation hereunder to any TZ Canada
Indemnified Party when and if a court of competent jurisdiction
shall ultimately determine, and such determination shall have
become final and non appealable, that indemnification by such
entities of such TZ Canada Indemnified Party in the manner
contemplated hereby is prohibited by applicable law.
(b) Without limiting the foregoing, Parent and
AcquisitionCo acknowledge and agree that all rights to
indemnification and exculpation from liabilities for acts or
omissions occurring at or prior to the Plan of Arrangement
Effective Time now existing in favor of the current or former
directors, officers, trustees, employees, agents, or fiduciaries
of TZ Canada or any of the TZ Canada Subsidiaries as provided in
TZ Canada Articles and TZ Canada Bylaws (or, as applicable, the
charter, bylaws, partnership agreement, limited liability
company agreement, or other organizational documents of any of
the TZ Canada Subsidiaries) and indemnification agreements of TZ
Canada or any of the TZ Canada Subsidiaries shall continue in
full force and effect in accordance with their terms.
(c) Parent and AcquisitionCo acknowledge and agree that for
a period of at least six (6) years from the Plan of
Arrangement Effective Time, the organizational documents of TZ
Canada shall contain provisions no less favorable with respect
to indemnification than are set forth in the TZ Canada Articles
and TZ Canada Bylaws, which provisions shall not be amended,
repealed or otherwise modified for a period of six
(6) years from the Plan of Arrangement Effective Time in
any manner that would affect adversely the rights thereunder of
individuals who, at or prior to the Plan of Arrangement
Effective Time, were directors, officers, trustees, employees,
agents, or fiduciaries of TZ Canada or any of the TZ Canada
Subsidiaries, unless such modification shall be required by
Canadian Law and then only to the minimum extent required by
Canadian Law.
(d) TZ Canada shall maintain, and Parent and AcquisitionCo
acknowledge and agree that TZ Canada shall maintain, for a
period of at least six (6) years the current policies of
directors and officers liability insurance
maintained by TZ Canada and the TZ Canada Subsidiaries (or
implement run-off policies) with respect to claims arising from
facts or events that occurred on or before the Plan of
Arrangement Effective Time, including, without limitation, in
respect of the transactions contemplated by this Agreement;
provided, that (i) TZ Canada may substitute therefor
policies of at least the same coverage and amounts containing
terms and conditions which are, in the aggregate, no less
advantageous to the insured, provided that such substitution
shall not result in gaps or lapses of coverage with respect to
matters occurring before the Plan of Arrangement Effective Time;
(ii) in no event shall TZ Canada be required to expend
pursuant to this Section 8.08(d) more than an amount per
year of coverage equal to three hundred percent (300%) of the
current annual premiums paid by TZ Canada for such insurance. In
the event that, but for the proviso to the immediately preceding
sentence, TZ Canada would be required to expend more than three
hundred percent (300%) of the current annual premiums paid by TZ
Canada, TZ Canada shall obtain the maximum amount of such
insurance obtainable by payment of annual premiums equal to
three hundred percent (300%) of the current annual premiums paid
by TZ Canada. Parent and AcquisitionCo acknowledge and agree
that TZ Canada shall maintain such policies in full force and
effect, and continue to honor all obligations thereunder.
(e) If TZ Canada or any of its respective successors or
assigns (i) consolidates with or merges with or into any
other person and shall not be the continuing or surviving entity
of such consolidation or merger or (ii) transfers or
conveys all or substantially all of its properties and assets to
any person, then, and in each such case, proper provision shall
be made so that the successors and assigns of TZ Canada assumes
the obligations set forth in this Section 8.08.
(f) This Section 8.08 is intended for the irrevocable
benefit of, and to grant third party rights to, the TZ Canada
Indemnified Parties and shall be binding on all successors and
assigns of TZ Canada and Parent. Each of the Indemnified Parties
shall be entitled to enforce the covenants contained in this
Section 8.08.
(g) Parent shall have the right to participate in the
defense or settlement of any shareholder or member litigation
against TZ Canada, its directors or officers, relating to the
Mergers or the other transactions contemplated by this
Agreement, provided, however, that no such settlement shall be
agreed to without Parents consent, which consent will not
be unreasonably withheld.
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Section 8.09. Financing;
Cooperation with Financing.
(a) Parent shall use its reasonable best efforts to arrange
and obtain the proceeds of the Debt Financing on the terms and
conditions described in the Debt Commitment Letter, including
using reasonable best efforts to (i) negotiate definitive
agreements with respect thereto on terms and conditions
contained therein and (ii) to satisfy all conditions
applicable to the Buyer Parties in such definitive agreements.
In the event any portion of the Debt Financing becomes
unavailable on the terms and conditions contemplated in the Debt
Commitment Letter, Parent shall use its reasonable best efforts
to arrange to obtain any such portion from alternative sources
as promptly as practicable following the occurrence of such
event. Parent shall give Trizec and TZ Canada prompt notice of
any material breach by any party of the Debt Commitment Letter
or any termination of the Debt Commitment Letter. Parent shall
keep Trizec and TZ Canada informed on a reasonably current basis
in reasonable detail of the status of its efforts to arrange the
Debt Financing and shall not permit any material amendment or
modification to be made to, or any waiver of any material
provision or remedy under, the Debt Commitment Letter without
first consulting with Trizec and TZ Canada or, if such amendment
would or would be reasonably expected to materially and
adversely affect or delay in any material respect Parents
ability to consummate the transactions contemplated by this
Agreement, without first obtaining Trizecs and TZ
Canadas prior written consent. For the avoidance of doubt,
if the Debt Financing (or any alternative financing) has not
been obtained, the Buyer Parties shall continue to be obligated
to consummate the Trizec Merger and the Arrangement on the terms
contemplated by this Agreement and subject only to the
satisfaction or waiver of the conditions set forth in
Sections 8.01 and 8.02 of this Agreement and to
Parents rights under Section 9.01, regardless of
whether the Buyer Parties have complied with all of their other
obligations under this Agreement (including their obligations
under this Section 8.09).
(b) Each of Trizec and TZ Canada agrees to provide, and
shall cause the Trizec Subsidiaries and the TZ Canada
Subsidiaries, as applicable, to provide, all reasonable
cooperation in connection with the arrangement of the Debt
Financing as may be reasonably requested by Parent (provided
that such requested cooperation does not unreasonably interfere
with the ongoing operations of Trizec and Trizec Subsidiaries or
TZ Canada and TZ Canada Subsidiaries, as the case may be),
including without limitation, (a) delivering such financial
and statistical information and projections relating to Trizec,
the Trizec Subsidiaries, the Material Trizec JV Entities, TZ
Canada, and the TZ Canada Subsidiaries as may be reasonably
requested in connection with the Debt Financing,
(b) arranging for Trizecs and TZ Canadas
independent accountants, lawyers and consultants to provide such
services that may be reasonably required in respect of the Debt
Financing, (c) making appropriate officers of Trizec, the
Trizec Subsidiaries, the Material Trizec JV Entities, TZ Canada,
and the TZ Canada Subsidiaries available for due diligence
meetings and for participation in meetings with rating agencies
and prospective sources of financing, (d) providing timely
access to diligence materials and appropriate personnel to allow
sources of financing and their representatives to complete all
appropriate diligence, (e) providing assistance with
respect to the review and granting of mortgages and security
interests in collateral for the Debt Financing, and obtaining
any consents associated therewith, and (f) obtaining
estoppels and certificates from tenants, lenders and ground
lessors in form and substance reasonably satisfactory to any
potential lender. Parent shall promptly reimburse Trizec and TZ
Canada for any reasonable costs incurred in performing their
obligations under this Section 8.09(b).
Section 8.10. Tax
Matters. During the period from the date of
this Agreement to Trizec Merger Effective Time, Trizec and the
Trizec Subsidiaries shall:
(a) continue to operate in such a manner as to permit
Trizec to continue to qualify as a REIT for the taxable year of
Trizec that includes the Trizec Merger Effective Time;
(b) prepare and timely file all Tax Returns (or obtain
extensions thereof ) required to be filed by them on or before
the Closing Date (Post-Signing Returns) in a
manner consistent with past practice, except as otherwise
required by applicable Laws;
(c) fully and timely pay all Taxes due and payable in
respect of such Post-Signing Returns that are so filed;
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(d) properly reserve (and reflect such reserve in their
books and records and financial statements), for all Taxes
payable by them for which no Post-Signing Return is due prior to
Trizec Merger Effective Time in a manner consistent with past
practice; and
(e) terminate all Tax sharing agreements to which Trizec or
any of the Trizec Subsidiaries is a party such that there are no
further liabilities thereunder (provided that the foregoing does
not apply to existing Tax Protection Agreements). For greater
certainty, the parties acknowledge that the Tax Co-operation
Agreement dated May 8, 2002 between Trizec and TrizecHahn
Office Properties Ltd. (a predecessor to TZ Canada) is not a Tax
sharing agreement and shall not be terminated.
Section 8.11. Further
Action; Reasonable Efforts.
(a) Upon the terms and subject to the conditions of this
Agreement, each of the parties hereto shall (i) make
promptly its respective filings, and thereafter make any other
required submissions, under the HSR Act with respect to this
Agreement and the Trizec Merger, if required, (ii) make
promptly its respective filings, and thereafter make any other
required submissions, under the Competition Act (Canada) and the
Investment Canada Act with respect to this Agreement and the
Arrangement, if required, and (iii) use its reasonable best
efforts to take, or cause to be taken, all appropriate action,
and to do, or cause to be done, all things necessary, proper or
advisable under applicable Laws and applicable Canadian Laws to
consummate and make effective the Trizec Merger and the
Arrangement as promptly as practicable, including using its
reasonable best efforts to obtain all Permits, consents,
approvals, authorizations, qualifications and orders of
Governmental Authorities and parties to contracts with Trizec,
the Trizec Subsidiaries, TZ Canada and the TZ Canada
Subsidiaries as are necessary for the consummation of the
transactions contemplated by this Agreement and to fulfill the
conditions to the Trizec Merger and the Arrangement as promptly
as practicable.
(b) The parties hereto agree to cooperate and assist one
another in connection with all actions to be taken pursuant to
subsection (a) of this Section 8.11, including
the preparation and making of the filings referred to therein
and, if requested, amending or furnishing additional information
thereunder, including, subject to applicable Law and the
Confidentiality Agreement, providing copies of all related
documents to the non-filing party and their advisors prior to
filing, and, to the extent practicable, none of the parties will
file any such document or have any communication with any
Governmental Authority without prior consultation with the other
parties. Each party shall keep the other parties apprised of the
content and status of any communications with, and
communications from, any Governmental Authority with respect to
the transactions contemplated by this Agreement. To the extent
practicable and permitted by a Governmental Authority, each
party hereto shall permit representatives of the other parties
to participate in meetings and calls with such Governmental
Authority.
(c) Each of the parties hereto agrees to cooperate and use
its reasonable best efforts to defend through litigation on the
merits any Action, including administrative or judicial Action,
asserted by any third party in order to avoid the entry of, or
to have vacated, lifted, reversed, terminated or overturned any
decree, judgment, injunction or other order (whether temporary,
preliminary or permanent) that in whole or in part restricts,
delays, prevents or prohibits consummation of the Trizec Merger
or the Arrangement, including, without limitation, by vigorously
pursuing all available avenues of administrative and judicial
appeal.
(d) Parent and AcquisitionCo shall carry out the terms of
the Interim Order and Final Order applicable to either of them
and use commercially reasonable efforts to comply promptly with
all requirements which applicable Canadian Laws may impose on
them with respect to the transactions contemplated by this
Agreement and the Plan of Arrangement.
Section 8.12. Transfer
Taxes. Parent and Trizec shall cooperate in
the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any
real property transfer or gains, sales, use, transfer, value
added, stock transfer or stamp taxes, any transfer, recording,
registration and other fees and any similar taxes that become
payable in connection with the transactions contemplated by this
Agreement (together with any related interests, penalties or
additions to Tax, Transfer Taxes), and shall
cooperate in attempting to minimize the amount of Transfer
Taxes. From and after the Trizec Merger Effective Time, the
Surviving Corporation shall pay or cause to be paid, without
deduction or withholding from any
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consideration or amounts payable to holders of the Trizec Common
Shares, Redeemable Preferred Shares, Trizec Stock Options, and
Trizec Restricted Share Rights and Trizec Restricted Shares, all
Transfer Taxes.
Section 8.13. Trizec
Indebtedness. Subject to Section 2.07,
Trizec agrees to provide, and shall request that their
respective Representatives provide, all reasonable cooperation
in order for the Buying Parties to prepay or assume such
outstanding indebtedness of Trizec or any Trizec Subsidiary as
may be reasonably requested by the Buying Parties (collectively,
Loan Activities).
Section 8.14. Public
Announcements. The parties hereto agree that
no public release or announcement concerning the transactions
contemplated by this Agreement or the Mergers or the Arrangement
shall be issued by a party without the prior consent of the
other parties (which consent shall not be unreasonably
withheld), except as such release or announcement may be
required by Law, Canadian Law or the rules or regulations of any
securities exchange, in which case the party required to make
the release or announcement shall use its reasonable efforts to
allow the other parties reasonable time to comment on such
release or announcement in advance of such issuance. The parties
have agreed upon the form of a joint press release announcing
the Mergers, the Arrangement and the execution of this Agreement.
Section 8.15. Operating
Company Merger.
In connection with the Operating Company Merger, each of the
members of the Operating Company (not including the membership
interests held by Trizec) will receive a Redeemable Preferred
Unit with the rights set forth on Exhibit E hereto,
subject to the Amended Operating Agreement. The Amended
Operating Agreement shall be negotiated in good faith and
mutually agreed upon by Parent, Trizec and the Operating Company
following the date hereof. Parent agrees that the Amended
Operating Agreement shall provide rights for the holders of the
Continuing Common Units and Redeemable Preferred Units
comparable to those afforded to the Non-Managing
Members in the Operating Company LLC Agreement so as to
qualify for the exception from the definition of Adverse
Modification set forth in the second sentence of the
definition of such term in the Redemption and Contribution
Agreement dated as of May 1, 2006. Notwithstanding any
provision of this Agreement to the contrary, none of Trizec
Parties shall have any liability hereunder either for any
failure to qualify for such exception or for the Operating
Company Merger being deemed to violate the Operating Company LLC
Agreement and any such failure or violation shall not be
asserted as the basis for a breach by the Trizec Parties of this
Agreement or as the basis for a failure to satisfy the
conditions for obligations of the parties set forth in
Article IX. TZ Canada, Trizec and the Operating Company
agree to cooperate in good faith and use their reasonable best
efforts to take all actions necessary or advisable to effect the
foregoing.
ARTICLE IX
CONDITIONS
TO THE MERGER
Section 9.01. Conditions
to the Obligations of Each Party. The
obligations of Trizec, Operating Company, TZ Canada, Parent,
MergerCo and AcquisitionCo to consummate the Trizec Merger and
the Arrangement are subject to the satisfaction or waiver in
writing (where permissible) of the following conditions:
(a) The Trizec Stockholder Approval shall have been
obtained by Trizec.
(b) The TZ Canada Shareholder Approval shall have been
obtained by TZ Canada in accordance with the terms imposed by
the Interim Order and all other terms and conditions set out in
the Interim Order shall have been satisfied.
(c) The Interim Order and the Final Order shall each have
been obtained on terms consistent with this Agreement and shall
not have been set aside or modified in a manner unacceptable to
the parties, acting reasonably, on appeal or otherwise.
(d) Any waiting period (and any extension thereof)
applicable to the consummation of the Trizec Merger under the
HSR Act and the Arrangement under the Competition Act (Canada)
and the Investment
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Canada Act, shall have expired or been terminated, and any
approvals required thereunder shall have been obtained.
(e) No Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any injunction, order, decree
or ruling (whether temporary, preliminary or permanent) which is
then in effect and has the effect of making consummation of the
Mergers or the Arrangement illegal or prohibiting consummation
of the Mergers or the Arrangement.
Section 9.02. Conditions
to the Obligations of Parent, MergerCo and
AcquisitionCo. The obligations of Parent,
MergerCo and AcquisitionCo to consummate the Trizec Merger and
the Arrangement are subject to the satisfaction or waiver in
writing of the following additional conditions:
(a) The representations and warranties of each of the
Trizec Parties and TZ Canada, as applicable, contained in this
Agreement that (i) are not made as of a specific date shall
be true and correct as of the date of this Agreement and as of
the Closing, as though made on and as of the Closing, and
(ii) are made as of a specific date shall be true and
correct as of such date, in each case except where the failure
of such representations or warranties to be true and correct
(without giving effect to any limitation as to
materiality or Material Adverse
Effect set forth in such representations and
warranties (other than (A) the representation in
clause (b) of Section 4.08 in the case of the Trizec
Parties and (B) the representation in clause (b) of
Section 5.08 in the case of TZ Canada)) does not have and
would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
(b) The Trizec Parties and TZ Canada shall have performed,
in all material respects, all obligations and complied with, in
all material respects, each of their respective agreements and
covenants to be performed or complied with by each of them under
this Agreement on or prior to the Plan of Arrangement Effective
Time.
(c) The Trizec Parties and TZ Canada shall have each
delivered to Parent a certificate, dated the date of the Trizec
Merger Effective Time and the Plan of Arrangement Effective
Time, respectively, signed by an officer of Trizec or TZ Canada,
as applicable, and certifying as to the satisfaction by the
Trizec Parties or TZ Canada, as applicable, of the applicable
conditions specified in Sections 9.02(a) and 9.02(b).
(d) On the Closing Date, there shall not exist an event,
change or occurrence that, individually or in the aggregate, has
had a Material Adverse Effect.
(e) Parent, Merger LLC and MergerCo shall have received a
tax opinion of Hogan & Hartson L.L.P., or other counsel
to Trizec satisfactory to the Parent, dated as of the date of
the Closing Date, prior to the Trizec Merger Effective Time, in
the form attached hereto as Exhibit I, such opinion
to be based upon the assumptions set forth therein and the
representations to be made by Trizec and the Trizec Subsidiaries
in the form of representation certificate contained in such
Exhibit I, and such representations shall be subject
to such changes or modifications from the language set forth on
such Exhibit as may be deemed necessary or appropriate by
Hogan & Hartson L.L.P. (or such counsel rendering the
opinion) and as shall be reasonably satisfactory to Parent.
The REIT Certificate shall be addressed to Parent and to Goodwin
Procter LLP, each of whom shall be entitled to rely on such REIT
Certificate for purposes of determining the status as a real
estate investment trust of the Surviving Corporation and of any
direct or indirect owner or other affiliate of Parent that
intends to qualify as a REIT.
Section 9.03. Conditions
to the Obligations of the Trizec Parties and TZ
Canada. The obligations of the Trizec Parties
and TZ Canada to consummate the Mergers and the Arrangement are
subject to the satisfaction or waiver in writing (where
permissible) of the following additional conditions:
(a) The representations and warranties of Parent, MergerCo
and AcquisitionCo in this Agreement that (i) are not made
as of a specific date shall be true and correct as of the date
of this Agreement and as of the Closing, as though made on and
as of the Closing, and (ii) are made as of a specific date
shall be true and correct as of such date, in each case except
where the failure of such representations or
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warranties to be true and correct (without giving effect to any
limitation as to materiality or Parent
Material Adverse Effect set forth in such representations
and warranties) does not have and would not have, individually
or in the aggregate, a Parent Material Adverse Effect.
(b) Parent shall have performed, in all material respects,
all obligations and complied with, in all material respects, its
agreements and covenants to be performed or complied with by it
under this Agreement on or prior to the Trizec Merger Effective
Time.
(c) Parent shall have delivered to the Trizec Parties and
TZ Canada a certificate, dated the date of the Trizec Merger
Effective Time, signed by an officer of Parent and certifying as
to the satisfaction of the conditions specified in
Sections 9.03(a) and 9.03(b).
ARTICLE X
TERMINATION,
AMENDMENT AND WAIVER
Section 10.01. Termination. This
Agreement may be terminated and the Trizec Merger and the
Arrangement may be abandoned at any time prior to the Trizec
Merger Effective Time by action taken or authorized by the
Trizec Board, the Special Committee, the TZ Canada Board,
notwithstanding any requisite approval of the Trizec Merger by
the Trizec Stockholders or the Arrangement by TZ Canada
Shareholders, and whether before or after the stockholders of
Trizec have approved the Trizec Merger at the Trizec
Stockholders Meeting or whether before or after the TZ
Canada Shareholders have approved the Arrangement at the TZ
Canada Shareholders Meeting, as follows (the date of any such
termination, the Termination Date):
(a) by mutual written consent of Parent, the Trizec Parties
and TZ Canada;
(b) by either Parent or the Trizec Parties or TZ Canada if
the Trizec Merger Effective Time shall not have occurred on or
before December 31, 2006 (the Outside
Date); provided, however, that the right
to terminate this Agreement under this Section 10.01(b)
shall not be available to a party whose failure to fulfill any
obligation under this Agreement materially contributed to the
failure of the Trizec Merger Effective Time to occur on or
before such date;
(c) by either Parent or the Trizec Parties and TZ Canada if
any Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any injunction, order, decree
or ruling or taken any other action (including the failure to
have taken an action) which, in either such case, has become
final and non-appealable and has the effect of making
consummation of the Trizec Merger or the Arrangement illegal or
otherwise preventing or prohibiting consummation of the Trizec
Merger or the Arrangement (Governmental
Order); provided, however, that the
terms of this Section 10.01(c) shall not be available to
any party unless such party shall have used its reasonable
efforts to oppose any such Governmental Order or to have such
Governmental Order vacated or made inapplicable to the Trizec
Merger or the Arrangement;
(d) by Parent if each of it and MergerCo and AcquisitionCo
is not in material breach of its obligations under this
Agreement, and if (i) any of the representations and
warranties of the Trizec Parties or TZ Canada, as applicable,
herein are or become untrue or incorrect such that the condition
set forth in Section 9.02(a) would be incapable of being
satisfied by the Outside Date, or (ii) there has been a
breach on the part of the Trizec Parties or TZ Canada, as
applicable, of any of their respective covenants or agreements
herein such that the condition set forth in Section 9.02(b)
would be incapable of being satisfied by the Outside Date;
(e) by the Trizec Parties or TZ Canada if they are not in
material breach of their respective obligations under this
Agreement, and if (i) any of the representations and
warranties of Parent, MergerCo and AcquisitionCo herein are or
become untrue or inaccurate such that the condition set forth in
Section 9.03(a) would be incapable of being satisfied by
the Outside Date; or (ii) there has been a breach on the
part of Parent, MergerCo and AcquisitionCo or any of their
respective covenants or
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agreements herein such that the conditions set forth in
Section 9.03(b) would be incapable of being satisfied by
the Outside Date.
(f) by the Trizec Parties, TZ Canada or Parent if
(i) the Trizec Stockholder Approval is not obtained at the
Trizec Stockholders Meeting or (ii) the TZ Canada
Shareholder Approval is not obtained at the TZ Canada
Shareholders Meeting;
(g) by Parent
(i) if the Trizec Board or Special Committee shall have
(1) effected a Trizec Change in Recommendation,
(2) publicly recommended or approved any Trizec Acquisition
Proposal, (3) a tender offer or exchange offer relating to
the Trizec Common Shares that constitutes a Trizec Acquisition
Proposal shall have been commenced by a Third Party and the
Trizec Board shall not have recommended that the Trizec
Stockholders reject such tender or exchange offer within ten
(10) business days following commencement thereof
(including, for these purposes, by taking no position with
respect to the acceptance of such tender or exchange offer by
the Trizec Stockholders, which shall constitute a failure to
recommend acceptance of such tender or exchange offer), or
(4) Trizec or the Trizec Board publicly announces its
intention to do any of the foregoing; or
(ii) by Parent if the TZ Canada Board shall have
(1) effected a TZ Canada Change in Recommendation,
(2) publicly recommended or approved any TZ Canada
Acquisition Proposal, (3) a tender offer or exchange offer
relating to the TZ Canada Shares that constitutes a TZ Canada
Acquisition Proposal shall have been commenced by a Third Party
and the TZ Canada Board shall not have recommended that the TZ
Canada Shareholders reject such tender or exchange offer within
ten (10) business days following commencement thereof
(including, for these purposes, by taking no position with
respect to the acceptance of such tender or exchange offer by
the TZ Canada Shareholders, which shall constitute a failure to
recommend acceptance of such tender or exchange offer), or
(4) TZ Canada or the TZ Canada Board publicly announces its
intention to do any of the foregoing; or
(h) by the Trizec Parties and TZ Canada, if the Trizec
Board or Special Committee and the TZ Canada Board have
approved, or authorized Trizec and TZ Canada, respectively, to
enter into a definitive agreement or agreements with respect to,
a Combined Superior Proposal, but only so long as:
(i) the Trizec Stockholder Approval and the TZ Canada
Shareholder Approval has not yet been obtained;
(ii) Trizec and TZ Canada shall have first given Parent at
least three (3) Business Days notice of their intent to
terminate pursuant to this subsection (including in such notice
the most current version of such agreement or agreements and any
amendments thereto);
(iii) no Trizec Party nor TZ Canada is then in breach (and
has not at any time been in breach) of any of its respective
obligations under Sections 8.04 and 8.05 in any material
respect;
(iv) during the three (3) Business Day period
following Parents receipt of such notice, (A) Trizec
shall have offered to negotiate with (and, if accepted,
negotiated in good faith with), and shall have caused its
respective financial and legal advisors to offer to negotiate
with (and, if accepted, negotiated in good faith with), Parent
in making adjustments to the terms and conditions of this
Agreement as would enable Trizec to proceed with the Merger, and
(B) the Trizec Board or Special Committee shall have
determined in good faith, after the end of such three Business
Day period, after considering the results of such negotiations
and any amendment to this Agreement entered into, or for which
Parent irrevocably covenants to enter into, within such three
(3) Business Day period and for which all internal
approvals of Parent have been obtained, such Trizec Superior
Proposal continues to constitute a Trizec Superior
Proposal; and
(v) during the three (3) Business Day period following
Parents receipt of such notice, (A) TZ Canada shall
have offered to negotiate with (and, if accepted, negotiated in
good faith with), and shall have caused its respective financial
and legal advisors to offer to negotiate with (and, if
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accepted, negotiated in good faith with), Parent in making
adjustments to the terms and conditions of this Agreement as
would enable TZ Canada to proceed with the Arrangement, and
(B) the TZ Canada Board shall have determined in good
faith, after the end of such three (3) Business Day period,
after considering the results of such negotiations and any
amendment to this Agreement entered into, or for which Parent
irrevocably covenants to enter into, within such three
(3) Business Day period and for which all internal
approvals of Parent have been obtained, such TZ Canada Superior
Proposal continues to constitute a TZ Canada Superior
Proposal; and
(vi) the Trizec Parties pay to Parent the Full Termination
Fee in accordance with Section 10.03(b)(iii) and the Parent
Expenses concurrently with or prior to such termination (any
purported termination pursuant to this Section 10.01(h)
shall be void and of no force or effect unless the Trizec
Parties shall have made such payment).
The party desiring to terminate this Agreement shall give
written notice of such termination to the other parties.
The right of any party hereto to terminate this Agreement
pursuant to this Section 10.01(a) shall remain operative
and in full force and effect regardless of any investigation
made by or on behalf of any party hereto, any Person controlling
any such party or any of their respective Representatives,
whether prior to or after the execution of this Agreement.
Section 10.02. Effect
of Termination. In the event of the
termination of this Agreement pursuant to Section 10.01,
this Agreement shall forthwith become void, and there shall be
no liability under this Agreement on the part of any party
hereto except that the provisions of Sections 2.07,
8.03(b), 8.09(b), this Section 10.02, Section 10.03
and Article X shall survive any such termination; provided,
however, that nothing herein shall relieve any party hereto from
liability for any breach of any of its representations,
warranties, covenants or agreements set forth in this Agreement
prior to such termination.
Section 10.03. Fees
and Expenses.
(a) Except as otherwise set forth in Sections 2.07,
8.09(b) and this Section 10.03, all expenses incurred in
connection with this Agreement shall be paid by the party
incurring such expenses, whether or not the Trizec Merger or the
Arrangement are consummated.
(b) In the event this Agreement shall be terminated:
(i) by Parent pursuant to Section 10.01(g)(i), Trizec
shall pay to Parent on or prior to the third Business Day
following the Termination Date the Full Termination Fee and the
Parent Expenses in immediately available funds to an account
directed by Parent;
(ii) by Parent pursuant to Section 10.01(g)(ii), TZ
Canada shall pay to Parent on or prior to the third Business Day
following the Termination Date the TZ Canada Termination Fee and
38% of the Parent Expenses in immediately available funds to an
account directed by Parent; provided, however, that if prior to
the expiration of the twelve (12) month period following
the Termination Date Trizec enters into a contract with respect
to or consummates a Trizec Acquisition Proposal, if and when
such contract is entered into or consummation of such Trizec
Acquisition Proposal occurs, as applicable, then Trizec shall
pay to Parent on such consummation date the Trizec Termination
Fee and the remaining 62% of the Parent Expenses in immediately
available funds to an account directed by Parent (and for
purposes of this Section 10.03(b)(ii), 50%
shall be substituted for 20% in the definition of
Trizec Acquisition Proposal);
(iii) by the Trizec Parties and TZ Canada pursuant to
Section 10.01(h), Trizec shall pay to Parent on or prior to
the Termination Date the Full Termination Fee and the Parent
Expenses in immediately available funds to an account directed
by Parent which payment shall be a condition to the
effectiveness of such termination;
(iv) by any of Parent, the Trizec Parties and TZ Canada
pursuant to Section 10.01(f)(i) and (A) at or prior to
the later of the Termination Date or the Trizec
Stockholders Meeting, a Trizec Acquisition
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Proposal shall have been made to any Trizec Party or publicly
announced prior to such date, and (B) concurrently with
such termination or within twelve (12) months following the
Termination Date, Trizec enters into a contract with respect to
or consummates any Trizec Acquisition Proposal, if and when such
contract is entered into or consummation of such Trizec
Acquisition Proposal occurs, as applicable, Trizec shall pay to
Parent on such consummation date the Full Termination Fee and
the Parent Expenses in immediately available funds to an account
directed by Parent (and for purposes of this
Section 10.03(b)(iv), 50% shall be substituted
for 20% in the definition of Trizec Acquisition
Proposal);
(v) by any of Parent, the Trizec Parties or TZ Canada
pursuant to Section 10.01(f)(ii) and (A) at or prior
to the later of the Termination Date or the TZ Canada
Shareholders Meeting, a TZ Canada Acquisition Proposal shall
have been made to TZ Canada or publicly announced prior to such
date, and (B) concurrently with such termination or within
twelve (12) months following the Termination Date, TZ
Canada consummates any TZ Canada Acquisition Proposal, if and
when such contract is entered into or consummation of such TZ
Canada Acquisition Proposal occurs, as applicable, TZ Canada
shall pay to Parent on such consummation date the TZ Canada
Termination Fee and 38% of the Parent Expenses in immediately
available funds to an account directed by Parent (and for
purposes of this Section 10.03(b)(v), 50% shall
be substituted for 20% in the definition of TZ
Canada Acquisition Proposal); provided, however, that if prior
to the expiration of the twelve (12) month period following
the Termination Date Trizec enters into a contract with respect
to or consummates a Trizec Acquisition Proposal, if and when
consummation of such Trizec Acquisition Proposal occurs, then
Trizec shall pay to Parent the Trizec Termination Fee and the
remaining 62% of the Parent Expenses, in each case on such
consummation date and in immediately available funds to an
account directed by Parent (and for purposes of this
Section 10.03(b)(v), 50% shall be substituted
for 20% in the definition of Trizec Acquisition
Proposal);
(vi) by Parent pursuant to Section 10.01(d) in
connection with a breach by the Trizec Parties, then the Trizec
Parties shall pay to Parent 62% of the Parent Expenses in
immediately available funds within three (3) Business Days
of termination to an account directed by Parent; or
(vii) by Parent pursuant to Section 10.01(d) in
connection with a breach by TZ Canada, TZ Canada shall pay to
Parent 38% of the Parent Expenses in immediately available funds
within three (3) Business Days of termination to an account
directed by Parent provided that if Parent Expenses shall be
payable pursuant to Section 10.03(b)(vi) no Parent Expenses
shall be payable pursuant to this Section 10.03(b)(vii).
(c) For purposes of this Agreement,
(i) Trizec Termination Fee shall
mean $71,300,000.
(ii) Full Termination Fee shall
mean an amount equal to the Trizec Termination Fee plus the TZ
Canada Termination Fee.
(iii) Parent Expenses shall mean
all reasonable
out-of-pocket
costs and expenses incurred by or on behalf of Parent (or its
affiliates or investors) in connection with the entering into of
this Agreement and the carrying out of any and all acts
contemplated hereunder, including, without limitation, financing
costs and the reasonable fees and expenses of lawyers,
accountants, consultants, financial advisors, and investment
bankers, up to an aggregate maximum amount of $25,000,000.
(iv) TZ Canada Termination Fee
shall mean $43,700,000.
(d) If this Agreement is terminated by the Trizec Parties
or TZ Canada pursuant to Section 10.01(e), Parent shall pay
to the Trizec Parties and TZ Canada within three
(3) Business Days after the date of termination all
reasonable
out-of-pocket
costs and expenses, including, without limitation, the
reasonable fees and expenses of lawyers, accountants,
consultants, financial advisors and investment bankers, incurred
by the Trizec Parties, the Trizec Subsidiaries, TZ Canada and
the TZ Canada Subsidiaries in connection with the entering into
of this Agreement and the carrying out of any and all acts
contemplated hereunder up to an
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aggregate maximum amount of $15,500,000 in respect of the Trizec
Parties (Trizec Expenses) and up to an
aggregate maximum amount of $9,500,000 in respect of TZ Canada
(TZ Canada Expenses, and together with Trizec
Expenses, the Seller Party Expenses). The
payment of expenses by Parent set forth in this
Section 10.03(e) or by TZ Canada or Trizec set forth in
Section 10.03(b) is not an exclusive remedy, but is in
addition to any other rights or remedies available to the
parties hereto (whether at law or in equity), and in no respect
is intended by the parties hereto to constitute liquidated
damages, or be viewed as an indicator of the damages payable, or
in any other respect limit or restrict damages available in case
of any breach of this Agreement.
(e) Each of the Trizec Parties, TZ Canada and Parent
acknowledges that the agreements contained in this
Section 10.03 are an integral part of the transactions
contemplated by this Agreement. In the event that
(w) Trizec shall fail to pay when due the Full Termination
Fee and Parent Expenses pursuant to Section 10.03(b)(i),
(iii) or (iv), (x) Trizec shall fail to pay when due
the Trizec Termination Fee pursuant to the proviso in
10.03(b)(ii), (v) or (vi), (y) TZ Canada shall fail to
pay when due the TZ Canada Termination Fee and Parent Expenses
pursuant to Section 10.03(b)(ii), (v) or (vii) or
(z) Parent shall fail to pay the Seller Party Expenses when
due pursuant to Section 10.03(d), the Trizec Parties and TZ
Canada or Parent, as the case may be, shall reimburse the other
party for all reasonable costs and expenses actually incurred or
accrued by such other party (including reasonable fees and
expenses of counsel) in connection with the collection under and
enforcement of this Section 10.03. If payable, none of the
Full Termination Fee, Trizec Termination Fee, TZ Canada
Termination Fee, Seller Party Expenses or Parent Expenses shall
be payable more than once pursuant to this Agreement. For the
avoidance of doubt, the parties hereto acknowledge that the
maximum aggregate amount that may be paid pursuant to
Section 10.03 by Trizec and TZ Canada shall be an amount
equal to the Full Termination Fee plus the Parent Expenses.
Section 10.04. Escrow
of Trizec Expenses.
(a) In the event that Parent is obligated to pay Trizec
Expenses set forth in Section 10.03(e), Parent shall pay to
Trizec from Trizec Expenses deposited into escrow in accordance
with the next sentence, an amount equal to the lesser of
(i) Trizec Expenses and (ii) the sum of (A) the
maximum amount that can be paid to Trizec without causing Trizec
to fail to meet the requirements of Sections 856(c)(2) and
856(c)(3) of the Code determined as if the payment of such
amount did not constitute income described in
Sections 856(c)(2)(A)-(H)
or 856(c)(3)(A)-(I) of the Code (Qualifying
Income), as determined by Trizecs independent
certified public accountants, plus (B) in the event Trizec
receives either (1) a letter from Trizecs counsel
indicating that Trizec has received a ruling from the IRS
described in Section 10.04(b) or (2) an opinion from
Trizecs outside counsel as described in
Section 10.04(b), an amount equal to Trizec Expenses less
the amount payable under clause (A) above. To secure
Parents obligation to pay these amounts, Parent shall
deposit into escrow an amount in cash equal to Trizec Expenses
with an escrow agent selected by Parent and on such terms
(subject to Section 10.04(b)) as shall be mutually agreed
upon by Trizec, Parent and the escrow agent. The payment or
deposit into escrow of Trizec Expenses pursuant to this
Section 10.04(b) shall be made at the time Parent is
obligated to pay Trizec such amount pursuant to
Section 10.03(e) by wire transfer or bank check.
(b) The escrow agreement shall provide that Trizec Expenses
in escrow or any portion thereof shall not be released to Trizec
unless the escrow agent receives any one or combination of the
following: (i) a letter from Trizecs independent
certified public accountants indicating the maximum amount that
can be paid by the escrow agent to Trizec without causing Trizec
to fail to meet the requirements of Sections 856(c)(2) and
(3) of the Code determined as if the payment of such amount
did not constitute Qualifying Income or a subsequent letter from
Trizecs accountants revising that amount, in which case
the escrow agent shall release such amount to Trizec, or
(ii) a letter from Trizecs counsel indicating that
Trizec received a ruling from the IRS holding that Trizec
Expenses would either constitute Qualifying Income or would be
excluded from gross income within the meaning of
Sections 856(c)(2) and (3) of the Code (or
alternatively, Trizecs outside counsel has rendered a
legal opinion to the effect that the receipt by Trizec of Trizec
Expenses would constitute Qualifying Income, would be excluded
from gross income within the meaning of Sections 856(c)(2)
and (3) of the Code or would not otherwise disqualify
Trizec as a REIT), in which case the escrow agent shall release
the remainder of Trizec Expenses to Trizec. Parent agrees to
amend this Section 9.04 at the request of Trizec in order
to (x) maximize the portion of Trizec Expenses that may be
distributed to Trizec hereunder
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without causing Trizec to fail to meet the requirements of
Sections 856(c)(2) and (3) of the Code, (y) improve
Trizecs chances of securing a favorable ruling described
in this Section 10.04(b) or (z) assist Parent in
obtaining a favorable legal opinion from its outside counsel as
described in this Section 10.04(b). The escrow agreement
shall also provide that any portion of Trizec Expenses held in
escrow for five (5) years shall be released by the escrow
agent to Parent.
Section 10.05. Waiver. At
any time prior to the Trizec Merger Effective Time, the Trizec
Parties and TZ Canada (jointly), on the one hand, and Parent,
MergerCo and AcquisitionCo, on the other hand, may
(a) extend the time for the performance of any obligation
or other act of the other party, (b) waive any inaccuracy
in the representations and warranties of the other party
contained herein or in any document delivered pursuant hereto
and (c) waive compliance with any agreement of the other
party or any condition to its own obligations contained herein.
Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by the Trizec Parties and TZ Canada
(jointly) or Parent (on behalf of Parent, MergerCo and
AcquisitionCo). The failure of any party to assert any of its
rights under this Agreement or otherwise shall not constitute a
waiver of those rights.
ARTICLE XI
GENERAL
PROVISIONS
Section 11.01. Non-Survival
of Representations and Warranties. The
representations and warranties in this Agreement and in any
certificate delivered pursuant hereto shall terminate at the
Trizec Merger Effective Time.
Section 11.02. Notices.
All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be
given (and shall be deemed to have been duly given upon receipt)
by delivery in person, by prepaid overnight courier (providing
proof of delivery), by facsimile or by registered or certified
mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses or facsimile
numbers (or at such other address for a party as shall be
specified in a notice given in accordance with this
Section 11.02):
|
|
|
if to Parent, MergerCo or
AcquisitionCo:
|
|
Brookfield Properties Corporation
|
Three World Financial Center,
11th Floor
|
New York, New York 10281
|
Telecopier No:
(212) 417-7262
|
Attention:
|
|
Richard B. Clark
|
|
|
Katheen G. Kane
|
|
with copies to:
|
|
Goodwin Proctor LLP
|
Exchange Plaza
|
Boston, MA 02109
|
Telecopier No:
(617) 523-1231
|
Attention:
|
|
Gilbert G. Menna
|
|
|
Suzanne D. Lecaroz
|
|
and
|
|
Simpson Thatcher &
Bartlett LLP
|
425 Lexington Ave.
|
New York, New York 10017
|
Telecopier No:
(212) 455-2502
|
Attention:
|
|
Brian M. Stadler
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|
|
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if to Trizec:
|
|
Trizec Properties, Inc.
|
10 South Riverside Plaza
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Chicago, Illinois 60606
|
Telecopier No:
(312) 803-2135
|
Attention:
|
|
Timothy H. Callahan
|
|
with copies to:
|
|
Trizec Properties, Inc.
|
10 South Riverside Plaza
|
Chicago, Illinois 60606
|
Telecopier No:
(866) 897-9160
|
Attention:
|
|
Ted R. Jadwin
|
|
and:
|
|
Hogan & Hartson L.L.P.
|
555 Thirteenth Street NW
|
Washington, DC
20004-1109
|
Telecopier No:
(202) 637-5910
|
Attention:
|
|
J. Warren Gorrell, Jr.
|
|
|
David W. Bonser
|
|
if to TZ Canada:
|
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Trizec Canada Inc.
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BCE Place, Suite 3820
|
181 Bay Street, P.O. Box 800
|
Toronto, Ontario, Canada M5J 2T3
|
Telecopier No:
(416) 364-5491
|
Attention:
|
|
Robert Wickham
|
|
with copies to:
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|
Davies Ward Phillips &
Vineberg LLP
|
1 First Canadian Place
|
Suite 4400
|
Toronto, Ontario M5X 1B1
|
Telecopier No:
(416) 863-0871
|
Attention:
|
|
William N. Gula
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|
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Carol D. Pennycook
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Section 11.03. Severability. If
any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law or
public policy or the application of this Agreement to any person
or circumstance is invalid or incapable of being enforced by any
rule of law or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of
the transactions contemplated by this Agreement is not affected
in any manner materially adverse to any party. To such end, the
provisions of this Agreement are agreed to be severable. Upon
such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a
mutually acceptable manner in order that the transactions
contemplated by this Agreement be consummated as originally
contemplated to the fullest extent possible.
Section 11.04. Amendment. This
Agreement may be amended by the parties hereto by action taken
by their respective board of directors (or similar governing
body or entity) at any time prior to the Trizec Merger Effective
Time; provided, however, that, after approval of the Trizec
Merger by the Trizec Stockholders, no amendment may be made
without further stockholder approval which, by Law or in
accordance with the rules of the NYSE, requires further approval
by such stockholders. This Agreement may not be amended except
by an instrument in writing signed by the parties hereto.
A-72
Section 11.05. Entire
Agreement; Assignment. This Agreement,
together with the Confidentiality Agreement and the Disclosure
Schedule, constitute the entire agreement among the parties with
respect to the subject matter hereof, and supersede all prior
agreements and undertakings, both written and oral, among the
parties, or any of them, with respect to the subject matter
hereof. This Agreement shall not be assigned (whether pursuant
to a merger, by operation of law or otherwise).
Section 11.06. Remedies. Except
as otherwise provided in Section 11.07 or elsewhere in this
Agreement, any and all remedies expressly conferred upon a party
to this Agreement shall be cumulative with, and not exclusive
of, any other remedy contained in this Agreement, at law or in
equity and the exercise by a party to this Agreement of any one
remedy shall not preclude the exercise by it of any other
remedy. Without limiting the right to receive any payment it may
be entitled to receive under Sections 2.07 and 8.09(b),
each of the Trizec Parties and TZ Canada agrees that to the
extent it has incurred losses or damages (including any amounts
paid by Parent pursuant to Section 8.09(b)) in connection
with this Agreement the maximum aggregate liability of the Buyer
Parties for such losses or damages shall be limited to an amount
equal to the amount of the Guaranty, and in no event shall the
Trizec Parties or TZ Canada seek to recover any money damages in
excess of such amount from the Buyer Parties or their respective
Representatives and affiliates in connection therewith.
Section 11.07. Specific
Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of
this Agreement were not performed in accordance with the terms
hereof and that, prior to the termination of this Agreement
pursuant to Section 10.01, the Buyer Parties shall be
entitled to an injunction or injunctions to prevent breaches of
this Agreement by the Trizec Parties or TZ Canada and to enforce
specifically the terms and provisions of this Agreement in any
court of the United States or any state having jurisdiction,
this being, in addition to any other remedy to which they are
entitled at law or equity. The parties acknowledge that none of
the Trizec Parties or TZ Canada shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement
or to enforce specifically the terms and provisions of this
Agreement and that the Trizec Parties and TZ Canadas
sole and exclusive remedy with respect to any such breach shall
be the remedy set forth in Section 11.06 and the Guaranty;
provided, however, the Trizec Parties and TZ Canada shall be
entitled to seek specific performance to prevent any breach by
the Buyer Parties of Section 8.03(b).
Section 11.09. Parties
in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and
nothing in this Agreement, express or implied, is intended to or
shall confer upon any other person any right, benefit or remedy
of any nature whatsoever under or by reason of this Agreement,
other than (a) the provisions of Article III and
Sections 8.06 and 8.07 (which are intended to be for the
benefit of the persons covered thereby or the persons entitled
to payment thereunder and may be enforced by such persons); and
(b) the right of Trizec
and/or TZ
Canada, on behalf of their respective stockholders, to pursue
damages in the event of Parents, MergerCos or
AcquisitionCos intentional breach of this Agreement or
fraud, which right is hereby acknowledged and agreed by Parent,
MergerCo, AcquisitionCo and the Guarantor.
Section 11.10. Governing
Law; Forum. All disputes, claims or
controversies arising out of or relating to this Agreement, or
the negotiation, validity or performance of this Agreement, or
the transactions contemplated hereby shall be governed by and
construed in accordance with the laws of the State of Delaware
without regard to its rules of conflict of laws, except for the
provisions hereof which relate expressly to the CBCA (including,
without limitation, the Plan of Arrangement), which shall be
construed, performed and enforced in accordance with the CBCA.
Except as set out below, each of the Trizec Parties, TZ Canada,
Parent, MergerCo and AcquisitionCo hereby irrevocably and
unconditionally consents to submit to the sole and exclusive
jurisdiction of the courts of the State of Delaware or any court
of the United States located in the State of Delaware (the
Delaware Courts) for any litigation arising
out of or relating to this Agreement, or the negotiation,
validity or performance of this Agreement, or the transactions
contemplated hereby (and agrees not to commence any litigation
relating thereto except in such courts), waives any objection to
the laying of venue of any such litigation in the Delaware
Courts and agrees not to plead or claim in any Delaware Court
that such litigation
A-73
brought therein has been brought in any inconvenient forum. Each
of the parties hereto agrees, (a) to the extent such party
is not otherwise subject to service of process in the State of
Delaware, to appoint and maintain an agent in the State of
Delaware as such partys agent for acceptance of legal
process, and (b) that service of process may also be made
on such party by prepaid certified mail with a proof of mailing
receipt validated by the United States Postal Service
constituting evidence of valid service. Service made pursuant to
(a) or (b) above shall have the same legal force and
effect as if served upon such party personally within the State
of Delaware. For purposes of implementing the parties
agreement to appoint and maintain an agent for service of
process in the State of Delaware, Parent does hereby appoint The
Prentice-Hall Corporation System, Inc. as such agent, Trizec
does hereby appoint The Prentice-Hall Corporation System, Inc.
as such agent and TZ Canada does hereby appoint The
Prentice-Hall Corporation System, Inc. as such agent.
Notwithstanding the foregoing, nothing herein shall derogate
from the authority of the Court and all Canadian courts
competent to hear appeals therefrom with respect to the Plan of
Arrangement and each of the parties hereto irrevocably and
unconditionally consents to submit to the sole jurisdiction of
such courts in that regard.
Section 11.11. Waiver
of Jury Trial. Each of the parties hereto
hereby waives to the fullest extent permitted by applicable Law
any right it may have to a trial by jury with respect to any
litigation directly or indirectly arising out of, under or in
connection with this Agreement or the transactions contemplated
by this Agreement. Each of the parties hereto (a) certifies
that no representative, agent or attorney of any other party has
represented, expressly or otherwise, that such other party would
not, in the event of litigation, seek to enforce that foregoing
waiver and (b) acknowledges that it and the other hereto
have been induced to enter into this Agreement and the
transactions contemplated by this Agreement, as applicable, by,
among other things, the mutual waivers and certifications in
this Section 11.10.
Section 11.12. Headings. The
descriptive headings contained in this Agreement are included
for convenience of reference only and shall not affect in any
way the meaning or interpretation of this Agreement.
Section 11.13. Counterparts. This
Agreement may be executed and delivered (including by facsimile
transmission) in two or more counterparts, and by the different
parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
Section 11.14. Waiver. Except
as provided in this Agreement, no action taken pursuant to this
Agreement, including, without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any
representations, warranties, covenants or agreements contained
in this Agreement. The waiver by any party hereto of a breach of
any provision hereunder shall not operate or be construed as a
waiver of any prior or subsequent breach of the same or any
other provision hereunder.
A-74
IN WITNESS WHEREOF, Parent, MergerCo, AcquisitionCo, the Trizec
Parties and TZ Canada have caused this Agreement to be executed
as of the date first written above by their respective officers
thereunto duly authorized.
GRACE HOLDINGS LLC
Name: Richard B. Clark
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Title:
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Chief Executive Officer
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GRACE ACQUISITION CORPORATION
Name: Richard B. Clark
|
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|
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Title:
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Chief Executive Officer
|
GRACE OP LLC
Name: Richard B. Clark
|
|
|
|
Title:
|
Chief Executive Officer
|
4162862 CANADA LIMITED
Name: Richard B. Clark
|
|
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Title:
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Chief Executive Officer
|
A-75
TRIZEC PROPERTIES, INC.
|
|
|
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By
|
/s/ Timothy H. Callahan
|
Name: Timothy H. Callahan
|
|
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Title:
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President and Chief Executive Officer
|
TRIZEC HOLDINGS OPERATING LLC
|
|
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By
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Trizec Properties, Inc., its sole managing member
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By
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/s/ Timothy H. Callahan
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Name: Timothy H. Callahan
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Title:
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President and Chief Executive Officer
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TRIZEC CANADA INC.
Name: Robert B. Wickham
Name: Colin J. Chapin
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Title:
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Senior Vice President and
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Chief Financial Officer
[SIGNATURE PAGE TO THE AGREEMENT AND PLAN OF MERGER AND
ARRANGEMENT AGREEMENT]
A-76
Annex B
June 4, 2006
The Special Committee of The Board of Directors
Trizec Properties, Inc.
10 S. Riverside Plaza, Suite 1100
Chicago, IL 60606
The Board of Directors
Trizec Properties, Inc.
10 S. Riverside Plaza, Suite 1100
Chicago, IL 60606
Members of the Board of Directors and Special Committee:
You have requested our opinion as to the fairness, from a
financial point of view, (i) to the holders of common
stock, par value $.01 per share (the Company Common
Stock), of Trizec Properties, Inc. (the
Company) of the merger consideration to be received
by such holders, other than Trizec Canada Inc. (Trizec
Canada) and its controlling shareholders, in the proposed
merger (the Company Merger) of the Company with a
wholly-owned indirect subsidiary of Grace Holdings LLC (the
Merger Partner) and (ii) to the holders of
Class B common units of limited liability company interest
(the Operating Company Class B Common Units) in
Trizec Holdings Operating LLC (the Operating
Company) of the merger consideration to be received by
such holders (assuming all such holders elect to receive the
Operating Company Merger Cash Consideration (as defined below)),
other than the Company and its subsidiaries, in the proposed
merger of the Operating Company with a wholly-owned indirect
subsidiary of the Merger Partner (the Operating Company
Merger and, together with the Company Merger, the
Mergers). Pursuant to the Agreement and Plan of
Merger and Arrangement Agreement (the Agreement),
among the Company, the Operating Company, Trizec Canada, the
Merger Partner, Grace Acquisition Corporation, 4162862 Canada
Limited (Canada Merger Sub) and Grace OP LLC:
(a) the Company will become a wholly-owned indirect
subsidiary of the Merger Partner, and each outstanding share of
Company Common Stock, other than shares of Company Common Stock
held in treasury and not outstanding, owned by Trizec Canada,
any subsidiary of Trizec Canada, the Merger Partner or Canada
Merger Sub or as to which appraisal rights have been perfected,
will be converted and exchanged automatically into one
redeemable preferred share of the Company which, immediately
after the Company Merger, will be redeemed for $29.01 per
share in cash; and
(b) the Operating Company will become a wholly-owned
indirect subsidiary of the Merger Partner, and each Operating
Company Class B Common Unit, other than Operating Company
Class B Common Units held by the Company or any subsidiary
of the Company, will be converted and exchanged automatically
for one redeemable preferred unit of the Operating Company
which, immediately after the Operating Company Merger may, at
the option of the holder, (i) be redeemed for $29.01 in
cash (the Operating Company Merger Cash
Consideration), (ii) be converted into a common unit
of the Operating Company or (iii) remain outstanding as a
preferred unit of the Operating Company.
In arriving at our opinion, we have (i) reviewed a draft
dated June 4, 2006 of the Agreement; (ii) reviewed
certain publicly available business and financial information
concerning the Company and the industries in which it operates;
(iii) compared the proposed financial terms of the Mergers
with the publicly available financial terms of certain
transactions involving companies we deemed relevant and the
consideration received for such companies; (iv) compared
the financial and operating performance of the Company with
publicly available information concerning certain other
companies we deemed relevant and reviewed the current and
historical market prices of the Company Common Stock and certain
publicly traded securities of such other companies;
(v) reviewed certain internal financial analyses and
forecasts prepared by the management of the
B-1
Company relating to its business; and (vi) performed such
other financial studies and analyses and considered such other
information as we deemed appropriate for the purposes of this
opinion.
In addition, we have held discussions with certain members of
the management of the Company with respect to certain aspects of
the Mergers, and the past and current business operations of the
Company, the financial condition and future prospects and
operations of the Company, and certain other matters we believed
necessary or appropriate to our inquiry.
In giving our opinion, we have relied upon and assumed, without
assuming responsibility or liability for independent
verification, the accuracy and completeness of all information
that was publicly available or was furnished to or discussed
with us by the Company or otherwise reviewed by or for us. We
have not conducted or been provided with any valuation or
appraisal of any assets or liabilities, nor have we evaluated
the solvency of the Company or the Merger Partner under any
state or federal laws relating to bankruptcy, insolvency or
similar matters. In relying on financial analyses and forecasts
provided to us, we have assumed that they have been reasonably
prepared based on assumptions reflecting the best currently
available estimates and judgments by management as to the
expected future results of operations and financial condition of
the Company to which such analyses or forecasts relate. We
express no view as to such analyses or forecasts or the
assumptions on which they were based. We have also assumed that
the Mergers and the other transactions contemplated by the
Agreement will be consummated as described in the Agreement, and
that the definitive Agreement will not differ in any material
respects from the draft thereof furnished to us. We have relied
as to all legal matters relevant to rendering our opinion upon
the advice of counsel. We have further assumed that all material
governmental, regulatory or other consents and approvals
necessary for the consummation of the Mergers will be obtained
without any adverse effect on the Company.
Our opinion is necessarily based on economic, market and other
conditions as in effect on, and the information made available
to us as of, the date hereof. It should be understood that
subsequent developments may affect this opinion and that we do
not have any obligation to update, revise, or reaffirm this
opinion. Our opinion is limited to the fairness, from a
financial point of view, (i) of the merger consideration to
be received by the holders of the Company Common Stock, other
than Trizec Canada Inc. and its controlling shareholders, in the
proposed Company Merger and (ii) of the merger
consideration to be received by the holders of Operating Company
Class B Common Units (assuming all such holders elect to
receive the Operating Company Merger Cash Consideration), other
than the Company and its subsidiaries, in the proposed Operating
Company Merger, and we express no opinion as to the fairness of
the Mergers to, or any consideration of, the holders of any
other class of securities, creditors or other constituencies of
the Company or the Operating Company or as to the underlying
decision by the Company and the Operating Company to engage in
the Mergers.
We have acted as financial advisor to the Company with respect
to the proposed Mergers and will receive a fee from the Company
for our services if the proposed Mergers are consummated. In
addition, the Company has agreed to indemnify us for certain
liabilities arising out of our engagement. We and our affiliates
have provided financial advisory services and other investment
services to the Company over the past two years, including
acting as agent on the Companys revolving credit facility
and as arranger on other asset level financing arrangements by
the Company. In the ordinary course of our businesses, we and
our affiliates may actively trade the debt and equity securities
of the Company or the Merger Partner for our own account or for
the accounts of customers and, accordingly, we may at any time
hold long or short positions in such securities.
On the basis of and subject to the foregoing, it is our opinion
as of the date hereof that the merger consideration to be
received by the holders of Company Common Stock is fair, from a
financial point of view, to such holders, other than Trizec
Canada Inc. and its controlling shareholders, and that the
merger consideration to be received by the holders of Operating
Company Class B Common Units is fair, from a financial
point of view, to such holders (assuming all such holders elect
to receive the Operating Company Merger Cash Consideration),
other than the Company and its subsidiaries.
This letter is provided to the Board of Directors and the
Special Committee of the Board of Directors of the Company in
connection with and for the purposes of its evaluation of the
Mergers. This opinion does not constitute a recommendation to
any shareholder of the Company as to how such shareholder should
vote with respect to the Mergers or any other matter. This
opinion may not be disclosed, referred to, or communicated (in
whole or in part) to any third party, including, but not limited
to, the Merger Partner, for any purpose whatsoever
B-2
except with our prior written approval. This opinion may be
reproduced in full in any proxy or information statement mailed
to shareholders of the Company but may not otherwise be
disclosed publicly in any manner without our prior written
approval.
Very truly yours,
J.P. MORGAN SECURITIES INC.
/s/ J.P. Morgan
Securities Inc.
B-3
Annex
C
SECTION 262
OF THE GENERAL CORPORATION LAW OF THE STATE OF
DELAWARE
Section 262. Appraisal
Rights.
(a) Any stockholder of a corporation of this State who
holds shares of stock on the date of the making of a demand
pursuant to subsection (d) of this section with respect to
such shares, who continuously holds such shares through the
effective date of the merger or consolidation, who has otherwise
complied with subsection (d) of this section and who has
neither voted in favor of the merger or consolidation nor
consented thereto in writing pursuant to § 228 of this
title shall be entitled to an appraisal by the Court of Chancery
of the fair value of the stockholders shares of stock
under the circumstances described in subsections (b) and
(c) of this section. As used in this section, the word
stockholder means a holder of record of stock in a
stock corporation and also a member of record of a nonstock
corporation; the words stock and share
mean and include what is ordinarily meant by those words and
also membership or membership interest of a member of a nonstock
corporation; and the words depository receipt mean a
receipt or other instrument issued by a depository representing
an interest in one or more shares, or fractions thereof, solely
of stock of a corporation, which stock is deposited with the
depository.
(b) Appraisal rights shall be available for the shares of
any class or series of stock of a constituent corporation in a
merger or consolidation to be effected pursuant to
§ 251 (other than a merger effected pursuant to
§ 251(g) of this title), § 252,
§ 254, § 257, § 258,
§ 263 or § 264 of this title:
(1) Provided, however, that no appraisal rights under this
section shall be available for the shares of any class or series
of stock, which stock, or depository receipts in respect
thereof, at the record date fixed to determine the stockholders
entitled to receive notice of and to vote at the meeting of
stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national
securities exchange or designated as a national market system
security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or (ii) held of
record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of
the constituent corporation surviving a merger if the merger did
not require for its approval the vote of the stockholders of the
surviving corporation as provided in subsection (f) of
§ 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection,
appraisal rights under this section shall be available for the
shares of any class or series of stock of a constituent
corporation if the holders thereof are required by the terms of
an agreement of merger or consolidation pursuant to
§§ 251, 252, 254, 257, 258, 263 and 264 of this
title to accept for such stock anything except:
a. Shares of stock of the corporation surviving or
resulting from such merger or consolidation, or depository
receipts in respect thereof;
b. Shares of stock of any other corporation, or depository
receipts in respect thereof, which shares of stock (or
depository receipts in respect thereof) or depository receipts
at the effective date of the merger or consolidation will be
either listed on a national securities exchange or designated as
a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc.
or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional
depository receipts described in the foregoing
subparagraphs a. and b. of this paragraph; or
d. Any combination of the shares of stock, depository
receipts and cash in lieu of fractional shares or fractional
depository receipts described in the foregoing
subparagraphs a., b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware
corporation party to a merger effected under § 253 of
this title is not owned by the parent corporation immediately
prior to the merger, appraisal rights shall be available for the
shares of the subsidiary Delaware corporation.
C-1
(c) Any corporation may provide in its certificate of
incorporation that appraisal rights under this section shall be
available for the shares of any class or series of its stock as
a result of an amendment to its certificate of incorporation,
any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all
of the assets of the corporation. If the certificate of
incorporation contains such a provision, the procedures of this
section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which
appraisal rights are provided under this section is to be
submitted for approval at a meeting of stockholders, the
corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record
date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsection (b) or (c)
hereof that appraisal rights are available for any or all of the
shares of the constituent corporations, and shall include in
such notice a copy of this section. Each stockholder electing to
demand the appraisal of such stockholders shares shall
deliver to the corporation, before the taking of the vote on the
merger or consolidation, a written demand for appraisal of such
stockholders shares. Such demand will be sufficient if it
reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand
the appraisal of such stockholders shares. A proxy or vote
against the merger or consolidation shall not constitute such a
demand. A stockholder electing to take such action must do so by
a separate written demand as herein provided. Within
10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall
notify each stockholder of each constituent corporation who has
complied with this subsection and has not voted in favor of or
consented to the merger or consolidation of the date that the
merger or consolidation has become effective; or (2) If the
merger or consolidation was approved pursuant to §228 or
§253 of this title, then either a constituent corporation
before the effective date of the merger or consolidation or the
surviving or resulting corporation within 10 days
thereafter shall notify each of the holders of any class or
series of stock of such constituent corporation who are entitled
to appraisal rights of the approval of the merger or
consolidation and that appraisal rights are available for any or
all shares of such class or series of stock of such constituent
corporation, and shall include in such notice a copy of this
section. Such notice may, and, if given on or after the
effective date of the merger or consolidation, shall, also
notify such stockholders of the effective date of the merger or
consolidation. Any stockholder entitled to appraisal rights may,
within 20 days after the date of mailing of such notice,
demand in writing from the surviving or resulting corporation
the appraisal of such holders shares. Such demand will be
sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends
thereby to demand the appraisal of such holders shares. If
such notice did not notify stockholders of the effective date of
the merger or consolidation, either (i) each such
constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of
the holders of any class or series of stock of such constituent
corporation that are entitled to appraisal rights of the
effective date of the merger or consolidation or (ii) the
surviving or resulting corporation shall send such a second
notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is
sent more than 20 days following the sending of the first
notice, such second notice need only be sent to each stockholder
who is entitled to appraisal rights and who has demanded
appraisal of such holders shares in accordance with this
subsection. An affidavit of the secretary or assistant secretary
or of the transfer agent of the corporation that is required to
give either notice that such notice has been given shall, in the
absence of fraud, be prima facie evidence of the facts stated
therein. For purposes of determining the stockholders entitled
to rece ive either notice, each constituent corporation may fix,
in advance, a record date that shall be not more than
10 days prior to the date the notice is given, provided,
that if the notice is given on or after the effective date of
the merger or consolidation, the record date shall be such
effective date. If no record date is fixed and the notice is
given prior to the effective date, the record date shall be the
close of business on the day next preceding the day on which the
notice is given.
C-2
(e) Within 120 days after the effective date of the
merger or consolidation, the surviving or resulting corporation
or any stockholder who has complied with subsections
(a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery
demanding a determination of the value of the stock of all such
stockholders. Notwithstanding the foregoing, at any time within
60 days after the effective date of the merger or
consolidation, any stockholder shall have the right to withdraw
such stockholders demand for appraisal and to accept the
terms offered upon the merger or consolidation. Within
120 days after the effective date of the merger or
consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) hereof, upon
written request, shall be entitled to receive from the
corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of
shares not voted in favor of the merger or consolidation and
with respect to which demands for appraisal have been received
and the aggregate number of holders of such shares. Such written
statement shall be mailed to the stockholder within 10 days
after such stockholders written request for such a
statement is received by the surviving or resulting corporation
or within 10 days after expiration of the period for
delivery of demands for appraisal under
subsection (d) hereof, whichever is later.
(f) Upon the filing of any such petition by a stockholder,
service of a copy thereof shall be made upon the surviving or
resulting corporation, which shall within 20 days after
such service file in the office of the Register in Chancery in
which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded
payment for their shares and with whom agreements as to the
value of their shares have not been reached by the surviving or
resulting corporation. If the petition shall be filed by the
surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in
Chancery, if so ordered by the Court, shall give notice of the
time and place fixed for the hearing of such petition by
registered or certified mail to the surviving or resulting
corporation and to the stockholders shown on the list at the
addresses therein stated. Such notice shall also be given by 1
or more publications at least 1 week before the day of the
hearing, in a newspaper of general circulation published in the
City of Wilmington, Delaware or such publication as the Court
deems advisable. The forms of the notices by mail and by
publication shall be approved by the Court, and the costs
thereof shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall
determine the stockholders who have complied with this section
and who have become entitled to appraisal rights. The Court may
require the stockholders who have demanded an appraisal for
their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery
for notation thereon of the pendency of the appraisal
proceedings; and if any stockholder fails to comply with such
direction, the Court may dismiss the proceedings as to such
stockholder.
(h) After determining the stockholders entitled to an
appraisal, the Court shall appraise the shares, determining
their fair value exclusive of any element of value arising from
the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to
be paid upon the amount determined to be the fair value. In
determining such fair value, the Court shall take into account
all relevant factors. In determining the fair rate of interest,
the Court may consider all relevant factors, including the rate
of interest which the surviving or resulting corporation would
have had to pay to borrow money during the pendency of the
proceeding. Upon application by the surviving or resulting
corporation or by any stockholder entitled to participate in the
appraisal proceeding, the Court may, in its discretion, permit
discovery or other pretrial proceedings and may proceed to trial
upon the appraisal prior to the final determination of the
stockholder entitled to an appraisal. Any stockholder whose name
appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and
who has submitted such stockholders certificates of stock
to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally
determined that such stockholder is not entitled to appraisal
rights under this section.
(i) The Court shall direct the payment of the fair value of
the shares, together with interest, if any, by the surviving or
resulting corporation to the stockholders entitled thereto.
Interest may be simple or compound, as the Court may direct.
Payment shall be so made to each such stockholder, in the case
of holders of uncertificated stock forthwith, and the case of
holders of shares represented by certificates upon the surrender
to the corporation of the certificates representing such stock.
The Courts decree may be enforced as other
C-3
decrees in the Court of Chancery may be enforced, whether such
surviving or resulting corporation be a corporation of this
State or of any state.
(j) The costs of the proceeding may be determined by the
Court and taxed upon the parties as the Court deems equitable in
the circumstances. Upon application of a stockholder, the Court
may order all or a portion of the expenses incurred by any
stockholder in connection with the appraisal proceeding,
including, without limitation, reasonable attorneys fees
and the fees and expenses of experts, to be charged pro rata
against the value of all the shares entitled to an appraisal.
(k) From and after the effective date of the merger or
consolidation, no stockholder who has demanded appraisal rights
as provided in subsection (d) of this section shall be
entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of
record at a date which is prior to the effective date of the
merger or consolidation); provided, however, that if no petition
for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder
shall deliver to the surviving or resulting corporation a
written withdrawal of such stockholders demand for an
appraisal and an acceptance of the merger or consolidation,
either within 60 days after the effective date of the
merger or consolidation as provided in subsection (e) of
this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal
proceeding in the Court of Chancery shall be dismissed as to any
stockholder without the approval of the Court, and such approval
may be conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to
which the shares of such objecting stockholders would have been
converted had they assented to the merger or consolidation shall
have the status of authorized and unissued shares of the
surviving or resulting corporation.
C-4
PROXY AUTHORIZATION INSTRUCTIONS
Authorize a Proxy by Telephone
Call toll-free using a touch-tone phone and follow the simple instructions to
authorize a proxy to vote your shares of Trizec Properties, Inc. common stock. Have your proxy card
available when you call.
Authorize a Proxy by Internet
Access the website and follow the simple instructions to authorize a proxy to vote
your shares of Trizec Properties, Inc. common stock. Have your proxy card available when you access
the web page.
Authorize a Proxy by Mail
Please mark, sign and date your proxy card and return it as soon as possible in the postage
pre-paid envelope provided or return it to:
Your authorization of a proxy by telephone or Internet must be received by , local time, on , 2006 in order
for your votes to be counted in the final tabulation.
If you authorize your proxy by telephone or Internet, do not mail your proxy card.
Proxy card must be signed and dated on the reverse side.
PROXY
TRIZEC PROPERTIES, INC.
10 SOUTH RIVERSIDE, SUITE 1100
CHICAGO, ILLINOIS 60606
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
TRIZEC PROPERTIES, INC.
FOLD AND DETACH HERE AND READ THE REVERSE SIDE
The undersigned stockholder of Trizec Properties, Inc., a Delaware corporation, hereby appoints
Timothy H. Callahan and Michael C. Colleran, and each of them singly, as proxies for the
undersigned, with full power of substitution or resubstitution in each of them, to attend and
represent the undersigned and to cast on behalf of the undersigned all votes that the undersigned
is entitled to cast at the Special Meeting of Stockholders, to be held at on , 2006
at , local time, and at all postponements or any adjournments thereof, and otherwise
represent the undersigned at the meeting with all the powers possessed by the undersigned if
personally present at the meeting. The undersigned hereby acknowledges receipt prior to the
execution of this proxy card of the Notice of Special Meeting of Stockholders and the Proxy
Statement and revokes any proxy heretofore given with respect to such meeting.
THE VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST AS DIRECTED. IF THIS PROXY IS
PROPERLY EXECUTED BUT NO DIRECTION IS GIVEN WITH RESPECT TO ANY PARTICULAR MATTER, THE VOTES
ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST FOR PROPOSAL 1 AND FOR PROPOSAL 2 AS
DESCRIBED IN THE PROXY STATEMENT. THE VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST IN
THE DISCRETION OF THE PROXY HOLDER ON ANY OTHER BUSINESS THAT MAY PROPERLY COME BEFORE THE SPECIAL
MEETING OF STOCKHOLDERS OR ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF.
(Continued and to be signed and dated on the reverse side)
YOUR VOTE IS IMPORTANT
Regardless of whether you plan to attend the Special Meeting of
Stockholders, you can be sure your shares of Trizec Properties, Inc. common stock are
represented by promptly returning your proxy in the enclosed envelope.
Proxy card must be signed and dated below
FOLD AND DETACH HERE AND READ THE REVERSE SIDE
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(Please mark, sign, date and return this proxy
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Please mark your votes like |
promptly in the enclosed postage prepaid envelope.)
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this in blue or black ink: þ |
THE BOARD OF DIRECTORS OF TRIZEC PROPERTIES, INC. RECOMMENDS A
VOTE FOR PROPOSAL 1 AND PROPOSAL 2.
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS INDICATED
BUT THE PROXY CARD IS SIGNED AND RETURNED, IT WILL BE
VOTED FOR EACH OF THE PROPOSALS BELOW.
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Adoption of the Agreement and
Plan of Merger and Arrangement
Agreement, dated as of June 5,
2006, by and among Trizec
Properties, Inc., Trizec
Holdings Operating LLC, Trizec
Canada Inc., Grace Holdings
LLC, Grace Acquisition
Corporation, 4162862 Canada
Limited, and Grace OP LLC,
pursuant to which Grace
Acquisition Corporation would
merge with and into Trizec
Properties, Inc. |
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Approval of any adjournments of
the Special Meeting of
Stockholders for the purpose of
soliciting additional proxies
if there are not sufficient
votes at the Special Meeting of
Stockholders to adopt the
Agreement and Plan of Merger
and Arrangement Agreement. |
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In their discretion, the named proxies are authorized to vote upon
such other business as may properly come before the Special Meeting or
any postponements or any adjournments thereof. |
o CHECK HERE ONLY IF YOU PLAN TO ATTEND THE MEETING IN PERSON.
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Signature:
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Signature:
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Dated: |
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IMPORTANT: Please DATE and SIGN this proxy where indicated above. Please sign exactly as your name
appears on the records of Trizec Properties, Inc. or its transfer agent. If the shares are held
jointly, each holder must sign. When signing as an attorney, executor, administrator, trustee,
guardian, officer of a corporation or other entity or in another representative capacity, please
give the full title as such above the signature(s).
o MARK HERE FOR CHANGE OF ADDRESS AND NOTE BELOW.